Stone Energy Corp.'s largest shareholder said he won't support the company's current restructuring plan with noteholders if it files for bankruptcy, saying in a regulatory filing that he has hired counsel to defend common shareholders in the event of those proceedings.
Thomas Satterfield on Tuesday disclosed in a filing with the U.S. Securities and Exchange Commission that he owns 9.9% of Stone's outstanding shares, which cost more than $6 million to acquire. While he holds some of those individually, others are owned by his spouse and company, Tomstat Investment Trading Co. Inc. and another entity in which he has an interest.
Satterfield believes that the restructuring plan "disproportionately impairs the interests of [Stone's] common shareholders and unfairly advantages other stakeholders, especially the issuer's board of directors and management," according to the filing. While Satterfield initially acquired the shares as a passive investor, the filing noted that he "holds the shares with a purpose or effect of changing or influencing control of the issuer."
In October, Stone reached a restructuring agreement with its noteholders, saying it would file for Chapter 11 bankruptcy protection by Dec. 9. The company also sold its Appalachian assets in Northern West Virginia and Northwest Pennsylvania to an affiliate of Tug Hill Inc. for $360 million in cash.
Satterfield said the proposed restructuring plan differs considerably from others outlined late last year. He said he won't support the agreement if it's left unchanged and has hired a law firm to represent the Stone Energy Shareholders Ad Hoc Committee and request that an equity committee be appointed to represent them during bankruptcy proceedings. He also intends to "retain financial advisers" and speak with other common shareholders to help fund those efforts.
After it sold assets in Appalachia, where low prices had squeezed its margins, Stone was left with offshore assets in the Gulf of Mexico. Earlier this year, its credit facility was reduced, which resulted in a borrowing base deficiency that the company warned could breach its lending agreement and lead to default. It hired an adviser to explore strategic alternatives and has been warning of the bankruptcy proceedings. Previous discussions with noteholders failed over the summer before the company announced its restructuring plan in October.
Satterfield also holds some of the company's outstanding 7.5% senior notes due 2022 and some of its outstanding 1.75% senior convertible notes due 2017.