NGI The Weekly Gas Market Report
The recent sale of 1 million shares of Tom Brown Inc. stock toan undisclosed investor garnered Lakewood, CO-based KN Energy about$29 million in cash and should help the company digest itsacquisition of Kinder Morgan Inc.
The preferred stock was originally issued to KN in 1996 as partof Tom Brown’s acquisition of KN Production Co. The stock isconvertible to 1,666,000 shares of Tom Brown common stock, andthese shares pay annual dividends of $1.75/share.
“The sale of these shares represents another step in our ‘backto basics’ strategy to focus on core assets and return the companyto profitability,” said Stewart Bliss, KN interim chairman and CEO.”The cash proceeds from the sale will be used to reduce ouroutstanding debt.”
Tom Brown CEO Don Evans said, “We are pleased that these shareshave been placed with a high quality, long-term investor.”
KN, based in Lakewood, CO, is the nation’s sixth-largestintegrated gas company with more than $8 billion in total assetsand is one of the largest pipeline operators with more than 25,000miles of pipe. It has operations in 16 states, including gasgathering, processing, marketing, storage, transportation, energycommodity sales – natural gas and natural gas liquids; electricgeneration design, construction and operation; and innovativeservices designed for consumers, utilities and commercial entities.
The marriage of KN and Kinder Morgan was called the deal of thedecade by one industry analyst when it was announced in July (seeDaily GPI, July 12, 1999). KN ChairmanLarry Hall immediately resigned; Kinder Morgan Chairman RichardD. Kinder, credited with helping build Enron’s underpinnings, wasnamed heir apparent, and KN’s stock price soared nearly 55% in oneday. Kinder told a teleconference he plans to “get the car out of theditch and get it going down the highway.” One industry veteran wasexcited to hear “Kinder’s rejoining the industry,” after leaving Enronin 1996 when Chairman Ken Lay announced he would lead the company foranother five years.
It was less than three weeks since KN’s proposed $6 billionmerger with Sempra Energy fell apart. The new alliance will createa massive midstream energy company with 30,000 miles of gas,petroleum products and liquids pipelines, and an enterprise valueof $8.5 billion.
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