Bloomberg News

Kravis’s Hometown Trip to Tulsa Bolsters KKR’s Buyout of Samson

November 25, 2011

Nov. 24 (Bloomberg) -- It took a visit by Henry Kravis to his hometown of Tulsa, Oklahoma, a trip to Japan, and one of KKR & Co.’s biggest deal teams to help seal the $7.2 billion takeover of Samson Investment Co.

Kravis, 67, traveled to Tulsa in July to meet Stacy Schusterman, chief executive officer of family-owned Samson, said people familiar with the talks. The trip eased her concern about outsiders moving the company’s home base and laid the foundation for the biggest oil-and-gas buyout in history, the people said.

Kravis and co-founder George Roberts enlisted more than 20 deal makers, geologists and engineers to review the business and help obtain financing, said the people, who declined to be identified as the negotiations were private. Kravis pitched Itochu Corp. in Tokyo on becoming an investor, said the people.

“We needed to reach around the globe to build the partnership,” Marc Lipschultz, KKR’s global head of energy and infrastructure, said in an interview with Bloomberg Television yesterday after the deal was announced. “To evaluate all that and ultimately bring together this partnership, we needed a lot of people.”

Jefferies Group Inc. began helping Samson seek possible buyers earlier this year and approached KKR about an offer, said one of the people. By October, they had started exclusive talks, the person said. To win over Schusterman, KKR pledged to keep Samson’s headquarters in Tulsa, the city of Kravis’s birth and where his brother still resides, people said.

“For Samson, Tulsa is home,” Kravis said in a statement, where he identified himself as a native of the city. “It has always been a Tulsa company, and it will remain a Tulsa company.”

Bidding Group

Kristi Huller, a spokeswoman for KKR, declined to comment. Dennis Neill, a spokesman for Samson, didn’t immediately return a telephone call or e-mail seeking comment.

KKR and its group, which includes Itochu, Natural Gas Partners and Crestview Partners, have lined up $4.5 billion in committed financing from 11 lenders led by JPMorgan Chase & Co., said a person with knowledge of the matter.

Bank of America Corp., Barclays Plc, Bank of Montreal, Citigroup Inc., Credit Suisse Group AG, Royal Bank of Canada, Tudor, Pickering, Holt & Co. and Wells Fargo & Co. provided financial advice to KKR, NGP and Crestview. Mizuho and Evercore Partners advised Itochu.

The deal gives KKR and its co-investors all of Samson save for the onshore Gulf Coast and offshore deep-water Gulf of Mexico assets, according to a statement yesterday. Samson, founded four decades ago by Schusterman’s father, owns interests in more than 10,000 wells, including 4,000 operated in the U.S.

RPM’s Help

“This company has vast existing resources and enormous resource potential,” said Lipschultz.

To evaluate Samson’s assets, Kravis and Roberts drafted employees from RPM Energy LLC, a Houston-based oil-and-gas producer created by KKR, said one of the people. The co-founders have already made oil-and-gas industry investments such as a midstream joint venture with El Paso Corp. and the acquisition of a stake in Colonial Pipeline Co. last year.

“Both have roots in the energy industry -- both of their families come from the energy industry,” said Lipschultz.

--With assistance from David Wethe in Houston and Jessica Resnick-Ault in New York. Editors: Julie Alnwick, Larry Edelman

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Zachary R. Mider in New York at zmider1@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net


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