Penn Virginia, Round 3, Sophistcated IPO

PENN VIRGINIA GP HOLDINGS LP (PVG-NYSE) priced its 6.3 million share IPO at $18.50 per share.  This is toward the lower-part of its price range estimated.  This is a complicated special purpose entity as the "company" is a partnership formed to own the general partner interest, all of the incentive distribution rights and approximately 41.1% of the limited partner interests in Penn Virginia Resource Partners, L.P. (PVR-NYSE).  This offering represents an approximate 16.4% limited partner interest in Penn Virginia GP Holdings.

Here is the use of the $107.1 million in proceeds: (i) approximately $102.5 million to purchase 416,444 PVR common units and 3,610,383 PVR Class B Units from PVR; (ii) approximately $2.1 million to make a capital contribution to PVR to maintain PVG’s 2% general partner interest; and (iii) the remainder of the proceeds for general partnership purposes. PVR is expected to use the $104.6 million of proceeds from the sale of units and general partner capital contribution to repay borrowings outstanding under its credit facility.

Lehman Brothers and UBS were the lead underwriters; and co-managers are listed as A.G.Edwards, RBC Capital, Wachovia, J.P.Morgan, BMO Capital, and Stifel Nicolaus.

To make matters even more complicated this "PVR" is a master limited partnership formed by Penn Virginia Corporation (PVA-NYSE). The Partnership manages coal properties and related assets and operates a midstream natural gas gathering and processing business.

At the end of November the company lowered its IPO price range of $19 to $21 down to a new $18 to $20 range, but raised the share count from 6 million to 6.3 million shares.

Jon C. Ogg
December 5, 2006