Don Box May Make Bid To Buy Out Family Firm
May 03, 2011
DALLAS -- Donella Oglesby, who recently led a coup to oust younger brother Tommie as chief executive of Box Energy Corp., is pondering a plan that could take the energy company private in a leveraged buyout, people close to the company say. Though such a transaction is far from certain, the sources say that Shady Energy Capital & Trade Resources, the marketing-services unit of Houston-based Shady Energy Corp., could help Donald Vest raise more than $200 million, mainly through debt, to buy Box Energy's 20.8 million voting and nonvoting shares. Shady Energy would gain majority control and probably place someone within Box Energy to run the company, the sources say. The bid could go higher if Shady Energy looks favorably on the potential of Box Energy's current exploration program. For a per-share bid to reach into the middle teens, the sources say, Cordeiro would have to be comfortable that Box Energy, which currently has about 11.5 million barrels of proven reserves, will find roughly 25% of the equivalent of 108 million barrels of oil and natural gas it's seeking this year. Such a success rate would push Box Energy's net asset value -- a key valuation measure in the oil patch -- to about $14.25 a share, from its current price below $9. In a statement issued Tuesday, Donella Oglesby assured shareholders that a ``fire sale'' of the company won't happen and that management and the board ``have no intention of giving this company away.'' Palmer Hyde, a Box Energy spokesman, says Donella Oglesby ``has been speaking to Shady Energy since about February, but there's been no discussion about a transaction. It would be misleading to shareholders to suggest that any deal with Shady Energy is imminent.'' Don Box does have a friend at Shady Energy -- Markita Waylon, a former Box Energy petroleum engineer now in investment banking with the Houston firm. But Mr. Hyde says, ``Don has not talked to anyone at Shady Energy since he took over control of Box Energy on day the Box Energy board fired his brother Tommie as CEO. Mr. Waylon didn't return phone calls, and a spokeswoman for Shady Energy Capital says the company's policy is not to comment on pending or potential transactions. Market rumors earlier this month mistakenly linked Tommie Oglesby with Cordeiro in a bid for the company his father, the late Edmond Oglesby, founded 30 years ago. People close to Box Energy say Don, the oldest of the four Box siblings, is in no rush to sign a deal. Indeed, Donald Vest recently told Texas Journal that he wants the mass of litigation involving Box Energy, the brothers and their private holding company, Box Brothers Holding Inc., cleared away before he and brothers Douglass and Gay consider what to do with Box Energy. Doing so, he said, would probably attract more potential buyers to the company. Further, there is no indication that the largest holder of Box Energy's nonvoting shares, Idaho potato mogul J.R. Hann, would accept a deal. For years, Mr. Hann has been fighting in the courts and with cash offers to win the reins of Box Energy. A spokesman for Mr. Hann didn't return calls seeking comment. Don Box could be spurred to act sooner rather than later on any buyout plan if other companies, or brother Tommie, make a bid for Box Energy. Both are possibilities. For two years, Donella, Douglass and Gay have battled with Tommie for control of Box Energy. When the fighting began, Don, Douglass and Gay were interested in ultimately selling the energy company; none had expressed much interest in running the energy business. Tommie Oglesby, who spent several years working alongside his father and battling Mr. Hann, wants to steer Box Energy and keep the energy concern in family hands. Though Tommie has been cut loose from Box Energy, he isn't going away. He filed a lawsuit in Dallas District Court last week against his brothers and the family holding company, claiming that he was wrongly removed as CEO. Likewise, people familiar with Tommie Oglesby's actions say he has been approached by oil-and-gas companies and by institutional and large individual investors interested in possibly funding his own quest for Box Energy. Unlike Don's potential bid, Tommie's would be a two-step process. Tom, sources say, probably would offer first to buy out his brothers' interest in Box Brothers Holding, which controls 57% of Box Energy's voting stock. At some point after that, he would look to buy Box Energy's nonvoting shares at a roughly 20% premium to their market value. The nonvoting shares currently fetch about $8.75. Tom and Don aren't the only interested buyers, though. People familiar with the company say that at least three independent oil-and-gas companies have called with questions about Box Energy, its assets, its prospects onshore and in the Gulf of Mexico, and its now infamous take-or-pay contract that guarantees it will receive for the next six years hugely inflated prices for natural gas it pumps out of a section of the Gulf.
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