Venoco Approves CEO Take-Private Proposal
Launched unsolicited bid to acquire remainaing 49.7% stake in company with assets onshore &offshore CA, gaining 17,265 BOE/d, 85.1 MMBOE.
Venoco Inc., Denver, (NYSE: VQ) reports the previous proposal by chairman and chief executive Timothy M. Marquez to acquire all of the remaining outstanding Venoco shares through his entity Denver Parent Corp. for approximately $734.6 million in cash has been approved.
Marquez, who holds 50.3% of Venoco stock, has offered $12.50 per share. Venoco has approximately 58.7 million shares outstanding with the remaining 49.7% not held by Marquez coming to about 29.2 million shares. The offer represents a 63% premium to Venoco's closing price on Jan. 13. and a premium of 75% to the volume-weighted one-month moving average for that date, and implies a total enterprise value of approximately $1.5 billion.
Rick Walker, chairman of the special committee, says, “After a thorough assessment, with the assistance of independent legal and financial advisors and after a comprehensive five-month search of the market for superior alternatives, we concluded that this transaction will maximize value for our public shareholders. We are also pleased to have successfully negotiated a 'majority of the minority' approval right for our public shareholders."
Venoco has operations in northern California’s Sacramento Basin. As of June 30, 2011, it held approximately 600,000 gross acres. The company’s properties include South Ellwood Field, Santa Clara Federal Unit, and Dos Cuardas Field offshore California; Willows and Greater Grimes fields in the Sacramento Basin; Santa Clara Avenue and West Montalvo fields in Ventura County; and Beverly Hills West Field in Los Angeles County. In addition, Venoco holds a reversionary interest in Hastings Field in Texas.
Production averaged 17,265 barrels of oil equivalent per day during the third quarter of 2011. Net proved reserves as of Dec. 31, 2010, were 85.1 million barrels equivalent.
Marquez says, “I am proud of the strong track record of our company, and our valued employees who make that possible. This transaction will position Venoco for the long term and allow our company to continue investing in its future in an era of continued economic uncertainty.”
The merger agreement contains a non-waivable condition that a majority of the outstanding shares of Venoco not owned by Marquez and his affiliates or by any director, officer or employee of Venoco or its subsidiaries vote in favor of the adoption of the merger agreement.
Bank of America Merrill Lynch and Strategic Energy Advisors LLC are financial advisors to Venoco. Squire Sanders is legal advisor. Citigroup and BMO Capital Markets are financial advisors to Marquez. Wachtell, Lipton, Rosen & Katz is legal advisor to Marquez.
When the deal was first proposed in August, KeyBanc Capital Markets Inc. analyst Jack N. Aydin said the deal values proved reserves at approximately $14.03 per barrel equivalent and production at $68,000 per barrel equivalent per day.