Tulsa World: SemGroup spiral

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SemGroup spiral

By ROD WALTON World Staff Writer
Published: 7/12/2009 2:22 AM
Last Modified: 7/12/2009 8:36 AM

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

Related story: SemGroup's shadow.

Tom Kivisto: 'Whiz kid' co-founder flopped

Tom Kivisto was the whiz kid who turned the energy world on its ear when he co-founded SemGroup and built it into a midstream giant. By July 2008, however, Kivisto's house of oil futures trading cards crashed into a heap of debt. He was placed on leave in mid-July and fired later that year.

His personal wealth, estimated at more than $200 million, may be dwarfed by the $300 million or more he allegedly owes SemGroup for oil futures trading done on behalf of his personal ventures. He has denied any wrongdoing and is still occasionally spotted around Tulsa.

Gregory Wallace: Co-founder floating in lawsuits

The reputed financial mastermind behind SemGroup, co-founder Wallace was paid $16.8 million in the 12 months prior to the company’s bankruptcy .

He left on paid disability leave shortly before the Chapter 11 filing and reportedly still lives in Tulsa.

The U.S. examiner’s report accused Wallace of misconduct as

SemGroup’s chief financial officer.

He did not talk to investigators. Wallace, however, recently accused the company of “throwing him under the proverbial bus” and making him a target of the probe. The co-founder also is fighting a lawsuit filed against him by SemGroup’s creditors.

Kevin Foxx: Survived to run SGlP

Kevin Foxx joined his Foxx Transports trucking firm with Tom Kivisto’s Eaglwing energy trading operation to form what became SemGroup in 2000. He was accused by U.S.

Examiner Louis Freeh of helping mismanage the company into bankruptcy and resigned his SemGroup executive and board positions in July 2008.

Foxx, however, survived that ordeal and kept his role as CEO of publicly traded subsidiary SemGroup Energy Partners. SGLP did not file for bankruptcy and later gained a credit waiver from its senior lenders.

Terry Ronan: Overseer opposes takeover

The longtime New Englander may or may not have known what he was getting into when he left Merrill Lynch Capital to oversee SemGroup’s finances in March 2008.

By May, Ronan was expressing fears about depleted cashflow and, two months later, he was named CEO amid the financial collapse.

Ronan has overseen all of SemGroup’s Chapter 11 journey, including the sale of its SemMaterials and SemFuels assets. He also has opposed New York billionaire John Catsimatidis in the suitor’s highly publicized attempt to take control of the company, although both men met to discuss their respective reorganization efforts recently.

John Catsimatidis: Business meddler or savior?

The brash New Yorker — is there any other kind? — originally made his fortune in the grocery business, but later branched out to real estate, aviation and energy.

Catsimatidis believes that he knows best how to guide Sem- Group through Chapter 11 reorganization, just as he did with United Refining Co. in the late 1980s.

His reorganization plan, however, is known only to a few insiders and has not been publicly dissected. Catsimatidis is still confident of victory in his battle for SemGroup. “I’m an optimist,” he said recently. “Hopefully sanity will prevail.

Probes

U.S. examiner blamed Kivisto for firm’s demise; SEC, U.S. Attorney still on it

Former FBI Director Louis Freeh’s appointment as U.S. examiner investigating Sem- Group’s bankruptcy gained some national attention, but it was his April 15 report which turned the most heads. The 258-page document went straight to the top, blaming CEO Tom Kivisto for SemGroup’s demise through what it called a secretive, risky futures trading strategy that put the company at least $2.4 billion to $3 billion in the hole.

The U.S. Attorney’s office in Tulsa and federal Securities and Exchange Commission are still looking into the downfall. SemGroup’s Unsecured Creditors Committee and various class-action plaintiffs also are trying to get more information about what happened.

Then and now

Future SemGroup is likely to be a leaner regional player in oil and gas, if...

Who knows what the future holds for SemGroup LP. The umbrella company, one of the nation’s biggest privately held firms a few years ago, no longer has the SemMaterials asphalt unit and likely will sell its SemFuel assets to QuikTrip Corp., Magellan Midstream Partners and others.

The future SemGroup may not boast the international, wide-ranging efforts in asphalt, oil, gas, residual fuels, pipelines, trucking and commodities’ trading. Instead, the SemGroup brand may be smaller, more regional and focused on crude oil storage and transportation. If it survives...

SemGroup timeline

2008

July 17: SemGroup Energy Partners LP’s stock price falls more than 50 percent before its parent company, SemGroup LP, discloses that it is considering filing for bankruptcy.

July 22: SemGroup LP files for bankruptcy protection, admits $2.4 billion in oil trading losses.

July 26: Tom Kivisto emerges from seclusion to read statement, takes no questions.

Aug. 11: SemGroup layoffs begin with 110 jobs locally.

Oct. 13: Former FBI Director Louis Freeh appointed to lead examiner probe of SemGroup LP.

Nov. 18: SemGroup Energy Partners fails to file earnings report for second straight quarter.

Dec. 14: New York billionaire John Catsimatidis steps into SemGroup story, says he can reorganize company, keeping all of its units intact and jobs in Tulsa.

2009

Jan. 7: Reports surface that Catsimatidis and SemGroup LP CEO Terry Ronan are at odds over direction of company’s reorganization.

Feb. 11: SemGroup LP sues Catsimatidis, although he controls its management committee. Catsimatidis later counter-sues Ronan.

March 23: SGLP files first earnings report in more than 10 months. Public SemGroup reports $21.6 million profit — for the second quarter of 2008, months before parent’s bankruptcy.

April 15: Freeh’s examiner’s report primarily blames co-founders Kivisto and Greg Wallace for company’s financial collapse. Neither co-founder talked to investigators.

May 15: SemGroup LP files reorganization plan promising $2.27 billion in equity and cash for creditors. Oil and gas producers eventually balk at payback, and proposal is amended.

June 19: Catsimatidis says his plan is ready. It’s not released to press but he later meets with creditors and SemGroup executives.

July 20: Delaware bankruptcy hearing to consider amended reorganization, Catsimatidis’ role. By ROD WALTON World Staff Writer

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	Report Comment Slatz, Tulsa (7/13/2009 8:07:49 AM) No mention of Anna Hollinger (and how her restaurant D'Novo was funded) or his other alleged GF? Where are they now? D'Novo is still open and I assume her real estate biz (Anna Hollinger Collection / McGraw) is going strong.
	Report Comment FS, Broken Arrow (7/12/2009 11:41:50 AM) Nobody really cares a whit about this company other than they'll miss the money being spread around ("philanthropy").
	Report Comment O&Gtrader, ft. worth (7/12/2009 11:54:09 AM) Let's not forget that none of this had to happen. Smart traders don't ride a losing trade into the ground. The way you can tell if a trader is smart or not is if he/she is still in business. I urge readers of this space to Google "commodity trading money management" and read some of the many hundreds of articles on that subject. They all basically state the same thing. That goes for you bankers, lawyers and oil producers involved in the SemGroup matter out there, too. Money management isn't rocket science.
	Report Comment JoTulsa, Broken Arrow (7/13/2009 3:53:02 PM) "If it survives... " nothing like being optomistic.
	Report Comment fumblerooski, tulsa (7/12/2009 10:42:28 AM) nothing new here, just a rehash of the old story. why don't they do a story on the employees that lost their jobs and what they are doing a year later. i think the general public would be more interested in that,

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