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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): NOVEMBER 25, 1997
CODA ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-10955 75-1842480
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NO.)
5735 PINELAND DR., SUITE 300
DALLAS, TEXAS 75231
(ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES
AND ZIP CODE)
(214) 692-1800
(REGISTRANT'S TELEPHONE NUMBER,
INCLUDING AREA CODE)
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ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT
On November 26, 1997, Belco Oil & Gas Corp., a Nevada corporation
("Belco"), completed the merger (the "Merger") of its subsidiary Belco
Acquisition Sub, Inc., a Delaware corporation ("Belco Sub"), with and into Coda
Energy, Inc., a Delaware corporation ("Coda"), and Belco is now the beneficial
owner of 100% of the voting securities of Coda.
The Merger was effected pursuant to the terms of an Agreement and Plan
of Merger, dated as of October 31, 1997, by and among Belco, Belco Sub and Coda
(the "Merger Agreement"). In connection with the Merger, Belco paid an
aggregate of approximately $191 million in cash ($149 million plus a $42
million adjustment for proceeds from the Taurus disposition described below)
and issued warrants to purchase 1,666,667 shares of common stock, par value
$0.01 per share, of Belco (the "Belco Common Stock") to the holders of the
outstanding common stock, preferred stock and options to purchase common stock
of Coda. The warrants are exercisable for a period of two years commencing on
November 26, 1998 at an exercise price of $27.50 per share. The warrant
exercise price and the number of shares of Belco Common Stock that may be
issued pursuant to the exercise of the warrants will be adjusted to prevent
dilution in the event of stock splits, stock dividends and certain other events
affecting the capital structure of Belco.
The holders of Coda's common stock, preferred stock and options to
acquire Coda common stock who received consideration from Belco pursuant to the
Merger consisted of Joint Energy Development Investments Limited Partnership, a
Delaware limited partnership ("JEDI"), and members of Coda's management. The
consideration paid and issued by Belco in connection with the Merger was
determined by arms' length negotiations among Belco, Coda and certain
stockholders of Coda, including JEDI (the holder of 95% of the Coda common
stock, on a fully diluted basis, and 100% of the Coda preferred stock
outstanding immediately prior to the Merger). JEDI is a limited partnership
whose general partner is an affiliate of Enron Capital & Trade Resources Corp.,
a subsidiary of Enron Corp. ("Enron"). Mr. Robert A. Belfer, the Chairman of
the Board and Chief Executive Officer of Belco and the beneficial owner of
approximately 39% of the outstanding Belco Common Stock, is also a director
and the beneficial owner of approximately 2.36% of the common stock of Enron
(assuming full conversion into shares of common stock of Enron of Preferred
Convertible Stock of Enron held by Mr. Belfer, family members and related
trusts and including shares of common stock in which Mr. Belfer disclaims
beneficial interest).
On November 25, 1997 (prior to the Merger), Coda disposed of Taurus
Energy Corp., a Texas corporation ("Taurus Corp."), which was a subsidiary of
Coda, to unrelated third parties for $42 million in cash, which is described in
Item 2 below. Concurrently with the Merger, Belco contributed $23 million to
Coda that Coda utilized, together with the funds from the Taurus disposition,
to repay all of the debt outstanding under Coda's revolving credit facility
(approximately $65 million in principal amount), plus accrued interest thereon,
at the time of the Merger, and such credit facility was thereafter terminated.
Belco funded the cash portion of the Merger consideration and the cash
contribution to Coda through cash on hand and borrowings under Belco's $150
million revolving credit facility with a group of banks for which The Chase
Manhattan Bank acts as Administrative Agent.
As a result of the Merger, Coda will be required to make an offer to
purchase all of the $110 million in principal amount of its 10 1/2% Senior
Subordinated Notes, Series B, due 2006 (the "Coda Notes") currently outstanding
at a price equal to 101% of the principal amount of the Coda Notes plus accrued
and unpaid interest thereon. Notice of such offer is required to be made
within 30 days following the closing of the Merger and such offer is required
to remain open for a period of between 30 and 60 days.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 25, 1997 Coda completed the disposition (the
"Disposition") of Taurus Corp., which was a wholly owned subsidiary of Coda, to
Continental Natural Gas, Inc., an Oklahoma corporation ("CNG") and certain of
its affiliates. The assets of Taurus Corp. consisted primarily of two natural
gas processing facilities and approximately 700 miles of related gathering
pipelines located in West Texas.
The Disposition was effected pursuant to the terms of an Agreement and
Plan of Merger dated as of November 24, 1997, by and among Coda, Taurus
Holdings Corp., CNG, Continental/Taurus Holdings Company, L.L.C.,
Continental/Taurus Acquisition Corp. and Continental Holdings Company. CNG and
its affiliates paid Coda an aggregate of $42 million in cash for Taurus Corp.
CNG and its affiliates are unrelated parties to Coda and its
affiliates. The consideration paid by CNG and its affiliates to Coda was
determined by arm's length negotiations between Coda and CNG.
As a result of the Disposition, the guarantee of the Coda Notes by
Taurus Corp. was terminated.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not Applicable
(b) PRO FORMA FINANCIAL INFORMATION.
Coda Energy, Inc. and Subsidiaries Unaudited Pro
Forma Condensed Financial Statements.
(c) EXHIBITS.
Exhibit 2.1 -- Agreement and Plan of Merger, dated as of
October 31, 1997, by and among Belco Oil &
Gas Corp., Belco Acquisition Sub, Inc. and
Coda Energy, Inc. (excluding schedules) filed
as Exhibit 2.1 to Coda's Quarterly Report on
Form 10-Q for the quarterly period ended
September 30, 1997 (the "September 1997
10-Q") and incorporated herein by reference
Exhibit 2.2 -- Agreement of Coda Energy, Inc. to provide
schedules to Agreement and Plan of Merger
(Exhibit 2.1) filed as Exhibit 2.2 to the
September 1997 10-Q and incorporated herein
by reference
Exhibit 2.3 -- Agreement and Plan of Merger, dated as of
November 24, 1997, by and among Coda Energy,
Inc., Taurus Holdings Corp., Continental
Natural Gas, Inc., Continental/Taurus
Holdings Company, L.L.C., Continental/Taurus
Acquisition Corp., and Continental Holdings
Company (excluding schedules)
Exhibit 2.4 -- Agreement of Coda Energy, Inc. to provide
schedules to Agreement and Plan of Merger
(Exhibit 2.3)
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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.
CODA ENERGY, INC.
Date: December 10, 1997
By: /s/ ROBERT A. BELFER
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Robert A. Belfer, Chairman of the Board
and Chief Executive Officer
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CODA ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed financial statements and
related notes are presented to show the pro forma effects of the sale by Coda
Energy, Inc. ("Coda" or the "Company") of its wholly owned gas gathering and
processing subsidiary, Taurus Energy Corp. ("Taurus").
The accompanying unaudited pro forma condensed statements of
operations of Coda for the year ended December 31, 1996 and for the nine months
ended September 30, 1997, have been prepared as if the sale of Taurus had
occurred on January 1, 1996. The accompanying unaudited pro forma condensed
balance sheet of the Company as of September 30, 1997 has been prepared as if
the sale of Taurus had occurred on that date.
Pro forma data is based on assumptions and includes adjustments as
explained in the notes to the unaudited pro forma condensed financial
statements. The unaudited pro forma condensed financial statements do not
purport to represent the financial position or results of operations which
would have occurred had such transactions been consummated on the dates
indicated or the Company's financial position or results of operation for any
future date or period. These unaudited pro forma combined condensed financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 and the Company's Quarterly
Report on Form 10- Q for the quarter ended September 30, 1997.
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CODA ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands)
Coda Historical
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47-Day Period 319-Day Period
Ended Ended
February 16, December 31, Pro Forma
1996 1996 Adjustments Pro Forma
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REVENUE
Oil and gas sales $ 8,079 $ 68,690 $ 76,769
Gas gathering and processing 5,322 39,553 $(44,875)(a) 772
772 (b)
Other income 168 2,139 2,307
------- -------- -------- --------
13,569 110,382 (44,103) 79,848
------- -------- -------- --------
COSTS AND EXPENSES
Oil and gas production 3,607 28,560 32,167
Gas gathering and processing 4,567 32,825 (37,392)(a) 505
505 (b)
Depletion, depreciation and
amortization 2,583 24,031 (3,082)(a) 23,591
59 (b)
General and administrative 320 2,078 (786)(a) 1,612
Interest 1,102 14,555 (2,902)(c) 12,755
Stock option compensation 3,199 --- 3,199
Writedown of oil and gas properties --- 83,305 83,305
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15,378 185,354 (43,598) 157,134
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Loss before income taxes (1,809) (74,972) (505) (77,286)
Income tax benefit (511) (26,683) (171)(d) (27,365)
------- -------- -------- --------
Net loss $(1,298) $(48,289) $ (334) $(49,921)
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CODA ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands)
Coda Pro Forma
Historical Adjustments Pro Forma
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REVENUE
Oil and gas sales $ 54,580 $54,580
Gas gathering and processing 32,712 $(32,712)(a) 542
542 (b)
Other income 846 77 (a) 923
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88,138 (32,093) 56,045
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COSTS AND EXPENSES
Oil and gas production 25,734 25,734
Gas gathering and processing 27,956 (27,956)(a) 386
386 (b)
Depletion, depreciation and
amortization 20,202 (2,394)(a) 17,853
45 (b)
General and administrative 1,172 (587)(a) 585
Interest 12,128 (2,129)(c) 9,999
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87,192 (32,635) 54,557
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Income before income taxes 946 542 1,488
Income tax expense 625 182 (d) 807
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Net income $ 321 $ 360 $ 681
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CODA ENERGY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(In thousands)
Coda Pro Forma
Historical Adjustments Pro Forma
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ASSETS
Current assets
Cash $ 8,708 $ 44,019 (e) $ 10,727
(42,000)(g)
Accounts receivable, net 12,486 (5,113)(e) 7,373
Other current assets 1,117 (91)(e) 1,026
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Total current assets 22,311 (3,185) 19,126
Oil and gas properties, net 234,636 234,636
Gas plants and gathering systems 32,182 (31,712)(e) 470
Other property and assets, net 8,471 (395)(e) 8,076
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Total assets $297,600 $(35,292) $262,308
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 11,059 $ (3,444)(e) $ 7,615
Other current liabilities 6,390 (31)(e) 6,359
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Total current liabilities 17,449 (3,475) 13,974
Long-term debt 67,100 (42,000)(g) 25,100
10 1/2% senior subordinated notes 110,000 110,000
Deferred income taxes 37,396 (5,917)(e) 36,953
5,474 (f)
15% cumulative preferred stock 20,000 20,000
Common stockholders' equity of management, net 3,623 3,623
Other common stockholder's equity 90,000 90,000
Retained earnings (deficit) (47,968) 16,100 (e) (37,342)
(5,474)(f)
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Total liabilities and stockholders equity $297,600 $(35,292) $262,308
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CODA ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The unaudited pro forma condensed statements of operations are based on the
audited statements of Coda for the 319- day period ended December 31, 1996 and
on the unaudited statements of Coda for the 47-day period ended February 16,
1996 and the nine months ended September 30, 1997. The pro forma information
adjusts the Company's historical results of operations for the sale of Taurus
based upon the adjustments and assumptions described below.
The pro forma balance sheets are based on Coda's unaudited balance sheet as
of September 30, 1997 and upon the adjustments and assumptions described below.
PRO FORMA ADJUSTMENTS
The accompanying unaudited pro forma condensed statements of operations have
been prepared as if the sale of Taurus occurred on January 1, 1996 and reflects
the following adjustments:
(a) To eliminate the effects of Taurus' operations, net of any
intercompany allocations which would continue.
(b) To record operating activities related to assets retained by the
Company.
(c) To adjust interest expense for the savings resulting from the use of
proceeds from the sale of Taurus ($42.0 million) to reduce debt
outstanding under the Company's credit facility. The interest rate
used was the Company's historical rate.
(d) To adjust the provision for income taxes for the change in financial
taxable income resulting from adjustments (a), (b) and (c).
The accompanying unaudited pro forma balance sheet has been prepared as if
the sale of Taurus occurred on September 30, 1997 and reflects the following
adjustments:
(e) To record the sale of Taurus for $42.0 million and adjustments to the
sales price for the (i) pro forma working capital adjustment of
$135,000 payable by Coda, (ii) pro forma development capital
expenditure adjustment of $290,000 payable by the purchaser, (iii)
elimination of Taurus' negative cash position of approximately $1.9
million, and (iv) the pro forma net book value of certain immaterial
assets transferred between Coda and Taurus resulting in an increase in
the purchase price of $309,000. The sale of Taurus results in a gain
to Coda of $16.1 million.
(f) To record the deferred tax provision related to the gain on sale of
Taurus.
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(g) To record repayment of long-term debt.
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EXHIBIT INDEX
Exhibit No.
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Exhibit 2.1 -- Agreement and Plan of Merger, dated as of October 31, 1997, by and among Belco Oil &
Gas Corp., Belco Acquisition Sub, Inc. and Coda Energy, Inc. (excluding schedules)
filed as Exhibit 2.1 to Coda's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1997 (the "September 1997 10-Q") and incorporated herein by
reference
Exhibit 2.2 -- Agreement of Coda Energy, Inc. to provide schedules to Agreement and Plan of Merger
(Exhibit 2.1) filed as Exhibit 2.2 to the September 1997 10-Q and incorporated herein
by reference
Exhibit 2.3 -- Agreement and Plan of Merger, dated as of November 24, 1997, by and among Coda Energy,
Inc., Taurus Holdings Corp., Continental Natural Gas, Inc., Continental/Taurus
Holdings Company, L.L.C., Continental/Taurus Acquisition Corp., and Continental
Holdings Company (excluding schedules)
Exhibit 2.4 -- Agreement of Coda Energy, Inc. to provide schedules to Agreement and Plan of Merger
(Exhibit 2.3)