Hicks, Muse Takes on Two Dallas Independents
The Dallas-based investment firm, Hicks, Muse, Tate & Furst,
announced it was picking up a significant interest in Triton
Energy, the second major investment in an oil and gas E&P
company Hicks Muse has made in the last two weeks.
Hicks Muse said it will invest approximately $350 million in
Triton, which also is headquartered in Dallas. Two weeks ago, the
firm said it was acquiring a majority stake in another Dallas-based
independent producer, Coho Energy, for about $250 million. The two
purchases are the investment firm's first in the oil and gas
business. "Since its formation in 1989, Hicks, Muse, Tate &
Furst Inc. has completed or currently has pending more than 230
transactions with a total capital value in excess of $30 billion,"
a press release said. Up until those deals, its investments had
been primarily in the radio and television business.
"With the current depressed market prices of energy assets, we
believe that this is a favorable time to make an investment of this
nature," said Thomas O. Hicks, chairman and CEO of the investment
firm. "Triton Energy in particular has assembled an outstanding
group of world-class assets, and with this investment, Triton will
be very well capitalized to take advantage of additional
acquisition opportunities that may emerge. We now have in place
another strong platform from which to implement our buy-and-build
strategy in oil and gas."
Triton Energy's common stock price dropped from $40+ to under
$20 a share in July after the company reported a second quarter
loss of $150 million due to an after-tax charge of $141.1 million
(non-cash). Included in the charge was $72.6 million related to a
decision to discontinue and write-off exploration activities in
certain countries and a $68.5 million full cost ceiling limitation
test write-down (oil price related) of the company's Colombian
assets. A number of shareholder lawsuits have been filed, claiming
the company misrepresented the value of its assets and prospects.
The share price fell Monday along with the rest of market, ending
the day at $11.50.
The Hicks Muse investment in Triton involves a several step
process including purchase of convertible preferred shares and four
seats on the 10-person board of directors.
Coho Energy also has seen a decline with assets affected by the
lower oil price. That company's stock has gone from $13 last
November to $4.50 Monday. Hicks Muse will own approximately 62% of
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