In his proposal, in association with co-founder Bill Morgan, Board members Fayez Sarofim and Mike Morgan, and investment partner GS Capital Partners, AIG, The Carlyle Group, and Riverstone Holdings, Richard Kinder says that the offer is “fair and in the best interest of the company and its public shareholders, and that the shareholders will find our proposal attractive.” The offer represents a premium of 18.5% over the closing price of the company’s shares on 26 May. Richard Kinder’s proposal to the Board is in the form of a merger of the company with a new acquisition company that is to be formed for the purpose. He continues: “I would continue as chairman and CEO following the transaction, and we also expect that the company’s senior management team would remain in place. We clearly anticipate continuing to run the business in accordance with our current practice and maintaining the company’s valuable employee base, which we view as one of its most important assets.
“I would expect to reinvest 100% of my equity ownership through this transaction. My reinvestment, when combined with the investment expected to be made by other members of senior management and by each of Fayez Sarofim and Bill and Mike Morgan, would have a value of approximately $2.8bn based on the proposed transaction price. In addition to this substantial reinvestment, the transaction would be financed through a combination of approximately $4.5bn of equity that would be provided by affiliates of and investment funds managed by GS Capital Partners, affiliates of AIG and funds managed by AIG Global Investment Group, funds managed by The Carlyle Group and funds managed by Riverstone Holdings, and approximately $14.5bn of funded indebtedness. We have received a ‘highly confident’ letter from Goldman Sachs Credit Partners stating that it is highly confident of its ability to raise the debt necessary to complete the transaction.”
Kinder Morgan is one of the largest energy transportation, storage and distribution companies in North America. It owns an interest in, or operates, approximately 68,800km of pipelines that primarily transport gas, crude oil, petroleum products, and CO2, along with more than 150 terminals and numerous associated facilities.