Chevron Corporation (NYSE: CVX) is continuing to generate industry-leading operational and financial results and advancing key projects to drive future growth, executives said today at the company’s annual security analyst meeting in New York.
“World energy demand continues to grow and the outlook for the energy business remains excellent,” said John Watson, Chevron’s chairman and CEO. Watson added, “Our strategies are sound, and we’re poised to deliver significant production growth through the end of the decade. We believe this compelling growth profile, combined with flattening capital spending levels these next few years, should serve as a strong catalyst for value creation for our shareholders in the years ahead.”
George Kirkland, vice chairman and executive vice president, Upstream, reviewed the performance of Chevron’s upstream business in 2013, marking yet another year where the company led the industry on multiple upstream financial metrics including earnings and cash unit margins, as well as return on capital employed. He also discussed some of the company’s portfolio management strategies and practices while highlighting key attributes of the portfolio, which included a special emphasis on the company’s Permian basin assets and future growth plans.
“Our upstream portfolio leads the industry in quality, breadth and depth. We have the right strategies, always adhere to a disciplined investment approach, and are constantly managing the portfolio to extract and maximize value for our shareholders. Our base business is performing exceptionally well and provides us a substantial, longer-term competitive advantage, driving continued peer-leading financial and operational performance.”
Jay Johnson, senior vice president, Upstream, provided an overview of Chevron’s queue of projects, exploration assets, and other long-term opportunities. “Our plan for production growth is solid and will be driven by near-term project ramp-ups as well as our larger major capital projects which begin starting up later this year.” Johnson added, “These projects are attractive, and when combined with profitable production growth from our shale and tight resource developments, are expected to add over 800,000 barrels of oil equivalent per day by 2017. We also have a deep queue of other growth opportunities which should allow us to continue growing production to the end of the decade.”
Mike Wirth, executive vice president, Downstream and Chemicals, reviewed market fundamentals while highlighting business performance and future growth plans. “Our strategy is to deliver competitive returns and grow earnings, including integration opportunities with our upstream business.” Wirth added, “We have a focused refining and marketing portfolio with strategically located and competitive assets. Our petrochemicals business leads its industry, and we continue to target profitable growth opportunities, primarily in chemicals and lubricants.”
Pat Yarrington, vice president and chief financial officer, highlighted Chevron’s continued financial strength, capital spending outlook, and asset divestment plans. “Our objective is to reward our shareholders through both share price appreciation and higher dividends. We’ve been able to sustain increasing shareholder distributions and, at the same time, reinvest for future growth. We believe we’ve balanced these objectives well, and that our existing portfolio and new investment projects will support continued value growth for our shareholders,” Yarrington said.
Presentations delivered by Watson, Kirkland, Wirth, Yarrington and Johnson are available on the Investor Relations website at www.chevron.com.
TD Ameritrade Holding Corporation (NYSE: AMTD) announced it has reached a new milestone: monthly average client trades per day eclipsing 500,000 for the first time in its history. Average client trades per day for the month of February 2014 were a record 501,000, up 1 percent from the record 496,000 average trades per day it reported for January 2014.
“We have reached an important milestone at TD Ameritrade: half-a-million average trades per day for the month of February. Investors remain engaged, and their behavior continues to suggest a bullish outlook moving forward,” said Fred Tomczyk, president and chief executive officer. “Investments in our systems, trading tools and education, have helped us respond to our clients’ needs in this market and will remain a focus for us as we seek to sustain engagement and continue growing our market share.”
Monthly activities for February 2014 included:
-- An average of 501,000 client trades per day in February 2014, up 30 percent from February 2013 and up 1 percent from January 2014.
-- $611.6 billion in total client assets as of Feb. 28, 2014, up 22 percent from February 2013 and up 4 percent from January 2014.
-- Average spread-based balances of $91.7 billion, up 12 percent from February 2013 and flat from January 2014.(1)
-- Average fee-based balances of $132.4 billion, up 19 percent from February 2013 and essentially flat from January 2014.(1)
A document detailing historical trends for this monthly activity can be found in the “Investor relations” section of the company’s corporate web site, www.amtd.com. Simply click on “Financials & reports” and select the “Operating metrics” tab.
Accretive Capital Partners, LLC, sent the following letter to MCG Capital's (Nasdaq: MCGC) Board of Directors:
Mr. Richard W. Neu
MCG Capital Corporation
1001 19th Street North, 10th Floor
Arlington, VA 22209
Dear Ladies and Gentlemen of the MCG Capital Corporation Board:
As you know, Accretive Capital Partners has been a significant and supportive shareholder of MCG Capital Corporation for more than five years. We believe we are among the largest owners of MCG Capital stock, with approximately 1.8 million shares held by our fund and its affiliates, and we take pride in being value-added partners to the company and our fellow shareholders. We have worked hard to provide constructive advice during these years, and we believe investment firms like ours serve an important societal role in identifying outstanding business managers and supporting them as they turn their visions of fulfilling market needs into realities of new products or better services, improving life for everyone. We strive to achieve our professional responsibilities by investing in and partnering with exceptional CEOs who have demonstrated their success at allocating assets as they build superior businesses. And we are committed to allocating the funds entrusted to us by our investors intelligently, honorably, and just as rationally. It is with these responsibilities in mind that we strongly urge the Board of Directors of MCG Capital Corporation to take immediate and substantial steps to replace management and to improve shareholder value.
MCG has been extraordinarily fortunate to have Rick Neu serving as its Chairman. From October 2011 through November 2012, Rick stepped in as CEO to stabilize an organization that had suffered years of mismanagement and a five-year and 56% decline in per-share net asset value (NAV). He brought order to the company during a critical management change, initiated significant cost cuts, and instilled a culture of acting in shareholders' best interests.
Rick also put his own money where his mouth was by purchasing roughly $890,000 of MCG stock in the open market between August 2011 and May 2013, at an average price nearly 20% greater than today's market price.
Toward the end of 2012, Rick selflessly relinquished the CEO reins to the company's longstanding business development officer, Hagen Saville. And Rick did so the moment he felt his job of stabilizing the business was completed -- without extracting an extraordinary bonus or extravagant stock options. In fact, Rick's compensation in 2012 was 61% less than the $2.3 million received by Mr. Saville, who reported to Rick for eleven months of that year. Including compensation in 2011, when Hagen Saville was heading business development only, Rick's combined compensation was 67% lower than the $3.4 million received by Mr. Saville.
Today, under Hagen Saville's direction, we find the situation at MCG Capital untenable. Eleven months into Mr. Saville's tenure as CEO, the very first transaction and fourth largest loan origination closed under his watch ($13.5 million to Color Star Growers) resulted in a total loss in less than a year. This alone resulted in a 4% ($0.19/share) decline in NAV. Since he assumed CEO responsibilities, per-share NAV has declined 9%, in spite of offsetting increases to NAV resulting from the ongoing share repurchase program. A year ago, when asked during the company's March 5, 2013 earnings conference call what benchmarks should be used to measure his success in the coming quarters, Mr. Saville told shareholders: "I think if you go back and review my comments in the prepared remarks, the objectives we have are to earn $0.50 in 2013." Exactly one year later, on MCG's March 5, 2014 earnings conference call, Mr. Saville announced that the company had earned only $0.02 in 2013, and shareholders now should expect only $0.25-$0.30 of net operating income in 2014.
After delivering performance 96% below benchmarks which Mr. Saville himself established only one year ago and setting a new goal for 2014 at only 50-60% of last year's benchmark, he reported that expenses will also increase in 2014, as he plans to hire additional loan origination employees. At the same time, he also reported: "We believe that current market conditions in our primary lending markets are consistent with the peak of a credit cycle. The current supply of debt capital exceeds the demand by issuers in our markets, resulting in lower pricing and weaker contractual protections." Are these really the right market conditions to increase loan origination staff and is this actually the appropriate leader to hire and oversee this new team?
It is beyond us as to why Mr. Saville advocates increasing operating expenses to add investment personnel while we are at the "peak of a credit cycle... resulting in lower pricing and weaker contractual protections." We offer an alternative solution to the poorly conceived strategy designed by Mr. Saville: Shares of MCG itself can be repurchased immediately and at virtually no additional cost, where the assets are seasoned and well-known to the company, and in a transaction which will produce an instantaneous 26% return for investors with an additional 7.4% annual dividend yield.
At December 31, 2013, MCG had $91.6 million ($1.30/share) of cash and cash equivalents available for general corporate purposes, and the company expects to receive another $100-$125 million ($1.42-$1.77/share) of cash repayments in 2014. The total debt was only $175 million ($2.49/share), and all debt associated with the BDC asset coverage test was repaid in January 2014. The net asset value was $335 million ($4.74/share). In short, MCG is sitting on an extraordinarily high level of unutilized cash assets, representing nearly 18% of total assets and over 27% of net assets, with no worrisome debt covenants or imminent repayments.
At the close of trading on March 10, 2014, MCG stock was $3.77/share, a 20% discount to net asset value. For every share purchased at this price, an investor receives nearly $1.00 of additional net asset value for free, or an immediate 25% gain on investment. And with the expected annual dividend rate of $0.28/share (which should approximate earnings), that equates to an additional 7.4% return annually.
In fact, shares of MCG are an extremely attractive investment for the company at any price up to $4.60. We direct your attention to some calculations which demonstrate the incredibly accretive nature of a $100 million share repurchase at $4.60/share (via a Dutch Auction Tender Offer, although we suspect such a transaction might be completed at a lower price). The calculations may be found at the following URL: http://accretivecapital.com/letter-to-mcg-capital-board.html
You will note that reducing the share count by investing unutilized cash immediately increases per-share NAV by $0.07, from $4.74 to $4.81. By the end of 2014, instead of a -1.2% decline, NAV would be 4.1% greater, growing $0.19 to $4.87. In 2015, NAV would be 6.6% greater, growing $0.31 to $4.99. Moreover, earnings per share increase 43%, from $0.28 to $0.40, in each of the next two years.
The $100 million share Dutch Auction Tender Offer at a lower price, say $4.40/share, generates even more compelling value for shareholders. By reducing the share count 22.7 million shares, the buyback results in an immediate increase to per-share NAV of $0.17, from $4.74 to $4.91. By the end of 2014, instead of a -1.2% decline, NAV would be 6.4% greater, growing $0.30 to $4.98. In 2015, NAV would be 9.2% greater, growing $0.43 to $5.11. Earnings per share increase 46%, from $0.28 to $0.41, in each of the next two years.
We believe that the most important thing MCG can do on behalf of shareholders is to deploy our unutilized cash into the highest yielding opportunity as soon as possible. Given the unfavorable market conditions for making new loans, together with the additional risks, increased costs, and extended time involved, we strongly encourage the MCG Capital Board of Directors to act on the recommendation of a Dutch Auction Tender Offer immediately.
We also believe MCG should be sold to a strategic buyer already operating a lending business. We can imagine such a buyer ascribing book value to the seasoned and high yielding loans already in place at MCG. Prospective buyers not currently operating Business Development Companies (BDCs) might also value MCG's public BDC structure; and those without SBIC licenses may also be attracted to MCG's existing license, provided the SBA authorizes its transfer.
In considering the sequence of events, however, we believe MCG should first deploy its unutilized cash to buy back shares as aggressively as possible, provided MCG's stock price remains discounted to per-share NAV. As soon as the cash is deployed and shares outstanding are reduced, the company should be sold.
Accretive Capital Partners, LLC has stood by MCG Capital for more than five years while waiting patiently for a turn-around to materialize and for NAV growth to resume. Instead, prospects for a turn-around and any organic NAV growth appear less likely now than ever. Given current management's lack of success, a stock price that trades at a substantial discount to NAV, and lending markets at "the peak of a credit cycle... resulting in lower pricing and weaker contractual protections," the Board of Directors of MCG Capital Corporation should take the following actions immediately:
1.) Remove Hagen Saville from his CEO and Board of Directors roles;
2.) Initiate a Dutch Auction Tender Offer to acquire MCG shares at prices up to $4.60/share;
3.) Abandon plans to grow loan origination staff and, instead, focus on managing and monetizing portfolio assets to avoid additional losses; and
4.) Begin a dialogue with potential buyers of the company.
We believe we share these sentiments with other significant shareholders of MCG Capital and we encourage you to take bold and decisive action on our behalf. MCG is currently in an excellent position to follow the strategic plan outlined above: The company is flush with cash; it has no imminent debt repayments or onerous covenants; it can continue to operate profitably, provided expenses are controlled and losses are minimized; and its Board of Directors is led by a strong and honorable businessman, experienced in directing successful sales of businesses. These dynamics are particularly compelling given the lackluster environment for and risks associated with deploying capital elsewhere. And the shareholder value created as a result of these actions is profound.
We at Accretive Capital Partners encourage you to pursue these recommendations immediately and, while we know Rick Neu to be anchored by rock-solid moral convictions, we remind you of your fiduciary duties to shareholders: As custodians of our investment in MCG Capital Corporation, you are charged with a duty to place shareholder interests above any personal gain or other motives. And, consistent with the motivation that compels us, we demand only that you do the right and noble thing on behalf of all MCG Capital Corporation shareholders.
Richard E. Fearon, Jr.
Accretive Capital Partners, LLC
16 Wall Street, 2nd Floor
Madison, Connecticut 06443
SunCoke Energy Partners, L.P. (NYSE: SXCP) announced that it expects to raise its per unit cash distribution 5.3 percent to $0.50 for its first quarter 2014 distribution payable in May.
SXCP’s sponsor, SunCoke Energy, Inc. (NYSE: SXC), announced plans to drop down a 33 percent ownership interest in the Haverhill and Middletown cokemaking facilities to SXCP. This planned transaction will increase SXCP’s ownership interest in both facilities to 98 percent from the current 65 percent level. SXC will continue to retain a 2% interest in these facilities. SXC, the largest independent producer of coke in the Americas, is SXCP’s general partner and largest unitholder, owning a 56 percent limited partnership interest and all the incentive distribution rights.
On an annual basis, the additional interest in Haverhill and Middletown is projected to raise SXCP’s Adjusted EBITDA attributable to unitholders by approximately $45 million and contribute approximately $38 million to distributable cash flow before financing costs. The proposed terms of the initial dropdown are being reviewed by the independent members of SXCP’s Board of Directors.
“On the strength of our cokemaking operations and successful coal logistics acquisitions, we have now increased cash distributions per unit four times since our initial public offering in January 2013,” said Fritz Henderson, Chairman and Chief Executive Officer of SXCP. “More importantly, with the expected acquisition of additional interests in Haverhill and Middletown, we are well positioned to build on this momentum. Both facilities sustain high levels of operating and safety performance, and considering the ease of execution and expected contribution to annual Adjusted EBITDA and distributable cash flow, this was a logical next step.”
The Company’s sponsor, SXC, also indicated that over time it expects to drop down to SXCP all of its domestic cokemaking assets. The pace of future dropdowns is flexible based on the execution of potential greenfield and acquisition opportunities. The Company discussed these announcements, its initiatives to enhance the productivity of existing assets and potential growth opportunities in the cokemaking, coal logistics and ferrous processing businesses at a joint Investor Day meeting held today with SXC.
Henderson continued, “With the initial dropdown transaction and prospective dropdown of the rest of our sponsor’s domestic coke fleet over time, we believe we can increase cash distributions per unit by 8 percent to 10 percent annually through 2016. In addition, any potential greenfield developments or acquisition opportunities we successfully pursue can provide upside to this outlook.”
Rexahn Pharmaceuticals (AMEX: RNN) announced today initial data for the Phase I dose-escalation clinical trial of Supinoxin (RX-5902) initiated in August 2013. This trial was designed to study safety and efficacy in patients with solid cancer tumors.
The study is still ongoing and the maximal tolerated dose (MTD) has not yet been achieved. Three dosing cycles have been completed (25, 50 and 100 mg) and no drug related adverse events have been reported. The fourth dosing cycle (150 mg) has been initiated. Two patients have received 2 cycles of treatment and one patient has received 6 cycles of treatment. Pharmacokinetic analysis has shown that SupinoxinTM displays dose-proportional exposure and an estimated oral bioavailability of 51%. The pharmacokinetic profile of Supinoxin is similar to what has been seen in preclinical studies.
Peter D. Suzdak, Ph.D., Rexahn’s Chief Executive Officer commented, “We are encouraged that Supinoxin is safe and well-tolerated over the dose range tested in cancer patients with solid tumors who have received multiple cycles of treatment. In addition, the pharmacokinetic profile and oral bioavailability of Supinoxin is consistent with preclinical studies. These data are very encouraging, and we look forward to sharing additional data from the trial when it is completed later this year.”
The Phase I trial of Supinoxin, which was initiated in August 2013, is a dose-escalation study which will evaluate the safety, tolerability, dose-limiting toxicities and MTD in patients with solid cancer tumors that have previously failed treatment with approved therapies and shown progression of disease. Secondary endpoints include pharmacokinetic analysis and evaluating the preliminary anti-tumor effects of Supinoxin. This trial is being conducted in three clinical oncology centers in the United States. Each patient has the ability to continue on the drug up to six cycles of treatment (a dosing cycle is defined as 3 weeks of drug treatment followed by and 1 week off) if no disease progression is seen. Patients are assessed by CT or MRI prior to the start of therapy and after every two cycles of therapy to assess tumor progression. The trial is using an accelerated dose-escalation design: one patient is treated per dose cycle until a grade 2 related adverse event occurs then three patients will be treated per dose cycle. The decision to escalate dose is made by the DMSB after completion of one cycle of treatment based on safety and tolerability. Patients have the possibility to receive up to 6 cycles of treatment if the disease does not progress. Tumor biopsy samples are taken to assess the biomarker phospho-P68.
More Management CommentsView Older Stories
GT Advanced Tech (GTAT) Enters $336M Supply Agreement with Cosmos Chemicals
ChannelAdvisor (ECOM) Announces Addition of Alibaba Group’s Tmall Global
Electronic Arts (EA) Reports Availability of 'Titanfall' on Xbox One, Origin.com
Quest Diagnostics (DGX) to Acquire Prevention, Wellness Program Provider, Summit Health
Synta Pharma (SNTA) Ganetespib Selected for Study in I-SPY 2 TRIAL
Bon-Ton Stores (BONT) CEO Hoffman Won't Renew Employment
E-House (EJ) Updates on Strategic Initiatives; Plans Joint Venture with Sina (SINA), Others
FuelCell Energy, Inc. (FCEL) Posts Q1 Loss of 4c/Share, Sales Beat
Home Inns & Hotels (HMIN) to Acquire Siji Hotel Management Co.
Premier Exhibitions (PRXI) to Explore Strategic Alternatives
La Jolla Pharma (LJPC) GCS-100 Phase 2 Met Primary, Secondary Endpoints
Hill International (HIL) Misses Q4 EPS by 4c; Guides FY Revs Above the Street
Tree.com, Inc. (TREE) Reports Q4 EPS from Con. Ops of $0.12
CNinsure, Inc. (CISG) Misses Q4 EPS by 2c
Headwaters (HW) Issues Update from Annual Analyst, Investor Day
Pershing Square Comments on Herbalife (HLF); Says Allegations 'Provably False', Hasn't Provided Proof
Microsoft (MSFT) is 'Extremely Committed' to Xbox Brand (SNE)
Boeing (BA) COO Sees 787 Costs Peaking at $25B, Falling by FY16
Green Mountain Coffee Roasters (GMCR) Becomes Keurig Green Mountain, Inc.
Daimler Calls Tesla (TSLA) One of the Best Investments Its Ever Made
Can-Fite BioPharma (CANF) Closes 1.48M ADS, Warrants Private Placement
GE (GE) Releases Annual Report, Shareholder Letter
Zygo Corp (ZIGO) OSD Receives $1.4M Contract for Laser Fusion Amplifiers
BlackBerry (BBRY) CEO Chen Compares Himself to Steve Jobs (AAPL)
Hemispherx Biopharma (HEB) Plans App Submissions in LatAm for Ampligen
Knightsbridge (VLCCF) to Acquire Five DWT Capesize Newbuilds from Frontline 2012
Minerals Technologies (MTX) to Acquire AMCOL Int'l (ACO) for $45.75/Share
3D Systems (DDD) Debuts New 3-D Printing-Focused Seminar Series
Pernix Therapeutics (PTX) Names Terence Novak as Operating Chief
Osmium Partners Sends Letter to Spark Networks (LOV) Holders
McDonald''s (MCD) Global Comps Fell 0.3% in Feb., Wider than Expected
Omeros Corp (OMER) Reports Positive Data for OMS721 in MASP-2
BioLineRx (BLRX) BL-7010 Completes BL-7010 Dose Escalation in Phase 1/2
FMC Corp. (FMC) Plans Split into Two, Publicly-Traded Companies
Trina Solar (TSL) Sells 50-MW Wuwei, Gansu Plant
WuXi (WX) Purchases Illumina (ILMN) HiSeq X Ten System
Revolution Lighting Tech (RVLT) to Acquire Value Lighting in $39M Deal
Alexion Pharma (ALXN) Boosts FY14 EPS, Revs Outlook
Yingli Green Energy (YGE) ENters 27.5-MW Module Supply Agreement in Israel, Middle East
CombiMatrix (CBMX) Names R. Weslie Tyson as Medical Chief
Chiquita Brands (CQB), Fyffes plc Enter Merger Agreement
Ford (F) Director Emeritus William Clay Ford Died
Bed Bath & Beyond (BBBY) Q4 Comps Up 1.7%
Palo Alto (PANW) Affirms Juniper (JNPR) Litigation Declared Mistrial
Aaron's (AAN) Affirms Receipt of Vintage Capital Nominations
Cliffs Natural (CLF) Will Continue to Pursue Settlement with Casablance
NeoPhotonics (NPTN) Appoints Broadcom (BRCM) Exec Ramaswami as Director
Intermune (ITMN) Plans to Stick with Long-Term Strategy; Doesn't Rule Out M&A
Furiex Pharma (FURX) Affirms Submission of SYR-472 NDA to Japan's MHLW
Vintage Capital Nominates Five to Aaron's (AAN) Board