Copano Energy, L.L.C. (Nasdaq: CPNO) today announced that it has issued
$300 million of convertible preferred equity to an affiliate of TPG
Capital, a leading global private investment firm. The Series A
preferred units were priced at $29.05 per unit, a 10% premium to the
30-day volume weighted average price of Copano's common units as of July
19, 2010. The preferred units are entitled to in-kind quarterly
distributions of $0.72625 per unit for the first three years, and are
generally convertible into common units on a one-for-one basis after
July 21, 2013. Copano intends to use the proceeds from the private
placement to fund its Eagle Ford Shale expansion strategy and other
growth initiatives in Texas and Oklahoma.
In connection with the equity issuance, Copano has expanded its Board of
Directors from seven to eight members and has appointed Michael G.
MacDougall, a TPG partner, as a director. Mr. MacDougall will stand for
election at Copano's 2011 annual meeting of unitholders.
"We are pleased to enter into this strategic capital partnership with
TPG, a global private investment firm with significant financial
resources and a long-term investment perspective," said Bruce Northcutt,
Copano Energy's President and Chief Executive Officer. "TPG shares our
vision for the growth of our business. We are confident that, with TPG's
support of our Eagle Ford Shale expansion plans and other capital
initiatives, this transaction will further our objective to increase the
scale and stability of our cash flow."
Mr. Northcutt added, "As we execute our growth initiatives, the
structure of this investment provides us the financial flexibility to
continue building our common unit distribution coverage. We believe the
transaction advances our common unitholders' interests over the
near-term and long-term by strengthening our balance sheet and liquidity
with patient, long-term capital."
Mr. MacDougall stated, "Copano is a highly successful company with a
strong track record of profitable growth. We have worked closely with
the senior management team over the last year to understand the
company's attractive growth opportunities, including the expansion of
Copano's existing capacity to serve producers in the Eagle Ford Shale,
and we are excited to provide a long-term source of flexible capital to
accelerate development of these opportunities. We look forward to
partnering with Bruce Northcutt and his talented team for many years to
come."
Key Terms of the Private Placement
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The preferred units were priced at $29.05 per unit, a 10% premium to
the 30-day volume weighted average price of Copano's common units as
of July 19, 2010.
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The preferred units are entitled to quarterly distributions of
$0.72625 per unit in kind for three years. After three years, Copano
will have the option to pay quarterly distributions of $0.72625 per
unit in kind, cash distributions at the greater of $0.72625 per unit
or the distribution per common unit with respect to such quarter, or
some combination thereof as determined by Copano's Board. After six
years, the preferred units are entitled to quarterly cash
distributions at the greater of $0.72625 per unit or the distribution
per common unit with respect to such quarter unless Copano and TPG
agree that such distribution will be paid in kind.
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The preferred units will vote with the common units on all matters,
subject to certain limitations.
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Beginning July 21, 2013, the preferred units will be convertible into
common units on a one-for-one basis, except the number of preferred
units that may be converted is limited by the listing rules of the
NASDAQ Stock Market pending approval of Copano's unitholders. Copano
has agreed to hold a special meeting of its unitholders to consider
the convertibility of all of the preferred units into common units.
Unless and until the required unitholder vote is received, the
preferred units that are not convertible into common units under
applicable NASDAQ rules will instead be convertible into new Class B
non-voting common units of Copano, each of which is entitled to
receive 110% of the quarterly distribution paid per common unit.
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The full terms and conditions of the definitive agreements related to
the private placement will be filed with the Securitiesand Exchange
Commission ("SEC") and available on the SEC's website at www.sec.gov.
BofA Merrill Lynch acted as exclusive placement agent to Copano in
connection with the transaction. Morgan Stanley acted as exclusive
financial advisor to Copano.
Conference Call Information
Copano will host a conference call to discuss this announcement on
Thursday, July 22, 2010 at 9:00 a.m. Eastern Time (8:00 a.m. Central
Time). To participate in the call, dial (480) 629-9820 and ask for the
Copano call 10 minutes prior to the start time, or access it live over
the internet at www.copanoenergy.com
on the "Investor Overview" page of the "Investor Relations" section of
Copano's website.
A replay of the audio webcast will be available shortly after the call
on Copano's website. A telephonic replay will be available through July
29, 2010 by calling (303) 590-3030 and using the pass code 4333071#.
About Michael G. MacDougall
Mr. MacDougall is a partner of TPG Capital. Mr. MacDougall leads the
firm's global energy and natural resources investing efforts. Prior to
joining TPG Capital in 2002, Mr. MacDougall was a vice president in the
Principal Investment Area of the Merchant Banking Division of Goldman,
Sachs & Co., where he focused on private equity and mezzanine
investments. He is a director of Energy Future Holdings Corp. (formerly
TXU Corp.), Graphic Packaging Holding Company, Kraton Performance
Polymers, Inc., and a director of the general partner of Valerus
Compression Services, L.P. He also serves as the Chairman of the Board
of The Opportunity Network and is a member of the board of directors of
the Dwight School Foundation and Iselsboro Affordable Property. Mr.
MacDougall received his B.B.A., with highest honors, from the University
of Texas at Austin and received his M.B.A., with distinction, from
Harvard Business School.
About Copano
Houston-based Copano Energy, L.L.C. (NASDAQ: CPNO) is a midstream
natural gas company with operations in Oklahoma, Texas, Wyoming and
Louisiana. Its assets include approximately 6,400 miles of active
natural gas gathering and transmission pipelines, 250 miles of NGL
pipelines and eight natural gas processing plants, with over one Bcf per
day of combined processing capacity. For more information please visit www.copanoenergy.com.
About TPG Capital
TPG Capital is the global buyout group of TPG, a leading private
investment firm founded in 1992, with approximately $48 billion of
assets under management and offices in San Francisco, Beijing, Fort
Worth, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New
York, Paris, Shanghai, Singapore and Tokyo. TPG Capital has extensive
experience with global public and private investments executed through
leveraged buyouts, recapitalizations, spinouts, growth investments,
joint ventures and restructurings. Prior investments by the firm in the
energy sector include Belden & Blake Corporation, Denbury Resources,
Energy Future Holdings (formerly TXU Corp.), Texas Genco Holdings, and
Valerus Compression Services, L.P. Other notable TPG investments include
Alltel, Beringer Wine Estates, Burger King, Continental Airlines,
Harrah's Entertainment, IMS Health, J. Crew, Kraton Performance
Polymers, Neiman Marcus, and Sabre Holdings.
Neither the Series A convertible preferred units nor the common units
into which they are convertible have been registered under the
Securities Act of 1933, as amended, and they may not be offered or sold
in the United States absent a registration statement or exemption from
registration. This notice is issued pursuant to Rule 135c under the
Securities Act of 1933 and shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would
be unlawful prior to the registration or qualification under the
securities laws of any such state.
This press release includes "forward-looking statements," as defined by
the Securities and Exchange Commission. Statements that address
activities, or events that Copano believes will or may occur in the
future are forward-looking statements. Such statements include those
relating to the intended use of proceeds of the private placement and
whether the private placement will provide increased financial
flexibility and long-term liquidity to Copano. These statements are
based on management's experience and perception of historical trends,
current conditions, expected future developments and other factors
management believes are reasonable. Important factors that could cause
actual results to differ materially from those in the forward-looking
statements include the following risks and uncertainties, many of which
are beyond Copano's control: The volatility of prices and market demand
for natural gas and natural gas liquids; Copano's ability to continue to
obtain new sources of natural gas supply and retain its key customers;
the impact on volumes and resulting cash flow of technological, economic
and other uncertainties inherent in estimating future production and
producers' ability to drill and successfully complete and attach new
natural gas supplies and the availability of downstream transportation
systems and other facilities for natural gas and NGLs; higher
construction costs or project delays due to inflation, limited
availability of required resources, or the effects of environmental,
legal or other uncertainties; general economic conditions; the effects
of government regulations and policies; and other financial, operational
and legal risks and uncertainties detailed from time to time in Copano's
filings with the Securities and Exchange Commission.
