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Hayward-Rothschild vehicle defends founder payout
June 13, 2011 / 12:55 PM / 6 years ago

Hayward-Rothschild vehicle defends founder payout

LONDON, June 13 (Reuters) - Vallares, the soon-to-be-listed acquisition vehicle established by former BP (BP.L) boss Tony Hayward and financier Nat Rothschild, has defended the payout its founders will receive if the project is successful.

“Some very large numbers have been used for the conversion value of the B-Shares in press reports over the past couple of days, and in practice such a value is highly unlikely,” said Rodney Chase, chairman of Vallares. Vallares plans to raise 1 billion pounds ($1.6 billion) in a flotation on the London Stock Exchange in the coming weeks and to then engineer a reverse takeover of a yet-to-be-identified emerging market oil and gas company.

The founders are investing 100 million pounds in the venture, including 15 million in “B” shares that will convert to 6.67 percent of the entire group, providing the founders manage to seal an acquisition within two years.

Hayward said he planned to create a company big enough to be in the FTSE 100 index of the biggest companies, suggesting a market capital of at least 3 billion pounds.

This would suggest the founders would receive a stake worth 200 million pounds ($326 million) in return for their B shares. But the payout could be much higher.

Vallares said it would seek out targets worth 3 billion to 8 billion pounds, suggesting, in the absence of the target having debt, that the listed group could be worth up to 9 billion pounds.

In this scenario, the founders would net a stake worth up to 600 million pounds ($977 million).

If the deal increased the value of the acquired assets plus the investors’ capital, as the founders intend it to, the payout would be larger.

Furthermore, the founders will also have “C” shares that entitle them to 15 percent of any gains above a 25 percent hurdle rate over four years.

However, Chase said since the acquisition was unlikely to be at the upper end of the indicated range, the remuneration the founders will receive was likely to be well below the maximum level.

Special acquisition vehicles often charge large fees or seek a chunk of any investors’ upside they create. (Reporting by Tom Bergin; Editing by Will Waterman) ($1=.6140 Pound)

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