Tulsa World: Court approves SemGroup plan

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Court approves SemGroup plan
Catsimatidis' exit frees the company to plan its own reorganization.

WALKING AWAY
John Catsimatidis: His United Refining Co. gets control of an asphalt marketing operation in New Mexico and Arizona in exchange for a $3.9 million payment to SemGroup. He and his business partners, including Nelson J. Happy, James Hansel, Myron Turfitt and a Tulsa businessman, Matthew Coughlin, all resigned from the SemGroup management committee.

By ROD WALTON World Staff Writer
Published: 7/31/2009 2:24 AM
Last Modified: 7/31/2009 4:08 AM

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

A bankruptcy judge Thursday approved the settlement between SemGroup LP and John Catsimatidis, formally ending the New Yorker's eight-month bid to guide the Tulsa-based company through reorganization.

The deal, which was completed last week, severs the lawsuits pending between Catsimatidis and SemGroup CEO Terry Ronan. Catsimatidis' departure also frees SemGroup to chart its own path toward reorganization as a public company by October.

"This was hard fought and hotly contested and ultimately achieved a satisfactory solution," U.S. Bankruptcy Judge Brendan L. Shannon said in his Wilmington, Del., courtroom.

Catsimatidis' United Refining Co. gets control of an asphalt marketing operation in New Mexico and Arizona in exchange for a $3.9 million payment to SemGroup. He and business partners including Nelson J. Happy, James Hansel, Myron Turfitt and Tulsa businessman Matthew Coughlin all resigned their positions from SemGroup management.

The group gained a majority of seats on the nine-member committee late last year. They butted heads with Ronan and other SemGroup officials and, in turn, were accused of violating confidentiality pacts and bankruptcy rules.

For their part, Catsimatidis' allies alleged that Ronan was derailing their reorganization efforts.

They tried to penalize Ronan for his opposition, but their control was counter-balanced by the veto power of hedge fund Carlyle/Riverstone's three seats on the board.

The Catsimatidis group later objected to the original disclosure statement of SemGroup's reorganization plan, arguing that the day-to-day executives did not have authority to guide the company.

"The settlement ends any dispute on the debtors' governance and ability to prosecute the plan of reorganization," SemGroup attorney John Strasburger said.

The plan calls for SemGroup to offer $2.26 billion in equity and cash to its creditors, with secured lienholders gaining 95 percent of the public stock in the firm. The confirmation hearing is set Sept. 16.

Catsimatidis earned his $2 billion fortune in the Gristedes and Red Apple grocery chains, then in real estate, aviation and energy. He guided United Refining through its own Chapter 11 reorganization in the late 1980s.

Ronan, who came to SemGroup from Merrill Lynch in early 2008, was named CEO after co-founder Tom Kivisto was placed on administrative leave and eventually fired last summer.

The judge already has approved a search process for a new CEO and board of directors for SemGroup ending later this year.

SemGroup stores and transports oil, natural gas and asphalt for customers. The company was forced into bankruptcy last July after Kivisto and other traders lost at least $2.4 billion in short positions on the oil futures market.

Kivisto eventually appointed Coughlin to take over his management committee seat in December. Catsimatidis and his other partners would join that board a few days later.

A court-appointed examiner, former FBI Director Louis Freeh, filed a report this spring accusing of Kivisto of secretive and risky trading strategy and misleading creditors. The examiner's report does not have indictment power, but the Securities and Exchange Commission and other federal authorities also are looking into factors behind SemGroup's collapse.

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

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Some reader comments for this story were copied from "Settlement between SemGroup, suitor approved," which was published on 7/30/2009.

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