Tulsa World: No SemGroup peace seen

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No SemGroup peace seen
Observers expect a fight fiercer than what has already transpired.

By ROD WALTON World Staff Writer
Published: 5/14/2009 2:32 AM
Last Modified: 5/14/2009 4:20 AM

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

SemGroup LP's long-awaited reorganization plan should be filed Friday, but it may not be the end of the Tulsa energy company's road past Chapter 11 bankruptcy.

In fact, the SemGroup executives' struggle with a would-be bidder, the New York billionaire John Catsimatidis, is only getting started, sources say. Too much money and too much of the company's future is at stake.

"Their plan will not go unchallenged," the Tulsa money manager Fred Russell, who has watched the SemGroup battles for 10 months, said Wednesday. "I would think this is just the first round in an increasingly bitter and complicated struggle about who will control this company."

U.S. Bankruptcy Judge Brendan L. Shannon gave SemGroup the exclusive right to file a plan on how to emerge from Chapter 11. That right expires Friday. A company spokesman, Tom Becker, could not give details about what that specific plan might offer, but CEO Terry Ronan's earlier memo to employees hinted that it might emerge as a public entity focused on its SemCrude unit.

"The company remains on schedule to file a plan of reorganization on May 15," Becker said. "I can't provide any color of what the plans are going to look like."

The aftermath, however, promises to be colorful. Ronan and other executives

have waged a legal battle with Catsimatidis almost since the New Yorker visited Tulsa with promises of keeping the tiered oil, gas and asphalt terminal, pipeline and transportation company intact and in town.

Catsimatidis has experience with saving Chapter 11 companies, having guided United Refining Co. through bankruptcy reorganization in the late 1980s. His tactics since he took control of SemGroup's management committee have not been popular with some executives and creditors, reports say.

Ronan initially said that he welcomed Catsimatidis' interest in helping the company. Later, the SemGroup CEO warned that the billionaire erred in not trying to work through court-approved consultants such as Blackstone Advisory Group and AlixPartners.

Catsimatidis' group has said that it believes that the consultants are bleeding the company financially.

Catsimatidis' attorney, Nelson Happy, who is a member of the SemGroup management committee, said his side is trying to stay open-minded about the reorganization plan but believes that the bankruptcy consultants are sure to try to gain from it.

"I think the same professionals who have taken out $50 million (in fees) are going to paper themselves into the deal going forward," Happy said. "They are not about to let go of this plum."

Ronan and other SemGroup officials have said that the consultants, some of whom are paid $795 per hour, perform critical, specialized services that help the company survive during the Chapter 11 process. Many of those consultants also could receive bonuses once SemGroup sells off some assets and emerges from the bankruptcy.

And then there's the matter of who controls SemGroup. Shannon will oversee a May 28 hearing — nearly two weeks after the reorganization plan is filed — in which Catsimatidis and SemGroup attorneys will argue over which of them truly represents the debtor in possession.

"If it's not a valid DIP plan, then it's going to create an issue," Happy said.

SemGroup also needs court and creditor approval for the reorganization plan to proceed, reports say. And even then, Russell said, the reorganized company faces an uncertain future.

Forget Catsimatidis vs. Ronan. What about a rapidly shifting oil and gas market, the involvement of federal investigations, hedge funds and the constricted credit environment?

"I don't see a very easy solution," Russell said. "Everybody seems ready to fight."

SemGroup’s road to reorganization

July 22, 2008: SemGroup LP files for Chapter 11 protection in Wilmington, Del.

Dec. 15: John Catsimatidis, a new York billionaire, goes public with a plan to take over SemGroup and lead it through reorganization.

Jan. 9: Catsimatidis tells SemGroup creditors that he hopes to deliver a reorganization plan by the end of that month. He still has not released a specific plan.

Feb. 11: SemGroup LP executives sue Catsimatidis, alleging that he violated a confidentiality agreement.

March 9: ronan sends a memo to employees that says SemGroup may emerge from bankruptcy as a public company focused on its SemCrude unit.

March 20: SemGroup asks the bankruptcy judge for a 90- day extension on exclusive rights to file a reorganization plan by mid-June. Bank of America objects, and the judge settles on a may 15 deadline.

April 1: SemGroup’s management committee, led by Catsimatidis, sues SemGroup Ceo Terry ronan, alleging that he has thwarted the group’s efforts to guide the company through Chapter 11.

Friday: The last day of Sem- Group’s exclusive right to file a reorganization plan for creditor and court approval.

May 28: A Delaware court hearing is to begin on Catsimatidis vs. ronan issues.

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

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	Report Comment chase, rogers county (5/14/2009 8:00:28 AM) No one cares.
	Report Comment Hawktalk, (5/14/2009 8:29:55 AM) Chase: Correction: Law firm meters are running. They care.
	Report Comment bent, (5/14/2009 8:45:43 AM) As an employee, I almost wish Cat man would give up and let this thing die peacefully so that we can know what is going to happen and so that we can move on with our lives, one way or the other. We are tired of the unknown more than anything and would really just like for it to be over. You've got Ronan in one corner fighting for his "ex"-employer, BOA, and Cat man that is fighting just to prove that he can win. Come on guys and do something good for the employees instead of yourselves.
	Report Comment OKBackbone42, (5/14/2009 9:42:17 PM) I fully support the employees and management (unculpable management, IF it turns our there is wrongdoing) in this struggle to keep the company afloat and in Tulsa. From a local perspective though, it troubles me to see these profitable, large companies constantly experiencing trouble in Tulsa. Since the Penn Square disaster, it seems that energy companies, through no fault of the city's, have experienced trouble while being located in Tulsa. Situations such as Citgo, Williams, Sunoco jumping ship to Houston, SemGroup, only make Tulsa less attractive to locate large energy business. I hope the Sem companies come out of this with flying colors. I truly do. Hang in there folks.
	Report Comment joker, (5/21/2009 12:59:29 PM) Do not trust Ronan or McCarthy. Everyone I know that is gone makes more money now. They didn't pay that well. That place was like socialism. People made the same, if you worked or didn't work, didn't matter. Glad FP is back. He really cares...but seems to be the only one. ML did, but he is now gone to bigger and better things.

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