Nov 5 Harbinger Group Inc, a holding
company controlled by billionaire hedge fund manager Philip
Falcone, said on Monday it will form a joint venture with Exco
Resources Inc, paying $372.5 million for a 75 percent
stake in Exco's conventional oil and natural gas assets.
Exco will contribute $172.5 million worth of oil and gas
properties to the venture, Harbinger said.
The venture will have $225 million of bank debt.
The deal will allow Harbinger to diversify its sources of
revenue. The holding company makes acquisitions in undervalued
firms and owns Spectrum Brands Holdings, a leading supplier of
batteries, pet supplies and small household appliances like the
George Foreman grill.
"We believe this deal will create long-term value by
anchoring our new energy operating business with
a long-duration gas asset at a time when natural gas is trading
near historically low levels," Harbinger President Omar Asali
said in a statement.
Oil and gas companies have been spending billions of dollars
in recent years to build positions in so-called unconventional
assets -- properties where oil and gas are locked in underground
rock formations and require special drilling techniques like
Exco generally focuses on its unconventional assets,
including properties in the Haynesville shale in West Texas, the
Permian Basin in West Texas and New Mexico, and Appalachia's
Last year Exco CEO Douglas Miller teamed up with investors
including oil man T. Boone Pickens to try to take Exco private,
but the company's directors scuttled the $4 billion bid.
Falcone, once one of the hedge fund industry's most
prominent managers thanks to a successful bet against the
overheated housing market, has faced significant troubles this
year. His largest portfolio company, LightSquared, has filed for
bankruptcy, and regulators have filed civil charges against
Falcone and his Harbinger Capital Partners fund, saying he
manipulated the market of certain securities, giving
preferential treatment to certain clients and borrowing cash
from his fund to pay personal expenses.