SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
MAY 28, 2002
EEX CORPORATION
(Exact Name of Registrant as Specified in Charter)
TEXAS 1-12905 75-2421863
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2500 CITYWEST BLVD.
SUITE 1400
HOUSTON, TEXAS 77042
(Address and Zip Code of Principal Executive Offices)
(713) 243-3100
(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS.
New Credit Agreement
Effective May 28, 2002, EEX Operating, L.P. ("EEX Operating"), as
Borrower and an Obligor and EEX Corporation ("EEX"), as an additional Obligor,
entered into a new revolving credit facility with a group of banks and JPMorgan
Chase Bank, as Administrative Agent. A copy of the new credit agreement and
related documents were filed as exhibits to EEX's Current Report on Form 8-K
filed on June 6, 2002. Unless indicated otherwise, capitalized terms used in the
following summary are defined in the new credit agreement.
Maximum Credit Amount: $240 million, with a $10 million sublimit
for letters of credit, and an additional $10
million available only for letters of credit
to support surety bond obligations of EEX.
Maturity: March 31, 2003, unless earlier terminated
upon the occurrence of certain specified
events.
Interest Rate: (i) For Base Rate Loans, the higher of
Federal Funds Rate plus 1/2 of 1% or
Administrative Agent's prime rate plus
2.75% and (ii) for Eurodollar Loans, the
Eurodollar Rate plus 4.0%, each rate
increasing 0.5% per quarter beginning
June 30, 2002.
Fees: A restructuring fee of $2,500,000 and an
arrangement fee of $750,000 are payable by
September 30, 2002; provided, that in the
event that EEX has received all governmental
approvals for its proposed merger and has
distributed all proxy and related voting
materials to its shareholders by such date,
then payment of the fees shall be delayed
until November 30, 2002; and provided
further, that if the merger has been
consummated by November 30, 2002, then EEX
Operating shall have no obligation to pay
the fees.
Guaranties: Loans are guaranteed by all of EEX's
domestic subsidiaries other than EEX
Reserves Funding LLC and its subsidiaries.
Security: Security interests in the equity and
ownership interests of EEX's domestic
subsidiaries (other than the subsidiaries of
EEX Reserves Funding LLC); other material
tangible and intangible assets of EEX
Operating, EEX and its subsidiaries; and
mortgages on substantially all of the oil
and gas properties of EEX Operating and EEX.
EEX and EEX Operating are required to
maintain liens on oil and gas properties of
not less than 100% of the total value of the
oil and gas properties and 100% of the
proved and probable reserves (other than
$500,000 of properties outside of Texas and
Louisiana).
Mandatory Pepayment: The proceeds from sales of assets and equity
offerings must be used to prepay loans
outstanding; mandatory prepayments reduce
the maximum credit amount available.
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Negative Covenants: Limits on additional borrowings, repayment
of existing debt, capital expenditures,
dividends, distributions and redemptions,
investments, loans and advances, liens, gas
imbalances, take-or-pay obligations,
mergers, property transfers and the sale of
oil and gas properties, restrictions on the
restructuring of certain forward sale
obligations and hedging arrangements, and
other customary negative covenants. EEX may
not use borrowed funds to pay the scheduled
principal and interest payment due January
2, 2003 on its Secured Notes.
Financial Covenants: The ratio of Total Debt to EBITDAX for the
four most recent quarters may not be greater
than 4.0 to 1.0.
Commencing April 1, 2002, the ratio of
EBITDAX to Fixed Charges may not be less
than 1.0 to 1.0.
EEX is required to maintain at least 375
billion cubic feet of proved natural gas
reserves.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after an
agreed upon grace period; material
inaccuracy of representations and
warranties; violation of covenants;
cross-default; bankruptcy events; material
judgments; change in control; and other
defaults customary for oil and gas
industry borrowers.
EEX Operating borrowed $225 million under the new credit agreement upon
execution and, together with $100 million in cash, repaid and terminated its
existing revolving credit agreement. On June 12, 2002, the outstanding amount
under the new credit agreement was $221 million and the available credit was $19
million.
Liquidity and Capital Resources
During the remainder of the year, EEX's sources of liquidity will be
operating cash flows from EEX Operating and borrowings under the new credit
agreement. The operating cash flows from EEX E&P Company, L.P. will not be
available to EEX because of restrictions in the agreement related to the gas
sales obligation. EEX estimates, based upon its current budget forecast, that it
will have drawn all of its available credit under the new credit agreement by
the end of 2002. EEX has no current source of funds to make the approximately
$15 million payment on its Secured Notes due January 2, 2003.
Also, there can be no assurances that EEX will be able to meet the
financial covenants of the new credit agreement as of the end of the second and
third fiscal quarters, and, if it does not, it will be in default. There can be
no assurances that EEX will be able to cure any other default under the new
credit agreement.
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EEX is not currently pursuing additional sources of financing because
of the pending merger agreement with Newfield Exploration Company. If the merger
does not take place, there can be no assurances that EEX will be able to obtain
additional financing before it uses all of its available credit under the new
credit agreement. EEX will also require additional financing to make the January
2, 2003 payment on the Secured Notes if the merger does not take place.
Devil's Island Well
The Devil's Island well completed operations on June 12, 2002. The
updip sidetrack discussed in EEX's May 14, 2002 press release, the second of two
sidetracks, encountered approximately 30 feet of pay in a zone separate from
that previously encountered. As previously reported, the original well
encountered approximately 100 feet of pay. EEX has a 20% working interest in the
Devil's Island project. The operator plans further study prior to determining
additional drilling locations or proposing a development plan.
The Glomar Arctic I rig was demobilized from the Devil's Island well
location to a stack location effective June 14, 2002. The rig contract expires
on July 3, 2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
The following exhibits are filed herewith:
EXHIBIT
NUMBER EXHIBIT
------- -------
10.1 Credit Agreement, dated as of May 28, 2002 among EEX
Operating L.P., as Borrower and an Obligor, EEX
Corporation, as an additional Obligor, JPMorgan Chase
Bank, as Administrative Agent, Canadian Imperial Bank of
Commerce, as Syndication Agent, J.P. Morgan Securities
Inc., as Lead Arranger and Sole Bookrunner, CIBC World
Markets Corp., as Co-Arranger, and the Lenders signatory
thereto (incorporated by reference to Exhibit 10.2 to
Registrant's Current Report on Form 8-K with report date
of May 29, 2002, filed on June 6, 2002)
10.2 Guarantee and Collateral Agreement, dated as of May 28,
2002 made by each of the Grantors defined therein in favor
of JPMorgan Chase Bank, as Administrative Agent
(incorporated by reference to Exhibit 10.3 to Registrant's
Current Report on Form 8-K with report date of May
29, 2002, filed on June 6, 2002).
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EXHIBIT
NUMBER EXHIBIT
------- -------
10.3 Form of Mortgage, Assignment of Production, Security
Agreement and Financing Statement executed by EEX
Operating L.P. and EEX Corporation to JPMorgan Chase Bank,
as Administrative Agent (incorporated by reference to
Exhibit 10.4 to Registrant's Current Report on Form 8-K
with report date of May 29, 2002, filed on June 6, 2002).
10.4 Form of Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement executed by EEX
Operating L.P. and EEX Corporation to Robert C.
Mertensotto, as Trustee for the benefit of JPMorgan Chase
Bank, as Administrative Agent (incorporated by reference
to Exhibit 10.5 to Registrant's Current Report on Form 8-K
with report date of May 29, 2002, filed on June 6, 2002).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EEX CORPORATION
By: /s/ T. E. Coats
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Name: T. E. Coats
Date: June 17, 2002 Title: Vice President and Controller
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