Cano wins court OK of $47.5 million stalking horse agreement

By Jim Witters

Wilmington, Del., April 19 - Cano Petroleum, Inc. won approval for a $47.5 million stalking horse bid agreement with NBI Services, Inc. and procedures for submission of competing bids, according to documents filed Thursday with the U.S. Bankruptcy Court for the Northern District of Texas.

Under the NBI stock purchase agreement, all existing capital stock, including Cano's common stock and series D convertible preferred stock, will be canceled and NBI Services will receive all of the outstanding capital stock of reorganized Cano in exchange for $47.5 million.

The proceeds will be distributed to creditors under Cano's plan.

If necessary, an auction will be conducted on June 12. A sale hearing is scheduled for July 2.

Bid procedures

Under the procedures approved by the court, competing bids must be for at least $49 million and must include a $2 million deposit.

Bids in the first three rounds at the auction must be made in minimum increments of $250,000. For the fourth and subsequent rounds, the bid increment will be $100,000.

If NBI Services is not the high bidder, Cano will pay it a $1.475 million breakup fee.

"The debtors have demonstrated a compelling and sound business justification for authorization to enter into the stalking horse agreement with NBI and to perform all of their respective obligations thereunder, including the break-up fee payment to the stalking horse in the amount of $1.475 million," the courts ruling states.

Cano, a Fort Worth-based oil and natural gas company, filed for bankruptcy on March 8. Its Chapter 11 case number is 12-31549.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.