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New Hires in Grand Rapids

It's been an exciting year for the Electronic Cigarettes International Group. The Michigan firm that was just li'l-ol' Victory E-cigs about a year ago spent the first half of 2014 acquiring other independent (non-Big-Tobacco) vaping supplies companies internationally, and expanding into new distribution channels worldwide, under the leadership of CEO Brent Willis, whose background is in beverage marketing. The new subsidiaries of the company-turned-conglomerate have moved into new European and other international markets (Vapestick), created controversial advertisements (VIP), and other new advertising campaigns (FIN) as recently as the first week of 2015. With a redesigned corporate moniker, ECIG, that suggests it stands for the industry as a whole, the company has become the largest non-poison-producing seller of vaping supplies.

The company's exciting ride in 2014 ended with a hair-raising nose dive on the stock market at year's end. With its large assets and large liabilities, the company took its stock from about $20 in mid-2014 to about 5 cents at the end of the calendar year, and it still hovers at about a nickel. The Board wants to conduct a reverse split of stock value, a move that has made some stockholders a bit testy. The stockholders' meeting for action on this proposal is to take place next month. The buzz, both from the company and from market analysts, is that the move is designed to forestall a potential aggressive buyout by Big Tobacco, as happened with Blu, bought by Lorillard, later swallowed by Reynolds, then sold to British American, like a floozy passed from hand to hand, and with Green Smoke, bought by Altria but little developed, and the original e-cig company Dragonite-Ruyan, bought by Imperial, which claims to have plans to enforce its patents on the entire industry.

With all of this going on, it comes as no surprise that ECIG of Grand Rapids is taking on new executives, apparently in the hope that they may provide solutions to current dilemmas. Coming on board as Executive Chairman will be Dan O'Neill, formerly President and CEO of Molson's Beer, a subsidiary of Coors. Says a company press release about O'Neill: “he has led transformational growth and delivered superior financial performance in a range of geographies and complex business environments.” The new exec says of his new job: “first priorities are to restructure the Company’s balance sheet and to improve overall cash flow management.” Like, no kidding!

With those priorities, it will come in handy to have a new Chief Financial Officer to replace outgoing CFO Jim McCormick, formerly of British American Tobacco. It will be Phil Anderson, whose background is particularly strong in, you guessed it, “balance sheet structuring and cash flow management”, according to the press release.

The company fired its accounting firm the same day.

When ECIG hired McCormick away from Big Tobacco last May, the company said he was bringing strength in "mergers and acquisition insight and industry-specific knowledge" -- and sure enough, acquisitions were the order of the day it seemed at the time. But his "industry-specific knowledge" was tobacco-industry knowledge. Now Willis is taking on someone with a background in beer, like himself. Is it presumptuous to read a sea-change into this difference?

Willis “look[-s] forward to working with [O'Neill and Anderson] to re-architect the capital structure of the firm and continue to drive profitable growth in what remains an incredible opportunity....”

Indeed, there is much to be done. Just 5 days before the announcement of the new hires, analysts at Hot Stocked mused: “It looks like it's just gathering downward momentum.... One can't help but wonder what ECIG's management team is thinking.”

The next few months will tell.