-----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, VVJHzRD7SEvTCGuds4AmDJW3qQ+RBpsmM2PciXdWKsIbVPKPXxFnTzUXX6xlzZrL bt0YyqyvVt5mWPODIJSfeQ== 0000909518-04-000624.txt : 20040721 0000909518-04-000624.hdr.sgml : 20040721 20040721171824 ACCESSION NUMBER: 0000909518-04-000624 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20040721 GROUP MEMBERS: PERSHING SQUARE GP, LLC GROUP MEMBERS: PERSHING SQUARE, L.P. GROUP MEMBERS: WILLIAM ACKMAN SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PLAINS RESOURCES INC CENTRAL INDEX KEY: 0000350426 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PETROLEUM & PETROLEUM PRODUCTS (NO BULK STATIONS) [5172] IRS NUMBER: 132898764 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-33092 FILM NUMBER: 04924936 BUSINESS ADDRESS: STREET 1: 700 MILAM STREET 2: SUITE 3100 CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 8322396000 MAIL ADDRESS: STREET 1: 700 MILAM STREET 2: SUITE 3100 CITY: HOUSTON STATE: TX ZIP: 77002 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LEUCADIA NATIONAL CORP CENTRAL INDEX KEY: 0000096223 STANDARD INDUSTRIAL CLASSIFICATION: TELEGRAPH & OTHER MESSAGE COMMUNICATIONS [4822] IRS NUMBER: 132615557 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 315 PARK AVE S CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2124601900 MAIL ADDRESS: STREET 1: 315 PARK AVENUE SOUTH CITY: NEW YORK STATE: NY ZIP: 10010 FORMER COMPANY: FORMER CONFORMED NAME: TALCOTT NATIONAL CORP DATE OF NAME CHANGE: 19800603 SC 13D/A 1 jd7-21_13da9.txt ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ SCHEDULE 13D INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. 9) ------------------ PLAINS RESOURCES INC. (Name of Issuer) COMMON STOCK, PAR VALUE $.10 PER SHARE 726540503 -------------------------------------- -------------------------------------- (Title of class of securities) (CUSIP number) JOSEPH A. ORLANDO WILLIAM ACKMAN - -------------------------------------------------------------------------------- LEUCADIA NATIONAL CORPORATION PERSHING SQUARE CAPITAL MANAGEMENT, LLC 315 PARK AVENUE SOUTH 110 EAST 42ND STREET NEW YORK, NEW YORK 10010 NEW YORK, NEW YORK 10017 (212) 460-1900 (212) 813-3700 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) JULY 21, 2004 - -------------------------------------------------------------------------------- (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 Rules 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_]. ================================================================================
- ----------------------------------------------------------------- --------------------------------------------------- CUSIP NO. 726540503 13D Page 2 - ----------------------------------------------------------------- --------------------------------------------------- - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 1 NAME OF REPORTING PERSON: Leucadia National Corporation I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY): - ----------------- ------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X] (B) [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ----------------- -------------------------- --------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: NA - ----------------- ------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [_] - ----------------- -------------------------------------------------------------- --------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: New York - --------------------------- ------ --------------------------------------------- --------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER: 0 SHARES ------ --------------------------------------------- --------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 0 OWNED BY ------ --------------------------------------------- --------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: 0 REPORTING ------ --------------------------------------------- --------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER: 0 - ----------------- ------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 0 - ----------------- ------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0% - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON: CO - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 2 - ----------------------------------------------------------------- --------------------------------------------------- CUSIP NO. 726540503 13D Page 3 - ----------------------------------------------------------------- --------------------------------------------------- - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 1 NAME OF REPORTING PERSON: Pershing Square, L.P. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY): 38-3694138 - ----------------- ------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X] (B) [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ----------------- -------------------------- --------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: NA - ----------------- ------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [_] - ----------------- -------------------------------------------------------------- --------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware - --------------------------- ------ --------------------------------------------- --------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER: 0 SHARES ------ --------------------------------------------- --------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 1,258,500 OWNED BY ------ --------------------------------------------- --------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: 0 REPORTING ------ --------------------------------------------- --------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,258,500 - ----------------- ------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 1,258,500 - ----------------- ------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.16% (See Item 5) - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON: PN - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 3 - ----------------------------------------------------------------- --------------------------------------------------- CUSIP NO. 726540503 13D Page 4 - ----------------------------------------------------------------- --------------------------------------------------- - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 1 NAME OF REPORTING PERSON: Pershing Square GP, LLC I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY): 38-3694141 - ----------------- ------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X] (B) [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ----------------- -------------------------- --------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: N/A - ----------------- ------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [_] - ----------------- -------------------------------------------------------------- --------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware - --------------------------- ------ --------------------------------------------- --------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER: 0 SHARES ------ --------------------------------------------- --------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 1,258,500 OWNED BY ------ --------------------------------------------- --------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: 0 REPORTING ------ --------------------------------------------- --------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,258,500 - ----------------- ------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 1,258,500 - ----------------- ------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.16% (See Item 5) - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON: OO - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 4 - ----------------------------------------------------------------- --------------------------------------------------- CUSIP NO. 726540503 13D Page 5 - ----------------------------------------------------------------- --------------------------------------------------- - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 1 NAME OF REPORTING PERSON: William Ackman I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY): - ----------------- ------------------------------------------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [X] (B) [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 3 SEC USE ONLY - ----------------- -------------------------- --------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS: N/A - ----------------- ------------------------------------------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e): [_] - ----------------- -------------------------------------------------------------- --------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States - --------------------------- ------ --------------------------------------------- --------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER: 0 SHARES ------ --------------------------------------------- --------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER: 1,269,300 (See Item 5) OWNED BY ------ --------------------------------------------- --------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: 0 REPORTING ------ --------------------------------------------- --------------------------------------------------- PERSON WITH 10 SHARED DISPOSITIVE POWER: 1,269,300 (See Item 5) - ----------------- ------------------------------------------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY REPORTING PERSON: 1,269,300 - ----------------- ------------------------------------------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: [_] - ----------------- ------------------------------------------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.20% (See Item 5) - ----------------- ----------------------------------------------- ------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON: IN - ----------------- ----------------------------------------------- ------------------------------------------------------------------
5 This Amendment No. 9, amends the Schedule 13D filed on February 23, 2004, and is filed by Leucadia National Corporation ("Leucadia"), Pershing Square, L.P., Pershing Square GP, LLC and William Ackman (collectively, the "Reporting Persons") with respect to the common stock, par value $0.10 per share ("Common Stock"), of Plains Resources Inc. (the "Company"). Item 4. Purpose of Transaction. ---------------------- Item 4 is hereby supplemented as follows: On July 21, 2004, Leucadia submitted a letter (the "Letter") to the Company's Board of Directors. A copy of the Letter is attached hereto as Exhibit 2 and incorporated herein by reference. A copy of the press release issued by Leucadia on July 21, 2004 is attached hereto as Exhibit 3 and incorporated herein by reference. Item 5. Interest in Securities of the Issuer. ------------------------------------ As of July 21, 2004, the Reporting Persons beneficially own the following shares of Common Stock: (i) The responses of Pershing Square to Rows (11) through (13) of the cover pages of this Amendment 9 are incorporated herein by reference. As of July 21, 2004, Pershing Square beneficially owned 1,258,500 shares of Common Stock, representing approximately 5.16% of the outstanding shares of Common Stock (the outstanding shares of Common Stock, 24,400,000, being based on the number of shares outstanding as of April 30, 2004, as reported in the Company's Form 10-Q for the quarterly period ended March 31, 2004). (ii) The responses of GP LLC to Rows (11) through (13) of the cover pages of this Amendment 9 are incorporated by reference. By virtue of being the general partner of Pershing Square, for purposes of this Amendment 9, GP LLC may be deemed to share voting and dispositive powers with respect to the shares of Common Stock beneficially owned by Pershing Square and therefore may be deemed to be beneficial owners of all of the shares of Common Stock beneficially owned by Pershing Square. GP LLC disclaims beneficial ownership of any shares of Common Stock beneficially owned by Pershing Square. (iii) The responses of William Ackman to Rows (11) through (13) of the cover pages of this Amendment 9 are incorporated herein by reference. By virtue of being the sole manager of GP LLC, for purposes of this Amendment 9, Mr. Ackman may be deemed to share voting and dispositive powers with respect to the shares of Common Stock beneficially owned by Pershing Square and therefore may be deemed to be a beneficial owner of all of the shares of Common Stock beneficially owned by Pershing Square. Mr. Ackman disclaims beneficial ownership of any shares of Common Stock beneficially owned by GP LLC or Pershing Square. The shares beneficially owned by Mr. Ackman include 10,800 shares owned by Ackman Family L.P. By virtue of being the managing member of Ackman Family LLC, the general partner of Ackman Family L.P. Mr. Ackman may be deemed to share voting and dispositive powers with respect to the shares of Common Stock beneficially owned by Ackman Family L.P. and therefore may be deemed to be a beneficial owner of all of the shares of Common Stock beneficially owned by Ackman Family L.P. Ackman Family L.P. is a Delaware partnership formed for the benefit of Mr. Ackman's family. Mr. Ackman disclaims beneficial ownership as to such shares of Common Stock except to the extent of his pecuniary interest therein. 6 (iv) The responses of Leucadia to Rows (11) through (13) of the cover pages of this Amendment 9 are incorporated herein by reference. (b) The responses of the Reporting Persons to (i) Rows (7) through (10) of the cover pages of this statement of this Amendment 9 and (ii) Item 5(a) hereof are incorporated herein by reference. (c) On July 21, 2004, Ackman Family L.P. purchased 5,000 shares of Common Stock at a price of $17.25 per share on the New York Stock Exchange. Except as set forth in this Item 5(c), to the Reporting Persons' knowledge, none of their respective general partners, directors or officers have had any transactions in the Common Stock that were effected in the past sixty days. (d) Not applicable. (e) Not applicable. Item 7. Materials to be Filed as Exhibits. --------------------------------- 1. Agreement among the Reporting Persons with respect to the filing of this Schedule 13D. 2. Letter, dated July 21, 2004, from Leucadia. 3. Press release of Leucadia National Corporation, dated July 21, 2004. 7 SIGNATURE 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. LEUCADIA NATIONAL CORPORATION By: /s/ Joseph A. Orlando -------------------------------------- Name: Joseph A. Orlando Title: Vice President and Chief Executive Officer PERSHING SQUARE, L.P. By: PERSHING SQUARE GP, LLC By: /s/ William Ackman ------------------------------------- Name: William Ackman Title: Managing Member PERSHING SQUARE GP, LLC By: /s/ William Ackman ------------------------------------- Name: William Ackman Title: Managing Member By: /s/ William Ackman ------------------------------------- Name: William Ackman Date: July 21, 2004 8 EX-1 2 jd7-21ex_1.txt EXHIBIT 1 AGREEMENT This will confirm the agreement by and among all the undersigned that the Schedule 13D filed on or about this date with respect to the beneficial ownership of the undersigned of shares of the common stock of Plains Resources Inc. is being filed on behalf of each of the entities named below. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Dated: July 21, 2004 LEUCADIA NATIONAL CORPORATION By: /s/ Joseph A. Orlando ------------------------------------ Name: Joseph A. Orlando Title: Vice President and Chief Executive Officer PERSHING SQUARE, L.P. By: PERSHING SQUARE GP, LLC By: /s/ William Ackman ------------------------------------ Name: William Ackman Title: Managing Member PERSHING SQUARE GP, LLC By: /s/ William Ackman ------------------------------------ Name: William Ackman Title: Managing Member By: /s/ William Ackman ------------------------------------- Name: William Ackman EX-2 3 jd7-21ex_2.txt EXHIBIT 2 Via Facsimile (832) 239-6210 Original to follow via FedEx July 21, 2004 Plains Resources Inc. 700 Milam Street, Suite 3100 Houston, TX 77002 Attn: The Board of Directors Gentlemen: In a letter dated July 20, 2004, Vulcan Energy is attempting to convince you and Plains Resources shareholders that PLX stock is worth a deep discount to where it currently trades. Vulcan argues that if the company remains public and completes a recapitalization, the stock's value will plummet by 30% or more. We think commonsense dictates that sellers should not rely on buyers' stated estimates of value because the buyer's goal is obviously to buy at the lowest possible price. Leucadia National Corporation and Pershing Square, L.P. have nothing to gain from encouraging the company to stay public and completing a recapitalization other that what Pershing Square will receive from continuing as an owner of PLX stock. As you know, Pershing Square has agreed that it will not tender its shares into a $18.00 per share self-tender by the company. If Vulcan is correct, this means that Pershing Square will lose nearly $10 million from its investment in the company. While we can debate for many hours about projections in a cash flow model, we think a few simple facts will help the board understand why we think $17.25 is inadequate. o In their July 20th letter, Vulcan argues that the net asset value of Plains Resources is between $529 million and $554 million or $21 to $22 per share before deducting more than $200 million for a "40% tax liability." We do not believe that Plains Resources should or will sell its interest in Plains All American Pipeline, L.P. As a result, we believe this tax liability is not in fact a liability that will be incurred. At $17.25, PLX shareholders would be selling their stock at an 18% or greater discount to net asset value using the buyer's estimates for the value of the PAA GP and Calumet Florida. At $17.25, we believe that Vulcan is paying nothing for PLX's ownership of PAA's general partner. o While Vulcan attempts to poke holes in our financial model, we believe our analysis is conservative. The value of PLX is driven largely by the growth rate in PAA's distributions over the next ten or more years. Since PAA became a public company, it has grown its quarterly distributions at a 5.8% annual rate. In our model, we have assumed that PAA's distributions over 10 years grow by 4.4% per annum, which is less than PAA's and the MLP universe's distribution growth rate. o Vulcan argues that a 12.5 multiple is appropriate because it is an historic multiple for PLX. Since PLX's free-cash-flow-per-share growth rate will now accelerate as a result of the distribution share with the GP going from 25% to 50%, we believe that PLX is most directly comparable with Crosstex Energy Inc. which recently crossed over to the 50% high GP split and is in the process of using up its remaining NOLs. Crosstex trades at 24.7 times 2005 cash earnings. We believe that improved governance will also contribute to an increased trading price for PLX. o If one accepts Vulcan's analysis, they are saying that Vulcan is vastly overpaying for PLX, and that Vulcan is doing shareholders of PLX a great service. They are begging PLX shareholders to accept a gift of approximately four dollars or more per share above their estimated values of PLX. We wonder whether their internal projections are as pessimistic as the ones presented to shareholders in their most recent SEC public filings. o In considering our recapitalization proposal please note that Mr. William Hitchcock, the Chairman of the Special Committee, the only truly independent member of PLX's board, and a large owner of PLX stock is reportedly voting against the merger and recommending that the company stay public and complete a recapitalization. o Similarly in considering our proposal, please note that Glass-Lewis, a highly respected independent proxy analysis firm chaired by the former Chief Accountant of the SEC, yesterday recommended that its clients vote against the $17.25 PLX merger. We think Vulcan is underestimating the intelligence of PLX shareholders. With nothing to gain but appreciation of its investment in PLX stock, Pershing Square has informed us that it is voting against the PLX merger. Cordially, /s/ Ian M. Cumming Ian M. Cumming EX-3 4 jd7-21ex_3.txt EXHIBIT 3 FOR IMMEDIATE RELEASE Leucadia National Corporation Contact: Laura Ulbrandt (212) 460-1900 LEUCADIA SUBMITS LETTER TO PLAINS RESOURCES INC. NEW YORK, NEW YORK, JULY 21, 2004 - Leucadia National Corporation (LUK - NYSE and PCX) submitted the following letter to Plains Resources Inc. (PLX - NYSE) on July 21, 2004: "Via Facsimile (832) 239-6210 Original to follow via FedEx July 21, 2004 Plains Resources Inc. 700 Milam Street, Suite 3100 Houston, TX 77002 Attn: The Board of Directors Gentlemen: In a letter dated July 20, 2004, Vulcan Energy is attempting to convince you and Plains Resources shareholders that PLX stock is worth a deep discount to where it currently trades. Vulcan argues that if the company remains public and completes a recapitalization, the stock's value will plummet by 30% or more. We think commonsense dictates that sellers should not rely on buyers' stated estimates of value because the buyer's goal is obviously to buy at the lowest possible price. Leucadia National Corporation and Pershing Square, L.P. have nothing to gain from encouraging the company to stay public and completing a recapitalization other that what Pershing Square will receive from continuing as an owner of PLX stock. As you know, Pershing Square has agreed that it will not tender its shares into a $18.00 per share self-tender by the company. If Vulcan is correct, this means that Pershing Square will lose nearly $10 million from its investment in the company. While we can debate for many hours about projections in a cash flow model, we think a few simple facts will help the board understand why we think $17.25 is inadequate. o In their July 20th letter, Vulcan argues that the net asset value of Plains Resources is between $529 million and $554 million or $21 to $22 per share before deducting more than $200 million for a "40% tax liability." We do not believe that Plains Resources should or will sell its interest in Plains All American Pipeline, L.P. As a result, we believe this tax liability is not in fact a liability that will be incurred. At $17.25, PLX shareholders would be selling their stock at an 18% or greater discount to net asset value using the buyer's estimates for the value of the PAA GP and Calumet Florida. At $17.25, we believe that Vulcan is paying nothing for PLX's ownership of PAA's general partner. o While Vulcan attempts to poke holes in our financial model, we believe our analysis is conservative. The value of PLX is driven largely by the growth rate in PAA's distributions over the next ten or more years. Since PAA became a public company, it has grown its quarterly distributions at a 5.8% annual rate. In our model, we have assumed that PAA's distributions over 10 years grow by 4.4% per annum, which is less than PAA's and the MLP universe's distribution growth rate. o Vulcan argues that a 12.5 multiple is appropriate because it is an historic multiple for PLX. Since PLX's free-cash-flow-per-share growth rate will now accelerate as a result of the distribution share with the GP going from 25% to 50%, we believe that PLX is most directly comparable with Crosstex Energy Inc. which recently crossed over to the 50% high GP split and is in the process of using up its remaining NOLs. Crosstex trades at 24.7 times 2005 cash earnings. We believe that improved governance will also contribute to an increased trading price for PLX. o If one accepts Vulcan's analysis, they are saying that Vulcan is vastly overpaying for PLX, and that Vulcan is doing shareholders of PLX a great service. They are begging PLX shareholders to accept a gift of approximately four dollars or more per share above their estimated values of PLX. We wonder whether their internal projections are as pessimistic as the ones presented to shareholders in their most recent SEC public filings. o In considering our recapitalization proposal please note that Mr. William Hitchcock, the Chairman of the Special Committee, the only truly independent member of PLX's board, and a large owner of PLX stock is reportedly voting against the merger and recommending that the company stay public and complete a recapitalization. o Similarly in considering our proposal, please note that Glass-Lewis, a highly respected independent proxy analysis firm chaired by the former Chief Accountant of the SEC, yesterday recommended that its clients vote against the $17.25 PLX merger. We think Vulcan is underestimating the intelligence of PLX shareholders. With nothing to gain but appreciation of its investment in PLX stock, Pershing Square has informed us that it is voting against the PLX merger. Cordially, /s/ Ian M. Cumming Ian M. Cumming" -----END PRIVACY-ENHANCED MESSAGE-----