Tuesday, October 20, 2009

Texas Industries Meeting, this Thursday

Texas Industries Inc., (NYSE: TXI) headquartered in Dallas, is a company that produces cement and other construction materials -- not be be confused, BTW, with Texas Instruments.

TXI's annual meeting takes place this Thursday, and its board faces a challenge from Shamrock Capital Advisors. I understand that settlement talks have not gone well.

Shamrock has charged that "the Company's performance lags its peers, hundreds of millions of dollars of the Company's funds have been 'invested' in ill-timed capital expansion projects that have failed to generate any incremental profits, and there appears to be no credible plan to address these shortcomings."

The expansion projects at issue consist of: $427 million on the Oro Grande project (2005-2008); $294 million on the Hunter expansion (2007-2009); and $55 million of capitalized interest (2005-2009).

Of course there hasn't been a lot of large-scale construction requiring cement over the last year or so. The price of cement, for the good old supply/demand reason, has plummeted, which helps explain the difficulties encountered by expansion plans developed before the downturn.

The principal of Shamrock Investment fund, by the way, is Roy Disney -- Walt's nephew. Now if someone were only building a new theme park, THAT would generate demand for cement!

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