The energy focused entity, Silver Run Acquisition Corporation has closed a deal to purchase the independent oil and natural gas company, Centennial Resources Production (CRP). According to a press release published at Riverstonellc.com on October 11, 2016 Silver Run Acquisition Corporation has acquired 89% controlling stake in the energy outfit using funds sought from its affiliate, NGP Energy Capital Management, LLC. Proceeds received from the sale of Silver Run Class A Common Stock by investors, including Riverstone and Capital World Investors that is managed by Fidelity Management and Research Company were also used to close the deal.
Riverstone purchased about $800 million worth of stock valued at $10 per share. The amount includes $175 million from the Riverstone Energy Ltd division. NGP was established in 1988 as a premier private equity firm focused on natural resources. The company boasts an impressive $17 billion in cumulative equity commitments earmarked for strategic investment in the energy sector. Riverstone Holdings LLC, on the other hand, boasts an investment capital of over $34 billion that targets buyout and capital investments in various sectors including exploration and production, renewable energy development and power production. The firm was established back in 2000 by David Leushen and Perre Lapeyre.
The board of directors of both companies approved the deal on October 7, 2016. The new board of directors has also been expanded to include eight members from the previous four. The members include Mark Papa, Pierre Lapeyre, Robert Tichio and Baldwin Bandtel among others. Mr. Tony Weber was seconded by NGP to be the new director of Silver Run BOD. Following the acquisition, Silver Run, which trades on NASDAQ as CDEV and CDEVW will now be known as the Centennial Resource Development, Inc. The investment made by Riverstone and its affiliates now makes the company the majority owner of Silver Run with a stake of over 50%; NGP retains 11% ownership interest in CRP.
The deal also involved amending the credit agreement by CRP to include several clauses, including:
i. Increasing the rate of borrowing from a base of $140 million to $200 million
ii. Reflecting the payment and all term loans in full
iii. Raising the interest rate to LIBOR plus ranging from (2.25 percent to 3.25 percent)
At the close of the transaction, CRP had cash in hand amounting to $100 million and no outstanding debt. Citigroup Global Markets stood as the financial advisor of Riverstone and private placement agent of Silver Run.