The company fired CEO Chip Blankenship and replaced him with Chairman John Plant, with the odd caveat that “[i]t is expected that Mr. Plant will serve in the role of Chief Executive Officer for a period of one year.” Another Board member, Elmer Doty, was appointed COO. Plant and Doty were directors put into place by Elliott Management. Elliott also, it turns out, championed the hired of the now departed Mr. Blankenship. It is said that Mr. Blankenship was asked to leave after failing to convince the Board to accept a sale of the company to Apollo Global Management(APO). Things took a strange and ugly twist as the New York Post reports that bankers working on behalf of Eliott gave out Plant’s personal cell phone number to shareholders and pressured them to call him to get him to support the sale.
Besides announcing the yet-to-be-determined spinoff, the company slashed its dividend by two thirds, from $.06 to $.02 per share. On the other hand the company’s buyback authorization was increased to $1 billion, half of which it expects to complete in the first half of this year. $200 million in cost cuts were promised as well, and the company expects that adjusted earnings per share will be between $1.55 and $1.65. This remains a profitable company and it may trade at an attractive valuation if you can quantify the risk of the Grenfell Tower liability. Elliott, one of the savviest investors out there has clearly looked at that and is not concerned, to the extent that they were discussed as a potential buyer of the affected division. What do they know that we don’t?
Disclosure: The author holds no position in any stock mentioned