TXCO files plans based on sale, operational reorganization scenarios

By Caroline Salls

Pittsburgh, Nov. 12 - TXCO Resources, Inc. filed two plans of reorganization Thursday, one based on the sale of its assets and one for the reorganization of the company's operations if the sale is not successful, according to a filing with the U.S. Bankruptcy Court for the Western District of Texas.

Sale-based plan

Under the sale-based plan:

• Holders of administrative claims and priority tax claims, secured tax claims and priority non-tax claims will be paid in full in cash;

• Holders of debtor-in-possession loan secured claims, secured claims of the revolver lenders and secured claims of the term loan lenders will be paid in full in cash plus interest and charges;

• Holders of secured claims of mineral lienholders will receive a joint interest billing payment;

• Holders of general unsecured claims will have the option to either receive an unsecured creditors discount payment or a five-year trust certificate reflecting an interest in the creditor trust;

• Holders of administrative convenience claims will receive cash equal to an undisclosed percentage of their claims;

• Intercompany claims will be deemed discharged on the plan effective date; and

• Holders of preferred stock and common stock will receive no distribution.

Operational plan

Meanwhile, under the operational plan:

• Holders of administrative claims and priority tax claims, secured tax claims and priority non-tax claims will be paid in full in cash;

• Holders of DIP loan claims will receive senior secured convertible notes in the amount of half of their claims and convertible preferred A shares with a liquidation preference equal to half of their claims;

• The secured claim of Western National Bank will be satisfied either by reinstatement of the Western National Bank debt or by issuance of a five-year note;

• Holders of secured claims of the revolver lenders will receive first-lien notes in the amount of the unpaid principal balance plus interest;

• Holders of secured claims of term loan lenders will receive a share of 97.5% of the new common stock in the reorganized company, plus up to 2.5% that will be equal to the collective percentage of class 8 creditors opting for an unsecured creditors payment option multiplied by 2.5%. These creditors will also receive convertible preferred B shares with a liquidation preference equal to 64% of the unpaid principal balance of the term loans and second-lien notes equal to the 35% of the unpaid principal balance;

• Holders of secured claims of mineral lienholders will receive a joint interest billing payment;

• Holders of general unsecured claims will have the option to either receive an unsecured creditors discount payment equal to 5% of the claim or new common stock equal to what would be the creditor's share of 2.5% of the stock if all general unsecured creditors opted to receive new common stock;

• Holders of administrative convenience claims will receive a single $1,000 cash payment;

• Intercompany claims will be deemed discharged on the plan effective date; and

• Holders of preferred stock and common stock will receive no distribution.

The company said it would obtain a $32 million exit facility, which would bear interest at Libor plus 350 basis points.

TXCO, a San Antonio-based energy company, filed for bankruptcy on May 18. Its Chapter 11 case number is 09-51807.

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