NEW YORK--(BUSINESS WIRE)--Feb. 15, 2013--
Harbinger Group Inc. (NYSE: HRG) (“HGI” or
the “Company”) announced today that its
wholly-owned subsidiary, HGI Energy Holdings, LLC, successfully closed,
effective February 14, 2013, on its previously announced joint venture
with EXCO Resources, Inc. (“EXCO”; NYSE: XCO) to create a private oil
and gas partnership (the “Partnership”).
Pursuant to the transaction, the Partnership purchased and will operate
EXCO’s conventional oil and natural gas assets in West Texas, including
and above the Canyon Sand formation, as well as in the Danville, Waskom,
Holly and Vernon fields in East Texas and North Louisiana. A definitive
agreement to enter into the Partnership was announced on November 5,
2012.
“This joint venture with EXCO fits well within our strategy of
identifying and acquiring businesses with untapped value that we can
support and grow by providing access to long-term capital and partnering
with high-quality, proven management teams,” said Philip A. Falcone, HGI
Chairman and Chief Executive Officer. “With this transaction, we are
further diversifying HGI by establishing a new Energy operating business
that will complement our existing, highly-successful Consumer Products
and Insurance & Financial Services businesses. We will continue to look
for strategic opportunities to increase our footprint in the important
Energy sector by acquiring companies with long-term growth potential.”
“The Partnership is expected to provide stable dividends to HGI from
long-life, low geological-risk conventional oil and gas assets that
generate steady production and reliable cash flows, while at the same
time retaining ample cash flow to invest in its reserve base, maintain
production and position itself for further growth,” said HGI President
Omar Asali. “Additionally, as a result of the July 1, 2012 effective
date of the transaction, we have already received an economic benefit of
approximately $24.2 million. We appreciate the efforts of the EXCO team
in facilitating an orderly transaction and are excited about working
with such an established and well-known operator.”
Under the terms of the agreement announced on November 5, the
Partnership acquired the oil and gas assets from EXCO for approximately
$725 million of total consideration, which represents HGI’s effective
equity interest of $372.5 million, $127.5 million in oil and gas
properties and related assets contributed by EXCO, in each case before
giving effect to preliminary closing adjustments described below, and
approximately $225 million of bank debt. The net cash contributed from
HGI was $348.3 million reflecting the effect of preliminary closing
adjustments and the economic benefits related to the July 1, 2012
effective date.
HGI has approximately a 75% equity interest in the Partnership. The
Partnership will be governed by a Board of Directors of the general
partner consisting of two EXCO directors and two HGI directors. EXCO
will continue to operate the assets as contract operator of the
properties and provide services pursuant to contract operating and
administrative service agreements with the Partnership.
HGI and EXCO intend to opportunistically add incremental cash flow to
the Partnership through the acquisition of other mature, conventional
assets over time. As the first step in executing this business strategy,
effective as of February 14, 2013, the Partnership entered into an
agreement to acquire certain conventional oil and natural gas assets in
the Danville, Waskom and Holly fields in East Texas and North Louisiana,
including and above the Cotton Valley formation, from an affiliate of BG
Group plc for $132.5 million, subject to customary closing adjustments.
These properties represent an incremental working interest in properties
that EXCO contributed to the Partnership. This transaction is expected
to close in March 2013. The Partnership intends to fund the acquisition
using its revolving credit agreement.
HGI’s financial advisor for this transaction is Citigroup and its legal
advisors were Andrews Kurth LLP and Paul, Weiss, Rifkind, Wharton &
Garrison LLP.
The foregoing summary does not purport to be a complete description of
the transaction and related agreements. Interested parties should read
HGI’s other announcements and public filings regarding this transaction
and related agreements by reviewing HGI’s filings with the Securities
and Exchange Commission (www.sec.gov).
About Harbinger Group Inc.
Harbinger Group Inc. (“HGI”; NYSE: HRG) is
a diversified holding company. HGI’s principal operations are conducted
through subsidiaries that offer life insurance and annuity products;
branded consumer products such as batteries, personal care products,
small household appliances, pet supplies, and home and garden pest
control products; and energy assets. HGI is principally focused on
acquiring controlling and other equity stakes in businesses across a
diversified range of industries and growing its existing businesses. In
addition to HGI’s intention to acquire controlling equity interests, HGI
may also from time to time make investments in debt instruments and
acquire minority equity interests in companies. Harbinger Group Inc. is
headquartered in New York and traded on the New York Stock Exchange
under the symbol HRG. For more information on HGI, visit: harbingergroupinc.com.
About EXCO Resources, Inc.
EXCO Resources, Inc. is an oil and natural gas acquisition,
exploitation, development and production company headquartered in
Dallas, Texas with principal operations in East Texas, North Louisiana,
Appalachia and West Texas.
Forward Looking Statements
“Safe Harbor” Statement Under the Private Securities Litigation Reform
Act of 1995: Some of the statements contained in the Press Release and
certain oral statements made by our representatives from time to time
regarding the matters discussed herein are or may be forward-looking
statements. Such forward-looking statements are based upon management’s
current expectations that are subject to risks and uncertainties that
could cause actual results, events and developments to differ materially
from those set forth in or implied by such forward-looking statements.
These statements and other forward-looking statements made from
time-to-time by the Company and its representatives, including the
expected closing of the transaction with the BG seller and the expected
ability of the Partnership to make distributions, are based upon certain
assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,”
“projects,” “may” or similar expressions. Factors that could cause
actual results, events and developments to differ include, without
limitation, the ability of the Company’s subsidiaries (including, the
Partnership) to generate sufficient net income and cash flows to make
upstream cash distributions, capital market conditions, that the Company
may not be successful in identifying any suitable future acquisition
opportunities, the risks that may affect the performance of the
operating subsidiaries of the Company and those factors listed under the
caption “Risk Factors” in the Company’s most recent Annual Report on
Form 10-K and Quarterly Report on Form 10-Q, filed with the Securities
and Exchange Commission. All forward-looking statements described herein
are qualified by these cautionary statements and there can be no
assurance that the actual results, events or developments referenced
herein will occur or be realized. The Company does not undertake any
obligation to update or revise forward-looking statements to reflect
changed assumptions, the occurrence of unanticipated events or changes
to future operation results.
Source: Harbinger Group Inc.
Investors:
Harbinger Group Inc.
Tara Glenn, Investor
Relations
212-906-8560
or
Media:
Sard
Verbinnen & Co
Jamie Tully/Michael Henson
212-687-8080
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