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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF JUNE, 2000
PETSEC ENERGY LTD
Level 13, 1 Alfred Street
Sydney, NSW 2000
Australia
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F]
Form 20-F X Form 40-F
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[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No X
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PETSEC ENERGY LTD
ACN 000 602 700
17 June 2000
PETSEC ENERGY INC REACHES AGREEMENT WITH CREDITORS
Sydney, Australia - Petsec Energy Ltd (ASX: PSA and OTC BB: PSJEY) today
announced that its wholly owned USA subsidiary, Petsec Energy Inc., has reached
agreement with the unsecured creditors committee to sell Petsec Energy Inc. or
all of its assets. The unsecured creditors committee was appointed following
the Chapter 11 filing by Petsec Energy Inc. on April 13, 2000. Subject to
approval by the Bankruptcy Court presiding over Petsec Energy Inc.'s Chapter 11
proceedings, Houlihan Lokey Howard & Zukin Capital, L.P. will be managing the
divestiture process for Petsec Energy Inc. and the unsecured creditors
committee.
Houlihan Lokey will be distributing an information memorandum describing the
assets of Petsec Energy Inc. to potential interested parties. All sale
transactions will be subject to the approval of the Bankruptcy Court.
Petsec Energy Inc. anticipates filing a Plan of Reorganisation which
contemplates an agreed distribution of the sale proceeds to the creditors, the
equity owner and certain of Petsec Energy Inc.'s senior management team in the
USA. A copy of the term sheet which sets out the contemplated distribution
follows.
Petsec is an independent oil and gas exploration and production company
operating in the shallow waters of the US Gulf of Mexico. The Company's
corporate office is in Sydney, Australia. Field operations are managed in the
US from Lafayette, Louisiana.
All inquiries concerning the divestiture of Petsec Energy Inc.'s assets should
be directed to the following professionals at Houlihan Lokey:
Andrew B. Miller, Managing Director
Matthew R. Niemann, Vice President
Brett A. Lowrey, Associate
Houlihan Lokey Howard & Zukin Capital, L.P.
(310) 553-8871 (phone)
(310) 553-4024 (fax)
1930 Century Park West
Los Angeles, CA 90067-6802
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All other inquiries concerning Petsec should be directed to:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(61) 2 9247 4605 (phone) (337) 989 1942 (phone)
(61) 2 9251 2410 (fax) (337) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette, Louisiana 70503-3402
Company information is available at Petsec's website http://www.petsec.com
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1. Information in this report which relates to hydrocarbon reserves is based
on information compiled by a person qualified in accordance with Listing
Rule 5.11 and accurately reflects the information compiled by that person.
2. Certain statements in this report regarding future expectations and
plans of the Company may be regarded as "forward-looking statements"
within the meaning of Section 27A of the USA Securities Act of 1933 and
Section 21E of the USA Securities Exchange Act of 1934. Although the
Company believes that its expectations and plans are based upon reasonable
ssumptions, it can give no assurance that its goals will be met. Actual
results may vary significantly from those anticipated due to many factors,
including oil and gas prices, operating hazards, drilling risks,
environmental risks and uncertainties in interpreting engineering and
other data relating to oil and gas reservoirs, as well as other risks
discussed in the Company's SEC filings.
<PAGE> 4
PETSEC ENERGY INC.
Term Sheet for Plan of Reorganization
June 16, 2000
I. Parties to Term Sheet
Petsec (USA) Inc. ("PUSA")
Petsec Energy Inc. ("Petsec")
Undersigned holders of the 9 1/2% Senior Notes due 2007
(the "Notes") issued by Petsec
Senior Management of Petsec
The Official Committee of Unsecured Creditors (the "Committee")
of Petsec
II. Framework
Petsec and/or all the assets of Petsec will be sold as promptly as practicable.
During the sale process, Petsec will, in accordance with a budget (the
"Budget") agreed to by Petsec, the Committee and Foothill Capital Corporation
("Foothill"), (a) continue to operate its business in the ordinary course,
including managing its trade accounts payable in the ordinary course consistent
with past practice and (b) make capital expenditures necessary to preserve the
value of Petsec's assets. The process, timing and budget for the marketing and
sale of Petsec and/or its assets (the "Marketing Process") shall be agreed to
by Petsec and the Committee. The net proceeds of all sales of Petsec assets
after payment in full of Petsec's obligations to Foothill and amounts necessary
to assume and assign any contracts or leases related to the assets sold and in
excess of the amounts necessary to operate Petsec in accordance with the Budget
shall be deposited in an interest-bearing escrow account, which proceeds shall
not be used by Petsec without the consent of the Committee or an order of the
Bankruptcy Court.
III. Sale Terms
a. Any sale of Petsec or any of its assets shall be subject to
the consent of the Committee. Acceptance of a bid for
consideration other than cash that does not include
sufficient cash to pay the Foothill Debt, priority claims and
the Carve-Out Amounts contemplated hereby will also require
the consent of Petsec, PUSA and Senior Management.
b. Houlihan Lokey Howard & Zukin Capital, L.P. ("HLHZ") shall
serve as the transaction broker (the "Transaction Broker")
subject to being terminated by Petsec as provided in the
following sentence. Provided that (i) Petsec files a plan
which incorporates the terms of the Term Sheet and in no way
materially impairs the rights accorded the holders of the
Notes (the "Noteholders") under the Term Sheet; and (ii)
Petsec (w) circulates a draft of such plan to the Committee
and its advisors on or before May 26, 2000; (x) circulates a
draft of the disclosure statement to such plan (the
"Disclosure Statement") to the Committee and its advisors on
or before June 5, 2000; (y) files such Plan and Disclosure
Statement with the Court on or before June 30, 2000; and (z)
seeks to obtain a hearing on the Disclosure Statement, which
hearing shall occur on or before July 31, 2000, then, so long
as Petsec satisfies its obligations under clauses (i) and
(ii) hereinabove set forth, Petsec may, at its option,
terminate HLHZ as the Transaction Broker if, on or before the
earlier of (i) forty-five days after the entry of a final
order approving the adequacy of the
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Disclosure Statement or (ii) the date for submission of
ballots on the Plan, HLHZ fails to procure in writing,
binding commitments to vote to accept the Plan of at least
two-thirds in amount and more than one-half in number of the
claims held by the Noteholders that vote to accept or reject
the Plan.
c. Petsec and the Committee will jointly implement the sale in
accordance with the Marketing Process incorporating the
economic terms set forth herein relative to the allocation of
sales proceeds.
IV. Distribution of Sales Proceeds
The proceeds of the sale of Petsec and/or its assets shall be distributed in
the following order of priority:
a. The Foothill Debt;
b. Transaction costs, contract and lease assumption costs and claims
having priority over the Noteholders' claims (including (i) claims of
Petsec's senior management (the "Senior Management")1 for severance
benefits under their employment agreements or otherwise in an
aggregate amount not to exceed $491,303 (the "Guaranteed Payment")
which together with the Incentive Payment (as defined below) shall
constitute payment in full for any and all severance or related claims
asserted or assertable by Senior Management); (ii) claims of Petsec
employees (including Senior Management) for accrued and unpaid
vacation pay in an amount set out on Exhibit J of the Employee Motion
(as defined below); (iii) claims of Petsec employees (exclusive of
Senior Management) payable in accordance with the Petsec Energy Inc.
Year 2000 Severance Plan (the "Employee Severance"); and (iv)
reasonable professional fee claims of Akin, Gump, Strauss, Hauer &
Feld, L.L.P.; Vinson & Elkins L.L.P.; HLHZ; and Gordian Group, L.P.
("Gordian Group"), provided however, that Petsec's engagement letter
with Gordian Group shall be amended in accordance with Exhibit A
hereto. To the extent any of the amounts for the Guaranteed Payment
and/or Employee Severance are not paid, such amount shall be available
for distribution to Petsec's creditors, PUSA and the PUSA and Senior
Management Carve-Out Amounts in accordance with the terms set forth
herein.
c. To the extent not paid pursuant to paragraph IV.b. hereof, all
priority tax claims in cash in full in the ordinary course or as
otherwise required by applicable law.
d. Payment to the following on a pari passu basis:
(i) the Noteholders , including all interest, fees and expenses
accrued as of the petition date (who will carve out a portion of the
Noteholders' recoveries in accordance with the "Carve-Out Agreement"
described below);
(ii) all other unsecured claims on par with the Noteholders;(2)
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1 Senior Management shall be defined to include only John T. Bellatti,
Howard H. Wilson, William R. Sack, James E. Slatten, III, and Ross A. Keogh.
2 The Petsec Plan of Reorganization shall provide for an administrative
convenience class in the amount of up to $5000 per unsecured claim.
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e. The Noteholders in an amount equal to any amounts carved out of
Noteholders' recoveries under the Carve-Out Agreement;
f. The holder of the subordinated shareholder loan; and
g. The holder of equity interests in Petsec.
V. Carve-Out Agreement
a. The Noteholders agree to carve out from their recovery and allow
Petsec to pay to PUSA and the Senior Management, as applicable,
amounts (the "Carve-Out Amounts") representing the following
percentages of the actual distributions payable to the Noteholders in
the bankruptcy case (the "Recovery"); provided however, that the costs
incurred in connection with the prosecution of, and the proceeds of,
any claims asserted or assertable by the Debtor or the Committee under
Chapter 5 of the United States Bankruptcy Code (or similar state law
cause of action) shall be excluded from the calculation of the
Recovery for purposes of determining the Carve-Out Amounts. PUSA may
retain its portion of the Carve-Out Amounts on account of its equity
interest in Petsec (the "Equity Claim") or its subordinated
shareholder loan (the "Shareholder Loan Claim").
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Noteholders' Recovery PUSA Carve-Out Amounts Senior ManagementCarve-Out Amounts
===============================================================================================================
<S> <C> <C>
Less than $60 Million 3.375% of Recovery 1.375% of Recovery
---------------------------------------------------------------------------------------------------------------
$60 to less than $70 Million Above, plus 6.375% of Recovery from Above, plus 1.375% of Recovery
$60 to $70 Million from $60 to $70 Million
---------------------------------------------------------------------------------------------------------------
$70 to less than $80 Million Above, plus 9.375% of Recovery from Above, plus 1.375% of Recovery
$70 to $80 Million from $70 to $80 Million
---------------------------------------------------------------------------------------------------------------
$80 to less than $90 Million Above, plus 12.375% of Recovery from Above, plus 1.375% of Recovery
$80 to $90 Million from $80 to $90 Million
---------------------------------------------------------------------------------------------------------------
$90 to less than $100 Million Above, plus 15.375% of Recovery from Above, plus 1.375% of Recovery
$90 to $100 Million from $90 to $100 Million
---------------------------------------------------------------------------------------------------------------
$100 Million to 100% Recovery Above, plus 18.375% of Recovery from Above, plus 1.375% from $100
$100 Million to 100% Recovery million to 100% Recovery
---------------------------------------------------------------------------------------------------------------
</TABLE>
b. The Senior Management Carve-Out Amount shall be allocated as
incentive payments (the "Incentive Payments") among the Senior
Managers in accordance with the percentages set forth on Exhibit I to
the Employee Motion. Guaranteed Payment, accrued vacation, and the
Incentive Payment shall be payable in accordance with the Motion for
Authority to Continue Year 2000 Severance Plan and Vacation Policy, To
Assume Modified Key Employment Agreements and Approve Management
Incentive Plan (the "Employee Motion"), substantially in form as filed
by Petsec with the Bankruptcy Court on May 5, 2000. The relief
requested in the Employee Motion shall be approved by a separate,
signed order of the Bankruptcy Court on the same date that HLHZ is
appointed as Transaction Broker.
c. Provided that the Transaction Broker's terms of engagement contain
similar time-based incentives, the foregoing PUSA and Senior
Management Carve-Out Amounts shall be increased or decreased as
follows:
(i)If one or more purchase and sale agreements or similar transaction
agreements is entered into for the sale or transfer of Petsec or any
of its assets after January 18, 2000, but on or before September 15,
2000 (and such agreement or agreements close on or before October
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30, 2000), the PUSA and Senior Management Carve-Out Amounts shall be
increased by 20% with respect to that portion of the aggregate gross
consideration attributable to the assets transferred pursuant to such
agreement or agreements or any topping offers that are received in
respect of the underlying assets (the "Pre-September 15th Gross
Consideration") as it relates to the total aggregate gross
consideration received for all of Petsec and/or its assets (the "Total
Aggregate Gross Consideration"). The calculation of the foregoing is
as follows: (PUSA and Senior Management Carve-Out Amounts) x (1.20) x
(Pre-September 15th Gross Consideration / Total Aggregate Gross
Consideration).
(ii)If one or more purchase and sale agreements or similar transaction
agreements is entered into for the sale or transfer of Petsec or any
of its assets after September 15, 2000, but on or before December 15,
2000 (and such agreement or agreements close on or before January 31,
2001), then the PUSA and Senior Management Carve-Out Amounts shall not
be adjusted under this Paragraph with respect to that portion of the
aggregate gross consideration attributable to the assets transferred
pursuant to such agreement or agreements or any topping offers that
are received in respect of the underlying assets.
(iii)If one or more purchase and sale agreements or similar
transaction agreements is entered into for the sale or transfer of
Petsec or any of its assets after December 15, 2000, the PUSA and
Senior Management Carve-Out Amounts shall be decreased by 20% with
respect to that portion of the aggregate gross consideration
attributable to the assets transferred pursuant to such agreement or
agreements or any topping offers that are received in respect of the
underlying assets (the "Post-December 15th Gross Consideration") as it
relates to the Total Aggregate Gross Consideration. The calculation of
the foregoing is as follows: (PUSA and Senior Management Carve-Out
Amounts) x (0.80) x (Post-December 15th Gross Consideration/Total
Aggregate Gross Consideration). This clause shall not apply in the
event a "reasonable" written sale offer is received prior to December
15, 2000, but rejected by the Committee. A written offer shall be
deemed "reasonable" only if the asset or assets subject to such offer
are subsequently sold at a price that is equal to or less than the
price contained in the rejected offer.
d. The Shareholder Loan Claim and the Equity Claim shall be satisfied out
of the PUSA Carve-Out Amount and any deficiencies on such claims shall
be subordinate to the claims of Noteholders. To the extent that such
claims are paid on or after January 18, 2000 from sources other than
the PUSA Carve-Out Amount, the PUSA Carve-Out Amount shall be reduced
on a dollar-for-dollar basis.
VI. Implementation
Petsec and the Committee will use their best efforts to implement the
Marketing Process as promptly as practicable as contemplated hereby.
Petsec also will file a plan of reorganization (the "Plan") and, if
necessary or required by the buyer, a Section 363 Sale Motion as
promptly as practicable. The Plan will provide for the distribution of
the sale proceeds in accordance with the terms set forth above save
and except the payment of funds contemplated in the Employee Motion
which shall be covered by a separate order of the Bankruptcy Court.
<PAGE> 8
EXHIBIT A
TO
TERM SHEET FOR PLAN OF REORGANIZATION
Gordian Group's engagement letter dated October 15, 1999 (the
"Engagement Letter), shall be modified in the following respects:
1. Gordian Group shall waive any Additional Fees relating to any
Financial Transaction consummated after February 1, 2000.
2. Gordian Group shall be approved as Petsec's financial advisor for
the duration of Petsec's Chapter 11 bankruptcy case.
3. Petsec's estate's obligation to pay Gordian Group's fees and
expenses shall be the longer of (a) three (3) months or (b) such period as may
be required by Petsec's DIP/cash collateral lender as a condition of lending in
Chapter 11, but in no event shall the estate's obligation for Gordian's fees be
less than $195,000. Subject to the limitation on the estate's obligation to pay
Gordian Group's fees set forth in the preceding sentence, Gordian Group shall
continue to be paid $65,000 per month provided that the total payments to
Gordian Group under the Engagement Letter shall not exceed $1,500,000.
<PAGE> 9
PETSEC ENERGY LTD
(A.C.N. 000 602 700)
19 June 2000
PETSEC ENERGY INC. REACHES AGREEMENT WITH CREDITORS
Sydney, Australia - Petsec Energy Ltd (ASX: PSA and OTC BB: PSJEY) announced on
17 June, 2000 that its wholly owned US subsidiary, Petsec Energy Inc. ("PEI")
had reached agreement with the unsecured creditors committee to sell PEI or all
of its assets. The unsecured creditors committee was appointed following the
Chapter 11 filing by PEI on 13 April, 2000. Subject to approval by the US
Bankruptcy Court presiding over PEI's Chapter 11 proceedings, Houlihan Lokey
Howard & Zukin Capital, L.P. will be managing the divestiture process for PEI
and the unsecured creditors committee. PEI will continue to manage its
operations through the sales process.
PEI anticipates it will file a Plan of Reorganisation with the US Court in the
near future, which will incorporate the terms of the distribution of the sale
proceeds to the creditors, Petsec Energy Ltd and certain of PEI's senior
management team in the USA. On acceptance of the Plan of Reorganisation by the
Court, the agreement will be confirmed. On completion of this process, expected
within the current year to 31 December 2000, the PEI assets and debt will be
removed from the Petsec Energy Ltd consolidated balance sheet, with a positive
effect on shareholders' equity.
There is no recourse to Petsec Energy Ltd under the terms of PEI's secured and
subordinated debt documentation. Petsec Energy Ltd's assets, apart from PEI,
include approximately A$26 million in cash.
Once the Plan of Reorganisation has been confirmed by the Court, Petsec Energy
Ltd will be in a position to deploy its financial resources to begin rebuilding
the Company.
All inquiries concerning Petsec should be directed to:
In Australia: In USA:
Terry Fern, Managing Director Ross Keogh, Chief Financial Officer
Petsec Energy Ltd Petsec Energy Ltd
(61) 2 9247 4605 (phone) (337) 989 1942 (phone)
(61) 2 9251 2410 (fax) (337) 989 7271 (fax)
Level 13, Gold Fields House 143 Ridgeway Drive, Suite 113
1 Alfred Street, Sydney NSW 2000 Lafayette, Louisiana 70503-3402
Company information is available at Petsec's website http://www.petsec.com.au
------------------------
1. Information in this report which relates to hydrocarbon reserves is based
on information compiled by a person qualified in accordance with Listing
Rule 5.11 and accurately reflects the information compiled by that person.
2. Certain statements in this report regarding future expectations and
plans of the Company may be regarded as "forward-looking statements"
within the meaning of Section 27A of the USA Securities Act of 1933 and
Section 21E of the USA Securities Exchange Act of 1934. Although the
Company believes that its expectations and plans are based upon reasonable
assumptions, it can give no assurance that its goals will be met. Actual
results may vary significantly from those anticipated due to many factors,
including oil and gas prices, operating hazards, drilling risks,
environmental risks and uncertainties in interpreting engineering and
other data relating to oil and gas reservoirs, as well as other risks
discussed in the Company's SEC filings.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PETSEC ENERGY LTD
Date: June 19, 2000 By: /s/Ross A. Keogh
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Name: Ross A. Keogh
Title: Chief Financial Officer
