SemGroup Reaches Last Milestone To Emerge From Bankruptcy

By Dan Bewley and Scott Thompson

TULSA, OK -- SemGroup announces it has reached its last major milestone on the road out of bankruptcy.

More than a year after filing for bankruptcy, Tulsa based SemGroup has a clearer picture of the future. The energy company's re-organization plan was approved Monday by a federal judge in Delaware.

SemGroup filed for bankruptcy protection on July 22nd, 2008. The energy company owed more than $2 billion to creditors across the world.

An investigation by former FBI director Louis Freeh put most of the blame for the company's downfall on Tom Kivisto.

According to the report, Kivisto was operating his own trading company using SemGroup money and that management did not know or understand Kivisto's actions were putting the company at risk. Kivisto has denied the accusations.

"Anybody can break a company, but it takes a little extra talent to fix a company," said John Catsimatidis, Red Apple Group, December 2008.

Last December, New York billionaire John Catsimatidis entered the scene with a plan to take over the company's board. But it was met with a lawsuit by SemGroup and seven months later Catsimatidis was out of the picture.

The re-organization plan approved Monday puts 95-percent of the company's ownership in the hands of a group of secured lenders led by Bank of America. It also allows SemGroup to borrow $500 million after exiting bankruptcy and will pay oil producers close to $340 million.

Specifically, it calls for independent oil producers to get paid in full for oil sold to SemCrude in the 20 days before the company filed for bankruptcy.

Attorney Steven Bugg represented several oil producers. He says it's good the case is settled since his clients have been waiting 15 months to be paid.

"Last June and July prices for oil and gas were at their peak. We had these producers in Oklahoma who sold their production to SemCrude and then didn't get paid for that production. Obviously, prices have declined and it's been tough in the oil and gas industry and, all the while, these producers have had to wait for their payment," said Steve Bugg, attorney.

The court also created a trust to help the company pay for pending lawsuits. The re-organization plan will not be official until next month.

7/20/2009  Related Story: Catsimatidis Out At SemGroup