HOUSTON--()--Black Stone Minerals Company, L.P., one of the largest privately held royalty and fee mineral owners in the country, announced today that investors in its various institutional funds and co-investment vehicles have exchanged interests valued at over $1.1 billion for partnership units in Black Stone. The company also acquired for cash interests valued at $295 million bringing the total to $1.4 billion, making this transaction the largest in its history.
“We believe this transaction is a winner for all sides”
The exchange offer, which closed at year end, was part of a multi-stage process that included raising equity to provide additional resources for future acquisitions and the purchase of fund interests from those desiring liquidity. By its first closing on December 31st, the company had received $235 million in new equity commitments.
“We are extremely gratified by the strong response to the exchange offer and the equity round,” said Thomas L. Carter, Jr., Black Stone’s Chairman and Chief Executive, “and we are delighted to welcome all those who participated as new partners.” He added: “Going forward, we will now have a much simpler corporate structure, greatly increased cash flow and the critical mass to move quickly on significant mineral acquisitions without putting undue pressure on our balance sheet.”
Over the past twenty years, Black Stone has expanded its mineral and royalty ownership through a series of acquisitions initially financed internally and then through three funds comprised of institutional and private investors, along with numerous co-investment vehicles—a total of 11 funds. Investors in these funds, along with current Black Stone partners, management and employees, participated in the exchange offer and equity offering. Under the terms of the offering, Black Stone was valued in excess of $3.7 billion on a consolidated basis, including the exchanged interests and the new equity.
“We believe this transaction is a winner for all sides,” said Hallie A. Vanderhider, President and Chief Operating Officer. “Whether it was through an exchange or the purchase of new equity, our investors now own units in a large, diversified collection of oil and gas assets with an attractive current yield and upside potential. What’s more, those who wished either to sell their interests or remain in their existing investment vehicles have been able to do so.”
In structuring the transaction, Vanderhider said that Black Stone had worked closely with a group of its larger fund and co-investors on matters believed to be common to all the limited partners. She said this group was known as the Specified Investor Group, or SIG, and was represented by Vinson & Elkins LLP on legal matters and by Tudor Pickering Holt & Co. as financial advisor. “All of us at the company are grateful for the important input and constructive role the SIG played over these many months in helping this deal come to fruition,” Vanderhider said.
Black Stone was represented by the law firm of Fulbright & Jaworski L.L.P. and assisted by the consulting firm of Stout Risius Ross, Inc.’s Houston office (formerly Howard Frazier Barker Elliott, Inc. (HFBE)) for valuation purposes. No third party agents assisted with raising the equity funds.
Headquartered in Houston, Texas, Black Stone Minerals traces it roots to the timber and lumber operation founded in the late 19th century by W.T. Carter. Today, the company owns approximately 18 million acres of producing and non-producing fee minerals and royalty with revenue ownership in more than 50,000 wells spread across 41 states including most every major producing basin in the onshore United States. Although once a small family partnership, Black Stone is now a professionally managed company with more than 100 employees.