You don’t hear about “blank check” companies that often any more, and the term “special purpose acquisition company” (SPAC) is history. So what if you were told that a company has filed for an initial public offering (IPO) as a blank check company — in the down and out energy sector?

KLR Energy Acquisition is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. The company said in its SEC filing that its team has not identified any business combination target and has not initiated any substantive discussions (directly or indirectly) with any business combination target.

Each proposed unit has an offering price of $10.00 and consists of one share of its Class A common stock and one warrant. Each warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $11.50 per share. The company intends to sell 13 million units, so it plans to raise up to $130 million. KLR’s sole book-running manager is listed as EarlyBirdCapital. The January 19 SEC filing said:

Our sponsor is KLR Energy Sponsor, LLC (which we refer to as our “sponsor” throughout this prospectus). The managing member of our sponsor is KLR Group Investments, LLC. Certain members of our management team are officers of KLR Group Investments, LLC.

Our sponsor has committed to purchase an aggregate of 7,937,500 warrants (or 8,790,625 warrants if the over-allotment option is exercised in full) at a price of $0.80 per warrant ($6,350,000 in the aggregate, or $7,032,500 if the over-allotment option is exercised in full) in a private placement that will close simultaneously with the closing of this offering. We refer to these warrants throughout this prospectus as the private placement warrants. Each private placement warrant is exercisable to purchase one share of our Class A common stock at $11.50 per share.

The name “Energy” pretty much gives away the sector that the company will be in. Also, its location in Houston probably is another tell of what the company’s focus will be. The filing’s “Proposed Business” section said:

While we may pursue an acquisition opportunity in any sector or geographical location, we intend to focus on the sector that complements our management team’s expertise in the exploration, exploitation, operation and development of crude oil and natural gas wells and related infrastructure, and to capitalize on the ability of our management team to source, screen, evaluate, negotiate, structure, close and manage acquisitions of attractive assets or businesses in the U.S. In the event that we find an opportunity in a different sector, or in a different geographic region, that is more compelling than the opportunities presented to us in to the U.S. oil and gas industry, we would pursue the opportunity in such other sector or such other geographic region. However, we have not established any particular parameters as to when we might turn our attention to opportunities outside of the U.S. oil and gas industry. We will seek to acquire one or more businesses with an aggregate enterprise value of approximately $400 million to $1 billion.

Management is also very energy focused here for the prior experience. The filing noted specifically that its management team is in a prime position to take advantage of opportunities within oil and gas and to create value for stockholders. They said:

Our management team has a long history in oil and gas, with a deep knowledge of the industry and a well-established network of relationships with public and private oil and gas companies, equity sponsors, lending institutions, family offices, attorneys and brokers, from which we expect to generate attractive acquisition opportunities.

KLR’s list of executive officers, along with a portion of their background, is included here as follows:

• Gary C. Hanna — has over 30 years of executive experience in the energy exploration and production and service sectors, with a primary focus in the mid-continent U.S. and Gulf of Mexico regions. From 2009 until June 2014, Mr. Hanna served as the Chief Executive Officer of EPL and was elected as a director of EPL in June 2010 and Chairman in 2013.
• Edward Kovalik — has been the Chief Executive Officer and Managing Partner of KLR Holdings and KLR Group, an investment bank specializing in the energy sector which he co-founded in the spring of 2012. Mr. Kovalik manages the firm and focuses on structuring bespoke financing solutions for the firm’s clients. Mr. Kovalik has over 16 years of experience as an investment banker. Prior to founding KLR Holdings, from 2002 until April 2012, Mr. Kovalik was Head of Capital Markets at Rodman & Renshaw, and headed Rodman’s Energy Investment Banking team.
• Tiffany J. (“T.J.”) Thom — has more than 20 years of financial and operational experience in the energy industry. Ms. Thom served in various capacities for EPL from October 2000 until June 2014. Ms. Thom served as Principal Financial Officer of EPL from July 2009, as Senior Vice President of Business Development from September 2009, as Chief Financial Officer from June 2010 and as Executive Vice President from January 2014, to June 2014. Ms. Thom helped lead EPL through its Chapter 11 bankruptcy proceeding which culminated in 2009.
• Gregory R. Dow — has served as the Chief Operating Officer and General Counsel of KLR Holdings since April 2012. Mr. Dow was General Counsel at Rodman & Renshaw Capital Group, Inc. from February 2008 until April 2012 and a Managing Director and the Deputy General Counsel at Cowen and Company, LLC from May 2004 until December 2007.

With all the energy assets that are coming up for sale or that are distressed due to financial needs after oil went under $50, then under $40 and then under $30, chances are very high that a lot of opportunists (including the largest oil and gas players) are going to pursue buying assets if they think they are being bought on the cheap.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.