American Securities sells NEP in sprint ahead of ‘fiscal cliff’

NEW YORK, Dec 27 (Reuters) – Private equity firm American
Securities LLC said on Thursday it sold a U.S. media production
company to peer Crestview Partners, in one of the clearest
examples yet of a…

Apple CEO’s pay takes big hit vs. record 2011 package

NEW YORK (Reuters) – Apple Inc CEO Tim Cook’s 2012 compensation package of $4.17 million is a huge cut on paper for the top executive of the most valuable U.S. corporation, after a 2011 package fattened by more than $376 million in long-term stock awards.

Poseidon’s meltdown continues after ‘significant’ writedown warning

The stunning meltdown of Poseidon Concepts Corp. continued on Thursday after the company warned it could take “significant” writedowns as it struggles to collect payments from customers.

Poseidon also shook up its leadership and suspended its dividend. The announcements point to a company in disarray, analysts said, and one that grew too quickly for its overwhelmed management team to handle. The stock plunged 55%.

The amount of receivables they were not collecting on was truly mind boggling

Calgary-based Poseidon was spun off from Open Range Energy Corp. late last year as a standalone company supplying fluid tanks to unconventional oil and gas projects in North America. The company’s growth has been exponential: revenue climbed more than fivefold in the first six months of 2012 compared to the same period a year earlier, and its market value topped $1-billion.

Everything changed on Nov. 14, when Poseidon shocked investors by reporting extremely weak earnings and writing off $9.5-million of accounts receivables that it failed to collect. Accounts receivable were $125.5-million at the end of Q3, far ahead of the actual revenue total of $41.1-million.

“The amount of receivables they were not collecting on was truly mind boggling,” said Kevin Lo, an analyst at FirstEnergy Capital.

In addition to warning about possible future writedowns on Thursday, Poseidon said it set up a special committee to review the firm’s business plan. The monthly dividend of 9¢ a share was suspended to preserve liquidity, and the company named a new CEO, CFO and chief technology officer. Former CEO Lyle Michaluk is now interim CFO, and he resigned from the board along with founding president Cliff Wiebe.

Poseidon’s market value was $120-million following Thursday’s decline, less than its reported accounts receivable from the third quarter.

Poseidon has acknowledged that its management team struggled to adapt to the firm’s rapid growth. Collecting receivables in the energy services business is tricky, experts said, and the process changes depending on the customer. There is a perception among investors that management was not up to the job.

The company has also blamed a slowdown in exploration and development activity for its troubles. While it is a factor, Mr. Lo said the major issue is internal controls, noting that other energy services companies are not facing the same problems collecting on their receivables.

The suspension of the dividend was widely expected after the writedown on Nov. 14. Before Thursday, the company’s dividend yield was more than 30%. Cutting the payment will save the company about $87.6-million, providing financial flexibility in the event of a major writedown in the future.

According to RBC Capital Markets analyst Dan MacDonald, the dividend suspension suggests that Poseidon’s liquidity concerns could be more serious than originally thought.

“We would expect the stock to remain weak for the foreseeable future until further details are provided from management surrounding its liquidity position and improved collection procedures surrounding its outstanding [accounts receivable] balances,” he wrote in a note.

Poseidon is also the target of a proposed class-action lawsuit from Siskinds LLP, which accuses the company of overstating its incomes and inflating the value of its assets. The allegations are related to accounts receivable.

Porsche wins dismissal of U.S. hedge fund lawsuit over VW

NEW YORK (Reuters) – Porsche Automobil Holding SE on Thursday won the dismissal of a New York lawsuit by 26 hedge funds that accused the German automaker of causing more than $1 billion of losses by cornering the market in Volkswagen AG shares.

Michigan governor signs bill giving local governments fiscal options

(Reuters) – Michigan Governor Rick Snyder signed into law on Thursday a bill that gives options to cities and school districts for dealing with severe financial problems, including bankruptcy.

New York City faces $811 million budget gap in FY 2014: report

(Reuters) – New York City faces an $811 million budget shortfall in fiscal year 2014 and lowered revenue projections in part because of Superstorm Sandy, the city’s Independent Budget Office said on Thursday.