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UNITED STATES 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 13, 1999
KCS ENERGY, INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C> <C>
Delaware 1-11698 22-2889587
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
5555 San Felipe Road, Houston, TX 77056
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (713) 877-8006
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 July 13, 1999, KCS Energy, Inc. (the "Company") reported that its
lenders under each of its revolving bank credit facilities have reset the
Company's borrowing base to $91 million. The principal outstanding under the
bank loans is presently $126.7 million. Because the Company did not make this
$35.7 million additional lump-sum payment, a payment default has occurred. The
lenders have delivered a payment blockage notice to the indenture trustee of
the 8.875% subordinated notes. The Company will not make the scheduled July 15,
1999 interest payment on both the 8.875% subordinated notes and the 11% senior
notes, totaling $13.8 million. The outstanding amount of the subordinated
notes is $125 million and the outstanding amount of the senior notes is $150
million. The lenders also declared due all amounts owing under the bank loans,
demanded payment and declared in effect the default rate of interest. The
Company is continuing to have discussions with the bank groups regarding an
extension of the forbearance agreements which expired on June 30, 1999.
The Company also reported that since entering into initial forbearance
agreements on May 18, 1999, it has repaid the banks $23.3 million, reducing the
outstanding loans from $150 million to $126.7 million as of June 30, 1999.
The Company further reported that it and its financial advisors,
Houlihan Lokey Howard & Zukin, have been in discussions with bondholders and
plan to pursue a restructuring transaction that would result in a significantly
deleveraged balance sheet.
A copy of the press release, dated July 13, 1999, issued by the
Company announcing these developments is attached hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit 20
Press release dated July 13, 1999.
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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.
KCS Energy, Inc.
July 14, 1999 /S/ Frederick Dwyer
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Frederick Dwyer
Vice President, Controller
and Secretary
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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EX-20 Press Release regarding KCS Energy's Lenders Block
Interest Payment
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EXHIBIT 20
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
Kathryn M. Kinnamon Marianne Stewart - General Info (212) 661-8030
VP, Treasurer & Acting CFO Beth Lewis - Analyst (617) 342-7003
(713) 877-8006 Claudine Cornelis - Media (212) 661-8030
FOR IMMEDIATE RELEASE
July 13, 1999
KCS ENERGY'S LENDERS BLOCK INTEREST PAYMENT
Company Continues Discussions with Lenders and Bondholders
HOUSTON, TX, July 13, 1999 -- KCS Energy, Inc. (NYSE: KCS) today reported on the
status of the Company's forbearance agreements on each of its revolving bank
credit agreements. The agreements had provided that the lenders would defer
redetermination of the borrowing base until July 1, 1999, and would refrain from
exercising their rights and remedies as a result of the existing defaults until
June 30.
The lenders have reset the Company's borrowing base to $91 million. The
principal outstanding under the bank loans is presently $126.7 million. Because
the Company did not make this $35.7 million additional lump-sum payment, a
payment default has occurred. The lenders have delivered a payment blockage
notice to the indenture trustee of the 8.875% subordinated notes. The Company
will not make the scheduled July 15 interest payment on both the 8.875%
subordinated notes and the 11% senior notes, totaling $13.8 million. The
outstanding amount of the subordinated notes is $125 million and the outstanding
amount of the senior notes is $150 million.
The lenders also declared due all amounts owing under the bank loans, demanded
payment and declared in effect the default rate of interest. Since entering into
an initial forbearance agreement on May 18, KCS has repaid the banks $23.3
million, reducing the outstanding loans from $150 million to $126.7 million as
of June 30, 1999. KCS President and Chief Executive Officer James W. Christmas
said, "We are continuing to have constructive discussions with the bank groups
regarding an extension of the forbearance agreements. Although there can be no
assurance, we are hopeful we will be able to work out an extension soon."
According to Mr. Christmas, the Company and its financial advisors, Houlihan
Lokey Howard & Zukin, have been in discussions with bondholders. "The Company
plans to pursue a restructuring transaction that would result in a significantly
deleveraged balance sheet and would position the Company to pursue its
significant growth opportunities."
Mr. Christmas added, "With the substantial rebound in commodity prices since the
beginning of the year, the Company's cash flow and asset value have been
positively impacted. Even after reducing the outstanding bank loans by $23.3
million through June 30, the Company's working capital position has improved
since March 31, 1999, the Company remains current on its trade obligations and
intends to continue paying its trade obligations in the ordinary course of
business. The Company has a solid base of assets on which to grow and continues
to carry out its capital expenditure program." KCS is ahead of target on its
planned 1999 property sales of $25 million to $30 million, and intends to divest
additional non-core assets throughout 1999. In June, KCS reported asset and
property sales totaling $24.3 million.
KCS is an independent energy company engaged in the acquisition, exploration and
production of natural gas and crude oil with operations in the Mid-Continent and
Gulf Coast regions. The Company also purchases reserves (priority rights to
future delivery of oil and gas) through its Volumetric Production
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Payment (VPP) program. For more information on KCS Energy, Inc., please visit
the Company's web site at http://www.kcsenergy.com.
To receive KCS' latest news and other corporate developments via fax at no cost,
please call 1-800-PRO-INFO. Use company code KCS. See also
http://www.frbinc.com.
This press release contains forward-looking statements that involve a number of
risks and uncertainties. Among the important factors that could cause actual
results to differ materially from those indicated by such forward-looking
statements are delays and difficulties in developing currently owned properties,
the failure of exploratory drilling to result in commercial wells, delays due to
the limited availability of drilling equipment and personnel, fluctuations in
oil and gas prices, general economic conditions and the risk factors detailed
from time to time in the Company's periodic reports and registration statements
filed with the Securities and Exchange Commission.
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KCS Energy, Inc.
Lenders Block Interest Payment
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5555 San Felipe, Suite 1200, Houston, TX 77056
