Actuant Corporation (ATU) and 2 Other Battered Companies Receive a Vote of Confidence from Insiders

Clayton Williams Energy Inc. (NYSE:CWEI) is yet another company that saw a top executive purchase shares this week. President Mel G. Riggs bought 4,000 units of common stock on Tuesday at a weighted average cost of $9.44, lifting his direct ownership stake to 14,588 units. Mr. Riggs, who has been with the company since 1984, is currently responsible for the general supervision, direction and control of the day-to-day business of Clayton Williams Energy, so he surely has a better understanding of what’s going on within the company than anyone.

Clayton Williams Energy is an independent oil and gas company engaged in the exploration and production of oil and natural gas, mainly in Texas and New Mexico. The shares of the company have advanced by 45% in the past five days, after the company borrowed $350 million from private equity firm Ares Management LP. Clayton Williams Energy used a portion of this sum to fully repay the outstanding indebtedness of $160 million under its revolving credit facility. The company added the remaining cash to its balance sheet, which will be used to fund operations and future development. At the same time, the credit facility was reduced to $100 million from $450 million. In exchange for the $350 million received from Ares Management, the company issued warrants to purchase 2.25 million shares of common stock at a price of $22.00 per share, which account for 18.5% of the company’s outstanding shares. It is important to note, however, that Clayton Williams Energy has to pay an interest rate of 12.5% annually, which appears to be quite a high price in exchange for avoiding bankruptcy. Ares Management LP also elected two members for the company’s Board of Directors in connection with the aforementioned deal.

With crude oil prices significantly higher than their February low of $26.21 per barrel and the freshly-inked deal with Ares Management (though at extremely unfavorable terms), Clayton Williams Energy will not join the list of 51 North American oil and gas producers that have filed for bankruptcy since the beginning of 2015. The independent oil and gas company has seen its shares decline by 78% in the past 52 weeks. A total of 11 money managers tracked by Insider Monkey were invested in the company at the end of 2015, and held 16% of its outstanding shares. Israel Englander’s Millennium Management reported ownership of 706,014 shares of Clayton Williams Energy Inc. (NYSE:CWEI) as of the end of 2015.

Disclosure: None