Obtains Consent to Amend 11% Senior Note Indenture
HOUSTON, Dec. 28 /PRNewswire/ -- KCS Energy, Inc. (NYSE: KCS) announced
today that it has reached an agreement on a restructuring with the holders of
more than two-thirds of the Company's 8.875% Senior Subordinated Notes due
January 15, 2008 and more than a majority of its 11% Senior Notes due
January 15, 2003. In addition, KCS announced that the holders of its Senior
Notes have agreed to certain amendments to the governing indenture which will
facilitate implementation of the restructuring.
"We are very pleased to have such a high level of support from our
noteholders on a restructuring plan that will permit KCS to reduce total
indebtedness and obtain new financing to replace the two existing bank credit
facilities," said KCS President and Chief Executive Officer James W.
Christmas. "Our agreement also allows us to continue to pay our trade
creditors in the ordinary course of business."
Under the terms of the agreement, current shareholders will retain 100% of
the common stock on the restructuring effective date and employees and trade
creditors will continue to be paid in the ordinary course of business. Senior
Subordinated Noteholders will exchange $125 million principal amount of such
notes, together with accrued interest claims, for $46.875 million in cash and
newly issued redeemable convertible preferred stock. KCS may redeem the
preferred stock for 12 months from the effective date of the restructuring
plan as follows:
For $15.625 million if completed within 6 months of the effective date;
For $20.625 million if completed from 6 to 9 months of the effective date;
and
For $25.625 million if completed from 9 to 12 months of the effective
date.
If the Company does not redeem the new preferred stock, it will be
convertible into 49.9% of the outstanding common stock, assuming full
conversion of such preferred stock.
On the effective date, Senior Noteholders will receive a cash payment for
interest due as of January 15, 2000, totaling $16.5 million. Consenting
Senior Noteholders will exchange their existing notes for new 11% Senior Notes
due January 15, 2005, which will be secured by a junior lien on the Company's
assets. The remaining Senior Notes will be reinstated. The agreement also
provides that KCS will receive options to repurchase at least $50 million of
its new Senior Notes at $850 per $1,000 principal amount plus accrued interest
prior to July 15, 2000.
The Company is currently negotiating the terms of a new senior secured
credit facility that will replace its two current bank facilities. Under the
terms of the restructuring agreement, the Company must finalize the terms of a
satisfactory financing commitment by January 15, 2000.
To effectuate the agreement, the parties have agreed KCS will commence a
case under Chapter 11 of the Bankruptcy Code by January 18, 2000.
In addition, KCS obtained the consent of the majority of the Senior
Noteholders to amend the indenture governing the Company's 11% Senior Notes
due January 15, 2003. Among other things, the amendment would permit KCS to
replace its two existing bank credit facilities with a new senior secured
credit facility providing up to $190.0 million of indebtedness, to reduce to
2.0-to-1.0 the EBITDA (earnings before interest, taxes and DD&A) coverage
ratio required for the Company to incur additional indebtedness until
March 31, 2001, and to purchase its 8.875% Senior Subordinated Notes due
January 15, 2008 and to expend up to $26.0 million to acquire or retire the
newly issued preferred stock of the Company.
KCS is an independent energy company engaged in the acquisition,
exploration, development and production of natural gas and crude oil with
operations in the Mid-Continent and Gulf Coast regions. The Company also
purchases reserves (priority rights to future delivery of oil and gas) through
its Volumetric Production Payments (VPP) program. For more information on KCS
Energy, Inc., please visit the Company's web site at
http://www.kcsenergy.com .
To receive KCS' latest news and other corporate developments via fax at no
cost, please call 800-PRO-INFO. Use company code KCS. See also
http://www.frbinc.com .
This press release contains forward-looking statements that involve a
number of risks and uncertainties. Among the important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements are delays and difficulties in developing currently
owned properties, the failure of exploratory drilling to result in commercial
wells, delays due to the limited availability of drilling equipment and
personnel, fluctuations in oil and gas prices, general economic conditions and
the risk factors detailed from time to time in the Company's periodic reports
and registration statements filed with the Securities and Exchange Commission.
SOURCE KCS Energy, Inc.
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Related links:
http://www.kcsenergy.com
CONTACT:
James W. Christmas, President and CEO of KCS
Energy, Inc., 713-877-8006; General, Marianne Stewart,
212-661-8030, Analysts, Beth Lewis, 617-369-9240, or Media,
Claudine Cornelis, 212-661-8030, all of The Financial Relations
Board
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