Vanguard Natural Resources’ ad hoc equity committee filed with the U.S. Bankruptcy Court an objection to the Debtor’s disclosure statement and request for valuation hearing.
The equity committee asserts, “Simultaneously with its formation, the Equity Committee retained Huron Consulting Services to conduct a formal valuation of the Debtors….Huron believes that the Debtors’ reorganization value is in the range of $2.1 billion to $2.6 billion with a midpoint of $2.35 billion (the ‘Huron Valuation’). By comparison, the Disclosure Statement states that the Plan is premised on an enterprise value of the Debtors of only $1.625 billion….Without the Debtors explanation of the valuation methodologies used and the inputs for those valuation methods, including what discount rates were used, what prices were used, and what other factors were taken into account, it is impossible for a hypothetical investor to make an informed decision about how the Debtors arrived at the $1.625 billion figure. In addition, a hypothetical investor would want to know: (i) what specifically changed between the Debtors’ January 2017 Management Presentation and the execution of the RSA; and (ii) how the Debtors are going to explain the differences between the Debtors’ value and the substantially higher Huron Valuation. What also cannot be reconciled is Management’s justification for negotiating the Management Incentive Plan (‘MIP’), which gives them 10% of the equity post-confirmation. The Debtors have not disclosed how and why the MIP was negotiated and why this benefit to Management is not discriminatory.”
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