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Boart Longyear Ltd. has fired its CEO, who was unable to calm restive shareholders of the Utah-based provider of drilling services to mining companies and reverse its slumping stock price.
The immediate termination of CEO Craig Kipp was announced late Tuesday to coincide with the opening of the Australian stock market in Sydney, where Boart's shares trade under the ticker symbol BLY.AX.
"It was primarily due to the stock price," Boart spokeswoman Monika Portman said, adding that Kipp's strategies to make the company more profitable and increase its appeal to investors hadn't panned out. She said Kipp did not resign.
"All of these actions never really moved the stock price, and the board just felt it was time to move on," Portman said.
Kipp, who lives in Park City, said the board's decision was unexpected.
"I guess that's it, even though we are expecting to have record performance this year. It was somewhat of a surprise," he said.
Based in South Jordan, Boart is the world's largest mineral-exploration drilling services company. It pulled in $1.1 billion in revenue during the first six months of 2012, up 15 percent from the same time last year. Earnings before interest, taxes and other items were $208 million. That was 26 percent higher than in the first half of 2011. The company's net profit was $97.7 million, a 32 percent gain from the January-June period of the year before.
Even though the financial results were a "record," Kipp had announced in August that the company was revising downward its expectation of second-half revenue and EBITDA earnings. He cited "global uncertainties," including Europe's debt crisis, slowing growth in China, restrictive financing conditions and the U.S. elections. Revenue and EBITDA would be "more in line" with 2011 results, he said.
His comments spooked shareholders, who had already been backing away from the stock. From April to August, Boart shares had lost close to half their value. After Kipp's remarks, the stock plummeted to little more than Australian$1 a share. It closed at A$1.675 on Wednesday.
Kipp was appointed CEO in 2008 after serving three years as chief operating officer. He helped take the 124-year-old company public in 2007. Early in his tenure, the stock traded close to A$20 a share. The all-time high was A$21.78, before a 1-for-10 stock split in 2010.
Portman said Kipp's departure was unexpected. The decision to terminate Kipp was not done during a regular meeting of the board of directors, she said.
"The board didn't meet [Tuesday] ... it was actually quite a surprise to the organization," Portman said.
Boart's chairman, David McLemore, is serving as acting CEO, and a search for Kipp's replacement has begun.
Who is Boart Longyear?
Said to be the world's largest mineral-exploration drilling services company
Headquarters: South Jordan
Employees: 11,000 worldwide
Utah employees: 700
Founded: 1888 in Minnesota
Publicly traded on the Australian Securities Exchange since 2007
Recent history: Bain Capital and other investors acquired Boart in 2005 and moved the headquarters to Utah