The major deals that shaped the business scene in 2013. By Leslie Turk
Look no further than LEDA’s third quarter Economic Performance Index on Page 33 to see the kind of year Lafayette Parish has had, along with key indicators about the direction in which the economy is moving.
It’s also worth noting that in 2013 Lafayette was recognized as the No. 1 MSA in the country by Area Development, and fDi Magazine placed it among the top 10 Small American Cities of the Future. Just recently it was named one of 20 Best College Towns in America by Travel and Leisure. Together, all of this gives us a big picture view of where we live and how we’re faring, but ABiz also likes to glance back at specific developments — our so-called “Big Deals” — over the course of the year.
When it came to business recruitment, Lafayette really scored big — and not just in the traditional sense. This community took two major steps forward by hiring urban planner/lawyer Nathan Norris to head the Downtown Development Authority and Louisiana Economic Development’s Jason El Koubi to take over leadership of the Greater Lafayette Chamber of Commerce.
Those are Big Deals indeed, but there are at least 10 others that help tell the story.
Big Deals of 2013
The business community was a abuzz for much of 2013. Major expansions were announced, Gov. Jindal’s ill-conceived tax swap proposal fizzled, a newspaper war (or two) was started and Mike Moreno’s highly touted oilfield venture turned to the U.S. bankruptcy court for help. Below are our picks for the biggest business deals of the year. And for various reasons, they are all worth watching in the new year.
1. Frank’s International’s IPO
|Photo by Robin May|
|Frank's International President and CEO Frank Mosing|
Frank’s International made its second and final appearance atop ABiz’s list of the region’s largest privately held companies ranked by revenues — next year it will likely move to No. 1 on our list of publicly traded companies with the highest revenues. In August the 75-year-old oilfield service company debuted on the New York Stock Exchange under the symbol “FI,” selling 30 million shares at $22 each (ABiz broke the story of the planned IPO in June). The offer netted about $712 million in proceeds, with the Mosing family retaining majority ownership. The Frank’s deal was the largest of six IPOs that priced on the same day, the most, according to Dealogic, on a single night since May 8. Less than two months after the IPO, Frank’s made good on its promise to invest some of those proceeds in Lafayette, announcing that it is adding a 175,000-square-foot operations center on Beau Pre Road. The project consists of a combination of shop, warehouse and office space for the company’s operational departments and approximately 200 local employees (it employs more than 4,000 workers in 60 countries). Lafayette-based Core Construction Group was awarded the operations facility project, estimated to cost approximately $24 million and be completed by October 2014. “Everything in Lafayette is going to be expanded,” Frank’s International President and CEO Keith Mosing told ABiz. “We’re going to be bigger, better, stronger and able to serve our customers better.” No word yet on whether any acquisitions are planned.
2. Moreno’s Green Field in bankruptcy
Mike Moreno always seems to make an appearance on the Big Deals list, but this time the big story may not be as much about the bankruptcy reorganization of his Green Field Energy Services as it is about whether he can pull out of it. A couple of years ago the Cuban-born businessman — who grew up in Morgan City and earned an MBA from UL Lafayette — raised hundreds of millions to invest in a company that was providing hydraulic fracturing services to the oil and gas industry. In September the company defaulted on an $80 million loan from Shell and in October defaulted on a $250 million loan from Wilmington Trust, prompting its Oct. 27 bankrupcty filing in hopes of reorganizing its approximately $500 million in outstanding debt — about the same amount it lists in assets. Moreno is chairman and CEO of the private company, having led the group that purchased Hub City Industries in mid-2011, changing its name to Green Field, which soon boasted that it was years ahead of its competition in the use of natural gas to run its hydraulic fracturing equipment (saying it could even pipe the hydrocarbon directly from the wellhead). We’ll just have to wait to see if the high-flying entrepreneur behind The Moreno Group — Dynamic Industries, ARC Industries, Southern Steel & Supply, and Industrial Solutions Group — can land on his feet. One thing we do know is that Moreno has not been involved in the management of Moreno Group (now called Dynamic Energy Services International) since mid-2012.
3. Jim Flores brings it home
On the morning of May 9 ABiz broke the story on Lafayette native Jim Flores’ Houston-based Plains Exploration & Production Company’s plans to build a $20 million deepwater facility at LEDA Industrial Park on Bernard Road in Broussard, stealing a little of LEDA chief Gregg Gothreaux’s thunder. A few hours later, speaking at ABiz’s second annual State of the Economy luncheon at the Cajundome Convention Center, Gothreaux shared the details, revealing that over a five-year period, the independent oil and gas producer’s expanded Gulf of Mexico operations will create more than 600 direct and contract positions locally with an average annual salary of $100,000. Still headed by Flores, the company is now known as Freeport McMoran Oil and Gas (the result of Phoenix-based Freeport-McMoRan Copper & Gold’s late May purchase of Plains). The company’s local workforce, which stood at 220 at the time the deal was confirmed, has been growing since its acquisition of deepwater assets in the Gulf of Mexico in November 2012. “They’ve already hired, quietly out on Bernard Road, 180 people,” Gothreaux told the audience May 9. The now-completed project consists of a new warehouse and administrative offices to support Freeport’s growing offshore deepwater Gulf of Mexico operations. In 2012 then-PXP paid $6.1 billion (more than its market value at the time) for BP’s and Royal Dutch Shell’s stakes in a group of Gulf of Mexico oil fields, a move that doubled its crude production. BP got $5.5 billion in the deal, which closed in early December 2012; the divestiture was part of the London-based oil and gas giant’s ongoing sell of assets to pay for the Deepwater Horizon disaster. The 26.5-acre industrial park site was selected in part because of its proximity to Lafayette, according to Gothreaux, and the city of Broussard kicked in some infrastructure improvements. Flores’s company, however, neither requested nor received any kind of state incentive package for the local expansion. The LEDA chief also hinted to the audience that there may be more good news to come from Freeport: “I think we haven’t heard the last from one of our favorite sons, Mr. Flores.”
4. Bell rings in the New Year
|Photo by Robin May|
|Bell Helicopter CEO John Garrison|
A good year for the Lafayette Economic Development Authority ended with a gift from Bell Helicopter. The company’s Dec. 10 announcement that it is investing $11.4 million in equipment and tooling as part of a $46 million project at Lafayette Regional Airport to build new helicopters came on the heels of the company’s composite parts and rotoblade repair facility already under construction at LEDA Industrial Park in Broussard. The state is kicking in the remaining balance to bring the first modern-era aircraft assembly facility to Louisiana, including a $23.6 million hangar at the airport to house the operation (the space will be leased from the airport, which will own the hangar), performance-based grants of $4 million for lease support, $3.8 million for infrastructure and equipment, and $200,000 to reimburse relocation expenses. The project will create at least 115 new direct jobs averaging more than $55,000 per year, plus benefits. Louisiana Economic Development estimates the aerospace project will result in another 136 new, permanent indirect jobs, for a total of more than 250 new jobs in Acadiana. Bell Helicopter CEO John Garrison, however, made it clear he expects the job numbers to rise. “If we only hire 115 people I’ll be incredibly disappointed,” he said when the project was announced at LEDA’s office. “It puts us on the global map of aviation,” LEDA’s Gregg Gothreaux says of the new airport facility.
5. John Georges buys Advo
|Photo by Robin May|
Stunning as it was to many media watchers and political observers, successful New Orleans businessman John Georges’ purchase of family-owned The Advocate was significant on many fronts — perhaps none more important than his belief in the future of the printed word and willingness to sink millions into it (the purchase price was not disclosed). Georges wasted no time shaking things up — naming himself publisher and swiftly moving to hire former Times-Picayune managing editors Dan Shea and Peter Kovacs, both of whom were laid off in 2012 when the newspaper cut almost one-third of its staff ahead of a reduced printing schedule that left New Orleans as the only major U.S. city without a daily newspaper. Georges himself even offered to buy the T-P to keep it daily. Meanwhile, Advocate Publisher David Manship expanded into New Orleans and quickly built a daily subscription base, providing the enterprising, civic-minded Georges an attractive acquisition option. ABiz brought Georges to Acadiana to keynote our annual Top 50 Privately Held Companies luncheon. Georges updated the audience on The Advocate’s daily frequency in the Crescent City, noting that he also realized the opportunity awaiting him in Acadiana. He told the Top 50 crowd that the “Acadiana Advocate” would launch in 2014, but within months the local edition hit newsstands. The Acadiana bureau has added advertising staff but thus far hasn’t beefed up its local news content.
6. Whole Foods settles on location
After years of scouting locations, rampant speculation about where it would land — and even one false story about its intentions to open in a spot that had many local real estate professionals scratching their heads — Whole Foods Market confirmed in February that it is indeed coming to Lafayette. The natural and organics foods grocer is anchoring Houston-based developer Michael Ainbinder’s Ambassador Crossing at Settlers Trace Boulevard and Ambassador Caffery Parkway. The development took some odd twists and turns over the final months of the year, starting with Ainbinder telling ABiz he did not comment on letters of intent with potential tenants and then proceeding to issue a misleading Oct. 10 press release that claimed to have deals firmed up with seven additional tenants, several of whom quickly relayed to ABiz that their deals were not done. On Nov. 21 Lee Michaels confirmed that it will move its Acadiana Mall store (see “Around Town” in this issue for details) to Ambassador Crossing next year, joining Which Wich, Massage Envy and Superior Nails. Ainbinder also claims to have J. Crew, Carter’s Babies & Kids/Osh Kosh B’Gosh and Chipotle coming, but we have been unable to independently confirm the trio.
7. Newpark Mats invests $41 million in expansion
|Photo by Robin May|
Gov. Bobby Jindal and Newpark Resources Inc. President and CEO Paul Howes traveled to Carencro in late October to announce the company’s $41.1 million investment in its Newpark Mats and Integrated Services facility, doubling both the size of the facility and its estimated output. The Carencro site manufactures composite mats for drill-site construction and other applications. Locally based Newpark Mats is a division of Newpark Resources, headquartered in The Woodlands, Texas. Newpark employs 270 people in Louisiana. The project will create 35 new direct jobs, and Louisiana Economic Development estimates the expansion will result in an additional 71 indirect jobs, for a total of 106 new permanent jobs. Of the $41.1 million capital investment, $3.1 million will be dedicated to a new Research & Development and Technology Center that will create six jobs with an average salary of $80,000, plus benefits. The manufacturing expansion will create 29 jobs with an average salary of $36,600, plus benefits, according to the expansion announcement. Newpark also will retain 55 existing Carencro jobs, and the company estimates the project will create 35 construction jobs. To secure the project, the state offered Newpark a competitive incentive package that includes a $1.6 million Modernization Tax Credit incentive and the services of LED FastStart, the state’s workforce training program. The company also is expected to utilize the state’s Quality Jobs and Industrial Tax Exemption programs and will be eligible for the state’s refundable Research & Development Tax Credit.
8. Lafayette General Health takes over UMC
In late May Lafayette General Health and the state inked the deal for the private hospital to take over UMC, part of a Jindal-backed privatization effort widely touted as a way to stave off mass personnel cuts at the public hospital and ensure continuity of services.The arrangement certainly appears to have accomplished that (and more), but it remains unclear whether the projected savings from the privatization of the state’s charity system will materialize. In September the Legislative Fiscal Office issued a report noting that the lease contracts generate $39 million less than the Jindal administration was counting on for the budget. The Fiscal Office projects that the deals will generate $101.5 million, which is 28 percent less than the $140.25 million appropriated for the budget that began July 1. If the Fiscal Office is right about the shortfall, lawmakers will have to find that $39 million elsewhere before the fiscal year ends June 30, and higher education could again be impacted because its funding is in part tied to the lease money. The Jindal administration immediately dismissed the report, saying it doesn’t tally this year’s full lease payments for the LSU hospitals in New Orleans, Shreveport and Monroe. In late October, however, The Advocate reported that the federal Centers for Medicare and Medicaid Services was raising questions about the financial arrangements of the privatization deals. State Department of Health and Hospitals Undersecretary Jerry Phillip told the newspaper the inquiries are routine, but state Treasurer John Kennedy (no fan of Jindal’s) had a different take: The privatization effort might be improperly laundering federal money. Kennedy told the paper the federal government may not accept the way the state is accounting for the lease payments.
9. Halliburton makes major move in Iberia Parish
|Photo by Robin May|
|State Rep. Joel Robideaux|
Fueled by deepwater activity, Halliburton is investing undisclosed millions in a new “super campus” facility on 100 acres in Iberia Parish. Read more about how Halliburton has been quietly adding to its Acadiana presence since it investing $65 million in a new north Lafayette complex a couple of years ago on Page 4.
10. Jindal’s sales tax DOA
The handwriting was so on the wall that when Gov. Jindal gave his opening remarks at the commencement of the session on April 7, he had already abandoned an ambitious plan to eliminate state personal and corporate income taxes and replace the lost revenue with a sharp spike in the state sales tax, telling lawmakers that while he was abandoning the so-called “tax swap,” he still wanted the Legislature to eliminate income taxes and (miraculously) figure out how to offset the loss in revenue. A week later, Lafayette state Rep. Joel Robideaux announced that Jindal’s fantasy would probably not rise to the level of reality. Robideaux is the chairman of the House Ways & Means Committee — the launch pad, more or less, for any such revisions to the Louisiana tax code to take flight. In a statement released April 15, Robideaux said he would indefinitely defer any income tax repeal bills, though he left the door open for individual lawmakers to have such bills heard before the committee. That, thankfully, never happened.