Utah businessman Ian M. Cumming is going to move out of the state to the relative seclusion of Wyoming, leaving only the fate of the company he chairs, Leucadia National Corp., still in question.
Company spokeswoman Pat Gardner confirmed to the Deseret News Tuesday that Cumming, his wife, Annette, and their family will move their primary residence from Utah to Jackson, Wyo. They currently have homes in the Federal Heights area of Salt Lake City and at Snowbird Resort in Little Cottonwood Canyon.The disposition of Leucadia is less clear. According to the current issue of Forbes magazine, Cumming and Leucadia president Joseph S. Steinberg have told shareholders they plan to liquidate the company and return the proceeds to them.
"If we're not going to do anything (make investments), then you, the owners, should not have to pay for overhead," Forbes quotes Steinberg.
But Leucadia spokeswoman Gardner, when asked Tuesday if the company was being dissolved, said: "We expect to still be here. That's as much as I can tell you."
Leucadia's corporate offices are in New York City where Steinberg is based. Its executive offices, where chairman Cumming has his headquarters, are in Salt Lake City at 529 E. South Temple, the historic David Keith Building.
Steve Swindle, Salt Lake attorney for Leucadia and Cumming, said there is no doubt that Leucadia is being restructured but liquidation of the company is not a done deal.
"They are making some changes," said Swindle, "but to the best of my knowledge they have not formed details of the planning. There are a lot of complicated, convoluted issues they're working through. They're not going to go forward as usual."
Cumming could not be reached for comment. He never talks to the news media (not even Forbes) and is even known to go to great lengths to avoid having his picture taken.
Cumming and Steinberg were still unsure of their plans when compiling this year's corporate annual report for Leucadia. In their letter to shareholders, they talk of the "future conundrum," of "ru-minating" and "dithering" as to the direction the company should go.
They note that for the past 20 years they have done the same thing over and over again: bought assets or companies that they thought were undervalued and then worked to improve their cash flows and bring out their inherent value.
It's worked like a charm - Cumming and Steinberg are worth $350 million each, says Forbes - but they are now having trouble finding places to put Leucadia's $2 billion in cash and notes.
"There is a vast amount of money sloshing around the world," they write in the annual report. "As hard as we run, the hot money has beat us there. One of us predicts a very unhappy ending to the exuberance; the other doesn't know what to think."
They cite several alternatives to the "conundrum" of what to do with the company:
- "Do nothing. Keep our cash short and safe and wait until the old world returns. In the meantime, low returns are guaranteed.
- "Do the above but give the shareholders back a significant portion of their money.
- "Stop the merry-go-round and give all the money back on the theory that a 20-year run is a good one."
According to Forbes' Bernard Condon, the last choice is the way they've decided to go, notwithstanding the Salt Lake spokeswoman's assurance that "We ex-pect to still be here."
In their annual report, Cumming and Steinberg note that all it would take to make them change their minds about Leucadia's prospects is for a good deal to come along.
"If the right rabbit jumped in front of us, we might be singing a different tune."
Cumming and Steinberg met at Harvard Business School in the 1960s. In 1979 they bought control of a company called Talcott National, a factoring and consumer finance company, for $100,000 of their own money and $1.2 million from others. Talcott later became Leucadia National.
Cumming moved to Salt Lake City in 1971 as a partner in Terracor, the real estate company that developed Bloomington in St. George, Stansbury Park in Tooele County and other properties in Idaho and Colorado. He bought out the other partners in the company, which was in Chapter 11 bankruptcy.
The Cummings found Utah to their liking and stayed on after Terracor ceased to be an active company.
Cumming is a member of the Utah Board of Regents and was instrumental in the hiring of Arthur K. Smith, former president of the University of Utah, and current president J. Bernard Machem. He also is a director of SkyWest Inc., the St. George-based parent company of SkyWest Air-lines.
Cumming was the founding chairman of the Utah Sports Authority, the group responsible for assuring that tax money for the 2002 Winter Olympics facilities was handled appropriately.
Annette Cumming is a member of the Utah Symphony board of directors and has been involved in Planned Parenthood, Utahns Right to Choose and the University of Utah.
Whether the Cummings will retain their Utah affiliations remains to be seen, but it seems unlikely if they are no longer residents of the state. "If they move it would likely mean disengagement from many of the civic things they have done," said Swindle, and it would likely mean they would sell one or both of their homes here.
In an ominous precedent to the current stock market woes, Forbes compares what the magazine says is the decision of Cumming and Steinberg to dissolve the company to that of legendary investor Warren Buffett's similar decision 30 years ago when he couldn't find any stocks worth buying at reasonable prices and returned the money he was handling for a group of investors.
"There followed one of the more dismal periods in U.S. stock market history," notes Condon in his article titled "Cashing in the Chips."
Today, Leucadia is a financial services holding company. Its businesses include property and casualty insurance, banking, lending and manufacturing. Its operating companies include American Investment Bank in Salt Lake City.
In the first quarter, Leucadia's revenues were down 8 percent to $148.7 million but net income from continuing operations totaled $12.6 million, up from a loss of $6.1 million in the same period last year. Second quarter results are due to be published Aug. 13.
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