Houston-based independent KCS Energy Inc. is slowly emergingfrom bankruptcy, completing the necessary steps to reorganize,announcing it has signed a production agreement with Enron NorthAmerica Corp. to sell about 17.3% of its oil and gas reserves overthe next five years for $176 million. KCS held nearly 277 Bcfe ofreserves in 2000.

The Enron deal, as well as proceeds from issuing $30 million inpreferred stock and cash, were used to repay KCS’s two bank creditfacilities and $60 million of senior notes. Approved by the U.S.Bankruptcy Court for the District of Delaware, the plan also givesKCS money to pay its trader creditors, the $90 million principalamount of its senior notes and $125 million principal amount ofsenior subordinated notes with no change in interest rates.Shareholders will retain 100% of their common stock.

“We are very pleased that the significant improvement in thecompany’s performance and financial condition have enabled us tocomplete our plan of reorganization and emerge form Chapter 11 amuch stronger company,” said CEO James W. Christmas. “Our debt hasbeen reduced from over $400 million to $215 million. In addition tothe $185 million reduction in debt, we expect to have over $30million in cash on hand at the end of February.”

The independent energy company’s business is centered on theMidcontinent and Gulf Coast regions, and it also purchases reservesthrough its Volumetric Production Payment program. It began itsrocky path toward reorganization in 2000, and the approved plan wasthe third one offered.

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