Commerce Energy Reduces Workforce by 31%
June 03 2008 - 4:00PM
Business Wire
As part of a company-wide restructuring plan under its new senior
management team, Commerce Energy Group, Inc. (Amex: EGR), a U.S.
electricity and natural gas marketing company, today announced it
will eliminate approximately 80 jobs, or about 31% of its
workforce, throughout the organization. As part of the
restructuring, the company will exit its energy consulting
business, Skipping Stone, Inc., and close its offices in Houston
and Boston, used primarily by Skipping Stone. The company also will
significantly downsize its Irving, Texas office. To implement the
exit of its energy consulting business, the company entered into an
agreement with the former president of Skipping Stone to sell
substantially all of the assets of Skipping Stone, including its
name, for a nominal amount of cash and the assumption of
substantially all of its liabilities (valued at approximately
$300,000), including the assumption of the Boston lease. The
workforce reduction is expected to generate more than $5.0 million
in annualized pre-tax cost savings. The company expects to record
related restructuring charges estimated to range from between
$575,000 to $650,000 in the fourth quarter of the fiscal year
ending July 31, 2008. The restructuring charges include
approximately $500,000 of severance payments and termination costs,
along with lease termination and related facilities closing
expenses. In connection with the preparation of its financial
statements for its third quarter ended April 30, 2008, the company
expects to record a $1.4 million asset and goodwill impairment
charge related to Skipping Stone in the third quarter of the fiscal
year ending July 31, 2008. �The workforce reduction and office
closures represent the first major step in a broader initiative and
transformation that is aimed at significantly streamlining our
operations, returning the company to profitability and positioning
it for growth,� said Gregory L. Craig, who joined Commerce Energy
in February 2008 as chairman and chief executive officer. �Our plan
calls for centralizing all core functions at our Orange County,
California headquarters, which, we believe, will enable us to
operate more efficiently with greater controls and offer improved
customer service. �While it is always difficult to cut staff,
especially when loyal, talented people are involved, many of the
jobs eliminated were duplicative in nature,� Craig said. �The cuts
were necessary to better align costs with current revenue levels
and to eliminate those positions that were not contributing
significantly to the efficiency and potential growth of the
company.� About Commerce Energy Group Commerce Energy Group is a
leading independent U.S. electricity and natural gas marketing
company. Its principal operating subsidiary, Commerce Energy, Inc.,
is licensed by the Federal Energy Regulatory Commission and by
state regulatory agencies as an unregulated retail marketer of
natural gas and electricity and serves homeowners, commercial and
industrial consumers and institutional customers. For more
information, visit www.CommerceEnergy.com. Forward-Looking
Statements Except for historical information contained in this
release, certain statements in this release, including those of Mr.
Craig, may constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The company intends that all such
statements be subject to the �safe harbor� provisions contained in
those sections. These statements include, but are not limited to,
the company�s estimates regarding the restructuring charges and the
impairment charges, estimates regarding the implementation of the
company�s cost reduction measures and other forward-looking
statements. Many important factors may cause the company�s actual
results to differ from those discussed in any such forward-looking
statements, including higher than expected attrition of company
personnel; the success and effects of the company�s realignment of
corporate and regional functions and how effective the company is
in its implementation of new strategies; the volatility of the
energy market; higher than expected attrition of, and/or unforeseen
operating difficulties relating to, customer accounts, the
volatility of the energy markets, competition, operating hazards,
uninsured risks, the failure of performance by suppliers and
transmitters; changes in general economic conditions and seasonal
weather or force majeure events that adversely affect electricity
or natural gas supply or infrastructure; decisions by energy
suppliers requiring the company to post additional collateral for
energy purchases; uncertainties in the capital or debt markets
should the company seek to raise additional capital or debt;
uncertainties arising from federal and state proceedings regarding
the 2000-2001 California energy crisis; accounts receivable
collection issues caused by unfavorable changes in regulations or
economic trends, increased or unexpected competition, adverse state
or federal legislation or regulation, or adverse determinations by
regulators; and other risks and uncertainties described in the
company�s other filings with the U.S. Securities and Exchange
Commission. Although the company believes that the assumptions
underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, the company
cannot assure that the results contemplated in forward-looking
statements will be realized in the timeframe anticipated or at all.
In light of the uncertainties inherent in the forward-looking
information included herein, the inclusion of such information
should not be regarded as a representation by the company or any
other person that the company�s objectives or plans will be
achieved. Accordingly, investors are cautioned not to place undue
reliance on our forward-looking statements. The company undertakes
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. New factors emerge from
time to time, and it is not possible for management to predict all
such factors.
Commerce Energy (AMEX:EGR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Commerce Energy (AMEX:EGR)
Historical Stock Chart
From Jul 2023 to Jul 2024