BANGALORE, Aug 29 (Reuters) - Venoco Inc's chief executive and top shareholder offered to take the natural gas producer private, valuing the company at about $770 million at a time when low gas prices and higher costs are weighing on the sector.
Debt-heavy, natural gas-weighted companies are selling off assets to raise the cash they need to meet higher capital spending forecasts, although there is no corresponding increase in their production outlook.
The proposed price of $12.50 a share by Venoco's CEO Timothy Marquez, who owns half the company's shares, is 44 percent below the stock's 52-week high of $22.46 in February.
However, the proposal is a 39 percent premium to Friday's closing price. Marquez shares rose 34 percent before the bell on Monday on the New York Stock Exchange.
The stock's weakness mirrors that of other companies as natural gas prices have slumped 6 percent to $3.88 per million British thermal units.
Marquez's proposal comes when Venoco looks to offset low gas prices by investing heavily in the oil-rich Monterey shale formation. It spent about half its capital expenditure on the shale in its most recent quarter.
The low gas prices have led to the likes of Southwestern Energy, Quicksilver Resources Inc, Cabot Oil & Gas and Range Resources running low cash flows and high debt -- making them potential acquisition targets.
Quicksilver and EXCO Resources were both recently the target of management-led buyout offers. However, both the deals did not go through.
Earlier this month Venoco -- which has long-term debt of about $644 million and cash and equivalents of just over $3 million as of June 30 -- cut its full-year production outlook by 5 percent and said it would shift certain activities from this year to 2012.
Venoco will form a special committee of independent directors to consider the proposal and that no decision has been made regarding the proposal, it said in a statement.
Marquez, who owns about 50.3 percent of the company's outstanding shares, said he was confident of getting the financing required to make his offer.
'I would expect to reinvest 100 percent of my equity ownership through this transaction,' Marquez wrote in the letter to Venoco's board.
(Reporting by Vaishnavi Bala in Bangalore; Editing by Gopakumar Warrier) Keywords: VENOCO/
(vaishnavi.bala@thomsonreuters.com within U.S. +1 646 223 8780 outside U.S. +91 80 4135 5800 Reuters Messaging:vaishnavi.bala.reuters.com@reuters.net)
COPYRIGHT
Copyright Thomson Reuters 2011. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Get a feel for live tradingTrade Simulator Download here
0 Responses: UPDATE 3-Venoco CEO's go-private offer values co at $770 mln
Posting Komentar