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FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event Reported) April 17, 1995
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THE COLUMBIA GAS SYSTEM, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-1098 13--1594808
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
20 Montchanin Road, Wilmington, Delaware 19807
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(Address of principal executive offices)
Registrant's telephone number, including area code (302) 429-5000
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Item 5. Other Events
Information contained in a News Release dated
April 17, 1995, is incorporated herein by reference.
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SIGNATURE
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.
The Columbia Gas System, Inc.
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(Registrant)
By /s/ R. E. Lowe
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R.E. Lowe
Vice President and
Controller
Date: April 17, 1995
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Contacts: Media - H. W. Chaddock (302) 429-5261
W. R. McLaughlin (302) 429-5443
Analysts - T. L. Hughes (302) 429-5363
K. P. Murphy (302) 429-5471
FOR IMMEDIATE RELEASE April 17, 1995
COLUMBIA GAS SYSTEM, COLUMBIA TRANSMISSION FILE CHAPTER 11 PLANS
OF REORGANIZATION; ANTICIPATE YEAR END DISTRIBUTIONS TO CREDITORS
WILMINGTON, DEL. -- The Columbia Gas System, Inc. (NYSE:CG),
and its principal pipeline subsidiary, Columbia Gas Transmission Corporation,
today filed separate reorganization plans and disclosure statements with the U.
S. Bankruptcy Court for the District of Delaware.
The Parent Company plan proposes total distributions of
approximately $3.6 billion to its creditors, which includes $2.3 billion in
payment of the Corporation's pre-petition debt and $1.1 billion of interest on
that debt.
Columbia Transmission's filing, which is supported financially
by the Parent Company, amends the plan it filed January 18, 1994, and proposes
a total distribution of approximately $3.9 billion to its creditors, including
approximately $2.2 billion to the Parent Company to resolve its secured and
unsecured debt claims; about $1.2 billion to resolve producer claims, and about
$300 million to resolve other third party claims.
The two companies, which have been operating as
debtors-in-possession since July 31, 1991, also asked the Bankruptcy Court to
extend their exclusive periods for filing plans to October 16, 1995, and
soliciting acceptances to December 18, 1995.
Distributions under the two plans are projected to take place
prior to December 31, 1995. Columbia Gas System Chairman and CEO John H. Croom
said he is optimistic that all necessary creditor, judicial, regulatory and
shareholder approvals for the plans can be obtained by that date. He also said
he expects the Corporation will emerge with investment-grade debt ratings.
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Croom expressed confidence that the required majorities of
creditors of each company and the Parent Company's shareholders "will vote to
approve the plans, recognizing they represent balanced business solutions to
the complex bankruptcy proceedings."
SETTLEMENT AGREEMENTS
The plans incorporate terms of an agreement in principle
reached with virtually all of Columbia Transmission's major producer creditors
and a settlement with its firm service customers.
The producer agreement, which is expected to be filed with the
Bankruptcy Court this week, reflects settlements and minimum distributions for
claims filed against Columbia Transmission by 18 major gas producers and a
group of Appalachian producers. These producers represent in excess of 80
percent of the approximately $1.2 billion that Columbia Transmission's
reorganization plan proposes to distribute to producer creditors to resolve all
producer claims. Producers who reject the settlement offers will be free to
litigate their claims and will receive the same percentage payout on their
claims, when and if ultimately allowed, as received by the settling producers.
The producer agreement in principle requires that the
Bankruptcy Court approve the claim settlements by October 27, 1995 and that
distributions under the plan occur by June 28, 1996.
The plan also incorporates a major settlement between Columbia
Transmission and its firm service customers on numerous Order 636 transition
cost, rate and bankruptcy matters. The agreement also has wide support from
state regulatory commissions and consumer advocates. The settlement will be
filed with the Federal Energy Regulatory Commission today.
PARENT COMPANY PLAN
The Parent Company plan proposes paying creditors the full
amount of their principal balances and accrued pre- petition interest,
post-petition interest and interest on overdue interest through distribution
of:
- About $900 million in cash, to be funded by new bank debt;
- About $2.1 billion in new debt securities, with maturities
ranging from five to 30 years; and
- About $200 million in preferred stock and $200 million in
dividend enhanced convertible securities.
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The interest rate on the proposed new debt securities and the
dividend rates and other financial terms of the proposed new equity securities
will be based on market levels at the time of emergence.
COLUMBIA TRANSMISSION PLAN
The distribution of approximately $3.9 billion proposed in
Columbia Transmission's amended plan reflects a comprehensive settlement. This
settlement monetizes the enterprise value of Columbia Transmission and provides
for a Parent Company guarantee of all third party distributions required under
the plan, including the customer settlement, along with other considerations
for the retention of Columbia Transmission as a wholly-owned subsidiary of the
Parent Company and the resolution of litigation over the intercompany claims,
producer and other creditor claims and various other issues.
Confirmation of the plan would terminate pending litigation
challenging the status of secured and unsecured debt Columbia Transmission owes
the Parent Company and certain other intercompany transactions.
Columbia Transmission's amended plan proposes paying:
- 100 percent of all priority and administrative claims which
amount to approximately $255 million;
- 100 percent of the Parent Company's secured claim of
approximately $2 billion, including interest, which will be funded with new
debt securities of reorganized Columbia Transmission and all of its equity;
- 100 percent of all unsecured claims of $25,000 or less which
amount to approximately $8 million;
- Approximately $40 million which represents 72.5 percent of
all trade and other miscellaneous unsecured creditor claims in excess of
$25,000;
- Approximately $160 million in customer refunds as provided
under terms of the settlement agreement between Columbia Transmission and its
firm service customers and certain other parties;
- 72.5 percent of the Parent Company's $351 million unsecured
claim; and
- 72.5 percent of the settlement values listed in the plan to
resolve claims filed by producers whose gas supply contracts were rejected or
who have pre-petition claims under
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those contracts in excess of $25,000. Total payout to producers is projected
to be about $1.2 billion.
The precise level of the distributions to producers and their
total amount depends on the ultimate outcome of litigation with producers who
decline the settlements offered to them in Columbia Transmission's plan and
establish claims that are higher or lower that those projected in the plan.
Columbia Transmission's plan provides that until the total
amount of contested producer claims is established, five percent of the amount
distributable to all settling producer claimants will be withheld. This will
be used on a 50/50 basis with a like contribution by reorganized Columbia
Transmission to fund distributions on contested producer claims in excess of
those contemplated by the plan. Any recoveries after the holdback fund is
exhausted would be funded entirely by Columbia Transmission, backed by the
Parent Company's guarantee.
APPROVAL PROCESS
The next steps in the bankruptcy process are for the
Bankruptcy Court to approve the producer settlement and the customer settlement
and the two companies' disclosure statements. In addition, the Parent Company
plan and the Parent Company's financial participation in Columbia
Transmission's plan require Securities and Exchange Commission approval under
the Public Utility Holding Company Act. FERC approval of the customer
settlement is also necessary.
After obtaining these approvals, some of which can occur
concurrently, the Parent Company will send a copy of its reorganization plan
and disclosure statement and a report of the SEC to each of its creditors and
shareholders for voting purposes. Columbia Transmission will also send its
reorganization plan and disclosure statement to its creditors for voting
purposes. The companies believe that all regulatory, judicial, creditor and
shareholder approvals can be obtained in order that distributions can take
place prior to December 31, 1995.
The Columbia Gas System, Inc., is one of the nation's largest
natural gas systems. Subsidiary companies are engaged in the exploration,
production, purchase, storage, transmission and distribution of natural gas and
other energy operations such as cogeneration.
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