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Merger of Communications Firms Puts Texas Oilman Back in the Black

February 05, 1989|From Associated Press

MIDLAND, Tex. — While many prominent Texas business people are short on cash and long on debt, entrepreneur Clayton W. Williams Jr. says he's debt free for the first time in 10 years and may even run for governor.

Williams, founder of Claydesta Communications, recently agreed to merge the long-distance company with 55,000 customers into Atlanta-based Advanced Telecommunications Corp. The deal will pay him $33 million in cash and $10 million in Advanced Telecommunications stock.

"I've battled back like a lot of people in Texas and emerged with a good financial statement," he said in an interview in his hometown of Midland, center of the depressed Texas energy industry. "It's not as good as it once was, but it's better than a lot of people's."

The move will erase the remainder of what once totaled almost half a billion dollars in debt spread among more than 20 companies owned by Williams, including more than $45 million incurred to start Claydesta Communications.

Williams says that after he closes the merger deal, he will owe "virtually nothing."

Ahead of Tide

It's no accident that Williams is paying off debt while the rest of the state suffers effects of the economic catastrophe he calls "the Wreck," said the 57-year-old oilman with holdings in real estate, ranching, banking and farming.

The dizzying collapse of the Southwest oil and real estate empires in recent years has produced a list of prominent victims that reads like a Who's Who of Texas tycoons. It includes former Gov. John Connally, the Hunt brothers, industrialist T. Cullen Davis and Dallas Cowboys owner Bum Bright.

Williams is unusual because he isn't on the list. Keeping ahead of the economic tide is one of his specialties. Even his bank, Claydesta National, is making money in a state where troubled banks have become a fact of daily life.

Although he denied political aspirations a few months ago, Williams said in January after he returned from a two-week Pakistan safari that he was considering a run for the governor's office on the Republican ticket. He has said his annual exotic hunting forays often provide him inspiration.

It was on another such trip, this one to the Yukon in 1981, that Williams decided that it was time to get out of the oil and gas business no matter how much it hurt his pride.

"When the time came, I said, 'Clay, you're not such a big deal. You better retrench, consolidate, sell,' " he recalls.

His formula for walking away largely unharmed by the Wreck: cut your losses, and if it doesn't work, unload it.

"We worked like hell going up and then when the Wreck came, we worked like hell going down to keep from going broke while everything fell apart," he said.

Hostile Economics

In more than 30 years of doing business in Texas, Williams mostly thought only of growth and expansion. Now, he said, "my direction is tied to bottom line, cash flow, efficiency."

While paring down helped him survive, Williams struggled to nurture his long-distance company, started in the aftermath of the breakup of the American Telephone & Telegraph Co. monopoly.

"A lot of things happened to this company that happened to Texas," Williams said. "We'd sign up people (as customers) and a year later, they'd be broke. They wouldn't even exist anymore. Companies that had 1,000 employees would have 100 or 200."

Despite hostile economics, Claydesta Communications grew to 370 employees from five in one year. It's projecting revenue of $63 million for 1988--up from $3 million in revenue in 1984, the year the company was started.

Then, Williams said, his oil brought close to $30 a barrel and natural gas $3 per cubic foot. With today's prices a fraction of that, money to fund a fast-growing company wasn't available.

"We weren't able to grow and realize the potential of our market and our employees because I wasn't able to put more money and more money into it on $12 oil," he said.

To Retain Name

After studying a merger for the communications company for about a year, Williams decided Advanced Telecommunications, with more than 150,000 customers and $168 million in revenue, would be a good fit.

Williams has never been a fan of AT&T and once grabbed headlines by leading a mounted posse up the steps of the Capitol to protest the proposed deregulation of the telephone giant.

Ironically, he found himself in the unfamiliar telecommunications business after problems getting phone service for a tenant spawned plans for his own phone company. The digital and fiber optic network he built will continue to form the basis for Claydesta Communications under the new company.

Claydesta will retain its name, management and employees under the merger. Williams, featured in the company's Western-themed commercials, will sit on Advanced Telecommunication's board and serve as Claydesta's spokesman.

With responsibility for the phone company's growth and management now shared, Williams is looking to bolster other ventures. His cattle operation in Alpine, in far West Texas, is his most profitable business, he said.

Given the depressed real estate market and further cutbacks in the energy sector, Williams said he plans to be a bargain hunter.

"The oil business is still sick, which means there could be opportunities, because of the Wreck, for a small efficient operator," he said.

Ever cheerful, Williams is optimistic about discovering hidden profit in unfamiliar businesses.

"It's like being an old hunting dog looking for birds," he said. "If you get out there and get to hunting you'll find some birds, but you've got to get out there first."

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