Tekoil debtor gets court approval of reduced $3.2 million sale price

By Caroline Salls

Pittsburgh, July 31 - Tekoil & Gas Corp. debtor Tekoil and Gas Gulf Coast LLC received court approval to reduce the proposed cash purchase price for substantially all of its assets by $2.3 million, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the motion, ERG Resources, LLC agreed in April to purchase substantially all of Tekoil Gulf Coast's assets for $6.7 million in cash, including a $500,000 deposit, plus $1.5 million to repay Tekoil Gulf Coast's debtor-in-possession credit facility.

The assets include mineral leases for tracts in Galveston Bay, Texas, that Tekoil Gulf Coast leases from the State of Texas General Land Office.

At the sale hearing, Tekoil Gulf Coast and ERG agreed to reduce the cash payment to $5.5 million.

Tekoil Gulf Coast said it was prepared to close the sale with ERG designee Galveston Bay Energy, LLC on July 1 as agreed, but Galveston Bay did not close on that date.

On July 3, Galveston Bay said it was terminating the sale because of alleged conduct by Tekoil Gulf Coast, which ERG and Galveston Bay claimed to have discovered only after the June 24 sale hearing.

ERG also demanded the return of its deposit.

Tekoil Gulf Coast said it disputes the assertions made as the basis for Galveston Bay's refusal to close on the sale, and it denies that ERG is entitled to a return of the deposit.

Despite these disputes and the allegations, Tekoil Gulf Coast said Galveston Bay has offered to promptly close on the sale and waive its demand for the return of the deposit if the cash payment due at closing is reduced to $3.2 million from $5.5 million. The DIP loan repayment portion would remain unchanged.

Although it was reluctant to accept Galveston Bay's proposal, Tekoil Gulf Coast said its efforts to find an alternate buyer at a higher price were not successful.

Based in The Woodlands, Texas, Tekoil is an oil and natural gas exploration, development, acquisition and production company that filed for bankruptcy on June 10, 2008. The Chapter 11 case number is 08-80270.

© 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.