Vulcan Energy ups ante for Plains Resources to $419 million

Ray Tyson

Petroleum News Houston correspondent

Vulcan Energy has agreed to increase its bid for independent energy company Plains Resources from $16.75 to $17.25 per share, Plains said July 12.

Microsoft co-founder and billionaire Paul Allen, along with Plains chairman James Flores and company chief executive John Raymond, are party to the proposed takeover through Vulcan Energy, an affiliate of Allen’s Vulcan Capital.

Vulcan’s proposal, which goes to Plains shareholders for their approval July 22, was valued at around $419 million.

Plain’s board of directors said it considered a competing offer from Leucadia National Corp. suggesting a leveraged recapitalization in which Plains would remain a public company, would borrow about $175 million and use the proceeds to commence a tender offer to purchase up to 10 million shares of common stock at a price of $17 per share, 25 cents less than Vulcan’s final offer. The board rejected Leucadia’s proposal and voted to amend an earlier agreement with Vulcan to raise the price to $17.25 per share. The amendment also provides that Plains will pay Vulcan’s expenses incurred to date in connection with the acquisition.

Plains said holders of about 17 percent of its outstanding common stock are contractually committed to vote for the new deal with Vulcan.

Plains is engaged in the acquisition, development and exploitation of oil and natural gas. Through its ownership in Plains All American Pipeline, a limited partnership, Plains also holds interests in lucrative midstream activities of marketing, gathering, transportation, terminaling and storage of oil.