Newspaper article THE JOURNAL RECORD

Ratex, FDIC Agree to Loan Default Plan / $27 Million Debt

Newspaper article THE JOURNAL RECORD

Ratex, FDIC Agree to Loan Default Plan / $27 Million Debt

Article excerpt

An agreement has been reached to settle a default on a $27 million loan due to the Federal Deposit Insurance Corp. by RATEX Resources Inc., it was announced Monday.

The agreement calls for RATEX, an Oklahoma City-based oil and gas company, to assign common stock, cash and approximately 92 percent of its discounted net future revenues to the FDIC.

Upon consummation of the settlement agreement, the company would have total assets of approximately $1.75 million and shareholders equity of approximately $820,000, according to the company. RATEX shareholders will vote on the agreement on Jan. 11.

"Although RATEX will be a smaller company after the settlement, we will have no long-term debt and will be in a position for growth as conditions improve in the oil industry," said R. Kevin Leonard, chairman and chief executive officer.

The FDIC's percentage interest in the company through its common stock holdings, if the settlement is finalized, was not released. However, the FDIC would not hold a majority interest in RATEX, according to Randy Harp, vice president and chief financial officer.

The company has 2.26 million shares of common stock outstanding, Harp said, with 4 million shares authorized. If the settlement is completed, RATEX would not need to issue additional shares to meet its obligation with the FDIC, he said.

RATEX will retain 50 producing wells, of which at least 85 percent are natural gas-producing, Harp said. The wells are located in western Oklahoma, Arkansas, Texas and North Dakota, he said. With these wells, the company will have flexibility to begin normal oil and gas operations, Leonard said.

The loans that RATEX defaulted on were received in 1980 and 1981 from Penn Square Bank, Harp said, adding that the company began defaulting on those loans in late 1985. …

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