Eagle Rock Energy (EROC) Receives Joint Letter Regarding NGP and Black Stons Partnership Proposals

November 10, 2009 7:37 AM EST

Eagle Rock Energy Partners, L.P. (NASDAQ: EROC) announced today that the Conflicts Committee of the Board of Directors of the general partner of the general partner of the Partnership received a joint letter on November 7, 2009, from Natural Gas Partners VII, L.P. and Natural Gas Partners VIII, L.P. and Black Stone Minerals Company, L.P.

The joint letter dated November 7, 2009 includes a joint term sheet setting forth revised terms and conditions of, and serving as a replacement of, both NGP’s and Black Stone’s most recent individual proposals to the Partnership. A copy of the Joint Proposal has been filed by the Partnership with the Securities and Exchange Commission on Form 8-K.

The Joint Proposal contemplates, among other things:

• A commitment by NGP to participate in a portion of, and provide support for (“back-stop”), a rights offering and an equity offering;
  
  
• A commitment by Black Stone to purchase the Partnership’s Minerals Business (as defined in the Partnership’s filings with the Securities and Exchange Commission) for $170 million;
  
  
• A contribution to the Partnership of all incentive distribution rights in the Partnership and the 20,691,495 subordinated units outstanding;
  
  
• An option in favor of the Partnership to acquire the Partnership’s 844,551 outstanding general partner units by acquiring all of the outstanding equity of the general partner of the general partner of the Partnership and all of the limited partner units of the Partnership’s general partner, in exchange for one million newly-issued common units; and
  
  
• The payment by the Partnership to NGP of a transaction fee, payable at the Partnership’s option as $29 million in cash or as some combination of cash, common units and/or warrants.

At management’s request to the Conflicts Committee, the new incentives for the management team that were included in NGP’s prior proposals were not included in the Joint Proposal.

NGP owns a significant equity position in Eagle Rock Holdings, L.P., which owns 2,338,419 common units, 20,691,495 subordinated units and all of the equity interests in Eagle Rock Energy GP, L.P., the Partnership’s general partner (directly and through ownership of all equity interests of the general partner of the Partnership’s general partner), which holds the general partner units and incentive distribution rights in the Partnership. In addition, NGP owns and controls 8,700,169 aggregate common units and reports beneficial ownership over some additional common units.

Related Categories

Corporate News

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?