Classic Communications Inc. CEO J. Merritt Belisle is the latest casualty in a management shakeup at the rural-system MSO, spurred in part by a drop of more than 90 percent in the company's stock price since its December 1999 initial public offering.
Belisle, who founded Classic in 1992, resigned Dec. 20 to pursue other interests, according to a company statement.
Classic has been under fire for months because of digital-cable rollout delay and a stock price that has hovered under $5 per share.
The MSO went public on Dec. 22, 1999 at $25 per share and rose as high as $39 a week later. At its peak on Dec. 28, 1999-following the sale of some overallotment shares by the underwriter-Classic's market capitalization had risen to $705 million from $515 million a week earlier.
But the stock price has been in a steady decline since then.
Classic was up about 25 cents per share in early trading Dec. 20 to $2.75 per share, before falling back to $2.56 each. It closed at $1.81 per share on Dec. 26-meaning the market cap was down to just $32.3 million from the high of $705 million.
In November, Classic president Steven Seach resigned to take a job with Austin Ventures, a venture capital firm based in Austin, Texas. Chief operating officer Dale Bennett assumed Seach's duties.
Brera Capital Partners L.P., the New York City private equity fund that bought voting control of Classic with a $100 million investment in June 1999, named James Kofalt as Classic's chairman of the board. Alberto Cribiore, another Brera principal, had been the MSO's chairman. Kofalt, already a Classic director, will become a Brera partner.
Kofalt has more than 25 years of cable-industry experience, including a stint as president of Cablevision Systems Corp. from 1992 to 1994.
"We are very grateful for [Belisle's] dedication and hard work and wish him future success both personally and professionally," Kofalt said in a prepared statement.
Belisle started Classic in 1992 with one system in Lubbock, Texas. He grew the MSO to 600 systems in 10 states with 404,000 subscribers.
When Classic went public a year ago, raising $206 million, Belisle's focus was on growing it to 1 million or more subscribers.
But in light of sluggish capital markets and a depressed stock price, acquisitions aren't Classic's priority anymore. Belisle said it was apparent that Classic needed an operations person-like Bennett-to take the helm.
"I'm going to go to the sidelines and let Dale run with the football," Belisle said last week.
Classic's stock price was not a factor in his leaving, he said.
"It [the stock price] doesn't always reflect the true value of the company," Belisle said. "We didn't feel pressure [from investors]. But what would have been a very effective currency to help us make acquisitions is not."
Belisle said he will continue as a consultant to Classic for six months and will then take some time off. He didn't know if he would return to the cable industry.
"I've got an employment agreement with the company," he said. "Don't cry any tears for me."
According to documents filed with the U.S. Securities and Exchange Commission, Belisle's employment agreement provides him with two years' salary-worth about $700,000-in the event of his departure.
In addition, Belisle owns about 240,000 shares and has options for another 450,000 shares of Classic stock, currently valued at about $1.2 million. He also signed a two-year non-compete agreement that takes effect with his leaving Classic.