TGX ANNOUNCES JUDGMENT IN NATIONAL FUEL GAS LITIGATION
TGX ANNOUNCES JUDGMENT IN NATIONAL FUEL GAS LITIGATION SHREVEPORT, La., Dec. 20 /PRNewswire/ -- Since 1984, TGX Corporation
("TGX") has been involved in litigation with National Fuel Gas Distribution Corporation ("NFG") regarding the validity of a contract (the "Contract") pursuant to which TGX sells certain natural gas production to NFG. On Jan. 16, 1991, the New York Federal District Court entered a final summary judgment, certified as final for purposes of appeal, declaring the contract to be void and no longer of any force and effect effective as of Dec. 20, 1983. On Feb. 11, 1991, TGX filed a notice of appeal with the United States Court of Appeals for the second circuit ("Court of Appeals") regarding the final summary judgment of the New York Federal District Court. On Dec. 3, 1991, the Court of Appeals reversed and remanded the judgment of the New York Federal District Court and held that the contract had not been voided and that the contract remains in effect. TGX's current management, its legal counsel and its independent accountants are currently reviewing the decision of the Court of Appeals to ascertain TGX's legal options and the business and accounting consequences of such options.
TGX is currently engaged in a reorganization proceeding pursuant to Chapter 11, Title 11 of the United States Code. On Sept. 4, 1991, a Joint Plan of Reorganization ("Joint Plan") and disclosure statement for TGX were filed with the Bankruptcy Court. On Oct. 15, 1991, the Bankruptcy Court entered an order approving the adequacy of the disclosure statement and setting Jan. 3, 1992, as the date for a hearing on the confirmation of the Joint Plan. As a result of the decision of the Court of Appeals, the Bankruptcy Court has entered an order approving supplemental disclosure relating to the status of the NFG litigation. For the natural gas reserves dedicated under the contract, TGX's calculation of the standard measure of discounted future net cash flows attributable to its oil and gas reserves ("Standardized Measure") has been based upon the pricing provisions of the contract and not the price being received by TGX. TGX's management and legal counsel handling the NFG litigation believe the decision of the second circuit, when and if it becomes final, will have a significant beneficial impact on the financial condition and performance of TGX. However, pending the completion of TGX's review of the Court of Appeals decision and considering the current status of TGX's reorganization proceeding and management (the current board of directors of TGX will be replaced 11 days subsequent to the date of confirmation) a decision by TGX's management regarding TGX's intent and ability to realize the economic effect of the contract, as currently reflected in TGX's calculation of the Standardized Measure, has not yet been made. This decision could have a material affect on TGX's calculation of the Standardized Measure. It the decision of TGX's management results in a reduction of the Standardized Measure, any net capitalized cost related to oil and gas properties in excess of a revised Standardized Measure will be written off. Due to these circumstances, TGX has not filed its report on Form 10-Q for the quarter ended Sept. 30, 1991. In addition, the Bankruptcy Court is closely regulating all material furnished to impaired creditors and stockholders who will vote to accept or reject the joint plan. Until TGX has obtained all the information required to accurately file all reports that are required to be filed pursuant to the appropriate sections of the Securities Exchange Act of 1934 such reports will not be filed by TGX. It is anticipated that the NASDAQ Stock Market will suspend trading of TGX's common stock if TGX's report on Form 10-Q for the third quarter of 1991 is not filed in the near future. On Dec. 16, 1991, a hearing was conducted in the Bankruptcy Court to consider TGX's motion to sell its stock ownership in LEDCO, Inc. ("LEDCO"), a wholly owned subsidiary of TGX. As a result of that hearing, the Bankruptcy Court approved TGX's sale of LEDCO to Steinhardt Partners, L.P. ("Steinhardt"). The total consideration to be paid to TGX by Steinhardt for TGX's stock ownership in LEDCO is $3,000,000 cash and the assignment to TGX by Steinhardt of $3,000,000 of claims owned by Steinhardt that are related to the TGX reorganization proceeding. In addition, Steinhardt has agreed to withdraw its competing plan of reorganization for TGX and vote for and support the joint plan. The amount of aggregate consideration is subject to adjustment for any net increase or decrease in working capital, as defined, between the effective date (Aug. 31, 1991), and the closing date (on or before Dec. 31, 1991). If there is a net decrease in working capital, the maximum decrease of the cash component of the consideration will be $100,000 with any decrease in excess of that amount being applied toward the reduction of the amount of claims to be assigned to TGX. As a result of this transaction, it is anticipated that TGX will report a financial loss on the sale of LEDCO of approximately $1,000,000 to $2,000,000. TGX is a balanced energy company headquartered in Shreveport, La., engaged in the production of oil and gas reserves and in natural gas marketing and transmission. TGX's common stock is traded in the NASDAQ Stock Market weekly bid and ask under the system "XTGXQ." -0- 12/20/91 /CONTACT: George McKellar of TGX, 318-221-0707/ (XTGXQ) CO: TGX Corporation; National Fuel Gas Corporation ST: Louisiana IN: OIL SU: PS-OS -- NY074 -- 4543 12/20/91 16:57 EST
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|Date:||Dec 20, 1991|
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