TECO leader confident about company's strengths
By LOUIS HAU, Times Staff Writer
TAMPA -- Robert Fagan, the chairman and chief executive of TECO Energy Inc., knows his company's recent troubles are a test of his leadership.
"Any manager can manage in an up market," Fagan said after a crucial conference call with a skeptical audience of Wall Street analysts last week. "You really get your mettle tested in a market like this."
TECO's expansion into unpredictable wholesale power markets has come into question, its stock is at a 12-year low, and its debt ratings have been cut. Yet Fagan, at least publicly, exudes calm and a quiet confidence that is already paying off.
In the conference call Wednesday, Fagan and other TECO executives were hit with tough questions from analysts hungry for more details about how the company intends to protect its bottom line next year. Although some disagreed sharply with the adequacy of the company's measures, the executives' forthright responses gained TECO some badly needed credit on Wall Street.
"On balance, management did a credible job in responding to a host of topics . . . that have weighed on the stock over the past eight weeks," UBS Warburg analyst Ronald Barone said in a research note. Barone has a "buy" rating on the stock.
Even Credit Suisse First Boston analyst Neil Stein, who has assigned his firm's lowest rating to TECO's stock, commended the company's executives for sending out the right signals.
"Management demonstrated that it is aware of the challenges it faces and has developed credible action steps to address them," he said in a research note. "Further, it was direct and forthcoming in communicating these issues to the financial community."
Fagan, 57, came to TECO in 1999 after five years as president of PP&L Global Inc. in Fairfax, Va. He sped up TECO's move into wholesale power, a strategy that is now coming under attack.
Rejecting the notion that there are fundamental problems with the company's energy investments, Fagan blamed TECO's headaches on the aftereffects of the California power crisis, the scandals at Enron and the economic slowdown. As for the recent downgrades by Wall Street analysts and the subsequent plunge in TECO's stock price, Fagan attributed that to disappointment over the absence of a significant uptick in electricity prices during the summer that some observers had anticipated.
He added that there have been delays in the anticipated shutdowns of older, inefficient plants in the southeastern markets where many of TECO's wholesale plants are located.
"We just got a number of blows," he says. "Given our capabilities as a company, we're able to get through it."
Few individual TECO shareholders have lost more on paper than Fagan during the stock's recent plunge. He holds 195,286 shares of TECO stock valued at $3.09-million, based on Friday's closing price of $15.82. That's down 40 percent from the $5.12-million those same shares were worth at the end of 2001. Despite the losses, he enjoyed a windfall most TECO investors haven't seen this year: Two days after TECO's annual shareholders meeting on April 17, with the stock nearing its 52-week intraday high of $29.05 the following week, he sold 126,239 option-linked and performance-based shares of company stock for a net gain of at least $1.45-million.
But Fagan said his concern is for the average TECO shareholder.
"Our retail shareholders, our long-term shareholders, are the ones we want protected," Fagan said, emphasizing that the company will maintain its dividend in the coming year.
"We're in this together," he said. "They're big supporters of us and we're big supporters of them."
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