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BreitBurn Energy unitholder Quicksilver disapproves of shelf filing
By Angela McDaniels
Tacoma, Wash., June 19 - BreitBurn Energy Partners LP unitholder Quicksilver Resources Inc. is "extremely concerned" by the $500 million shelf registration for equity and debt securities recently filed by the company.
Quicksilver made its comment in a Thursday letter to BreitBurn Energy's general partner, BreitBurn GP, LLC. The letter was included in a schedule 13D/A filing with the Securities and Exchange Commission on Friday.
Quicksilver believes the board should not consider the sale of equity securities at BreitBurn's currently depressed unit prices and is fearful of what BreitBurn might do with the proceeds of any sale made under the shelf.
"We further believe that the incurrence of additional debt would allow the board to potentially pursue further inappropriate and expensive acquisitions like the Provident transaction, which left the partnership with an overleveraged balance sheet and ultimately resulted in the suspension of quarterly distributions," the letter said.
BreitBurn bought out Provident Energy Trust's stake in the company in June 2008 for $345 million. It acquired BreitBurn GP in the process.
Quicksilver also questioned whether the "real motivation" for a potential equity offering has "more to do with diluting existing unitholders in order to further entrench the existing board" given the board's adoption of a poison pill in December 2008 and some amendments made to its organization documents in June 2008, which "severely impaired the rights of unitholders."
BreitBurn is a Los Angeles-based oil and gas limited partnership.
Quicksilver is a Fort Worth-based natural gas and crude oil exploration and production company. It holds 40.45% of BreitBurn's common units.
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