Consolidated Oil Says Offer to Swap Debt Fell Short of Goal
DENVER -- Consolidated Oil & Gas Inc. said the response to its exchange offer for its debentures outstanding fell short of the company's goal, and that as a result it could face serious financial difficulties in the spring.</br></br>The oil and gas exploration company said about $15.7 million, or 37%, of its debentures outstanding had been tendered in exchange for a new series of 6% senior secured notes, due 1994, and series 1986 common stock purchase warrants. The offer, which expired Sept. 12, originally was contingent on 65% of the debentures outstanding being tendered. The debentures outstanding are in six series with interest rates from 8% to 12%.</br></br>The company said the tendered debentures would result in savings of about $800,000 a year in interest payments. It had said it hoped to save $1.6 million from the exchange offer. Consolidated said that if oil and gas prices don't improve significantly by the time "substantial" interest payments come due in late May and early June, it may have to consider seeking protection from creditors under Chapter 11 of the federal Bankruptcy Code.</br></br>A Consolidated official said the exchange offer "gets us through the problems we have right now," and allows it to make interest payments that had been deferred on two of its debenture series. It said it expects to make the payments in two or three weeks.</br></br>Harry A. Trueblood, Consolidated's president, said the company can pay interest on its debentures through this year "but 1987 fiscal-year requirements are an entirely different matter."