Appleton is looking at eliminating its employee stock ownership plan

APPLETON — Papermaker Appleton is looking at eliminating its employee stock ownership plan (ESOP), but the process is neither simple nor certain, an executive told analysts during a Web conference call Tuesday.

"We have frequent conversations about mitigation of the ESOP," said Thomas Ferree, chief financial officer.

The stock was priced at $10 a share when the plan was launched in November 2001. In 2007, it had risen to about $33.60 per share, he said. As of this week, the stock hovered around $13 per share. Analysts tossed some pointed questions about the ESOP at Ferree during the call to review 2009 final-quarter and full-year earnings. Ferree said there are two ways to terminate an ESOP: Pay off shareholders in cash or provide some form of tradable public securities. "There's really no set value for that," he said.

With 10 million shares outstanding, the full value is about $130 million. While Appleton is privately held — 100 percent owned by employees or former employees —it has some publicly traded debt and thus must publicly report financial results. Bill Van Den Brandt, manager for corporate communications, said it's largely the public bondholders who have pushed for the company to consider eliminating the ESOP, structured so the company must buy back the stock in a process called a repurchase obligation.

  

Comments posted at Post Crescent:

oldster2 wrote:

Where are the answers to key questions:
Does the company have the financial capacity to repurchase ESOP shares? (Presumably not, which suggests that a buyer is needed.)
Are any viable buyers engaged in discussion with the company?
Are there alternative lenders other than public bondholders available to the company?
If this information is provided, we could conclude what is likely to occur.

smack2649 wrote:

There are probably 2 main reasons. The company is not doing very good - not meeting annual objectives. Secondly, executives will receive platinum parachutes. When there is a change of control to the company the CEO gets 3 times salary & bonus and the other execs get 2 times - sounds like a great plan to me.

Bluedevil84 wrote:

Appears that the public bondholders are nervous about the poor performance of the company. Look for a merger or company sale to take place and we can all watch as the CEO and his team float away on their golden parachutes!

sludgemonkey wrote:

The real issue appears to be marginal performance.