SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
December 3, 1996
___________________
HOWELL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
1-8704 74-1223027
(Commission File Number) (I.R.S. Employer Identification No.)
1111 Fannin, Suite 1500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 658-4000
Item 2. Disposition of Assets
On December 3, 1996 (the "Closing Date"), Genesis Crude Oil, L.P., a
Delaware limited partnership ("Buyer"), Genesis Energy, L.P., a Delaware limited
partnership ("MLP"), and Genesis Energy, L.L.C., a Delaware limited liability
company ("LLC"), entered into a Purchase & Sale and Contribution & Conveyance
Agreement ("Agreement") with Howell Corporation and certain of its subsidiaries
("Registrant") and Basis Petroleum, Inc. ("Basis"), a subsidiary of Salomon Inc
("Salomon"). Pursuant to the Agreement, Registrant agreed to sell and convey
certain of its assets to Buyer. These assets consist of the crude oil gathering
and marketing operations and pipeline operations of Registrant (referred to
hereafter as the "Business").
Buyer was formed by MLP and LLC to acquire the Business from Registrant and
similar assets from Basis. MLP is owned 98% by limited partners and 2% by LLC,
which is the general partner. LLC is owned 46% by Registrant and 54% by Basis.
MLP made an initial public offering of 7,500,000 common units. Additionally,
the underwriters of the transaction have exercised their option to purchase an
additional 1,125,000 common units to cover overallotments. The sales of the
initial 7,500,000 common units and the 1,125,000 additional common units have
been treated in this report on Form 8-K as though both transactions have been
completed.
In accordance with the Agreement, Registrant received cash of approximately
$74.9 million and 991,300 subordinated limited partner units in Buyer in
exchange for its sale and conveyance of the Business. Except as specifically
provided in the Agreement, Registrant retained all liabilities related to the
Business arising from the operations, activities and transactions of the
Business up through the Closing Date, including various environmental related
liabilities. Registrant made various representations and warranties as to
itself and the Business and has agreed to indemnify Buyer for any breaches
thereof. Claims for breaches of such representations and warranties must be
brought before December 3, 2001. Registrant has also agreed to perform, and
retain the liability for, the cleaning of certain tanks used in the pipeline
operations.
On the Closing Date, Registrant entered into various agreements with Buyer,
MLP and LLC pursuant to the Agreement including (a) a noncompetition agreement
prohibiting Registrant from competing with the Business for a period of ten
years; (b) an agreement relating to the purchase of crude oil by Registrant for
use in its technical fuels business and the sale of crude oil by Registrant from
its oil and gas exploration and production business; (c) an agreement whereby
Registrant will provide certain transitional services to Buyer; (d) an agreement
whereby MLP will sell additional limited partner units to the public and use the
proceeds to redeem the subordinated limited partner units in Buyer owned by
Registrant after certain conditions are met; and (e) an agreement whereby one-
half of the subordinated limited partner units owned by Registrant are pledged
to secure Registrant's indemnification of Buyer for environmental liabilities.
Also at Closing, Registrant entered into an agreement with Salomon which
provides (a) an unconditional obligation of Registrant to buy its 46% share of
additional limited partner interests ("API's") from Salomon if Registrant (as a
member of LLC) has approved an acquisition by Buyer and (b) to the extent API's
are outstanding, an obligation by Registrant to purchase 46% of such outstanding
API's, but only to the extent of any distributions made to Registrant by Buyer
on Registrant's subordinated limited partner units.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1996 Page F-1
Pro Forma Condensed Consolidated Statements of Earnings:
Year Ended December 31, 1995 Page F-2
Nine Months Ended September 30, 1996 Page F-3
The Pro Forma Condensed Consolidated Balance Sheet of the Registrant as of
September 30, 1996, reflects the financial position of the Registrant after
giving effect to the disposition of the Business discussed in Item 2 and
assumes the disposition took place on September 30, 1996. The Pro Forma
Condensed Consolidated Statements of Earnings for the year ended December 31,
1995, and the nine months ended September 30, 1996, assume that the
disposition occurred on January 1, 1995, and January 1, 1996, respectively,
and are based on the operations of the Registrant for the year ended December
31, 1995 and the nine months ended September 30, 1996.
The unaudited pro forma condensed consolidated financial statements have
been prepared by the Registrant based upon assumptions deemed proper by it.
The unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations
of the Registrant, or of the financial position or results of operations of
the Registrant that would have actually occurred had the transaction been in
effect as of the date or for the periods presented. In addition, it should
be noted that future filings of Registrant's financial statements will
reflect the disposition only from December 3, 1996, the Closing Date.
The Pro Forma Condensed Consolidated Statements of Earnings for the year
ended December 31, 1995, and the nine months ended September 30, 1996, assume
that all cash proceeds were used to retire debt and therefore reduce interest
expense for the periods. The gain on the disposition of the assets is not
included in such Pro Forma Condensed Combined Statements of Earnings.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of the Registrant.
(c) Exhibits
2.1 Purchase & Sale and Contribution & Conveyance Agreement, dated as of
November 26, 1996, by and among the Registrant, Buyer, the MLP, the
LLC and Basis. (Registrant hereby agrees to furnish supplementally to
the Securities and Exchange Commission upon request a copy of any
omitted schedule or exhibit, all of which are listed in the Table of
Contents of the Purchase & Sale and Contribution & Conveyance
Agreement.)
2.2 First Amendment to Purchase & Sale and Contribution & Conveyance
Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOWELL CORPORATION
(Registrant)
Date: December 18, 1996 By /s/ Robert T. Moffett
-----------------------
Robert T. Moffett
Vice President, General Counsel
and Secretary
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT SEPTEMBER 30, 1996
(UNAUDITED)
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
Assets (Dollars in thousands)
Current assets:
Cash and cash equivalents $ 4,110 $ - $ (1,556)<F2> $ 1,554
24,625 <F3>
(25,625)<F5>
Trade accounts receivable 77,178 (69,625) 7,553
Inventories 5,476 (3,045) 2,431
Other current assets 1,699 (162) 1,537
--------- --------- -------- ---------
Total current assets 88,463 (72,832) (2,556) 13,075
--------- --------- -------- ---------
Property, plant and equipment:
Oil and gas properties 278,594 - 278,594
Mineral fee interests 18,188 - 18,188
Other 112,179 (78,779) 33,400
Less accumulated depreciation,
depletion and amortization (218,719) 8,444 (210,275)
--------- --------- -------- ---------
Net property and equipment 190,242 (70,335) - 119,907
--------- --------- -------- ---------
Investment in Genesis LLC and MLP - - 5,006 <F2> 20,504
15,498 <F3>
Other assets 1,944 (232) 1,712
--------- --------- -------- ---------
Total assets $ 280,649 $(143,399) $ 17,948 $ 155,198
========= ======== ======== =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt $ 14,362 $ (6,147) $ (8,215)<F5>$ -
Note payable on demand - - 3,450 <F2> 3,450
Accounts payable 70,655 (69,328) 1,327
Accrued liabilities 8,589 (3,822) 4,767
Accrued income taxes payable - - 2,920 <F4> 2,920
--------- --------- -------- ---------
Total current liabilities 93,606 (79,297) (1,845) 12,464
--------- --------- -------- ---------
Deferred income taxes 21,659 - 3,949 <F4> 25,608
--------- --------- -------- ---------
Other liabilities 459 - - 459
--------- --------- -------- ---------
Long-term debt 83,805 (42,055) (17,410) <F5> 24,340
--------- --------- -------- ---------
Commitments and contingencies - - - -
Total shareholders' equity 81,120 (22,047) 33,254 92,327
--------- --------- -------- ---------
Total liabilities and
shareholders' equity $ 280,649 $(143,399) $ 17,948 $ 155,198
========= ======== ======== =========
<FN>
<F1>
To eliminate assets and liabilities included in the balance sheet of the
Business as of September 30, 1996.
<F2>
To reflect the investment in LLC by Registrant. The investment consisted of
cash totaling $1.6 million and a note in the amount of $3.5 million. Through
its investment in LLC, Registrant holds a general partner interest in both MLP
and Buyer.
<F3>
To reflect the net proceeds from the sale of the Business, net of the repayment
of debt secured by assets of the Business which was eliminated in (a) above, and
the receipt of 991,300 subordinated limited partner units in Buyer.
<F4>
To reflect income tax liabilities related to the transactions.
<F5>
To reflect the use of unexpended net proceeds to reduce other debt of
Registrant.
</FN>
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(dollars and shares in thousands except per share amount)
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
Revenues $673,537 $(630,794) $ - $42,743
-------- --------- ------ -------
Costs and expenses:
Products including operating expenses 646,676 (617,720) 28,956
Selling, general and administrative
expenses 11,748 (4,116) 7,632
-------- --------- ------ -------
658,424 (621,836) - 36,588
-------- --------- ------ -------
Other income (expense):
Interest expense (7,109) 3,598 2,101 <F2> (1,410)
Interest income 229 (9) 220
Equity in earnings of Genesis - 2,100 <F3> 2,100
Other, net 154 (1) 153
-------- --------- ------ -------
(6,726) 3,588 4,201 1,063
-------- --------- ------ -------
Earnings from operations before income taxes 8,387 (5,370) 4,201 7,218
Provision for income taxes 3,061 (483) <F4> 2,578
-------- --------- ------ -------
Net earnings $ 5,326 $ (5,370) $4,684 $4,640
======== ========= ====== =======
Weighted average shares outstanding 4,869 4,869
======== =======
Net earnings per common share $ 0.60 $ 0.46
======== =======
<FN>
<F1>
To eliminate the profit and loss of the Business for the entire period including
interest expense related to debt secured by assets of the Business.
<F2>
To reflect the reduction in interest expense due to a revised debt structure
that would have existed had the transaction occurred at the beginning of the
period.
<F3>
To reflect the Registrant's equity in the pro forma earnings of Buyer and LLC.
Such pro forma earnings were determined in accordance with the rules and
regulations of the Securities and Exchange Commission.
<F4>
To reflect the change in the provision for income taxes related to (a), (b) and
(c) above.
</FN>
PRO FORMA FINANCIAL INFORMATION
HOWELL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(dollars and shares in thousands except per share amount)
Pro Forma Adjustments
Historical Disposition<F1> Other Pro Forma
---------- ----------- ----- ---------
Revenues $554,958 $(521,302) $ $33,656
-------- --------- ------ -------
Costs and expenses:
Products including operating expenses 533,731 (509,903) 23,828
Selling, general and administrative
expenses 8,589 (3,100) 5,489
-------- --------- ------ -------
542,320 (513,003) 29,317
-------- --------- ------ -------
Other income (expense):
Interest expense (5,666) 3,034 1,461 <F2> (1,171)
Interest income 73 (2) 71
Equity in earnings of Genesis - 1,630 <F3> 1,630
Other, net 4 4
-------- --------- ------ -------
(5,589) 3,032 3,091 534
-------- --------- ------ -------
Earnings from operations before income taxes 7,049 (5,267) 3,091 4,873
Provision for income taxes 2,615 (808) <F4> 1,807
-------- --------- ------ -------
Net earnings $ 4,434 $(5,267) $3,899 $ 3,066
======== ========= ====== =======
Weighted average shares outstanding 4,936 4,936
======== =======
Net earnings per common share $ 0.53 $ 0.25
======== =======
<FN>
<F1>
To eliminate the profit and loss of the Business for the entire period including
interest expense related to debt secured by assets of the Business.
<F2>
To reflect the reduction in interest expense due to a revised debt structure
that would have existed had the transaction occurred at the beginning of the
period.
<F3>
To reflect the Registrant's equity in the pro forma earnings of Buyer and LLC.
Such pro forma earnings were determined in accordance with the rules and
regulations of the Securities and Exchange Commission.
<F4>
To reflect the change in the provision for income taxes related to (a), (b) and
(c) above.
</FN>