IN THE MONEY: Investors Buy, Insiders Sell Boots & Coots
01 Apr 07:30
By Carol S. Remond
A Dow Jones Newswires Column
(This article was originally published Monday.)
NEW YORK (Dow Jones)--Investors looking for a play on the Iraq war have
pumped millions of dollars over the past few months into the shares of a
company that puts out oil well fires.
But while many investors were buying, some insiders of Boots & Coots
International Well Control Inc. (WEL) were happy to provide some extra
liquidity by dumping thousands of shares into the market.
Take Danny Clayton, operations manager at Boots & Coots and president of the
company's Venezuelan operations. Clayton, who at one time worked with famous
oil and gas firefighter Paul "Red" Adair, sold more than 800,000 shares of
Boots & Coots since the beginning of the year.
When asked why he sold the stock, Clayton said because "the stock price is
up." He then hung up the phone.
To be sure, Clayton and anyone else who has owned this stock for some time
don't stand to make much money right now. The shares are trading for around 80
cents on the American Stock Exchange.
But something is better than nothing and this is a company whose auditor has
issued a going concern statement.
Tracy Scott Turner, a director of Boots & Coots, also sold shares of the
company's stock this year. Filings with the Securities and Exchange Commission
show that Turner sold 5,000 shares in February, while Interra Ventures LLC, a
firm that Turner is a founding principal, sold 20,000 Boots & Coots shares.
A company that at one time counted Turner as one of its partners sold a big
chunk of stock earlier this year. Geneva Associates Merchant Banking Partners
General Partnership 1 sold about half a million shares in early February.
Turner has not been associated with Geneva since the year 2000.
Turner, according to a filing with the SEC last March, controlled 1.8 million
shares of Boots & Coots, or 4.2%. He is also a managing member of Specialty
Finance Fund I LLC, which, according to SEC filings, controlled more than 8.8
million shares, or 22.2%.
Turner declined to comment about Boots & Coots.
And others may have unloaded stock, too.
In late March, Prudential Insurance Co. of America converted a big piece of a
privately placed preferred stock into 12 million shares of Boots & Coots common
stock. Prudential declined to comment. But you have to figure that the
insurance company began the cashing out process and you can only do that with a
security for which there is a public market.
Earlier in March, Boots & Coots' stock rose more than 300% on extremely heavy
volume on speculation that the company would land some of the business to put
out oil fires in Southern Iraq.
In fact, the company does have representatives on the scene and is reportedly
earning at least $50,000 a day. But it remains in financial trouble with more
than $20 million in current liabilities.
Meanwhile, Boots & Coots late Friday said it rejected a restructuring plan
put forward by one of its creditors, Checkpoint Business Inc. Checkpoint in
late January had declared Boots & Coots in default on a $1 million loan
extended just a month before.
Under the Checkpoint plan, Boots & Coots's restructuring would have taken
place by filing for Chapter 11 bankruptcy. Boots & Coots stock under that deal
would have been cancelled.
To get out from that potential default and onerous bankruptcy plan, Boots &
Coots said it repaid the $1 million loan with interest. But what remains
unclear is how Boots & Coots could have come up with the money.
Boots & Coots' balance sheet showed only $127,000 in cash and cash equivalent
as of the end of September, according to its latest SEC filing.
Boots & Coots officials were not available for comment Monday. But an outside
spokesman said that the majority of the money used to repay Checkpoint came
from "continuing operations", especially"operations from Venezuela". The
spokesman referred all other inquiries to Boots & Coots.
No one at Checkpoint, a firm that was registered last October in Panama, was
available to comment.
Boots & Coots stock closed Monday at 82 cents, off 1 cent, on 41 million
shares.
Carol S. Remond; Dow Jones News; (201) 938-2074; carol.remond@dowjones.com
(END) Dow Jones Newswires
04-01-03 0730ET |
