Oil & Gas Held Separate Business Trustee

As a requirement of the  proposed merger of two major downstream oil & gas companies, the FTC  mandated the divestiture of a large refinery and a number of company  operated retail sites.  When BYG, INC. was operating under the R. Shermer & Company name, we were appointed by both  federal and state regulators as the Held Separate Trustee with oversight  responsibility for the operations of the divested businesses during the period comprising the offering, buyer selection, due diligence, and  transition planning processes.  

The divested units were to be operated and managed as a Held Separate Business (HSB), independent of  their parent company until sold.  The HSB was not considered a legal entity but was to be treated as a competitor of the newly merged-companies.  The Trustee's principal goals were to maintain the  viability and competitiveness of the business and to prevent harm to  competition pending the sale to the ultimate purchaser.  In addition,  the trustee ensured that a "business-as-usual" operating approach was taken. 

The role of the trustee was  two dimensional.  On the one hand, the team monitored both the  competitive environment and the performance of the assets being  divested.  In addition, the monitoring role included confidentiality  compliance and transition planning activities. On the other hand,  managing largely through the HSB Manager, the Trustee provided direction  and leadership to the day-to-day running of the business.  Analogous to  the Board of Directors, the Trustee worked closely with the management  team to ensure the successful operation of the divested assets as  segregated business units.  In addition, the Trustee ensured that HSB  management and staff were not involved in the production, distribution,  sales, marketing, and financial operations of the parent company.  Once  the eventual buyer was selected, the Trustee also monitored the access  of personnel and the flow of information between the parties to assure  that no commercially sensitive information was shared. 

1. Working with management of the HSB to assure that the focus was on "long term" competitiveness. 
2. Monitoring financial and operating results to ensure that business viability was maintained.
3. Developing policies and procedures to satisfy requirements for the separation of business operations. 
4. Developing guidelines and recommending solutions to separate the electronic flow of information. 
5. Addressing employee issues to assure a smooth transition.
6. Facilitating communication between all parties.
7. Reviewing the Transition Services Agreements involving the transfer of assets. 
8. Reviewing the planning involved in the information technology transition.
9. Tracking of the issues raised during the transaction to assure timely resolution.
10. Reporting to the federal and state regulatory agencies involved in the transaction.

The Trustee  was an independent party selected by the seller and appointed by the  FTC and the state agencies involved.  With functional experience in  finance, operations, retail marketing, and information technology, the  Trustee was well positioned to support both the refinery and retail  locations during this period.  When asked about the principal benefits  of having a trustee in place during these types of transactions,  representatives of the companies involved had the following comments:

• "The trustee assured that  there was communication between the government agencies, the buyer, the  seller, and the employees of the HSB"
• "Played the role of referee very effectively and helped resolve a number of issues" 
• "Looked after the people  in the HSB when it appeared no one else was interested in the many  issues that individuals have as they transfer to a new company's benefit  programs"
• "The trustee team has  really helped all involved understand the complexities of our business,  the competitive environment and the transaction"