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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 and Exchange Act of 1934
Date of Report (Date of earliest event reported) -- January 15, 1996
MAPCO INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-5254 73-0705739
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1800 South Baltimore Avenue
Tulsa, Oklahoma 74119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 581-1800
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On January 15, 1996, MAPCO Inc. issued the following press
release:
TULSA, OK, January 15, 1996: MAPCO Inc. (NYSE/MDA) today announced plans to
sell a majority interest in its coal business.
MAPCO has signed a letter of intent with The Beacon Group Energy Investment
Fund L P to form a limited liability company which will own the assets of MAPCO
COAL Inc. The transaction is expected to close in the first quarter of 1996.
Beacon will own 75 percent of the new company and MAPCO will own 25 percent.
The agreement values MAPCO COAL at $310 million. MAPCO has the potential to
receive additional value up to $35 million from development of low sulfur coal
reserves in Gibson County, Indiana and from pending international coal
projects.
James E. Barnes, MAPCO's Chairman, President and Chief Executive Officer, said
that the Company is considering alternatives for use of proceeds from the coal
transaction, including a major share repurchase program, reduction of debt or
other capital uses.
Commenting further on the coal transaction, Barnes said, "The restructuring of
MAPCO's coal business is part of a strategic plan to realize additional value
from our coal assets for the benefit of shareholders and to concentrate our
future financial resources on further development of the Company's remaining
core businesses. We look forward to our relationship with the Beacon Group."
Barnes noted that, "This transaction is very tax efficient and, with the
retention of a minority interest, provides MAPCO with an opportunity to
participate in the future growth that is anticipated for MAPCO COAL, both
domestically and internationally." The new Company will provide the financial
resources for MAPCO COAL to build on its strengths as one of the most
productive and profitable coal operations in the United States. MAPCO COAL's
management is expected to continue under the new structure.
Barnes said, "This is a win-win transaction, and we look forward to our
relationship with the Beacon Group. The Beacon Group brings not only financial
strength and creativity, but also an understanding of energy and a commitment
to the industry."
Geoffrey T. Boisi, Senior Partner of The Beacon Group, said, "We are very
pleased to be forming a partnership with MAPCO Inc. They are strong operators,
with an excellent reputation in the energy industry, and there is a good fit
and complimentary skill set between the partners. We are impressed with the
quality of the management team and excited about the prospect to grow MAPCO
COAL from a very strong base."
The Beacon Group Energy Investment Fund is a $658 million equity limited
partnership vehicle focused on strategic investments in the energy industry and
is affiliated with The Beacon Group, a private investment partnership based in
New York. The Beacon Group is also engaged in non-energy investments through
its Focus Value Fund, and provides strategic advisory counseling to private and
public companies.
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For the first nine months of 1995, MAPCO COAL reported revenues of $330 million
and operating profit of $31 million. For the full year 1994, Coal reported
revenues of $425 million and operating profit of $36 million. The segment sold
15 million tons in 1994.
Commenting on MAPCO Inc.'s strategic plan, Barnes noted that major investments
made in the company's Natural Gas Liquids and Petroleum Refining and Marketing
businesses are expected to make an increasing contribution to future earnings.
He noted that these investments, combined with recently announced projects, are
part of a plan to maximize profitable growth of the Company's core businesses.
He pointed to several projects, including strategic alliances with major
customers, completed or announced in 1995, including:
o Completion of a 413-mile expansion of MAPCO's main line pipeline
system in New Mexico and the connection of El Paso Natural Gas
Company's Chaco gas processing plant near Farmington, New Mexico.
Product shipments on this segment began in December, 1995.
o A joint venture between Mid-America Pipeline Company, Amoco Pipeline
Company and Navajo Pipeline Company to provide pipeline transportation
of natural gas liquids to Pemex's Mendez terminal in the Ciudad Juarez
area in northern Mexico.
o Upgrading of the Memphis refinery which is expected to improve margins
by about $8 to $10 million per year through an increase in jet fuel
production combined with other enhancements.
o Acquisition of 27 gasoline/convenience stores in the Nashville area
and substantial progress in the Petroleum Retail Marketing asset
high-grading program.
Barnes also noted that several recent reorganizational changes, both in
operations and at the senior management level, are expected to result in
savings of about $6 million per year.
In summary, Barnes said, "We will continue to build on the niche market
positions of our core businesses. Each generates substantial cash in excess of
their operating needs and we plan to use that cash to make investments that
will grow our future earnings and the value of shareholders' investment in our
company."
MAPCO is a diverse energy company whose principal businesses are conducted by
three operating subsidiaries: MAPCO NATURAL GAS LIQUIDS operates natural gas
liquids and ammonia pipelines, fractionation and storage facilities and
produces and markets natural gas liquids and fertilizers; MAPCO PETROLEUM
operates refineries and retail marketing networks through the Mid-South and
Alaska Systems; and MAPCO COAL produces and markets bituminous steam and
metallurgical coal.
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MAPCO press releases are also available through the Internet:
http.//www.mapcoinc.com
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
None.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MAPCO INC.
By: /s/ James N. Cundiff
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Name: James N. Cundiff
Title: Assistant General Counsel
and Assistant Secretary
Date: January 15, 1996
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