Cobalt International Energy Inc, the explorer seeking oil in the U.S. Gulf of Mexico and West Africa, fell the most in more than a month after Goldman Sachs Group Inc. and other backers announced plans to sell 40 million shares worth more than $1 billion.
Cobalt fell 7.1 percent to $24.84 at the close in New York, the biggest decline since Dec. 12. The share sale would reduce the holdings of Goldman Sachs and First Reserve Corp. as well as funds owned by Carlyle Group LP and Riverstone Holdings LLC from about 15 percent each to less than 13 percent, according to a filing today.
A successful sale would drop holdings by Cobalt’s biggest investors below 50 percent, requiring the company to qualify a majority of directors as independent within a year to meet New York Stock Exchange standards, according to the filing. Cobalt won’t receive any proceeds from the share sale. The shares have climbed to as much as $34.03 since first offered to the public at $13.50 in December 2009.
Cobalt, based in Houston, announced Dec. 5 a “significant” discovery at its North Platte prospect in the Gulf of Mexico. The company announced its second discovery off the coast of Angola July 31. It has yet to report a profit as a public company, according to data compiled by Bloomberg.
Goldman intends to sell 13 million shares, paring its stake to 12.15 percent from 15.33 percent, according to the filing. Funds controlled by Carlyle and Riverstone will also offer 13 million shares, trimming their holdings to 12.15 percent. Funds of First Reserve expect to sell 10 million shares to retain a 12.76 percent stake.
KERN Fund, with investors that include Stanford University and Caisse de depot et placement due Quebec, plans to sell 3.9 million shares, trimming its stake to 5.61 percent from 6.56 percent, according to the filing.
Cobalt’s $1.38 billion of 2.625 percent convertible notes, which mature in December 2019 and can be swapped for shares at about $35.69 each, dropped 3.4 cents to 103.5 cents on the dollar and yielded 2.1 percent at 9:52 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
“We have had successes in our exploration efforts in each of our focus areas,” Cobalt said in the prospectus filed today with the U.S. Securities and Exchange Commission. Cobalt has “long-lived leasehold positions that cannot be replicated,” according to the filing.
Morgan Stanley and Citigroup Inc. will handle the sale with an option to buy as many as 6 million additional shares at the offer price, according to the filing.