Plains Resources Inc. will sell a portion of its interest in Plains All American Pipeline LP to an investor group for approximately $149.3 million, and take on James C. Flores as chairman and chief executive officer. Greg Armstrong, who currently holds those positions with the E&P company, will continue as chairman and CEO of Plains All American Pipeline. "Upon the closing of this transaction, Plains Resources will achieve the two primary objectives of its strategic restructuring process," says Armstrong. The goal was to increase the value-creating ability of the two businesses and unlock existing value. "The creation of two distinct, driven and entrepreneurial management teams will allow for the aggressive execution of the business plans of both entities." Other Plains Resources executives who will join him full-time at Plains All American include president Harry Pefanis, executive vice president and chief financial officer Phil Kramer, vice president and general counsel Tim Moore and treasurer Al Swanson. Flores recently retired as vice chairman of Ocean Energy Inc. , Houston, earlier this year. He co-founded Flores & Rucks Inc. , a Louisiana independent, in the late 1980s that was renamed Ocean Energy. After two large mergers, the company now has a market capitalization of approximately $3 billion. Flores is part of the investor group that is buying 5 million, or approximately 50%, of the pipeline partnership's subordinated units. Other participants include Kayne Anderson Capital Advisors , EnCap Investments LLC and Plains All American management. Plains Resources will receive approximately $104 million in cash and 23,108 shares of its Series F preferred stock that is held by Kayne and EnCap, with an imputed value of approximately $45.2 million. Plains Resources also agreed to make available up to a 4% aggregate ownership interest in Plains All American's general partner to certain purchasers on identical terms. Petrie Parkman & Co. advised Plains Resources in the deal. The transaction will reduce Plains Resources' stake in Plains All American to 39% percent from 54%. It also will greatly simplify Plains Resources' corporate and capital structure, while substantially improving its liquidity and financial strength, according to Armstrong. Plains Resources will no longer consolidate the balance sheet and income statement of Plains All American, but will account for its remaining minority investment under the equity method. Flores says Plains Resources' 239-million-bbl. reserve base, with an inherent organic growth profile and strong capital structure, provides an excellent growth platform. The sale deconsolidates Plains All American and strengthens Plains Resources' financial position significantly, according to Flores. "Following the transaction, the company will have no bank debt, $275 million of subordinated debt and cash of approximately $67.0 million. This strong balance sheet will allow for external growth when attractive opportunities arise or the repurchase of additional shares of the company's common stock." Flores plans to purchase 1 million Plains Resources common shares from Kayne, to avoid dilution. Four members of Plains Resources' management-executive vice president Bill Egg and vice presidents Jim Hester, Cindy Feeback and Susie Peters-will remain with the company.