SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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):September 16, 2002
TRANSTEXAS GAS CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-30475 76-0401023
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(Commission File Number) (I.R.S. Employer
Identification No.)
1300 North Sam Houston Parkway East, Suite 310
Houston, Texas 77032
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(Address of principal executive offices, including zip code)
(281) 987-8600
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(Registrant's telephone number, including area code)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Preferred Stock Dividends and Conversion to Class A Common Stock
The Certificate of Designation for the Senior Preferred Stock of the
Company provides for the mandatory conversion of one-half of the
outstanding shares of Senior Preferred Stock into fully paid and
non-assessable shares of Class A Common Stock at the rate of 0.3461
shares of Class A Common Stock for each $1.00 of liquidation preference
per share, plus an amount equal to accrued and unpaid dividends, of
Senior Preferred Stock if the Company fails to pay dividends on the
Senior Preferred Stock as required by the Certificate of Designation
for the Senior Preferred Stock on any two dividend payment dates. The
Certificate of Designation for the Junior Preferred Stock provides for
the mandatory conversion of all of the outstanding shares of Junior
Preferred Stock into fully paid and non-assessable shares of Class A
Common Stock at the rate of 0.1168 shares of Class A Common Stock for
each $1.00 of liquidation preference per share, plus an amount equal to
accrued and unpaid dividends, of the Junior Preferred Stock if the
Company fails to pay dividends on the Senior Preferred Stock as
required by the Certificate of Designation for the Senior Preferred
Stock on any two dividend payment dates.
Upon the occurrence of the mandatory conversion specified above, the
outstanding shares of Senior Preferred Stock and Junior Preferred Stock
shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing
such shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to issue
certificates evidencing the shares of Class A Common Stock issuable
upon such conversion unless the certificates evidencing such shares of
Senior Preferred Stock and Junior Preferred Stock are either delivered
to the Company or its transfer agent as provided below, or the holder
thereof notifies the Company or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Company to indemnify the Company from any
loss incurred by it in connection with such certificates.
Upon the occurrence of such mandatory conversion of the Preferred
Stock, the holders of Preferred Stock shall surrender the certificates
representing each share of such Preferred Stock at the office of the
Company or any transfer agent for the Preferred Stock. Thereupon, there
shall be issued and delivered to each such holder of Senior Preferred
Stock promptly at such office and in its name as shown on such
surrendered certificate or certificates, (i) a certificate or
certificates for the number of shares of Class A Common Stock into
which one-half of the number of shares of Senior Preferred Stock
surrendered by such holder were convertible on the date on which such
automatic conversion occurred, and (ii) a certificate or certificates
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for one-half of the number of shares of Senior Preferred Stock
surrendered by such holder. Thereupon, there shall be issued and
delivered to each such holder of Junior Preferred Stock promptly at
such office and in its name as shown on such surrendered certificate or
certificates a certificate or certificates for the number of shares of
Class A Common Stock into which the shares of Junior Preferred Stock
surrendered were convertible on the date on which such automatic
conversion occurred.
The Certificate of Designation for each of the Senior Preferred Stock
and the Junior Preferred Stock required the payment to the holders of a
cash dividend on the Senior Preferred Stock and an in-kind dividend on
the Junior Preferred Stock, respectively, by the Company on June 15,
2002 and on September 15, 2002. The Company did not make the required
dividend payments on either date. Therefore, the liquidation preference
of the Senior Preferred Stock was increased to approximately $1.04 per
share and the liquidation preference of the Junior Preferred Stock was
increased to approximately $1.05 per share. As a result, on September
16, 2002, each two shares of Senior Preferred Stock was converted into
one share of New Senior Preferred and into approximately 0.3596 shares
of Class A Common Stock and each share of Junior Preferred Stock was
converted into approximately 0.1227 shares of Class A Common Stock. No
fractional shares will be issued in the conversion. The Board of
Directors of the Company has determined that the fair market value of
each share of the Preferred Stock and Common Stock for purposes of the
conversion is less than $0.01 per share and, therefore, no cash will be
paid to holders of Preferred Stock in lieu of fractional shares.
In the aggregate 164,333,875 shares of Senior Preferred Stock
representing one-half of all of the outstanding Senior Preferred Stock
were converted into 59,101,243 shares of Class A Common Stock and
25,240,513 shares of Junior Preferred Stock representing all of the
outstanding Junior Preferred Stock were converted into 3,097,338 shares
of Class A Common Stock. Since the Company did not pay the required
dividend payments, holders of the Senior Preferred Stock will have the
right, voting separately as a class, to elect all five directors to the
Company's Board of Directors.
Events of Default
In addition, as a result of its current cash position, the Company has
not paid the $15 million interest payment due September 15, 2002 on its
15% Senior Secured Notes due 2005 ("15% Notes") and has entered the
30-day cure period described under the terms of the indenture governing
the 15% Notes. The Company does not intend to make the $15 million
interest payment within such cure period. If the Company does not make
the $15 million interest payment within such cure period, (i) the
Company will be in default under the terms of the Oil and Gas Facility,
the Accounts Receivable Facility and other long-term debt of the
Company which could result in acceleration of the maturity of the
obligations thereunder and (ii) the Company will be in default under
the indenture allowing the holders of the 15% Notes to make the
outstanding debt on the 15% Notes immediately due and payable.
Recapitalization
The Company has entered into discussions with holders owning
approximately 90% of the outstanding principal amount of the 15% Notes
and the outstanding shares of Preferred Stock and with the lenders
under the Oil and Gas Facility and the Accounts Receivable Facility
with respect to a proposed consensual recapitalization. The Company has
engaged Jefferies & Company, Inc. as a financial advisor to assist in
exploring strategic alternatives in connection with such consensual
recapitalization. The Company believes that any such recapitalization
may significantly reduce overall debt and the Company's interest and
dividend obligations. As with any recapitalization, no assurance can be
given that the Company will be successful in reaching an agreement with
any of its investors or lenders or in reaching agreement with the other
parties to the recapitalization. In the event that negotiations are not
successful, the Company will consider other available alternatives.
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ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a)Financial statements of businesses acquired:
Not applicable.
(b)Pro forma financial information:
Not applicable.
(c)Exhibits:
Not applicable.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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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.
TRANSTEXAS GAS CORPORATION
By: /s/ ED DONAHUE
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Name: Ed Donahue
Title: Vice President
Dated: September 16, 2002
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