Santa Fe Holders to Settle Suit Over Kinder Morgan Buy
Santa Fe Pacific Pipeline Partners unit holders have agreed to settle a suit over Kinder Morgan Energy Partners’ $1.49 billion purchase of the shipper of gasoline and jet-fuel in exchange for more information about the acquisition, according to court records.
In October 1997, Houston-based Kinder Morgan Energy offered cash, stock and assumed debt equaling $55.34 per partnership unit for Orange-based Santa Fe, which owned pipelines in six states.
Santa Fe unit holders quickly filed four suits in Delaware and California state courts arguing they weren’t getting enough for their stakes in the pipeline partnership.
Investors have agreed to drop their suits in Delaware Chancery Court in Wilmington in return for more details about the financial performance of both companies and how a fairness review of the purchase was conducted, court records show.
“While plaintiffs in the action believe that the claims asserted have merit, they also believe that the settlement provides substantial benefits to (investors),” lawyers for unit holders said in settlement papers.
If a Delaware judge approves the settlement in February, Santa Fe investors have agreed to drop their suit in Superior Court in Orange County.
Kinder Morgan officials said Tuesday that they believe they paid a fair price for Santa Fe, but agreed to the settlement to cut litigation costs. Lawyers representing unit holders are asking for $350,000 in fees and costs for bringing the case.
“We figured if we could settle the whole thing for $350,000, let’s get rid of it and move on,” said Joe Listengart, Kinder Morgan’s in-house attorney.
Santa Fe unit holders argued in their suits that Kinder Morgan had agreed to make an $85 million payment to Santa Fe’s controlling partners that was the equivalent of a “an unlawful payoff or kickback” for agreeing to the acquisition.
That payment created a conflict of interest for Santa Fe officials and left unit holders without anyone to protect their interests, the suits said.
