Attached files
| file | filename |
|---|---|
| 8-K - CROSS CANYON ENERGY CORP. | e606369_8k-cross.htm |
| EX-2.1 - CROSS CANYON ENERGY CORP. | e606369_ex2-1.htm |
| EX-2.2 - CROSS CANYON ENERGY CORP. | e606369_ex2-2.htm |
CROSS
CANYON ENERGY FILES PREPACKAGED PLAN OF REORGANIZATION
UNDER
CHAPTER 11 OF THE U.S. BANKRUPTCY CODE
HOUSTON – February 2, 2010 –
Cross Canyon Energy Corp. (the “Company”) (OTC BB: CCYE) announced today that it
has filed a voluntary petition for reorganization (the “Chapter 11 Case”) under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of Texas, Houston Division. The Company will
continue to manage its properties and operate its businesses in the ordinary
course throughout the Chapter 11 process while the Company seeks confirmation of
its reorganization plan under the jurisdiction of the Bankruptcy
court.
The
Chapter 11 Case was filed pursuant to a Plan Support and Lock-Up Agreement (the
“Plan Support Agreement”), dated as of January 28, 2010, among the Company and
the holders of all of the Company’s outstanding senior secured debt (the
“Prepetition Secured Lenders”), in the aggregate amount of approximately $35.2
million (principal and accrued interest). Pursuant to the Plan
Support Agreement, the Company commenced a solicitation of the Prepetition
Secured Lenders and the holder of all of the Company’s outstanding Series C
Convertible Preferred Stock (the “Prepetition Preferred Stockholder”), as the
only impaired classes entitled to vote on the Company’s proposed prepackaged
plan of reorganization (the “Plan”). As part of the prepetition
solicitation, the Prepetition Secured Lenders and the Prepetition Preferred
Stockholder each received copies of the Plan, the related disclosure statement
(together with various exhibits thereto, the “Disclosure Statement”) and a
ballot requesting each of them to accept or reject the Plan. On
January 29, 2010, the Company received ballots from the Prepetition Secured
Lenders and the Prepetition Preferred Stockholder accepting the
Plan.
The
Company was compelled to file for Chapter 11 relief as a result of its inability
to service its outstanding debt obligations. A number of factors,
most notably the general economic turmoil that occurred in the U.S. and global
credit markets in late 2008 and early 2009, as well as steeply declining
commodity prices and the Company’s operating results, precluded the Company from
making a required interest payment of $446,361 to its Prepetition Secured
Lenders that was due on September 4, 2009. At December 31, 2009, the
Company’s current liabilities grossly exceeded its current assets by
approximately $34.5 million.
As the
Company proceeds with its financial restructuring, the Company expects, based on
current commodity prices, that its cash on hand and cash from operating
activities will be adequate to fund its projected cash needs, including the
payment of operating costs and expenses. In connection with the filing of the
Chapter 11 Case, the Company asked the Bankruptcy court to consider several
“first day” motions on an expedited basis benefiting its employees and
vendors. Importantly, the Company intends, under the Plan, to pay all
of its creditors, other than the Prepetition Secured Lenders, in full, whether
their claims arose prior to or after the filing of the Chapter 11 Case, and to
continue paying its employees’ salaries and benefits and to maintain its cash
management systems.
Upon
consummation of the Plan, the Company will cease filing periodic and other
reports with the Securities and Exchange Commission, and current holders of the
Company’s common stock will share five percent (5%) of the new common stock
issued by the reorganized Company, on a pro rata basis. Such “new”
common stock will not be listed for trading on any exchange. The Plan
also provides for the Prepetition Secured Lenders to enter into a new $10
million senior secured credit facility, and to receive securities in the
reorganized Company, consisting of new shares of senior preferred stock and new
common stock. The Prepetition Preferred Stockholder will receive new
shares of junior preferred stock.
The
Company has retained Thompson & Knight LLP as legal counsel, and Grant
Thornton LLP as financial advisor with regard to the Chapter 11
Case.
FORWARD-LOOKING
STATEMENTS: This document includes forward-looking statements. Forward-looking
statements include, but are not limited to, statements concerning estimates of
expected drilling and development wells and associated costs, statements
relating to estimates of, and increases in, production, cash flows and values,
statements relating to the continued advancement of Cross Canyon Energy Corp’s
projects and other statements which are not historical facts. When used in this
document, the words such as “could,” “plan,” “estimate,” “expect,” “intend,”
“may,” “potential,” “should,” and similar expressions are forward-looking
statements. Although Cross Canyon Energy Corp. believes that its expectations
reflected in these forward-looking statements are reasonable, such statements
involve risks and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements. Important
factors that could cause actual results to differ from these forward-looking
statements include the potential that the Company’s projects will experience
technological and mechanical problems, geological conditions in the reservoir
may not result in commercial levels of oil and gas production, changes in
product prices and other risks disclosed in Cross Canyon’s Annual report on Form
10-K filed with the U.S. Securities and Exchange Commission.
Cross
Canyon Energy Corp.
Contact
Carl A. Chase, CFO
(832)
559-6060