Hiland companies chairman proposes going-private transaction

By Lisa Kerner

Charlotte, N.C., Jan. 15 - Hiland Partners GP, LLC and Hiland Partners GP Holdings, LLC chairman Harold Hamm is offering to buy the outstanding units of each of the Hiland companies not already owned by him or his affiliates.

In making the offer, Hamm said he believes that Hiland Partners will experience a decrease in future cash flow and will need "substantial" new equity capital to remain in compliance with its debt covenants.

"Obtaining such equity capital in the current environment on acceptable terms does not appear feasible and would be significantly dilutive to current unitholders. Accordingly, I am of the view that a going-private transaction is the best strategic alternative currently available to the partnership to maximize unitholder value during a time of significant market and industry turmoil," Hamm said in letters to the boards of directors.

Under the proposed going-private transaction, Hiland Partners, LP unitholders would receive $9.50 in cash per common unit and Hiland Holdings GP, LP unitholders would receive $3.20 in cash per common unit, a Hiland news release said.

The offer is not contingent on debt financing, according to Hamm.

Hiland Partners GP is the general partner of Hiland Partners, LP, and Hiland Partners GP Holdings is the general partner of Hiland Holdings GP.

Hamm would remain chairman and would keep the partnership's senior management team in place following the transaction's close.

The separate conflicts committees of the board of directors of Hiland Partners GP and Hiland Partners GP Holdings will review the proposals with their own advisers, Hiland said.

Hamm, either individually or together with his affiliates or the Hamm family trusts, beneficially owns 100% of Hiland Partners GP Holdings and approximately 61% of the outstanding common units of Hiland Holdings GP.

Enid, Okla.-based Hiland provides natural gas gathering and processing services and air compression and water injection services for oil and gas secondary recovery operations.

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