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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended July 31, 1999
Commission File Number 0-23580
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TRANSTEXAS GAS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 76-0401023
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 NORTH SAM HOUSTON PARKWAY EAST
SUITE 310
HOUSTON, TEXAS 77032
(Address of principal executive offices) (Zip Code)
(281) 987-8600
(Registrant's telephone number, including area code)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
The number of shares of common stock of the registrant outstanding on
September 20, 1999 was 57,515,566.
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TRANSTEXAS GAS CORPORATION
TABLE OF CONTENTS
<TABLE>
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PAGE
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PART I.
FINANCIAL INFORMATION
Item 1. Financial Statements:
Report of Independent Accountants............................................................ 2
Condensed Consolidated Balance Sheet as of July 31, 1999 and January 31, 1999................ 3
Condensed Consolidated Statement of Operations for the three and six months ended
July 31, 1999 and 1998................................................................... 4
Condensed Consolidated Statement of Cash Flows for the six months ended
July 31, 1999 and 1998................................................................... 5
Notes to Condensed Consolidated Financial Statements......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations ............................................................................ 14
Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................... 20
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings............................................................................... 21
Item 4. Submission of Matters to a Vote of Security Holders............................................. 21
Item 6. Exhibits and Reports on Form 8-K................................................................ 21
Signature.................................................................................................. 22
</TABLE>
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
of TransTexas Gas Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
TransTexas Gas Corporation (debtor-in-possession) as of July 31, 1999 and the
related condensed consolidated statements of operations and of cash flows for
the three and six months ended July 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as of January 31, 1999, and the
related consolidated statements of operations, of stockholders' equity
(deficit), and of cash flows for the year then ended (not presented herein); and
in our report dated May 20, 1999, which contains an explanatory paragraph
regarding the Company's ability to continue as a going concern, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of January 31, 1999, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
PricewaterhouseCoopers LLP
Houston, Texas
September 15, 1999
2
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1999 1999
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................................ $ 16,670 $ 3,775
Accounts receivable .............................................................. 24,187 16,091
Receivable from affiliates ....................................................... 1,075 1,286
Inventories ...................................................................... 2,592 3,210
Other current assets ............................................................. 5,010 3,693
------------ ------------
Total current assets ........................................................ 49,534 28,055
------------ ------------
Property and equipment .............................................................. 1,471,235 1,459,630
Less accumulated depreciation, depletion and amortization ........................... 1,203,135 1,167,487
------------ ------------
Net property and equipment -- based on the full cost method of accounting for
gas and oil properties of which $20,816 and $20,477 was excluded from
amortization at July 31, 1999
and January 31, 1999 respectively .............................................. 268,100 292,143
------------ ------------
Other assets, net ................................................................... 22,805 25,169
------------ ------------
$ 340,439 $ 345,367
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable ..................................................................... $ 20,000 $ --
Revolving credit agreement ....................................................... 1,815 --
Accounts payable ................................................................. 5,431 --
Accrued liabilities .............................................................. 6,322 983
------------ ------------
Total current liabilities ................................................... 33,568 983
------------ ------------
Production payments, less current portion ........................................... 49,796 56,260
Liabilities subject to compromise (Note 2)........................................... 727,752 718,139
Commitments and contingencies (Note 3) .............................................. -- --
Stockholders' deficit:
Common stock, $0.01 par value, 100,000,000
shares authorized, 57,515,566 shares issued and outstanding
at July 31, 1999 and January 31, 1999 ........................................... 740 740
Additional paid-in capital ....................................................... 20,615 19,915
Accumulated deficit .............................................................. (229,627) (188,265)
------------ ------------
(208,272) (167,610)
Treasury stock, at cost, 16,484,434 shares ....................................... (262,405) (262,405)
------------ ------------
Total stockholders' deficit .............................................. (470,677) (430,015)
------------ ------------
$ 340,439 $ 345,367
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 5
TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Gas, condensate and natural gas liquids ........ $ 28,096 $ 20,538 $ 46,489 $ 39,868
Gain (loss) on the sale of assets .............. (29) 47,693 (531) 60,020
Other .......................................... 506 3,208 1,680 5,018
------------ ------------ ------------ ------------
Total revenues ............................... 28,573 71,439 47,638 104,906
------------ ------------ ------------ ------------
Costs and expenses:
Operating ...................................... 4,662 6,061 11,542 12,573
Depreciation, depletion and amortization ....... 19,708 13,870 36,040 25,716
General and administrative ..................... 5,869 6,132 11,806 11,777
Taxes other than income taxes .................. 2,450 2,474 4,110 3,450
Impairment loss ................................ -- 21,843 -- 21,843
------------ ------------ ------------ ------------
Total costs and expenses ..................... 32,689 50,380 63,498 75,359
------------ ------------ ------------ ------------
Operating income (loss) ...................... (4,116) 21,059 (15,860) 29,547
------------ ------------ ------------ ------------
Other income (expense):
Interest income ................................ 87 453 136 1,027
Interest expense, net .......................... (2,006) (20,995) (24,719) (40,524)
------------ ------------ ------------ ------------
Total other income (expense) ................. (1,919) (20,542) (24,583) (39,497)
------------ ------------ ------------ ------------
Income (loss) before reorganization items,
income taxes and extraordinary item ....... (6,035) 517 (40,443) (9,950)
Reorganization items .............................. (919) -- (919) --
Income taxes (benefit) ............................ -- 181 -- (3,483)
------------ ------------ ------------ ------------
Income (loss) before extraordinary item ...... (6,954) 336 (41,362) (6,467)
Extraordinary item - early extinguishment
of debt (net of income tax benefit) .......... -- (1,142) -- (1,142)
------------ ------------ ------------ ------------
Net loss ..................................... $ ( 6,954) $ (806) $ (41,362) $ (7,609)
============ ============ ============ ============
Basic and diluted net loss per share:
Income (loss) before extraordinary item ...... $ (0.12) $ 0.01 $ (0.72) $ (0.11)
Extraordinary item ........................... -- (0.02) -- (0.02)
------------ ------------ ------------ ------------
Basic and diluted net loss per share ...... $ (0.12) $ (0.01) $ (0.72) $ (0.13)
============ ============ ============ ============
Weighted average number of shares outstanding
for basic and diluted net loss per share ........ 57,515,566 57,515,566 57,515,566 57,515,566
============ ============ ============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JULY 31,
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1999 1998
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Operating activities:
Net loss ............................................................... $ (41,362) $ (7,609)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Extraordinary item .................................................. -- 1,142
Depreciation, depletion and amortization ............................ 36,040 25,716
Impairment loss ..................................................... -- 21,843
Amortization of debt issue costs .................................... 1,656 2,880
(Gain) loss on the sale of assets ................................... 531 (60,020)
Deferred income taxes ............................................... -- (3,481)
Changes in assets and liabilities:
Accounts receivable ............................................... (8,096) 1,067
Receivable from affiliates ........................................ 211 --
Inventories ....................................................... 618 1,284
Other current assets .............................................. (1,317) 5,060
Accounts payable .................................................. 2,470 (4,161)
Accrued interest payable to affiliates ............................ 14,692 28
Accrued liabilities ............................................... (1,867) 6,093
Transactions with affiliates, net ................................. 700 (4,497)
Other assets ...................................................... 605 197
Other liabilities ................................................. (1,796) (6,064)
------------ ------------
Net cash provided (used) by operating activities ............... 3,085 (20,522)
------------ ------------
Investing activities:
Capital expenditures ................................................... (7,109) (128,393)
Proceeds from the sale of assets ....................................... 556 104,920
------------ ------------
Net cash used by investing activities .......................... (6,553) (23,473)
------------ ------------
Financing activities:
Issuance of production payments ........................................ -- 52,214
Principal payments on production payments .............................. (5,107) (4,985)
Issuance of note payable to TEC ........................................ -- 11,948
Principal payment on note payable to TEC ............................... -- (19,206)
Issuance of note payable ............................................... 20,000 --
Issuance of long-term debt ............................................. -- 15,500
Principal payments on long-term debt ................................... -- (33,037)
Revolving credit agreement, net ........................................ 1,470 (708)
Debt issue costs ....................................................... -- (143)
------------ ------------
Net cash provided by financing activities ...................... 16,363 21,583
------------ ------------
Increase (decrease) in cash and cash equivalents ............... 12,895 (22,412)
Beginning cash and cash equivalents ....................................... 3,775 38,502
------------ ------------
Ending cash and cash equivalents .......................................... $ 16,670 $ 16,090
============ ============
Noncash operating and investing activities:
Accounts payable for property and equipment ............................ $ 44,610 $ 29,194
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
In the opinion of management, all adjustments, consisting of normal
recurring accruals, have been made that are necessary to fairly state the
financial position of TransTexas Gas Corporation ("TransTexas" or the "Company")
as of July 31, 1999 and the results of its operations and cash flows for the
interim periods ended July 31, 1999 and 1998. The condensed consolidated balance
sheet as of January 31, 1999 was derived from audited financial statements, but
does not include all disclosures required by generally accepted accounting
principles. The results of operations for interim periods should not be regarded
as necessarily indicative of results that may be expected for the entire year.
The financial information presented herein should be read in conjunction with
the consolidated financial statements and notes included in TransTexas' annual
report on Form 10-K for the year ended January 31, 1999. Unless otherwise noted,
the terms "TransTexas" and the "Company" refer to TransTexas Gas Corporation and
its subsidiaries, including Galveston Bay Processing Corporation ("Galveston Bay
Processing") and Galveston Bay Pipeline Company ("Galveston Bay Pipeline").
TransTexas is a subsidiary of TransAmerican Energy Corporation ("TEC"), which is
an indirect subsidiary of TransAmerican Natural Gas Corporation
("TransAmerican"). TransAmerican Refining Corporation ("TARC") is a wholly owned
subsidiary of TEC.
Recently Issued Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which establishes accounting
and reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. The Company
will adopt SFAS 133 effective February 1, 2001. TransTexas is uncertain as to
the impact that adoption of SFAS 133 will have on its financial statements.
2. CHAPTER 11 FILING AND LIQUIDITY
On April 19, 1999, TransTexas filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"). On April 20, 1999, TEC and
TARC also filed voluntary petitions under Chapter 11. On May 20, 1999, the cases
were transferred to the Southern District of Texas, Corpus Christi Division. The
bankruptcy cases are being jointly administered. TransTexas, TEC and TARC are
operating their businesses and managing their properties as
debtors-in-possession. TransTexas' Chapter 11 filing does not include its
subsidiaries, including Galveston Bay Processing and Galveston Bay Pipeline.
See Note 6 for summarized financial information of TransTexas' subsidiaries. As
a result of the Chapter 11 filings, absent approval from the Bankruptcy Court,
the Company is prohibited from paying, and creditors are prohibited from
attempting to collect, claims or debts arising prior to the bankruptcy.
Pursuant to a Credit Agreement (the "DIP Facility") dated April 27, 1999
among TransTexas, as Borrower, various financial institutions, as Lenders,
Credit Suisse First Boston Management Corporation, as Administrative Agent, and
TEC and TARC, as Guarantors, the Lenders have agreed to provide up to $20
million in post-petition financing to the Company (with an additional $10
million potentially available). On April 28, 1999, $6 million was disbursed to
TransTexas under the Credit Agreement pursuant to an interim order of the
Bankruptcy Court. On July 27, 1999, $14 million was disbursed to TransTexas
under the Credit Agreement pursuant to a final order dated June 16, 1999. The
Company expects to obtain an additional $10 million under the Credit Agreement
in September 1999. Advances under the Credit Agreement bear interest at the
rate of 13% per annum. TransTexas' obligations are guaranteed by TEC and TARC
and are secured by a first priority senior priming lien (subject to certain
exceptions) on all property of TransTexas, TEC and TARC. Amounts outstanding
under the DIP Facility will mature on the earlier of October 20, 1999 or the
effective date of a plan of reorganization. The maturity date may be extended by
the Lenders under the DIP Facility; however, there is no assurance that an
extension, if needed, will be granted.
Pursuant to an order of the Bankruptcy Court, TransTexas can borrow up to
$10 million under the GMAC Facility (defined in Note 4).
6
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
The bankruptcy petitions were filed in order to preserve cash and to give
the Company the opportunity to restructure its debt. The consummation of a plan
of reorganization is the primary objective of the Company. On July 16, 1999, the
Company filed its Plan of Reorganization with the Bankruptcy Court. An amended
plan was filed on July 23, 1999. The Company's Plan of Reorganization, as
amended, is referred to herein as the "Plan." A Disclosure Statement relating to
the Plan was filed with Bankruptcy Court on August 13, 1999. The Plan sets forth
TransTexas' proposal for satisfying claims, including liabilities subject to
compromise, and interests in the Company. The Plan will likely result in, among
other things, material dilution or elimination of the interests of existing
security holders. A copy of the Plan is being filed as an exhibit to this Form
10-Q. Consummation of the Plan will require approval of the Bankruptcy Court.
There can be no assurance that the terms of the Plan will not be modified prior
to approval or that the Plan will be approved.
As a result of the bankruptcy filing, a significant amount of the
Company's liabilities, including secured debt, are subject to compromise. As of
July 31, 1999 and January 31, 1999, liabilities subject to compromise included
the following (in thousands of dollars):
<TABLE>
<CAPTION>
JULY 31, JANUARY 31,
1999 1999
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<S> <C> <C>
Long-term debt............................ $ 124,876 $ 125,170
Notes payable to affiliates .............. 457,928 457,928
Accounts payable ......................... 69,091 66,231
Accrued interest payable to affiliates ... 23,305 8,613
Accrued liabilities ...................... 39,112 44,961
Other liabilities ........................ 13,440 15,236
---------- -----------
$ 727,752 $ 718,139
========== ===========
</TABLE>
As of the petition date, in accordance with current accounting
pronouncements applicable to companies operating under Chapter 11, TransTexas
discontinued the accrual of interest and amortization of deferred debt issue
costs related to liabilities subject to compromise. If such interest had
continued to be accrued, based on contractual terms without increase for default
provisions, and related deferred debt issue costs continued to be amortized,
interest expense for the three and six months ended July 31, 1999 would have
increased by approximately $18.6 million and $19.2 million, respectively.
The accompanying financial statements have been prepared on a going
concern basis, which contemplates continuity of operations, realization of
assets and liquidation of liabilities in the ordinary course of business. As a
result of the bankruptcy filing and related events, there is no assurance that
the carrying amounts of assets will be realized or that liabilities will be
liquidated or settled for the amounts recorded. In addition, confirmation of a
plan of reorganization, or rejection thereof, could change the amounts reported
in the financial statements. As a result, there is substantial doubt about the
Company's ability to continue as a going concern. The ability of TransTexas to
continue as a going concern is dependent upon confirmation of a plan of
reorganization, adequate sources of capital and the ability to sustain positive
results of operations and cash flows sufficient to continue to explore for and
develop gas and oil reserves.
In the ordinary course of business, TransTexas makes substantial capital
expenditures for the exploration and development of natural gas and oil
reserves. TransTexas historically has financed its capital expenditures, debt
service and working capital requirements with cash flow from operations, public
and private offerings of debt and equity securities, the sale of production
payments, asset sales, an accounts receivable revolving credit facility and
other financings. Cash flow from operations is sensitive to the prices
TransTexas receives for its natural gas and oil. A reduction in planned capital
spending or an extended decline in gas and oil prices could result in less than
anticipated
7
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
cash flow from operations in fiscal year 2000 and later years, which could have
a material adverse effect on TransTexas.
Management's plans are to continue to incur capital expenditures with the
goal of increasing production and reserves. To finance these planned capital
expenditures, TransTexas will be required to supplement its anticipated cash
flow from operations with a combination of asset sales, financings or other
capital-raising transactions. The ability to incur capital expenditures, sell
properties and obtain additional financing is subject to the approval and
ongoing supervision of the Bankruptcy Court, as well as the approval of the
lenders under the DIP Facility or, if subsequent to confirmation of the Plan,
the post-confirmation lenders. There is no assurance that adequate funds can be
obtained on a timely basis or that the Bankruptcy Court will approve such
transactions.
3. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
Chapter 11 Bankruptcy. On April 19, 1999 (the "Petition Date"), TransTexas
filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy
Code in the United States Bankruptcy Court for the District of Delaware. On
April 20, 1999, TEC and TARC also filed voluntary petitions under Chapter 11. On
May 20, 1999, the cases were transferred to the Southern District of Texas,
Corpus Christi Division. The bankruptcy cases are being jointly administered
under the caption "In re: TransTexas Gas Corporation, et al., Debtors," Case No.
99-21550-C-11. TransTexas, TEC and TARC are operating their businesses and
managing their properties as debtors-in-possession. As a result of the Chapter
11 filings, absent approval of the Bankruptcy Court, the Company is prohibited
from paying, and creditors are prohibited from attempting to collect, claims or
debts arising prior to the Petition Date. The Company filed its Plan with the
Bankruptcy Court on July 16, 1999. An amended Plan was filed on July 23, 1999
and a Disclosure Statement was filed on August 13, 1999. See Note 2.
Arabian Offshore Partners. On June 27, 1997, Arabian Offshore Partners
filed a lawsuit against TransTexas in the 14th Judicial District Court, Dallas
County, Texas, seeking $20 million in damages in connection with TransTexas'
refusal to proceed with the acquisition of two jack-up drilling rigs.
TransTexas' motion for summary judgment was granted on January 13, 1998. The
plaintiffs have appealed. This matter is stayed as a result of the Company's
Chapter 11 filing.
Blue Gulf. On July 14, 1998, Blue Gulf Seafood, an owner of oyster leases,
sued TransTexas in the U. S. District Court, Southern District of Texas,
Galveston Division. Blue Gulf is claiming damages in excess of $5 million as a
result of alleged economic injury to its oyster beds caused by TransTexas'
drilling and development activities in the Eagle Point Prospect in Galveston
Bay. In October 1998, TransTexas obtained a final judgment in its favor
principally on the grounds that Blue Gulf lacked standing. Blue Gulf has
appealed. This matter is stayed as a result of the Company's Chapter 11 filing.
Finkelstein. On April 22, 1991, Finkelstein filed a suit against
TransAmerican and various affiliates in the 49th Judicial District Court, Zapata
County, Texas, alleging an improper calculation of overriding royalties
allegedly owed to the plaintiff and seeking damages and attorneys' fees in
excess of $33.7 million. On November 18, 1993, the plaintiff added TransTexas as
an additional defendant. The parties arbitrated this matter in January 1997. In
May 1998, the arbitration panel awarded $13 million to plaintiff, and plaintiff
subsequently obtained a judgment against TransTexas for the awarded amount.
Pursuant to a settlement agreement, TransTexas will pay the amount awarded over
a 24-month period. If payments are not made, plaintiff will have the right to
enforce its judgment. This matter is stayed as a result of the Company's
Chapter 11 filing.
Hein Minerals. On April 3, 1998, Henry and Luz A. Hein Minerals, L.C.
("Hein") filed suit in the 49th Judicial District Court, Zapata County, Texas,
against TransAmerican, TransTexas, TransTexas Transmission Corporation ("TTC")
and Conoco, Inc. Plaintiff alleges that a 1990 mineral lease from plaintiffs to
TransAmerican, comprising approximately 2,000 acres, was breached by failure to
release certain acreage from the lease. Plaintiff alleges trespass, tortious
interference, conversion, fraud, breach of fiduciary duty, breach of contract,
conversion and slander of title, and claim damages including $10 per day per
acre that was not released.
8
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TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
On April 29, 1999, TransTexas removed the case to the United States Bankruptcy
Court for the Southern District of Texas, Laredo Division. On May 28, 1999,
plaintiffs filed a motion to remand the case to the 49th Judicial District
Court, Zapata County, Texas. This matter is stayed as a result of the Company's
Chapter 11 filing. TransTexas intends to vigorously defend against these claims.
Zurich. On May 5, 1998, The Home Insurance Company and Zurich Insurance
Company filed suit against TransTexas in the United States District Court,
Southern District of New York, to enforce an arbitration award of approximately
$7.25 million relating to additional collateral for payments under workers'
compensation policies. In January 1999, the court entered a judgment in favor of
Zurich and Home, confirming the arbitration award. Zurich has also, by notice
dated November 25, 1998, filed a second arbitration against TransAmerican with
respect to its attempt to satisfy a disputed premium payment of approximately
$4.2 million. Zurich has also made claims on collateral to cover unpaid loss
billings of over $1 million. Although Zurich's notice of arbitration names only
TransAmerican, TransTexas has provided significant collateral to Zurich and
objected to any draw on its collateral. These matters are stayed as a result of
the Company's Chapter 11 filing. Hearings have been held to consider whether the
stay should be lifted, but the Bankruptcy Court has not ruled on the matter.
Vendor Claims. Numerous suppliers of goods and services have filed or
asserted liens against property of the Company and Galveston Bay Processing to
secure the payment of invoices which are included in liabilities subject to
compromise. Many of these vendors have also filed collection suits against the
Company and Galveston Bay Processing and/or suits to enforce their liens. These
matters are stayed as a result of the Company's Chapter 11 filing. The amount of
claims as to which liens have been asserted or filed against property of the
Company and its subsidiaries, including Galveston Bay Processing, was
approximately $37.3 million as of September 9, 1999. Of this amount,
approximately $3.5 million in liens have been filed against property of
Galveston Bay Processing and approximately $1.8 million in liens have been
filed against property of Galveston Bay Pipeline.
Royalty Claims. Numerous royalty owners have made claims and filed suits
against the Company for payment of unpaid prepetition royalties under mineral
leases and other agreements. These matters are stayed as a result of the
Company's Chapter 11 filing. Unpaid prepetition royalties, included in
liabilities subject to compromise, totaled approximately $9.4 million at July
31, 1999.
General. The resolution in any reporting period of one or more of the
foregoing matters in a manner adverse to TransTexas could have a material
adverse effect on TransTexas' results of operations and cash flows for that
period. TransTexas is also a named defendant in other ordinary course, routine
litigation incidental to its business. Although the outcome of these other
lawsuits cannot be predicted with certainty, TransTexas does not expect these
matters to have a material adverse effect on its financial position. At July 31,
1999, the possible range of estimated losses related to litigation claims, in
addition to the estimates accrued by TransTexas, is $0 to $20 million.
Litigation expense, including legal fees, totaled approximately $1.4 million and
$0.9 million for the three months ended July 31, 1999 and 1998, respectively,
and approximately $1.8 million and $1.0 million for the six months ended July
31, 1999 and 1998, respectively.
Environmental Matters
TransTexas' operations and properties are subject to extensive federal,
state, and local laws and regulations relating to the generation, storage,
handling, emission, transportation, and discharge of materials into the
environment. Permits are required for various of TransTexas' operations, and
these permits are subject to revocation, modification, and renewal by issuing
authorities. TransTexas also is subject to federal, state, and local laws and
regulations that impose liability for the cleanup or remediation of property
which has been contaminated by the discharge or release of hazardous materials
or wastes into the environment. Governmental authorities have the power to
enforce compliance with their regulations, and violations are subject to fines
or injunctions, or both. Certain aspects of TransTexas' operations may not be in
compliance with applicable environmental laws and regulations, and such
noncompliance may give rise to compliance costs and administrative penalties. It
is not anticipated that TransTexas will be required in the near future to expend
amounts that are material to the financial condition or operations of TransTexas
by reason of environmental laws and regulations, but because such laws and
regulations are frequently changed and, as a result, may impose increasingly
strict requirements, TransTexas is unable to predict the ultimate cost of
complying with such laws and regulations.
9
<PAGE> 11
TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
Gas Sales and Delivery Commitments
In January 1997, TransTexas and Koch Energy Trading Inc. entered into a
gas purchase contract pursuant to which TransTexas is required to deliver 25,000
MMBtu per day to a specified delivery point. The purchase price is determined by
an industry index less $0.08 per MMBtu. On August 10, 1999, the Company obtained
Bankruptcy Court approval to reject this contract.
As of July 31, 1999, TransTexas had delivery commitments for an aggregate
of approximately 125 MMcf of natural gas per day pursuant to certain contracts.
These contracts require TransTexas to pay certain charges if it does not deliver
the specified quantities. Such charges totaled $0.5 million and $1.4 million for
the three months ended July 31, 1999 and 1998, respectively, and approximately
$1.1 million and $2.4 million for the six months ended July 31, 1999 and 1998,
respectively. The Company expects to obtain Bankruptcy Court approval to reject
these contracts.
Pursuant to the Bankruptcy Code, the Company has the right to assume or
reject executory contracts. As of September 10, 1999, the Company had obtained
Bankruptcy Court approval to reject 11 contracts.
Lobo Sale
Pursuant to the Lobo Sale Agreement, TransTexas is required to indemnify
the buyer for certain liabilities related to the assets previously owned by TTC.
Although TransTexas does not anticipate that it will incur any material
indemnity liability with respect to the Lobo Sale Agreement, no assurance can be
given that TransTexas will not incur such indemnity liability.
Potential Tax Liability
Part of the refinancing of TransAmerican's debt in 1993 involved the
cancellation of approximately $65.9 million of accrued interest and a contingent
liability for interest of $102 million owed by TransAmerican. TransAmerican has
taken the federal tax position that the entire amount of this debt cancellation
is excluded from its income under the cancellation of indebtedness provisions
(the "COD Exclusion") of the Internal Revenue Code of 1986, as amended, and has
reduced its tax attributes (including its net operating loss and credit
carryforwards) as a consequence of the COD Exclusion. No federal tax opinion was
rendered with respect to this transaction, however, and TransAmerican has not
obtained a ruling from the IRS regarding this transaction. TransTexas believes
that there is substantial legal authority to support the position that the COD
Exclusion applies to the cancellation of TransAmerican's indebtedness. However,
due to factual and legal uncertainties, there can be no assurance that the IRS
will not challenge this position, or that such challenge would not be upheld.
Under an agreement between TNGC Holdings Corporation, the sole stockholder of
TransAmerican ("TNGC"), TransAmerican and its existing subsidiaries, including
TARC, TEC and TransTexas (the "Tax Allocation Agreement"), TransTexas has agreed
to pay an amount equal to any federal tax liability (which would be
approximately $25.4 million) attributable to the inapplicability of the COD
Exclusion. Any such tax could be offset in subsequent years by alternative
minimum tax credits and retained loss and credit carryforwards to the extent
recoverable from TransAmerican. As a member of the TNGC Consolidated Group
(defined below), each of TransTexas, TEC and TARC will be severally liable for
any tax liability resulting from the above-described transactions. The IRS has
commenced an audit of the consolidated federal income tax returns of the TNGC
Consolidated Group for its taxable years ended July 31, 1995 and 1994. At this
time, it is not possible to predict the scope of the IRS' review or whether any
tax deficiencies will be proposed by the IRS as a result of its review.
Based in part upon independent legal advice, TransTexas determined that it
was not required to report any significant federal income tax liability as a
result of the Lobo Sale. There are, however, significant uncertainties regarding
TransTexas' tax position and no assurance can be given that its position will be
sustained if challenged by the IRS. TransTexas is part of an affiliated group
for tax purposes (the "TNGC Consolidated Group"), which also includes TNGC,
TransAmerican, TEC and TARC. No letter ruling has been or will be obtained from
the IRS regarding the Lobo Sale by any member of the TNGC Consolidated Group. If
the IRS were to successfully challenge TransTexas' position, each member of the
TNGC Consolidated Group would be severally liable under the consolidated tax
return
10
<PAGE> 12
TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
regulations for the resulting taxes, in the estimated amount of up to $270
million (assuming no reduction of tax attributes of the TNGC Consolidated
Group), possible penalties equal to 20% of the amount of the tax, and interest
at the statutory rate (currently 8%) on the tax and penalties (if any). The Tax
Allocation Agreement provides that TransAmerican will be obligated to fund the
entire tax deficiency (if any) resulting from the Lobo Sale. There can be no
assurance that TransAmerican would be able to fund any such payment at the time
due and the other members of the TNGC Consolidated Group may be required to pay
the tax. As a result of subsequent net operating losses and the bankruptcy
filing, it is more likely than not that any claims against TransTexas as a
result of the Lobo Sale will be in the form of reduced net operating loss
carryforwards.
If the aggregate ownership of TransTexas by members of the TNGC
Consolidated Group (excluding TransTexas) is less than 80% (measured by voting
power and value), TransTexas will no longer be a member of the TNGC Consolidated
Group for federal tax purposes ("Deconsolidation") and, with certain exceptions,
will no longer be obligated under the terms and conditions of, or entitled to
the benefits of, the Tax Allocation Agreement. A Deconsolidation could result
from the issuance of additional equity securities by TransTexas, or from the
sale or other disposal of shares of TransTexas by TEC or TransAmerican. Upon a
Deconsolidation of TransTexas, members of the TNGC Consolidated Group that own
TransTexas' common stock could incur a substantial amount of federal income tax
liability. If such Deconsolidation occurred during the fiscal year ending
January 31, 2000, the aggregate amount of this tax liability is estimated to be
approximately $100 million, assuming no reduction for tax attributes of the TNGC
Consolidated Group. However, such tax liability would be substantially reduced
or eliminated in the event that the IRS successfully challenged TransTexas'
position on the Lobo Sale. Each member of a consolidated group filing a
consolidated federal income tax return is severally liable to the IRS for the
consolidated federal income tax liability of the consolidated group. There can
be no assurance that each TNGC Consolidated Group member will have the ability
to satisfy any tax obligation attributable to these transactions at the time due
and, therefore, other members of the group, including TEC, TransTexas or TARC,
may be required to pay the tax.
TransTexas is required, under the Tax Allocation Agreement, to pay any
Texas franchise tax (which is estimated not to exceed $11.4 million)
attributable to prior year transactions by any member of the TNGC Consolidated
Group. As of July 31, 1999, TransTexas had paid $9.6 million of these franchise
taxes.
It is not possible to predict the impact of the bankruptcy filing on the
Tax Allocation Agreement, any obligations of TransTexas to the TNGC Consolidated
Group or the tax attributes of TransTexas, including its net operating loss
carryforwards. In addition, the utilization of any remaining net operating loss
carryforwards after discharge from bankruptcy may be limited. Net operating loss
carryforwards attributable to TransTexas at July 31, 1999 were approximately
$397 million.
4. CREDIT AGREEMENT
TransTexas and GMAC Commercial Credit LLC, formerly known as BNY Factoring
LLC, successor by merger to BNY Financial Corporation ("GMAC"), are parties to a
Second Amended and Restated Accounts Receivable Management and Security
Agreement dated as of October 14, 1997, as amended (the "GMAC Facility").
Interest accrues on advances at the rate of (i) the higher of (a) the prime rate
of The Bank of New York or (b) the Federal Funds Rate plus 1/2 of 1% plus (ii)
1/2 of 1%. Obligations under the GMAC Facility are secured by liens on
TransTexas' receivables and inventory and are guaranteed by John R. Stanley. The
GMAC Facility contains certain financial covenants. Pursuant to an order of the
Bankruptcy Court, TransTexas can borrow up to $10 million and access cash
collateral under the GMAC Facility. The amounts that may be advanced under the
GMAC Facility are based on a percentage of certain of the Company's receivables
and inventory. As of July 31, 1999, outstanding advances under the GMAC Facility
totaled approximately $1.8 million with availability for additional advances of
approximately $1.5 million.
11
<PAGE> 13
TRANSTEXAS GAS CORPORATION
(DEBTOR-IN-POSSESSION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(UNAUDITED)
5. TRANSACTIONS WITH AFFILIATES
In connection with a December 15, 1998 transaction pursuant to which TARC
transferred its refinery assets to a minority-owned subsidiary, TCR Holding
Corporation, a Delaware corporation ("TCR Holding"), and TCR Holding transferred
such assets to its majority-owned subsidiary, Orion Refining Corporation, a
Delaware corporation ("Orion"), TransTexas entered into an Amended and Restated
Services Agreement with TransAmerican and its affiliates (other than TCR Holding
and Orion) and an Amended and Restated Services Agreement (the "TCR Group
Services Agreement") with TCR Holding and Orion. Pursuant to the TCR Group
Services Agreement, TransTexas will provide accounting, legal, administrative
and other services to the TCR Group through December 15, 2000. The fee for such
services, from December 15, 1998 through February 28, 1999, was $200,000 per
month. Subsequent to February 28, 1999, the monthly fee will be adjusted based
on an assessment of the cost to TransTexas of providing such services. For the
three and six months ended July 31, 1999, respectively, TransTexas charged Orion
$0.1 million and $0.5 million for such services. As of July 31, 1999 and January
31, 1999, respectively, the receivable from Orion for such services was $0.1
million and $0.3 million.
In December 1998, TransTexas executed a note payable to TransAmerican in
the original principal amount of $1.4 million plus interest at a rate of 15% per
annum. This note is secured by a second lien on the assets of Galveston Bay
Processing. The proceeds from this loan were used to pay a portion of the
Company's interest payment obligations on December 31, 1998. As of July 31, 1999
and January 31, 1999, respectively, the balance due on the note was $1.4
million. Accrued interest was $0.1 million as of July 31, 1999.
In April 1999, TEC made a cash contribution of $0.7 million to TransTexas.
In October 1998, TransTexas and Galveston Bay Processing entered into a
treating agreement. Pursuant to the agreement, Galveston Bay Processing treats
and dehydrates gas and separates and handles condensate produced from
TransTexas' Eagle Bay Field at its processing facility located in Winnie, Texas.
6. SUMMARIZED FINANCIAL INFORMATION OF SUBSIDIARIES
Summarized combined financial information of TransTexas' subsidiaries not
in bankruptcy is as follows (in thousands of dollars):
<TABLE>
<CAPTION>
July 31, January 31,
1999 1999
-------- -----------
<S> <C> <C>
Assets
Current assets $ 811 $ 115
Net property and equipment 12,262 145
Other assets 7 1
-------- --------
$ 13,080 $ 261
======== ========
Liabilities and Equity
Current liabilities $ 141 $ --
Payable to affiliates 12,844 251
Equity 95 10
-------- --------
$ 13,080 $ 261
======== ========
</TABLE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
July 31, July 31,
1999 1999
------------ ----------
<S> <C> <C>
Revenues $ 2,396 $ 3,607
Costs and expenses 1,754 2,595
-------- --------
Operating income 642 1,012
Interest income 2 4
Interest expense (45) (64)
-------- --------
Income before income taxes 599 952
Income taxes 210 333
-------- --------
Net income $ 389 $ 619
======== ========
</TABLE>
Galveston Bay Processing and Galveston Bay Pipeline conduct significant
intercompany activities with TransTexas. Included in revenues of subsidiaries
for the three and six months ended July 31, 1999 are processing fees from
TransTexas of $2.0 million and $2.7 million, respectively.
7. GAS AND OIL PROPERTIES
TransTexas uses the full cost method of accounting for exploration and
development costs. Under this method of accounting, net capitalized costs of gas
and oil properties are limited to the lower of unamortized cost or the cost
center ceiling. As of July 31, 1999, TransTexas' net capitalized costs of gas
and oil properties exceeded the cost center ceiling. TransTexas did not adjust
its net capitalized costs because, subsequent to July 31, 1999, prices for gas
and oil increased such that TransTexas' net capitalized costs did not exceed the
recalculated cost center ceiling.
12
<PAGE> 14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the condensed
consolidated financial statements and notes thereto of TransTexas included
elsewhere in this report.
RESULTS OF OPERATIONS
GENERAL
TransTexas' results of operations are dependent upon natural gas
production volumes and unit prices from sales of natural gas, condensate and
natural gas liquids ("NGLs"). The profitability of TransTexas also depends on
its ability to minimize finding and lifting costs and maintain its reserve base
while maximizing production.
TransTexas' operating data for the three and six months ended July 31,
1999 and 1998, is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Sales volumes:
Gas (Bcf) ............................ 7.7 8.7 14.8 16.5
NGLs (MMgal) ......................... 8.5 1.3 16.9 3.3
Condensate (MBbls) ................... 455 147 913 219
Average prices:
Gas (dry) (per Mcf) .................. $ 2.26 $ 2.23 $ 2.07 $ 2.21
NGLs (per gallon) .................... .30 .18 .25 .23
Condensate (per Bbl) ................. 17.96 12.24 15.82 12.65
Number of gross wells drilled .......... 2 15 5 29
Percentage of wells completed .......... 50% 67% 20% 66%
</TABLE>
A summary of TransTexas' operating expenses is set forth below (in
millions of dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
--------------------- ---------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Operating costs and expenses:
Lease ................................ $ 2.0 $ 3.5 $ 6.0 $ 6.7
Pipeline and gathering ............... 2.7 1.1 5.5 3.7
Drilling services .................... -- 1.5 -- 2.2
-------- -------- -------- --------
4.7 6.1 11.5 12.6
Taxes other than income taxes (1) ...... 2.4 2.5 4.1 3.5
-------- -------- -------- --------
$ 7.1 $ 8.6 $ 15.6 $ 16.1
======== ======== ======== ========
</TABLE>
- ----------------------------
(1) Taxes other than income taxes include severance, property and other taxes.
TransTexas' average depletion rates have been as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JULY 31, JULY 31,
------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Depletion rates (per Mcfe) ... $ 1.81 $ 1.36 $ 1.80 $ 1.34
========== ========== ========== ==========
</TABLE>
13
<PAGE> 15
THREE MONTHS ENDED JULY 31, 1999 COMPARED WITH THE THREE MONTHS ENDED
JULY 31, 1998
Gas, condensate and NGL revenues for the three months ended July 31, 1999
increased $7.6 million from the prior period due primarily to increases in
condensate and NGL sales volumes and higher prices for those products offset in
part by a decrease in natural gas sales volumes. The average monthly prices
received per Mcf of gas ranged from $2.25 to $2.32 in the three months ended
July 31, 1999, compared to a range of $2.17 to $2.31 in the prior period.
Drilling services revenues decreased by $1.3 million for the three months ended
July 31, 1999 due to the sale of certain drilling services division assets in
the prior period. For the three months ended July 31, 1998, TransTexas
recognized a pre-tax gain of $52.3 million on the sale of certain drilling
services division assets and a pre-tax loss of $4.6 million due to post-closing
adjustments to the Lobo Sale purchase price.
Lease operating expenses for the three months ended July 31, 1999
decreased $1.5 million from the prior period due primarily to decreases in
maintenance costs. Pipeline and gathering expenses increased $1.6 million
primarily due to the operations of TransTexas' natural gas treating facility in
Winnie, Texas. Drilling service expenses for the three months ended July 31,
1999 decreased $1.5 million due to the sale of certain drilling assets in the
prior period. Depreciation, depletion and amortization expense for the three
months ended July 31, 1999 increased $5.8 million due to an increase in the
depletion rate resulting from higher cost properties and unsuccessful drilling
results. General and administrative expenses decreased by $0.3 million primarily
as a result of a decrease in salaries and benefits offset in part by an increase
in professional fees. Taxes other than income taxes decreased by $0.1 million
over the prior period due primarily to decreases in severance taxes. The
impairment loss of $21.8 million for the three months ended July 31, 1998
related to a write-down of $16.3 million of TransTexas' net capitalized costs of
gas and oil properties to the cost center ceiling and a $5.5 million write-down
of an underutilized pipeline system that was exchanged as part of a settlement
of certain natural gas delivery commitments.
Interest income for the three months ended July 31, 1999 decreased by $0.4
million as compared to the prior period due to lower cash balances available for
investment. Interest expense decreased $19.0 million primarily as a result of
discontinuing interest accruals on pre-petition unsecured debt obligations.
Reorganization items of $0.9 million for the three months ended July 31, 1999
included legal and professional fees and expenses directly related to
TransTexas' Chapter 11 proceedings.
SIX MONTHS ENDED JULY 31, 1999 COMPARED WITH THE SIX MONTHS ENDED
JULY 31, 1998
Gas, condensate and NGL revenues for the six months ended July 31, 1999
increased by $6.6 million from the prior period due primarily to increases in
condensate and NGL sales volumes and higher prices for those products offset in
part by decreases in natural gas sales volumes and prices. The average monthly
prices received per Mcf of gas ranged from $1.74 to $2.32 in the six months
ended July 31, 1999, compared to a range of $2.09 to $2.36 in the prior period.
Drilling services revenues decreased by $2.7 million for the six months ended
July 31, 1999 due to the sale of certain drilling services division assets in
the prior period. For the six months ended July 31, 1998, TransTexas recognized
a pre-tax gain of $62.6 million for the sale of certain drilling services
division assets and a pre-tax loss of $2.6 million due to post-closing
adjustments to the Lobo Sale purchase price.
Lease operating expenses for the six months ended July 31, 1999 decreased
$0.7 million from the prior period due primarily to decreases in maintenance
costs. Pipeline and gathering expenses increased $1.8 million primarily due to
the operations of TransTexas' natural gas treating facility at Winnie, Texas.
Drilling services expenses for the six months ended July 31, 1999 decreased $2.2
million due to the sale of certain drilling assets in the prior period.
Depreciation, depletion and amortization expense for the six months ended July
31, 1999 increased $10.3 million due to an increase in the depletion rate
resulting from higher cost properties and unsuccessful drilling results. General
and administrative expenses were unchanged from the prior period. Taxes other
than income taxes increased by $0.6 million over the prior period due primarily
to increases in property taxes. The impairment loss of $21.8 million for the six
months ended July 31, 1998 related to a write-down of $16.3 million of
TransTexas' net capitalized costs of gas and oil properties to the cost center
ceiling and a $5.5 million write-down of an underutilized pipeline system that
was exchanged as part of a settlement of certain natural gas delivery
commitments.
Interest income for the six months ended July 31, 1999 decreased by $0.9
million as compared to the prior period due to lower cash balances available for
investment.
14
<PAGE> 16
Interest expense decreased $15.8 million primarily as a result of discontinuing
interest accruals on pre-petition unsecured debt obligations. Reorganization
items of $0.9 million for the six months ended July 31, 1999 included legal and
professional fees and expenses directly related to TransTexas' Chapter 11
proceedings.
LIQUIDITY AND CAPITAL RESOURCES
On April 19, 1999, TransTexas filed a voluntary petition for relief under
Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware. On April 20, 1999, TEC and TARC also filed voluntary
petitions under Chapter 11. On May 20, 1999, the cases were transferred to the
Southern District of Texas, Corpus Christi Division. The bankruptcy cases are
being jointly administered. TransTexas, TEC and TARC are operating their
businesses and managing their properties as debtors-in-possession. As a result
of the Chapter 11 filings, absent approval from the Bankruptcy Court, the
Company is prohibited from paying, and creditors are prohibited from attempting
to collect, claims or debts arising prior to the bankruptcy.
Pursuant to a Credit Agreement (the "DIP Facility") dated April 27, 1999
among TransTexas, as Borrower, various financial institutions, as Lenders,
Credit Suisse First Boston Management Corporation, as Administrative Agent, and
TEC and TARC, as Guarantors, the Lenders have agreed to provide up to $20
million in post-petition financing to the Company (with an additional $10
million potentially available). On April 28, 1999, $6 million was disbursed to
TransTexas under the Credit Agreement pursuant to an interim order of the
Bankruptcy Court. On July 27, 1999, $14 million was disbursed to TransTexas
under the Credit Agreement pursuant to a final order dated June 16, 1999. The
Company expects to obtain an additional $10 million under the Credit Agreement
in September 1999. Advances under the Credit Agreement bear interest at the rate
of 13% per annum. TransTexas' obligations are guaranteed by TEC and TARC and are
secured by a first priority senior priming lien (subject to certain exceptions)
on all property of TransTexas, TEC and TARC. Amounts outstanding under the DIP
Facility will mature on the earlier of October 20, 1999 or the effective date of
a plan of reorganization. The maturity date may be extended by the Lenders under
the DIP Facility; however, there is no assurance that an extension, if needed,
will be granted.
TransTexas and GMAC Commercial Credit LLC, formerly known as BNY Factoring
LLC, successor by merger to BNY Financial Corporation, are parties to a Second
Amended and Restated Accounts Receivable Management and Security Agreement dated
as of October 14, 1997, as amended (the "GMAC Facility"). Interest accrues on
advances at the rate of (i) the higher of (a) the prime rate of The Bank of New
York or (b) the Federal Funds Rate plus 1/2 of 1% plus (ii) 1/2 of 1%.
Obligations under the GMAC Facility are secured by liens on TransTexas'
receivables and inventory and are guaranteed by John R. Stanley. Pursuant to an
order of the Bankruptcy Court, the Company can borrow up to $10 million and
access cash collateral under the GMAC Facility. The amounts that may be advanced
under the GMAC Facility are based on a percentage of certain of the Company's
receivables and inventory. As of July 31, 1999, outstanding advances under the
GMAC Facility totaled approximately $1.8 million with availability for
additional advances of approximately $1.5 million.
The bankruptcy petitions were filed in order to preserve cash and to give
the Company the opportunity to restructure its debt. The consummation of a plan
of reorganization is the primary objective of the Company. On July 16, 1999, the
Company filed its Plan with the Bankruptcy Court. An amended Plan was filed on
July 23, 1999 and a Disclosure Statement was filed on August 13, 1999. The Plan
sets forth TransTexas' proposal for satisfying claims, including liabilities
subject to compromise, and interests in the Company. The Plan will likely result
in, among other things, material dilution or elimination of the interests of
existing security holders. Consummation of the Plan will require approval of the
Bankruptcy Court. There can be no assurance that the terms of the Plan will not
be modified prior to approval or that the Plan will be approved.
At this time, it is not possible to predict the outcome of the bankruptcy
proceedings, in general, or the effect on the business of the Company or on the
interests of creditors, royalty owners or stockholders. There can be no
assurance that the Plan will be approved or that the Bankruptcy Court will
permit TransTexas to continue to operate as a debtor-in-possession. As a result
of these uncertainties and other matters, there is substantial doubt about the
Company's ability to continue as a going concern. See the Notes to Condensed
Consolidated Financial Statements of the Company included under Item 1 of this
report.
TransTexas makes substantial capital expenditures for the exploration and
development of natural gas and oil reserves in the normal course of business.
TransTexas historically has financed its capital expenditures, debt service and
working capital requirements with cash flow from operations, public and private
offerings of debt and equity securities, the sale of production payments, asset
sales, an accounts receivable revolving credit facility and other financings.
Cash flow from operations is sensitive to the prices TransTexas receives for its
natural gas and oil. A reduction in planned capital spending or an extended
decline in gas and oil prices could result in less than anticipated cash flow
from operations in fiscal year 2000 and later years which could have a material
adverse effect on TransTexas. Proceeds from natural gas and oil sales are
received at approximately the same time that production-related burdens, such as
royalties, production taxes and drilling program obligations, are payable.
For the six months ended July 31, 1999, total capital expenditures
incurred were $11 million, including $3 million for lease acquisitions, $7
million for drilling and development and $1 million for gas gathering, other
equipment and seismic acquisitions. Capital expenditures for the remainder of
fiscal 2000 are estimated to be approximately $42 million which amount is in
excess of anticipated cash flows from operating activities. To finance these
planned capital expenditures, TransTexas will be required to supplement its
anticipated cash flow from operations with a combination of asset sales,
financings or other
15
<PAGE> 17
capital-raising transactions. The ability to incur capital expenditures, sell
properties and obtain additional financing is subject to the approval and
ongoing supervision of the Bankruptcy Court, as well as the approval of the
lenders under the DIP Facility or, if subsequent to confirmation of the Plan, to
the post-confirmation lenders. There is no assurance that adequate funds can be
obtained on a timely basis or that the Bankruptcy Court will approve such
transactions.
In February 1998, TransTexas entered into a production payment drilling
program agreement with an unaffiliated third party for the reimbursement of
certain drilling costs with respect to wells drilled by TransTexas. Pursuant to
the agreement, upon the approval of the third party of a recently drilled or
currently drilling well for inclusion in the program, the third party will
commit to the reimbursement of all or a portion of the cost of such well. The
program wells are subject to a dollar-denominated production payment equal to
the primary sum of such reimbursed costs, plus an amount equivalent to a 15%
annual interest rate on the unpaid portion of such primary sum. As of July 31,
1999, the outstanding balance of the production payment was $44.0 million.
In September 1998, TransTexas sold to an unaffiliated third party a term
overriding royalty in the form of a dollar-denominated production payment in
certain of TransTexas' producing properties for net proceeds of $10 million. The
production payment calls for the repayment of the primary sum plus an amount
equivalent to a 16% annual interest rate on the unpaid portion of such primary
sum. As of July 31, 1999, the outstanding balance of the production payment was
$8.1 million.
In December 1998, TransTexas executed a note payable to TransAmerican in
the original principal amount of $1.4 million plus interest at a rate of 15% per
annum. This note is secured by a second lien on the assets of Galveston Bay
Processing. The proceeds from this loan were used to pay a portion of the
Company's interest payment obligations on December 31, 1998. As of July 31, 1999
and January 31, 1999, respectively, the balance due on the note was $1.4
million. Accrued interest was $0.1 million as of July 31, 1999.
In April 1999, TEC made a cash contribution of $0.7 million to TransTexas.
CONTINGENT LIABILITIES
TransTexas has significant contingent liabilities. Although the outcome of
these contingencies or the probability of the occurrence of these contingencies
cannot be predicted with certainty, TransTexas does not expect these matters to
have a material adverse effect on its financial position. However, these
contingencies, individually and in the aggregate, amount to potential liability
that could have a material adverse effect on TransTexas' cash flows or results
of operations.
In January 1997, TransTexas and Koch Energy Trading Inc. entered into a
gas purchase contract pursuant to which TransTexas is required to deliver 25,000
MMBtu per day to a specified delivery point. The purchase price is determined by
an industry index less $0.08 per MMBtu. On August 10, 1999, the Company obtained
Bankruptcy Court approval to reject this contract.
As of July 31, 1999, TransTexas had delivery commitments for an aggregate
of approximately 125 MMcf of natural gas per day pursuant to certain
contracts. These contracts require TransTexas to pay certain charges if it does
not deliver the specified quantities. Such charges totaled $0.5 million and $1.1
million, respectively, during the three and six months ended July 31, 1999. The
Company expects to obtain Bankruptcy Court approval to reject these contracts.
Pursuant to the Bankruptcy Code, the Company has the right to assume or
reject executory contracts. As of September 10, 1999, the Company had obtained
Bankruptcy Court approval to reject 11 contracts.
16
<PAGE> 18
Pursuant to the Lobo Sale Agreement, TransTexas is required to indemnify
the buyer for certain liabilities related to the assets previously owned by TTC.
Although TransTexas does not anticipate that it will incur any material
indemnity liability with respect to the Lobo Sale Agreement, no assurance can be
given that TransTexas will not incur such indemnity liability.
POTENTIAL TAX LIABILITY
Part of the refinancing of TransAmerican's debt in 1993 involved the
cancellation of approximately $65.9 million of accrued interest and of a
contingent liability for interest of $102 million owed by TransAmerican.
TransAmerican has taken the federal tax position that the entire amount of this
debt cancellation is excluded from its income under the cancellation of
indebtedness provisions (the "COD Exclusion") of the Internal Revenue Code of
1986, as amended, and has reduced its tax attributes (including its net
operating loss and credit carryforwards) as a consequence of the COD Exclusion.
No federal tax opinion was rendered with respect to this transaction, however,
and TransAmerican has not obtained a ruling from the IRS regarding this
transaction. TransTexas believes that there is substantial legal authority to
support the position that the COD Exclusion applies to the cancellation of
TransAmerican's indebtedness. However, due to factual and legal uncertainties,
there can be no assurance that the IRS will not challenge this position, or that
such challenge would not be upheld. Under an agreement between TNGC Holdings
Corporation, the sole stockholders of TransAmerican ("TNGC"), TransAmerican and
certain of TransAmerican's subsidiaries including TransTexas, TEC and TARC (the
"Tax Allocation Agreement"), TransTexas has agreed to pay an amount equal to any
federal tax liability (which would be approximately $25.4 million) attributable
to the inapplicability of the COD Exclusion. Any such tax could be offset in
subsequent years by alternative minimum tax credits and retained loss and credit
carryforwards to the extent recoverable from TransAmerican. As a member of the
TNGC Consolidated Group (defined below), each of TransTexas, TEC and TARC will
be severally liable for any tax liability resulting from the above-described
transactions. The IRS has commenced an audit of the consolidated federal income
tax returns of the TNGC Consolidated Group for its taxable years ended July 31,
1995 and 1994. At this time, it is not possible to predict the scope of the IRS'
review or whether any tax deficiencies will be proposed by the IRS as a result
of its review.
Based in part upon independent legal advice, TransTexas determined that it
was not required to report any significant federal income tax liability as a
result of the Lobo Sale. There are, however, significant uncertainties regarding
TransTexas' tax position and no assurance can be given that its position will be
sustained if challenged by the IRS. TransTexas is part of an affiliated group
for tax purposes (the "TNGC Consolidated Group"), which also includes TNGC,
TransAmerican, TEC and TARC. No letter ruling has been or will be obtained from
the IRS regarding the Lobo Sale by any member of the TNGC Consolidated Group. If
the IRS were to successfully challenge TransTexas' position, each member of the
TNGC Consolidated Group would be severally liable under the consolidated tax
return regulations for the resulting taxes, in the estimated amount of up to
$270 million (assuming no reduction of tax attributes of the TNGC Consolidated
Group), possible penalties equal to 20% of the amount of the tax, and interest
at the statutory rate (currently 8%) on the tax and penalties (if any). The Tax
Allocation Agreement provides that TransAmerican will be obligated to fund the
entire tax deficiency (if any) resulting from the Lobo Sale. There can be no
assurance that TransAmerican would be able to fund any such payment at the time
due; therefore, the other members of the TNGC Consolidated Group may be required
to pay the tax. TransTexas' obligations for any liability arising from the Lobo
Sale would likely be in the form of reduced net operating losses.
If the aggregate ownership of TransTexas by members of the TNGC
Consolidated Group (excluding TransTexas) is less than 80% (measured by voting
power and value), TransTexas will no longer be a member of the TNGC Consolidated
Group for federal tax purposes ("Deconsolidation") and, with certain exceptions,
will no longer be obligated under the terms and conditions of, or entitled to
the benefits of, the Tax Allocation Agreement. A Deconsolidation could result
from the issuance of additional equity securities by TransTexas, or from the
sale or other disposal of shares of TransTexas by TEC or TransAmerican. Upon a
Deconsolidation of TransTexas, members of the TNGC Consolidated Group that own
TransTexas' common stock could incur a substantial amount of federal income tax
liability. If such Deconsolidation occurred during the fiscal year ending
January 31, 2000, the aggregate amount of this tax liability is estimated to be
approximately $100 million, assuming no reduction for tax attributes of the TNGC
Consolidated Group. However, such tax liability would be substantially reduced
or eliminated in the event that the IRS successfully challenged TransTexas'
position on the Lobo Sale. Each member of a consolidated group filing a
consolidated federal income tax return is severally liable to the IRS for the
consolidated federal income tax liability of the consolidated group. There can
be no assurance that each TNGC Consolidated Group member will have the ability
17
<PAGE> 19
to satisfy any tax obligation attributable to these transactions at the time due
and, therefore, other members of the group, including TEC, TransTexas or TARC,
may be required to pay the tax.
Generally, under the Tax Allocation Agreement, if net operating losses of
TransTexas are used by other members of the TNGC Consolidated Group, then
TransTexas is entitled to the benefit (through reduced current taxes payable) of
such losses in later years to the extent TransTexas has taxable income, remains
a member of the TNGC Consolidated Group and the other group members have the
ability to pay such taxes. If Deconsolidation of TransTexas occurs, TransTexas
would not thereafter receive any benefit pursuant to the Tax Allocation
Agreement for net operating losses of TransTexas used by other members of the
TNGC Consolidated Group prior to the Deconsolidation of TransTexas. Should
Deconsolidation occur, TransTexas would retain, as of July 31, 1999,
approximately $397 million of net operating loss carryforwards. However, such
net operating loss carryforwards could be reclaimed by the remaining members of
the TNGC Consolidated Group if certain events occur. Such events would include a
successful challenge to the tax treatment of the Lobo Sale.
TransTexas is required, under the Tax Allocation Agreement, to pay any
Texas franchise tax (which is estimated not to exceed $11.4 million)
attributable to transactions by any member of the TNGC Consolidated Group in
prior years. As of July 31, 1999, TransTexas had paid approximately $9.6 million
of these franchise taxes.
It is not possible to predict the impact of the bankruptcy filing on the
Tax Allocation Agreement, any obligations to the TNGC Consolidated Group or
TransTexas' tax attributes, including its net operating loss carryforwards. In
addition, the amount of net operating loss carryforwards remaining after
discharge from the bankruptcy that may be used in any future year may be
limited.
LACK OF COMPLETE YEAR 2000 COMPLIANCE
The widespread use of computer programs that rely on two-digit date
programs to perform computations and decision-making functions may cause
information technology ("IT") systems to malfunction in and around the Year
2000. Such malfunctions may lead to significant business delays in the U.S. and
internationally. The Year 2000 problem will potentially impact the Company's
normal business activities because information necessary to monitor and control
various operations is controlled by computers. In addition to potential problems
from computer systems, potential problems could arise from equipment with
embedded chips.
TransTexas has defined a Year 2000-compliant system as one capable of
correct identification, manipulation and calculation when processing data in
connection with the year change from December 31, 1999 to January 1, 2000. A
Year 2000-compliant system is also capable of correct identification,
manipulation and calculation using leap years both alone and in conjunction with
other dates.
Not all of TransTexas' systems are compliant under the above definition.
However, TransTexas is addressing the issues associated with this problem in the
following manner.
o In the first stage, TransTexas commenced preparation of an inventory
of all IT and non-IT systems, as well as equipment that could have
embedded chips, whether or not critical to the operation of the
business. TransTexas also compiled a listing of material
relationships with third parties with which it conducts business.
These relationships include contractors, suppliers and financial
institutions. This stage of the Year 2000 compliance process is
substantially complete.
o In stage two, TransTexas is assessing the results of the completed
inventory done in the first stage to determine the Year 2000 impact
and what actions need to be taken to obtain Year 2000 compliance.
For TransTexas' internal systems, actions needed include obtaining
vendor certification of Year 2000 compliance, remediating internal
systems or replacing systems and equipment that cannot be
remediated. This stage is approximately 95% complete with respect to
internal systems. Major outstanding items include receipt of vendor
certifications and installation of Year 2000 upgrades for certain
non-critical systems. TransTexas has determined a course of action
for remediation or replacement of all identified critical internal
systems. TransTexas is surveying and obtaining information about
Year 2000 readiness of its material third-party relationships.
Contingency plans will be developed for those third parties that
cannot satisfactorily demonstrate Year 2000 compliance.
18
<PAGE> 20
o The third stage includes the repair, replacement or retirement of
systems. This stage of the Year 2000 process is ongoing and is
dependent upon the availability of upgrades from TransTexas' IT
vendors, technician time to implement the upgrades and notification
from other third parties of Year 2000 compliance. TransTexas has
been upgrading packaged software throughout the organization.
TransTexas has implemented a new financial reporting system. Several
operational systems are in various stages of implementation, which
should be completed prior to November 1999. The vendors of these new
systems have provided certification that their respective software
packages are Year 2000 compliant according to TransTexas'
definition.
o The last stage of the implementation process, which is approximately
80% complete, includes testing all of the changes implemented
individually and integrating those changes with all of the systems
of TransTexas and its suppliers and customers. Various forms of
testing are used depending on the type of change implemented. Each
upgrade, to the extent economically feasible, will be run through a
test environment before it is implemented. It is then tested to see
how well it integrates into TransTexas' overall IT environment.
Currently, TransTexas is not employing any independent verification
processes of its systems' tests.
As of July 31, 1999, TransTexas had incurred approximately $2 million in
direct costs with respect to its Year 2000 compliance program. TransTexas
anticipates spending an additional $0.2 million in direct costs to complete its
Year 2000 compliance program.
Despite TransTexas' best efforts to ready its systems and infrastructure
for the Year 2000, there are many factors outside of TransTexas' control that
could affect readiness for the Year 2000. Although TransTexas believes that Year
2000 compliance will be accomplished by the implementation of the program
described above, there could be operational issues with the new systems
implemented that prevent TransTexas from solving the Year 2000 compliance issue
in a timely manner. In such event, TransTexas could be required to implement a
contingency plan for Year 2000 compliance. Although TransTexas has not
completely finalized its contingency plans, TransTexas will select from several
alternative plans including remediation of its software, installation of other
third party vendor software or some combination of alternatives. Substantial
completion of these plans is expected by November 1999 with continual
refinement until all of TransTexas' critical systems and all critical
third-party relationships have demonstrated Year 2000 compliance.
The potential impact of the Year 2000 problem on TransTexas could be
material, as virtually every aspect of its business will be affected. TransTexas
may be adversely affected by this problem, depending on whether it and the
entities with which it does business address this issue successfully.
FORWARD-LOOKING STATEMENTS
Forward-looking statements, within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
are included throughout this report. All statements other than statements of
historical facts included in this report regarding TransTexas' financial
position, business strategy, and plans and objectives of management for future
operations, including, but not limited to words such as "anticipates,"
"expects," "estimates," "believes" and "likely" indicate forward-looking
statements. TransTexas' management believes its current views and expectations
are based on reasonable assumptions; however, there are significant risks and
uncertainties that could significantly affect expected results. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include fluctuations in the commodity prices for
natural gas, crude oil, condensate and natural gas liquids, the extent of
TransTexas' success in discovering, developing and producing reserves,
conditions in the equity and capital markets, competition, Year 2000 readiness
and the ultimate resolution of litigation, including bankruptcy.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of July 31, 1999, the Company did not have any market risk sensitive
instruments.
19
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to the condensed consolidated financial statements for a
discussion of TransTexas' legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its 1999 Annual Meeting of Stockholders on July 9,
1999. No matters, other than the election of directors, were voted upon. James
V. Langston and Robert L. May were elected to serve as Class III directors for a
three-year term. Thomas B. McDade's term as Class II director expires in 2001.
John R. Stanley's term as Class I director expires in 2000.
The following votes were cast with respect to each nominee:
<TABLE>
<CAPTION>
FOR WITHHELD
---------- --------
<S> <C> <C>
James V. Langston 56,715,111 228,843
Robert L. May 56,707,411 236,543
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
2.1 -- First Amended Plan of Reorganization dated July 22, 1999.
10.1 -- Amendment No. 1 dated June 28, 1999 to Credit Agreement dated
April 27, 1999 among TransTexas, Credit Suisse First Boston
Management Corporation, the Lenders named therein, and TEC and
TARC, as guarantors.
15.1 -- Letter of Independent Accountants regarding awareness of
incorporation by reference.
27.1 -- Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended July 31,
1999.
20
<PAGE> 22
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 thereunto duly authorized.
TRANSTEXAS GAS CORPORATION
(Registrant)
By: /s/ Ed Donahue
----------------------------------
Ed Donahue, Vice President
and Chief Financial Officer
September 20, 1999
21
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------ -------
<S> <C>
2.1 -- First Amended Plan of Reorganization dated July 22, 1999.
10.1 -- Amendment No. 1 dated June 28, 1999 to Credit Agreement dated
April 27, 1999 among TransTexas, Credit Suisse First Boston
Management Corporation, the Lenders named therein, and TEC and
TARC, as guarantors.
15.1 -- Letter of Independent Accountants regarding awareness of
incorporation by reference.
27.1 -- Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 2.1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
IN RE: )
)
TRANSTEXAS GAS CORPORATION, ) CASE NO. 99-21550-C-11
)
DEBTOR. )
FIRST AMENDED PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
PROPOSED BY DEBTOR
Dated: July 22, 1999
JORDAN, HYDEN, WOMBLE GARDERE & WYNNE, L.L.P.
& CULBRETH, P.C. John Nabors
Shelby Jordan Deirdre B. Ruckman
Bank America Towers 3000 Thanksgiving Tower
500 N. Shoreline, Suite 900 1601 Elm Street
Corpus Christi, TX 78471 Dallas, TX 75201
COUNSEL FOR DEBTOR SPECIAL COUNSEL FOR
DEBTOR
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S>
ARTICLE I
INTRODUCTION
Section 1.01 Introduction................................................................................1
ARTICLE II
DEFINITIONS
Section 2.01 Administrative Expense.................................................................1
Section 2.02 Affiliate of the Debtor................................................................1
Section 2.03 Allowed................................................................................1
Section 2.04 Allowed Claim or Allowed Interest......................................................1
Section 2.05 Amended Bylaws.........................................................................2
Section 2.06 Amended Certificate of Incorporation...................................................2
Section 2.07 Ballot/Election Deadline...............................................................2
Section 2.08 Ballots/Elections......................................................................2
Section 2.09 Bank One...............................................................................2
Section 2.10 Bankruptcy Code........................................................................2
Section 2.11 Bankruptcy Court.......................................................................2
Section 2.12 Bankruptcy Rules.......................................................................2
Section 2.13 Bar Date...............................................................................2
Section 2.14 Bondholder Committee...................................................................2
Section 2.15 Bondholder DIP Facility................................................................2
Section 2.16 Bondholder DIP Secured Claims .........................................................3
Section 2.17 Bondholder Lenders.....................................................................3
Section 2.18 BNYFC..................................................................................3
Section 2.19 BNYFC DIP Facility.....................................................................3
Section 2.20 BNYFC Secured Claim....................................................................3
Section 2.21 Business Day...........................................................................3
Section 2.22 Cash...................................................................................3
Section 2.23 Causes of Action.......................................................................3
Section 2.24 Chapter 11 Case........................................................................3
Section 2.25 Claim..................................................................................3
Section 2.26 Class..................................................................................3
Section 2.27 Collateral ............................................................................3
Section 2.28 Confirmation...........................................................................4
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 2.29 Confirmation Date......................................................................4
Section 2.30 Confirmation Hearing...................................................................4
Section 2.31 Confirmation Order.....................................................................4
Section 2.32 Convenience Claim......................................................................4
Section 2.33 Creditor...............................................................................4
Section 2.34 Creditors' Committee...................................................................4
Section 2.35 Cure Amount Schedule...................................................................4
Section 2.36 Debtor.................................................................................4
Section 2.37 Debtor-in-Possession...................................................................4
Section 2.38 Deductible Claim.......................................................................4
Section 2.39 Deficiency Claim.......................................................................5
Section 2.40 DGCL...................................................................................5
Section 2.41 Disallowed.............................................................................5
Section 2.42 Disbursing Agent.......................................................................5
Section 2.43 Disclosure Statement...................................................................5
Section 2.44 Disputed Claim.........................................................................5
Section 2.45 Disputed Interest......................................................................5
Section 2.46 Distribution Record Date...............................................................5
Section 2.47 Distributions..........................................................................5
Section 2.48 Effective Date.........................................................................5
Section 2.49 Entity.................................................................................6
Section 2.50 Estate.................................................................................6
Section 2.51 Exchange Act...........................................................................6
Section 2.52 Extended Bondholder DIP Facility.......................................................6
Section 2.53 Face Amount............................................................................6
Section 2.54 File, Filed or Filing..................................................................6
Section 2.55 Final Order............................................................................6
Section 2.56 Firstar................................................................................7
Section 2.57 General Unsecured Claim................................................................7
Section 2.58 Governmental Unit......................................................................7
Section 2.60 Indemnity Claim........................................................................7
Section 2.61 Indentures.............................................................................7
Section 2.62 Indenture Trustee......................................................................7
Section 2.63 Indenture Trustee Claim................................................................7
Section 2.64 Insured Claim..........................................................................7
Section 2.65 Insured Portion........................................................................7
Section 2.66 Interests..............................................................................7
Section 2.67 Lien...................................................................................8
Section 2.68 Management Agreement...................................................................8
Section 2.69 Maximum GUC Cash Amount................................................................8
Section 2.70 Mineral Property.......................................................................8
Section 2.71 Mineral Property Claimant..............................................................8
Section 2.72 Mineral Property Secured Claim.........................................................8
Section 2.73 Miscellaneous Secured Claims...........................................................8
Section 2.74 New Board of Directors.................................................................8
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 2.75 New Common Stock.......................................................................8
Section 2.76 New Junior Preferred Stock.............................................................8
Section 2.77 New Senior Preferred Stock.............................................................9
Section 2.78 New Secured Notes Security Documents ..................................................9
Section 2.79 New Senior Secured Notes...............................................................9
Section 2.80 New Senior Secured Notes Indenture.....................................................9
Section 2.81 New Senior Secured Notes Indenture Trustee.............................................9
Section 2.82 New Warrant Agent .....................................................................9
Section 2.83 New Warrant Agreement..................................................................9
Section 2.84 New Warrants...........................................................................9
Section 2.85 Old Common Stock.......................................................................9
Section 2.86 Paying Agent...........................................................................9
Section 2.87 Petition Date..........................................................................9
Section 2.88 Plan..................................................................................10
Section 2.89 Plan Documents........................................................................10
Section 2.90 Plan Rate.............................................................................10
Section 2.91 Post-Confirmation Credit Facility.....................................................10
Section 2.92 Priority Claim........................................................................10
Section 2.93 Priority Tax Claim....................................................................10
Section 2.94 Production Payment Holder Claims......................................................10
Section 2.95 Professionals ........................................................................10
Section 2.96 Quarterly Distribution Date...........................................................10
Section 2.97 Ratable Proportion....................................................................10
Section 2.98 Registration Rights Agreement.........................................................11
Section 2.99 Registration Statement................................................................11
Section 2.100 Rejection Claim.......................................................................11
Section 2.101 Reorganization Securities.............................................................11
Section 2.102 Reorganized TransTexas or Reorganized Debtor .........................................11
Section 2.103 Schedules.............................................................................11
Section 2.104 Secured Claim.........................................................................11
Section 2.105 Secured Tax Claim.....................................................................11
Section 2.106 Special Master........................................................................11
Section 2.107 TARC..................................................................................11
Section 2.108 TARC Plan.............................................................................12
Section 2.109 TEC...................................................................................12
Section 2.110 TEC Bondholders.......................................................................12
Section 2.111 TEC Senior Secured Notes..............................................................12
Section 2.112 TEC Senior Secured Notes Indenture....................................................12
Section 2.113 TEC Plan..............................................................................12
Section 2.114 Tort Claim............................................................................12
Section 2.115 TransTexas............................................................................12
Section 2.116 TransTexas Senior Secured Loan Agreement..............................................12
Section 2.117 TransTexas Senior Secured Note Claims.................................................12
Section 2.118 TransTexas Senior Secured Note Deficiency Claim.......................................12
Section 2.119 TransTexas Subordinated Note Claims...................................................12
</TABLE>
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<TABLE>
<S> <C>
Section 2.120 TransTexas Subordinated Notes.........................................................13
Section 2.121 TransTexas Subordinated Notes Indenture...............................................13
Section 2.122 Unclaimed Property....................................................................13
Section 2.123 Unimpaired............................................................................13
Section 2.124 Workers' Compensation Claims..........................................................13
Section 2.125 Workers' Compensation Programs........................................................13
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE
EXPENSE CLAIMS AND PRIORITY TAX CLAIMS
AND BONDHOLDER DIP CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses..........................................13
Section 3.02 Treatment of Bondholder DIP Secured Claims............................................14
Section 3.03 Treatment of Allowed Priority Tax Claims..............................................14
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Section 4.01 Class 1...............................................................................15
Section 4.02 Class 2...............................................................................15
Section 4.03 Class 3...............................................................................15
Section 4.04 Class 4...............................................................................15
Section 4.05 Class 5...............................................................................15
Section 4.06 Class 6...............................................................................15
Section 4.07 Class 7...............................................................................15
Section 4.08 Class 8...............................................................................15
Section 4.09 Class 9 ..............................................................................15
Section 4.10 Class 10..............................................................................15
Section 4.11 Class 11..............................................................................15
Section 4.12 Class 12 .............................................................................15
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (Priority Claims).................................15
Section 5.02 Treatment of Allowed Class 2 Claims (Secured Tax Claims)..............................16
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
Section 5.03 Treatment of Allowed Class 3 Claim (TransTexas Senior Secured
Note Claims)..........................................................................16
Section 5.04 Treatment of Allowed Class 4 Claim (BNYFC)............................................17
Section 5.05 Treatment of Allowed Class 5 Claims (Miscellaneous Secured
Claims)...............................................................................18
Section 5.06 Treatment of Allowed Class 6 Claims (Mineral Property Secured
Claims). .............................................................................19
Section 5.07 Treatment of Allowed Class 7 Claims (TransTexas Senior Secured
Note Deficiency Claims)...............................................................19
Section 5.08 Treatment of Allowed Class 8 Claims (General Unsecured Claims)........................20
Section 5.09 Treatment of Allowed Class 9 Claims (TransTexas Subordinated
Note Claims)..........................................................................20
Section 5.10 Treatment of Allowed Class 10 Claims (Convenience Claims).............................20
Section 5.11 Treatment of Allowed Class 11 Claims (Production Payment Holder
Claims)...............................................................................20
Section 5.12 Treatment of Allowed Class 12 Interests (Old Common Stock
Interests)............................................................................21
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
Section 6.01 General Corporate Matters. ...........................................................21
Section 6.02 Post-Confirmation Financing...........................................................21
Section 6.03 Effectiveness of Securities, Instruments and Agreements...............................21
Section 6.04 Corporate Action for Reorganized Debtor...............................................21
Section 6.05 Directors of the Reorganized Debtor. ................................................22
Section 6.06 Management Agreement. ................................................................22
Section 6.07 Approval of Agreements. ..............................................................22
Section 6.08 Employee Benefit Plans................................................................22
Section 6.09 Listing of New Common Stock; Registration of Reorganization
Securities............................................................................22
Section 6.10 Distributions to Holders of Allowed Claims and Interests; Source
of Cash and Reorganization Securities for Distributions...............................23
Section 6.11 Distribution to Holders of TransTexas Senior Secured Notes............................23
Section 6.12 Cancellation and Surrender of Existing Securities; Cancellation of
Indentures............................................................................23
Section 6.13 Release of Liens and Perfection of Liens..............................................24
Section 6.14 Election of Treatment in Class 8......................................................24
Section 6.15 Liens Securing New Senior Secured Notes; Further Transactions.........................25
</TABLE>
v
<PAGE> 7
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
<TABLE>
<S> <C>
Section 7.01 Objections............................................................................25
Section 7.02 Amendments to Claims; Claims Filed After the Confirmation Date........................25
Section 7.03 Reserves for Disputed Claims and Disputed Interests...................................26
Section 7.04 Fluctuation in Value of Securities....................................................26
Section 7.05 Distributions on Account of Disputed Claims...........................................26
Section 7.06 Quarterly Distributions...............................................................27
Section 7.07 Excess Reserves.......................................................................27
Section 7.08 Undeliverable or Unclaimed Distributions..............................................27
Section 7.09 Allocation of Consideration...........................................................27
Section 7.10 Distributions to the Holders of General Unsecured Claims..............................28
Section 7.11 Limitations on Amounts to be Distributed to Holders of Allowed
Deductible Claims.....................................................................28
Section 7.12 Transmittal of Distributions and Notices. ...........................................28
Section 7.13 Distribution Record Date..............................................................29
Section 7.14 Method of Cash Distributions..........................................................29
Section 7.15 Distributions on Non-Business Days....................................................29
Section 7.16 Rounding..............................................................................29
Section 7.17 Withholding Taxes.....................................................................30
Section 7.18 Disputed Distributions................................................................30
Section 7.19 Retention of Rights to Pursue Causes of Action........................................30
Section 7.20 Special Master Proceedings. ..........................................................30
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Assumption Generally..................................................................30
Section 8.02 Approval of Assumptions...............................................................31
Section 8.03 Objections to Assumption of Executory Contracts and Unexpired
Leases................................................................................31
Section 8.04 Objections to Proposed "Cure" Amounts.................................................31
Section 8.05 Payment Related to Assumption of Executory Contracts and
Unexpired Leases. ...................................................................32
Section 8.06 Executory Contracts and Unexpired Leases to be Rejected...............................32
Section 8.07 Bar Date for Rejection Damages........................................................33
Section 8.08 Contracts Entered Into on or After the Petition Date..................................33
</TABLE>
vi
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ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
<TABLE>
<S> <C>
Section 9.01 Discharge of All Claims and Interests and Releases....................................33
Section 9.02 Indemnification.......................................................................35
Section 9.03 Conclusion of Chapter 11 Case and Dissolution of Creditors'
Committee.............................................................................35
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date........................................35
Section 10.02 Waiver of Conditions to Occurrence of the Effective Date..............................36
ARTICLE XI
EFFECTS OF PLAN CONFIRMATION
Section 11.01 Reorganized Debtor....................................................................37
Section 11.02 Revesting and Vesting.................................................................37
Section 11.03 Injunction. .........................................................................37
ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction.............................................................38
Section 12.02 Jurisdiction Over the Reorganized Debtor..............................................39
Section 12.03 Cram Down. ..........................................................................39
Section 12.04 Modification of the Plan. ............................................................39
Section 12.05 Exemption from Certain Transfer Taxes.................................................40
Section 12.06 Setoffs. ............................................................................40
Section 12.07 Compromise of Controversies...........................................................40
Section 12.08 Withdrawal or Revocation of the Plan. ...............................................41
Section 12.09 Successors and Assigns................................................................41
Section 12.10 Governing Law. ......................................................................41
Section 12.11 Notices...............................................................................41
Section 12.12 Severability..........................................................................42
Section 12.13 Interpretation, Rules of Construction, Computation of Time,
and Choice of Law.....................................................................42
</TABLE>
vii
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<TABLE>
<S> <C>
Section 12.14 No Admissions.........................................................................43
Section 12.15 Limitation of Liability...............................................................43
ANNEX A PRINCIPAL TERMS OF THE MANAGEMENT AGREEMENT............................................................45
ANNEX B PRINCIPAL TERMS OF NEW JUNIOR PREFERRED STOCK..........................................................46
ANNEX C PRINCIPAL TERMS OF NEW SENIOR PREFERRED STOCK..........................................................48
ANNEX D PRINCIPAL TERMS OF NEW SENIOR SECURED NOTES............................................................51
ANNEX E PRINCIPAL TERMS OF NEW WARRANTS........................................................................54
</TABLE>
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ARTICLE I
INTRODUCTION
Section 1.01 Introduction. This Plan is proposed by TransTexas Gas
Corporation. Reference is made to the Disclosure Statement accompanying the Plan
for a discussion of each of TransTexas Gas Corporation's, TransAmerican Energy
Corporation's, and TransAmerican Refining Corporation's history, results of
operations, historical financial information and properties, and for a summary
and analysis of this Plan. All holders of Claims against and Interests in
TransTexas Gas Corporation are encouraged to read this Plan and the Disclosure
Statement in their entirety before voting to accept or reject the Plan.
ARTICLE II
DEFINITIONS
The following terms used herein shall have the respective meanings
defined below:
Section 2.01 Administrative Expense means (a) any cost or expense of
administration of the Chapter 11 Case (including, without limitation, the fees
and expenses of Professionals) asserted or arising under Sections 503(b), or
507(b) of the Bankruptcy Code, (b) a Claim determined to be an Administrative
Expense pursuant to a Final Order, and (c) any fees or charges assessed against
the Estate under Section 1930, title 28, United States Code.
Section 2.02 Affiliate of the Debtor means John R. Stanley, or any
corporation, limited liability company or other business entity directly or
indirectly controlled by John R. Stanley.
Section 2.03 Allowed means with respect to Claims and Interests, (a)
any Claim against, or Interest in, the Debtor, proof of which is timely Filed or
by order of the Bankruptcy Court is not or will not be required to be Filed, (b)
any Claim or Interest that has been or is hereafter listed in the Schedules as
neither disputed, contingent or unliquidated, and for which no timely Filed
proof of Claim has been Filed, (c) any Interest registered in the stock register
maintained by or on behalf of the Debtor as of the Distribution Record Date or
(d) any Claim allowed pursuant to this Plan and, in each such case in (a), (b)
and (c) above, as to which either (i) no objection to the allowance thereof has
been Filed within the applicable period of time fixed by this Plan, the
Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court or (ii) such an
objection is so Filed and the Claim and Interest shall have been allowed
pursuant to a Final Order (but only to the extent so allowed).
Section 2.04 Allowed Claim or Allowed Interest means an Allowed Claim
or an Allowed Interest in a specified class. For example, an Allowed General
Unsecured Claim is an Allowed Claim in the General Unsecured Claims Class and an
Allowed Old Common Stock Interest is an Allowed Interest in the Old Common Stock
Interest Class.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 1
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Section 2.05 Amended Bylaws means the amended and restated bylaws of
TransTexas to become effective on the Effective Date.
Section 2.06 Amended Certificate of Incorporation means the amended and
restated certificate of incorporation of TransTexas to become effective on the
Effective Date, substantially in the form as Filed on or prior to the
Confirmation Date.
Section 2.07 Ballot/Election Deadline means the date set by the
Bankruptcy Court as the last date on which Ballots/Elections may be submitted.
Section 2.08 Ballots/Elections means the ballots and election forms
that accompany the Plan and the Disclosure Statement upon which holders of
Impaired Claims entitled to vote on the Plan and/or make elections hereunder
shall indicate their acceptance or rejection, of or elections respecting, the
Plan.
Section 2.09 Bank One means Bank One, N.A., as Indenture Trustee under
the TransTexas Subordinated Notes Indenture.
Section 2.10 Bankruptcy Code means Title 11, United States Code, as
amended from time to time, as applicable to the Chapter 11 Case.
Section 2.11 Bankruptcy Court means the United States Bankruptcy Court
for the Southern District of Texas, Corpus Christi Division, having jurisdiction
over the Chapter 11 Case or such other court of competent jurisdiction as may
obtain such jurisdiction in the future.
Section 2.12 Bankruptcy Rules means the Federal Rules of Bankruptcy
Procedure as promulgated by the United States Supreme Court under Section 2075,
title 28, United States Code, as amended from time to time, applicable to the
Chapter 11 Case, and any local rules of the Bankruptcy Court.
Section 2.13 Bar Date means as to Creditors other than Governmental
Units, September 27, 1999, as the final date for Filing proofs of Claim or
proofs of Interest herein; and as to Governmental Units, October 18, 1999, as
the final date for Filing proofs of Claim or proofs of Interest herein.
Section 2.14 Bondholder Committee means an unofficial committee
composed of the following TEC Bondholders: Credit Suisse First Boston
Corporation, Oaktree Capital Management, L.L.C., Angelo Gordon & Co., L.P. and
Merrill Lynch Asset Management, L.P.; provided, however, each of the foregoing
Entities shall cease to be a member of such committee from any date on which it
ceases to hold or manage at least $50,000,000 in principal amount of the TEC
Senior Secured Notes
Section 2.15 Bondholder DIP Facility means the Debtor-In-Possession
loans and other financial accommodations provided pursuant to the Credit
Agreement among the Debtor, as borrower, and TEC and TARC, as guarantors, and
the Bondholder Lenders dated as of April 27, 1999, as amended, and all ancillary
agreements and instruments thereto.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 2
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Section 2.16 Bondholder DIP Secured Claims means the Secured Claims of
the Bondholder Lenders arising under the Bondholder DIP Facility.
Section 2.17 Bondholder Lenders means Credit Suisse First Boston
Corporation, Angelo Gordon & Co., L.P., and Oaktree Capital Management, L.L.C.
and their respective successors and assigns.
Section 2.18 BNYFC means BNY Financial Corporation.
Section 2.19 BNYFC DIP Facility means the Debtor-In-Possession loans
and other financial accommodations provided pursuant to the Post-Petition
Amendment No. 1 to Financing Agreement between the Debtor and BNYFC dated as of
April 19, 1999 and all ancillary agreements and instruments thereto.
Section 2.20 BNYFC Secured Claim means the Secured Claim of BNY
Financial Corporation.
Section 2.21 Business Day means any day other than a Saturday, Sunday
or legal holiday.
Section 2.22 Cash means currency, a certified check, a cashier's check
or a wire transfer of immediately available funds from any source or a check
drawn on a domestic bank.
Section 2.23 Causes of Action means any and all actions, causes of
action, suits, accounts, controversies, agreements, promises, rights to legal
remedies, rights to equitable remedies, rights to payment, and Claims, whether
known or unknown, reduced to judgment, not reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, unsecured and whether asserted or assertable directly or indirectly or
derivatively, in law, equity or otherwise.
Section 2.24 Chapter 11 Case means the Debtor's voluntary case pending
in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case number
99-21550.
Section 2.25 Claim means any right to (a) payment from the Debtor,
whether or not such right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured, or unsecured, known or unknown, or (b) an equitable remedy for breach
of performance if such breach gives rise to a right of payment from the Debtor,
whether or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, or unsecured,
known or unknown.
Section 2.26 Class means any group of substantially similar Claims or
Interests classified by the Plan pursuant to Section 1129(a)(1) of the
Bankruptcy Code.
Section 2.27 Collateral means any property or interest in property of
the Estate subject to a Lien to secure the payment or performance of a Claim,
which Lien is not subject to avoidance under the Bankruptcy Code.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 3
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Section 2.28 Confirmation means the entry of the Confirmation Order on
the docket maintained by the Clerk of the Bankruptcy Court with respect to the
Chapter 11 case.
Section 2.29 Confirmation Date means the date on which the Confirmation
Order is entered on the docket maintained by the Clerk of the Bankruptcy Court
with respect to the Chapter 11 Case.
Section 2.30 Confirmation Hearing means the hearing held by the
Bankruptcy Court regarding confirmation of the Plan pursuant to Section 1129 of
the Bankruptcy Code, as such hearing may be adjourned or continued from time to
time.
Section 2.31 Confirmation Order means the order of the Bankruptcy Court
confirming the Plan pursuant to Section 1129 of the Bankruptcy Code.
Section 2.32 Convenience Claim means any Claim, which would otherwise
be a General Unsecured Claim that (a) is Allowed in an amount of $500 or less,
or (b) is Allowed in an amount greater than $500, but which is reduced pursuant
to Section 6.16 of the Plan to an amount of $500 or less.
Section 2.33 Creditor means any Entity that is the holder of a Claim
that arose on or before the Petition Date or a Claim of the kind specified in
Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code.
Section 2.34 Creditors' Committee means the Official Committee of
Unsecured Creditors in the Chapter 11 cases of the Debtor, TEC and TARC, as
appointed by the Office of the United States Trustee and reconstituted from time
to time, which members are identified in the Disclosure Statement.
Section 2.35 Cure Amount Schedule means the schedule setting forth the
proposed amounts to cure all executory contracts to be assumed under Article
VIII of the Plan.
Section 2.36 Debtor means TransTexas Gas Corporation, a Delaware
corporation, the debtor in the Chapter 11 Case.
Section 2.37 Debtor-in-Possession means the Debtor in its capacity as a
debtor in possession in the Chapter 11 Case under Sections 1101, 1107 and 1108
of the Bankruptcy Code.
Section 2.38 Deductible Claim means with respect to any Insured Claim,
an amount equal to the applicable deductible, self-insured retention or
retrospective rating under the relevant insurance policy and any reimbursement
obligation of the Debtor to the insurance carrier for sums expended by the
insurance carrier on account of such Claim (including, without limitation, any
costs and expenses relating to the defense of such Claim). For purposes hereof,
the term "Deductible Claim" shall include any Secured Deductible Claim.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 4
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Section 2.39 Deficiency Claim means with respect to a Claim that is
partially secured, the amount by which the Allowed amount of such Claim exceeds
the value of the Collateral which secures such Claim.
Section 2.40 DGCL means the General Corporation Law of the State of
Delaware, as amended from time to time.
Section 2.41 Disallowed means, when used with respect to a Claim or an
Interest, a Claim or an Interest that has been disallowed pursuant to a Final
Order.
Section 2.42 Disbursing Agent means the Entity or Entities designated
in the Confirmation Order to disburse property pursuant to the Plan and may
include the Reorganized Debtor when acting in that capacity.
Section 2.43 Disclosure Statement means the Disclosure Statement
relating to the Plan, including, without limitation, all exhibits and schedules
thereto as approved by the Bankruptcy Court pursuant to Section 1125 of the
Bankruptcy Code, as such Disclosure Statement may be amended, modified, or
supplemented.
Section 2.44 Disputed Claim means the portion (including, when
appropriate, the whole) of a Claim that is not an Allowed Claim as to which: (a)
a proof of Claim has been Filed, or deemed Filed under applicable law or order
of the Bankruptcy Court; (b) an objection has been or may be timely Filed; and
(c) such objection has not been: (i) withdrawn, (ii) overruled or denied in
whole or in part pursuant to a Final Order, or (iii) granted in whole or part
pursuant to a Final Order. Before the time that an objection has been or may be
Filed, a Claim shall be considered a Disputed Claim (A) if the amount or
classification of the Claim specified in the proof of Claim exceeds the amount
or classification of any corresponding Claim scheduled by the Debtor in its
Schedules, to the extent of such excess; (B) in its entirety, if any
corresponding Claim scheduled by the Debtor has been scheduled as disputed,
contingent or unliquidated in its Schedules; or (C) in its entirety, if no
corresponding Claim has been scheduled by the Debtor in its Schedules.
Section 2.45 Disputed Interest means an Interest, or portion thereof,
that has not become an Allowed Interest.
Section 2.46 Distribution Record Date means 5:00 p.m. on the Business
Day immediately preceding the Confirmation Date or other such time and date
designated in the Confirmation Order.
Section 2.47 Distributions means the distributions to be made pursuant
to the Plan.
Section 2.48 Effective Date means a Business Day selected by the
Debtor, with the prior consent of the Bondholder Committee, that is the later of
(a) a day that is not less than eleven (11) days after the Confirmation Date and
(b) the first Business Day on which all conditions to the occurrence of the
Effective Date have been satisfied or duly waived.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 5
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Section 2.49 Entity means any individual, corporation, limited or
general partnership, joint venture, association, joint stock company, limited
liability company, estate, entity, trust, trustee, United States Trustee,
unincorporated organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.
Section 2.50 Estate means the estate of TransTexas created by Section
541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case.
Section 2.51 Exchange Act means the Securities Exchange Act of 1934, as
amended.
Section 2.52 Extended Bondholder DIP Facility means the Bondholder DIP
Facility as amended on the Effective Date to provide for, among other things:
(i) the extension of the maturity date thereunder with respect to one-third of
the principal amount owing thereunder on the Effective Date and all interest,
fees and other charges accruing thereon and associated therewith to the date
that is six months after the Effective Date and (ii) securing the amounts due
thereunder pari passu with all amounts owing under the Post Confirmation Credit
Facility, substantially in the form as Filed on or prior to the Confirmation
Date.
Section 2.53 Face Amount means: (a) with respect to a particular Claim
(i) if the Claim is listed in the Schedules and the holder of such Claim has not
Filed a proof of Claim within the applicable period of limitation fixed by the
Bankruptcy Court pursuant to the Bankruptcy Code, the Bankruptcy Rules or other
applicable law, the amount of such Claim that is listed in the Schedules as not
disputed, contingent or unliquidated; or (ii) if the holder of such Claim has
Filed a proof of Claim with the Bankruptcy Court within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code, the
Bankruptcy Rules or other applicable law, the liquidated amount stated in such
proof of Claim, or such amount as is determined by the Final Order of the
Bankruptcy Court; (b) in the case of an Administrative Expense, the liquidated
amount set forth in any application Filed with respect thereto, or the amount
set forth in the Debtor's books and records or such amount as is determined
pursuant to a Final Order; or (c) in all other cases, zero or such amount as
shall be fixed or estimated pursuant to a Final Order.
Section 2.54 File, Filed or Filing means file, filed or filing with the
Bankruptcy Court in the Chapter 11 Case.
Section 2.55 Final Order means an order or judgment of the Bankruptcy
Court entered by the Clerk of the Bankruptcy Court on the docket in the Chapter
11 Case, which has not been reversed, vacated or stayed and as to which (a) the
time to appeal, petition for certiorari or move for a new trial, reargument or
rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for a new trial, reargument or rehearing shall then be pending
or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing
thereof has been sought, such order or judgment of the Bankruptcy Court shall
have been affirmed by the highest court to which such order was appealed, or
certiorari shall have been denied or a new trial, reargument or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari or move for a new trial,
reargument or rehearing shall have expired;
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 6
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provided, however, that the possibility that a motion under Rule 60 of the
Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy
Rules, may be Filed relating to such order, shall not cause such order not to
be a Final Order.
Section 2.56 Firstar means Firstar Bank of Minnesota, N.A., as
Indenture Trustee.
Section 2.57 General Unsecured Claim means any Claim (including,
without limitation, any Deductible Claim) that is not an Administrative Expense,
a Priority Tax Claim, a Priority Claim, a Secured Claim, a Convenience Claim or
a Production Payment Claim.
Section 2.58 Governmental Unit means a governmental unit as such term
is defined in Section 101(27) of the Bankruptcy Code.
Section 2.59 Impaired means with respect to any Claim or Interest,
impaired within the meaning of Section 1124 of the Bankruptcy Code.
Section 2.60 Indemnity Claim means a Claim of a director or officer of
the Debtor that is not assumed by the Debtor pursuant to Article VIII of the
Plan for any obligations of the Debtor to indemnify directors or officers
against any obligations pursuant to the Debtor's certificate of incorporation,
bylaws, contract, applicable state law, any combination of the foregoing, or
otherwise.
Section 2.61 Indentures means, collectively, the TransTexas Senior
Secured Loan Agreement, the TEC Senior Secured Notes Indenture and the
TransTexas Subordinated Notes Indenture.
Section 2.62 Indenture Trustee means any entity identified as the
trustee, paying agent or other similar fiduciary under a bond, note or other
debt instrument (including, but not limited to, the TEC Senior Secured Notes and
the TransTexas Subordinated Notes), whether or not the agreement evidencing the
debt or delineating its terms is denominated as an indenture.
Section 2.63 Indenture Trustee Claim means the fees and expenses of
Bank One or Firstar, as Indenture Trustee under their respective Indentures, or
any other successor Indenture Trustee, incurred in their capacity as such,
including the fees and expenses of its counsel.
Section 2.64 Insured Claim means any Claim arising from an incident or
occurrence that is covered under the Debtor's general liability insurance
policies but shall not include Workers' Compensation Claims arising out of
Workers' Compensation Programs and employee benefit plans.
Section 2.65 Insured Portion means the portion of any Insured Claim
that is covered under an applicable Debtor's general liability insurance policy
and would not constitute a Deductible Claim.
Section 2.66 Interests means, as of the Petition Date, the equity
Interests in the Debtor, including, without limitation, shares of common stock
and shares of preferred stock of the Debtor and any rights, options, warrants,
calls, subscriptions or other similar rights or agreements,
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 7
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commitments or outstanding securities obligating the Debtor to issue, transfer
or sell any shares of capital stock of the Debtor.
Section 2.67 Lien means any charge against, encumbrance upon or other
interest in property, the purpose of which is to secure payment of a debt or
performance of an obligation.
Section 2.68 Management Agreement means the new employment agreement
between John R. Stanley and the Reorganized Debtor dated as of the Effective
Date. The principal terms of the Management Agreement are set forth on Annex A
to the Plan.
Section 2.69 Maximum GUC Cash Amount means $15 million.
Section 2.70 Mineral Property means any estate or interest in oil, gas
and/or minerals, leases, in which the Debtor claims (either in severalty or in
common with other mineral property owners) rights to a share of oil and gas
production as defined in Section 9.319(q) of the Texas Business and Commerce
Code.
Section 2.71 Mineral Property Claimant means (a) any Entity other than
the Debtor that owns an interest in a Mineral Property, including without
limitation, the owners of royalty Interests, overriding royalty Interests,
working Interests, and mineral Interests, whether such interest are perpetual or
terminable (excluding any person or entity that claims an interest pursuant to a
production payment) or (b) any Entity that has a valid mineral contractor or
mineral subcontractor Claim pursuant to Chapter 56 of the Texas Property Code or
similar statute of a state other than Texas.
Section 2.72 Mineral Property Secured Claim means a Secured Claim held
by a Mineral Property Claimant which has been determined by the Special Master
to be senior in priority as of the Petition Date under the applicable state law
to the Secured Claim of TEC and/or Firstar with respect to the Collateral
securing such Secured Claim.
Section 2.73 Miscellaneous Secured Claims means a Secured Claim other
than Secured Tax Claims, Bondholder DIP Secured Claims, TransTexas Senior
Secured Note Claims, BNYFC Secured Claims, and Mineral Property Secured Claims.
Section 2.74 New Board of Directors means the board of directors of
Reorganized TransTexas, as of the Effective Date.
Section 2.75 New Common Stock means, collectively, the 100 million
shares of authorized new Common Stock of Reorganized TransTexas, par value $.01
per share, of which ten million shares are to be issued on the Effective Date
pursuant to the Plan.
Section 2.76 New Junior Preferred Stock means the Junior Preferred
Stock to be authorized and issued on the Effective Date by Reorganized
TransTexas pursuant to the Plan. The principal economic terms of the New Junior
Preferred Stock are set forth on Annex B to the Plan.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 8
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Section 2.77 New Senior Preferred Stock means the 10% Senior Preferred
Stock to be authorized and issued on the Effective Date by Reorganized
TransTexas pursuant to the Plan. The principal economic terms of the New Senior
Preferred Stock are set forth on Annex C to the Plan.
Section 2.78 New Secured Notes Security Documents means the security
and pledge agreement and mortgages pursuant to which certain Collateral shall be
pledged to secure Reorganized TransTexas' obligations under the New Senior
Secured Notes, substantially in the form as Filed on or prior to the
Confirmation Date.
Section 2.79 New Senior Secured Notes means the Senior Secured Notes to
be issued by Reorganized TransTexas pursuant to the Plan under the New Senior
Secured Notes Indenture. The principal economic terms of the New Senior Secured
Notes are set forth on Annex D hereto.
Section 2.80 New Senior Secured Notes Indenture means the Indenture
between Reorganized TransTexas, as issuer, and the New Senior Secured Notes
Indenture Trustee, as indenture trustee, which indenture relates to the New
Senior Secured Notes, substantially in the form as Filed on or prior to the
Confirmation Date.
Section 2.81 New Senior Secured Notes Indenture Trustee shall be as
designated at the Confirmation Hearing and have the meaning set forth in the
Confirmation Order.
Section 2.82 New Warrant Agent shall be as designated by the Debtor,
with the consent of the Bondholder Committee, at the Confirmation Hearing and
shall have the meaning set forth in the Confirmation Order.
Section 2.83 New Warrant Agreement means the Warrant Agreement between
Reorganized TransTexas, as issuer, and the New Warrant Agent, as agent, which
agreement relates to the New Warrants, substantially in the form as Filed on or
prior to the Confirmation Date.
Section 2.84 New Warrants means the freely transferable rights issued
pursuant to the New Warrant Agreement to purchase shares of the New Common
Stock. The principal economic terms of the New Warrants are set forth on Annex E
hereto.
Section 2.85 Old Common Stock means all authorized, issued and
outstanding shares of the common stock of TransTexas, $.01 par value, as of the
Petition Date.
Section 2.86 Paying Agent means the Disbursing Agent, any Indenture
Trustee, or any other entity contractually authorized and/or obligated to make
Distributions to certain holders of Claims and Interests and similar
intermediaries an agents participating in making or conveying Distributions as
required by the Plan.
Section 2.87 Petition Date means April 19, 1999, the date on which the
Debtor commenced the Chapter 11 Case.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 9
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Section 2.88 Plan means this Plan of Reorganization Under Chapter 11 of
the Bankruptcy Code proposed by the Debtor dated as of July 16, 1999, including,
without limitation, the annexes, exhibits and schedules hereto, as the same may
be amended or modified from time to time in accordance with the Confirmation
Order, the provisions of the Bankruptcy Code and the terms hereof.
Section 2.89 Plan Documents means the agreements, documents and
instruments entered into on or as of the Effective Date as contemplated by, and
in furtherance of, the Plan.
Section 2.90 Plan Rate means the "underpayment rate" (as defined in
Section 6612(a)(2) of the Internal Revenue Code of 1986, as amended) on the
Business Day immediately preceding the Confirmation Date, which rate is the rate
of interest charged by the Internal Revenue Service on delinquent federal income
taxes.
Section 2.91 Post-Confirmation Credit Facility means the $40,000,000
credit facility between the Reorganized Debtor and certain lender(s), and all
ancillary agreements and instruments thereto, in the form as Filed on or prior
to the Confirmation Date.
Section 2.92 Priority Claim means any Claim other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority in
payment under Section 507(a) of the Bankruptcy Code.
Section 2.93 Priority Tax Claim means any Claim of a Governmental Unit
of the kind entitled to priority in payment as specified in Sections 502(i) and
507(a)(8) of the Bankruptcy Code.
Section 2.94 Production Payment Holder Claims means Claims of TCW
Portfolio No. 1555 DRV Sub-Custody Partnership, L.P., TCW DR VI Investment
Partnership, L.P. and TCW Asset Management Company which relate to that certain
agreement entitled the Production Payment Drilling Program dated February 23,
1998; and Claims of TCW DR VI Investment Partnership, L.P. and TCW Asset
Management Company which relate to that certain agreement entitled the
Production Payment Transactions dated September 30, 1998.
Section 2.95 Professionals means those Entities: (a) employed pursuant
to an order of the Bankruptcy Court in accordance with Sections 327 or 1103 of
the Bankruptcy Code providing for compensation for services rendered prior to
the Effective Date pursuant to Sections 327, 328, 329, 330 and 331 of the
Bankruptcy Code, or (b) seeking compensation and reimbursement pursuant to
Sections 503(b)(2) or (4) of the Bankruptcy Code.
Section 2.96 Quarterly Distribution Date means the first Business Day
of each quarterly period (i.e., March 31, June 30, September 30, and December
31) following the Effective Date, or as soon thereafter as practicable.
Section 2.97 Ratable Proportion means, with reference to any
Distribution on account of any Claim or Interest in any Class or subclass, a
Distribution equal in amount to the ratio (expressed as a percentage) that the
amount of such Claim or number of shares evidencing such
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 10
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Interests, as applicable, bears to the aggregate amount of Claims or aggregate
number of outstanding shares evidencing such Interests in the same Class or
subclass, as applicable.
Section 2.98 Registration Rights Agreement means the registration
rights agreement relating to the Reorganization Securities, in substantially the
form as Filed on or prior to the Confirmation Date.
Section 2.99 Registration Statement means a registration statement
pursuant to Section 12 of the 1934 Act.
Section 2.100 Rejection Claim means any Claim arising from the
rejection of any executory contract or unexpired lease, including any Claim of
(a) a lessor for damages resulting from the rejection of a lease of real
property as any such Claim shall be calculated in accordance with Section
502(b)(6) of the Bankruptcy Code or (b) an employee for damages resulting from
the rejection of an employment agreement as any such Claim shall be calculated
in accordance with Section 502(b)(7) of the Bankruptcy Code. A Rejection Claim
shall constitute a General Unsecured Claim.
Section 2.101 Reorganization Securities means the New Senior Secured
Notes, the New Senior Preferred Stock, the New Junior Preferred Stock, the New
Common Stock and the New Warrants.
Section 2.102 Reorganized TransTexas or Reorganized Debtor means the
Debtor from and after the Effective Date.
Section 2.103 Schedules means the schedules of assets and liabilities
and the statement of financial affairs Filed by the Debtor under Section 521 of
the Bankruptcy Code, Bankruptcy Rule 1007 on June 14, 1999, as amended from time
to time.
Section 2.104 Secured Claim means a Claim secured by a Lien on
Collateral to the extent of the value of such Collateral (a) as set forth in the
Plan, (b) as agreed to by the holder of such Claim and the Debtor or (c) as
determined pursuant to a Final Order in accordance with Section 506(a) of the
Bankruptcy Code or, in the event that such Claim is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of such setoff.
Section 2.105 Secured Tax Claim means a Secured Claim of a Governmental
Unit for property taxes assessed before the commencement of the Case.
Section 2.106 Special Master means the person appointed pursuant to a
Final Order of the Bankruptcy Court who shall finally determine, after review of
applicable evidence, the validity and priority of all Mineral Property Secured
Claims asserted against the Debtor and/or its property.
Section 2.107 TARC means TransAmerican Refining Corporation, a Texas
corporation, and a debtor-in-possession, in case number 99-21552, pending in the
Bankruptcy Court and which is jointly administered with the Debtor and TEC.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 11
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Section 2.108 TARC Plan means the Plan of Liquidation under Chapter 11
of the Bankruptcy Code proposed by TARC dated as of July 16, 1999, including,
without limitation the annexes, exhibits and schedules thereto, as amended from
time to time.
Section 2.109 TEC means TransAmerican Energy Corporation, a Delaware
corporation, and a debtor-in-possession, in case number 99-21551, pending in the
Bankruptcy Court and which is jointly administered with the Debtor and TARC.
Section 2.110 TEC Bondholders means the holders of the TEC Senior
Secured Notes.
Section 2.111 TEC Senior Secured Notes means, collectively, the $475
million aggregate principal amount of the 11 1/2 % Senior Secured Notes due 2002
and the $1.13 billion aggregate principal amount of the 13% Senior Secured
Discount Notes due 2002 issued by TEC pursuant to the TEC Senior Secured Notes
Indenture.
Section 2.112 TEC Senior Secured Notes Indenture means the Indenture
between TEC, as issuer, and Firstar, as Indenture Trustee, dated as of June 13,
1997, as amended from time to time, which relates to the TEC Senior Secured
Notes.
Section 2.113 TEC Plan means the Plan of Liquidation under Chapter 11
of the Bankruptcy Code proposed by TEC dated as of July 16, 1999, including,
without limitation, the annexes, exhibits and schedules thereto, as amended from
time to time.
Section 2.114 Tort Claim means any Claim related to personal injury,
property damage, products liability or other similar Claims against the Debtor.
A Tort Claim shall constitute an Unsecured Claim.
Section 2.115 TransTexas means TransTexas Gas Corporation, a Delaware
corporation and the Debtor and the Debtor-in-Possession.
Section 2.116 TransTexas Senior Secured Loan Agreement means the Loan
Agreement between TransTexas and TEC, dated as of June 13, 1997, as amended from
time to time.
Section 2.117 TransTexas Senior Secured Note Claims means the Secured
Claims of the holder of the $450 million senior secured note dated June 13,
1997, originally made by TransTexas payable to TEC and which was pledged as
Collateral for the TEC Senior Secured Notes.
Section 2.118 TransTexas Senior Secured Note Deficiency Claim means the
Deficiency Claim of the holder of the $450 million senior secured note dated
June 13, 1997, originally made by TransTexas payable to TEC and the Claim of the
holder of the $50 million unsecured note dated January 23, 1998, originally made
by TransTexas payable to TEC.
Section 2.119 TransTexas Subordinated Note Claims means the Claims of
the holders of the TransTexas Subordinated Notes due 2001.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Section 2.120 TransTexas Subordinated Notes means the $115.8 million
aggregate principal amount of TransTexas 13 3/4% Series D Senior Subordinated
Notes due 2001 issued by TransTexas pursuant to the TransTexas Subordinated Note
Indenture.
Section 2.121 TransTexas Subordinated Notes Indenture means the
Indenture between TransTexas, as issuer, and Bank One, as Indenture Trustee,
dated as of June 13, 1997, as amended from time to time, which relates to the
TransTexas Subordinated Notes.
Section 2.122 Unclaimed Property means any Cash and Reorganization
Securities unclaimed on or after the applicable distribution date made in
respect of the relevant Allowed Claim or Allowed Interest. Unclaimed Property
shall include: (a) checks (and the funds represented thereby) and Reorganization
Securities, mailed to an address of a holder of a Allowed Claim or Interest and
returned as undeliverable without a proper forwarding address; (b) funds for
uncashed checks; and (c) checks (and the funds represented thereby) and
Reorganization Securities not mailed or delivered because no address to mail or
deliver such property was available.
Section 2.123 Unimpaired means a Claim that is not Impaired.
Section 2.124 Workers' Compensation Claims means any Claims held by (a)
current and former employees of the Debtor, (b) beneficiaries of current and
former employees of the Debtor and (c) Governmental Units, for payment or
reimbursement under and according to the terms of the Workers' Compensation
Programs.
Section 2.125 Workers' Compensation Programs means those statutorily
mandated programs in effect on the Petition Date providing compensation, paid
for by third parties, to employees of the Debtor for job-related injuries or job
related illnesses, which were required to be maintained under provisions of
non-bankruptcy law.
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND
PRIORITY TAX CLAIMS AND BONDHOLDER DIP CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses. Unless
otherwise provided for herein, each holder of an Allowed Administrative Expense
(including, without limitation, all compensation and reimbursement of expenses
of Professionals pursuant to Sections 327, 328, 330, 331, 503(b) or 1103 of the
Bankruptcy Code) shall receive 100% of the unpaid Allowed amount of such
Administrative Expense in Cash on or as soon as reasonably practicable after the
later of: (a) the Effective Date; and (b) the date on which such Administrative
Expense becomes Allowed, provided, however, that an Allowed Administrative
Expense representing obligations incurred in the ordinary course of business
consistent with past practices of TransTexas shall be paid in full or performed
by the Reorganized Debtor, in accordance with its terms and conditions, in the
ordinary course of business consistent with such past practices, provided,
further, however, that an Allowed Administrative Expense may be paid on such
other terms and conditions
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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as are agreed to between the Reorganized Debtor and the holder of such Allowed
Administrative Expense. All Professionals requesting compensation or
reimbursement of expenses pursuant to Sections 327, 328, 330, 331, or 503(b) of
the Bankruptcy Code for services rendered before the Effective Date shall File
and serve on Reorganized TransTexas, the Creditors' Committee, the Bondholder
Committee, BNYFC and the United States Trustee an application for final
allowance of compensation and reimbursement of expenses no later than
forty-five (45) days after the Confirmation Date. Objections to applications of
Professionals for compensation or reimbursement of expenses must be Filed and
served on Reorganized TransTexas, the United States Trustee, the Bondholder
Committee, BNYFC, the Creditors' Committee and the Professionals to whose fee
application the objections are addressed.
Section 3.02 Treatment of Bondholder DIP Secured Claims. The Bondholder
DIP Secured Claims are Allowed in full. Unless otherwise agreed by the holders
of the Bondholder DIP Secured Claims and the Debtor or Reorganized Debtor, on
the Effective Date, each holder of an Allowed Bondholder DIP Secured Claim shall
receive its Ratable Proportion of (a) in Cash, an amount equal to two-thirds of
the sum of (i) the principal amount owing under the Bondholder DIP Facility on
the Effective Date, (ii) all interest accruing thereon in accordance with the
Bondholder DIP Facility and (iii) all fees and other charges relating thereto in
accordance with the Bondholder DIP Facility and (b) Claims and entitlements
under the Extended Bondholder DIP Facility. As more specifically set forth in,
and without in any way limiting, Section 9.01 of the Plan, the Distributions
provided hereunder are in full settlement, release and discharge of each
Bondholder DIP Secured Claim.
Section 3.03 Treatment of Allowed Priority Tax Claims. At the option of
the Reorganized Debtor, each holder of an Allowed Priority Tax Claim shall
receive on account of such Allowed Priority Tax Claim: (a) equal Cash payments
made on the last Business Day of every six (6) month period following the
Effective Date, over a period not exceeding six (6) years after the assessment
of the tax on which such Claim is based, totaling the principal amount of such
Claim plus simple interest on any outstanding balance from the Effective Date
calculated at the Plan Rate; (b) such other treatment agreed to by the holder of
such Allowed Priority Tax Claim and the Reorganized Debtor, provided such
treatment is on more favorable terms to the Reorganized Debtor than the
treatment set forth in clause (a) hereof; or (c) the full amount in Cash of such
Allowed Priority Tax Claim on or as soon as practicable after the later of: (i)
the Effective Date, or (ii) the date on which such Priority Tax Claim becomes an
Allowed Priority Tax Claim. The Reorganized Debtor, shall have the right, in its
sole discretion, to prepay Allowed Priority Tax Claims without penalty of any
sort or nature.
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to Section 1122 of the Bankruptcy Code, set forth below is a
designation of classes of Claims and Interests. Administrative Expenses and
Priority Tax Claims of the kinds specified in Sections 507(a)(1), 502(i) and
507(a)(8) of the Bankruptcy Code have not been
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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classified and are excluded from the following classes in accordance with
Section 1123(a)(1) of the Bankruptcy Code.
Section 4.01 Class 1 consists of all Priority Claims.
Section 4.02 Class 2 consists of all Secured Tax Claims.
Section 4.03 Class 3 consists of the TransTexas Senior Secured Note
Claims.
Section 4.04 Class 4 consists of the BNYFC Secured Claims.
Section 4.05 Class 5 consists of all Miscellaneous Secured Claims.
Section 4.06 Class 6 consists of all Mineral Property Secured Claims.
Section 4.07 Class 7 consists of the TransTexas Senior Secured Note
Deficiency Claims.
Section 4.08 Class 8 consists of all General Unsecured Claims.
Section 4.09 Class 9 consists of all TransTexas Subordinated Note
Claims.
Section 4.10 Class 10 consists of all Convenience Claims.
Section 4.11 Class 11 consists of all Production Payment Holder Claims.
Section 4.12 Class 12 consists of all Old Common Stock Interests.
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (Priority Claims).
(a) Unless otherwise agreed by the holder of an Allowed Priority Claim
and the Debtor, or following the Effective Date, the Reorganized Debtor, each
holder of an Allowed Priority Claim shall receive an amount in Cash equal to
100% of the Allowed amount of such Claim on account of such Allowed Priority
Claim on or as soon as practicable after the later of: (i) the Effective Date,
or (ii) the date on which such Priority Claim becomes an Allowed Priority Claim.
(b) As more specifically set forth in, and without any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.01 are
in full settlement, release and discharge of each such holder's Priority Claim.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(c) Class 1 is Unimpaired. Holders of Allowed Priority Claims shall be
deemed to have accepted the Plan.
Section 5.02 Treatment of Allowed Class 2 Claims (Secured Tax Claims).
(a) At the option of the Reorganized Debtor, each holder of an Allowed
Secured Tax Claim shall receive on account of its Allowed Secured Tax Claim one
of the following alternatives: (i) equal Cash payments made on the last Business
Day of every six (6) month period following the Effective Date, over a period
not exceeding six (6) years after the assessment of the tax on which such Claim
is based, totaling the principal amount of such Claim plus simple interest on
any outstanding balance from the Effective Date calculated at the Plan Rate;
(ii) such other treatment agreed to by the holder of such Allowed Secured Tax
Claim and the Reorganized Debtor, provided such treatment is on more favorable
terms to the Reorganized Debtor, than the treatment set forth in clause (i)
hereof; or (iii) payment in full of such Allowed Secured Tax Claim on or as soon
as practicable after the later of: (A) the Effective Date, or (B) the date on
which such Secured Tax Claim becomes an Allowed Secured Tax Claim. The
Reorganized Debtor, shall have the right, in its sole discretion, to prepay
Allowed Secured Tax Claims without penalty of any sort or nature.
(b) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.02 are
in full settlement, release and discharge of each holder's Secured Tax Claim.
(c) Class 2 is Impaired. Holders of Allowed Secured Tax Claims shall be
entitled to vote to accept or reject the Plan.
Section 5.03 Treatment of Allowed Class 3 Claim (TransTexas Senior
Secured Note Claims).
(a) The TransTexas Senior Secured Note Claims are Allowed in full. On
the Effective Date, the holder of the Allowed TransTexas Senior Secured Note
Claims shall receive on account of its Allowed TransTexas Senior Secured Note
Claims: (i) all of the New Senior Secured Notes; (ii) all of the New Senior
Preferred Stock; (iii) all of the New Junior Preferred Stock; (iv) all of the
New Common Stock; (v) all of the New Warrants; and (vi) an amount in Cash equal
to the Maximum GUC Cash Amount.
(b) Subject to the occurrence of the Effective Date, the holder of
Allowed TransTexas Senior Secured Note Claims has agreed to reallocate and
direct the Reorganized Debtor to distribute certain of the Distributions set
forth in Section 5.03(a), and the Reorganized Debtor shall distribute such
Distributions, as follows:
(i) each holder of an Allowed TransTexas Subordinated Note
Claim as of the Distribution Record Date shall receive its Ratable
Proportion of 80 million shares of New Junior Preferred Stock on the
Effective Date or as soon thereafter as is practicable;
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(ii) each holder of an Allowed General Unsecured Claim shall
receive one of the following alternatives in accordance with the
Ballot/Election submitted by such holder or its predecessor in
interest with respect to such General Unsecured Claim on or before
the Ballot/Election Deadline, on the earlier of Effective Date or
the date on which such Claim becomes an Allowed General Unsecured
Claim, or as soon thereafter as is practicable: (a) Cash in an
amount equal to the lesser of (1) 20% of the Allowed amount of its
General Unsecured Claim or (2) its Ratable Proportion of the Maximum
GUC Cash Amount; or (b) shares of New Junior Preferred Stock with an
aggregate par value equal to the Allowed Amount of its Claim;
provided, however, that each election made by a holder of an Allowed
General Unsecured Claim shall be irrevocable and binding on any
subsequent holder of such Claim; and provided further, that each
holder of an Allowed General Unsecured Claim that failed to submit
its Ballot/Election on or before the Ballot/Election Deadline and
otherwise in accordance with the instructions contained thereon
shall be deemed to have elected to receive shares of New Junior
Preferred Stock with an aggregate par value equal to the Allowed
Amount of its Claim;
(iii) each holder of the Old Common Stock on the Distribution
Record Date that is not an Affiliate of the Debtor shall receive its
Ratable Proportion of (a) 4.2% of the New Common Stock and (b)
875,000 New Warrants on the Effective Date or as soon thereafter as
is practicable; and
(iv) John R. Stanley, or his designee, shall receive 19.8% of
the New Common Stock and 4,125,000 New Warrants on the Effective
Date or as soon thereafter as is practicable.
(c) Subject to the occurrence of the Effective Date, the holder of the
Allowed TransTexas Senior Secured Note Claims has agreed to allow Reorganized
TransTexas to retain an amount of Cash equal to the aggregate amount not paid to
the holders of Allowed General Unsecured Claims pursuant to Section 5.03(b)(ii).
(d) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.03 are
in full settlement, release and discharge of the holder's TransTexas Senior
Secured Note Claims.
(e) Class 3 is Impaired. Holders of Allowed TransTexas Senior Secured
Note Claims shall be entitled to vote to accept or reject the Plan.
Section 5.04 Treatment of Allowed Class 4 Claim (BNYFC).
(a) The BNYFC Secured Claim is Allowed in full. On the Effective Date
the BNYFC Secured Claim shall be reinstated or rendered Unimpaired in accordance
with Section 1124 of the Bankruptcy Code, notwithstanding any contractual
provision or applicable nonbankruptcy law
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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that entitles the holder of the BNYFC Secured Claim to demand or receive
payment of such Allowed Secured Claim prior to the stated maturity of such
Allowed Secured Claim from and after the occurrence of a default and
notwithstanding the provisions of any order of the Bankruptcy Court (other than
the Confirmation Order) to the contrary.
(b) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.04 are
in full settlement, release and discharge of the BNYFC Secured Claim.
(c) Class 4 is unimpaired. The holder of such Claim shall be deemed to
have accepted the Plan.
Section 5.05 Treatment of Allowed Class 5 Claims (Miscellaneous Secured
Claims).
(a) At the option of the Reorganized Debtor, on the Effective Date,
each holder of an Allowed Miscellaneous Secured Claim shall receive on account
of its Allowed Miscellaneous Secured Claim one of the following alternatives:
(i) the Reorganized Debtor shall execute a written undertaking in favor of the
holder of such Claim, whereby the Reorganized Debtor shall assume such Claim and
leave unaltered such holder's legal, equitable and contractual rights with
respect to such Claim, (ii) notwithstanding any contractual provision or
applicable law that entitles the holder of such Claim to demand or receive
accelerated payment of such Claim after the occurrence of a default, the
Reorganized Debtor, shall (1) cure any such default that occurred before or
after the Petition Date, other than a default of a kind specified in Section
365(b)(2) of the Bankruptcy Code, (2) reinstate the maturity of such Claim as
such maturity existed before such default, (3) compensate the holder of such
Claim for any damages incurred as a result of any reasonable reliance by such
holder on such contractual provision or such applicable law or (4) execute a
written undertaking in favor of such holder, whereby the Reorganized Debtor
shall assume such Claim and, except as permitted in clauses (1), (2) and (3)
hereof, shall not otherwise alter the legal, equitable or contractual rights of
such holder with respect to such Claim, or (iii) the Reorganized Debtor shall
provide such other treatment agreed to by the holder of such Allowed
Miscellaneous Secured Claim, and the Reorganized Debtor with the prior consent
of the Bondholders.
(b) Notwithstanding the foregoing, the Debtor, may elect by sending
written notice, to the Bondholder Committee and to the affected Claim holder on
or before the Confirmation Date to (i) pay the holder of such Allowed
Miscellaneous Secured Claim the allowed Amount thereof, in Cash; (ii) distribute
to the holder of an Allowed Claim in Class 5 the property securing such holder's
Claim, in which event such holder shall be entitled within thirty (30) days of
such election to File a proof of Claim for any deficiency entitled to treatment
as a Claim in Class 8 or be forever barred from thereafter asserting a
Deficiency Claim against the Debtor or the Reorganized Debtor; or (iii) provide
to such holder such treatment, including deferred Cash payments, as shall be
consistent with Section 1129(b) of the Bankruptcy Code.
(c) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.05 are
in full settlement, release and discharge of each holder's Miscellaneous Secured
Claim.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(d) Class 5 is Impaired. Holders of such Claims shall be entitled to
vote to accept or reject the Plan. Each Miscellaneous Secured Claim receiving
treatment under Section 5.05(b) above shall be deemed to be in separate Class
for classification, voting and Distribution purposes.
Section 5.06 Treatment of Allowed Class 6 Claims (Mineral Property
Secured Claims).
(a) Each holder of an Allowed Mineral Property Secured Claim shall
receive on account of its Allowed Mineral Property Secured Claim one of the
following alternatives in accordance with the Ballot/Election submitted by such
holder or its predecessor in interest with respect to such Mineral Property
Secured Claim on or before the Ballot/Election Deadline, on the earlier of
Effective Date or the date on which such Claim becomes an Allowed Mineral
Property Secured Claim, or as soon thereafter as is practicable: (i) equal Cash
payments made on the last Business Day in December in each year following the
Effective Date, over a period of five (5) years, totaling the principal amount
of such Claim plus simple interest on any outstanding balance from the Effective
Date calculated at the Plan Rate, and a continuing Lien securing such Claim
until paid in full or (ii) in Cash, an amount equal to forty percent (40%) of
the Allowed Mineral Property Secured Claim; provided, however, that each
election made by a holder of an Allowed Mineral Property Secured Claim shall be
irrevocable and binding on any subsequent holder of such claim; and provided
further, that each holder of an Allowed Mineral Property Secured Claim that
fails to submit its Ballot/Election on or before the Ballot/Election Deadline
and otherwise in accordance with the instructions contained therein shall be
deemed to have elected to receive equal Cash payments made on the last Business
Day in December in each year following the Effective Date, over a period of five
(5) years, totaling the principal amount of such Claim plus simple interest on
any outstanding balance from the Effective Date calculated at the Plan Rate, and
a continuing Lien securing such Claim until paid in full.
(b) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.06 are
in full settlement, release and discharge of each Mineral Property Secured
Claim.
(c) Class 6 is Impaired. Holders of such Claims shall be entitled to
vote to accept or reject the Plan. Each Mineral Property Secured Claim receiving
treatment under Section 5.06(b) above shall be deemed to be in separate Class
for classification, voting and distribution purposes.
Section 5.07 Treatment of Allowed Class 7 Claims (TransTexas Senior
Secured Note Deficiency Claims).
(a) The holder of the TransTexas Senior Secured Note Deficiency Claims
shall receive no Distribution on account of its TransTexas Senior Secured Notes
Deficiency Claims.
(b) Class 7 is Impaired. The holder of such Claim shall be deemed to
have rejected the Plan.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 19
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Section 5.08 Treatment of Allowed Class 8 Claims (General Unsecured
Claims).
(a) The holders of Allowed General Unsecured Claims shall receive no
Distribution on account of their General Unsecured Claims.
(b) Class 8 is Impaired. Holders of such Claims shall be deemed to have
rejected the Plan.
Section 5.09 Treatment of Allowed Class 9 Claims (TransTexas
Subordinated Note Claims).
(a) The holders of the TransTexas Subordinated Note Claims shall
receive no Distributions on account of their TransTexas Subordinated Note
Claims.
(b) Class 9 is Impaired. Holders of such Claims shall be deemed to have
rejected the Plan.
Section 5.10 Treatment of Allowed Class 10 Claims (Convenience Claims).
(a) On the Effective Date, or as soon thereafter as is practicable,
each holder of an Allowed Convenience Claim shall receive on account of its
Allowed Convenience Claim Cash in an amount equal to 100% of its Allowed
Convenience Claim (as reduced in accordance with Section 6.16 of this Plan),
without interest.
(b) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.10 are
in full settlement, release and discharge of each holder's Convenience Claim.
(c) Class 10 is Impaired under this Plan. Holders of such Claims shall
be entitled to vote to accept or reject the Plan.
Section 5.11 Treatment of Allowed Class 11 Claims (Production Payment
Holder Claims).
(a) On the Effective Date, except to the extent that a holder of an
Allowed Production Payment Holder Claim agrees to a different treatment of such
Allowed Production Payment Holder Claim, each Allowed Production Payment Holder
Claim shall be rendered Unimpaired in accordance with Section 1124 of the
Bankruptcy Code. All Allowed Production Payment Holder Claims that are not due
and payable on or before the Effective Date shall be paid in accordance with the
terms of their underlying agreement and in the ordinary course of business of
TransTexas.
(b) As more specifically set forth in, and without in any way limiting,
Section 9.01 of this Plan, the Distributions provided in this Section 5.11 are
in full settlement, release and discharge of each Production Payment Holder
Claim.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 20
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(c) Class 11 is Unimpaired. Holders of such Claims shall be deemed to
have accepted the Plan.
Section 5.12 Treatment of Allowed Class 12 Interests (Old Common Stock
Interests).
(a) The holders of Old Common Stock Interests shall receive no
Distributions of any kind under the Plan in respect of those Interests.
(b) Class 12 is Impaired under the Plan. Holders of such Claims shall
be deemed to have rejected the Plan.
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
In addition to the provisions set forth elsewhere in this Plan, the
following shall constitute the means for implementation of this Plan.
Section 6.01 General Corporate Matters. Reorganized TransTexas shall
take such action as is necessary under the laws of the States of Delaware and
Texas, federal law and other applicable law to effect the terms and provisions
of the Plan and the Plan Documents.
Section 6.02 Post-Confirmation Financing. On the Effective Date, the
transactions contemplated by the Post-Confirmation Credit Facility shall be
consummated and thereupon become effective.
Section 6.03 Effectiveness of Securities, Instruments and Agreements.
On the Effective Date, all Plan Documents issued or entered into pursuant to the
Plan, including, without limitation, (i) the New Secured Notes Security
Documents, (ii) the New Senior Secured Notes, (iii) the New Senior Secured Notes
Indenture, (iv) the New Senior Preferred Stock, (v) the New Junior Preferred
Stock, (vi) the New Warrant Agreement, (vii) the New Warrants, (viii) the
Registration Rights Agreement, (ix) the Management Agreement, (x) the
Post-Confirmation Credit Facility, (xi) the Extended Bondholder DIP Facility,
(xii) the BNYFC DIP Facility and/or (xiii) any agreement entered into or
instrument issued or in connection with any of the foregoing or any other Plan
Document, shall become effective and binding in accordance with their respective
terms and conditions upon the Entities thereto and shall be deemed to become
effective simultaneously.
Section 6.04 Corporate Action for Reorganized Debtor. On the Effective
Date, the issuance of the New Common Stock, the New Senior Preferred Stock, the
New Junior Preferred Stock, the New Warrants, the election or appointment of
directors and officers pursuant to this Plan, and the other matters provided in
this Plan involving the corporate structure of the Reorganized Debtor shall be
deemed to have occurred and shall be in effect from and after the Effective Date
pursuant to Section 303 of the DGCL without any requirement of further action by
the stockholders or directors of the Debtor or the Reorganized Debtor. On the
Effective Date or as soon thereafter as is practicable, the Reorganized Debtor
shall file with the Secretary of State of the State of
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Delaware in accordance with Sections 103 and 303 of the DGCL, the Amended
Certificate of Incorporation. The Amended Certificate of Incorporation shall
provide for, among other things, (i) the authorization of 100 million shares of
New Common Stock, (ii) the authorization of the New Senior Preferred Stock and
the New Junior Preferred Stock, (iii) the indemnification of officers and
directors of the Reorganized Debtor to the fullest extent permitted by Section
145 of the DGCL, (iv) the cancellation of the Old Common Stock, and (v) a
prohibition on the issuance of nonvoting equity securities to the extent, and
only to the extent, required by Section 1123(a)(6) of the Bankruptcy Code.
Section 6.05 Directors of the Reorganized Debtor. On the Effective
Date, the operation of Reorganized TransTexas shall become the general
responsibility of its New Board of Directors, subject to, and in accordance
with, the Amended Certificate of Incorporation and the Amended By-Laws. The
initial New Board of Directors shall consist of [five] members identified at the
Confirmation Hearing by the Debtor, with the prior consent of the Bondholder
Committee. Such directors shall be deemed elected or appointed, pursuant to the
Confirmation Order, but shall not take office and shall not be deemed to be
elected or appointed until the occurrence of the Effective Date. Those directors
and officers not continuing in office shall be deemed to have resigned therefrom
as of the Effective Date pursuant to the Confirmation Order.
Section 6.06 Management Agreement. The Management Agreement supersedes
all employment, severance, retention bonus and other agreements between the
Debtor and Mr. John R. Stanley prior to the Effective Date and all such
agreements shall be deemed rejected on the Effective Date. On the Effective
Date, all Claims and Administrative Expenses of Mr. John R. Stanley against the
Debtor under any employment, severance, retention bonus and other agreements, if
any, between Mr. John R. Stanley and the Debtor will be governed by, and
completely satisfied in accordance with, the terms and conditions of the
Management Agreement.
Section 6.07 Approval of Agreements. The solicitation of votes on the
Plan shall be deemed a solicitation for the approval of the Plan Documents and
all transactions contemplated by this Plan. Entry of the Confirmation Order
shall constitute approval of the Plan Documents and such transactions.
Section 6.08 Employee Benefit Plans. Subject to the occurrence of the
Effective Date, all employee benefit plans, policies and programs of the Debtor
and the Debtor's obligations thereunder, shall survive confirmation of the Plan,
remain unaffected thereby, and not be discharged. Except as otherwise provided
in this Plan, employee benefit plans, policies, and programs shall include,
without limitations, all savings plans, retirement pension plans, health care
plans, disability plans, severance benefit plans, life, accidental death and
dismemberment insurance plans (to the extent not executory contracts assumed
under the Plan) and Workers' Compensation Programs, but shall exclude all
employees' equity or equity-based incentive plans, which Interests shall be
canceled pursuant to the terms hereof.
Section 6.09 Listing of New Common Stock; Registration of
Reorganization Securities. Reorganized TransTexas shall use its best efforts to
cause as soon as practicable after the Effective Date, the shares of New Common
Stock issued hereunder to be listed on a national
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 22
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securities exchange or quoted in the national market system of the National
Association of Securities Dealer's Automated Quotation System. Within ten days
after the Effective Date and in accordance with the terms of the Registration
Rights Agreement, Reorganized TransTexas shall file, at its expense, and use
its best efforts to have declared effective as soon as practicable thereafter,
a registration statement or registration statements under the Securities Act
for the offering on a continuous or delayed basis in the future the
Reorganization Securities (the "Shelf Registration"). All of the Reorganization
Securities shall be included in the Shelf Registration statement. The
Reorganized Debtor shall keep the Shelf Registration effective for a five-year
period from the Effective Date and supplement or make amendments to the Shelf
Registration, if required under the Securities Act or by the rules and
regulations promulgated thereunder, or in accordance with the terms of the
Registration Rights Agreement, and have such supplements and amendments
declared effective as soon as practicable after Filing.
Section 6.10 Distributions to Holders of Allowed Claims and Interests;
Source of Cash and Reorganization Securities for Distributions. On the Effective
Date, Reorganized TransTexas shall deliver to the Disbursing Agent sufficient
Cash and Reorganization Securities to (a) make the Distributions to be made on
the Effective Date to the holders of Allowed Claims and Allowed Interests; and
(b) establish reserves for the Classes of Disputed Claims (other than those in
Class 8) and Disputed Interests as set forth below. Payments and other
distributions to be made pursuant to the Plan will be available from the
Reorganized Debtor's funds, including funds provided to the Debtor in connection
with the Post-Confirmation Credit Facility.
Section 6.11 Distribution to Holders of TransTexas Senior Secured
Notes. For the purposes of Distributions to the holder of Allowed TransTexas
Senior Secured Note Claims, Firstar shall be deemed to be the sole holder of all
such Claims. All Distributions on account of Allowed TransTexas Senior Secured
Note Claims shall be distributed to Firstar, for further distribution to the TEC
Bondholders pursuant to the terms of the TEC Senior Secured Notes Indenture, the
Plan and the TEC Plan.
Section 6.12 Cancellation and Surrender of Existing Securities;
Cancellation of Indentures.
(a) Cancellation of Existing Securities and Agreements. On the
Effective Date, the TransTexas Senior Secured Notes, the TransTexas Loan
Agreement, the TransTexas Subordinated Notes, the TransTexas Subordinated Notes
Indenture, the Old Common Stock, and any options, warrants, calls,
subscriptions, or other similar rights or other agreements or commitments,
contractual or otherwise, obligating the Debtor to issue, transfer, or sell any
shares of Old Common Stock, or any other capital stock of the Debtor shall be
canceled and the holders thereof shall have no rights, and such instruments
shall evidence no rights, except the right to receive the Distributions to be
made to holders of such instruments under this Plan. After the Indenture
Trustees or their agents perform their obligations under the Plan, the Plan
Documents and their respective Indentures, the Indenture Trustees and their
agents, successors and assigns shall be discharged of all of their obligations
associated with the respective Indentures and related agreements and released
from all Claims arising in this Chapter 11 Case, and as of the Effective Date,
such Indentures shall be deemed canceled, except that such cancellation shall
not impair the rights of the holders of the TransTexas
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Senior Secured Note Claims and the TransTexas Subordinated Note Claims to
receive Distributions under the Plan or the rights of the Indenture Trustee
under their charging liens, if any, pursuant to the Indentures to the extent
that the Indenture Trustee has not received payment.
(b) Surrender of Existing Securities. As a condition to receiving any
Distribution under the Plan, each holder of a promissory note, share
certificate, or other instrument evidencing a Claim or Interest must surrender
such promissory note, share certificate, or other instrument to the Reorganized
Debtor or its designee. Any holder of a Claim or Interest that fails to (i)
surrender such instrument or (ii) execute and deliver an affidavit of loss
and/or indemnity reasonably satisfactory to the Reorganized Debtor and furnish a
bond in the form, substance, and amount reasonably satisfactory to the
Reorganized Debtor before the later to occur of (1) the second anniversary of
the Effective Date and (2) six (6) months following the date such holder's Claim
becomes an Allowed Claim, shall be deemed to have forfeited all rights, Claims,
and/or Interests and may not participate in any Distribution under the Plan.
(c) Payment of Firstar's Fees and Expenses As Indenture Trustee. Unless
otherwise agreed by Firstar and the Debtor, on the Effective Date, the Debtor
shall pay or cause to be paid to Firstar an amount in Cash equal to the
Indenture Trustee Claim of Firstar for its reasonable fees and expenses incurred
as Indenture Trustee prior to the Effective Date.
Section 6.13 Release of Liens and Perfection of Liens. Except as
otherwise provided in the Plan or in any Plan Document: (a) each holder of (i) a
Miscellaneous Secured Claim, (ii) a Bondholder DIP Secured Claim, (iii) a BNYFC
DIP Secured Claim, (iv) a Secured Claim, (v) a judgment, and (vi) a Mineral
Property Claim, shall on the Effective Date (x) turn over and release to the
Reorganized Debtor any and all Collateral that secures or purportedly secures
such Claim, as they pertain to the properties currently owned or leased by the
Debtor or such Lien shall automatically, and without further action by the
Debtor or Reorganized Debtor, be deemed released, and (y) execute such documents
and instruments as the Reorganized Debtor requests to evidence such Claim
holder's release of such property or Lien; and (b) on the Effective Date, all
right, title and interest in any and all property of the Estate shall revert or
be transferred to the Reorganized Debtor free and clear of all Claims and
Interests, including, without limitation, Liens, escrows, charges, pledges,
encumbrances and/or security Interests of any kind. No Distribution hereunder
shall be made to or on behalf of any Claim holder unless and until such holder
executes and delivers to the Debtor or Reorganized Debtor such release of Liens
or otherwise turns over and releases such Cash, pledge, or other possessory
Lien. Any such holder that fails to execute and deliver such release of Liens
within 120 days of the Effective Date shall be deemed to have no further Claim
against the Debtor, the Reorganized Debtor or its assets or property in respect
of such Claim and shall not participate in any Distribution hereunder.
Notwithstanding the immediately preceding sentence, any holder of a Disputed
Claim shall not be required to execute and deliver such release until such time
as the Claim is Allowed or Disallowed.
Section 6.14 Election of Treatment in Class 8. Each holder of a Claim
in Class 8 may elect, in the Ballot/Election by which it votes to accept or
reject the Plan, to reduce the amount of its Claim to $500 or less and thereby
be deemed a holder of a Claim in Class 10 for purposes of voting and payment
under the Plan. Holders of Claims in any other class shall not be entitled to
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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make an election into Class 10 pursuant to this Plan. Any such election shall
be effective only upon the receipt thereof by the Debtor prior to the
Confirmation Date. Once the election is made, and received by the Debtor, such
election shall be irrevocable and binding on any successor-in-interest with
respect to such Claim, but shall not preclude the Debtor and/or other Entities
from objecting to such Claim as reduced.
Section 6.15 Liens Securing New Senior Secured Notes; Further
Transactions. On the Effective Date, the Reorganized Debtor shall execute and
deliver to Firstar, as Indenture Trustee under the New Senior Secured Notes
Indenture, such documents, instruments and agreements as are necessary to confer
the priority of TEC with respect to its Liens under the TransTexas Senior
Secured Loan Agreement and the documents, instruments and agreements entered
into in connection therewith and Firstar under the TEC Senior Secured Notes
Indenture and the documents, instruments and agreements entered into in
connection therewith on Firstar as Indenture Trustee under the New Senior
Secured Notes Indenture and the documents, instruments and agreements entered
into in connection therewith. On the Effective Date, the Reorganized Debtor
shall execute and deliver such further documents, instruments and agreements as
are necessary to effectuate and further evidence the terms and conditions of the
Plan.
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
Section 7.01 Objections. An objection to the allowance of a Claim
(other than an Administrative Expense Claim) or Interest shall be in writing and
may be Filed by the Debtor or Reorganized Debtor, or any other party in
interest, at any time on or before the Objection Deadline. The "Objection
Deadline" is the later of (a) the 120th day following the Effective Date unless
such period is extended by order of the Bankruptcy Court, (b) sixty (60) days
after the Filing of the proof of such Claim or Interest or (c) such other date
set by order of the Bankruptcy Court (the application for which may be made on
an ex parte basis). The objecting party shall serve a copy of each such
Objection upon the holder of the Claim or Interest to which it pertains and upon
the Debtor or the Reorganized Debtor, as the case may be, and, prior to the
Effective Date, the Debtor or the Reorganized Debtor will prosecute each
Objection to a Claim or Interest until determined by a Final Order unless the
Debtor or the Reorganized Debtor (i) compromises and settles an Objection to a
Claim or Interest by written stipulation, subject to Bankruptcy Court approval,
if necessary or (ii) withdraws an Objection to a Claim or Interest.
Section 7.02 Amendments to Claims; Claims Filed After the Confirmation
Date. Except as otherwise provided in this Plan, after the Confirmation Date, a
Claim may not be Filed or amended without the authorization of the Bankruptcy
Court and, even with such Bankruptcy Court authorization, may be amended by the
holder of such Claim solely to decrease, but not to increase, the Face Amount
thereof. Except as otherwise provided in this Plan, any new or amended Claim
Filed after the Confirmation Date shall be deemed disallowed in full and
expunged without any action by the Debtor or Reorganized Debtor.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Section 7.03 Reserves for Disputed Claims and Disputed Interests.
(a) On the Effective Date, Reorganized Debtor shall reserve sufficient
shares of New Common Stock to be issued to the holders of Class 4 Claims and
other distributees as specified in Section 5.03.
(b) On the Effective Date, the Reorganized Debtor shall transmit to the
Disbursing Agent, and the Disbursing Agent shall reserve for the account of each
holder of a Disputed Claim or Interest, (i) the property which would otherwise
be distributable to such holder on such date in accordance with the Plan were
such Disputed Claim or Disputed Interest an Allowed Claim or Allowed Interest,
as applicable, on such date, in the Face Amount thereof, or such other amount as
ordered by the Bankruptcy Court or (ii) such other property as such holder and
the Reorganized Debtor may agree; provided, however, in no event shall the Cash
reserve exceed the Maximum GUC Cash Amount. Property reserved under this Section
7.03(b) shall be set aside and to the extent practicable, held by the Disbursing
Agent in an interest bearing account to be established and maintained by the
Disbursing Agent pending resolution of such Disputed Claim, provided, however,
that Cash shall be invested in a manner consistent with the requirements of
Section 345 of the Bankruptcy Code or otherwise ordered by the Bankruptcy Court.
To the extent such Disputed Claim or Disputed Interest becomes an Allowed Claim
or Allowed Interest, the property so reserved for the holder thereof, together
with any proceeds thereon, shall be distributed by the Disbursing Agent to such
holder pursuant to, and to the extent provided for in the Plan.
(c) Any voting rights of Reorganization Securities held in reserve in
respect of a Disputed Claim or Disputed Interest shall be suspended until such
securities are released from such reserve.
Section 7.04 Fluctuation in Value of Securities. The value of the
Reorganization Securities held in reserve under Section 7.03 of the Plan is
likely to fluctuate. The Reorganized Debtor does not represent or warrant that
the value of any Reorganization Securities will not decline after the Effective
Date and they do not otherwise assume any liability or risk of loss which the
holder of a Disputed Claim or Disputed Interest which becomes an Allowed Claim
or Allowed Interest, as applicable, after the Effective Date may suffer by
reason of any decline in value of a reserved Reorganization Securities pending
determination of the amount of such Disputed Claim. The risk or benefit of any
appreciation or depreciation in the value of any reserved Reorganization
Securities shall be borne solely by the Entity to whom such Reorganization
Securities is ultimately distributed.
Section 7.05 Distributions on Account of Disputed Claims. In
determining the amount of Distributions to be made under the Plan to the holders
of Allowed Claims on the Effective Date or a Quarterly Distribution Date, the
appropriate Distributions shall be made as if all the Disputed Claims as of such
Distribution Date were Allowed Claims in the full amount claimed by the holders
thereof, unless otherwise ordered by the Court. No Distributions will be made on
a Disputed Claim or Disputed Interest unless and until such Disputed Claim or
Disputed Interest becomes an Allowed Claim or Allowed Interest.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Section 7.06 Quarterly Distributions. On the Quarterly Distribution
Date, the Disbursing Agent shall make Ratable Proportion or other Distributions
of Cash or Reorganization Securities reserved for any Disputed Claim that has
become an Allowed Claim during the preceding quarterly period. Additionally, on
each Quarterly Distribution Date, the Reorganized Debtor, shall distribute to
holders of previously Allowed Class 8 Claims their Ratable Proportion of
distributable cash in the Cash Reserve Account less the total amount of any
Distribution previously received.
Section 7.07 Excess Reserves. On the date on which all Class 8 Claims
and Class 10 Claims are either Allowed or Disallowed Claims and all payments
required to be made pursuant to the Plan to the holders of such Allowed Claims
shall have been made, all Cash and Reorganization Securities reserved for the
payment of, or Distribution on, the disallowed portion of Disputed Claims and
Disputed Interests and not required to be otherwise Distributed pursuant to the
Plan, shall immediately and irrevocably vest in the Reorganized Debtor and the
Disbursing Agent shall transmit such property to the Reorganized Debtor,
whereupon the Reorganized Debtor shall thereafter be empowered to take whatever
steps may be necessary to exercise control over such property. Shares of New
Common Stock that are reserved pursuant to Section 7.03 for issuance but not
issued shall remain authorized but unissued New Common Stock.
Section 7.08 Undeliverable or Unclaimed Distributions. Any Entity that
is entitled to receive a Cash Distribution under this Plan but that fails to
cash a check within 120 days of its issuance shall be entitled to receive a
reissued check from the Reorganized Debtor for the amount of the original check,
without any interest, if such Entity requests the Reorganized Debtor or its
designee to reissue such check and provides the Reorganized Debtor or its
designee, with such documentation as the Reorganized Debtor or its designee
requests to verify that such Entity is entitled to such check, prior to the
later of (a) the second anniversary of the Effective Date or (b) six (6) months
after such Claim becomes an Allowed Claim. If an Entity fails to cash a check
within 120 days of its issuance and fails to request reissuance of such check
prior to the later to occur of (a) the second anniversary of the Effective Date
or (b) six (6) months following the date such Entity's Claim becomes an Allowed
Claim, such Entity shall not be entitled to receive any distribution under this
Plan with respect to the amount of such check. If the distribution to any holder
of an Allowed Claim or Interest is returned to the Reorganized Debtor or its
designee as undeliverable, no further distributions will be made to such holder
unless and until the Reorganized Debtor or its designee is notified in writing
of such holder's then-current address.
All Claims for undeliverable distributions must be made on or before
the later to occur of (i) the second anniversary of the Effective Date and (ii)
six (6) months following the date such Entity's Claim becomes an Allowed Claim
or Allowed Interest. After such date, all unclaimed property shall revert to the
Reorganized Debtor and the Claim of any holder or successor to such holder with
respect to such property shall be discharged and forever barred notwithstanding
any federal or state escheatment laws to the contrary.
Section 7.09 Allocation of Consideration. The aggregate consideration
to be distributed to the holders of Allowed Claims in each Class under this Plan
shall be treated as first satisfying an amount equal to the stated principal
amount of the Allowed Claim for such holders and
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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any remaining consideration as satisfying accrued, but unpaid, interest through
the Effective Date, if any.
Section 7.10 Distributions to the Holders of General Unsecured Claims.
For purposes of formulating this Plan, the Debtor has estimated the aggregate
total of Allowed General Unsecured Claims, after the resolution of all disputes,
to be approximately $75 million. In connection with the process of resolution of
Disputed Claims, the Bankruptcy Court will determine the amount of ultimately
Allowed General Unsecured Claims and consequently, the final distributions to
holders of Allowed General Unsecured Claims pursuant to this Plan.
Section 7.11 Limitations on Amounts to be Distributed to Holders of
Allowed Deductible Claims. Distributions under the Plan to each holder of an
Allowed Deductible Claim shall be in accordance with the treatment provided
under the Plan for the Class in which such Allowed Deductible Claim is
classified and such distribution shall be in full settlement, release and
discharge of each holder's Allowed Deductible Claim. A holder of an Allowed
Deductible Claim shall be barred from attempts to collect on such Deductible
Claim from the applicable insurance carrier or administrator. Nothing in this
section or this Plan shall constitute a waiver of any Claim, debt, right, cause
of action or liability that any entity may hold with respect to the Insured
Portion against any other entity, including the Debtor's insurance carriers. To
the extent permitted by applicable law, the holder of an Insured Claim shall
have the right with respect to the Insured Portion of such Claim to proceed
directly against the Debtor's or the Reorganized Debtor's insurance carrier. In
addition, in jurisdictions where a holder of an Insured Portion is prevented
from proceeding directly against the Debtor's insurance carrier, the Debtor or
the Reorganized Debtor, will proceed against the insurance carrier. Any proceeds
that are received by the Debtor or the Reorganized Debtor, from the insurance
carrier with respect to such Insured Portion will be distributed to the holder
of such Insured Portion. Other than as set forth in this Section 7.11, the
Debtor and the Reorganized Debtor will have no liability with respect to the
Insured Claims and no Distributions will be made to holders of Insured Claims or
the Debtor's insurance carriers with respect to such Claims. Notwithstanding
anything in this Plan to the contrary, in its sole discretion, the Debtor or the
Reorganized Debtor, may pay any Secured Deductible Claim, in Cash, even where no
proof of Claim is timely Filed to prevent any insurance carrier from executing
on collateral held by or for the benefit of such insurance carrier. The
treatment set forth in this Section 7.11 shall be in full settlement, release
and discharge of Insured Claims.
Section 7.12 Transmittal of Distributions and Notices.
(a) Any property or notice other than Cash Distributions made through
Section 7.14 which an Entity is or becomes entitled to receive pursuant to the
Plan shall be delivered by regular mail, postage prepaid, in an envelope
addressed to that Entity at the address indicated on any notice of appearance
Filed by that Entity or his authorized agent prior to the Effective Date. If no
notice of appearance has been Filed, notice shall be sent to the address
indicated on a properly Filed proof of Claim or Interest or, absent such a proof
of Claim or Interest, the address that is Scheduled for that Entity or register
maintained for register securities. The date of Distribution shall be the date
of mailing, and property distributed in accordance with this Section shall be
deemed delivered to such Entity regardless of whether such property is actually
received by that Entity.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(b) A holder of a Claim or Interest may designate a different address
for notices and distributions by notifying the Debtor or the Reorganized Debtor,
or with respect to the holder of a TransTexas Senior Secured Note Claims,
Firstar, or with respect to a holder of a TransTexas Subordinated Note Claim,
Bank One, of that address in writing. The new address shall be effective upon
receipt by the Debtor or the Reorganized Debtor, as the case may be.
(c) Notwithstanding anything contrary herein and above, to the extent
that a Distribution is required to be made to a Paying Agent, the address for
the relevant Claim or Interest shall be the address of the relevant Paying
Agent.
Section 7.13 Distribution Record Date. As of the close of business on
the Distribution Record Date, the transfer register for the TransTexas
Subordinated Notes and the TEC Secured Notes will be closed, and the Disbursing
Agent, Bank One, Firstar and their respective agents will have no obligation to
recognize the transfer of any TransTexas Subordinated Notes occurring after such
time and will be entitled for all purposes herein to recognize and deal only
with those holders of record as of such time.
Section 7.14 Method of Cash Distributions. Any Cash payment to be made
pursuant to this Plan may be made by draft, check, wire transfer, or as
otherwise required or provided in any relevant agreement or applicable law.
Section 7.15 Distributions on Non-Business Days. Any Distribution due
on a day other than a Business Day shall be made, without interest, on the next
Business Day.
Section 7.16 Rounding. Notwithstanding any other provision of the Plan,
only whole numbers of shares of New Senior Preferred Stock, New Junior Preferred
Stock and New Common Stock and whole numbers of New Warrants will be issued.
When any distribution on account of an Allowed Claim would otherwise result in
the issuance of a number of shares of New Senior Preferred Stock, New Junior
Preferred Stock and New Common Stock or a number of New Warrants that is not a
whole number, the actual distribution of shares of such stock or warrants will
be rounded to the next higher or lower whole number as follows: (i) fractions
equal to or greater than 1/2 will be rounded to the next higher whole number and
(ii) fractions less than 1/2 will be rounded to the next lower number. The total
number of shares of New Senior Preferred Stock, New Junior Preferred Stock and
New Common Stock and New Warrants to be distributed to a Class of Claims or
Interests will be adjusted as necessary to account for the rounding provided for
herein. If, as a result of such rounding, the amount of shares of New Senior
Preferred Stock, New Junior Preferred Stock and New Common Stock or the amount
of New Warrants to be distributed to a particular Class differs from the
aggregate number of shares of New Senior Preferred Stock, New Junior Preferred
Stock and New Common Stock or New Warrants to be distributed pursuant to the
Plan to that Class, the aggregate number of shares of New Senior Preferred
Stock, New Junior Preferred Stock and New Common Stock or the amount of New
Warrants specified with respect to such Class will be adjusted upward or
downward to provide for the distribution of New Senior Preferred Stock, New
Junior Preferred Stock and New Common Stock or New Warrants, as the case may be,
in an aggregate number of shares or New Warrants equal to such sum. No
consideration will be provided in lieu of fractional shares or warrants that are
rounded down.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Section 7.17 Withholding Taxes. Any federal, state or local withholding
taxes or other amounts required to be withheld under applicable law shall be
deducted from distributions hereunder. All Entities holding Claims shall be
required to provide any information necessary to effect the withholding of such
taxes.
Section 7.18 Disputed Distributions. If any dispute arises as to the
identity of a holder of an Allowed Claim or an Allowed Interest who is to
receive any distribution, the Disbursing Agent, Firstar, or Bank One may, in
lieu of making such distribution to such Entity, make such distribution into an
escrow account until the disposition thereof shall be determined by Final Order
of the Bankruptcy Court or by written agreement among the interested parties to
such dispute.
Section 7.19 Retention of Rights to Pursue Causes of Action. Pursuant
to Section 1123(b)(3) of the Bankruptcy Code, the Reorganized Debtor (as
representatives of the Debtor's estate) will retain and have the exclusive right
to enforce against any Entity any and all Causes of Action (including, without
limitation, all Causes of Action arising under Sections 510, 544 through 550 and
553 of the Bankruptcy Code or otherwise arising under the Bankruptcy Code and/or
those arising under other applicable law) that arose before the Effective Date,
including all Causes of Action of a trustee and debtor-in-possession under the
Bankruptcy Code, other than those expressly released or compromised as part of
or pursuant to this Plan; provided, however, that all Causes of Action that
arose before the Effective Date relating to any of the Distributions received by
the holder of the TransTexas Senior Secured Note Claims pursuant to Section
5.03(a) and not reallocated pursuant to 5.03(b) or retained pursuant to Section
5.03(c) are hereby assigned to Firstar on behalf of the TEC Bondholders.
Section 7.20 Special Master Proceedings. All Disputed Secured Claims of
a Mineral Property Claimant shall be referred to the Special Master. The Special
Master shall make findings of fact and shall refer all questions of law to the
Bankruptcy Court. The Special Master shall enter findings and conclusions as to
the allowance of a Disputed Secured Claim of a Mineral Property Claimant;
provided, however, that any party may obtain a trial de novo before the
Bankruptcy Court by appealing the Special Master's finding and conclusions
within 10 days of the Special Master's Filing of his report to the Bankruptcy
Court.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Assumption Generally. Except as otherwise provided in this
Plan or in any order of the Bankruptcy Court, subject to the occurrence of the
Effective Date, on the Effective Date, pursuant to Section 365 of the Bankruptcy
Code, all executory contracts and unexpired leases not listed on the Schedule of
Rejected Contracts to be served and Filed by the Debtor at least five (5) days
before the Confirmation Hearing (the "Schedule of Rejected Contracts"), or which
is not the subject of a motion to reject as of the Confirmation Date, and is not
rejected under Section 8.06 hereof, are assumed, subject to the same rights that
the Debtor or the Reorganized Debtor held or holds at, on, or after the Petition
Date to modify or terminate such agreements under applicable nonbankruptcy law.
Each contract and lease assumed under this
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Section shall be assumed only to the extent, if any, that it constitutes an
executory contract or unexpired lease, and nothing contained herein shall
constitute an admission by the Debtor or the Reorganized Debtor that such
contract or lease is an executory contract or unexpired lease or that the Debtor
or the Reorganized Debtor has any liability thereunder. To the extent the
Bankruptcy Court, or any other court of competent jurisdiction, determines,
either before, on, or after the Effective Date, that any agreement in the form
of a lease of real or personal property identified for assumption in this
Article VIII of the Plan, is, in fact, a secured transaction, the resulting
secured indebtedness arising from such determination shall be treated in
accordance with the applicable section of the Plan. Each executory contract and
unexpired lease assumed pursuant to this Article VIII shall revest in and be
fully enforceable by the Reorganized Debtor in accordance with its terms, except
as modified by the provisions of the Plan, any order of the Bankruptcy Court
authorizing and providing for its assumption, or applicable federal law.
Section 8.02 Approval of Assumptions. Subject to the occurrence of the
Effective Date, the Confirmation Order (except as otherwise provided therein)
shall constitute an order of the Bankruptcy Court approving the assumptions,
revestments and, to the extent not subject to dispute as set forth in Section
8.04 of the "cure" amounts described in this Article VIII and the Cure Amount
Schedule attached to the Schedule of Rejected Contracts pursuant to Section 365
of the Bankruptcy Code effective as of the Effective Date.
Section 8.03 Objections to Assumption of Executory Contracts and
Unexpired Leases.
(a) Any Entity objecting to the Debtor's proposed assumption of an
executory contract or unexpired lease based on a lack of adequate assurance of
future performance or on any ground other than the adequacy of the "cure" amount
set forth in the Cure Amount Schedule, shall File and serve a written objection
to the assumption of such contract or lease within the same deadline and in the
same manner established for Filing objections to Confirmation of this Plan.
Failure to File an objection within the time period set forth above shall
constitute consent to the assumption and revestment of those contracts and
leases, including an acknowledgment that the proposed assumption provides
adequate assurance of future performance.
(b) If any Entity Files an objection to assumption based on any ground
other than the adequacy of the "cure" amount set forth in the Cure Amount
Schedule, and the Bankruptcy Court ultimately determines that the Debtor cannot
assume the executory contract or lease or that the Debtor cannot provide
adequate assurance of future performance as proposed or in any modified proposal
submitted by the Debtor or the Reorganized Debtor, then the unexpired lease or
executory contract shall automatically thereupon be deemed to have been included
on the Schedule of Rejected Contracts and shall be rejected pursuant to Section
8.06 hereof.
Section 8.04 Objections to Proposed "Cure" Amounts.
(a) The Debtor believes that any executory contract of the Debtor that
is not listed on the Schedule of Rejected Contracts or in the Cure Amount
Schedule may be assumed by the Debtor without the payment of any monetary cure
amount. Any party to an executory contract or
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unexpired lease to be assumed that asserts arrearages or damages pursuant to
Section 365(b)(1) of the Bankruptcy Code that exceeds the amount set forth in
the Cure Amount Schedule, or which is not listed therein and pertains to an
executory contract not listed in the Schedule of Rejected Contracts must File
and serve an objection to the proposed cure amount within the same deadline and
in the same manner established for Filing objections to Confirmation of this
Plan. Failure to assert arrearages different from the amount set forth on the
Cure Amount Schedule or which pertains to an executory contract not listed in
the Schedule of Rejected Contracts or the Cure Amount Schedule within the time
period set forth above shall constitute consent to the cure amount set forth in
the Cure Amount Schedule or to the Debtor's position that no cure amount must
be paid and an acknowledgment that the amount identified for "cure" on the Cure
Amount Schedule is the only amount necessary to cover any and all outstanding
defaults under the respective executory contract or unexpired lease to be
assumed and an acknowledgment that no other defaults exist under said contract
or lease.
(b) To the extent that any objections to the amounts set forth in the
Cure Amount Schedule are timely Filed and served and such objections are not
resolved between the Debtor and the objecting Entities, the Bankruptcy Court
shall resolve such disputes at a hearing to be held at a date to be determined
by the Bankruptcy Court at the Confirmation Hearing. The resolution of such
disputes shall not affect the Debtor's assumption of the contracts or leases
that are subject of such a dispute, but rather shall affect only the "cure"
amount the Debtor must pay in order to assume such contract or lease.
Notwithstanding the immediately preceding sentence, if the Debtor in its
discretion determines that the amount asserted to be the necessary "cure" amount
would, if ordered by the Bankruptcy Court, make the assumption of the contract
or lease imprudent, then the Debtor may, prior to or at the Confirmation
Hearing, elect to (1) reject the contract or lease pursuant to Section 8.06
hereof, or (2) request an expedited hearing on the resolution of the "cure"
dispute, exclude assumption or rejection of the contract or lease from the scope
of the Confirmation Order, and retain the fight to reject the contract or lease
pursuant to Section 8.06 hereof pending the outcome of such dispute.
Section 8.05 Payment Related to Assumption of Executory Contracts and
Unexpired Leases. If not the subject of dispute pursuant to Section 8.04 hereof
as of Confirmation Date, any monetary defaults under each executory contract and
unexpired lease to be assumed under the Plan shall be satisfied by the Debtor,
pursuant to Section 365(b)(1) of the Bankruptcy Code, by payment of the amount
set forth in the Cure Amount Schedule or such other amount as ordered by the
Bankruptcy Court or agreed upon by the Debtor in Cash within 60 days following
the Effective Date or on such other terms as agreed to by the parties to such
executory contract or unexpired lease. In the event of a dispute pursuant to
Section 8.04, payment of the amount otherwise payable hereunder shall be made
following entry of a Final Order or agreement by the Debtor or the Reorganized
Debtor, as the case may be, and the party to the contract or lease.
Section 8.06 Executory Contracts and Unexpired Leases to be Rejected.
(a) Effective as of, and subject to the occurrence of, the Effective
Date, the executory contracts and unexpired leases listed on the Schedule of
Rejected Contracts shall be rejected as of the Effective Date. The Debtor may
amend the Schedule of Rejected Contracts at any
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time prior to the Confirmation Hearing (i) by Filing such amendment with the
Bankruptcy Court and serving it on parties directly affected by the amendment;
or (ii) with Bankruptcy Court approval after a hearing on notice to the
Creditors' Committee and the affected parties. Listing a contract or lease by
category above or on the Schedule of Rejected Contracts shall not constitute an
admission by the Debtor or the Reorganized Debtor that such contract or lease,
including related agreements, is an executory contract or unexpired lease or
that the Debtor or the Reorganized Debtor have any liability thereunder.
(b) The Confirmation Order shall constitute an order of the Bankruptcy
Court approving such rejections on the Confirmation Date, pursuant to Section
365 of the Bankruptcy Code, effective as of the Effective Date. Any party to an
executory contract or unexpired lease identified for rejection as provided
herein may, within the same deadline and in the same manner established for
Filing objections to Confirmation, file any objection thereto. Failure to file
any such objection within the time period set forth above shall constitute
consent and agreement to the rejection.
Section 8.07 Bar Date for Rejection Damages. If the rejection of an
executory contract or unexpired lease pursuant to Section 8.06 above gives rise
to a Claim by the other party or parties to such contract or lease, such Claim,
to the extent that it is timely Filed and is a Miscellaneous Secured Claim,
shall be classified in Class 6, and to the extent that it is timely Filed and is
a General Unsecured Claim, shall be classified in Class 8 or Class 10, as the
case may be; provided, however, that in either event any Claim arising from the
rejection shall be forever barred and shall not be enforceable against the
Debtor, the Reorganized Debtor, their affiliates, their successors, estates, or
their properties, unless a proof of Claim is Filed and served on the Debtor or
the Reorganized Debtor within thirty days after the earlier of (a) the date of
entry of the first order of the Bankruptcy Court rejecting the executory
contract or unexpired lease, or (b) the Confirmation Date.
Section 8.08 Contracts Entered Into on or After the Petition Date. On
the Effective Date, all contracts, leases, and other agreements entered into by
the Debtor on or after the Petition Date, which agreements have not been
terminated in accordance with their terms on or before the Confirmation Date
shall revest in and remain in full force and effect as against the Reorganized
Debtor and the other parties to such contracts, leases and other agreements.
ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 9.01 Discharge of All Claims and Interests and Releases.
(a) Except as otherwise specifically provided by this Plan, the
Confirmation (subject to the occurrence of the Effective Date) shall discharge
the Debtor and the Reorganized Debtor from any debt that arose before the
Confirmation Date, and any debt of the kind specified in Sections 502(g), 502(h)
or 502(i) of the Bankruptcy Code, whether or not a proof of Claim is Filed
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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or is deemed Filed, whether or not such Claim is an Allowed Claim, and whether
or not the holder or such Claim has voted on this Plan.
(b) Except as otherwise specifically provided by this Plan, the
Distributions and rights that are provided in this Plan shall be in complete
satisfaction, discharge and release, effective as of the Confirmation Date (but
subject to the occurrence of the Effective Date) of (i) all Claims and Causes of
Action against, liabilities of, liens on, obligations of and Interests in the
Debtor or the Reorganized Debtor or the direct or indirect assets and properties
of the Debtor or the Reorganized Debtor whether known or unknown, and (ii) all
Causes of Action (whether known or unknown, either directly or derivatively
through the Debtor or the Reorganized Debtor) against, Claims (as defined in
Section 101 of the Bankruptcy Code) against, liabilities (as guarantor of a
Claim or otherwise) of, Liens on the direct or indirect assets and properties
of, and obligations of successors and assigns of, the Debtor, the Reorganized
Debtor and their successors and assigns based on the same subject matter as any
Claim or Interest or based on any act or omission, transaction or other activity
or security, instrument or other agreement of any kind or nature occurring,
arising or existing prior to the Effective Date that was or could have been the
subject of any Claim or Interest, in each case regardless of whether a proof of
Claim or Interest was Filed, whether or not Allowed and whether or not the
holder of the Claim or Interest has voted on this Plan.
(c) On the Effective Date, the Reorganized Debtor shall be deemed to
release unconditionally, and hereby is deemed to release unconditionally on such
date (i) each present or former officer, director, shareholder, employee,
consultant, attorney, accountant and other representatives of the Debtor, (ii)
the Creditors' Committee and, solely in their capacity as members or
representatives of the Creditors' Committee, each consultant, attorney,
accountant or other representative or member of the Creditors' Committee, (iii)
the Entities serving on the Bondholder Committee at any time in the Chapter 11,
and, solely in their capacity as representatives of such holders, each of such
Entity's respective officers, directors, shareholders, employees, consultants,
attorneys, accountants and other representatives, (iv) Firstar, as Indenture
Trustee, and, solely in their capacity as representatives of Firstar, as
Indenture Trustee, each of Firstar's officers, directors, shareholders,
employees, consultants, attorneys, accountants and other representatives, (v)
BNYFC and, solely in their capacity as representatives of BNYFC, each of BNYFC's
officers, directors, shareholders, employees, consultants, attorneys,
accountants and other representatives and (vi) the holders of Bondholder DIP
Claims and, solely in their capacity as representatives of such holders, each of
such holder's respective officers, directors, shareholders, employees,
consultants, attorneys, accountants and other representatives (the Entities
specified in clauses (i) and (vi) are referred to collectively as the
"Releasees"), from any and all Claims, obligations, suits, judgments, damages,
rights, causes of action and liabilities whatsoever, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or prior to the Effective Date in any
way relating to the Debtor, the Reorganized Debtor, the Chapter 11 Case, or the
Plan, except that no Releasees shall be released from acts or omissions which
are the result of willful misconduct.
(d) On the Effective Date, each holder of a Claim and/or an Interest
shall be deemed to have released unconditionally, and hereby is deemed to
release unconditionally on such
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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date, the Releasees, from any and all rights, Claims, causes of action,
obligations, suits, judgments, damages and liabilities whatsoever which any
such holder may be entitled to assert, whether known or unknown, foreseen or
unforeseen, existing or hereafter arising, in law, equity or otherwise, based
in whole or in part upon any act or omission, transaction, event or other
occurrence taking place on or before the Effective Date in any way relating to
the Reorganized Debtor, the Debtor, the Chapter 11 Case or the Plan, except
that no Releasees shall be released from acts or omissions which are the result
of willful misconduct.
(e) If and to the extent that the Bankruptcy Court concludes that the
Plan cannot be confirmed with any portion of the foregoing releases, then the
Debtor, with the prior consent of the Bondholder Committee, reserves the right
to amend the Plan so as to give effect as much as possible to the foregoing
releases, or to delete them.
Section 9.02 Indemnification. Notwithstanding any other provisions of
the Plan, the obligations of the Debtor to indemnify its present and former
directors, officers and employees against any obligations, liabilities, costs or
expenses pursuant to the articles of incorporation or by-laws of the Debtor,
applicable state law, specific agreement or any combination of the foregoing
shall not survive the Effective Date and shall be discharged, regardless of
whether indemnification is owed in connection with an event occurring prior to,
upon or subsequent to the Petition Date, provided, however, that the Reorganized
Debtor shall take all such actions as are necessary to maintain in full force
and effect the existing insurance policies until such time as it may expire by
its terms and directors and officers of the Debtor covered by the existing
insurance policies shall be entitled to make Claims thereunder pursuant to the
terms thereof notwithstanding the provisions of this Section 9.02.
Section 9.03 Conclusion of Chapter 11 Case and Dissolution of
Creditors' Committee.
Except with respect to any appeal of an order in the Chapter 11 Case,
and any matters related to any proposed modification of the Plan, on the
Effective Date, the Creditors' Committee shall be dissolved and the members,
employees, agents, advisors and representatives (including, without limitation,
attorneys, financial advisors, and other Professionals) thereof shall thereupon
be released from and discharged of and from all further authority, duties,
responsibilities and obligations related to, arising from and in connection with
the Chapter 11 Case and shall be indemnified (including for reasonable
attorneys' fees and costs) by the Reorganized Debtor for any and all acts
performed, or omissions, in connection with the Chapter 11 Case, except for acts
or omissions as shall constitute fraud, willful misconduct or gross negligence
of their duties.
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date. The
following are conditions precedent to the occurrence of the Effective Date:
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(a) The Bankruptcy Court shall have entered an order confirming the TEC
Plan, and the TEC Plan and the order confirming the TEC Plan shall each be in
form and substance satisfactory to the Bondholder Committee and the Debtor.
(b) The Bankruptcy Court shall have entered an order confirming the
TARC Plan, and the TARC Plan and the order confirming the TARC Plan shall each
be in form and substance satisfactory to the Bondholder Committee and the
Debtor.
(c) The order confirming the TEC Plan shall have become a Final Order
(as such term is defined in the TEC Plan).
(d) The order confirming the TARC Plan shall have become a Final Order
(as such term is defined in the TARC Plan).
(e) The Confirmation Order shall have been entered and become a Final
Order in form and substance satisfactory to the Debtor and the Bondholder
Committee.
(f) The Debtor shall have sufficient Cash under the Post-Confirmation
Credit Facility and otherwise to satisfy all Cash obligations under the Plan due
on or as of the Effective Date.
(g) The Amended Certificate of Incorporation shall have been Filed with
the Secretary of State of Delaware in accordance with such State's corporation
laws and the Amended By-Laws shall have been adopted by the Reorganized Debtor.
(h) All authorizations, consents and regulatory approvals required, if
any, in connection with the Plan's effectiveness shall have been obtained.
(i) No order of a court shall have been entered and shall remain in
effect restraining the Debtor from consummating the Plan.
(j) The Debtor and the Bondholder Committee shall each have approved
each of the Plan Documents and such Plan Documents shall have been executed in
accordance with their terms.
(k) All amounts required to be paid pursuant to Section 3.02 shall have
been paid in full in Cash to the Bondholder Lenders.
Section 10.02 Waiver of Conditions to Occurrence of the Effective Date.
The Debtor may waive, with the prior consent of the Bondholder Committee, one or
more of the conditions to the occurrence of the Effective Date.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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ARTICLE XI
EFFECTS OF PLAN CONFIRMATION
Section 11.01 Reorganized Debtor. The Debtor shall, as the Reorganized
Debtor, continue to exist after the Effective Date as a separate corporate
entity, with all the powers of a corporation under applicable law, without
prejudice to any right to terminate such existence (whether by merger or
otherwise) under applicable law after the Effective Date.
Section 11.02 Revesting and Vesting. Except as otherwise provided in
this Plan, pursuant to Section 1123(a)(5) and 1141 of the Bankruptcy Code, all
property comprising the Estate shall revest in the Reorganized Debtor or its
successor, free and clear of all Claims, Liens, charges, encumbrances and
Interests of Creditors and equity security holders on the Effective Date. As of
the Effective Date, the Reorganized Debtor may operate its businesses and use,
acquire and dispose of property and settle and compromise Claims or Interests
without supervision of the Court free of any restrictions of the Bankruptcy Code
or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan
and the Confirmation Order. Without limiting the foregoing, the Reorganized
Debtor may pay the charges it incurs for Professional fees, disbursements,
expenses, or related support services after the Effective Date without any
application to the Court.
Section 11.03 Injunction. Except as otherwise provided in the Plan, the
Confirmation Order shall provide, among other things, that all Entities who have
held, hold or may hold Claims against or Interests in the Debtor are, with
respect to any such Claims or Interests, permanently enjoined from and after the
Confirmation Date from: (a) commencing, conducting or continuing in any manner,
directly or indirectly, any suit, action or other proceeding of any kind
(including, without limitation, any proceeding in a judicial, arbitral,
administrative or other forum) against or affecting the Debtor or the
Reorganized Debtor, any of their property, or any direct or indirect transferee
of any property of, or direct or indirect successor in interest to, the Debtor,
or any property of any such transferee or successor; (b) enforcing, levying,
attaching (including, without limitation, any pre-judgment attachment),
collecting or otherwise recovering by any manner or means, whether directly or
indirectly, of any judgment, award, decree or order against the Debtor or the
Reorganized Debtor, any of their property, or any direct or indirect transferee
of any property of, or direct or indirect successor in interest to, the Debtor,
or any property of any such transferee or successor; (c) creating, perfecting or
otherwise enforcing in any manner, directly or indirectly, any encumbrance of
any kind against the Debtor or the Reorganized Debtor, any of their property, or
any direct or indirect transferee of any property of, or successor in interest
to, any of the foregoing Entities; (d) asserting any right of setoff,
subrogation, or recoupment of any kind, directly or indirectly, against any
obligation due the Debtor or the Reorganized Debtor, any of their property, or
any direct or indirect transferee of any property of, or successor in interest
to, the Debtor; and (e) acting or proceeding in any manner, in any place
whatsoever, that does not conform to or comply with the provisions of the Plan.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction. Notwithstanding entry of the
Confirmation Order, the Bankruptcy Court shall retain jurisdiction as is legally
permissible, including, without limitation, for the following purposes:
(a) to determine (i) any Disputed Claims, Disputed Interests and all
related Claims accruing after the Confirmation Date including rights and
liabilities under contracts giving rise to such Claims, (ii) the validity,
extent, priority and nonavoidability of consensual and nonconsensual liens and
other encumbrances and (iii) preconfirmation tax liability pursuant to Section
505 of the Bankruptcy Code;
(b) to allow, disallow, estimate, liquidate or determine any Claim or
Interest against the Debtor and to enter or enforce any order requiring the
Filing of any such Claim or Interest before a particular date;
(c) to approve all matters related to the assumption, assumption and
assignment, or rejection of any executory contract or unexpired lease of any of
the Debtor pursuant to Section 365 of the Bankruptcy Code and Article X herein;
(d) to determine requests for payment of administrative expenses
entitled to priority under Section 507(a)(1) of the Bankruptcy Code, including
compensation of parties entitled thereto;
(e) to resolve controversies and disputes regarding the interpretation
and implementation of this Plan, any disputes relating to whether or not a
timely and proper proof of Claim was Filed or whether a Disallowed Claim or
Disallowed Interest should be reinstated;
(f) to implement the provisions of this Plan and entry of orders in aid
of confirmation and consummation of this Plan;
(g) to modify the Plan pursuant to Section 1127 of the Bankruptcy Code;
(h) to adjudicate any and all Causes of Action that arose in these
Chapter 11 Case preconfirmation or in connection with the implementation of this
Plan, whether or not pending on the Confirmation Date, including without
limitation, any remands of appeals;
(i) to resolve disputes concerning any reserves with respect to
Disputed Claims, Disputed Interests or the administration thereof;
(j) to resolve any disputes concerning whether a person or entity had
sufficient notice of the Chapter 11 Case, the applicable Claims bar date, the
hearing on the approval of the Disclosure Statement as containing adequate
information, the hearing on the confirmation of this
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Plan for the purpose of determining whether a Claim or Interest is discharged
hereunder or for any other purpose;
(k) to determine any and all applications, Claims, Interests, pending
adversary proceedings and contested matters (including, without limitation, any
adversary proceeding or other proceeding to recharacterize agreements or
reclassify Claims or Interests) in these Chapter 11 Case;
(l) to enter and implement such orders as may be appropriate in the
event the Confirmation Order is for any reason stayed, revoked, modified, or
vacated;
(m) to seek the issuance of such orders in aid of execution of the
Plan, to the extent authorized by Section 1142 of the Bankruptcy Code;
(n) to consider any modifications of the Plan, to cure any defect or
omission, or reconcile any inconsistency in any order of the Court, including,
without limitation, the Confirmation Order;
(o) to recover all assets of the Debtor and property of the Estate,
wherever located, including any Causes of Action under Sections 544 through 550
of the Bankruptcy Code;
(p) to hear and resolve matters concerning state, local, and federal
taxes in accordance with Sections 346, 505, and 1146 of the Bankruptcy Code;
(q) to hear any other matter not inconsistent with the Bankruptcy Code;
(r) to resolve any and all disputes or controversies relating to
Distributions to be made, and/or reserves to be established, under this Plan,
including, without limitation, Distributions to be made by the Indenture
Trustee; and
(s) to enter a final decree closing the Chapter 11 Case.
Section 12.02 Jurisdiction Over the Reorganized Debtor. Notwithstanding
the jurisdiction retained in Section 12.01 hereof, from and after the Effective
Date, the Bankruptcy Court shall not have the power to issue any order which
modifies the Reorganization Securities or the rights of the holders thereof with
respect to such Reorganization Securities.
Section 12.03 Cram Down. If all of the applicable requirements for
confirmation of the Plan are met as set forth in Section 1129(a) of the
Bankruptcy Code except subsection (8) thereof, the Debtor may request the Court
to confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code,
notwithstanding the requirements of such subsection (8), on the basis that the
Plan is fair and equitable and does not discriminate unfairly with respect to
any Impaired Class that does not vote to accept this Plan as described in the
Disclosure Statement.
Section 12.04 Modification of the Plan. The Debtor reserves the right,
with the prior consent of the Bondholder Committee, to alter, amend or modify
the Plan prior to the entry of the Confirmation Order. After the entry of the
Confirmation Order, the Debtor may, upon order of the
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 39
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Bankruptcy Court and with the prior consent of the Bondholder Committee, alter,
amend or modify the Plan in accordance with Section 1127(b) of the Bankruptcy
Code, or remedy any defect or omission or reconcile any inconsistency in the
Plan in such manner as may be necessary to carry out the purpose and intent of
the Plan.
Section 12.05 Exemption from Certain Transfer Taxes. Pursuant to
Section 1146(c) of the Bankruptcy Code: (a) the issuance, transfer or exchange
of any securities, instruments or documents; (b) the creation of any other lien,
mortgage, deed of trust or other security interest; (c) the making or assignment
of any lease or sublease or the making or delivery of any deed or other
instrument of transfer under, pursuant to, in furtherance of, or in connection
with, the Plan, including, without limitation, any deeds, bills of sale or
assignments executed in connection with any of the transactions contemplated
under the Plan or the revesting, transfer or sale of any real or personal
property of the Debtor pursuant to, in implementation of, or as contemplated in
the Plan, and (d) the issuance, renewal, modification or securing of
indebtedness by such means, and the making, delivery or recording of any deed or
other instrument of transfer under, in furtherance of, or in connection with,
the Plan, including, without limitation, the Confirmation Order, shall not be
subject to any document recording tax, stamp tax, conveyance fee or other simple
tax, mortgage tax, real estate transfer tax, mortgage recording tax or other
similar tax or governmental assessment. Consistent with the foregoing, each
recorder of deeds or similar official for any county, city or governmental unit
in which any instrument hereunder is to be recorded shall, pursuant to the
Confirmation Order, be ordered and directed to accept such instrument, without
requiring the payment of any filing fees, documentary stamp tax, deed stamps,
stamp tax, transfer tax, intangible tax or similar tax.
Section 12.06 Setoffs. Except for distributions to holders of allowed
Bondholder DIP Claims and allowed BNYFC Claims (as to which the Debtor and
Reorganized Debtor shall have no right of setoff and/or recoupment) and as
otherwise provided in the Plan, agreements entered into in connection with the
Plan, the Confirmation Order, or in agreements previously approved by Final
Order of the Bankruptcy Court, the Debtor or the Reorganized Debtor, may but
will not be required to, set off against any Claim and the Distributions made
with respect to the Claim, before any distribution is made on account of such
Claim, any and all of the Claims, rights and causes of action of any nature that
the Debtor or the Reorganized Debtor may hold against the holder of such Claim;
provided, however, that neither the failure to effect such a setoff, the
allowance of any Claim hereunder, any other action or omission of the Debtor or
the Reorganized Debtor, nor any provision of this Plan shall constitute a waiver
or release by the Debtor or the Reorganized Debtor of any such Claims, rights
and causes of action that the Debtor or the Reorganized Debtor may possess
against such holder. To the extent the Reorganized Debtor fails to set off
against a holder of a Claim or Interest and seek to collect a Claim from the
holder of such Claim or Interest after a distribution to the holder of such
Claim or Interest pursuant to the Plan, the Reorganized Debtor shall be entitled
to full recovery on its Claim against the holder of such Claim or Interest.
Section 12.07 Compromise of Controversies. Pursuant to Bankruptcy Rule
9019, and in consideration for the classification, distribution and other
benefits provided under the Plan, the provisions of this Plan shall constitute a
good faith compromise and settlement of all Claims or controversies resolved
pursuant to the Plan. The entry of the Confirmation Order shall constitute
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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the Bankruptcy Court's approval of each of the foregoing compromises or
settlements, and all other compromises and settlements provided for in the
Plan, and the Bankruptcy Court's findings shall constitute its determination
that such compromises and settlements are in the best Interests of the Debtor,
the Reorganized Debtor, the Estates, and any Entity holding Claims against the
Debtor.
Section 12.08 Withdrawal or Revocation of the Plan. The Debtor reserves
the right, with the prior consent of the Bondholder Committee, to revoke or
withdraw the Plan prior to the Confirmation Date. If the Plan is revoked or
withdrawn, or if the Confirmation Date does not occur, the Plan shall have no
force and effect.
Section 12.09 Successors and Assigns. The rights, benefits and
obligations of any Entity named or referred to in the Plan shall be binding on,
and shall inure to the benefit of, the heirs, executors, administrators,
successors and/or assigns of such Entity.
Section 12.10 Governing Law. Except to the extent that the Bankruptcy
Code or Bankruptcy Rules are applicable, the rights and obligations arising
under this Plan shall be governed by and construed and enforced in accordance
with the laws of the State of Texas.
Section 12.11 Notices. All notices, requests or demands for payments
provided for in this Plan shall be in writing and shall be deemed to have been
received, by mail, addressed to:
TransTexas Gas Corporation
1300 North Sam Houston Parkway East
Houston, Texas 77032-2949
Attn: Simon Ward
with copies to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Deirdre B. Ruckman, Esq.
and:
Bondholder Committee
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Michael J. Sage, Esq.
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by Filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Section 12.12 Severability. Except as to terms which would frustrate
the overall purposes of this Plan, should any provision in this Plan be
determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any or all other provisions of
this Plan.
Section 12.13 Interpretation, Rules of Construction, Computation of
Time, and Choice of Law.
(a) The provisions of the Plan shall control over any descriptions
thereof contained in the Disclosure Statement.
(b) Any term used in the Plan that is not defined in the Plan, either
in Article II (Definitions) or elsewhere, but that is used in the Bankruptcy
Code or the Bankruptcy Rules shall have the meaning assigned to that term in
(and shall be construed in accordance with the rules of construction under) the
Bankruptcy Code or the Bankruptcy Rules. Without limiting the foregoing, the
rules of construction set forth in Section 102 of the Bankruptcy Code shall
apply to the Plan, unless superseded herein.
(c) Unless specified otherwise in a particular reference, all
references in the Plan to Articles, Sections and Exhibits are references to
Articles, Sections and Exhibits of or to the Plan.
(d) Any reference in the Plan to a contract, document, instrument,
release, bylaw, certificate, indenture or other agreement being in a particular
form or on particular terms and conditions means that such document shall be
substantially in such form or substantially on such terms and conditions.
(e) Any reference in the Plan to an existing document or Exhibit means
such document or Exhibit as it may have been amended, restated, modified or
supplemented as of the Effective Date without limitation to the provisions set
forth in Article VI of this Plan.
(f) Captions and headings to Articles and Sections in the Plan are
inserted for convenience of reference only and shall neither constitute a part
of the Plan nor in any way affect the interpretation of any provisions hereof.
(g) In computing any period of time prescribed or allowed by the Plan,
the provisions of Bankruptcy Rule 9006(a) shall apply.
(h) All exhibits, annexes and schedules to the Plan are incorporated
into the Plan, and shall be deemed to be included in the Plan, regardless of
when Filed.
(i) Subject to the provisions of any contract, certificate, bylaws,
instrument, release, indenture or other agreement or document entered into in
connection with the Plan, the rights and obligations arising under the Plan
shall be governed by, and construed and enforced in accordance with, federal
law, including the Bankruptcy Code and Bankruptcy Rules.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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(j) Where applicable, references to the singular shall include the
plural, and vice-versa.
Section 12.14 No Admissions. Notwithstanding anything herein to the
contrary, nothing contained in the Plan shall be deemed as an admission by any
Entity with respect to any matter set forth herein.
Section 12.15 Limitation of Liability. None of the Debtor, the
Reorganized Debtor, the Creditors' Committee, the Entities serving on the
Bondholder Committee at any time during the Chapter 11 Case, the Bondholder
Lenders, BNYFC, the Indenture Trustees, nor any of their respective officers,
directors, employees, members, agents, underwriters or investment bankers, nor
any other professional persons employed by any of them (collectively, the
"Exculpated Persons"), shall have or incur any liability to any Entity for any
act taken or omission made in good faith in connection with or related to
formulating, negotiating, implementing, confirming or consummating the Plan, the
Disclosure Statement or any Plan Document. The Exculpated Persons shall have no
liability to the Debtor, the Reorganized Debtor, any holder of a Claim, any
holder of an Interest, any other party in interest in the Chapter 11 Case or any
other Entity for actions taken or not taken under the Plan, in connection
herewith or with respect thereto, or arising out of their administration of the
Plan or the property to be distributed under the Plan, in good faith, including,
without limitation, failure to obtain Confirmation or to satisfy any condition
or conditions, or refusal to waive any condition or conditions, to the
occurrence of the Effective Date, and in all respects such Exculpated Persons
shall be entitled to rely upon the advice of counsel with respect to their
duties and responsibilities under the Plan.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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Respectfully submitted,
TransTexas Gas Corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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ANNEX A
PRINCIPAL TERMS OF THE MANAGEMENT AGREEMENT
Parties: The Reorganized Debtor and John R. Stanley.
Term: Three years, subject to two one-year extensions at
the option of John R. Stanley, provided certain
performance tests have been met.
Compensation: $300,000 per year. Mr. Stanley will also be given
warrants each year during the term of the
Management Agreement to purchase 300,000 shares of
New Common Stock at an exercise price of $15 per
share.
Termination Rights: The Reorganized Debtor will have the right to
terminate the Management Agreement for "cause" (as
defined, including, without limitation, events
customarily constituting cause, a default by the
Reorganized Debtor in the payment of interest or
principal payments due on the New Senior Secured
Notes or dividend or redemption payments due on
the New Senior Preferred Stock and a bankruptcy
filing by the Reorganized Debtor). Upon
termination, Mr. Stanley will cease to be an
officer or director of the Reorganized Debtor.
Required Approval of Sale: Prior to February 15, 2001, unanimous approval of
the New Board of Directors will be required to
approve a sale of the Reorganized Debtor, unless
the Reorganized Debtor has filed for protection
under the Bankruptcy Code.
Severance Payment: $3 million, if the Management Agreement is
terminated without cause, or $1.5 million, if the
Management Agreement is terminated with cause.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
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ANNEX B
PRINCIPAL TERMS OF NEW JUNIOR PREFERRED STOCK
Dividends: Holders of the New Junior Preferred Stock will
have the right to receive quarterly dividends,
cumulative from the Effective Date, in preference
to the holders of any other shares of capital
stock of the Reorganized Debtor, in an amount per
share equal to 8% of the par value per share
annually, payable in kind (i.e., in additional
shares of New Junior Preferred Stock with an
aggregate par value equal to the dividend amount)
quarterly in arrears on the last day of the third,
sixth, ninth and twelfth months after the
Effective Date and on successive anniversaries of
such dates.
Par Value: $1.00 per share.
Liquidation Preference: Par value per share, plus an amount equal to
accrued and unpaid dividends.
Mandatory Redemption: None.
Optional Redemption: The Junior Preferred Stock will be redeemable, in
whole or in part, at the option of the Reorganized
Debtor for cash in an amount equal to the par
value per share thereof at any time after the New
Senior Secured Notes and the New Senior Preferred
Stock have been retired.
Voting Rights: Holders of New Junior Preferred Stock will have
one-tenth of a vote per share, voting together
with holders of the New Common Stock, on all
matters on which holders of the New Common Stock
are entitled to vote.
Mandatory Conversion: Shares of the New Junior Preferred Stock will be
automatically converted into shares of New Common
Stock on the basis of .334 shares of New Common
Stock for each $1 of liquidation preference
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 46
<PAGE> 56
of the New Junior Preferred Stock if either (i)
more than 75 million shares of the New Senior
Preferred Stock are outstanding after the sixth
anniversary of the Effective Date or (ii) two
successive dividend payments are in arrears on the
New Senior Preferred Stock.
Ranking: The New Junior Preferred Stock will rank junior to
the New Senior Preferred Stock, and senior to the
New Common Stock and to all preferred stock of the
Reorganized Debtor, if any, that is expressly
stated to be junior to the New Junior Preferred
Stock with respect to the payment of dividends and
amounts upon the liquidation, dissolution or
winding up of the Reorganized Debtor.
Registration: The New Junior Preferred Stock will be registered
pursuant to the Shelf Registration Statement and
freely tradable, subject to applicable law.
Additional Issuances: Additional issuances of the New Junior Preferred
Stock (other than shares issued to pay dividends
in kind) will be prohibited.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 47
<PAGE> 57
ANNEX C
PRINCIPAL TERMS OF NEW SENIOR PREFERRED STOCK
Number of Shares: 215 million
Dividends: Subject to the right of the Reorganized Debtor to
pay dividends in kind in the first two years, as
described below, holders of the New Senior
Preferred Stock will have the right during the
first two years after the Effective Date to
receive quarterly cash dividends, cumulative from
the Effective Date, in preference to holders of
any other shares of capital stock of the
Reorganized Debtor, in an amount per share equal
to 10% per annum of the par value per share
payable quarterly in arrears on the last day of
the third, sixth, ninth and twelfth months after
the Effective Date and on successive anniversaries
of such dates. During the first two years after
the Effective Date, in lieu of paying cash
dividends, the Reorganized Debtor will be
entitled, at its option, to pay dividends in kind
(i.e., in additional shares of New Senior
Preferred Stock with an aggregate par value equal
to the dividend amount), in an amount per share
equal to 20% per annum of the par value per share.
After the first two years following the Effective
Date, dividends are payable in cash at the rate of
7.75% per annum of the par value per share.
Par Value: $1.00 per share.
Liquidation Preference: Par value per share, plus an amount equal to
accrued and unpaid dividends.
Mandatory Redemption: The New Senior Preferred Stock will be required to
be redeemed by the Reorganized Debtor on the sixth
anniversary of the Effective Date, at 100% of the
liquidation preference per share.
Optional Redemption: Redeemable at the option of the Reorganized Debtor
at an initial price equal to $0.88 per share,
increasing by $0.005 per share per month to a
maximum of 100% of the liquidation preference per
share, provided
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 48
<PAGE> 58
that no redemption will be permitted prior to the
time the New Senior Secured Notes have been
retired.
Mandatory Conversion: If either (i) more than 75 million shares of the
New Senior Preferred Stock are outstanding after
the sixth anniversary of the Effective Date or
(ii) two successive dividend payments are in
arrears on the New Senior Preferred Stock,
one-half of the shares of the New Senior Preferred
Stock will be automatically converted into shares
of the New Common Stock on the basis of 3.34
shares of New Common Stock for each $1 of
liquidation preference of the shares of New Senior
Preferred Stock converted. The remaining shares of
New Senior Preferred Stock will remain
outstanding.
Voting Rights: Holders of the New Senior Preferred Stock will
have the right, voting separately as a class, to
elect four (4) of the five (5) directors to the
Board of Directors of the Reorganized Debtor;
provided, that if dividends are in arrears with
respect to the payments due commencing two (2)
years after the Effective Date, such holders will
have the right, voting separately as a class, to
elect all five (5) directors to the Board of
Directors of the Reorganized Debtor. Holders of
the New Senior Preferred Stock will have one vote
per share, voting together with the New Common
Stock, on all matters on which the holders of the
New Common Stock are entitled to vote generally.
The voting rights of the New Senior Preferred
Stock will not be subject to change absent the
consent of the holders of 75% of the New Senior
Preferred Stock, voting as a class.
Ranking: The New Senior Preferred Stock will rank senior to
all other capital stock of the Reorganized Debtor
with respect to the payment of dividends and
amounts upon liquidation, dissolution or winding
up of the Reorganized Debtor.
Restrictive Covenants: The New Senior Preferred Stock will contain
covenants limiting the Reorganized Debtor's
ability to (a) incur indebtedness other than the
Post-Confirmation Facility and the Extended
Bondholder DIP Facility (in an aggregate amount
not to exceed $50,000,000), Liens of holders of
Allowed Mineral Property Secured Claims electing
to continue such Liens under Section 5.06(a)(i)
and the Ballots/Elections and the BNYFC Facility,
(b) engage in transactions with affiliates and
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 49
<PAGE> 59
related parties, including Mr. John R. Stanley,
absent unanimous approval of the New Board of
Directors and the obtaining of a fairness opinion
from an internationally recognized investment bank
or accounting firm, (c) dispose of assets or
engage in sale/leaseback transactions, (d) issue
dividends to the holders of the New Common Stock
while the New Senior Preferred Stock is
outstanding, (e) change the Reorganized Debtor's
line of business, (f) consolidate with or merge
into any other Entity or convey, transfer or lease
substantially all of the Reorganized Debtor's
assets, and (g) authorize or issue any additional
shares of preferred stock (other than shares of
New Senior Preferred Stock and New Junior
Preferred Stock issued to pay dividends in kind).
Additional Issuances: Additional issuances of the New Senior Preferred
Stock (other than shares issued to pay dividends
in kind) will be prohibited.
Registration: The New Senior Preferred Stock will be registered
pursuant to the Shelf Registration and freely
tradable, subject to applicable law.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 50
<PAGE> 60
ANNEX D
PRINCIPAL TERMS OF NEW SENIOR SECURED NOTES
Principal Amount: $200 million.
Interest: 15% per annum, accruing from the Effective Date,
payable semi-annually in arrears, in cash,
beginning six months after the Effective Date.
Maturity: Five years after the Effective Date.
Mandatory Redemption: None.
Optional Redemption: The New Senior Secured Notes will be redeemable by
the Reorganized Debtor, at its option, in whole or
in part, in cash, at the redemption prices
(expressed as a percentage of the outstanding
principal amount) set forth below, together with
accrued and unpaid interest, if any, to the
redemption date:
<TABLE>
<CAPTION>
If redeemed during the 12- Redemption
month period beginning Price
-------------------------- ----------
<S> <C>
the Effective Date 115%
1 year after the Effective Date 112%
2 years after the Effective Date 109%
3 years after the Effective Date 106%
4 years after the Effective Date 103%
</TABLE>
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 51
<PAGE> 61
Collateral: First Lien on all Collateral securing the note
governed by the TransTexas Senior Secured Loan
Agreement and all assets securing the Bondholder
DIP Facility.
Ranking: The New Senior Secured Notes will be senior
indebtedness of the Reorganized Debtor.
Registration: The New Senior Secured Notes will be registered
pursuant to the Shelf Registration Statement and
freely tradable subject to applicable law.
Restrictive Covenants: The New Senior Secured Notes Indenture will
contain covenants limiting the Reorganized
Debtor's ability to (a) incur indebtedness other
than the Post- Confirmation Facility and the
Extended Bondholder DIP Facility (in an aggregate
amount not to exceed $50,000,000), Liens of
holders of Allowed Mineral Property Secured Claims
electing to continue such Liens under Section
5.06(a)(i) and the Ballots/Elections and the BNYFC
Facility, (b) engage in transactions with
affiliates and related parties, including Mr. John
R. Stanley, absent unanimous approval of the New
Board of Directors and the furnishing of a
fairness opinion from an internationally
recognized investment bank or accounting firm to
the indenture trustee for the New Senior Secured
Notes, (c) dispose of assets or engage in
sale/leaseback transactions, (d) issue dividends
to the holders of the New Common Stock while the
New Senior Secured Notes are outstanding, (e)
change the Reorganized Debtor's line of business
and (f) consolidate with or merge into any other
Entity or convey, transfer or lease substantially
all of the Reorganized Debtor's assets.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 52
<PAGE> 62
Other Provisions: The New Senior Secured Notes Indenture will
contain other customary provisions and such
Indenture will be qualified under the Trust
Indenture Act of 1939, as amended.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 53
<PAGE> 63
ANNEX E
PRINCIPAL TERMS OF NEW WARRANTS
Amount: 5,000,000 New Warrants, each to acquire one share
of New Common Stock.
Term: Expire on June 30, 2002.
Exercise Price: $15.00 per share.
Customary Provisions: The New Warrant Agreement will contain customary
terms such as anti-dilution provisions.
First Amended Plan of Reorganization proposed by TransTexas Gas Corporation
Page 54
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1
AMENDMENT, dated as of June 28, 1999 (this "Amendment"), to the Credit
Agreement, dated as of April 27, 1999 (as amended, supplemented or otherwise
modified prior to the date hereof, the "Credit Agreement"), among TransTexas Gas
Corporation, a Delaware corporation and debtor-in-possession (the "Borrower"),
the banks and other financial institutions parties thereto (the "Lenders") and
Credit Suisse First Boston Management Corporation, as administrative agent (in
such capacity, the "Administrative Agent") for the Lenders.
RECITALS
The Borrower has requested the Administrative Agent and the Lenders to
agree to amend certain provisions of the Credit Agreement as set forth in this
Amendment. The Administrative Agent and the Lenders parties hereto are willing
to agree to such amendments, but only on the terms and subject to the conditions
set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Borrower and the Administrative Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
2. Amendments. The Credit Agreement is hereby amended as follows:
a) The Table of Contents to the Credit Agreement is hereby amended
as follows:
(i) by deleting Heading 5.2 and substituting the following new
Heading 5.2 in lieu thereof:
"5.2 Conditions to Subsequent Advances of Loans............20";
(ii) by adding the following new heading as Heading 10.17:
"10.17 Concerning the Plan Condition.......................40"
b) The Recitals of the Credit Agreement are hereby amended as
follows:
(i) The First Recital is hereby amended by inserting the words "the
District of" immediately before the word "Delaware" in line three (3)
and by deleting the defined term ("Bankruptcy Court") and substituting
the defined term ("Delaware Court") in lieu thereof;
<PAGE> 2
(ii) The Second Recital is hereby amended by deleting the words
"Bankruptcy Court" in line five (5) and substituting the words
"Delaware Court" in lieu thereof;
(iii) By adding the following new Recital as Recital Three:
"On or about May 20, 1999, the venue of the Chapter 11 Cases
was transferred to the United States Bankruptcy Court for the
southern District of Texas, Corpus Christi Division (the "Bankruptcy
Court")."; and
(iv) The Fourth Recital is hereby amended by deleting the words "a
term loan" in line two (2) and substituting the words "term loans" in
lieu thereof and by deleting the amount "$20,000,000" in line three (3)
and substituting the amount "$30,000,000" in lieu thereof.
c) Section 1, DEFINITIONS, is hereby amended as follows:
(i) The definition "Cash Collateral Accounts" in subsection 1.1, is
hereby amended by deleting the word "Affilitiates" in line two (2) and
substituting the "Affiliates" in lieu thereof; and
(ii) The definition of "Maturity Date" in subsection 1.1, is hereby
amended by adding the clause "; provided, however, that such date may
be extended to a time acceptable to each of the Lenders by providing
written notice of the same to the Borrower" immediately after the word
"Reorganization" in line two (2).
d) Section 3, GENERAL PROVISIONS APPLICABLE TO THE LOANS, is hereby
amended by deleting the word "Lender" in line thirteen (13) of subsection
3.2, and substituting the word "Lenders" in lieu thereof.
e) Section 5, CONDITIONS PRECEDENT, is hereby amended as follows:
(i) Section 5.2 is amended by deleting the words "Second Advance" in
line one (1) and substituting the words "Subsequent Advances" in lieu
thereof, by deleting the words "second advance" in line two (2) and
substituting the words "subsequent advances" in lieu thereof and by
deleting the words "the second advance of such Loan" beginning in line
three (3) and substituting the words "each such advance" in lieu
thereof;
(ii) Subsection 5.2(b) is hereby amended by adding the words "acting
in their reasonable discretion" after the word "Lenders" in line three
(3);
(iii) Subsection 5.2(c) is hereby amended by deleting the word "no"
in line one (1) and substituting the word "No" in lieu thereof;
-2-
<PAGE> 3
(iv) Subsection 5.2(d) is hereby amended by deleting the word "all"
in line one (1) and substituting the word "All" in lieu thereof and by
deleting the word "and" in line two (2);
(v) Subsection 5.2(e) is hereby amended by deleting the word "no" in
line one (1) and substituting the word "No" in lieu thereof and by
adding the word "and" immediately after the word "Effect;" in line two
(2); and
(vi) The following new paragraph is hereby added as subsection
5.2(f):
"(f) The Administrative Agent shall have received, with a
counterpart for each lender, the executed legal opinion of Jordan,
Hyden Womble & Culbreth, P.C., counsel to the Borrower and the other
Loan Parties. Such legal opinion shall cover such other matters
incident to the transactions contemplated by this Agreement as the
Administrative Agent may reasonably require."
g) Section 8, EVENTS OF DEFAULT, is hereby amended as follows:
(i) Subsection 8(k) is hereby amended by deleting the words "as
defined herein" in line (5) and substituting the words "which is
satisfactory in form and substance to the Administrative Agent and the
Lenders, acting in their reasonable discretion" in lieu thereof;
(ii) Subsection 8(l) is hereby deleted in its entirety and the
following new subsection 8(l) substituted in lieu thereof:
" (l) A motion for any Case Order shall be filed by (i) the Borrower
or any Guarantor or (ii) any other Person and the Borrower or any
Guarantor shall have consented thereto or shall have failed to
contest such motion within the earlier of (x) three (3) Business
Days prior to any hearing with respect thereto and (y) twenty (20)
days following the date on which such motion is filed; or"; and
(iii) Subsection 8(m) is hereby amended by deleting the number
"thirty (30)" in line two (2) and substituting the number "sixty (60)"
in lieu thereof and by adding the word "or" immediately after words
"Closing Date;" in line three (3);
(h) Section 10, MISCELLANEOUS, is hereby amended as follows:
(i) Subsection 10.2 is hereby amended by adding the word
"Corporation" immediately after the word "Management" in line sixteen
(16);
(ii) Subsection 10.16 is hereby amended by deleting the word "lien"
in line one (1) and substituting the word "Lien" in lieu thereof; and
-3-
<PAGE> 4
(iii) The following new paragraph is hereby added as Section 10.17:
" 10.17 Concerning the Plan Condition. No consent given or agreement
made by the Administrative Agent and/or the Lenders in connection
with this Agreement shall bind the Administrative Agent or any
Lender for any purpose other than with respect to its undertakings
under this Agreement, or constitute an acceptance of any Plan of
Reorganization under Section 1126 of the Bankruptcy Code."
3. Effectiveness. This Amendment shall become effective upon receipt by
the Administrative Agent of (a) evidence satisfactory to the Administrative
Agent that this Amendment has been executed and delivered by the Borrower, the
Lenders and each of the Subsidiary Guarantors, and (b) any other evidence or
documentation required by the sole discretion of the Administrative Agent.
4. Representations and Warranties. To induce the Administrative Agent
and the Lenders to enter into this Amendment, the Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that, after giving effect
to the amendments provided for herein, the representations and warranties
contained in the Credit Agreement and the other Loan Documents will be true and
correct in all material respects as if made on and as of the date hereof and
that no Default or Event of Default will have occurred and be continuing.
5. No Other Amendments. Except as expressly amended hereby, the Credit
Agreement, the Notes and the other Loan Documents shall remain in full force and
effect in accordance with their respective terms, without any waiver, amendment
or modification of any provision thereof.
6. Counterparts. This Amendment may be executed by one or more of the
parties hereto on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
7. Expenses. The Borrower agrees to pay and reimburse the
Administrative Agent for all of the out-of-pocket costs and expenses incurred by
the Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including, without limitation, the fees and
disbursements of Cadwalader, Wickersham & Taft, counsel to the Administrative
Agent.
8. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[SIGNATURE PAGES FOLLOW]
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed and delivered as of the day and year first above written.
TRANSTEXAS GAS CORPORATION
By:
------------------------------------------
Title:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION, as
Administrative Agent
By:
------------------------------------------
Title:
-5-
<PAGE> 6
The undersigned Lenders hereby consent and agree to the foregoing
Amendment No. 1:
CREDIT SUISSE FIRST BOSTON
MANAGEMENT CORPORATION
By:
------------------------------------------
Title:
ANGELO GORDON & CO., L.P.
By:
------------------------------------------
Title:
OAKTREE CAPITAL MANAGEMENT L.L.C.
By:
------------------------------------------
Title:
-6-
<PAGE> 7
The undersigned guarantors hereby consent and agree to the foregoing
Amendment No. 1:
TRANSAMERICAN ENERGY CORPORATION
By:
------------------------------------------
Title:
TRANSAMERICAN REFINING CORPORATION
By:
------------------------------------------
Title:
-7-
<PAGE> 1
EXHIBIT 15.1
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: TransTexas Gas Corporation
Registration Statement on Form S-3
Ladies and Gentlemen:
We are aware that our report dated September 15, 1999 on our review of
interim condensed consolidated financial information of TransTexas Gas
Corporation for the three and six months ended July 31, 1999 and 1998 included
in this Form 10-Q for the quarter then ended is incorporated by reference in the
Company's registration statement on Form S-3 (Registration No. 33-91494), as
filed with the Securities and Exchange Commission. Pursuant to Rule 436(c) under
the Securities Act of 1933, this report should not be a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and 11 of
that Act.
PricewaterhouseCoopers LLP
Houston, Texas
September 15, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT JULY 31, 1999 AND THE
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED JULY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> JUL-31-1999
<CASH> 16,670
<SECURITIES> 0
<RECEIVABLES> 25,262
<ALLOWANCES> 0
<INVENTORY> 2,592
<CURRENT-ASSETS> 49,534
<PP&E> 1,471,235
<DEPRECIATION> 1,203,135
<TOTAL-ASSETS> 340,439
<CURRENT-LIABILITIES> 33,568
<BONDS> 582,804
0
0
<COMMON> 740
<OTHER-SE> (471,417)
<TOTAL-LIABILITY-AND-EQUITY> 340,439
<SALES> 46,489
<TOTAL-REVENUES> 47,638
<CGS> 0
<TOTAL-COSTS> 63,498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,719
<INCOME-PRETAX> (41,362)
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,362)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,362)
<EPS-BASIC> (0.72)
<EPS-DILUTED> (0.72)
</TABLE>
