Petsec Energy Inc. Reaches Agreement With Creditors.Business Editors SYDNEY Sydney, city, Australia Sydney, city (1991 pop. 3,097,956), capital of New South Wales, SE Australia, surrounding Port Jackson inlet on the Pacific Ocean. Sydney is Australia's largest city, chief port, and main cultural and industrial center. , Australia--(BUSINESS WIRE)--June 16, 2000 Petsec Energy Ltd (ASX ASX See: Australian Stock Exchange :PSA (Professional Services Automation) An information system designed to organize, track and manage all opportunities, work, resources, costs, revenues and invoices to improve the productivity and efficiency of the workforce. ) (OTCBB OTCBB See OTC Bulletin Board (OTCBB). :PSJEY) today announced that its wholly owned USA subsidiary, Petsec Energy Inc., has reached agreement with the unsecured creditors Unsecured Creditor An individual or institution that lends money without obtaining specified assets as collateral. This poses a higher risk to the creditor because they have nothing to fall back on should the borrower default on the loan. A debenture holder is an unsecured creditor. committee to sell Petsec Energy Inc. or all of its assets. The unsecured creditors committee was appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. following the Chapter 11 filing by Petsec Energy Inc. on April 13, 2000. Subject to approval by the Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. presiding pre·side intr.v. pre·sid·ed, pre·sid·ing, pre·sides 1. To hold the position of authority; act as chairperson or president. 2. To possess or exercise authority or control. 3. over Petsec Energy Inc.'s Chapter 11 proceedings Chapter 11 Proceedings Provisions of the Bankruptcy Reform Act under which the debtor firm is reorganized by a court because the estimated value of the reorganized firm exceeds the expected proceeds from its liquidation. , Houlihan Lokey Howard Howard, English noble family. Landowners in Norfolk from the 13th cent., the Howards obtained the duchy of Norfolk through the marriage of Sir Robert Howard to Margaret Mowbray, daughter of Thomas Mowbray, 1st duke of Norfolk. & Zukin Capital, L.P. will be managing the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). process for Petsec Energy Inc. and the unsecured creditors committee. Houlihan Lokey will be distributing an information memorandum Information memorandum A document detailing the project and project financing, usually in connection with a syndication. describing the assets of Petsec Energy Inc. to potential interested parties. All sale transactions will be subject to the approval of the Bankruptcy Court. Petsec Energy Inc. anticipates filing a Plan of Reorganisation Noun 1. reorganisation - the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet which contemplates an agreed distribution of the sale proceeds to the creditors, the equity owner and certain of Petsec Energy Inc.'s senior management team in the USA. A copy of the term sheet which sets out the contemplated distribution follows. Petsec is an independent oil and gas exploration and production company operating in the shallow waters See:
Golfo de Mexico Atlantic, Atlantic Ocean - the 2nd largest ocean; separates North and South America on the west from Europe and Africa on the east . The Company's corporate office is in Sydney, Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. . Field operations are managed in the US from Lafayette, Louisiana Lafayette is a city on the Vermilion River in Lafayette Parish, in the U.S. state of Louisiana. [1] [2] Lafayette is the parish seat. As of the 2000 census, the city had a total population of 110,257; a 2004 census estimate put the metro area's population at . All inquiries concerning the divestiture of Petsec Energy Inc.'s assets should be directed to the following professionals at Houlihan Lokey:
Andrew B. Miller, Managing Director
Matthew R. Niemann, Vice President
Brett A. Lowrey, Associate
Houlihan Lokey Howard & Zukin Capital, L.P.
310/553-8871 (phone)
310/553-4024 (fax)
1930 Century Park West
Los Angeles, CA 90067-6802
All other inquiries concerning Petsec should be directed to:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(61) 2 9247 4605 (phone) (337) 989 1942 (phone)
(61) 2 9251 2410 (fax) (337) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette, Louisiana 70503-3402
Company information is available at Petsec's website:
http://www.petsec.com.au.
1. Information in this report which relates to hydrocarbon
reserves is based on information compiled by a person
qualified in accordance with Listing Rule 5.11 and accurately
reflects the information compiled by that person.
2. Certain statements in this report regarding future
expectations and plans of the Company may be regarded as
"forward-looking statements" within the meaning of Section 27A
of the USA Securities Act of 1933 and Section 21E of the USA
Securities Exchange Act of 1934. Although the Company believes
that its expectations and plans are based upon reasonable
assumptions, it can give no assurance that its goals will be
met. Actual results may vary significantly from those
anticipated due to many factors, including oil and gas prices,
operating hazards, drilling risks, environmental risks and
uncertainties in interpreting engineering and other data
relating to oil and gas reservoirs, as well as other risks
discussed in the Company's SEC filings.
PETSEC ENERGY INC.
Term Sheet for Plan of Reorganization
June 16, 2000
I. Parties to Term Sheet
Petsec (USA) Inc. ("PUSA")
Petsec Energy Inc. ("Petsec")
Undersigned holders of the 9 1/2% Senior Notes due
2007 (the "Notes") issued by Petsec
Senior Management of Petsec
The Official Committee of Unsecured Creditors (the
"Committee") of Petsec
II. Framework
Petsec and/or all the assets of Petsec will be sold as promptly as
practicable. During the sale process, Petsec will, in accordance with
a budget (the "Budget") agreed to by Petsec, the Committee and
Foothill Capital Corporation ("Foothill"), (a) continue to operate its
business in the ordinary course, including managing its trade accounts
payable in the ordinary course consistent with past practice and (b)
make capital expenditures necessary to preserve the value of Petsec's
assets. The process, timing and budget for the marketing and sale of
Petsec and/or its assets (the "Marketing Process") shall be agreed to
by Petsec and the Committee. The net proceeds of all sales of Petsec
assets after payment in full of Petsec's obligations to Foothill and
amounts necessary to assume and assign any contracts or leases related
to the assets sold and in excess of the amounts necessary to operate
Petsec in accordance with the Budget shall be deposited in an
interest-bearing escrow account, which proceeds shall not be used by
Petsec without the consent of the Committee or an order of the
Bankruptcy Court.
III. Sale Terms
a. Any sale of Petsec or any of its assets shall be subject
to the consent of the Committee. Acceptance of a bid for
consideration other than cash that does not include
sufficient cash to pay the Foothill Debt, priority claims
and the Carve-Out Amounts contemplated hereby will also
require the consent of Petsec, PUSA and Senior Management.
b. Houlihan Lokey Howard & Zukin Capital, L.P. ("HLHZ") shall
serve as the transaction broker (the "Transaction Broker")
subject to being terminated by Petsec as provided in the
following sentence. Provided that (i) Petsec files a plan
which incorporates the terms of the Term Sheet and in no
way materially impairs the rights accorded the holders of
the Notes (the "Noteholders") under the Term Sheet; and
(ii) Petsec (w) circulates a draft of such plan to the
Committee and its advisors on or before May 26, 2000; (x)
circulates a draft of the disclosure statement to such
plan (the "Disclosure Statement") to the Committee and its
advisors on or before June 5, 2000; (y) files such Plan
and Disclosure Statement with the Court on or before June
30, 2000; and (z) seeks to obtain a hearing on the
Disclosure Statement, which hearing shall occur on or
before July 31, 2000, then, so long as Petsec satisfies
its obligations under clauses (i) and (ii) hereinabove set
forth, Petsec may, at its option, terminate HLHZ as the
Transaction Broker if, on or before the earlier of (i)
forty-five days after the entry of a final order approving
the adequacy of the Disclosure Statement or (ii) the date
for submission of ballots on the Plan, HLHZ fails to
procure in writing, binding commitments to vote to accept
the Plan of at least two-thirds in amount and more than
one-half in number of the claims held by the Noteholders
that vote to accept or reject the Plan.
c. Petsec and the Committee will jointly implement the sale
in accordance with the Marketing Process incorporating the
economic terms set forth herein relative to the allocation
of sales proceeds.
IV. Distribution of Sales Proceeds
The proceeds of the sale of Petsec and/or its assets shall be
distributed in the following order of priority:
a. The Foothill Debt;
b. Transaction costs, contract and lease assumption costs and
claims having priority over the Noteholders' claims (including
(i) claims of Petsec's senior management (the "Senior
Management")(1) for severance benefits under their employment
agreements or otherwise in an aggregate amount not to exceed
$491,303 (the "Guaranteed Payment") which together with the
Incentive Payment (as defined below) shall constitute payment
in full for any and all severance or related claims asserted
or assertable by Senior Management); (ii) claims of Petsec
employees (including Senior Management) for accrued and unpaid
vacation pay in an amount set out on Exhibit J of the Employee
Motion (as defined below); (iii) claims of Petsec employees
(exclusive of Senior Management) payable in accordance with
the Petsec Energy Inc. Year 2000 Severance Plan (the "Employee
Severance"); and (iv) reasonable professional fee claims of
Akin, Gump, Strauss, Hauer & Feld, L.L.P.; Vinson & Elkins
L.L.P.; HLHZ; and Gordian Group, L.P. ("Gordian Group"),
provided however, that Petsec's engagement letter with Gordian
Group shall be amended in accordance with Exhibit A hereto. To
the extent any of the amounts for the Guaranteed Payment
and/or Employee Severance are not paid, such amount shall be
available for distribution to Petsec's creditors, PUSA and the
PUSA and Senior Management Carve-Out Amounts in accordance
with the terms set forth herein.
c. To the extent not paid pursuant to paragraph IV.b. hereof, all
priority tax claims in cash in full in the ordinary course or
as otherwise required by applicable law.
d. Payment to the following on a pari passu basis:
(i) the Noteholders, including all interest, fees and
expenses accrued as of the petition date (who will carve out a
portion of the Noteholders' recoveries in accordance with the
"Carve-Out Agreement" described below);
(ii) all other unsecured claims on par with the
Noteholders;(2)
e. The Noteholders in an amount equal to any amounts carved out
of Noteholders' recoveries under the Carve-Out Agreement;
f. The holder of the subordinated shareholder loan; and
g. The holder of equity interests in Petsec.
V. Carve-Out Agreement
a. The Noteholders agree to carve out from their recovery and
allow Petsec to pay to PUSA and the Senior Management, as
applicable, amounts (the "Carve-Out Amounts") representing the
following percentages of the actual distributions payable to
the Noteholders in the bankruptcy case (the "Recovery");
provided however, that the costs incurred in connection with
the prosecution of, and the proceeds of, any claims asserted
or assertable by the Debtor or the Committee under Chapter 5
of the United States Bankruptcy Code (or similar state law
cause of action) shall be excluded from the calculation of the
Recovery for purposes of determining the Carve-Out Amounts.
PUSA may retain its portion of the Carve-Out Amounts on
account of its equity interest in Petsec (the "Equity Claim")
or its subordinated shareholder loan (the "Shareholder Loan
Claim").
PUSA Senior Management
Noteholders' Recovery Carve-Out Amounts Carve-Out Amounts
--------------------- ----------------- ------------------
Less than $60 Million 3.375% of Recovery 1.375% of Recovery
$60 to less than $70 Million Above, plus 6.375% Above, plus 1.375%
of Recovery from of Recovery from
$60 to $70 Million $60 to $70 Million
$70 to less than $80 Million Above, plus 9.375% Above, plus 1.375%
of Recovery from of Recovery from
$70 to $80 Million $70 to $80 million
$80 to less than $90 Million Above, plus 12.375% Above, plus 1.375%
of Recovery from of Recovery from
$80 to $90 million $80 to $90 million
----------------------------- ------------------- -------------------
$90 to less than $100 Million Above, plus 15.375% Above, plus 1.375%
of Recovery from of Recovery from
$90 to $100 Million $90 to $100 Million
$100 Million to 100% Recovery Above, plus 18.375% Above, plus 1.375%
of Recovery from from $100 million
$100 Million to 100% to 100% Recovery
Recovery
b. The Senior Management Carve-Out Amount shall be allocated as
incentive payments (the "Incentive Payments") among the Senior
Managers in accordance with the percentages set forth on
Exhibit I to the Employee Motion. Guaranteed Payment, accrued
vacation, and the Incentive Payment shall be payable in
accordance with the Motion for Authority to Continue Year 2000
Severance Plan and Vacation Policy, To Assume Modified Key
Employment Agreements and Approve Management Incentive Plan
(the "Employee Motion"), substantially in form as filed by
Petsec with the Bankruptcy Court on May 5, 2000. The relief
requested in the Employee Motion shall be approved by a
separate, signed order of the Bankruptcy Court on the same
date that HLHZ is appointed as Transaction Broker.
c. Provided that the Transaction Broker's terms of engagement
contain similar time-based incentives, the foregoing PUSA and
Senior Management Carve-Out Amounts shall be increased or
decreased as follows:
(i) If one or more purchase and sale agreements or similar
transaction agreements is entered into for the sale or
transfer of Petsec or any of its assets after January 18,
2000, but on or before September 15, 2000 (and such agreement
or agreements close on or before October 30, 2000), the PUSA
and Senior Management Carve-Out Amounts shall be increased by
20% with respect to that portion of the aggregate gross
consideration attributable to the assets transferred pursuant
to such agreement or agreements or any topping offers that are
received in respect of the underlying assets (the
"Pre-September 15th Gross Consideration") as it relates to the
total aggregate gross consideration received for all of Petsec
and/or its assets (the "Total Aggregate Gross Consideration").
The calculation of the foregoing is as follows: (PUSA and
Senior Management Carve-Out Amounts) x (1.20) x (Pre-September
15th Gross Consideration/Total Aggregate Gross
Consideration).
(ii) If one or more purchase and sale agreements or similar
transaction agreements is entered into for the sale or
transfer of Petsec or any of its assets after September 15,
2000, but on or before December 15, 2000 (and such agreement
or agreements close on or before January 31, 2001), then the
PUSA and Senior Management Carve-Out Amounts shall not be
adjusted under this Paragraph with respect to that portion of
the aggregate gross consideration attributable to the assets
transferred pursuant to such agreement or agreements or any
topping offers that are received in respect of the underlying
assets.
(iii) If one or more purchase and sale agreements or similar
transaction agreements is entered into for the sale or
transfer of Petsec or any of its assets after December 15,
2000, the PUSA and Senior Management Carve-Out Amounts shall
be decreased by 20% with respect to that portion of the
aggregate gross consideration attributable to the assets
transferred pursuant to such agreement or agreements or any
topping offers that are received in respect of the underlying
assets (the "Post-December 15th Gross Consideration") as it
relates to the Total Aggregate Gross Consideration. The
calculation of the foregoing is as follows: (PUSA and Senior
Management Carve-Out Amounts) x (0.80) x (Post-December 15th
Gross Consideration/Total Aggregate Gross Consideration). This
clause shall not apply in the event a "reasonable" written
sale offer is received prior to December 15, 2000, but
rejected by the Committee. A written offer shall be deemed
"reasonable" only if the asset or assets subject to such offer
are subsequently sold at a price that is equal to or less than
the price contained in the rejected offer.
d. The Shareholder Loan Claim and the Equity Claim shall be
satisfied out of the PUSA Carve-Out Amount and any
deficiencies on such claims shall be subordinate to the claims
of Noteholders. To the extent that such claims are paid on or
after January 18, 2000 from sources other than the PUSA
Carve-Out Amount, the PUSA Carve-Out Amount shall be reduced
on a dollar-for-dollar basis.
VI. Implementation
Petsec and the Committee will use their best efforts to
implement the Marketing Process as promptly as practicable as
contemplated hereby. Petsec also will file a plan of
reorganization (the "Plan") and, if necessary or required by
the buyer, a Section 363 Sale Motion as promptly as
practicable. The Plan will provide for the distribution of
the sale proceeds in accordance with the terms set forth
above save and except the payment of funds contemplated in
the Employee Motion which shall be covered by a separate
order of the Bankruptcy Court.
PETSEC ENERGY INC.
By:_________________________________________
Name:
Title:
PETSEC (USA) INC.
By:_________________________________________
Name:
Title:
JOHN T. BELLATTI
____________________________________________
HOWARD H. WILSON
____________________________________________
WILLIAM R. SACK
____________________________________________
JAMES B. SLATTEN, III
____________________________________________
ROSS A. KEOGH
____________________________________________
THE OFFICIAL COMMITTEE OF UNSECURED
CREDITORS OF PETSEC ENERGY INC.
SUN AMERICA INVESTMENTS INC.
By:______________________________________
Kaye Handley
Committee Co-Chair
FIDELITY MANAGEMENT & RESEARCH CO.
By:______________________________________
William P. Wall
Committee Co-Chair
EVERGREEN STRATEGIC INCOME FUND
By:______________________________________
Prescott Crocker
Title:
FIDELITY SUMMER STREET TRUST:
FIDELITY CAPITAL & INCOME FUND
By:______________________________________
Name:
Title:
FIDELITY FIXED -- INCOME TRUST:
FIDELITY HIGH INCOME FUND
By:______________________________________
Name:
Title:
SUN AMERICA INC.
By:______________________________________
Name:
Title:
THE DREYFUS CORP.
By:______________________________________
Roger E. King
Title:
COLONIAL MANAGEMENT ASSOCIATES, INC.
By:______________________________________
Greg Smalley
Title:
EXHIBIT A TO TERM SHEET FOR PLAN OF REORGANIZATION The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. Gordian Gordian (gôr`dēən), name of three Roman emperors. Gordian I (Marcus Antonius Gordianus Africanus), d. 238, was a Roman of great wealth and was colleague in the consulship with Caracalla and with Alexander Severus, who Group's engagement letter dated October October: see month. 15, 1999 (the "Engagement Letter"), shall be modified mod·i·fy v. mod·i·fied, mod·i·fy·ing, mod·i·fies v.tr. 1. To change in form or character; alter. 2. in the following respects: 1. Gordian Group shall waive To intentionally or voluntarily relinquish a known right or engage in conduct warranting an inference that a right has been surrendered. For example, an individual is said to waive the right to bring a tort action when he or she renounces the remedy provided by law for such any Additional Fees relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc any Financial Transaction consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. after February February: see month. 1, 2000. 2. Gordian Group shall be approved as Petsec's financial advisor for the duration of Petsec's Chapter 11 bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most case. 3. Petsec's estate's obligation to pay Gordian Group's fees and expenses shall be the longer of (a) three (3) months or (b) such period as may be required by Petsec's DIP/cash collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. as a condition of lending in Chapter 11, but in no event shall the estate's obligation for Gordian's fees be less than $195,000. Subject to the limitation on the estate's obligation to pay Gordian Group's fees set forth in the preceding sentence, Gordian Group shall continue to be paid $65,000 per month provided that the total payments to Gordian Group under the Engagement Letter shall not exceed $1,500,000. ----------- (1) Senior Management shall be defined to include only John T. Bellatti, Howard H. Wilson, William Wilson, (William Griffith) “Bill W.” (1895–1971) founder of Alcoholics Anonymous; born in East Dorset, Vt. Alcoholism ran in his family and he suffered from a strong sense of inferiority and separation from other people. R. Sack, James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Slatten, III, and Ross Ross , Sir Ronald 1857-1932. British physician. He won a 1902 Nobel Prize for proving that malaria is transmitted to humans by the bite of the mosquito. A. Keogh For the name, see Kehoe. Keogh plans are full fledged pension plans for self employed people. They are sometimes called HR10 plans and are not Individual Retirement Accounts (IRA). . (2) The Petsec Plan of Reorganization shall provide for an administrative convenience class in the amount of up to $5000 per unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. claim. |
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