0000928475-05-000054.txt : 20120628
0000928475-05-000054.hdr.sgml : 20120628
20050303132523
ACCESSION NUMBER: 0000928475-05-000054
CONFORMED SUBMISSION TYPE: SC 13D
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20050303
DATE AS OF CHANGE: 20050303
GROUP MEMBERS: KERR
SUBJECT COMPANY:
COMPANY DATA:
COMPANY CONFORMED NAME: KERR MCGEE CORP /DE
CENTRAL INDEX KEY: 0001141185
STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311]
IRS NUMBER: 731612389
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
SEC ACT: 1934 Act
SEC FILE NUMBER: 005-78007
FILM NUMBER: 05657099
BUSINESS ADDRESS:
STREET 1: KERR-MCGEE CENTER
STREET 2: 123 ROBERT S. KERR AVENUE
CITY: OKLAHOMA CITY
STATE: OK
ZIP: 73102
BUSINESS PHONE: 4052701313
MAIL ADDRESS:
STREET 1: KERR-MCGEE CENTER
STREET 2: P.O. BOX 25861
CITY: OKLAHOMA CITY
STATE: OK
ZIP: 73125
FORMER COMPANY:
FORMER CONFORMED NAME: KERR MCGEE HOLDCO INC
DATE OF NAME CHANGE: 20010525
FORMER COMPANY:
FORMER CONFORMED NAME: KING HOLDCO INC
DATE OF NAME CHANGE: 20010523
FILED BY:
COMPANY DATA:
COMPANY CONFORMED NAME: ICAHN CARL C ET AL
CENTRAL INDEX KEY: 0000921669
STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000]
IRS NUMBER: 000000000
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: SC 13D
BUSINESS ADDRESS:
STREET 1: C/O ICAHN ASSOCIATES CORP
STREET 2: 767 FIFTH AVE #4700
CITY: NEW YORK
STATE: NY
ZIP: 10153
BUSINESS PHONE: 2127024300
MAIL ADDRESS:
STREET 1: C/O ICAHN ASSOCIATES CORP
STREET 2: 767 FIFTH AVE #4700
CITY: NEW YORK
STATE: NY
ZIP: 10153
SC 13D
1
kerrmcgee13dfinal.txt
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.__)*
Kerr-McGee Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
492386107
(CUSIP Number)
Marc Weitzen, Esq.
General Counsel
Icahn Associates Corp. & affiliated companies
767 Fifth Avenue, 47th Floor
New York, New York 10153
(212) 702-4388
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
February 28, 2005
(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 " 240.13d-1(e), 240.13d-1(f) or 240.13d-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.
*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).
SCHEDULE 13D
CUSIP No. 492386107
1 NAME OF REPORTING PERSON
High River Limited Partnership
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
1,421,200
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
1,421,200
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,421,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.94%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Hopper Investments LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
1,421,200
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
1,421,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,421,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.94%
14 TYPE OF REPORTING PERSON*
OO
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Barberry Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
1,421,200
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
1,421,200
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,421,200
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.94%
14 TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Icahn Partners Master Fund L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
2,901,212
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
2,901,212
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,901,212
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.91%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Icahn Offshore L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
2,901,212
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
2,901,212
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,901,212
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.91%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
CCI Offshore LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
2,901,212
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
2,901,212
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,901,212
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.91%
14 TYPE OF REPORTING PERSON*
OO
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Icahn Partners L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
2,783,588
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
2,783,588
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,783,588
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.84%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
Icahn Onshore L.P.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
2,783,588
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
2,783,588
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,783,588
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.84%
14 TYPE OF REPORTING PERSON*
PN
SCHEDULE 13D
CUSIP No. 492386107
NAME OF REPORTING PERSON
CCI Onshore LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
2,783,588
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
2,783,588
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,783,588
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.84%
14 TYPE OF REPORTING PERSON*
OO
SCHEDULE 13D
CUSIP No. 492386107
1 NAME OF REPORTING PERSON
Carl C. Icahn
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /X/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
7,106,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
7,106,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
7,106,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.68%
14 TYPE OF REPORTING PERSON*
IN
SCHEDULE 13D
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par value $1.00 per
share (the "Shares"), of Kerr-McGee Corporation, a Delaware corporation (the
"Issuer"). The address of the principal executive offices of the Issuer is
Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, OK 73102.
Item 2. Identity and Background
The persons filing this statement are Barberry Corp., a Delaware
corporation ("Barberry"), Hopper Investments, LLC, a Delaware limited liability
company, High River Limited Partnership, a Delaware limited partnership ("High
River"), Icahn Partners Master Fund L.P., a Cayman Islands limited partnership
("Icahn Master"), Icahn Offshore L.P., a Delaware limited partnership ("Icahn
Offshore"), CCI Offshore LLC, a Delaware limited liability company ("CCI
Offshore"), Icahn Partners L.P., a Delaware limited partnership ("Icahn
Partners"), Icahn Onshore L.P., a Delaware limited partnership ("Icahn
Onshore"), CCI Onshore LLC, a Delaware limited liability company (" CCI
Onshore") and Carl C. Icahn, a citizen of the United States of America
(collectively, the "Reporting Persons"). The principal business address and the
address of the principal office of the Reporting Persons is c/o Icahn Associates
Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153, except that (i)
the principal business address of each of Barberry, Hopper and High River is 100
South Bedford Road, Mount Kisco, New York 10549 and (ii) the principal business
address of Icahn Master is c/o Walkers SPV Limited, P.O. Box 908GT, 87 Mary
Street, George Town, Grand Cayman, Cayman Islands.
Barberry is the sole member of Hopper, which is the general partner of
High River. CCI Offshore is the general partner of Icahn Offshore, which is the
general partner of Icahn Master. CCI Onshore is the general partner of Icahn
Onshore, which is the general partner of Icahn Partners. Each of Barberry, CCI
Offshore and CCI Onshore is 100 percent owned by Carl C. Icahn. As such, Mr.
Icahn is in a position directly and indirectly to determine the investment and
voting decisions made by the Reporting Persons.
Each of Icahn Master, Icahn Partners, Barberry and High River is
primarily engaged in the business of investing in securities. Hopper is
primarily engaged in the business of serving as the general partner of High
River. Icahn Offshore and Icahn Onshore are primarily engaged in the business of
serving as the general partner of Icahn Master and Icahn Partners, respectively.
CCI Offshore and CCI Onshore are primarily engaged in the business of serving as
the general partner of Icahn Offshore and Icahn Onshore, respectively. Carl C.
Icahn's present principal occupation or employment is (i) owning all of the
interest in CCI Onshore and CCI Offshore, through which Mr. Icahn indirectly
directs and manages the investments of Icahn Master and Icahn Partners and (ii)
acting as President and a director of Starfire Holding Corporation ("Starfire"),
and as the Chairman of the Board and a director of various of Starfire's
subsidiaries. Starfire is primarily engaged in the business of investing in and
holding securities of various entities.
The name, citizenship, present principal occupation or employment and
business address of each director and executive officer of High River and
Barberry, are set forth in Schedule A attached hereto.
Except as set forth on Schedule B, no member of any of the Reporting
Persons nor any manager or executive officer of the Reporting Persons, has,
during the past five years, (a) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (b) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting, or mandating
activities subject to, Federal or State securities laws or a finding of any
violation with respect to such laws.
Any disclosures made herein with respect to persons or entities other
than the Reporting Persons are made on information and belief after making
inquiry to the appropriate party. By virtue of the transactions described in
Item 4, the Reporting Persons may be deemed to be a "group" with the Jana
Parties (as hereinafter defined) within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Act"). Although the Reporting
Persons do not affirm that such a group has been formed, these disclosures are
being made to ensure compliance with the Act. The Reporting Persons expressly
disclaim beneficial ownership of securities held by any person or entity other
than the Reporting Persons. The securities reported herein as being beneficially
owned by the Reporting Persons do not include any securities held by the Jana
Parties or any other person or entity other than the Reporting Persons.
Item 3. Source and Amount of Funds or Other Consideration
The aggregate purchase price of the 7,106,000 Shares purchased by High
River, Icahn Master and Icahn Partners, collectively, was $509,002,173.34
(including commissions and, with respect to Shares acquired upon exercise of
options, including option purchase prices). The source of funding for the
purchase of these Shares was the respective general working capital of the
purchasers, and, with respect to High River, pursuant to margin accounts in the
regular course of business.
Item 4. Purpose of Transaction
The Reporting Persons acquired the Shares believing them to be
undervalued. The Reporting Persons reserve the right to acquire additional
Shares at any time and from time to time in the open market or otherwise. In
addition, the Reporting Persons may dispose of all or any portion of the Shares
at any time or from time to time in the open market or otherwise.
Representatives of the Reporting Persons have had discussions with
Barry Rosenstein and other representatives of Jana Partners LLC regarding the
Issuer and the Shares. Barry Rosenstein is a managing member of Jana Partners
LLC, which serves as the investment manager of Jana Master Fund Ltd. (Barry
Rosenstein, Jana Partners LLC and Jana Master Fund Ltd. are sometimes
hereinafter referred to collectively as the "Jana Parties").
On February 14, 2005, the Reporting Persons acquired an option (the
"Jana Option") to purchase, in the aggregate, 250,000 Shares from Jana Master
Fund Ltd. Pursuant to the exercise of the Jana Option on March 1, 2005, Icahn
Partners purchased 96,000 Shares, Icahn Master purchased 104,000 Shares and High
River purchased 50,000 Shares. The Jana Option had an exercise price of $60.00
per Share and an expiration date of August 14, 2005. A copy of the Jana Option
is filed herewith as an exhibit and incorporated herein by reference, and any
descriptions herein of the Jana Option are qualified in their entirety by
reference to the Jana Option.
On March 2, 2005, the Reporting Persons delivered a letter to the
Issuer (the "Notification Letter"), notifying the Issuer that the Reporting
Persons intend to appear at the 2005 annual meeting of the Issuer's
stockholders, in person or by proxy, to nominate and seek to elect Carl Icahn
and Barry Rosenstein as members of the board of directors of the Issuer. A copy
of the Notification Letter is filed herewith as an exhibit and incorporated
herein by reference, and any descriptions herein of the Notification Letter are
qualified in their entirety by reference to the Notification Letter.
On March 3, 2005, the Reporting Persons and Jana Partners LLC sent a
letter to the Issuer (the "Proposed Transaction Letter"), regarding a proposed
transaction to increase shareholder value. A copy of the Proposed Transaction
Letter is filed herewith as an exhibit and incorporated herein by reference, and
any descriptions herein of the Proposed Transaction Letter are qualified in
their entirety by reference to the Proposed Transaction Letter.
As a result of the foregoing, the Reporting Persons may be deemed to be
members of a "group" with the Jana Parties within the meaning of Section
13(d)(3) of the Act. However, the Reporting Persons disclaim membership in any
such group for all purposes and disclaim ownership of any Shares held by the
Jana Parties, and neither the fact of this filing or anything contained herein
shall be deemed to be an admission by any of the Reporting Persons that they are
members of such a group.
SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS
RELATED TO SOLICITATION OF PROXIES BY MR. ICAHN AND HIS AFFILIATES FROM THE
STOCKHOLDERS OF KERR-MCGEE CORPORATION FOR USE AT ITS ANNUAL MEETING (A) WHEN
AND IF THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION,
INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN ANY SUCH PROXY
SOLICITATION, AND (B) WHEN AND IF COMPLETED, A DEFINITIVE PROXY STATEMENT AND A
FORM OF PROXY WHICH WILL BE MAILED TO STOCKHOLDERS OF KERR-MCGEE CORPORATION AND
WILL BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION'S
WEBSITE AT HTTP://WWW.SEC.GOV.
Item 5. Interest in Securities of the Issuer
(a) The Reporting Persons may be deemed to beneficially own, in the
aggregate, 7,106,000 Shares, representing approximately 4.68% of the Issuer's
outstanding Shares (based upon the 151,692,157 Shares stated to be outstanding
as of October 31, 2004 by the Issuer in the Issuer's Form 10-Q for the period
ending September 30, 2004, filed with the Securities and Exchange Commission on
November 9, 2004).
(b) High River has sole voting power and sole dispositive power with
regard to 1,421,200 Shares. Each of Barberry, Hopper and Carl C. Icahn has
shared voting power and shared dispositive power with regard to such Shares.
Icahn Master has sole voting power and sole dispositive power with regard to
2,901,212 Shares. Each of Icahn Offshore, CCI Offshore and Carl C. Icahn has
shared voting power and shared dispositive power with regard to such Shares.
Icahn Partners has sole voting power and sole dispositive power with regard to
2,783,588 Shares. Each of Icahn Onshore, CCI Onshore and Carl C. Icahn has
shared voting power and shared dispositive power with regard to such Shares.
Each of Hopper, Barberry and Mr. Icahn, by virtue of their
relationships to High River (as disclosed in Item 2), may be deemed to
beneficially own (as that term is defined in Rule 13d-3 under the Act) the
Shares which High River directly beneficially owns. Each of Hopper, Barberry and
Mr. Icahn disclaims beneficial ownership of such Shares for all other purposes.
Each of Icahn Offshore, CCI Offshore and Mr. Icahn, by virtue of their
relationships to Icahn Master (as disclosed in Item 2), may be deemed to
beneficially own (as that term is defined in Rule 13d-3 under the Act) the
Shares which Icahn Master directly beneficially owns. Each of Icahn Offshore,
CCI Offshore and Mr. Icahn disclaims beneficial ownership of such Shares for all
other purposes. Each of Icahn Onshore, CCI Onshore and Mr. Icahn, by virtue of
their relationships to Icahn Partners (as disclosed in Item 2), may be deemed to
beneficially own (as that term is defined in Rule 13d-3 under the Act) the
Shares which Icahn Partners directly beneficially owns. Each of Icahn Onshore,
CCI Onshore and Mr. Icahn disclaims beneficial ownership of such Shares for all
other purposes.
The Reporting Persons may be deemed to be members of a "group" with the
Jana Parties within the meaning of Section 13(d)(3) of the Act. As such, the
Reporting Persons may be deemed to beneficially own Shares owned by the Jana
Parties. Upon information and belief, the Jana Parties, as of the close of
business on March 2, 2005, may be deemed to beneficially own 4,501,300 Shares in
the aggregate. Accordingly, the 11,607,300 Shares that may be deemed to be
beneficially owned in the aggregate by the Reporting Persons and the Jana
Parties, as of the close of business on March 2, 2005, constitutes approximately
7.65% of the Shares outstanding. However, the Reporting Persons disclaim
membership in any such group for all purposes and disclaim ownership of any
Shares owned by the Jana Parties, and neither the fact of this filing or
anything contained herein shall be deemed to be an admission by any of the
Reporting Persons that they are members of such a group.
(c) The following table sets forth all transactions with respect to
Shares effected during the past sixty (60) days by any of the Reporting Persons.
Other than the purchase of Shares upon exercise of the Jana Option, all such
transactions were effected in the open market, and the table includes
commissions paid in per share prices (and, with respect to Shares acquired upon
exercise of options, the table includes option purchase prices paid in per share
prices).
------------------ -------------- ------------------- -------------------
No. of Shares Price
Name Date Purchased Per Share
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/24/05 45,000 60.1318
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/25/05 45,000 60.3339
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/26/05 67,000 59.2852
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/26/05 12,000 60.5174
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/28/05 60,000 60.5075
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 01/31/05 10,000 60.8514
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/03/05 30,000 62.5149
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/04/05 27,000 62.9524
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/24/05 118,000* 66.1770
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/24/05 30,000* 65.8539
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/24/05 25,400* 64.0752
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/24/05 20,000* 65.9420
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/24/05 300,000 76.4535
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 02/28/05 125,000 77.1996
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 03/01/05 50,000* 66.0000
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 03/01/05 238,600 77.1092
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 03/01/05 110,000 76.7300
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
High River 03/02/05 108,200 77.7004
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/24/05 91,800 60.1318
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/25/05 91,800 60.3339
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/26/05 136,680 59.2852
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/26/05 24,480 60.5174
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/28/05 122,400 60.5075
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 01/31/05 20,400 60.8514
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/03/05 61,200 62.5149
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/04/05 55,080 62.9524
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/24/05 240,700* 66.2058
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/24/05 61,200* 65.8823
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/24/05 51,800* 64.1035
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/24/05 40,800* 65.9700
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/24/05 612,000 76.4535
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 02/28/05 255,000 77.1996
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 03/01/05 104,000* 66.0000
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 03/01/05 486,744 77.1092
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 03/01/05 224,400 76.7300
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Master 03/02/05 220,728 77.7004
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/24/05 88,200 60.1318
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/25/05 88,200 60.3339
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/26/05 131,320 59.2852
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/26/05 23,520 60.5174
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/28/05 117,600 60.5075
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 01/31/05 19,600 60.8514
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/03/05 58,800 62.5149
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/04/05 52,920 62.9524
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/24/05 231,300* 66.2062
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/24/05 58,800* 65.8823
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/24/05 49,800* 64.1035
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/24/05 39,200* 65.9700
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/24/05 588,000 76.4535
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 02/28/05 245,000 77.1996
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 03/01/05 96,000* 66.0000
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 03/01/05 467,656 77.1092
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 03/01/05 215,600 76.7300
------------------ -------------- ------------------- -------------------
------------------ -------------- ------------------- -------------------
Icahn Partners 03/02/05 212,072 77.7004
------------------ -------------- ------------------- -------------------
* Shares acquired upon exercise of options
(including, where applicable, the Jana Option)
Item 6. Contracts, Arrangements, Understandings or Relationship
with Respect to Securities of the Issuer
On March 1, 2005, the Reporting Persons exercised the Jana Option more
fully described in Item 4. A copy of the Jana Option is filed herewith as an
exhibit and incorporated herein by reference, and any descriptions herein of the
Jana Option are qualified in their entirety by reference to the Jana Option.
On March 2, 2005, the Reporting Persons sent to the Issuer the
Notification Letter more fully described in Item 4. A copy of the Notification
Letter is filed herewith as an exhibit and incorporated herein by reference, and
any descriptions herein of the Notification Letter are qualified in their
entirety by reference to the Notification Letter.
On March 3, 2005, the Reporting Persons and Jana Partners LLC sent to
the Issuer the Proposed Transaction Letter more fully described in Item 4. A
copy of the Proposed Transaction Letter is filed herewith as an exhibit and
incorporated herein by reference, and any descriptions herein of the Proposed
Transaction Letter are qualified in their entirety by reference to the Proposed
Transaction Letter.
As a result of the foregoing, the Reporting Persons may be deemed to be
members of a "group" with the Jana Parties within the meaning of Section
13(d)(3) of the Act. However, the Reporting Persons disclaim membership in any
such group for all purposes and disclaim ownership of any Shares held by the
Jana Parties, and neither the fact of this filing or anything contained herein
shall be deemed to be an admission by any of the Reporting Persons that they are
members of such a group.
Except as described herein, none of the Reporting Persons has any
contracts, arrangements, understandings or relationships (legal or otherwise)
with any person with respect to any securities of the Issuer, including but not
limited to the transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits
1 Joint Filing Agreement of the Reporting Persons.
2 Stock Option Agreement among the Reporting Persons and Jana Master Fund Ltd.
3 Notification Letter from the Reporting Persons to the Issuer.
4 Proposed Transaction Letter from the Reporting Persons and Jana Partners
LLC to the Issuer.
SIGNATURE
After reasonable inquiry and to the best of each of the undersigned
knowledge and belief, each of the undersigned certifies that the information set
forth in this statement is true, complete and correct.
Dated: March 3, 2005
HOPPER INVESTMENTS LLC
By: Barberry Corp.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
BARBERRY CORP.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
HIGH RIVER LIMITED PARTNERSHIP
By: Hopper Investments LLC, General Partner
By: Barberry Corp., member
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS MASTER FUND L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
[Signature Page of Schedule 13D - Kerr-McGee, Inc.]
ICAHN OFFSHORE L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
CCI OFFSHORE LLC
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN ONSHORE L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
CCI ONSHORE LLC
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
/s/ Carl C. Icahn_____________
-----------------
CARL C. ICAHN
[Signature Page of Schedule 13D - Kerr-McGee, Inc.]
{88883\1060\3/3/2005\00518108v4}
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of
1934, as amended, the persons named below agree to the joint filing on behalf of
each of them of a statement on Schedule 13D (including amendments thereto) with
respect to the Class A Common Stock and Class B Common Stock of Kerr-McGee, Inc.
and further agree that this Joint Filing Agreement be included as an Exhibit to
such joint filings. In evidence thereof, the undersigned, being duly authorized,
have executed this Joint Filing Agreement this 3rd day of March, 2005.
HOPPER INVESTMENTS LLC
By: Barberry Corp.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
BARBERRY CORP.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
HIGH RIVER LIMITED PARTNERSHIP
By: Hopper Investments LLC, General Partner
By: Barberry Corp., member
By:/s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS MASTER FUND L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN OFFSHORE L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
[Signature Page of Joint Filing Agreement to Schedule 13D -
Kerr-McGee, Inc.]
CCI OFFSHORE LLC
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN ONSHORE L.P.
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
CCI ONSHORE LLC
By: /s/ Edward E. Mattner
Name: Edward E. Mattner
Title: Authorized Signatory
/s/ Carl C. Icahn_____________
-----------------
CARL C. ICAHN
[Signature Page of Joint Filing Agreement to Schedule 13D -
Kerr-McGee, Inc.]
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSONS
Name, Business Address and Principal Occupation of Each Executive
Officer and Director of High River and Barberry.
The following sets forth the name, position, and principal occupation
of each director and executive officer of each of High River and Barberry. Each
such person is a citizen of the United States of America. Except as otherwise
indicated, the business address of each director and officer is c/o Icahn
Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York 10153. To the
best of the Reporting Persons' knowledge, except as set forth in this statement
on Schedule 13D, none of the directors or executive officers of the Reporting
Persons own any shares of the Issuer.
HIGH RIVER LIMITED PARTNERSHIP
Name Position
---- --------
Hopper Investments LLC General Partner
BARBERRY CORP.
Name Position
---- --------
Carl C. Icahn Chairman, President and Secretary
Jordan Bleznick Vice President - Taxes
SCHEDULE B
-----------
On January 5, 2001, Reliance Group Holdings, Inc. ("Reliance")
commenced an action in the United States District Court for the Southern
District of New York against "Carl C. Icahn, Icahn Associates Corp. and High
River Limited Partnership" alleging that High River's tender offer for Reliance
9% senior notes violated Section 14(e) of the Exchange Act. Reliance sought a
temporary restraining order and preliminary and permanent injunctive relief to
prevent defendants from purchasing the notes. The Court initially imposed a
temporary restraining order. Defendants then supplemented the tender offer
disclosures. The Court conducted a hearing on the disclosures and other matters
raised by Reliance. It then denied plaintiffs' motion for a preliminary
injunction and ordered dissolution of its temporary restraining order following
dissemination of the supplement.
Reliance took an immediate appeal to the United States Court of Appeals
for the Second Circuit and sought a stay to restrain defendants from purchasing
notes during the pendency of the appeal. On January 30, 2001, the Court of
Appeals denied plaintiff's stay application. On January 30, Reliance also sought
a further temporary restraining order from the District Court. The Court
considered the matter and reimposed its original restraint until noon the next
day, at which time the restraint was dissolved. The appeal was argued on March 9
and denied on March 22, 2001.
EX-99
2
kerrstockoption.txt
STOCK OPTION AGREEMENT
dated as of February 14, 2005
by and between
JANA PARTNERS LLC
and
HIGH RIVER LIMITED PARTNERSHIP,
ICAHN PARTNERS LP and
ICAHN PARTNERS MASTER FUND LP
with respect to 250,000 shares of
common stock of
KERR-MCGEE CORPORATION
This STOCK OPTION AGREEMENT, dated as of February 14, 2005, is
made and entered into by and between HIGH RIVER LIMITED PARTNERSHIP, a Delaware
limited partnership, ICAHN PARTNERS LP, a Delaware limited partnership, ICAHN
PARTNERS MASTER FUND LP, a Cayman Islands exempted limited partnership
(collectively, the "Purchasers"), and JANA PARTNERS LLC, on behalf of funds and
accounts managed by it and its affiliates (the "Seller"). Capitalized terms not
otherwise defined herein have the meanings set forth in Article IV.
WHEREAS, the Purchasers desire to acquire from the Seller an
option to acquire 250,000 shares (the "Shares") of the common stock, par value
$1.00 per share, of Kerr-McGee Corporation, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
GRANT OF OPTION, SALES OF SHARES AND CLOSING
1.01 Grant of Option. In consideration of a payment by the Purchasers to the
Seller of an aggregate of $1,500,000, to be wired to the Seller on the date
hereof in accordance with the wire instructions set forth on Schedule A hereto,
the Seller hereby grants to the Purchasers the right and option to purchase the
Shares at a strike price of $60.00 per Share (the "Option"). The Purchasers may
exercise the Option, in whole or in part, from time to time, from the date
hereof through August 14, 2005, by delivery of one or more notices (each an
"Exercise Notice") to the Seller by email as follows: gary@janapartners.com,
with a copy to barry@janapartners.com, at or prior to 3:00 p.m. New York City
time on the date of exercise, to be accompanied by a phone call to the Seller as
follows: Gary Claar at (212) 692-7696 or Barry Rosenstein at (415) 909-7770,
indicating that such notice has been sent. Each Exercise Notice shall contain
instructions (i) specifying the number of Shares to be purchased by each
individual Purchaser and (ii) identifying the account(s) to which such Shares
are to be delivered.
1.02 Purchase and Sale. The Seller agrees to and shall sell to the Purchasers,
and the Purchasers agree to purchase from the Seller, those Shares subject to
each such Exercise Notice at the closing for such Shares as contemplated in
Section 1.04 below, on the terms set forth in this Agreement.
1.03 Purchase Price. The applicable purchase price of $60.00 per Share is
payable in immediately available United States funds at the closing for such
Shares in the manner provided in Section 1.04.
1.04 Closing. The Shares to be sold in any particular closing will be delivered
by the Seller via DTC-book entry transfers from the Seller to the accounts of
the Purchasers with Icahn & Co., Inc. and Goldman Sachs as set forth on Schedule
A hereto, against delivery of the applicable purchase price, in transactions to
be closed not later than the close of trading on the first NYSE trading day
following the date of delivery of the applicable Exercise Notice.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchasers,
as of the date hereof and as of the date of each closing, as follows:
2.01 Existence of the Seller. The Seller is duly organized, validly existing and
in good standing under the Laws of its jurisdiction of organization or
incorporation. The Seller has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby, including without limitation to sell and
transfer (pursuant to this Agreement) the Shares.
2.02 Authority. This Agreement has been duly and validly executed and delivered
by the Seller and constitutes a legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms.
2.03 Shares. The Shares are owned beneficially by the Seller free and clear of
all Liens, and at each closing the Seller will transfer to the Purchasers good
and valid title to the Shares purchased thereby, free and clear of all Liens.
2.04 No Conflicts. The execution and delivery by the Seller of this Agreement
does not, and the performance by the Seller of its obligations under this
Agreement and the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the organizational documents of the Seller or of the
funds and accounts under its management; or
(b) conflict with or result in a violation or breach of any term or provision of
any Contract, Law or Order applicable to the Seller, the funds and accounts
under its management or any of the respective Assets and Properties.
2.05 Brokers. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out on behalf of the Seller directly with
the Purchasers without the intervention of any person on behalf of the Seller in
such manner as to give rise to any valid claim by any person against the
Purchasers for a finder's fee, brokerage commission or similar payment.
2.06 Holdings. At all times after the execution of this Agreement and prior to
August 14, 2005, the Seller shall continue to hold beneficial ownership of the
Shares subject to the Option and one or more custodians for the Seller shall
hold record ownership thereof and the Seller shall not loan or sell, or permit
the loan or sale of, such Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
The Purchasers hereby represent and warrant to the Seller as follows:
3.01 Organization of the Purchasers. The Purchasers are duly organized, validly
existing and in good standing under the Laws of their jurisdictions of
organization or incorporation. The Purchasers have full authority to execute and
deliver this Agreement and to perform the Purchasers' obligations hereunder and
to consummate the transactions contemplated hereby, including, without
limitation, to buy (pursuant to this Agreement) the Shares.
3.02 Authority. This Agreement has been duly and validly executed and delivered
by the Purchasers and constitutes a legal, valid and binding obligation of the
Purchasers, enforceable against the Purchasers in accordance with its terms.
3.03 No Conflicts. The execution and delivery by the Purchasers of this
Agreement do not, and the performance by the Purchasers of their obligations
under this Agreement and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of their organizational documents; or
(b) conflict with or result in a violation or breach of any term or provision of
any Contract, Law or Order applicable to the Purchasers or any of their Assets
and Properties.
3.04 Brokers. All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by the Purchasers directly with the
Seller without the intervention of any Person on behalf of the Purchasers in
such manner as to give rise to any valid claim by any Person against the Seller
for a finder's fee, brokerage commission or similar payment.
ARTICLE IV
DEFINITIONS
4.01 Definitions.
(a) Defined Terms. As used in this Agreement, the following
defined terms have the meanings indicated below:
"Agreement" means this Stock Option Agreement, as the same
shall be amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person.
"Contract" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract.
"Exercise Notice" has the meaning ascribed to it in Section
1.01 of this Agreement.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States or any state, county, city or other political subdivision or of any
governmental or regulatory authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Option" has the meaning ascribed to it in Section 1.01 of
this Agreement.
"Person" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or governmental or
regulatory authority.
"Purchasers" has the meaning ascribed to it in the forepart of
this Agreement.
"Seller" has the meaning ascribed to it in the forepart of
this Agreement.
"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
ARTICLE V
MISCELLANEOUS
5.01 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof and
contains the sole and entire agreement between the parties hereto with respect
to the subject matter hereof. Except as set forth herein, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
between the parties with respect to any securities of Kerr-McGee Corporation.
5.02 Expenses. Each party will pay its own costs and expenses incurred in
connection with the negotiation, execution and closing of this Agreement and the
transactions contemplated hereby.
5.03 Waiver. Any term or condition of this Agreement may be waived at any time
by the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or on
behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
5.04 Amendment. This Agreement may be amended, supplemented or modified only by
a written instrument duly executed by or on behalf of each party hereto.
5.05 No Third Party Beneficiary. The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their respective
successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person.
5.06 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do so will be
void, except for assignments and transfers by operation of Law. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and
is enforceable by the parties hereto and their respective successors and
assigns.
5.07 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
5.08 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
5.09 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of New York applicable to a Contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
5.10 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
5.11 Authority of Agent. The Seller hereby represents and
warrants to the Purchasers that the Seller has full authority to execute and
deliver this Agreement on behalf of the funds and accounts under its management
and that the Purchasers may deal with and take instructions from, and rely in
dealing with and taking instruction from, the Seller, in all respects with
respect to this Agreement and any matter arising in connection therewith.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first above written.
Purchasers:
HIGH RIVER LIMITED PARTNERSHIP
By: Hopper Investments, LLC, general partner
By: Barberry Corp., sole member
By:________________________________
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS LP
By: Icahn Onshore LP, general partner
By: CCI Onshore LLC, sole member
By:________________________________
Name: Edward E. Mattner
Title: Authorized Signatory
ICAHN PARTNERS MASTER FUND LP
By: Icahn Offshore LP, general partner
By: CCI Offshore LLC, sole member
By:________________________________
Name: Edward E. Mattner
Title: Authorized Signatory
Seller:
JANA PARTNERS LLC
By:_________________________________
Name: Barry Rosenstein
Title: Authorized Signatory
[Stock Option Agreement with Jana Partners LLC re Kerr-McGee
dated February 14, 2005]
>
EX-99
3
kerrstockholderletter.txt
ICAHN PARTNERS LP
ICAHN PARTNERS MASTER FUND LP
HIGH RIVER LIMITED PARTNERSHIP
c/o Icahn Associates Corp.
767 Fifth Avenue, 47th Floor
New York, New York 10153
March 2, 2005
VIA HAND DELIVERY AND FACSIMILE
Kerr-McGee Corporation
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Attention: Office of the Secretary
Re: Stockholder Notification of Nominations
Ladies and Gentlemen:
Icahn Partners LP, a Delaware limited partnership, Icahn
Partners Master Fund LP, a Cayman Islands exempted limited partnership, and High
River Limited Partnership, a Delaware limited partnership (collectively, the
"Nominating Parties"), are hereby submitting this notice on the date hereof in
order to comply with the requirements (the "Bylaw Requirements") set forth in
Article III, Section 10(A) of the Amended and Restated Bylaws of Kerr-McGee
Corporation (the "Corporation"). The address of Icahn Partners LP and Icahn
Partners Master Fund LP, as it appears on the Corporation's books, is 767 Fifth
Avenue, 47th Floor, New York, New York 10153. The address of High River Limited
Partnership, as it appears on the Corporation's books, is One Whitehall Street,
New York, NY 10004.
The decision to nominate the Slate (as defined below) was made
pursuant to discussions among representatives of the Nominating Parties and Jana
Partners LLC.
Each of the Nominating Parties is the record owner directly of
1,000 shares of common stock, par value $1.00 per share, of the Corporation
("Common Stock"), which, in the aggregate, constitutes less than one percent
(1%) of the outstanding Common Stock. The Nominating Parties own beneficially,
in the aggregate, approximately 4.3% of the outstanding Common Stock (based on
the 151,692,157 shares stated to be outstanding as of October 31, 2004 by the
Corporation in its Quarterly Report on Form 10-Q for the period ended September
30, 2004) as of the close of business on March 1, 2005. For further information
on the beneficial ownership of the Corporation's securities by the Nominating
Parties, reference should be made to Annex A to this notice.
The Nominating Parties hereby represent that they intend to
appear at the 2005 annual meeting of the Corporation's stockholders (the "Annual
Meeting") in person or by proxy to submit the business specified in this notice.
The Nominating Parties are seeking at the Annual Meeting to
elect Mr. Carl Icahn and Mr. Barry Rosenstein as members of the Board of
Directors of the Corporation and, in that regard, propose to nominate Messrs.
Icahn and Rosenstein as their nominees (the "Nominees" or the "Slate") for
election as directors of the Corporation at the Annual Meeting.
The Nominating Parties intend to propose the following
resolution at the Annual Meeting (and/or any other form of resolution required
by the Corporation to nominate these Nominees):
"It is hereby being resolved, that Mr. Carl Icahn and Mr.
Barry Rosenstein are nominated to be elected as members of the
Board of Directors of the Corporation."
As required by the Bylaw Requirements, the Nominating Parties
hereby advise you that certain information relating to the Nominees is set forth
in Annex B of this notice. Except as set forth herein or in any of the Annexes
(or any attachments thereto), to the best knowledge of the Nominating Parties
(i) the Nominees do not own any securities of the Corporation or any parent or
subsidiary of the Corporation, directly or indirectly, beneficially or of
record, nor have they purchased or sold any securities of the Corporation within
the past two years, and none of their associates beneficially owns, directly or
indirectly, any securities of the Corporation, (ii) neither the Nominees, their
associates or any member of their immediate families, nor the Nominating Parties
or their associates has any arrangement or understanding with any person (a)
with respect to any future employment by the Corporation or its affiliates or
(b) with respect to future transactions to which the Corporation or any of its
affiliates will or may be a party, nor any material interest, direct or
indirect, in any transaction, or series of similar transactions, that has
occurred since the beginning of the Corporation's last fiscal year or any
currently proposed transaction, or series of similar transactions, to which the
Corporation or any of its subsidiaries was or is to be a party and in which the
amount involved exceeds $60,000, (iii) neither the Nominees, their associates or
any member of their immediate families, nor the Nominating Parties or their
associates has been indebted to the Corporation or its subsidiaries at any time
since the beginning of the Corporation's last fiscal year in an amount in excess
of $60,000, (iv) the Nominees are not, or were not within the past year, party
to any contract, arrangement or understanding with any person with respect to
any securities of the Corporation, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits or the giving or withholding
of proxies, (v) neither the Nominees nor any of their associates has any
arrangement or understanding with any person pursuant to which he was or is to
be selected as a director, nominee or officer of the Corporation, (vi) there are
no relationships between the Nominees, their associates or any member of their
immediate families, nor the Nominating Parties or their associates and the
Corporation that are listed in, or substantially similar in nature and scope to
those relationships listed, in paragraphs (b)(1) through (5) of Item 404 of
Regulation S-K under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and (vii) there is no other information with respect to the
Nominees, their associates or any member of their immediate families, nor the
Nominating Parties or their associates that is required to be disclosed in
solicitations of proxies for election of directors or is otherwise required by
the rules and regulations of the SEC promulgated under the Exchange Act. Matters
disclosed in any part of this notice, including the Annexes and any attachments
thereto, should be deemed disclosed for all purposes of this notice. The written
consent of the Nominees as required by the Bylaw Requirements is attached as
Annex C.
As more fully described in Annex A, 250,000 of the shares of
Common Stock beneficially owned by the Nominating Parties were purchased from
Jana Master Fund Ltd., of which Jana Partners LLC is investment manager,
pursuant to the exercise of an option. Barry Rosenstein (one of the Nominees) is
a managing member of Jana Partners LLC.
The Nominating Parties will promptly provide any other
information reasonably requested by the Corporation pursuant to the Bylaw
Requirements. Please be advised, however, that, notwithstanding the compliance
by the Nominating Parties with the Bylaw Requirements, neither the delivery of
this notice in accordance with the terms of the Bylaws Requirements nor the
delivery of any additional information, if any, provided by the Nominating
Parties or any of their affiliates to the Corporation from and after the date
hereof shall be deemed to constitute an admission by the Nominating Parties or
any of its affiliates of the legality or enforceability of the Bylaw
Requirements or a waiver by any such person or entity of its right to, in any
way, contest or challenge the enforceability thereof. The Nominating Parties
reserve the right to nominate additional nominees, in the event the Corporation,
by the appropriate corporate action, increased or increases the number of
directors to be elected at the Annual Meeting to be greater than two (2).
[Remainder of page intentionally left blank]
Very truly yours,
ICAHN PARTNERS LP
By: ______________________
Name: Edward E. Mattner
Its: Authorized Signatory
ICAHN PARTNERS MASTER FUND LP
By: ______________________
Name: Edward E. Mattner
Its: Authorized Signatory
HIGH RIVER LIMITED PARTNERSHIP
By: Hopper Investments LLC, general partner
By: Barberry Corp., sole member
By: ______________________
Name: Edward E. Mattner
Its: Authorized Signatory
[Signature page to Kerr-McGee stockholder proposal notice]
ANNEX A
As of the close of business on March 1, 2005, Icahn Partners LP is the
direct beneficial owner of 2,571,516 shares of the Corporation's common stock,
par value $1.00 per share ("Shares"). Each of (i) Icahn Onshore LP, as the
general partner of Icahn Partners LP, and (ii) CCI Onshore LLC, as the general
partner of Icahn Onshore LP, may be deemed to be an indirect beneficial owner of
the 2,571,516 Shares directly beneficially owned by Icahn Partners LP.
As of the close of business on March 1, 2005, Icahn Partners Master
Fund LP is the direct beneficial owner of 2,680,484 Shares. Each of (i) Icahn
Offshore LP, as the general partner of Icahn Partners Master Fund LP, and (ii)
CCI Offshore LLC, as the general partner of Icahn Offshore LP, may be deemed to
be an indirect beneficial owner of the 2,680,484 Shares directly beneficially
owned by Icahn Partners Master Fund LP.
As of the close of business on March 1, 2005, High River Limited
Partnership is the direct beneficial owner of 1,313,000 Shares. Each of (i)
Hopper Investments LLC, as the general partner of High River Limited
Partnership, and (ii) Barberry Corp., as the sole member of Hopper Investments
LLC, may be deemed to be an indirect beneficial owner of the 1,313,000 Shares
directly beneficially owned by High River Limited Partnership.
Each of CCI Onshore LLC, CCI Offshore LLC and Barberry Corp. is wholly
owned by Carl C. Icahn. As such, Mr. Icahn may be deemed to be the indirect
beneficial owner of 6,565,000 Shares.
On February 14, 2005, Icahn Partners LP, Icahn Partners Master Fund LP
and High River Limited Partnership acquired an option to purchase, in the
aggregate, 250,000 Shares from Jana Master Fund Ltd., of which Jana Partners LLC
is investment manager. Barry Rosenstein (one of the Nominees) is a managing
member of Jana Partners LLC. Pursuant to the exercise of this option on March 1,
2005, Icahn Partners LP purchased 96,000 Shares, Icahn Partners Master Fund LP
purchased 104,000 Shares and High River Limited Partnership purchased 50,000
Shares. The option had an exercise price of $60.00 per Share and an expiration
date of August 14, 2005.
ANNEX B
CARL C. ICAHN
Name: Carl C. Icahn (the "Nominee")
Age: 69
Business Address: 767 Fifth Avenue
New York, NY 10153
Residence Address: 15 West 53rd Street
Penthouse B&C
New York, NY 10019
Set forth below is a brief description of the Nominee's
business experience during the past five years, including the Nominee's
principal occupations and employment during the past five years, the name and
principal business of any corporation or other organization in which such
occupations and employment were carried on and the Nominee's current principal
occupation or employment:
Mr. Icahn has served as Chairman of the Board and a director of
Starfire Holding Corporation ("Starfire") (formerly Icahn Holding
Corporation), a privately-held holding company, and Chairman of the
Board and a director of various subsidiaries of Starfire, since 1984.
Mr. Icahn is and has been since 1994 a majority shareholder, the
Chairman of the Board and a Director of American Railcar Industries,
Inc. ("ARI"), a Missouri corporation. ARI is primarily engaged in the
business of manufacturing, managing, leasing and selling of railroad
freight and tank cars. Mr. Icahn has also been Chairman of the Board
and President of Icahn & Co., Inc., a registered broker-dealer and a
member of the National Association of Securities Dealers, since 1968.
Since November 1990, Mr. Icahn has been Chairman of the Board of
American Property Investors, Inc., the general partner of American Real
Estate Partners, L.P., a public limited partnership that invests in
real estate and holds various other interests, including the interests
in its subsidiaries that are engaged, among other things, in the oil
and gas business and casino entertainment business. Mr. Icahn has been
a director of Cadus Pharmaceutical Corporation, a firm that holds
various biotechnology patents, since 1993. From August 1998 to August
2002, Mr. Icahn served as Chairman of the Board of Maupintour Holding
LLC (f/k/a/ Lowestfare.com, LLC), an internet travel reservations
company. From October 1998 through May, 2004, Mr. Icahn was the
President and a director of Stratosphere Corporation, which operates
the Stratosphere Hotel and Casino. Since September 29, 2000, Mr. Icahn
has served as the Chairman of the Board of GB Holdings, Inc., which
owns all of the outstanding stock of Atlantic Coast Entertainment
Holdings, Inc., which through its wholly-owned subsidiary owns and
operates The Sands Hotel and Casino in Atlantic City, New Jersey. Mr.
Icahn also serves in the same capacity with Atlantic Coast
Entertainment Holdings, Inc. In January 2003, Mr. Icahn became Chairman
of the Board and a director of XO Communications, Inc., a
telecommunications company. Mr. Icahn received his B.A. from Princeton
University in 1957.
The entities listed above are not a parent, subsidiary or
other affiliate of Kerr-McGee Inc. ("Kerr-McGee"). The Nominee does not hold any
positions or offices with Kerr-McGee.
BARRY ROSENSTEIN
Name: Barry Rosenstein (the "Nominee")
Age: 46
Business Address: 201 Post Street
San Francisco, CA 94108
Residence Address: 768 El Camino Del Mar
San Francisco, CA 94121
Set forth below is a brief description of the Nominee's
business experience during the past five years, including the Nominee's
principal occupations and employment during the past five years, the name and
principal business of any corporation or other organization in which such
occupations and employment were carried on and the Nominee's current principal
occupation or employment:
Barry Rosenstein is the founder and Managing Partner of JANA Partners LLC, an
investment management company, a position he has held since 2001. Mr. Rosenstein
also founded, and from 1993 to 2001 served as Managing Partner of, Sagaponack
Partners L.P., a private equity fund. He received his M.B.A. from the University
of Pennsylvania's Wharton School of Business in 1984. In 1981, Mr. Rosenstein
graduated Phi Beta Kappa from Lehigh University. Mr. Rosenstein is also a C.P.A.
Mr. Rosenstein serves on the board of directors of Cobra Electronics and Marisa
Christina, Inc.
The entities listed above are not a parent, subsidiary or
other affiliate of Kerr-McGee Inc. ("Kerr-McGee"). The Nominee does not hold any
positions or offices with Kerr-McGee.
As of the close of business on March 1, 2005, Jana Master Fund
Ltd. is the direct beneficial owner of 3,693,235 Shares. Jana Partners LLC is
the investment manager of Jana Master Fund Ltd. In addition, as of such date, a
separate account also managed by Jana Partners LLC was the direct beneficial
owner of 289,565 Shares. As the investment manager to both Jana Master Fund Ltd.
and such managed account, Jana Partners LLC may be deemed to be an indirect
beneficial owner of the 3,982,800 Shares directly beneficially owned by such
entities. As a managing member of Jana Partners LLC, Mr. Rosenstein may also be
deemed an indirect beneficial owner of such Shares.
Pursuant to the exercise of an option on March 1, 2005, Jana
Master Fund Ltd. sold to Icahn Partners LP, Icahn Partners Master Fund LP and
High River Limited Partnership 250,000 Shares in the aggregate. The option had
an exercise price of $60.00 per Share and an expiration date of August 14, 2005.
Such Shares are not included in the amounts set forth in the immediately
preceding paragraph.
ANNEX C
CONSENT OF NOMINEES
Each of the undersigned hereby consents to being named as a
nominee for election as a director of Kerr-McGee Inc. (the "Company"), in the
proxy statement and other materials concerning the undersigned's nomination in
connection with the solicitation of proxies from stockholders of the Company to
be voted at the 2005 annual meeting of stockholders of the Company and any
adjournment thereof, and further consents to serve as a director of the Company,
if elected.
/s/ Carl C. Icahn
Carl C. Icahn
/s/ Barry Rosenstein
Barry Rosenstein
EX-99
4
kerrmcgeeschedulea.txt
ICAHN PARTNERS LP
ICAHN PARTNERS MASTER FUND LP
HIGH RIVER LIMITED PARTNERSHIP
JANA PARTNERS LLC
March 3, 2005
VIA FEDERAL EXPRESS AND FACSIMILE
----------------------------------
Mr. Luke R. Corbett
Chairman and Chief Executive Officer
Kerr-McGee Corporation
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
Dear Mr. Corbett:
As we have previously discussed with you, each of us is a large
shareholder of Kerr-McGee Corporation ("KMG"), beneficially owning, in the
aggregate, approximately 11.6 million shares or approximately 7.6% of the
outstanding shares of KMG's common stock. Entities affiliated with Carl Icahn
recently proposed Carl Icahn and Barry Rosenstein, managing partner of Jana
Partners (a $3 billion hedge fund), as nominees for KMG's board of directors at
the upcoming annual meeting. This action was taken in order to help ensure that
KMG is focused on maximizing shareholder value. While management's recent
announcement of its intention to review strategic alternatives for its chemicals
business is a positive first step, we feel this action does not go far enough
toward maximizing the value of KMG's common stock.
A great opportunity exists today for shareholders of KMG. Never before
has there been such a disconnect between the stock market valuation of publicly
traded E&P companies such as KMG on a per barrel of oil equivalent ("boe") of
proved reserves basis and the value at which oil and gas futures are trading in
the commodity markets. We believe that this spread can be captured by KMG by
selling today a portion of its production for delivery over the next five years
and utilizing the proceeds from such a sale, today, to immediately repurchase
stock. We believe that if KMG were to follow the plan outlined below (and
detailed in the attached schedule), KMG's share price would increase
significantly. The plan would require KMG to take the following steps:
1. Sell the chemical business;
2. Enter into a transaction to monetize forward production and capitalize
on today's high price of oil and gas, low interest rate environment and
increased commodity market liquidity; and
3. Utilize the proceeds from the chemical business sale and the forward
sale of a portion of KMG's future oil and gas production to buy back
shares.
At KMG's current market price of $78.99 per share (as of the close of
the market on March 2, 2005), and pro-forma for the sale of its chemicals
business for $1.7 billion (the mid-point of the range projected on KMG's January
26, 2005 fourth quarter conference call), KMG is trading at approximately $11.80
per boe of proved in the ground reserves. To monetize the current discount in
KMG's stock market valuation versus the commodity market valuation for oil and
gas, we recommend that KMG immediately execute a Volumetric Production Payment
transaction ("VPP") for 50 million boe's of proved producing reserves per year
over each of the next five years (i.e., 250 million boe's of production total,
or approximately 32% of KMG's total proved producing reserves), constituting
approximately 37% of KMG's projected 2005 production.
Based on the current forward curve for oil and gas, the low interest
rate environment and increased liquidity in the commodity markets, we believe
(as a result of discussions with commodity trading firms) that KMG could realize
proceeds of between $35 and $38 per boe sold forward through a VPP transaction.
As such, KMG could raise a total of approximately $8.75 BILLION OF CASH
(assuming the VPP transaction at $35 per boe), or approximately 60% of its
enterprise value (excluding KMG's chemicals business), by selling only
approximately 21% of its total proved reserves. After raising the proceeds
described above (including proceeds from the sale of the chemicals business),
KMG should repurchase up to approximately 116 million shares of its stock at $90
per share. Following such a transaction, KMG would still have approximately 950
million boe of proved reserves, approximately 56% of which would be proved
developed reserves and approximately 44% would be proved undeveloped reserves.
Assuming that KMG would trade at its current value of $11.80 per boe of
proved reserves (excluding the chemical business), the pro forma share price
following the proposed transactions would be $111 per share. Historically, we
believe investors have penalized KMG's share price due to what we perceive as
poor results achieved in exploration, drilling and use of free cash flow.
However, after giving effect to the proposed VPP transaction and the sale of the
chemicals business, we believe that the public market valuation for KMG's
remaining reserves could increase to be more in line with the reserve valuations
attributed to its comparable companies (see attached schedule). If this were to
occur, KMG could trade at $132 per share. Obviously, there can be no assurance
that KMG common stock will trade within the $111 to $132 range, even if all of
these transactions are undertaken and completed.
We would like to discuss this recommendation with you at your earliest
convenience since we feel it is important to move quickly while the opportunity
exists.
Very truly yours,
CARL C. ICAHN
BARRY ROSENSTEIN
[03.03.05 Letter to Kerr-McGee from Icahn and Rosenstein re VPP transaction]
SCHEDULE A
This should be read only in conjunction with the
attached letter dated March 3, 2005
KMG VALUATION: PROFORMA FOR SALE OF CHEMICALS BUSINESS
AND 250 MMBOE VPP TRANSACTION AND STOCK REPURCHASE
CHEMICAL BUSINESS SALES PROCEEDS (1) $ 1,700,000,000
Estimated Tax Basis 1,600,000,000
Assumed Tax Rate 35%
----------------------
ESTIMATED AFTER-TAX PROCEEDS FROM THE CHEMICAL SALE
$ 1,665,000,000
VPP BOE's Sold 250,000,000
Estimated VPP Sales Proceeds per BOE $ 35.00
----------------------
ESTIMATED VPP SALES PROCEEDS $ 8,750,000,000
ESTIMATED PROCEEDS AVAILABLE FOR STOCK PUCHASES $ 10,415,000,000
ASSUMED STOCK REPURCHASE PRICE PER SHARE $ 90.00
Diluted Shares Outstanding at 12/31/04
(Per KMG 2004 Earnings Release) 161,706,000
Assumed Shares Repurchased 115,722,222
Pro Forma Shares Outstanding after Assumed Repurchases 45,983,778
Total Proved Reserves at 12/31/04
(Per KMG 2004 Earnings Release) 1,200,000,000
Proved Producing Reserves Sold in VPP Transaction 250,000,000
----------------------
Total Proved Reserves after VPP Transaction 950,000,000
Calculated Current Value of KMG Per Proved
Reserve (2) $ 11.80
IMPLIED ENTERPRISE VALUE OF REMAINING KMG RESERVES
@ $11.80 PER BOE $ 11,210,000,000
Value Attributed to KMG Exploratory Acreage
and Other Assets
Less Current KMG Net Debt (Per KMG 2004 Earnings Release)$ 3,189,100,000
Present Value of Cost Associated with VPP Production 1,581,000,000
(Assumed at $6.0 per boe grown at 15% per annum,
discounted at 8% cost of capital)
Estimated Present Value of VPP Tax Liability $ 1,330,000,000
REMAINDER EQUALS PRO FORMA KMG EQUITY VALUE $ 5,109,900,000
Divided by Pro Forma KMG Shares Outstanding 45,983,778
REULTS IN PRO FORMA KMG VALUE PER SHARE @ $11.80 PER BOE $ 111.12
EFFECT ON KMG'S SHARE PRICE ASSUMING A $12.80 PER BOE VALUATION OF PROVED
RESERVES
Current Assumed E&P Comparable Company Value
of Public Market Proved Reserves (3) $ 12.80
IMPLIED ENTERPRISE VALUE OF REMAINING KMG RESERVES
@ $12.80 PER BOE $ 12,160,000,000
Value Attributed to KMG Exploratory Acreage and Other
Assets
Less Current KMG Net Debt
(Per KMG 2004 Earnings Release) $ 3,189,100,000
Present Value of Cost Associated with VPP Production $ 1,581,000,000
(Assumed at $6.0 per boe grown at 15% per annum,
discounted at 8% cost of capital)
Estimated Present Value of VPP Tax Liability $ 1,330,000,000
REMAINDER EQUALS PRO FORMA KMG EQUITY VALUE $ 6,059,900,000
Divided by Pro Forma KMG Shares Outstanding $ 45,983,778
RESULTS IN PRO FORMA KMG VALUE PER SHARE
AT $12.80 PER BOE $ 131.78
Notes:
-----------------------
(1) Assumes Chemical business is sold for the mid-point of KMG management's
estimated valuation range as of January 26, 2005.
(2) KMG currently is trading at approximatley $11.80 per boe of proved reserve
after deducting the value of the Chemical business at the mid-point of KMG
management's estimated valuation range as of January 26, 2005.
(3) Assumes KMG trades at $12.80 per boe of proved reserves. $12.95 represents
the comparable company valuation on a per boe of proved reserves basis (Based on
2004 Earrnings Releases for each company.) Comps. are comprised of Apache,
Devon, Chesapeake and XTO Energy.
This should be read only in conjunction with the
attached letter dated March 3, 2005