Houston-based Plains Resources Inc., which already has agreed to a merger with a subsidiary of private equity firm Vulcan Capital, said Friday that a rating by Moody’s Investors Service indicates that an offer it initially turned down by Leucadia National Corp. is “likely to result in a superior proposal.” Plains’ board of directors had agreed to Vulcan’s bid earlier this year (see Daily GPI, March 2).

Plains appointed a special board committee to review the offers for the company, and said Leucadia recently was assigned a “B2” rating by Moody’s for its proposal to issue debt securities to buy Plains.

“After consideration of the rating by Moody’s, among other things…the Special Committee, following review with its financial and legal advisers, has determined in good faith that the…proposal is reasonably likely to result in a superior proposal (as defined in the Vulcan merger agreement…).” The committee said it would negotiate with Leucadia about its proposal, and said it had requested additional information, including detailed terms of both the proposed debt securities and proposed preferred stock.

Under the terms of the merger agreement with an affiliate of Vulcan, stockholders of Plains, except for Chairman James C. Flores and CEO John T. Raymond, would receive $16.75 per share in cash for each share of Plains stock that they own. Flores and Raymond are participating with the Vulcan transaction.

Following Vulcan’s bid in early March, Leucadia issued a second bid, which valued Plains at about $18/share.

Plains has a 24% equity ownership in Plains All American Pipeline LP, which operates in Texas, Oklahoma, California and Louisiana and in the Canadian provinces of Alberta and Saskatchewan.

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