UAP execs get payday from stock sale

GREELEY- On Nov. 29, less than a week after the company launched its initial public offering, seven executives of UAP Holding Corp. of Greeley reaped $6.9 million from the sale of 463,361 shares of company stock.
While the sale was legal, it does concern analysts who would have preferred the officials hold on to the stock for a year or longer.
Executives who exercised the options and their stock sale values include: Kenny Cordell, CEO, $2.2 million; David Bullock, chief financial officer, $1.3 million; Brian Wilson, distribution president, $1.3 million; Todd Suko, general counsel, $1.09 million; Dave Tretter, executive vice president, $758,872; Kevin Howard, executive vice president, $51,323.
“It happens all the time but when looking at research reports you never want to see insider trading,´ said David Menlow, president of ipofinancial.com. “When you are trying to gain interest in your stock and telling people how wonderful it is, why would you sell it?”
Menlow said one reason executives would sell right after the initial public offering is the belief, “They have invested their whole life for this company and now it is time for their pay day.”
“Ideally we would like to see share holders in a stock for a year,” Menlow said. “It shows they are focused on their investors and not on the insiders lining their pockets.”
The prospectus lays out the annual compensation of the top 5 members of the management team.
Cordell, president and CEO, who has been with the company since 2001, earned $350,000 and a $49,731 bonus in 2004. Cordell also received $1.3 million in long-term compensation common stock awards.
Most members of the management team of UAP (Nasdaq: UAPH) are new to the company since 2000. Of the 13 members of the management team, two were with the company prior to 2000. The company recognized this fact in its final prospectus stating: “At the end of fiscal 2002, our new management team began to implement several strategic initiatives to increase our operational efficiency. As part of that strategy, we enhanced our credit policies and information systems, improved inventory management, rationalized headcount and closed unprofitable distribution centers.”
United Agri Products Holding Co. sold 27.4 million shares at an initial price of $16 on November 23, raising $439 million. The company said its net proceeds from the offering would be approximately $46.9 million after deducting underwriting discounts and commissions. Officials said they intend to use the net proceeds from this offering as follows:
n approximately $16.4 million to redeem all of its outstanding Series A Redeemable Preferred Stock from its former parent company, ConAgra Foods;
n approximately $24.1 million to redeem the $21.5 million principal amount of 8.25 percent Senior Notes at a redemption price approximately $23.2 million, plus accrued and unpaid interest to the date of redemption.
n approximately $6.4 million for estimated fees and expenses, with any balance to be used for general corporate purposes.
UAP Holdings has no direct operations and no significant assets other than ownership of 100 percent of the stock of United Agri Products.
The company was founded in 1978 and is a distributor of agriculture and non-crop inputs. Food giant ConAgra Foods Inc. sold UAP in November 2003 to Apollo Management L.P. for approximately $600 million. Apollo Management owns United Agri Products Holding Corp. The company has 320 distribution and storage facilities and three formulation plants. The company’s net sales and income from continuing operations before income taxes for the 12-month period ended Aug. 29, 2004 were approximately $2.5 billion and $62.2 million, respectively, on a pro forma basis for the acquisition.

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