| NEW YORK
NEW YORK Nov 25 Billionaire investors Wilbur
Ross and Prem Watsa are backing a $273 million rights offering
by oil and gas company Exco Resources Inc as it works to
raise money to drill newly acquired assets.
The company announced the offering on Monday, four days
after the resignation of former Chief Executive Doug Miller.
Under the terms of the offering, shareholders will receive
the right to buy one new share for $5 for every four shares
they own. Ross and Watsa's companies have agreed to buy the
shares that Exco's other shareholders do not purchase.
Exco shares closed up 4.3 percent at $5.59. They closed at
$5.15 on Nov. 20, the day before Miller announced his departure.
Ross, who owns 14 percent of Exco's shares, said in an
interview he would not be committing more capital to Exco unless
he believed in its prospects.
"I think it speaks for itself," he said.
In 2010 and 2011, Miller led a group of the company's
investors in several attempts to take the company private for as
much as $20.50 a share, or nearly $4.4 billion.
Since then, the shares of Dallas-based Exco have been
battered by the company's high exposure to low-price natural gas
reserves in fields that include the Haynesville shale in
In 2012, 93 percent of the company's proved reserves were
gas, according to its annual filing with the U.S. Securities and
Exchange Commission. Exco bought acreage in the Eagle Ford shale
in south Texas from Chesapeake in July this year for $685
million to increase its exposure to more profitable crude oil.
Ross, who is also on Exco's Board of Directors, said the
agreement to backstop the offering was not related to Miller's
"They are two separate events. One is a personnel matter and
this is a capital matter ... We were obviously aware of Doug's
departure at the time when we agreed to stand behind the half of
the offering," he said.
He said the company's pressing issues are to find a new
chief executive, complete the rights offering and prove the
assets they own are viable.
"They have a lot of prospects," Ross said. "They have a lot
of reserves. They have amassed, I believe, a large capital
budget for drilling. A lot of what's needed is simply to prove
up the reserves that they have."
On Thursday, Exco said it would spend $368 million next
year, up sharply from the $273 million it planned to spend in