Wellstream bosses sell shares worth £72.9m

Apr 29 2008 by Peter McCusker, The Journal

EIGHT bosses of the North East’s top-performing listed company are to harvest the fruit of their labours by selling shares which will net them a total of nearly £73m.

Oil and gas pipeline maker Wellstream Holdings yesterday revealed that it was placing more than 5.2m shares – equivalent to 5.3% of the company.

This follows an amazing first year on the Stock Market for the Newcastle company which saw turnover jump by 81% and its share price soar from an initial offering of 320p to a high of £14.50 10 days ago.

As a result the company’s market capitalisation value has risen from £318m to around £1.3bn.

When the company floated on April 26, last year, eight of its senior people agreed to a “lock-up” undertaking whereby they would not to sell any shares until Friday April 25, 2008.

With that deadline now passed chief executive, Gordon Chapman, chairman, John Kennedy, and six other senior company figures have decided to liquidise some of their share assets – at Friday’s closing share price of £13.93 that is equivalent to £72.9m.

A company spokesman said: “These directors and senior staff still hold a significant proportion of the company’s shares. The company’s recent results and its healthy order book are an indication of how well it has been performing.”

It is common practice for senior bosses to agree to “lock-up” arrangements when floating a company as a means of encouraging investor confidence.

Andrew Miller, regional head of Barclays Wealth in Newcastle, said: “It’s certainly a substantial sale. But these lock-up arrangements are not unusual.

“People who are investing in the company would not want to put their money in if they see the directors are walking away. The share price has performed phenomenally well. The whole commodity sector is booming. The oil price cannot keep rising at the rate it has been.

“This is driving the share price of companies in the sector and it is not a big surprise to see them selling at this sort of price. This is a substantial shareholding, and in the short term it may show the directors think the price is fully valued.”

At the time of Wellstream’s floatation its majority shareholder, private equity firm Candover, which owned 88% of the company, sold 65% of its holding. It sold the remaining 13% earlier this month.

Wellstream, based at Walker, is the world’s second-largest designer and manufacturer of offshore flexible pipeline systems.

Earlier this month chief executive Gordon Chapman announced it had had a “truly remarkable year” with a full order book and pre-tax profits of £41.7m.

The results showed revenue had increased by 81% to £266.8m. The company also announced it had orders for £335m – more than £109m ahead of the year before.

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The Wellstream winners

THESE eight bosses at pipeline company Wellstream are to profit from selling shares in the Newcastle company

:: John Kennedy, executive chairman gets £27.9m*.

He is selling two million shares.

The Kennedy Family Trust will retain 2,078,125 shares.

:: Gordon Chapman, CEO gets £12.5m*.

Selling 900,000 shares, giving 400,000 shares to his children.

Retaining 1.2 million shares.

:: Christopher Braithwaite, chief operating officer gets £13.9m*.

Selling one million shares.

One million shares will be held in trust for his children.

:: Sir Graham Hearne, senior independent non-executive director gets £5.5m*.

Selling 392,250 shares.

Retaining 300,000 shares.

:: Steve Pywell, senior manager North America gets £8m*.

Selling 575,000 shares.

Retaining 175,000 shares.

:: Dr Terry Sheldrake, senior manager technology gets £1.7m*.

Selling 125,000 shares.

125,000 shares will be held in a trust for his children.

:: Frank Buck, senior manager, pipe manufacturing and supply chain gets £1.7m*.

Selling 125,000 shares.

Retaining 125,000 shares in a trust for his children.

:: Luis Antonio Gomes Araujo, senior manager, Brazil Operations gets £1.7m*

Selling 125,000 shares.

Retaining 125,000 shares.

* The amounts are based on last Friday’s closing share price of £13.93.

The company’s share price fell 2.8% yesterday to £13.14.