George Halatsis missed out on one private equity payday. He's not going to pass up on that opportunity again.
Mr. Halatsis popped up Thursday as the new chief financial officer at Husky Injection Molding Systems, the manufacturer that was taken private last year by buyout firm Onex. Given Onex's passion for aligning shareholder and management interests, it's logical to assume the new CFO will become a substantial investor in Husky.
Mr. Halatisis is the respected former CFO at Shoppers Drug Mart, and that's where the missed opportunity to score with private equity played out.
Shoppers brass enjoyed one of the great passes in Canadian capital markets history. When the company was spun out of Imasco, new owners Kolhberg Kravis Roberts & Co. and the Ontario Teachers Pension Plan allowed executives to purchase a substantial stake at $5 a share.
Those executives are up 10-fold on their investment, as the retailer's went public in 2001 and never looked back, with stock peaking last year at $57, and now trading at $44. Wins along these lines are the reason private equity will continue to be a popular corporate structure. Part of the allure is lost in a credit crunch, as leverage helps juice these deals. But buyouts are in hibernation; they're far from extinct.
Unfortuantely for Mr. Halatsis, he arrived at the drug store chain just as the private equity window closed. He joined Shoppers after the IPO, and his first options grant came with a $17.13 strike price.
Brad Lukow, who stepped up this week as the new CFO at Shoppers, has been at the chain for 14 years and was part of that 2001 buyout.
In describing the management transition on Wednesday, knowing that the former CFO was looking at a private equity opportunity, an RBC Dominion Securities analyst report said it “does not believe that Mr. Halatsis' imminent departure signals anything ominous with regard to Shoppers' future. Rather, it is an opportunity for this talented 54-year-old seasoned finance executive to have another ‘kick at the can.'”
“While no transition is entirely seamless, this one is probably as close as it gets,” said the RBC Dominion Securities report. Before joining Shoppers eight years ago, Mr. Halatsis was CFO at Inco and CP Rail.
