Financially troubled energy producer Coho Energy Inc. announcedthat after several modifications, its plan for a bankruptcyreorganization was approved earlier this month by the U.S.Bankruptcy Court for the Northern District of Texas. The confirmedplan is anticipated to begin March 31. Coho could not be reachedfor comment before press time.
The modifications include the retention by the commonshareholders as of Feb. 7, of 20% of any proceeds from Coho’slawsuit against Hicks, Muse, Tate & Furst as well as 40% of anynet sale proceeds from the company’s Tunisia permit.
The Dallas-based company is suing the investment firm because of afailed merger attempt in 1999 (see Daily GPI, March 15). The failed deal and the weakcommodity price environment of 1998 and part of 1999 were the two mainfactors that put Coho on the path toward bankruptcy.
The company has also announced a change in the number of sharesto be outstanding after the effectiveness of the plan. Instead ofissuing shares at a one-for-one ratio, it will dole out the sharesat a ratio of one new share for every 40 old shares. Coho hopesthis change will help it meet Nasdaq listing requirements moreefficiently. The majority of the Coho stock will be issued to thecompany’s bondholders and it will not affect the relativepercentage ownership interests among various groups ofshareholders.
Also as part of the plan, Jeffrey Clarke, Coho president andCEO, is expected to resign once the reorganization becomeseffective. The CEO change results from the request of the majorityholders of Coho’s 8 7/8% bonds and was not a decision taken by theboard of directors, the company said in a statement.
Once the reorganization goes into effect, Mike McGovern, amanaging director of Pembrook Capital Corp. and formerly CEO ofEdisto Resources Corp., is expected to be elected as the new CEO.
Coho’s proved reserves for 1999 rose 3.1% to 107.7 millionbarrels of oil and NGLs and 40.6 Bcf of gas from 100.0 millionbarrels of oil and 66.3 Bcf at the end of 1998, Coho said. Itreported a loss of $30.7 million ($1.20/share) for the year ascompared to a loss of $203.3 million ($7.94/share) in 1998.Included in 1999 results are charges totaling $4.2 million relatingto reorganization costs and tax penalties as well as a $5.4 millioncharge associated with multiple asset writedowns.
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