Kinder Morgan Judge Urged to Block $44 Billion Buyout

Billionaire Richard Kinder should be blocked from pushing ahead with a $44 billion consolidation of his oil-pipeline empire until he wins the approval of two-thirds of investors in one of the partnerships he’s seeking to acquire, a lawyer argued.The voting rights of Kinder Morgan Energy Partners LP KMP unitholders, who put money in the pipeline company because of its tax-deferred structure, are improperly altered under Kinder’s offer to acquire the partnership, Nathaniel Orenstein, a lawyer for investors, told a judge. Investors also complain that they’ll face hefty tax bills as a result of the deal.Kinder Morgan’s arguments that only a simple majority of the partnership’s investors must approve the buyout stem from an “improper reading of the contract” governing the entity, Orenstein told Delaware Chancery Court Judge Travis Laster at a hearing today in Wilmington.Orenstein wants Laster to block a Nov. 20 shareholder vote until Kinder Morgan officials acknowledge they must win the support of a supermajority of the partnership’s investors. Laster said he’d rule later on the request to halt the vote.“We believe that plaintiffs’ assertion that the proposed transaction must be approved by a supermajority of KMP’s investors is factually and legally wrong,” Larry Pierce, a spokesman for Kinder Morgan, said in an e-mail after the hearing. The partnership agreement “clearly provides that the proposed transaction is required to be approved by a simple majority of all outstanding units.”Richard Kinder, 70, is consolidating his pipeline holdings to strengthen his company for growth as the U.S. shale drilling boom opens up $1.5 trillion in potential purchases and expansion. Shareholders in the parent company have been pressuring the billionaire to consolidate, cut costs and increase profits.

via Kinder Morgan Judge Urged to Block $44 Billion Buyout – Bloomberg.

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