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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): May 29, 1997
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)
1-12204 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) 987-860O
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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.
On May 29, 1997, the Company entered into a Stock Purchase Agreement
with First Union Bank of Connecticut, as trustee under that certain
trust agreement dated February 28, 1997 by and between First
Intercontinental Leasing, L.P. and First Union Bank of Connecticut,
pursuant to which the Company sold all of the issued and outstanding
stock of its wholly owned subsidiary, TransTexas Transmission
Corporation, a Delaware corporation ("TTC"). The negotiated purchase
price of approximately $1.1 billion was paid in cash at closing.
TTC's assets consisted primarily of certain oil and gas producing
properties in Webb and Zapata Counties, Texas and pipeline gathering
and transmission assets located in Duval, Jim Hogg, Jim Wells,
Nueces, Webb and Zapata Counties, Texas. The purchase price is
subject to adjustment for, among other things, the value of certain
NGLs and stored hydrocarbons, the value of gas in TTC's pipeline,
prepaid expenses relating to post-effective date operations,
post-closing expenses relating to pre-closing operations, the value
of oil and gas produced and sold between the effective date of the
Stock Purchase Agreement and the closing date, property defects, and
estimated costs associated with liabilities incurred before closing.
Purchase price adjustments made at closing of the Lobo Sale are
expected to be subject to a review, reconciliation and resolution
process, which is expected to be completed within 105 days following
the closing and which could increase the total consideration received
by the Company.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
In connection with the sale of TTC described in Item 2. above, the
Company solicited and obtained from the holders of its outstanding
11 1/2% Senior Secured Notes consents to certain waivers under and
amendments to the Indenture governing such notes. The Company also
solicited and obtained from the holders of its outstanding 13 1/4%
Senior Subordinated Notes consents to certain waivers under the
Indenture governing such notes.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The following financial statements, pro forma financial information
and exhibits are filed as a part of this report:
(a) Financial Statements of Businesses Acquired:
Not applicable.
(b) Pro forma financial information:
(1) Pro Forma Condensed Consolidated Balance Sheet dated January
31, 1997 (unaudited).
(2) Pro Forma Condensed Consolidated Statement of Operations for
the Year Ended January 31, 1997 (unaudited).
(c) Exhibits:
4.1 - First Supplemental Indenture dated May 29, 1997 by and
among the Company, TransTexas Transmission Corporation
and Firstar Bank of Minnesota, N.A.
10.1 - Stock Purchase Agreement dated as of May 29, 1997 by and
between the Company and First Union Bank of Connecticut,
as trustee.
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ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S.
Not applicable.
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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma condensed consolidated financial
information of TransTexas Gas Corporation (the "Company") as of and for the
year ended January 31, 1997, illustrates the effect, as described in Item 2 of
this Report on Form 8-K, of the sale of the Company's wholly owned subsidiary,
TransTexas Transmission Corporation ("Lobo Sale"). The unaudited pro forma
condensed consolidated balance sheet has been prepared assuming that the Lobo
Sale was consummated on January 31, 1997. The unaudited pro forma condensed
consolidated statement of operations has been prepared assuming that the Lobo
Sale was consummated on February 1, 1996.
The unaudited pro forma adjustments and the resulting unaudited pro
forma condensed consolidated financial information are based on the assumptions
noted in the footnotes thereto. Accordingly, the unaudited pro forma
adjustments and resulting unaudited pro forma condensed consolidated financial
information may change. The unaudited pro forma condensed consolidated
financial information does not purport to represent what the Company's
financial position or results of operations would have been had the Lobo Sale
actually occurred on the dates indicated or the financial position or results
of operations for any future date or period.
The unaudited pro forma condensed consolidated financial information
and notes thereto should be read in conjunction with the Company's historical
consolidated financial statements and the notes thereto as filed on Form 10-K.
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TRANSTEXAS GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 31,1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Adjustments Pro Forma
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ASSETS
Current assets:
Cash and cash equivalents ....................... $ 23,561 $ 1,073,420 (a) $ 980,586
(116,395)(b)
Cash restricted for interest .................... 46,000 46,000
Receivable from affiliates ...................... 3,248 3,248
Accounts receivable ............................. 78,660 -- 78,660
Inventories ..................................... 12,481 -- 12,481
Other current assets ............................ 24,984 -- 24,984
----------- ----------- -----------
Total current assets ................... 188,934 957,025 1,145,959
Net property and equipment ............................ 846,393 (446,810)(a) 399,583
Other assets .......................................... 17,825 -- 17,825
Deferred tax asset .................................... -- 14,380 (c) 14,380
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$ 1,053,152 $ 524,595 $ 1,577,747
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt ............ $ 5,787 $ -- $ 5,787
Accounts payable ................................ 28,150 -- 28,150
Accrued liabilities ............................. 83,411 (4,100)(b) 79,311
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Total current liabilities .............. 117,348 (4,100) 113,248
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Long-term debt, less current maturities ............... 8,775 (2,000)(b) 6,775
Production payments ................................... 11,931 (11,931)(b) --
Senior secured notes .................................. 800,000 -- 800,000
Subordinated notes .................................... 101,092 -- 101,092
Revolving credit agreement ............................ 26,268 -- 26,268
Deferred revenue ...................................... 54,554 (54,554)(b) --
Deferred income taxes ................................. 31,367 (45,747)(c) --
14,380 (c)
Payable to affiliates ................................. 19,621 262,200 (c) 126,821
(155,000)(d)
Other liabilities ..................................... 32,991 -- 32,991
Stockholders' equity (deficit):
Common stock .................................... 740 -- 740
Paid-in capital (deficit) ....................... (123,524) 155,000 (d) 31,476
Retained earnings ............................... 31,267 366,347 (e) 397,614
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(91,517) 521,347 429,830
Advances to affiliates .......................... (59,278) -- (59,278)
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Total stockholders' equity (deficit) ... (150,795) 521,347 370,552
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$ 1,053,152 $ 524,595 $ 1,577,747
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TRANSTEXAS GAS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(dollars in thousands)
(a) To record the Lobo Sale for a purchase price of $1,073.4 million:
Cash proceeds.......................... $ 1,073,420
Carrying value of stock sold........... (446,810)
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Pretax gain on Lobo Sale.......... $ 626,610
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In addition, purchase price adjustments were made for, among other
things, the value of certain NGLs and stored hydrocarbons, the value of
gas in TTC's pipeline, prepaid expenses relating to post-effective date
operations, post-closing expenses related to pre-closing operations, the
value of oil and gas produced and sold between the effective date of the
Stock Purchase Agreement and the closing date, property defects, and
estimated costs associated with liabilities incurred before closing.
Purchase price adjustments made at the closing of the Lobo Sale are
expected to be subject to a review, reconciliation and resolution process,
which is expected to be completed within 105 days following the closing
and which could increase the total consideration received by the Company.
(b) To record the application of a portion of the proceeds from (a) above:
Lobo Sale production payment......................... $ 43,810
Repayment of volumetric production payments
(deferred revenues), dollar-denominated
production payments and other debt
attributable to the Lobo Sale ..................... 72,585
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$116,395
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(c) To record the income tax effect of the Lobo Sale and to reclassify $14.4
million of deferred taxes to deferred tax assets.
Payable to TransAmerican pursuant to the Tax
Allocation Agreement................................. $ 262,200
Deferred income taxes.................................. (45,747)
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$ 216,453
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(d) To record the assumption of $155 million of estimated net tax liability by
TransAmerican in accordance with the Tax Allocation Agreement.
(e) To record the effects on retained earnings as a result of (a) through (d).
Pretax gain on Lobo Sale................... $ 626,610
Lobo Sale production repayment............. (43,810)
Federal income taxes....................... (216,453)
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Total effect on retained earnings.... $ 366,347
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TRANSTEXAS GAS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JANUARY 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
Historical Adjustments Pro Forma
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Revenues:
Gas, condensate and natural gas liquids ...... $ 363,459 $(223,077)(a) $ 140,382
Transportation ............................... 34,423 (34,423)(a) --
Gain on the sale of assets ................... 7,856 -- 7,856
Other ........................................ 609 -- 609
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Total revenues ....................... 406,347 (257,500) 148,847
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Costs and expenses:
Operating .................................... 114,453 (101,939)(a) 12,514
Depreciation, depletion and amortization ..... 132,453 (78,932)(a) 53,521
General and administrative ................... 45,596 -- 45,596
Taxes other than income taxes ................ 22,566 (12,818)(a) 9,748
Litigation settlement ........................ (96,000) -- (96,000)
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Total costs and expenses ............. 219,068 (193,689) 25,379
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Operating income ..................... 187,279 (63,811) 123,468
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Other income (expenses):
Interest income .............................. 5,544 -- 5,544
Interest expense, net ........................ (97,007) (4,250)(b) (101,257)
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Total other income (expense) ......... (91,463) (4,250) (95,713)
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Income before income taxes ................... 95,816 (68,061) 27,755
Income taxes ....................................... 12,491 (2,777)(c) 9,714
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Net income ........................... $ 83,325 $ (65,284) $ 18,041
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TRANSTEXAS GAS CORPORATION
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands)
(a) To adjust revenues, operating expenses, depreciation, depletion and
amortization and taxes other than income taxes as a result of the Lobo
Sale.
(b) To adjust interest expense as follows:
Interest on estimated federal income tax liability included
in payable to affiliate at an assumed rate of 9.0%........ $ 6,750
Historical interest expense on other debt................... (2,500)
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Total adjustment to interest expense.............. $ 4,250
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(c) To adjust income tax expense for the effects of adjustments (a) and (b)
above based on the federal statutory rate of 35%.
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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: June 13, 1997
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EXHIBITS
Exhibit
No. Description Page
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4.1 First Supplemental Indenture dated May 29, 1997 by and among the
Company, TransTexas Transmission Corporation and Firstar Bank of
Minnesota, N.A.
10.1 Stock Purchase Agreement dated as of May 29, 1997 by and between
the Company and First Union Bank of Connecticut, as trustee.
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