Source: EXCO Resources
The Special Committee of the Board of Directors of EXCO Resources, Inc. (NYSE: XCO) today announced it will explore strategic alternatives to maximize shareholder value, including a potential sale of the shale-focused Company.
As part of a comprehensive process, the Special Committee will consider a previously announced unsolicited proposal received on October 29, 2010 from Douglas H. Miller, the Company's Chairman and Chief Executive Officer, to purchase all of EXCO's outstanding common shares for $20.50 per share in cash as well as acquisition proposals the Special Committee may receive from other interested parties and other strategic alternatives potentially available to the Company.
Announced Thursday, the company’s proved reserves at December 31, 2010 are estimated at 1.5 trillion cubic feet equivalent (Tcfe), and the company estimates its total net resource potential to be approximately 11.3 Tcfe. This does not include the previously announced Marcellus Shale acquisitions.
The company currently holds approximately 76,000 net acres prospective for the Haynesville and Bossier Shales. Pro forma for the closing of the two previously mentioned Marcellus Shale acquisitions and assuming BG Group elects to participate in these acquisitions, EXCO will hold approximately 152,000 net acres prospective for the Marcellus Shale.
As previously announced, EXCO's Board of Directors has established a Special Committee of independent directors consisting of Vincent J. Cebula and Mark F. Mulhern to consider Mr. Miller's offer and related matters.
At the direction of the Special Committee, the Company has adopted a shareholder rights plan with a one-year term. The shareholder rights plan is intended to enhance the ability of the Special Committee to conduct a thorough, deliberative process of exploring the Company's strategic alternatives.
The Company and the Special Committee have entered into an agreement with Douglas Miller containing customary confidentiality and standstill provisions. The standstill provisions prohibit Mr. Miller from, among other things, acquiring additional shares of EXCO common stock, entering into agreements regarding or soliciting proxies in connection with an acquisition of the Company and seeking to influence the management of the Company in connection with such an acquisition. In addition, the agreement prohibits Mr. Miller from entering into agreements preventing EXCO shareholders from voting in favor of or tendering their shares in other offers to acquire the Company or preventing financing sources from providing financing to other parties in connection with an acquisition of the Company. The agreement also limits the parties with whom Mr. Miller can enter into financing arrangements. The Special Committee expects to enter into similar agreements with other parties interested in exploring a possible acquisition of the Company.
Vincent Cebula said, "After carefully reviewing Mr. Miller's unsolicited proposal and other relevant factors with the assistance of our financial and legal advisors, the Special Committee determined it is in the best interests of shareholders to commence a comprehensive and independent review of strategic alternatives to maximize shareholder value. We intend to conduct a thorough process in which all interested parties will have an opportunity to participate on a level playing field. To that end, we believe it is in the best interests of EXCO shareholders to adopt a shareholder rights plan and require potential bidders to sign confidentiality and standstill agreements."
There can be no assurance that the Special Committee's exploration of strategic alternatives will result in a sale of the Company or any other transaction.