-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUEayiEqQ4kb7Njv3yrZ03eSFHAFLjObQQUtG+MiOrMAtkmz3Gn99QWL9Z/lOC/y WDJakCFt34TN9JrrUZVzOQ== 0000902664-06-001343.txt : 20060503 0000902664-06-001343.hdr.sgml : 20060503 20060503161905 ACCESSION NUMBER: 0000902664-06-001343 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20060503 DATE AS OF CHANGE: 20060503 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: JANA PARTNERS LLC CENTRAL INDEX KEY: 0001159159 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: JANA PARTNERS LLC STREET 2: 536 PACIFIC AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 2125935955 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HOUSTON EXPLORATION CO CENTRAL INDEX KEY: 0001015293 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 222674487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-48519 FILM NUMBER: 06804120 BUSINESS ADDRESS: STREET 1: 1100 LOUISIANA STREET STREET 2: SUITE 2000 CITY: HOUSTON STATE: TX ZIP: 77002-5219 BUSINESS PHONE: 713-830-6800 MAIL ADDRESS: STREET 1: 1100 LOUISIANA STREET STREET 2: SUITE 2000 CITY: HOUSTON STATE: TX ZIP: 77002-5219 SC 13D/A 1 sc13da.txt THE HOUSTON EXPLORATION COMPANY UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------- SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* THE HOUSTON EXPLORATION COMPANY - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 Par Value - -------------------------------------------------------------------------------- (Title of Class of Securities) 442120101 - -------------------------------------------------------------------------------- (CUSIP Number) Marc Weingarten, Esq. Schulte Roth & Zabel LLP 919 Third Avenue New York, New York 10022 (212) 756-2000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) May 3, 2006 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 5 Pages) - -------------------------- * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------ -------------------- CUSIP NO. 442120101 SCHEDULE 13D PAGE 2 OF 5 PAGES - ------------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) JANA PARTNERS LLC - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER 2,617,700 --------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY -0- OWNED BY --------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 2,617,700 --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 2,617,700 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.0% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IA - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! - ------------------------------ -------------------- CUSIP NO. 442120101 SCHEDULE 13D PAGE 3 OF 5 PAGES - ------------------------------ -------------------- The Schedule 13D filed on February 21, 2006 by Jana Partners LLC, a Delaware limited liability company (the "Reporting Person"), relating to the shares ("Shares") of common stock, $0.01 par value, of The Houston Exploration Company (the "Issuer"), as previously amended by Amendment No. 1 to the Schedule 13D filed on April 17, 2006, Amendment No. 2 to the Schedule 13D filed on April 24, 2006 and Amendment No. 3 to the Schedule 13D filed on April 28, 2006, is hereby further amended as set forth below by this Amendment No. 4 to the Schedule 13D. Item 4. Purpose of Transaction. Item 4 of the Schedule 13D is hereby amended by the addition of the following: Following the preliminary results of the Issuer's 2006 annual meeting of shareholders, on May 3, 2006, the Reporting Person issued a press release and a letter to the Board requesting that the Board follow the example of other companies who have faced substantial withhold votes and take immediate responsive action to the demands of its shareholders. A copy of the press release with the letter to the Board is attached hereto as Exhibit E and is incorporated herein by reference. Item 7. MATERIAL TO BE FILED AS EXHIBITS Item 7 of the Schedule 13D is hereby amended by the addition of the following: 3. Exhibit E - Press release with the letter to the Board dated May 3, 2006. - ------------------------------ -------------------- CUSIP NO. 442120101 SCHEDULE 13D PAGE 5 OF 5 PAGES - ------------------------------ -------------------- SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: May 3, 2006 JANA PARTNERS LLC By: /s/ Barry Rosenstein ------------------------ Name: Barry Rosenstein Title: Managing Partner By: /s/ Gary Claar -------------------------- Name: Gary Claar Title: Managing Director EX-99 2 ex99.txt THE HOUSTON EXPLORATION COMPANY FOR IMMEDIATE RELEASE For more information contact JANA Partners LLC at (212) 692-7696 JANA PARTNERS LLC CALLS ON HOUSTON EXPLORATION COMPANY'S BOARD TO RESPOND TO SHAREHOLDER DEMANDS EVIDENCED BY LARGE "WITHHOLD" VOTE AT ANNUAL MEETING NEW YORK, NEW YORK - MAY 3, 2006 - JANA Partners LLC ("JANA") today called upon the Board of Directors of The Houston Exploration Company ("Houston Exploration" or the "Company") (NYSE - THX) to recognize the overwhelming shareholder support for JANA's efforts to force the Board to take value-maximizing action evidenced by the substantial number of "withhold" votes cast at the Company's annual meeting of shareholders last week. In a letter sent today to the Company's Board of Directors, JANA Managing Partner Barry Rosenstein pointed out that the already sizable 30% withhold vote cast by shareholders last week would have been even larger had the vote reflected the current shareholder base. Rosenstein pointed out that as of the record date for last week's annual meeting, JANA held for voting purposes only slightly more than 1% of the Company's stock (holding for regulatory reasons the remainder of its stake in options which have since been exercised), as opposed to its current 9% voting ownership, meaning the withhold vote would have been closer to 40% today. Factoring in the considerable turnover in the Company's shares between the March 9 record date for voting at the annual meeting and today, Rosenstein estimated that today the withhold campaign would have generated support from the holders of more than 50% of the Company's shares. "In short, any comfort the Board takes in receiving a majority of the votes cast at the Annual Meeting should be abandoned," Rosenstein stated. Mr. Rosenstein also pointed out that the size of the withhold vote was made even more notable by the fact that JANA publicly called on shareholders to withhold their votes only five days before the annual meeting and had been without the benefit of either a shareholder list for contacting shareholders directly or the ability to request support from proxy advisor Institutional Shareholder Services. Rosenstein encouraged the Board to follow the example of other companies which responded to sizeable withhold votes by taking immediate action responsive to shareholder demands. Rosenstein noted that the resignation of former Disney Chairman and CEO Michael Eisner as chairman of that company's board following an approximately 40% withhold vote was one such example, and pointed to board responses to withhold campaigns at Federated Department Stores, Inc., Safeway Inc. and Career Education Corporation as well. "The Board has to date indicated that it feels free to effectively disregard pressure to maximize shareholder value," Mr. Rosenstein stated in today's letter. "But even the most intransigent board must at some point answer to its shareholders, and last week's withhold vote makes clear that time for Houston Exploration's Board to do so has run out." "You should consider last week's vote the beginning of a process, the outcome of which will be that shareholders will have a Board which aggressively pursues maximum value for them," Mr. Rosenstein concluded. "The only question now is the means by which this will occur. You can do the right thing for shareholders now by instituting a substantial share repurchase as we have described, or you can continue to ignore shareholder demands and face an unhindered campaign next year in which shareholders will be free to replace you. We encourage you to avoid further wasteful delay and respond to your shareholders' wishes now." BACKGROUND JANA Partners LLC, a Delaware limited liability company, is a hedge fund with assets exceeding $5 billion with offices in New York and San Francisco and is the beneficial owner of approximately 9% of the outstanding shares of Houston Exploration. JANA holds the Company's common stock in various accounts under its management and control. JANA has publicly called upon the Board to put the proceeds of recent asset sales to work for shareholders through a substantial share repurchase rather than pursuing new acquisitions or repaying debt, which JANA has said will deliver far less value for shareholders. Following what JANA has called the Board's failure to seriously consider its analysis, JANA encouraged shareholders last week to join it in withholding their votes for the Company's directors at last Friday's annual meeting. *** 2 ATTACHMENT: FULL TEXT OF MAY 3, 2006 LETTER FROM JANA PARTNERS LLC TO ALL SHAREHOLDERS OF THE HOUSTON EXPLORATION COMPANY May 3, 2006 The Board of Directors The Houston Exploration Company 1100 Louisiana Street, Suite 2000 Houston, Texas 77002 Attention: William G. Hargett Chairman, CEO & President VIA FACSIMILE AND OVERNIGHT DELIVERY Gentlemen, JANA Partners LLC ("we" or "us"), the beneficial owner of approximately 9% of the shares of The Houston Exploration Company ("Houston Exploration" or the "Company"), discussed with management last month our belief that the proceeds of the recent Gulf of Mexico asset sale, together with the Company's underleveraged balance sheet, should be used to fund a prompt repurchase of a substantial portion of the Company's shares. As we have said repeatedly, this will clearly create more value than either new acquisitions or debt repayments. Following the Board's refusal to even feign serious consideration of our analysis, last week we announced that we would withhold our votes for the Board at the Company's annual shareholders meeting (the "Annual Meeting") and urged other shareholders to join us. The results could not have been clearer. Notwithstanding that our "campaign" started only five days before the Annual Meeting, the preliminary returns show that approximately 30% of the votes cast were to withhold authority for the reelection of seven incumbent directors and substantially more to withhold for an eighth director, in contrast to only approximately 4-7% of the votes cast at last year's annual meeting. Furthermore, these results hardly begin to tell the full story. What makes the results even more overwhelming is that on the record date for the Annual Meeting, we held for voting purposes only slightly more than 1% of the stock,(1) meaning that the vote would have been closer to 40% had we been able to vote the shares we hold outright today. Also, given the substantial turnover in the Company's ownership base between the record date for the Annual Meeting and today, which we assume has been comprised largely of shareholders supporting our efforts, you would be quite safe in assuming the - ------------------------ (1) On the record date the majority of our shares were held through options given that we had not yet received the necessary regulatory clearance to purchase additional shares outright. These options have since been exercised. 3 vote today would be well above 50%. In short, any comfort the Board takes in receiving a majority of the votes cast at the Annual Meeting should be abandoned. The strength of this message is also highlighted by the fact that such a sizable percentage was assembled despite the numerous factors working in the Board's favor. Because the Gulf of Mexico asset sale issue arose only shortly before the Annual Meeting, we were deprived both of the time to conduct a genuine campaign and of many of the tools typically available in such undertakings. We were without a shareholder list, meaning that we were able to contact only a small number of shareholders directly. Also, by last week it was too late to seek the support of Institutional Shareholder Services, the nation's leading proxy voting advisory service. We therefore strongly suggest that you follow the example of other companies who have faced a substantial withhold vote and have responded by taking actions in accordance with their shareholders' wishes. A prominent example was the response to the approximately 40% withhold votes cast at Walt Disney's annual meeting in 2005, which led Michael Eisner to step down as Chairman of the Board. Other notable examples of companies recognizing sizable withhold votes as wake-up calls and responding to their shareholders' wishes include Federated Department Stores, Inc., Safeway Inc. and Career Education Corporation. The Board has to date indicated that it feels free to effectively disregard pressure to maximize shareholder value. But even the most intransigent board must at some point answer to its shareholders, and last week's withhold vote makes clear that time for Houston Exploration's Board to do so has run out. You should consider last week's vote the beginning of a process, the outcome of which will be that shareholders will have a Board which aggressively pursues maximum value for them. The only question now is the means by which this will occur. You can do the right thing for shareholders now by instituting a substantial share repurchase as we have described, or you can continue to ignore shareholder demands and face an unhindered campaign next year in which shareholders will be free to replace you. We encourage you to avoid further wasteful delay and respond to your shareholders' wishes now. You may contact us at (415) 989-7770 should you wish to discuss this matter further. Sincerely, Barry Rosenstein JANA Partners LLC Managing Partner BR/MW/CP 4 -----END PRIVACY-ENHANCED MESSAGE-----