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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 27, 2000
MICHAEL PETROLEUM CORPORATION
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(Exact name of registrant as specified in its charter)
Texas 333-52263* 76-0510239
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
13101 Northwest Freeway,
Suite 320
Houston, Texas 77040
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (713) 895-0909
* The Commission File Number refers to a Form S-4 Registration Statement
filed by the Registrant under the Securities Act of 1933 which was
declared effective on July 22, 1998.
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Item 3. Bankruptcy or Receivership.
On July 27, 2000, the United States Bankruptcy Court for the Southern
District of Texas (the "Bankruptcy Court") entered an order (the"Confirmation
Order") confirming the Second Amended Joint Plan of Reorganization dated June
12, 2000 (the "June 12, 2000 Plan"), for Michael Petroleum Corporation
("MPC"), Michael Petroleum Alpha Corporation ("MPA"), one of MPC's
subsidiaries, and Michael Holdings, Inc. ("MHI"), MPC's parent company
(collectively, the "Debtors"), as such June 12, 2000 Plan was subsequently
supplemented and modified as further described below (the June 12, 2000 Plan,
as supplemented and modified, is hereinafter referred to as the "Plan"). The
effective date of the Plan is August 11, 2000 (the "Effective Date"). Copies
of the Plan, the Confirmation Order, and those certain related Findings of
Fact and Conclusions of Law of the Bankruptcy Court, regarding confirmation
of the Plan (the "Findings"), are filed herewith.
On December 10, 1999, the Debtors filed with the Bankruptcy Court
petitions for relief under Chapter 11 of the Bankruptcy Code. After the
filing of the petitions, the Debtors continued to operate their businesses
and manage their properties as debtors-in-possession. Shortly after the
petitions were filed, the Debtors obtained an order of the Bankruptcy Court
permitting the Debtors to pay royalty owners in the ordinary course of
business (for both pre and post petition amounts owing). Following a
marketing process, the Debtors and their financial advisers, with the
cooperation of the Official Committee of Unsecured Creditors (the
"Committee") and its financial advisers, negotiated with a limited number of
potential acquirers and other interested parties. As a result of these
negotiations, it was determined that the best option for a restructuring of
the Debtors was the proposal of El Paso Energy Corporation and EnCap Energy
Advisors, LLC (collectively, "EnCap") through an acquisition entity, MP
Acquisition Company, LLC ("MPAC"), to acquire MPC and/or its assets for $107
million in cash.
Effective June 30, 2000, pursuant to the terms of the June 12, 2000
Plan, the Debtors and MPAC entered into the Acquisition Agreement. The
Acquisition Agreement contemplated the merger of MPA and MHI with and into
MPC, and for MPC to file Amended and Restated Articles of Incorporation with
the Secretary of State of Texas. All shares of capital stock of the Debtors
(and all warrants, options or other rights associated therewith) were to be
canceled.
On July 27, 2000, a hearing was held in the Bankruptcy Court
concerning confirmation (the "Confirmation Hearing") of the June 12, 2000
Plan. The June 12, 2000 Plan was subsequently supplemented by a Plan
Supplement filed by the Debtors on July 20, 2000 (the "Plan Supplement"), and
was also subsequently modified by the Debtors' First Modification of Debtors'
Second Amended Joint Plan of Reorganization Dated June 12, 2000, filed July
20, 2000, and by the terms of the Confirmation Order.
The following is a general summary of the material features of the
Plan. The following summary is qualified in its entirety by the terms of the
Plan and the Confirmation Order. For
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purposes of the Plan, the Debtors were considered to be one consolidated
entity. Any reference to a claim against a particular Debtor is for ease of
reference.
The Plan provides that all administrative claims will be paid in full
in cash on the later of (a) the Effective Date of the Plan (or as soon
thereafter as practicable), (b) the date that any such claim becomes an
allowed claim, or (c) such other date as is agreed upon by MPC, as
reorganized ("Reorganized MPC") and the holder of any such claim. The Plan
provides that all prepetition priority tax claims will either receive (a)
cash in full on the later of (i) the Effective Date (or as soon thereafter as
practicable), (ii) 30 days after the date on which an order allowing any such
claim becomes a final non-appealable order, (iii) the last day the tax claim
may be paid under applicable law without penalty or interest, or (iv) such
other date as is agreed upon by Reorganized MPC and the holder of any such
claim; or (b) with respect to tax claims of a kind described in Section
507(a)(8) of the Bankruptcy Code, deferred cash quarterly payments over a
period not to exceed six years after the date of assessment of any such
claim, of a value, as of the Effective Date of the Plan, equal to the allowed
amount of such claim.
For all claims other than administrative claims and prepetition
priority tax claims, there were six classes delineated in the Plan: (1) Class
1 consisted of all Allowed Priority Claims under Section 507(a)(2) or (9) of
the Bankruptcy Code against the Debtors; (2) Class 2 consisted of the Allowed
Secured Claim of Christiania Bank against MPC arising from the Credit
Agreement dated May 15, 1998 among MPC, as Borrower, Christiania Bank, as
Administrative Agent, and the Lenders named therein, as modified by the First
Amendment to Credit Agreement dated March 29, 1999 and the Second Amendment
to Credit Agreement dated August 1, 1999; (3) Class 3A consisted of the
Allowed Secured Claims of Mineral Contractors and Mineral Subcontractors
against MPC and Class 3B consisted of four miscellaneous "other" secured
claims in connection with vehicles or equipment; (4) Class 4 consisted of all
Allowed Unsecured Claims, including but not limited to (a) the Allowed
Unsecured Claims of the Holders of the 11 1/2 % Senior Notes against MPC and
MPA, (b) the Allowed Unsecured Claim of Enron Capital & Trade Resources
Corp., (c) Rejection Claims and (d) any Allowed Unsecured Claim of Mineral
Contractors and Mineral Subcontractors who were either not perfected or
undersecured; (5) Class 5 consisted of all Allowed Unsecured Claims against
the Debtors, other than the Claims of any Holders of Senior Notes, of
Creditors who were either (i) owed $15,000 or less in amount or (ii)
Classified in Class 4 and owed in excess of $15,000, but who elected to
accept $15,000 cash in full satisfaction of their Claims; (6) Class 6
consisted of all Interests in the Debtors (inclusive of rights arising out of
ownership of common stock and all rights arising out of contracts, options or
warrants to purchase common stock) and any Allowed Claims relating thereto.
Additionally, Class 6 was divided into three sub-classes:
Class 6A consisted of the Holders of the MPC Common Stock.
Class 6B consisted of the Holders of the MPA Common Stock.
Class 6C consisted of the Holders of the MHI Common Stock.
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On the Effective Date, any and all administrative claims and
prepetition priority tax claims that had already become allowed claims,
including, but not limited to, certain "cure" payments owing in connection
with certain assumed executory contracts, certain court-approved employee
retention bonuses, and certain expenses of MPAC, were paid in cash in full.
Additionally, on the Effective Date, each holder of an Allowed Priority Claim
(Class 1) against the Debtors was paid in cash in full the allowed amount of
such claim, to the extent permitted under the applicable provision of Section
507(a) of the Bankruptcy Code, or, alternatively, such claims will be paid in
cash in full the allowed amount of such claims on the first business day
after any such claims become allowed claims. A total of $1,264,968 in cash
was paid to administrative and priority claimants on the Effective Date, with
another $7,783,878 being reserved for administrative and priority claims that
are either in dispute or are subject to the bankruptcy fee application
process.
Also on the Effective Date, Christiania Bank (Class 2) was paid in
cash the Allowed Amount of its Secured Claim, in the aggregate amount of
$24,410,252, in full satisfaction and discharge of its lien.
Each Mineral Contractor and Mineral Subcontractor (Class 3A) with a
valid and properly perfected lien on any assets of the Debtors was paid in
cash the Allowed Amount of its Secured Claim in full satisfaction and
discharge of its lien on the Effective Date. The Allowed Amount of such
Mineral Contractor or Mineral Subcontractor's Secured Claim was determined by
the value of the assets of the Debtors to which the lien attached or, in some
cases, by stipulation (entered into with the oversight and involvement of the
Creditors Committee). To the extent the amount of any Mineral Contractor or
Mineral Subcontractor's Claim exceeded the value of the assets to which such
lien attached, the Mineral Contractor or Mineral Subcontractor had a Class 4
or Class 5 Claim for the amount of the deficiency. Any Mineral Contractor or
Mineral Subcontractor that did not hold a valid and properly perfected lien
on any Assets of the Debtors was treated as a Class 4 or 5 Creditor, as
applicable. A total of $2,176,774 in cash was paid to Class 3A claimants on
the Effective Date, with another $886,784 being reserved for Class 3A claims
that are still disputed. Additionally, each secured creditor of a kind
classified in Class 3B was treated as unimpaired under the Plan, as of the
Effective Date, and will be paid going forward by the Reorganized MPC in
accordance with contractual terms.
Also on the Effective Date, each Holder of an Allowed Unsecured Claim
(Class 4) was paid, at the option of each Class 4 Creditor, either in cash or
in shares of Reorganized MPC Common Stock, its PRO RATA share of the Net Plan
Consideration. Only one Class 4 creditor made a valid election to accept
shares of Reorganized MPC Common Stock (CFSC Wayland Advisers, Inc.). Thus,
on the Effective Date, CFSC Wayland Advisers, Inc. was issued 473,684 shares
of Reorganized MPC Common Stock, and all other Class 4 creditors received
their PRO RATA share of $50,241,246 of cash distributed on the Effective Date
(with certain additional amounts of Net Plan Consideration being reserved for
disputed Class 4 claims). State Street Bank and Trust Company, as Indenture
Trustee in respect of the Senior Notes, made the distributions of cash to the
holders of Senior Notes, and the Reorganized MPC made all other cash
distributions to Class 4 claimants, as well as the distributions of
Reorganized MPC Common
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Stock and cash to CFSC Wayland Advisers, Inc. (CFSC Wayland Advisers, Inc.
received $1,659,360 cash, as part of the PRO RATA consideration owing to it
under the Plan, in addition to Reorganized MPC Common Stock). As of the
Effective Date, Senior Notes represent only the right to participate in the
distributions provided in the Plan with respect to the Senior Notes claims.
Also on the Effective Date, each Holder of an Unsecured Convenience
Claim (Class 5) was paid in cash the lesser of the full amount of its Claim
or $15,000. Each Holder of an Unsecured Claim in excess of $15,000 (Class 4)
could have elected, on its ballot in connection with the Plan, to take
$15,000 in full and final satisfaction of its Claim. A total of $305,577 of
cash was distributed to Class 5 unsecured creditors on the Effective Date,
with additional amounts reserved for Class 5 claims that are still disputed.
The MPC, MPA and MHI Common Stock (Class 6), and all options,
warrants or other rights associated therewith, were canceled and of no
further force or effect as of the Effective Date. On the Effective Date, the
Reorganized MPC issued 1,000,000 shares ($0.10/share par value) of new
Reorganized MPC Common Stock. The Holders of Allowed Interests and Claims in
Classes 6A and 6B did not receive any distribution on account of their
Interests or Claims. The Holders of Allowed Interests and Claims in Class 6C
received an aggregate of 4.386% of the total shares of Reorganized MPC Common
Stock issued on the Effective Date (I.E., 43,860 shares), and MPAC (which was
issued 482,246 shares) and CFSC Wayland Advisers, Inc. (which was issued
473,684 shares) collectively received the remaining 95.614% of the total
shares of Reorganized MPC Common Stock issued on the Effective Date. The
shares of Reorganized MPC Common Stock distributed to the Class 6C Interest
Holders came only from that portion of the Private Equity Issue of
Reorganized MPC Common Stock that would have otherwise been distributed to
MPAC, and not from the portion of the Private Equity Issue of Reorganized MPC
Common Stock available for distribution to any Electing Class 4 Creditor.
There are currently a total of 10,000,000 shares of Reorganized MPC Common
Stock authorized for issuance under its charter.
On the Effective Date, the transactions closed, and MPAC issued its
membership interests to El Paso Energy Corporation or its designee. All MPC
Common Stock (and options, warrants, and rights associated therewith) were
canceled, and MPC, MPA and MHI merged, with MPC as the survivor, to become
Reorganized MPC. Reorganized MPC filed its Amended and Restated Articles of
Incorporation with the Secretary of State of Texas which conformed to the
provisions of the Plan. Also on the Effective Date, 100% of the shares of the
Reorganized MPC Common Stock were issued under the Private Equity Issue to
MPAC, to the sole Electing Class 4 Creditor (CFSC Wayland Advisers, Inc.),
and to the Class 6C Interest Holders in accordance with the percentages
attributable to them. Finally, subject to the Reserve provisions of the Plan,
cash was distributed to Creditors in accordance with the terms of the Plan
and the Bankruptcy Code.
On the Effective Date, Reorganized MPC reserved sufficient cash to be
distributed to holders of disputed claims, rejection claims that are
unliquidated claims as of the Effective Date,
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unpaid Administrative Claims and any other Claims that could not, for any
reason, be paid on the Effective Date. The cash Reserve established on the
Effective Date was in excess of $9 million. Any and all Cash reserved which
was not distributed on the Effective Date will be distributed to the
Creditors as soon as is reasonably practicable.
Financial information regarding the assets and liabilities of the
Company is set forth in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2000, which is specifically incorporated into this
Form 8-K by reference. For a further description of the proposed acquisition
and restructuring, see the Second Amended Joint Plan of Reorganization dated
June 12, 2000, as subsequently supplemented by the "Plan Supplement" filed on
July 20, 2000, and as subsequently modified by the Debtors' First
Modification of Debtors' Second Amended Joint Plan of Reorganization Dated
June 12, 2000, filed July 20, 2000, and by the Confirmation Order.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
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2.1 Debtors' Second Amended Joint Plan of Reorganization
Dated June 12, 2000.
2.2 "Plan Supplement" filed by the Debtors on July 20,
2000 (inclusive of Acquisition Agreement by and among
the Debtors and MPC dated June 30, 2000 and Amended
and Restated Articles of Incorporation and Bylaws for
Reorganized MPC).
2.3 Debtors' First Modification of Debtors' Second
Amended Joint Plan of Reorganization Dated June 12,
2000, filed July 20, 2000.
2.4 Order of the United States Bankruptcy Court for the
Southern District of Texas, entered July 27, 2000,
confirming the Debtors' Second Amended Joint Plan of
Reorganization Dated June 12, 2000.
2.5 Findings of Fact and Conclusions of Law of the United
States Bankruptcy Court for the Southern District of
Texas, entered July 27, 2000, regarding Confirmation
of Debtors' Second Amended Joint Plan of
Reorganization Dated June 12, 2000.
2.6 Michael Petroleum Corporation Quarterly Report on
Form 10-Q for the quarter ended March 31, 2000, which
exhibit is incorporated herein by reference to the
Form 10Q filed May 19, 2000.
2.7 Press Release, dated August 14, 2000, announcing
effectiveness of the Second Amended Joint Plan of
Reorganization Dated June 12, 2000, as supplemented
and modified.
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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 hereunto duly authorized.
MICHAEL PETROLEUM CORPORATION
By: /s/ Glenn D. Hart
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Glenn D. Hart
Chief Executive Officer
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