ACQUISITION / Plains Resources to acquire All American Pipeline Co
HOUSTON, March 23 /CNW/ -- Plains Resources Inc. (Amex: PLX) today
announced it had entered into a definitive agreement to acquire all of the
outstanding capital stock of All American Pipeline Company, Celeron Gathering
Corporation and Celeron Trading & Transportation Company from The Goodyear
Tire & Rubber Company (NYSE: GT). Aggregate proceeds to Goodyear through
closing are estimated at $420 million. The principal assets of the entities
to be acquired include the All American Pipeline System, a 1,233 mile crude
oil pipeline extending from California to Texas and a 45 mile crude oil
gathering system in the San Joaquin Valley of California as well as other
assets related to such operations. The purchase price is subject to certain
adjustments through the closing date and the transaction is subject to
regulatory review and approval. The transaction is expected to be completed
in the third quarter after regulatory approvals have been secured.
Greg L. Armstrong, President and CEO of Plains Resources, stated that the
acquisition is structured to be made by Plains All American Inc., a wholly
owned subsidiary of Plains Resources. A major portion of the financing for
the transaction will be provided through a new $325 million, limited recourse
bank facility made available to Plains All American Inc. by ING Barings and
BankBoston, N.A.
In addition to the bank facility, Plains Resources will make a capital
contribution to Plains All American Inc. of up to $130 million which will be
used to fund the balance of the purchase price and transaction costs and
provide initial working capital. To finance its capital contribution, Plains
Resources will borrow approximately $50 million under its existing bank
revolving credit facility and has entered into financing commitments for a new
issue of privately placed, convertible preferred stock aggregating
approximately $80 million. Commitments for the preferred stock placement have
been obtained from a group of equity investors comprised primarily of existing
shareholders. Kayne Anderson Investment Management, Plains' largest
shareholder, and EnCap Investments L.C. are the lead investors in the private
placement.
Harry N. Pefanis, President of Plains Resources' existing midstream
operations and Plains All American Inc., stated that, as a result of this
transaction, Plains will own and operate the single largest crude oil pipeline
connecting California to West Texas, where it connects with pipelines that
transport crude oil to Cushing, Oklahoma and the Gulf Coast. The Cushing
Interchange is the largest crude oil trading location in the United States and
the designated delivery point for the New York Mercantile Exchange crude oil
futures contract. At Cushing, Plains owns and operates a two million barrel
crude oil terminal and storage facility, the largest terminal facility in
Cushing not owned by a major oil company and the fourth largest overall.
Pefanis also noted that the 45 mile gathering system is located in the San
Joaquin Valley, currently the most prolific crude oil producing region in the
continental United States. The areas serviced by the pipeline and gathering
system currently produce over 700,000 barrels of crude oil per day,
representing approximately 15% of total oil production in the continental
United States. For 1997, the operations to be acquired generated
approximately $65 million in earnings before interest, taxes, depreciation and
amortization.
Except for the historical information contained herein, the matters
discussed in this news release are forward-looking statements that involve
certain risks and uncertainties. These risks and uncertainties include, among
other things, market conditions, governmental regulations and other factors
discussed in the company's filings with the Securities and Exchange
Commission.
Plains Resources is an independent energy company engaged in the
exploration, acquisition, development and exploitation of crude oil and
natural gas and the midstream activities of marketing, transportation,
terminalling and storage of crude oil. The company is headquartered in
Houston, Texas.
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