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Hicks, Muse Takes on Two Dallas Independents

September 7, 1998
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Hicks, Muse Takes on Two Dallas Independents

The Dallas-based investment firm, Hicks, Muse, Tate &amp Furst, announced it was picking up a significant interest in Triton Energy, the second major investment in an oil and gas E&ampP 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 &amp 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 Coho shares.

Ellen Beswick

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