Columbus company defendant in Texas investor lawsuit
A Columbus oil well services company has been drawn into an investors lawsuit filed in Texas.
Warrior Energy Services Corp. and president Bill Jenkins are among eight people and companies being sued by 22 investors in a lawsuit filed in Houston, Texas.
In the lawsuit, which gives only one side of the legal argument, members of St. James Capital Partners contend their investment managers used their money in recent years to enabled the defendants “to enrich” themselves “at the expense of the partnership.”
The charges against Jenkins and Warrior are false, said company spokesman Jim Sledge.
“I’ve read the allegations and they are just not true,” said Sledge, a Tuscaloosa, Ala., attorney. “I just don’t see the basis of this.”
The partners who filed the suit are seeking to be repaid money they placed with the investment group, led by chairman Charles Underbrink, plus other funds they claim to have lost.
Defendants are St. James Capital Corp., Underbrink, Jenkins, Warrior and others.
The partners said they made a “substantial investment” in Warrior and are trying to recover losses. The partners contend the alleged financial misdeeds caused them to lose money when they liquidated their holdings in Warrior last April.
St. James Partners got all the money Warrior owed to the investors, Sledge told The Commercial Dispatch newspaper of Columbus.
Warrior Energy Services does work for natural gas and oil well operators. From its Columbus headquarters, the company oversees 25 operating bases in 10 states and more than 570 employees, according to information obtained from Superior Energy Services.
Formerly called Black Warrior Wireline Corp., it changed its name to Warrior Energy Services this year. Jenkins co-founded Warrior and has been its chief executive since 1989.
“Warrior has done a good job and has been successful and is about to merge with a company that has also worked hard and been successful,” Sledge said.
Warrior Energy stockholders are scheduled to vote Dec. 19 on the merger with Superior Energy Services of Harvey, La. Warrior will become a Superior subsidiary and remain based in Columbus, Sledge said.
Warrior’s work is mostly with onshore drilling operations while Superior concentrates on offshore wells in the Gulf of Mexico.
“The two of them fit together very well,” Sledge said.
Superior is acquiring Warrior for $175 million and 5.3 million shares of stock.
The lawsuit was filed in 2004 against accounting firm KPMG, St. James Capital Corp., St. James Merchant Bankers and Underbrink. KPMG was dropped as a defendant in November.
St. James Capital Partners includes investors from Texas, California, Colorado, Wisconsin, Minnesota, Michigan, Illinois and Florida, according to the lawsuit.
St. James Capital Partners was formed to make loans to small, undervalued companies like Warrior that were “beneath the radar screen,” according to the lawsuit. St. James began investing in Warrior in 1997.
The lawsuit, which is scheduled trial in April 2007 in Harris County, Texas, District Court, claims the defendants failed to pursue alternative financing that would have retired Warrior’s debt to benefit its shareholders.
Sledge said Warrior’s management followed “accepted business norms” and pulled a once-struggling corporation out of trouble to become “quite successful.”
“The company acted very prudently with respect to its financing opportunities. It’s just not correct to say the company could have been in a position to refinance the debt at the time it would have been relevant,” he said.
Sledge said St. James Partners were repaid the money loaned to Warrior when the company had a public stock offering in April.
“The partnership sold the stock and got a lot of money for it,” Sledge said.
Warrior received about $163.5 million from the offering with plans to use it to simplify its financial structure and reduce debt, according to company officials.
The lawsuit also claims the defendants made financial decisions concerning Warrior’s debts that should have been put to a vote by shareholders.