Pacific Enterprises’ Chief Resigns in a Surprise Move : People: James R. Ukropina cites health problems. His departure comes as the retailing and natural gas company is going through hard times.
James R. Ukropina, citing unspecified health problems, quit Tuesday after two years as chairman and chief executive of Pacific Enterprises, the financially troubled parent of Southern California Gas Co. and Thrifty Corp.
Ukropina’s departure caught analysts by surprise and comes as the company struggles to revive the ailing retail and oil exploration businesses that have hurt the Los Angeles-based company’s profits and resulted in a plunging stock price and dividend.
Willis B. (Bill) Wood Jr., 57, the company’s president, will assume Ukropina’s job as chief executive, effective immediately. The chairmanship will remain vacant.
Ukropina, 54, declined to be interviewed. A company spokesman would not detail Ukropina’s health problems.
Officials of the union representing gas company workers suggested that Ukropina may have been forced out, but Wood denied that Ukropina was asked to leave by the board of directors.
The announcement came after the close of the market. Pacific Enterprises stock closed unchanged at $24.50 a share Tuesday. The stock price has plunged from $43.375 earlier in the year, before Pacific slashed its dividend in half.
The company’s financial troubles continued Tuesday, when Moody’s Investors Service, a credit-rating agency, said it may downgrade Pacific’s $150 million worth of preferred stock.
Analysts said the resignation could be good for Pacific if it results in a change from the company’s strategy of diversifying from its core utility business--a strategy that has drawn strong criticism.
“Substantial changes need to be made at the company,” said David N. Fleischer, a natural gas industry analyst at Prudential Securities in New York. “The question has been whether Mr. Ukropina would be able to effect the changes to make the retailing and exploration assets earn their keep and make a fair return. But for the last two years plus, both of those areas have been big disappointments.”
Wood--a 31-year company veteran who started with the utility--said: “The success we’re having in (retailing and exploration) is not what we’d like it to be, and we’ll be taking a hard look at it. But I’m not in a position to make a decision today.”
He added: “My key objective is to get us heading in the best direction as I can. But I have not a specific time schedule for that yet.”
Ukropina’s departure was only the latest in a series of recent management changes. In August, the company’s troubled Thrifty Corp. retail unit hired William E. Yingling III as its new chairman. In October, Eve Rich resigned as president of the unit’s Thrifty Drug chain, citing management differences.
Troubles in Thrifty’s 1,000 drug and sporting goods stores and Pacific’s oil and exploration unit have wiped out improved financial results from SoCal Gas. In the third quarter, Pacific’s earnings were 54% below last year’s level.
In retailing, analysts blamed the recession in part for losses. But in oil and gas exploration, analysts said the company has had a poor record of finding new reserves, and those at extremely high cost.
In August, Pacific Enterprises announced a range of cost-cutting moves, including slashing its exploration budget and laying off an unspecified number of employees.
Separately, Southern California Gas said it would begin its own cost-cutting program that would include charging new fees for certain services. “It really finally points to what a lot of us as early as 1989 said: That diversification was hurting Pacific Enterprises and was wreaking havoc on the utility,” said Maureen Lynch, president of Local 132 of the Utility Workers Union of America, which represents about 5,000 employees of Southern California Gas.
Pacific officials have denied that, arguing that the utility’s moves are not related to the parent company’s financial problems.
Regulators want to make sure that is so: The Public Utilities Commission is conducting an audit to ensure that ratepayers are not adversely affected by Pacific Enterprises’ financial woes.