Investors Beware Of Sketchy Advice

Editor's note: Jeff Apel, the author of this article, is a longtime journalist and friend of mine. We both worked together at The Grand Island Independent. He has a passion for horses. He works at a casino.

 By Jeff Apel

Shortly after moving to Lexington, Ky., in 2005, I was at a bar when a man walked by and gave me a thumbs up regarding my Nebraska hat. Turns out, Bill graduated from Lincoln Northeast High School and was a huge Husker fan.

Bill had just moved to Lexington to take a job with the cable company. His wife hadn't made the move yet, so Bill and I hung out together at the racetrack and a bar or two.

Bill and his wife, Sherry, eventually bought a really nice house. One thing about Bill was he never could keep a job very long.

I'd stop by the house every now and then, always afraid to ask what Bill might be doing for income. At one point, an elderly relative parked his RV in the backyard and lived in the house.

When the horse economy tanked in early 2000s, Lexington, as the horse capital of the world, was hit hard. Out of work again, after a 2-year stay selling phone systems, Bill asked if I would be willing to help him write a book about how to run a call center, something he had lots of experience in.

I balked because there was no pay involved.

As time went on, Bill mentioned occasionally that, if things got worse, his wife had an aunt living in Lincoln that they could stay with. I couldn't imagine making such a move so I got bill a job in Carmel, Ind., at a company that a casino friend owned. Sherri was supposed to work there as well.

True to form, Bill took off one day, never showing up again. My friend mentioned that Bill kept asking to see the books, saying something about the bottom line didn't add up. His request was denied.

With their home now in foreclosure, Bill and Sherri did move to Lincoln to live in the basement of a house owned by the aunt and her husband. When they arrived, they posted pictures of themselves on Facebook, saying how glad they were to be back in Lincoln and spending time with the family again.

Someone asked Sherri where they were living. She responded that herself and Bill put their belongs in storage in Kentucky and moved in with the aging aunt and uncle to help out. Sherri said she and Bill generously agreed to live downstairs in the house that the uncle purchased for tax purposes.

Not true at all but it sure sounds good. The uncle has owned the house for years, long before Bill and Sherri moved in along with two dogs and two cats.

Bill sent me an email once, telling my to be careful about my gambling in terms of owning horses because it was a high-risk investment. After laughing, I assured him I had enough money on hand to make such a bet.

Unlike him.

Now I see Bill is offering friends investment advice. One guy sought him out on Facebook, asking him if bonds or stocks were a better investment. Bill has got people buffaloed into thinking he's Warren Buffet II who downsized his life style for the benefit of his in-laws.

Man, if those seeking an expert opinion only knew the financial past of the man they were dealing with. He already declared bankruptcy once in his life so foreclosure was basically his only option.

I still send Bill emails when a horse I co-own makes a few bucks. We talk about living in Nebraska, our days in Lexington and he always promises me a job if I ever want to move back to Lincoln.

Nice guy. Just don't ask him for any financial advice.

Westar Energy Stock Declines 5% On New Merger Deal

Stock in Westar Energy (WR) fell -5% today after disclosing a new deal to merge with Great Plains Energy (GXP).
Boards of directors for both companies approved a new merger deal that creates a holding company to be owned by Westar at 52.5% share and Great Plains at 47.5% share.
Stock in Westar fell because some shareholders are disappointed they aren't receiving a premium for their stock in the deal. A previous deal, rejected by the Kansas Corporation Commission, required Great Plains to pay $60 per share for Westar in a combination of cash and stock. The new deal includes no premium. In mid-morning trading, stock in Westar fell to $50.36 per share, down $2.80 per share.
A joint statement by the two companies says, "Under the terms of the agreement, Westar Energy shareholders will exchange each share of Westar Energy common stock for a share in the new holding company. Great Plains Energy shareholders will receive .5981 shares of common stock in the new holding company for each Great Plains Energy share. The transaction has a total equity value of approximately $14 billion. It is structured to permit a tax-free exchange of shares. No transaction debt will be incurred. The exchange ratio reflects the agreed-upon ownership split between the two companies. Following completion of the merger, Westar Energy shareholders will own approximately 52.5 percent and Great Plains Energy shareholders will own approximately 47.5 percent of the combined company. The agreement provides that, upon closing, the new holding company expects to set its initial common dividend at a level which maintains the current dividend for Great Plains Energy shareholders. This will result in approximately a 15 percent dividend increase for Westar Energy shareholders."
The companies also said, "The new, combined company will provide electric utility service to approximately one million Kansas customers and nearly 600,000 customers in Missouri. The combined company will have a new name, yet to be established. “The logic of combining these two companies is compelling. We are confident we have addressed the regulatory concerns with our originally-proposed transaction. We appreciate the Commission welcoming a different way to combine these two companies, preserving the unique value available only through this particular business combination,” said Mark Ruelle, president and chief executive officer of Westar Energy. “This merger creates a stronger company for our customers and a much more valuable company for shareholders, with no additional acquisition debt, along with sustaining commitments to Topeka and Kansas. It is a win-win. For our shareholders, it means a large increase in their dividend. We also expect significant earnings accretion and a larger and stronger earnings growth platform than we could achieve on our own. The company and its utilities will continue to have strong investment grade credit ratings.” 
Westar Energy and Great Plains Energy will merge to form a new holding company, which will operate regulated electric utilities in Kansas and Missouri. Operating headquarters will be in both Topeka, Kansas, and Kansas City, Missouri. Corporate headquarters will be in Kansas City, Missouri. “We are pleased to announce a revised agreement with Westar Energy that we believe directly addresses regulatory concerns with our originally-proposed transaction, while increasing the long-term value and upside opportunity for our shareholders, customers, communities and employees,” said Terry Bassham, chairman, president and chief executive officer of Great Plains Energy. 
Upon closing, Ruelle will become the non-executive chairman of the new company board. Bassham will serve as president and chief executive officer of the new company and will also serve as a member of the board of directors. Senior management roles will be shared by executives from both companies. Among these are: Westar’s current senior vice president and chief financial officer (CFO), Tony Somma, will become executive vice president and CFO. Kevin Bryant, current Great Plains Energy senior vice president of finance and strategy and CFO will become executive vice president and chief operating officer. Greg Greenwood, Westar’s senior vice president of strategy, including regulatory affairs, will become the new company’s executive vice president of strategy and chief administrative officer, responsible for regulatory affairs and merger savings, among other responsibilities.