Travis Street Partners LLC of Houston has reduced its offer to buy compounder ICO Inc. At the same time, the investment firm announced it has increased its stake in ICO and now controls more than 7 percent of the company.
Travis Street reduced is per-share offer from $2.85 to $2.65 after ICO posted disappointing financial results in its last quarter. ICO's sales for the quarter ended Dec. 31 were down almost 5 percent from the previous quarter, while its pretax profit was down almost 25 percent. ICO stock was trading at $2.125 late Feb. 22.
But Travis Street added a provision that would increase its offer to $3.25 per share if ICO reduced the value of "golden parachute" clauses for six top executives to $1 million or less. Those clauses — four of which are held by members of the Pacholder family — currently provide almost $11 million in post-termination pay.
"In view of ICO's disappointing financial results ... the company is worth less than we thought," Chris O'Sullivan, Travis Street manager, said of his firm's Feb. 20 offer. "If the employment agreements don't cost so much, we can again increase our price to shareholders."
Meanwhile, Travis Street has increased its ICO stake from 5.11 percent to 7.23 percent by partnering with Kleinheinz Capital Partners, a Fort Worth, Texas-based hedge-fund adviser that owned 2.12 percent of ICO. Kleinheinz also has purchased a portion of Travis Street, Travis Street manager Tim Gollin said.
Travis Street also has declined ICO management's request to sign confidentiality agreements concerning ICO expense records that Travis Street had asked to review. Travis Street said signing the agreements might have limited the firm from acquiring more shares in ICO.
ICO management could not be reached for comment. The Houston firm owns Wedco Inc. and Bayshore Industrial Inc.