Boots & Coots staring at bankruptcy despite Iraq
Tuesday April 8, 6:13 pm ET
By C. Bryson Hull
HOUSTON, April 8 (Reuters) - Boots & Coots International Well Control Inc. (AMEX:WEL - News) acknowledged on Tuesday that it still faces bankruptcy risk despite the cash infusion it expects for its work battling oil well fires in Iraq.
The Houston-based oil field firefighting company on March 28 rejected a proposal from one of its lenders, Checkpoint Business Inc., to declare Chapter 11 bankruptcy and cancel shareholders' equity.
But Chairman Kirk Krist said the company's substantial debt -- $21 million at the end of 2002 -- means bankruptcy is still a possibility despites its efforts to the contrary.
"The board of directors and senior executives continue to work toward an out-of-court restructuring of the company," Krist said in a conference call in which the company took no questions except for written submissions.
Checkpoint, a mysterious group of investors chartered in Panama that Boots & Coots has refused to identify, lent the company up to $1 million in December and soon thereafter declared the loan to be in default. Boots & Coots on March 28 said it paid off roughly $700,000 in principal and interest it owed Checkpoint.
Checkpoint's bankruptcy proposal led some investors to question whether it was a grab for control of Boots & Coots before it secured the substantial business fighting the Iraq oil well fires.
Boots & Coots and competitors Wild Well Control, a subsidiary of Superior Energy Service Inc. (NYSE:SPN - News), are the two firefighting companies subcontracted by Halliburton Inc.'s (NYSE:HAL - News) engineering arm KBR to battle oil well blazes in southern Iraq.
Both companies are now in Iraq's Rumaila oil fields fighting oil fires set by fleeing Iraqi soldiers. Boots & Coots Chief Executive Jerry Winchester did not elaborate on the company's progress or operations in Iraq.
Halliburton, once run by U.S. Vice President Dick Cheney, on March 24 was awarded a U.S. Defense Department (News - Websites) contract to rebuild Iraq's oil production infrastructure.
CHECKPOINT MYSTERY
The identity of Checkpoint's principals remains a mystery, although Boots & Coots on Tuesday denied that any of Checkpoint's members had ever worked for the company.
Checkpoint still has an option to buy Boots & Coots' Venezuelan subsidiary, but has not signaled its intention to do so, Krist said.
Kevin Johnson, the vice president of finance for Boots & Coots, said the company had assets of $4 million and total liabilities of $21 million at the end of 2002. That equalled a working capital deficit of $17 million, he said.
"This resulted in a deficit on shareholders' equity of $14 million," Johnson said.
Last week, Boots & Coots reported a net loss of $9.2 million for 2002, compared with net income of $1.3 million in 2001.
When dividends for preferred shareholders were figured in, the loss to common shareholders for 2002 was $12.3 million, or 28 cents per share, compared with a net loss of $1.6 million, or 4 cents a share, in 2001.
Shares of Boots & Coots, which has been threatened with delisting from the American Stock Exchange, closed on Tuesday at 61 cents, down 6 cents or nearly 9 percent. |
