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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): December 15, 1998
TRANSAMERICAN REFINING CORPORATION
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(Exact name of registrant as specified in its charter)
TEXAS
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(State or other jurisdiction of incorporation)
33-85930 76-0229632
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(Commission File Number) (I.R.S. Employer
Identification No.)
1300 North Sam Houston Parkway East, Suite 320
Houston, Texas 77032
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(Address of principal executive offices, including zip code)
(281) 986-8811
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(Registrant's telephone number, including area code)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Prior to December 15, 1998, TransAmerican Refining
Corporation, a Texas corporation ("TARC" or the "Company")
owned a refinery located in the Gulf Coast region along the
Mississippi River approximately 20 miles from New Orleans,
Louisiana. As a result of the Transaction (described below),
the Company no longer owns the refinery, but maintains a
non-controlling equity interest in TCR Holding Corporation, a
Delaware corporation ("TCR Holding"). TCR Holding owns a
controlling interest in TransContinental Refining
Corporation, a Delaware corporation ("TransContinental"), the
corporation that owns the refinery. TransContinental intends
to operate existing units and to complete construction of
additional units.
The following Transaction was consummated on December 15,
1998 in order to provide additional capital for construction
of the refinery. The Transaction included the following:
(i) The issuance by TARC of $150 million aggregate
principal amount of its 15% Senior Secured Notes due
2003 (the "Notes") to certain purchasers (the "New
Lenders");
(ii) the transfer by TARC to TCR Holding of substantially
all of its assets (the "Refinery Assets") in exchange
for (x) all of the capital stock of TCR Holding, which
includes the following:
(a) Class A Participating Preferred Stock,
Series A and Class A Participating Preferred
Stock, Series B (the "TCR Voting Preferred
Stock"),
(b) Class B junior non-voting participating
preferred stock ("Class B Preferred Stock"),
Class C junior non-voting participating
preferred stock ("Class C Preferred Stock")
and Class D junior non-voting participating
preferred stock ("Class D Preferred Stock"
and, together with the Class B Preferred
Stock and the Class C Preferred Stock, the
"TCR Repurchasable Preferred Stock"),
(c) Class E junior non-voting participating
preferred stock (the "TCR Non-Repurchasable
Preferred Stock" and, together with the TCR
Repurchasable Preferred Stock, the "TCR
Non-Voting Preferred Stock"),
(d) Class A Voting Common Stock, Series A (the
"TCR Voting Common Stock"), and
(e) Class B Non-Voting Common Stock (the "TCR
Non-Voting Common Stock" and, together with
the TCR Voting Common Stock, the "TCR Common
Stock"),
and (y) the assumption of debt and other specified
obligations of TARC (including the Notes, approximately
$43.5 million in post-Transaction intercompany debt to
TransAmerican Energy Corporation ("TEC") (the "TARC
Working Capital Loan") and approximately $36 million in
debt secured by certain tank storage and terminaling
facilities (the "Tank Storage Debt")) other than (a)
the debt issued pursuant to the Loan Agreement dated as
of June 13, 1997, as amended, between TEC and TARC (the
"TARC Intercompany Loan"), (b) TARC's Series A 16%
Senior Subordinated Notes due 2003 (the "Series A
Notes"), (c) TARC's Series C 16% Senior Subordinated
Notes due 2003 (the "Series C Notes" and, together with
the Series A Notes, the "TARC Subordinated Notes") and
(d) certain accounts payable and other liabilities;
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(iii) the transfer by TCR Holding to TransContinental of the
Refinery Assets as a capital contribution and the
assumption by TransContinental of the debt and other
obligations of TARC assumed by TCR Holding on the date
of such transfer (including the Notes and the Tank
Storage Debt) other than the TARC Working Capital Loan;
(iv) the acquisition from TARC by the New Lenders, certain
holders (the "TEC Holders") of TEC's 11 1/2% Senior
Secured Notes due 2002 and 13% Senior Secured Discount
Notes due 2003 (the "TEC Notes") and certain of the
holders of the TARC Subordinated Notes (together with
the TEC Holders, the "Purchasers") of TCR Repurchasable
Preferred Stock representing 30.0% of the Residual
Equity of TCR Holding and TCR Non-Repurchasable
Preferred Stock representing 29.6% of the Residual
Equity of TCR Holding. Affiliates of Trust Company of
the West (the "TCW Affiliates") received the TCR
Non-Voting Common Stock representing 5% of the Residual
Equity of TCR Holding. Certain of the Purchasers
acquired the TCR Voting Common Stock representing 0.4%
of the Residual Equity and 59% of the voting power of
TCR Holding. TARC retained the TCR Voting Preferred
Stock representing 30.6% of the Residual Equity and 41%
of the voting power of TCR Holding. The remaining 4.4%
of the Residual Equity of TCR Holding, in the form of
TCR Non-Repurchasable Preferred Stock, initially will
be retained by TARC and is expected to be offered to
holders of certain of TARC's outstanding common stock
purchase warrants (the "TARC Warrants") in exchange for
such TARC Warrants. "Residual Equity" means the
interest of the indicated stockholders in the assets of
TCR Holding upon a liquidation or winding up of TCR
Holding, which interest is subject to the prior payment
of the liquidation preference of the TCR Voting
Preferred Stock and the TCR Non-Voting Preferred Stock;
(v) the grant by TARC of a security interest in the TCR
Voting Preferred Stock to secure the TARC Intercompany
Loan and the collateral assignment of such security
interest by TEC to secure the TEC Notes, the grant by
TCR Holding to TEC of a security interest in the common
stock of TransContinental to secure the TARC Working
Capital Loan, the collateral assignment of such
security interest to secure the TEC Notes, and the
provision in the TCR Voting Preferred Stock of the
right of holders of such stock in certain circumstances
to require TCR Holding to sell common stock of
TransContinental held by TCR Holding, or any assets
received on exchange or sale therefor, and apply the
proceeds to reduce the liquidation preference and
certain accrued but unpaid dividend amounts on the TCR
Voting Preferred Stock; and
(vi) the purchase from TransContinental by the New Lenders
of TransContinental's 6% Participating Preferred Stock
("TransContinental Preferred Stock").
As part of the Transaction, (i) the holders of TCR Holding
capital stock entered into a stockholders agreement providing
for the election of two nominees of TARC, two nominees of the
TCW Affiliates and one nominee of an affiliate of one of the
Purchasers as directors of TCR Holding and the election of
two nominees of TARC and two nominees of the TCW Affiliates
as directors of TransContinental, (ii) the stockholders of
TransContinental entered into an agreement providing for the
election of one nominee of the holders of the
TransContinental Preferred Stock (which initially shall be a
nominee of an affiliate of one of the Purchasers) and four
nominees of TCR Holding as directors of TransContinental,
(iii) the holders of the TransContinental Preferred Stock
would have the right to elect a majority of the directors of
TransContinental if either of such stockholders agreements
has been breached, is not being complied with or has been
adjudicated to be unenforceable, (iv) TransAmerican Natural
Gas Corporation ("TransAmerican"), as the sole stockholder of
TEC, and TEC, as the sole stockholder of TARC, would agree to
elect a representative of the TCW Affiliates as a director of
TEC and of TARC, respectively, (v) TCR Holding and
TransContinental would enter into registration rights
agreements or otherwise provide for certain registration
rights relating to their
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respective securities being issued to the New Lenders in the
Transaction, (vi) TCR Holding and TransContinental,
respectively, would enter into services agreements with
TransTexas Gas Corporation ("TransTexas") providing for
certain services to be rendered to TCR Holding and
TransContinental by TransTexas and (vii) TEC or one of its
affiliates will be granted certain rights to repurchase
shares of the TCR Repurchasable Preferred Stock (which would
become voting stock upon exercise of such rights), which
could result in TEC and its affiliates owning a majority of
the capital stock of TCR Holding and being entitled to elect
a majority of the directors of TCR Holding and, indirectly,
TransContinental. Such repurchase rights would only be
exercisable after the Notes, the TEC Notes and the TARC
Subordinated Notes have been fully repaid and certain
financial performance tests have been met. In addition, TARC
would have the right to repurchase the shares of TCR
Non-Voting Common Stock issued to the TCW Affiliates pursuant
to the Transaction for $5 million at any time during the
two-year period commencing with the Issue Date (as defined);
provided, however, that if the TCR Voting Preferred Stock
remains outstanding after July 31, 1999, TARC will have the
option to repurchase such stock at a nominal cost.
All of the above transactions, as well as other agreements
and transactions necessary to facilitate or related to the
foregoing, are referred to as the "Transaction."
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
Not applicable.
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:
Pro forma financial information was filed as part of
the Company's Quarterly Report on Form 10-Q for the
quarter ended October 31, 1998, and is incorporated
herein by reference.
(c) Exhibits:
2.1 -- Securities Purchase Agreement dated
December 15, 1998 by and among TARC, TCR
Holding, TransContinental and the purchasers
named therein.
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2.2 -- Asset Transfer Agreement dated December 15,
1998 between TARC and TCR Holding.
2.3 -- Asset Transfer Agreement dated December 15,
1998 between TCR Holding and
TransContinental.
99.1 -- Pro Forma Condensed Financial Information
of TARC (filed as part of TARC's Quarterly
Report on Form 10-Q for the quarter ended
October 31, 1998, and incorporated herein
by reference).
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.
TRANSAMERICAN REFINING CORPORATION
By: /s/ ED DONAHUE
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Name: Ed Donahue
Title: Vice President
Dated: December 30, 1998
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EXHIBIT INDEX
Exhibit
No. Description
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2.1 -- Securities Purchase Agreement dated December 15, 1998 by and among
TARC, TCR Holding, TransContinental and the purchasers named therein.
2.2 -- Asset Transfer Agreement dated December 15, 1998 between TARC and TCR
Holding.
2.3 -- Asset Transfer Agreement dated December 15, 1998 between TCR Holding
and TransContinental.
99.1 -- Pro Forma Condensed Financial Information of TARC (filed as part of
TARC's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1998, and incorporated herein by reference).