Farewell to a Dynasty

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For more than a century, a Kean has run things at NUI, the Bedminster utility company whose holdings include Elizabethtown Gas. The Kean”s reign at NUI ended two weeks ago when the company said it was up for sale and that its CEO, John Kean Jr., 46, had resigned. At the same time, the company lowered its earnings guidance for the fiscal year that ended September 30. NUI now expects earnings per share of 95¢ to $1.05 for the period, down from earlier forecasts of $1.10 to $1.25. For the third quarter ended June 30, NUI reported a net loss of $25.1 million, compared with a loss of $11.3 million for the same period of the previous year. “I really think that they see trouble ahead,” says Roderick Powell, senior equity analyst for Weiss Ratings of Palm Beach Gardens, Florida. “They want to sell now while things are going relatively good. But there are too many signs that something’s wrong with the company.” The for-sale announcement trailed rumors of financial difficulties at NUI as rating agencies cut the utility’s credit to nearly below investment grade, increasing the cost of its borrowings. Under the leadership of John Kean Jr., NUI had been selling non-core assets. In July, it announced the sale of NUI Telecom, its telecommunications subsidiary. “That’s a segment that the company had been narrowing its focus away from,” says George Koodray, director of public affairs for NUI. Also in July, the company sold Utility Business Services, its billing and customer-information unit. NUI has also contended with the downdraft from the collapse of energy trader Enron. NUI has a unit that does wholesale gas and electric trading throughout the country. Following the Enron fiasco, companies with such operations found it increasingly difficult to receive favorable financial ratings. Overall, NUI lagged slightly behind industry averages and the company’s New Jersey competitors in terms of profit margin and earnings per share. “They were just middling along,” says Powell. NUI shares traded for about $15 last week, down from a 52-week high of $22.25 on October 7, 2002. Earlier this year, NUI’s tightly knit board of seven directors-chaired by John Kean Sr., 73, a cousin of former New Jersey Governor Tom Kean-had named a committee to develop a turnaround plan. Koodray said members of the Kean family were excluded from the committee. The panel began its work last spring and two weeks ago recommended the sale of the company. The board accepted the decision and John Kean Jr. stepped down. In the wake of his resignation, COO Mark Abramovic, 54, was elevated to president. “I think where the leadership is going to be focusing its efforts is on a successful sale of the company,” says Koodray. “The process is just beginning.” With a debt load of some $474 million, NUI could have difficulty polishing its appeal. Says Powell of Weiss Ratings: “There are not a lot of buyers out there right now.” | email [email protected]