TXCO Resources' short-term cash needs push company into Chapter 11

By Jennifer Lanning Drey

Portland, Ore., May 18 - TXCO Resources Inc. and its subsidiaries filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Western District of Texas due to substantial difficulties meeting short-term cash needs, according to a company news release.

TXCO said extreme volatility in energy prices and a deteriorating global economy have hindered its ability to raise debt and/or equity capital.

The company has filed a motion for interim approval of a debtor-in-possession financing commitment comprised of a $32 million multiple-draw term loan facility. The company is seeking interim access to $12.5 million of the DIP financing.

According to court documents filed Monday, the DIP lenders are current term lenders, including Double Black Diamond Offshore, Ltd.

TXCO has filed a variety of other first-day motions with the court that will allow it to continue to conduct business without interruption.

DIP loan details

TXCO's proposed multiple-draw $32 million DIP facility will be used to fund disbursements in accordance with a budget to be provided by TXCO to its lenders, according to the company's most recently filed 10-Q with the Securities and Exchange Commission.

Interest on the loans is expected to Libor plus 4% on extensions of credit up to $7.5 million and Libor plus 10% on extensions in excess of $7.5 million, with Libor being subject to a 3% floor.

TXCO will pay an origination fee of 1% of the total commitment upon closing of the interim facility, with a fee of 2% of the total commitment being due at maturity.

The DIP loans will mature on the earliest of 30 days after the entry of the interim order if a final order has not yet been approved, six months after the company's bankruptcy filing, the effective date of a court-approved plan of reorganization and such date that the obligations become due in accordance with the terms of the DIP facility.

Largest unsecured creditors

According to a Monday court filing, TXCO's largest unsecured creditors include:

• Weatherford Artificial Lift Systems, based in Houston, with an $8.0 million trade debt claim;

• MTZ Vacuum Service, Uvalde, based in Texas, with a $5.3 million trade debt claim;

• Strata Directional Technology, based in Dallas, with a $5.1 million trade debt claim;

• Patterson-UTI Drilling Co. LP, located in Dallas, with a $4.2 million trade debt claim;

• BJ Services Co. of Houston, with a $4.2 million trade debt claim;

• Thomas Energy Services, Inc., based in Dallas, with a $2.7 million trade debt claim;

• Capital Well Service, LLC, located in Jourdanton, Texas, with a $1.9 million trade debt claim;

• Doug Frazier of Eagle Pass, Texas, with a $1.9 million trade debt claim;

• C&J Spec-Rent Services, Inc. of Dallas, with a $1.2 million trade debt claim; and

• Halliburton Energy Services, based in Houston, with a $1.0 million trade debt claim.

TXCO is a San Antonio-based energy company. Its Chapter 11 case number is 09-51807.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.