Bloomberg reported KKR, Crestview Partner and NGP Energy will likely turn over Samson Resources to a different set of private equity underwriters, debt holders SilverPoint Capital and Cerebus, beating out a third group of PEU's Blackstone, Oaktree, GSO Capital and Centerbridge Partners.
KKR led a group that bought Tulsa, Oklahoma-based Samson in a 2011 leveraged buyout valued at close to $7.9 billion including fees and reimbursed capital expenses. The sponsors, which included Crestview Partners and NGP Energy Capital Management, invested $4.1 billion of equity in the deal, according to company filings.
Where's The Carlyle Group, given co-founder David Rubenstein's repeatedly beating the drum on energy investing? I thought they might have a stake in Samson via Carlyle's deal with NGP, but that culminated after KKR and company bought out Samson. Carlyle's deal with NGP was announced at the end of 2012.
“They are a spectacular fit with us,” Youngkin said of NGP. “They’re primarily North American-focused and they’re investing right into the teeth of the big exploration and production developments over the last five to eight years -- shale, tight oil, all the big trends.”Surely they put some money to work before fall 2014 when oil prices plunged. It will be interesting to see how that works out, given Carlyle's bath on Vermillion, an energy commodities hedge fund that fell from over $2 billion to $50 million.
Back to Samson's current PEU owners facing a complete loss of equity: This is how Samson explained their 75% owners in its $2.25 billion debt prospectus in 2012:
Samson Aggregator L.P. is a limited partnership in which investment funds associated with Kohlberg Kravis Roberts & Co. L.P., including KKR Samson Investors L.P., and other co-investors, including Crestview Partners II, L.P. and Natural Gas Partners IX, L.P., own the limited partner interests. Samson Aggregator GP LLC is the general partner of Samson Aggregator L.P. KKR Samson Investors GP LLC is the general partner of KKR Samson Investors L.P. KKR Samson Investors L.P. is a limited partnership in which Samson Co-Invest I LP, Samson Co-Invest II LP, Samson Co-Invest III LP, KKR 2006 Fund (Samson) L.P., 8 North America Investor L.P., KKR Financial Holdings III, LLC, KKR Fund Holdings L.P., KKR Management Holdings L.P., KKR Partners III, L.P., KKR SA Investors Co-Invest Fund L.P., Lion Rock Energy Investor L.P. and OPERF Co-Investment LLC own the limited partner interests. Samson Co-Invest GP LLC is the general partner of each of Samson Co-Invest I LP, Samson Co-Invest II LP and Samson Co-Invest III LP. KKR Fund Holdings L.P. is the sole member of Samson Co-Invest GP LLC. KKR 2006 Fund (Samson) L.P. is the sole member of KKR Samson Investors GP LLC. KKR Associates 2006 L.P. is the general partner of KKR 2006 Fund (Samson) L.P. KKR 2006 GP LLC is the general partner of KKR Associates 2006 L.P. KKR Fund Holdings L.P. is the designated member of KKR 2006 GP LLC. KKR Fund Holdings GP Limited is a general partner of KKR Fund Holdings L.P. KKR Group Holdings L.P. is a general partner of KKR Fund Holdings L.P. and the sole shareholder of KKR Fund Holdings GP Limited. KKR Group Limited is the sole general partner of KKR Group Holdings L.P. KKR & Co. L.P. is the sole shareholder of KKR Group Limited. KKR Management LLC is the sole general partner of KKR & Co. L.P. Henry R. Kravis and George R. Roberts are the designated members of KKR Management LLC. In addition, Messrs. Kravis and Roberts have been designated as managers of KKR 2006 GP LLC by KKR Fund Holdings L.P. In such capacities, each of the aforementioned entities and individuals may be deemed to have voting and dispositive power with respect to the shares held by Samson Aggregator L.P. but each such entity and individual disclaims beneficial ownership of the shares held by Samson Aggregator L.P. The address of each of the entities listed in this footnote is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, New York 10019.
This group planned to delever Samson in line with debt covenants.
The modified debt to Adjusted EBITDA covenant requires a ratio of no more than 5.75x for the remainder of 2012 and 2013, 5.5x for 2014, 5.0x for 2015 and 4.5x for 2016.
Obviously that did not happen. Samson will go from the hands of PEU equity holders to PEU debt holders.
Update 8-16-15: WSJ reported "Meanwhile, the 44-year-old, formerly family-owned company, which had nearly enough cash on-hand to pay off its $695 million in debt before the buyout, was left with $3.6 billion in debt on its books after the deal."