More sales of stock lead to questions about confidence in
By Jeff Smith
Rocky Mountain News
Tuesday, January 16, 2007
Philip Anschutz, Qwest founder and once the Denver telco's
largest investor, has now sold more than 90 percent of his
holdings in the company. Anschutz resigned from the Denver
telco's board last spring, and since then has been shedding
stock. The latest deal was last week.
He has grossed $1.4 billion from the sales, including $297.3
million in last week's transaction. Because of the way the
sales are structured, he could get more if Qwest shares rise
in the next few years.
The transactions have at least one analyst raising questions
about what the sales say about Anschutz's confidence in
Last week's sale sparked additional speculation because it
came amid a deal to pay David Beckham a reported $250
million over five years to play for Anschutz's Los Angeles
Galaxy soccer team.
Anschutz spokesman Jim Monaghan dismissed the view that the
Qwest stock sale will be used to cover the Beckham contract.
"I don't know how you can link (the two)," Monaghan said,
noting that Beckham's contract is said to be
performance-based and to be paid out of future team
Monaghan has stressed repeatedly that Anschutz runs an
investment company with broad interests -- and in recent
years that has meant professional soccer, movie production,
entertainment complexes and free daily newspapers in
For Anschutz, Qwest has receded to the back burner in terms
of time and focus.
And that's part of a pattern. Anschutz started in oil and
gas, moved to railroads, and then, in the 1990s, transformed
a Southern Pacific Railroad subsidiary into a nationwide
fiber-optic company called Qwest Communications.
Monaghan said Anschutz still owns some Qwest stock. He said
Qwest stockholders should take the sales of the past year as
a positive because they are structured so Anschutz shares in
Qwest stock-price growth during the period of the "forward
Anschutz also retains voting rights until the shares are
delivered at a time specified in the contracts. In last
week's transaction, for example, Anschutz gets the $297.3
million as a prepayment, essentially receives 25 percent of
the price appreciation, and the contracts are "settled" with
the shares delivered to the buyers in 2010.
Donna Jaegers, a telecommunications analyst at Janco
Partners in Greenwood Village, understands the argument that
Anschutz is sharing in some of the price appreciation. And
maybe he can say he has better investment options outside of
Qwest as well, she said.
"But it begs the question. If he felt the stock would go
significantly higher would he be selling at all?" Jaegers
asked. "It's hard to read between the lines, but it's
certainly not a warm and fuzzy feeling. It's certainly a
Qwest shares have soared to five-year highs in recent
months, peaking at $9.22 last Sept. 7. They closed at $8.45
last Friday, up 7 cents.
Qwest declined comment Monday on the Anschutz transactions.
Qwest's executive team also has been selling stock in recent
months, netting more than $50 million by exercising
low-priced stock options.
Qwest Chief Financial Officer Oren Shaffer said at a recent
investor conference in New York that he had sold some stock
for tax-planning reasons and that executives had issued an
"unintended signal" to the marketplace.
"It has nothing at all (to do) with my view about the
company. I continue to be heavily invested in the company,"
Anschutz could have made more than $1.4 billion by selling
the Qwest stock. As part of his transactions since last
spring, he donated 53.5 million shares currently worth more
than $450 million to his charitable Anschutz Foundation.
But he also derives tax advantages from the forward sales
contracts. He's able to defer taxes because the sales
aren't deemed complete until the contract settlement dates.
smithje@RockyMountainNews.com or 303-954-5155