?The co-chief executives of the MLP BreitBurn Energy Partners LP, Los Angeles, (Nasdaq: BBEP) Randall H. Breitenbach and Halbert S. Washburn, acting outside of the partnership, have joined with private-equity firms Metalmark Capital Partners and Greenhill Capital Partners to acquire the remaining 96% interest in BreitBurn Energy Co. LP from Calgary-based Provident Energy Trust (Toronto: PVE.UN; NYSE: PVX) for US$305 million.
The Breitburn management team will pay US$295 million in cash and Provident will take back US$10 million in a note. The sale represents an exit from the U.S. by Provident.
The privately held Breitburn Energy Co. (BEC) holds producing and nonproducing assets in Los Angeles, Orange and Santa Barbara counties in California. Breitenbach and Washburn currently hold a small interest in the company.
The BreitBurn MLP in June acquired all of Provident’s limited partner and indirect general partner interests in the MLP for US$345 million. The interests in BEC were not included in that transaction. Both deals resulted from Provident’s decision to pursue a potential sale of its BreitBurn interests, driven primarily by the Canadian government’s resolution in October 2006 to impose growth restrictions on Canadian energy trusts and implement a tax on income trust distributions effective in 2011.
Breitenbach says, “Members of our management team have managed these properties since before the IPO of the partnership in 2006 and, by acquiring Provident’s interests, we expect to be able to ensure that there will be no immediate change to the relationship between the partnership and BEC, and therefore no negative impact on the partnership’s near-term financial results.”
Provident president and chief executive Tom Buchanan says the two deals ?resulting from the strategic review process will allow Provident to focus on its core E&P and midstream businesses. “Provident has realized a substantial gain on the BreitBurn investment and this sale further strengthens our already strong balance sheet,” he says.
The transaction was expected to close in August. Provident will use proceeds to pay debt. Morgan Stanley is advisor to Provident. ST
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