Sem Group meltdown

[TulsaSue]

Just heard that they filed bankruptcy.

[cannon_fodder]

4 Subsidiaries have filed for Chapter 11:

quote:
The filing was signed by SemGroup CEO Terry Ronan, named SemCrude, SemCanada, Dynergy Gathering Services and EaglWing, as well as 30 creditors.

http://www.kten.com/Global/story.asp?S=8715438

They bet $3.2 Billion on oil going the wrong way, they are out of funds:
http://www.reuters.com/article/bondsNews/idUSN2229881520080722

On the positive side, no local creditors have been listed on the unsecured asset rolls in excess of $20mil (possible exception of Conoco Phillips, local?):

BP                        Trade Debt         159.0 (Millions USD)
Sunoco                    Trade Debt          88.9
PIMCO                     Bond Debt           86.0
Valero                    Trade Debt          79.3
Western Asset
Management Company        Bond Debt           77.0
ConocoPhillips            Trade Debt          74.2
Noble Energy, Inc         Trade Debt          60.6
Plains All American
Pipeline                  Trade Debt          59.8
Merrill Lynch
Asset Management          Bond Debt           55.0
National Refinery
Association               Trade Debt          53.7
Central Crude
Corporation               Trade Debt          52.2
Husky Energy              Trade Debt          50.1
Crescent Point
Energy Trust              Trade Debt          42.5
Crude Marketing
& Transportation          Trade Debt          40.8
Chevron Corp              Trade Debt          37.2
Alon USA                  Trade Debt          36.5
Eaton Vance Management    Bond Debt           28.0
Bain Capital/Sankaty      Bond Debt           27.5
Apache Canada Ltd         Trade Debt          27.2
Fountain Capital
Management                Bond Debt           27.0
Arc Energy Trust          Trade Debt          26.2
Muzinich & Company        Bond Debt           25.0
Legal and General
Investment Management     Bond Debt           25.0
Teppco Crude Oil          Trade Debt          24.9
Deutsche Capital          Bond Debt           24.0
Pioneer Natural
Resources USA             Trade Debt          23.2
Cimmaron Transportation   Trade Debt          22.8
Nexen Marketing           Trade Debt          22.3
Central Kansas Crude      Trade Debt          21.8
Royal Dutch/Shell         Trade Debt          17.5
TOTAL                                      1,395.2

So either the $135mil from BOk is secured or from a different entity.  Also heard rumors of MidFirst and F&M being out large to SemGroup.

The corporate structure of SemGroup is so complex it's hard to know what is really going on.

Tulsa World just posted an article:http://www.tulsaworld.com/news/article.aspx?articleID=20080722_11_SemC687402

[cannon_fodder]

Tulsa World has their Chapter 11 filing here:
http://www.tulsaworld.com//webextra/content/sem1.PDF

It includes a motion for continuation of operations, as well as wages and benefits for employees.  They are arguing they are more valuable as a going concern.

They lost a HUGE damn bet.  I can only hope they get out of this.

[FOTD]

Shameful. Let's hope they can rescue some of it. My guess, the banks rule.

It ain't ova til the fat lady sez Dnova.

[Conan71]

Cannon, am I reading correctly?  $1.3 billion???

Sheesh, the Duke brothers were only on the hook for $384 million [}:)]

[cannon_fodder]

The subsidiaries that filed bankruptcy are on the hook for $1.4Bil of UNSECURED debt.  No word on the total debt load, but well above the $1.4B for sure.  We just have to hope they win the argument that they are worth more as a going concern.

[bokworker]

The numbers get bigger...

http://biz.yahoo.com/rb/080722/semgroup.html?.v=3

[FOTD]

A painful mess for Tulsa and the banks.

Seems our debacles take precedent over our success'. Hard to lure business here with our rap sheet.

It ain't ova til the fat lady sez DNova.

[cannon_fodder]

quote: To meet obligations, SemGroup plans to sell off oil and natural gas gathering, transportation, and storage assets worth an estimated $6.14 billion that were purchased in a whirlwind of acquisitions since it was founded in 2000.

"We have determined that the best way to maximize value for our creditors is to undertake a sales process that will transition our valuable businesses to well-established companies," Terry Ronan, SemGroup's acting chief executive, said in a statement.

. . .

It listed liabilities of $7.53 billion in its bankruptcy filing, including $3.1 billion of total debt $2 billion of secured debt and $594 million in unsecured notes.

Assets of $6.14 Billion and liabilities of $7.53 billion.  

The Chapter 11 looks like protection to sell off assets in a more orderly & profitable way than a Chapter 7 liquidation.  

At the end of March BOk listed $88mil in exposure to SemGroup.  They did not appear on the unsecured list, so presumably...

It looks like it could be the worst.

[MacGyver]

Did anyone else raise an eyebrow to this in the Yahoo news link:

"Included in the NYMEX loss was $290 million owed to SemGroup by a trading company owned by co-founder and former chief executive Thomas Kivisto, who was placed on administrative leave on July 17."

Is this the first indication of off-book liabilities? [:O]

[OUGrad05]

This will have a substantial fallout and the dollars listed are only for public companies!  Private companies like mine have been hit as well.  

This is going to be a mess but the AP wire said the energy partners were not listed on the chapter 11.  Which was interesting.

[Renaissance]

This one looks like it is going to get ugly.

Sucks for SemGroup and sucks for Tulsa.

[Conan71]

It's such a convoluted mess of companies under the SEM umbrella it's really hard for the average person (and some analysts) to unravel it all.

SEM is correct, they have many valuable assets as they relate to the collection, storage, and distribution of petroleum products.

Everyone has been looking at the up-side of $140-plus oil from an investment standpoint, I think we've just seen the downside of it.

What a mess and what a total shame.

[HazMatCFO]

quote:Originally posted by Conan71

Cannon, am I reading correctly?  $1.3 billion???

Sheesh, the Duke brothers were only on the hook for $384 million [}:)]

Devaluation of the dollar since the mid 80s, about the same amount of money.

In regards to BOK, not good timing with IndyMac going belly up last week. I don't know if $ 130,000,000 could bankrupt BOK, but it may cause a run on the bank. Merger with larger bank on the horizon?

This is not good and I'm not usually a sky is falling person.

[Conan71]

Depends on what BOK has for security.  There would be a market for their assets.  Whether or not others are willing to pay carrying value remains to be seen.  Remember SEM is saying they can continue to operate it's fee-based businesses at a profit.

I would bet the assets will be sold off into smaller chunks.  Consolidating all that into one huge, convoluted ball doesn't look so brilliant now.