Tulsa World: SemGroup may exit court Nov. 30

MAKE US YOUR HOMEPAGE | Wednesday, February 10, 2010 | WIRELESS

Home > Business

Newspaper View Print this story

Comment

RSS

Bookmark

SemGroup may exit court Nov. 30
The oil and gas transport company prepares to emerge from bankruptcy.

By ROD WALTON World Staff Writer
Published: 11/20/2009 2:23 AM
Last Modified: 11/20/2009 4:46 AM

Complete coverage: Read all the stories and documents related to the SemGroup collapse.

SemGroup LP's 16-month journey through Chapter 11 should end in less than two weeks, a company attorney told a bankruptcy judge Thursday.

The Tulsa-based midstream oil and gas company anticipates exiting court protection Nov. 30, SemGroup attorney Martin Sosland told U.S. Bankruptcy Judge Brendan L. Shannon in Wilmington, Del.

Now privately held, SemGroup will emerge as a reorganized, publicly traded company focused on crude oil transportation and storage services.

"The exit facility documents were posted to various exit lenders last Sunday night," Sosland said. "Comments are being circulated this week. It's anticipated that signatures will be obtained prior to Thanksgiving."

SemGroup lined up about $500 million in exit financing, according to a reorganization plan approved by the court and creditors last month. The company plans to offer about $2.4 billion in cash and equity to creditors as a public company.

Listing on an exchange, such as the Nasdaq Stock Market or the New York Stock Exchange, will wait until early next year, according to reports.

Shannon also approved a $400,000 bonus for CEO Terry Ronan, who has guided SemGroup ever since co-founder Tom Kivisto was replaced. A Bankruptcy Examiner's report has accused Kivisto of misleading creditors and trading partners, enriching himself with millions of dollars in improper bonuses, and guiding a secretive, risky trading strategy that depleted cash flow in order to cover margin calls on the New York Mercantile Exchange.

The SemGroup attorney said Ronan is an exemplary leader during the crisis. Ronan plans to hand over the reins to Norm Szydlowski when the company emerges from Chapter 11.

"Mr. Ronan, in every instance, stood up and did the right thing," Sosland said in court.

Shannon, who previously granted an incentive motion that benefited other SemGroup executives but excluded Ronan because of creditor concerns, did not challenge the latest bonus request.

"I'm satisfied that the award is appropriate," he said.

If SemGroup exits Chapter 11 by Nov. 30, it will cap a busy month. SemGroup's onetime public subsidiary, SemGroup Energy Partners, or SGLP, announced a name change last week to Blueknight Energy Partners.

The parent SemGroup's liquidity crisis became public 16 months ago when traded units of SGLP tanked from $22 to $11 in one day. SemGroup sought Chapter 11 protection a few days later, detailing at least $2.4 billion in lost margin calls and billions more in debt to secured and unsecured creditors.

The company filed its fourth reorganization plan before gaining approvals from producers, creditors and the judge. A yearlong battle over payment for oil and gas bought on credit was settled when SemGroup offered more than $300 million to producers.

Earlier this week the company hired a presumptive chief financial officer, Bob Fitzgerald, a former Windsor Energy Partners executive and longtime Tulsan. He takes the post held until last year by SemGroup co-founder Gregory Wallace.

Kivisto, Wallace and Kevin Foxx formed what was later named SemGroup in 2000. The company grew by leaps and bounds, making national lists by 2005 with billions in annual revenue.

By May 2008, SemGroup was in the second year of sponsoring Tulsa's LPGA professional golf tournament. Two months later, the charade of solvency crashed when the trading losses and other debts became public.

Wallace and Foxx also were accused of mismanaging the company. All three SemGroup co-founders and other executives were later sued by their former employer in bankruptcy count. Kivisto, Wallace and Foxx have denied any wrongdoing and are fighting the lawsuit.

The U.S. Securities and Exchange Commission also has investigated the company.

Rod Walton 581-8457
rod.walton@tulsaworld.com By ROD WALTON World Staff Writer

Newspaper View Print this story

Comment

RSS

Bookmark

Reader Comments

Show: Most Recent Comment First

Add your comment

1 comments have been made on this story so far. Tell us what you think below!

Reporting Comments

If you see a comment that violates our terms and conditions, please help us by clicking the "Report this Comment" link next to a comment. That will alert the web staff to review the comment. Thank you. -- Web Editor Jason Collington

Report Comment

Jack Hammer, (11/21/2009 9:16:30 PM)

Thank God I can look back at all this mess now and smile.

At SEM, you had good, hard-working people, breaking their backs in all weather conditions, at twelve-plus hours a clip for next-to-nothing raises, having to do all kinds of cowboy stuff just to keep things running.

Meanwhile, the execs grant each other half-million dollar bonuses, while hiring lawyer friends as bankruptcy consultants making more in weekly salaries than those operators make in a year.

Tom Kivisto still walks free with more cash than some third-world countries, taking the fifth to avoid self-incrimination, laughing as he pile drove people's stock investments into the ground, and over a thousand good people into Twoweekseveranceville.

The best thing that ever happened to me was leaving that nonsense forever. I traded the cold and Carhartts for SMART boards and 7AM-to-2PM work days, making alot more money, getting much better benefits and a pension, all without the day-to-day uncertainty that existed at SEM.

Good luck to everyone still there, and those that have moved on. SEM never deserved such good, loyal people.

Add Your Comment
In order to post a comment on this article, you must sign in to Tulsaworld.com. If you do not have a site account, you can create an account for free.