Loren Steffy

A business blog

Winners and losers of 2007


This year, I wanted to try something new and compile a list of my picks for the biggest winners and losers. Obviously, on the national level, there was a lot to choose from: Wall Street firms, the dollar, the Federal Reserve and investors (losers) and CEOs (who seem to win even when they lose). But locally, these 10 seemed to stand out.


Oscar Wyatt

The Losers:

  1. Oscar Wyatt. The scrappy Houston oil man fought the government, but finally gave up the fight in early October. He agreed to plead guilty to one count of conspiracy to commit wire fraud for violating the United Nations’ oil-for-food program in Iraq. Wyatt, 83, was sentenced to a year and a day in federal prison. The deal, though, wasn’t a victory for prosecutors, either. They saw a key witness crumble and realized the case might be heading for a hung jury.
  2. BP. The company pleaded guilty to a felony and agreed to pay a $50 million fine, the largest levied under the Clean Air Act, for violations that led to the explosion of its Texas City refinery in 2005. BP continues to be dogged by civil lawsuits from victims of the blast. Meanwhile, Chief Executive John Browne was forced from office in early May after lying to a judge in London about how he met a former lover, Jeff Chevalier. There is some good news, though. BP seems to be fixing its problems and moving forward.
  3.  Jim Crane. The founder of EGL launched a bid to take his company private in January. A competing offer, from private equity firm Apollo Capital Management, emerged a month later and the ensuing bidding war ran up the price by more than 30 percent on a per-share basis. In the end, Apollo won. Crane did OK, though. His EGL stock alone was worth about $337 million.
  4. Tilman Fertitta. The chief executive of Landry’s Restaurants squared off with bondholders early in the year because the company hadn’t filed financial statements with the SEC. By the summer, the bondholders accelerated the debt, threatening to force Landry’s into bankruptcy if need be. The showdown came just as the credit markets tightened. Fertitta sued to forestall the effort, but he wound up renegotiating the bond deal at a cost of about $12.6 million.    
  5. Aegis Mortgage. The subprime implosion hit home in August when Aegis, which once was among the country’s biggest subprime lenders, stopped making loans and began cutting workers. Many employees found themselves on the street without severance or health benefits. By September, the company was in bankruptcy.

The winners

  1. John Wilder and the billionaire buyout boys. In a deal that shows who’s really benefiting from Texas’ deregulated electric market, former TXU chief Wilder left the Dallas-based company with about $280 million jangling around in his pockets thanks to a generous change-of-control provision in his contract. Meanwhile, the private equity firms leading the $32 billion buyout, TPG and Kohlberg Kravis Roberts & Co., got everything they wanted from shareholders and the legislature. They also snookered environmentalists into signing off on three coal-fired power plants.  But the real win comes from those plants and the others like them that TXU already owns. They produce power well below the wholesale market rate, creating a guaranteed profit for the buyout boys
  2. File photo

    John Arnold

  3. John Arnold. The former Enron wunderkind joined the Forbes list of billionaires, weighing in at $1.5 billion. Arnold rode the private equity frenzy and built his Centaurus Energy into a global player. At 33, he was the youngest person on the Forbes list. 
  4. Ethanol producers. Given the federal subsidies for corn-based ethanol, more companies are getting into the game. Look for the field to get even more crowded now that President Bush has signed the new energy bill, which calls for more than quadrupling our ethanol production. Not bad for a fuel that doesn’t appear to have a viable market on its own. Bonus winner: light bulb makers and big-box retailers who will reap the profit from a congressional mandate on compact fluorescent bulbs.
  5. Continental Airlines. The Houston-based carrier continued its expansion of profitable international routes. More important, it made it through another year without getting dragged into a merger. For some reason, most airlines haven’t learned from past mistakes, but Continental has. It started the year amid speculation it might be acquired by United. By November, when the speculation about a Delta-United deal surfaced, Continental was firmly ensconced on the sidelines. It may sound like a dubious win, but this is the airline industry. Continental, by the way, is poised to report an annual profit for the second straight year. 
  6. Dubai. The Persian Gulf emirate garnered worldwide attention when Halliburton announced it would move its corporate headquarters there from Houston. It’s the most visible in a growing wave of energy industry migration from the U.S. to the Middle East. As a bonus, Dubai and other emerging economies from the Persian Gulf to China are taking advantage of the weak dollar and buying major stakes in U.S. companies and real estate.

Feel free to add your own suggestions.

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