The bankruptcy court confirmed Teton's reorganization plan on January 20, 2010, and it took effect January 22, 2010, completing the Caerus sale that won the December 15 auction. Caerus paid $20,050,000 cash (including a $750,000 deposit) plus rights to 50% of net profits from the WashCo assets (via Teton DJCO) and the Big Horn assets, and acquired 100% of the reorganized company, now Teton Energy LLC. All equity interests, including the roughly 28.4 million common shares outstanding, were cancelled with nothing paid to holders. The 10.75% debentures were cancelled and discharged in exchange for a share of plan distributions, and JPMorgan's prepetition lenders were to receive at least $18,150,000 (subject to adjustment). Teton asked FINRA to stop trading in its stock, has been removed from OTC quotation, and says it will file a Form 15 to deregister its stock and end SEC reporting. This resolves the open questions about confirmation and shareholder treatment: shareholders get nothing.
At the December 15, 2009 bankruptcy auction, Caerus Oil and Gas LLC won, displacing Rise Energy Partners II as the sponsor. Caerus is to acquire 100% of the reorganized Teton for $20,050,000 cash (subject to working capital adjustments) plus a right to 50% of profits (net of Caerus' expenses) from certain assets; the filing says terms are expected to be substantially the same as the Rise agreement, under which all existing equity interests would have been cancelled. Rise is owed a $750,000 break-up fee plus up to $200,000 of expenses, proceeds go out under the Plan, and the confirmation hearing is set for January 8, 2010. The text provided does not state a payment to existing shareholders; the equity cancellation under Caerus is an inference from the 'substantially the same terms' statement.
Effective December 14, 2009, with Bankruptcy Court approval, Teton signed a Fourth Amendment with JPMorgan and its lenders providing up to $750,000 of debtor-in-possession financing, the working-capital line contemplated in the Rise agreement. Teton paid a $15,000 fee, agreed not to take on debt senior to or equal to the lenders', and agreed not to pay court-approved professionals until the court authorizes it. Interest on pre-bankruptcy loans becomes due from the earliest of the Rise deal or sponsorship agreement ending, a sale of all or a material part of the assets, or January 31, 2010.
NASDAQ told Teton on November 9, 2009 that its stock will be delisted, with trading suspended from November 18, 2009, citing the bankruptcy filing, concerns about the residual equity interest of existing shareholders, and doubts about its ability to keep meeting listing rules. Teton does not intend to appeal, and says the shares will not be immediately eligible for the OTC Bulletin Board or Pink Sheets unless a market maker applies and is cleared. This supersedes the earlier March 15, 2010 bid-price compliance deadline.
Teton and its subsidiaries filed for Chapter 11 bankruptcy on November 8, 2009 (Delaware), ending the months of warnings about a possible filing. Under a Plan Sponsorship Agreement with Rise Energy Partners II, all existing Teton equity interests are to be cancelled and Rise would own 100% of the reorganized company for $11.7 million cash plus a $7.0 million loan, funding repayment of the JPMorgan debt and a distribution to debenture holders and certain unsecured creditors. Rise's offer is open to higher bids (due December 14, auction December 15), with a break-up fee up to $750,000 plus expenses up to $200,000; JPMorgan and the debenture holders have agreed to support the plan, and a $750,000 DIP loan is to be arranged. The text provided does not describe any payment to existing shareholders.
Effective October 16, 2009 JPMorgan extended its pause on enforcement a further three weeks to November 6, 2009, and agreed that Teton's September 30 quarter financial statements are due by November 30. The $8,484,296 deficiency is still unresolved; the filing does not mention the debenture forbearance or any lasting fix.
Teton and JPMorgan extended the pause on enforcement again, from September 30 to October 16, 2009, and the debenture holders' interest-payment pause was also extended to October 16. The $8,484,296 deficiency remains uncured, and Teton again says it may have to seek bankruptcy protection if no lasting solution is reached.
JPMorgan extended its pause on enforcement from September 15 to September 30, 2009, and the debenture holders' pause on the interest payment was likewise extended to September 30; the deficiency is still $8,484,296 and unresolved. Separately, NASDAQ notified Teton on September 16 that its stock closed below $1.00 for 30 straight business days, giving it until March 15, 2010 to regain compliance or face delisting (with a possible further 180 days). Teton again says it may have to seek bankruptcy protection.
Effective August 26, 2009 Teton signed a third amendment with JPMorgan after missing the August 25 repayment of an $8,484,296 borrowing base deficiency. The borrowing base is cut further from $20 million to $14 million, and the lenders agree not to demand repayment or foreclose until September 15, 2009 at the latest. Default interest of 2% extra applies from August 25, and Teton must put account control agreements in place and keep pursuing strategic alternatives (more capital, merger, restructuring or sale of substantially all assets). This turns the feared August 25 default into a short, conditional reprieve rather than a fix.
4 June 2009asset acquisition disposition▼ BadMajor
On June 3, 2009 Teton sold its 12.5% non-operated Piceance Basin interest to an undisclosed buyer for about $9.9 million ($7.0 million cash after adjustments), effective June 1, 2009, replacing the Puckett deal that was terminated May 23. The bank borrowing base drops from $20 million to $15 million, leaving a shortfall of about $9.5 million on about $24.5 million borrowed after proceeds are applied. Teton says it lacks the cash or extra collateral to cure it; if not cured or waived, a default occurs August 25, 2009, which would also be a default on the debentures. It has hired Barrier Advisors and RBC Richardson Barr and says it may have to seek bankruptcy protection.
On May 21, 2009 Teton signed an amendment with JPMorgan setting the borrowing capacity at $20 million, with the next redetermination on August 1, 2009, plus revised interest margins (1.5% to 4.25%), tighter reporting and collateral rules, and a new pledge and security agreement. The filing says $25.5 million of debentures is outstanding, below the $30 million noted in September 2008; the filing does not explain the difference. Separately, Puckett terminated the $10.3 million Piceance sale on May 23, 2009 after the parties could not agree on certain Teton obligations, and Teton is evaluating alternatives for that interest. The sale that might have eased the debt problem has therefore fallen through; the filing does not say whether the borrowing base shortfall was resolved.
On May 18, 2009 JPMorgan's lenders cut Teton's borrowing base from $32.5 million to $20 million, leaving about $11.5 million more borrowed than allowed. Teton says it lacks cash to make the first repayment, due May 31, and that a default on the bank facility would also be a default on the debentures. It is exploring strategic alternatives and says it may have to seek bankruptcy protection. This is a serious warning for shareholders.
First New York Securities LLC, Thomas F. Donino, BATL Management LP, Lee Higgins reported a TETON ENERGY CORP shareholding of 903,354 shares (3.80% of votes) in a periodic institutional filing.
On April 22, 2009 Teton agreed to sell its 12.5% non-operated Piceance Basin interest to Puckett Land Company for $10.3 million before closing adjustments, with closing expected by May 22, 2009 and an effective date of January 1, 2009. This is the Piceance stake kept after the 2007 sale of half to Delta Petroleum.
On March 31, 2009 Teton sold its 25% non-operated interest in the Teton-Noble DJ Basin venture, plus its 50% operated interest in undeveloped Frenchman Creek acreage, to Noble Energy for $3.8 million, effective February 1, 2009. This disposes of the DJ Basin position held with Noble, which Teton had earlier kept at 25% of the Noble earning area.
First New York Securities LLC, Thomas F. Donino, BATL Management LP, Lee Higgins reported a TETON ENERGY CORP shareholding of 1,671,267 shares (7.60% of votes) in a periodic institutional filing.
