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Duratek's Stock Price Soars After Carlyle Cashes In

By Jerry Knight
The Washington Post
Monday, January 3, 2005; Page E03

Last month, Washington's biggest investment firm, Carlyle Group, finished cashing in its holdings in a small Columbia company, which by no coincidence was one of the best-performing local stocks of the year.

Since 1995, Carlyle had been the biggest investor in Duratek Inc., which specializes in radioactive waste disposal and other services for the nuclear power industry.

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Having a big-name investor like Carlyle can be a mixed blessing for a company like Duratek, which benefits from high-profile financial backing but suffers from the knowledge that someday Carlyle is going to cash in its holdings.

Last year Carlyle did. It sold 5 million shares of preferred stock back to Duratek for $9.74 a share and moved another 3 million shares in common stock in block trades at share prices of $15 and $19.

But rather than depress the price of Duratek's stock, Carlyle's exit helped push the stock to a record $25 a share, an increase of nearly 90 percent for the year.

Investor relations director Diane Brown said that Carlyle's decision to cash out removed a big overhang of shares that had long depressed the price of Duratek stock. Duratek shares traded about $15 for most of the year, but as Carlyle's exit strategy became clear, the stock moved up. The exit was completed in early December when Carlyle founder Daniel D'Aniello stepped down as chairman and was replaced by Admiral Bruce DeMars, former director of the Navy's nuclear propulsion program.

Duratek did well for Carlyle. The $24 million investment in preferred stock paid a healthy 8 percent a year cash dividend and was sold for twice the original price. The 3 million shares of common stock, bought for between $3 and $4 a share, were sold for about $51 million -- better than four times what they cost.

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