Creditors Take Charge Of SemGroup

Creditors for Tulsa's troubled SemGroup have stepped in and taken control of the company.  Last week, SemGroup, a large employer in Tulsa, surprised many by announcing it was close to bankruptcy.  The News On 6's Steve Berg reports Manchester Securities and Alerian Capital Management say they're acting on rights they have in their loan agreements with SemGroup.

Manchester and Alerian say they are still fully supportive of the existing management at SemGroup and are enthusiastic about the company's future.  But, financial experts say they face big hurdles.

While voicing support, the creditors for SemGroup's first step was to shake up the board of directors and appoint three of their own people.

"What the action says today is that the board failed.  The management team didn't do what they needed to do to make the company successful," said Jake Dollarhide with Longbow Asset Management.

Dollarhide says the first step for SemGroup will undoubtedly be to raise some cash.

"Just, much like Williams did.  Williams had to have a loan from Warren Buffet and Berkshire Hathaway and Lehman Brothers, August 2002.  $900 million loan to help them survive," said Jake Dollarhide with Longbow Asset Management.

But, unlike Williams Companies, SemGroup will be operating in a mortgage-crisis climate in which bankers don't have much appetite for risky loans.

"Unfortunately the financial markets, the banking sector is very weak and so they don't have some of the same options that Williams had back in 2002," said Jake Dollarhide with Longbow Asset Management.

Step two, he says, might be to sell some of its portfolio to raise money.

"They've made 50 or so acquisitions in the past four or five years.  There are definitely some candidates for helping the survival," said Jake Dollarhide with Longbow Asset Management.

While the directors have changed, the company still faces the same problems it did last week.

"All today's announcement means is the situation is as bad as everyone feared it might be," said Jake Dollarhide with Longbow Asset Management.

Dollarhide says thousands of companies go bankrupt without ever talking about it first.  The fact that SemGroup has discussed he says is not positive.

"That's not a good sign," said Jake Dollarhide with Longbow Asset Management.

SemGroup L.P. employs about 400 people in Tulsa and 2,000 companywide.

To read the news release, CLICK HERE. 

Related stories:

7/18/2008  Tough Times For Tulsa's SemGroup

7/18/2008  Cash Shortage Hurting SemGroup

7/18/2008  SemGroup's Sponsorships May Slow