Almost a year after seeking Chapter 11 protection, its improved performance and financial condition helped KCS Energy Inc., Houston, forge an agreement with top creditors on an amended reorganization plan, officials said Tuesday.
Officials of the independent oil and gas producer are arranging the private placement of at least $25 million of preferred stock, convertible into common stock at $3/share. They also are negotiating a new senior secured credit facility to replace two current bank loans.
The company must obtain a commitment for the private placement and complete negotiations for the new loan by Jan. 5, under terms of its agreement with the committee of unsecured creditors, noteholders and Credit Suisse First Boston Corp.
On the effective date of that plan, current shareholders would retain 100% of KCS Energy stock. Trade creditors are to be paid in full �in the ordinary course of business,� officials said. The company also is to repay $60 million of its senior notes as well as past due interest on senior notes and senior subordinated notes as of Jan. 15, compounded semi-annually.
The remaining $90 million principal on the senior notes and $125 million principal of the senior subordinated notes will be renewed under the amended indenture provisions, but without a change in interest rates, said officials.
The maturity of the subordinated notes will be amended to Jan. 15, 2006, from the same date in 2008.
�We are very pleased that the significant improvement in the company�s performance and financial condition have enabled us to reach an agreement with the creditor�s committee and our largest noteholders that should allow us to soon emerge from Chapter 11,� said James W. Christmas, president and CEO of KCS Energy.
�Our agreement also asks the court to defer any hearing on the three existing plans on file and consider only this consensual plan at the confirmation hearing currently scheduled (for) Jan. 30,� he said.
Company officials are to file the amended reorganization plan and its supporting supplemental disclosure statement. Both are subject to the approval of the bankruptcy court.