Tekoil eyes new DIP loan; lender to get 75% of new equity under plan

By Caroline Salls

Pittsburgh, April 24 - Tekoil & Gas Corp. requested court approval to obtain $23 million in debtor-in-possession financing from AIN Abu Dhabi Real Estate and Industrial Investments, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

Tekoil said the financing will be used to allow it to buy claims and other property owned by J. Aron and Co., Goldman, Sachs & Co. and MTGLQ Investors, LP, including the previous DIP loan provided to Tekoil's Gulf Coast subsidiary by J. Aron.

The DIP financing will also be used to pay claims under Tekoil's plan of reorganization and to fund its operating expenses through the plan effective date.

Under its proposed amended plan of reorganization, Tekoil said AIN will receive 75% of the new equity in the reorganized company in exchange for the lender's release of all claims and liens against the company.

The new DIP loan will mature on the earliest of the plan effective date, the entry of a non-appealable order denying confirmation of the amended plan or confirming a different plan, the sale of substantially all of the company's assets or the dismissal or conversion of Tekoil's bankruptcy case.

Interest will be Libor plus 1,000 basis points.

Based in the Woodlands, Texas, Tekoil is an oil and natural gas exploration, development, acquisition and production company that filed for bankruptcy on June 10, 2008. The Chapter 11 case number is 08-80270.

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