Vanguard Natural Resources To Buy LRR Energy For $539 Mln - Quick Facts

(RTTNews) - Vanguard Natural Resources LLC (VNR) and LRR Energy L.P. (LRE) announced that they have entered into a Purchase Agreement and Plan of Merger pursuant to which a subsidiary of Vanguard will merge into LRR Energy, L.P. and, at the same time, Vanguard will acquire LRE GP, LLC, the general partner of LRR Energy, L.P. for total consideration of $251 million in Vanguard common units and the assumption of LRE's net debt of $288 million.

As a result of the transaction, LRR Energy and its general partner will become wholly owned subsidiaries of Vanguard.

The transaction, which has been approved by the boards of directors of both companies, including the Conflicts Committee of the Board of Directors of LRR Energy, will be a tax-free unit-for-unit transaction with an exchange ratio of 0.55 Vanguard common units per LRE common unit.

In addition, Vanguard will acquire all of the limited liability company interests in LRE GP, LLC in exchange for 12,320 Vanguard common units. The consideration to be received by LRE unitholders is valued at $8.93 per LRR Energy common unit based on Vanguard's closing price as of April 20, 2015, representing a 13% premium to LRR Energy's closing price on April 20, 2015, and a 19% premium to LRR Energy's ten day volume weighted average price.

Vanguard and LRR Energy expect the transaction to close in the third quarter of 2015.

The merger is subject to customary closing conditions, including the approval of the LRR Energy unitholders. Affiliates of Lime Rock Resources, LRE's largest unitholder (owning over 30 percent of its outstanding equity), have agreed to support and vote in favor of the transaction.

Upon the closing of the transaction, LRR Energy will be terminating the existing management services agreement with Lime Rock Management LP and Lime Rock Resources Operating Company, Inc. Offset by incremental corporate hires, Vanguard expects to generate significant general and administrative expense savings.

Vanguard expects that the transaction will be immediately accretive to distributable cash flow per unit while also lowering Vanguard's pro forma debt leverage.