MEDIA / Koch Exploration Canada Gets Court Approval On Solv-Ex Oilsands Bid
Friday, November 21, 1997
The Financial Post
Canadian and U.S. courts have approved a bid by Koch Exploration Canada Ltd. for 78% of Solv-Ex Corp.'s oilsands property near Fort McMurray, Alta.
Solv-Ex, which has been close to bankruptcy for several months, will retain 12% of the oilsands project. Another 10% is held by Toronto-based United Tri-Star Resources Ltd.
Koch will pay US$23 million for its majority stake.
"We think this resource has the potential to be an economically viable source of heavy oil production," Koch president Steve Kromer said yesterday.
"The key will be [using] the proper technology."
The company may decide not to employ Solv-Ex's controversial extraction technology and may not even complete the US$64-million Solv-Ex plant as it now stands, Kromer said. "Everything is being evaluated."
The first priority, he said, is to work out a development plan and present it to the Alberta government. Koch needs an extension of the oilsands leases, one of which expires Dec 15.
Solv-Ex officials could not be reached for comment.
Koch Canada is one of the biggest exporters of Canadian crude oil, sending 14% of the volume shipped through the Interprovincial Pipe Line Inc. system, Kromer said.
The company is a subsidiary of Wichita, Kan.-based Koch Industries Inc., one of the largest private companies in the U.S., with an annual revenue of US$28 billion and extensive interests in oil and gas, chemicals, minerals and agriculture.
The Koch deal will enable Solv-Ex to pay off all, or most, of the trade debts incurred building the plant, but leaves the company with at least US$33 million of long-term debt.
Solv-Ex is trying to persuade debentureholders to convert their debt into common shares, which now trade broker to broker in the U.S. after being delisted from the Nasdaq Stock Market earlier this year. Their recent price was US$1.75.
The company is expected to present its reorganization plan to the courts within weeks, including plans for a new equity issue.
Based in Albuquerque, N.M., Solv-Ex started building the Fort McMurray plant late last year and ran out of cash.
It then filed for bankruptcy protection under the Companies' Creditors Arrangement Act in Canada and under Chapter 11 in the U.S.
|
