An investor in Encore Energy Partners LP (NYSE:ENP) filed a lawsuit alleging breaches of fiduciary duties arising out of the attempt to sell Encore Energy Partners LP too cheaply to Vanguard Natural Resources LLC.
According to the complaint the plaintiff alleges that defendants breached their fiduciary duties in connection with proposed takeover.

On Friday, March 25, 2011, Vanguard Natural Resources LLC (NYSE: VNR) had announced that it has submitted a proposal to the chairman of the Conflicts Committee of the board of directors of the general partner of Encore Energy Partners LP (NYSE: ENP) to purchase all of ENP's outstanding publicly-held units through a unit-for-unit exchange. Vanguard Natural Resources said that subject to negotiation and execution of a definitive agreement, Vanguard Natural Resources would offer 0.72 Vanguard Natural Resources common unit for each outstanding publicly-held ENP common unit as part of a transaction that would be structured as a merger of ENP with a wholly-owned subsidiary of the Company. The offer represents a value of $23.20 per ENP unit and a transaction value of about $567 million.

However, the plaintiff alleges that the deal undervalues Encore Energy Partners LP. In fact ENP units traded as recently as March 22, 2011 at $23.58, thus asking certain investors to hand over their ENP units at a discount. Further more the performance of Fort Worth, Texas based Encore Energy Partners LP for its investors was increasing lately. Encore Energy Partners’ 12months Total Revenue increased from $150.52million in 2009 to $183.75million in 2010. Encore Energy Partners LP was able to come out of a Net Loss of $40.33million in 2009 and report a Net Income of $32.07million in 2010. In addition Vanguard Natural Resources LLC said it owns 100 percent of the general partner of ENP and owns approximately 46% of the outstanding common units of ENP.