Rich Kinder gets richer in Company buy-back scheme after Enron trial concludes.

Rich Kinder Group to Buy Kinder Morgan for $13 Bln

Richard Kinder, co-founder, chairman and CEO of Kinder Morgan Inc., operator of about 43,000 miles of pipelines in the U.S. and Canada, is leading a group that will buy the company for $100 a share or about $13.4 billion an 18.5 % up on the $84.41 closing price of Kinder Morgan shares on May 26. In the funny munny ways these deals are counted that makes a a total value of US$22Mn for the whole deal - The single largest management buyout ever and the 2nd largest private equity deal since KKR's took in JR Nabisco.

The group includes a fund run by Goldman Sachs Group Inc., insurer American International Group Inc. and buyout firms Carlyle Group and Riverstone Holdings LLC, according to a May 28 letter to Houston-based Kinder Morgan's board released today by the company. Co-founder Bill Morgan, like Rich is an ex Enron staffer, his son Mike Morgan and director Fayez Sarofim are among the investors.

Houston money manager Fayez Sarofim, a Kinder Morgan director, is the second-largest KMI shareholder among individuals. He controls 2.3 million shares, or a stake of 1.7 percent.

Of those holdings, Sarofim as of March 1 had sole voting and investment power over approximately 1.55 million shares. That personal stake in Kinder Morgan as of Monday would be valued at about $143 million.

Sarofim and Kinder have served on the KMI board together since the early days of the company in 1999.

Meanwhile, more than 560,000 shares are held in investment advisory accounts managed by Houston-based Fayez Sarofim & Co., which Sarofim founded in 1958, according to a KMI proxy statement filed Monday April 3rd with the U.S. Securities and Exchange Commission.

The proxy statement also lists Rich Kinder's 2005 salary and bonus, a package that equals only $1. That continues Kinder's annual tradition of taking a mere dollar in salary plus bonuses.

Simmons gives OK

Kinder and his partners are respected as smart investors, and the proposed purchase indicates the bidders believe the bull market in oil and gas will continue, said Matthew Simmons, chairman of investment bank Simmons & Co. International, based in Houston.

``If they thought that we were at the peak, I think they'd be selling out to somebody not in the business,'' Simmons said today in a phone interview from Rockport, Maine. ``This should actually cause some of these smug people who are short oil to say, `God, could we be wrong?"

OPEC meets in a few days amongst talk of a production cut back, as Iran troubles don't die down, Nigerian field problems exist and Equatorial Guinea coup threatens.

There have been US$262.9 Bn. in takeovers announced in the energy industry so far this year, according to data compiled by Bloomberg, up 65 % from $159.5 billion in the same period last year.

Last month, Washington-based Carlyle and New York-based Riverstone raised $3.8 billion to purchase power, oil and energy companies. Carlyle and Riverstone have made 19 investments in energy companies since 2000 and their Carlyle/Riverstone Global Energy & Power Fund II generated annual returns of 78 percent as of Sept. 30.

Goldman Sachs raised an $8.5 billion buyout fund in April last year and put more than $2.5 billion of the firm's money into it. The new fund's aim is to double or triple its invested capital, Richard Friedman, head of Goldman's merchant banking division, said in an interview last year.

Alberta Oil sands distribution figures in deal.

Kinder Morgan Energy Partners will be offered the opportunity to buy the Trans Mountain pipeline system in British Columbia from Kinder Morgan if the transaction is completed, Kinder Morgan President Park Shaper said. The system carries oil to the West Coast from oil-sands projects in Alberta. (see Saturday, May 20 2006 Canada will double oil production by 2020.)

The company received the system when it acquired Vancouver- based Terasen Corp. last year for $3.1 billion. Kinder Morgan's Canadian operations include a natural-gas utility in Vancouver and a stake in a pipeline network that carries oil to the U.S. West and Midwest from Alberta.

Deal expected to take 6 months.

The buyers of Kinder Morgan Inc. would assume $14.5 billion in debt. The company said it received a letter from Goldman Sachs that it is ``highly confident'' that it can raise the debt to complete the transaction. The transaction is expected to close by year end if it proceeds, Kinder said.

See Friday, May 26 2006 Richard Kinder the Enron CEO - Apres moi le deluge ?


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