Mississippi’s public companies have been much in the news, both nationally and locally. WorldCom’s troubles make new headlines every day — but Mississippi’s presence on the major exchanges doesn’t begin and end with WorldCom. Mississippi is headquarters for companies in all major sectors of the US economy — from agribusiness to banking to casino gaming.
Has the fallout from WorldCom’s bankruptcy affected Mississippi’s other public companies? How are those companies faring in a stock market rendered suddenly vulnerable to description in every nuance of accounting theory discussed on the business pages? What are the ramifications of the current business environment for Mississippi citizens?
A look at two recent announcements — the proposed purchase of Jackson-based ChemFirst by DuPont and the sale of Halter Marine to Vision Technologies Kinetics Inc., a wholly owned subsidiary of Singapore Technologies Engineering, Ltd. — illustrate contrasting possibilities for the coming year for various Mississippi public companies, according to analysts.
The cash transaction valued at $408 million that DuPont negotiated for ChemFirst is actually a healthy sign of company growth, said Dr. Walter Neely, professor of finance in the Else School of Management at Millsaps College.
“It’s not a distress sale, certainly; it was actually a good deal for their shareholders,” said Neely, citing the agreement to pay ChemFirst shareholders a per share value of $29.20 The company had 2001 sales of $278 million and employs approximately 480 workers.
Edwin Sallis, vice president of Morgan Keegan, noted the attractiveness of many Mississippi-grown companies that were bought or absorbed by larger, national companies.
“As the Mississippi economy has grown, and the companies have grown, they have become attractive takeover targets for companies looking to expand their business,” Sallis said, noting the pattern established by McRae’s and Deposit Guaranty in the 1990’s.
The $66 million sale of Halter Marine, however, could forecast a potential strategy for WorldCom’s reorganization team to recover from bankruptcy — the auction was seen as a mechanism to aid Friede Goldman in paying down its debts. A similar strategy of selling desirable subsidiaries is seen by many analysts as a possibility for the telecom giant.
Anil Raj, COO of Friede Goldman, said, “Halter has continued to do business as a premiere vessel builder throughout the bankruptcy process. This change will allow the new VT-Halter to start new projects as well as options on existing contracts.”
James Decker, director, Houlihan Lokey Howard Zukin, investment bankers for Friede Goldman, said, “The sale of Halter Marine is a major step in providing a return to the creditors and brings the company closer to emerging from Chapter 11.”
Ashby Foote, president of Vector Money Management, said that with the losses that many Mississippians have suffered in their WorldCom holdings, less money is available for other investments.
“That is capital lost that could have been used to buy stock in other companies — or start new ones,” said Foote.
WorldCom’s success was good for Mississippi’s confidence that its companies could compete in a world market, said Foote, so the company’s fall from those heights is psychologically upsetting as well.
Other concerns include the loss of high-paying white-collar jobs such as WorldCom and its subsidiary SkyTel have provided graduates, said Neely.
“The job market for professionals is dwindling,” said Neely.
Students that graduate from Millsaps’ programs have to leave the state because the loss of jobs at company headquarters — fewer “first jobs” with visible career ladders are available when public companies suffer, according to Neely.
Banking very profitable for Mississippi
The low interest rates managed by the Federal Reserve have a significant impact on the success of Mississippi’s publicly owned banks, said Neely. “Their cost of money is lower,” said Neely, also pointing out the ability to diversify their offerings in financial services has contributed to rising revenue.
A sample of second-quarter earning reports illustrates the health of Mississippi’s publicly-owned banks:
• BancorpSouth previously reported net income of $30.9 million for the second quarter of 2002. Net income for the six months ended June 30, 2002 was $60.3 million or 74