Update: Recently in February 2018 a court decision on Oxbow could lead Bill Koch into a forced sale of the company. The post can be read here.
Bill Koch who is usually not the Koch brother that the media follows however is one of the most interesting has recently been in the news for multiple reasons (he is for sure the most flamboyant). The most recent news story from Bloomberg is discusses how Bill Koch actually might be ousted from his own company Oxbow Energy. Bill Koch formed Oxbow in 1983 after he had an all out war with his brothers Charles and David Koch in controlling Koch Industries. Charles Koch and David essentially bought out Bill Koch, Frederick Koch, and other Koch Shareholders at $200/share. The deal after much negotiating was finalized at midnight of June 4, 1983 as I previously covered here. When the whole thing was said and done Bill Koch walked away with $470 million and Frederick Koch walked away with $330 million (Frederick never worked a day at Koch Industries!). As I write this post Forbes has Bill Koch's worth pegged at a little over $2 billion which actually seems a lot however on a compounded basis really is okay. Over a 33 year period this is only a 4% return which is about half of the return the stock market provides. Had Bill Koch stayed a shareholder of Koch Industries he could have done quite well. It should be noted that Koch Industries does have shareholders who are not active members in the day to day business of running Koch Industries (Marshall family).
The latest story from Bloomberg claims that Crestview Partners (private equity firm) is trying to get rid of Bill Koch who is CEO of Oxbow Carbon and Minerals Company. This almost seems like a reversal of history considering Bill Koch tried to get rid of his brother Charles Koch in the 1980's from Koch Industries. Crestview Partners invested some capital and took a minority ownership in Oxbow back in 2007. Under the agreement Crestview had the right for Koch to cash out his position of Oxbow. Bill Koch refused to do this and this would cause all of Oxbow to be placed on the market. When Koch opposed the quick sale it was claimed that Crestview tried to scoop up information on Koch that was not only personal but also tried to leak his business affairs to potential buyers to obviously reduce the value of the business. It should be interesting to see if anything happens with Oxbow Energy.
This leads to the question is Bill Koch running out of money? His net worth as I mentioned above is around $2 billion, however he has been selling assets the past couple of years. Bill Koch has recently been selling assets off perhaps to increase his liquidity/build his haunted town in Colorado. Currently Bill has one of his many homes listed for sale in Colorado. However, it seems as if Mr. Koch is asking too much for it as the original price was $100 million and as I write this article the price has been reduced to $80 million (20% reduction). The home is currently the most expensive home in America. The home sits on 55 acres and the actual home itself is 14,000 square feet (28 bedrooms). Not only is the whole property for sale but you can buy individual pieces of the property (the main parcels can be purchased for between $4 million and $60 million). Brothers David Koch and Charles Koch each purchased homes in Aspen, Colorado for $2.5 million each back in 1992.
Recently also Mr. Koch sold 20,000 bottles of wine for roughly $22 million. Last year Koch put up one of his Gulf Stream Florida properties homes for sale for $3.4 million. The home located at 578 Palm Way was originally on sale for $4.2 million but then had the price reduced 3 times. The home was sold for $2.75 million on February 9, 2016. The home was only roughly 3,700 square feet with 4 beds and 5 bathrooms. Koch had his teenage daughter Charlotte Koch living in the property (she was one of the children that Koch had during an affair). Bill has not only been selling homes, wine, but has also been selling some of his artwork as well. Last year he sold 2 paintings (a Picasso and Monet) through Sothebys that fetched $100 million. Also late last year Christie's was going auction off some artwork that Bill had with the general theme being the American West. According to Christie's Koch received roughly $17 million for all his lots of artwork.
In 2013, he listed his Cape Cod property for a cool $15 million. The property located at 177 Seapult River Road as over 8,000 square feet. According to Zillow the property was sold for $8.5 million on September 14, 2014 so much less than Bill Koch was asking for. During the negotiations of Koch vs. Koch Bill always seem to put an extremely large premium on his shares.
Speaking of business Bill Koch is in the petroleum coke business which recently has been suffering due to rules from the EPA regulating coal. In this video Koch mentions that he sold 7 power plants businesses in 2000. Also he describes what Oxbow does as gas drilling, buy and resell petroleum coke (a byproduct of refining), process petroleum coke, do business in 100 different countries. Oxbow's sales are about $3-$4 billion compound growth rate 26% per year since 1984 but profits in 2014 were down 40%. Pet coke is used in coal burning power generators, either in power plants, or in the cement, iron, or steel businesses. What is interesting is that Koch Industries is a direct competitor of Oxbow Energy with their own division Koch Carbon (which Bill Koch worked for in the late 1970's however brother Charles Koch kept the file of Koch Carbon which showed it was an erratic money loser in this article).
Bill Koch in the past couple of years has raised a substantial amount of money. He announced years ago that he plans to build a haunted ghost town in Colorado which is covered in great detail here. The town is suppose to be a 19th century for a 10 acre town filled with salons, firehouse, bank, church, theater, a library, even a brothel. Koch intends for the town to be a private getaway for his friends/family (this strikes me as odd since a 19th century town would be one of the last places most people would want to visit). The cost of the town is unknown but I would imagine Bill Koch is building liquidity to pay for the operating expenses/staff to run a whole town. When I add up the recent art, home, and wine sales of Bill Koch (I estimate he will get around $65 million for the home to be conservative) that this will bring in roughly $215 million total. If his net worth is around $2 billion this would be roughly 10% of his assets are transforming into cash. If Bill Koch has to sell part of his company that would increase his liquidity however reduce his control for Oxbow. Time will tell if Bill Koch is facing a cash shortage. However, there is no question whatever happens will be interesting as there is nothing that is boring that happens to Bill Koch.
