Monday, August 29, 2011

Carlyle's Dynamic Offshore Resources to Go Public

The Carlyle Group and energy joint-venture partner Riverstone Holdings are ready to monetize Dynamic Offshore Resources.  The company commenced operations in 2008. The S-1 stated:

Dynamic Offshore Resources paid Riverstone a management fee of $1.1 million, $1.5 million and $1.5 million during the years ended December 31, 2009 and 2010 and the six months ended June 30, 2011, respectively.

Why the management fee acceleration for 2011?  Does it have anything to do with Riverstone and Carlyle's divorce?

How do investors stand to profit in the IPO?

Aggregate capital contributions to DOH were $174.0 million, $23.3 million and $28.6 million for the years ended December 31, 2008, 2009 and 2010, respectively. There were no capital contributions during the six months ended June 30, 2011.

DOH paid distributions to its limited partners in aggregate amounts of $33.0 million, $48.3 million and $12.5 million for the years ended December 31, 2009 and 2010 and the six months ended June 30, 2011, respectively.

That's $225 million in, $94 million out.  A $400 million IPO would send investors into the clear by $269 million.  That's easily a double over three years, with the potential for more if investors retain shares.

Carlyle pulled Stark's IPO due to a dire financial environment.  DOR's remains on track with an S-1 filing.  Carlyle's IPO documents are due to the SEC in September, possibly days away.  Beware the puffery.

Update 9-1-11:  Carlyle's China Forestry restarted logging operations and trading timber logs.  The company's stock is suspended while under investigation for accounting irregularities, relating to a $35 million embezzlement.  Will this resumption of operations help put this black mark behind Carlyle as their IPO marches forward?  Carlyle's DBD co-founders, want to cash in.  PEU salesmen par excellence....

Update 2-1-12:  Carlyle shelved the IPO and is selling Dynamic Offshore to SandRidge Energy for $680 million in cash and 74 million shares of SandRidge, currently trading at $8 per share.  It's nearly a four bagger for Carlyle when special dividends/distributions of $137 million are included.