DOMINION RESOURCES BLACK WARRIOR TRUST (DOMR) company history: the story so far

History

A royalty trust that depended on Walter Energy's gas payments lost its contracts when Walter went bankrupt, and was delisted and set to wind up by early 2016.

2015: Walter's bankruptcy and the squeeze

Dominion Resources Black Warrior Trust was a Delaware royalty trust holding a 65% overriding royalty interest (a right to a share of gas sales) in gas from wells in the Pottsville coal formation, Black Warrior Basin, Alabama. The wells were operated by a subsidiary of Walter Energy, which entered Chapter 11 bankruptcy on July 15, 2015. Walter did not pay the Trust's August 2015 and December 2015 distributions.

The fallout reached the Trust's listing. On November 24, 2015 the NYSE warned that the units' 30-day average closing price was below the $1.00 minimum. The units stayed listed with a '.BC' (below compliance) tag, but the NYSE said it would begin delisting unless the Trust said it intended to cure the problem.

On December 23, 2015 the Trust took a secured revolving credit line of up to $250,000 from Southwest Bank, its trustee. It was due December 23, 2016, carried 5.0% interest at the time, and was secured by the Trust's royalty interests and its claims in the Walter bankruptcy. The filing said the money was for working capital and approved expenses. NYSE delisting was listed as a default event.

2015-2016: Termination and delisting

On December 28, 2015 the bankruptcy court rejected the royalty agreement, the Trust Agreement and the Administrative Services Agreement, so all three will terminate. The trustee said the Trust also had to terminate under its own terms, because Walter's missed payments left it below the required 1.2-to-1.0 ratio of royalty cash to administrative costs for two quarters. The trustee said it intended to wind up the Trust while still weighing legal options.

Because it was terminating, the Trust could no longer say it would cure the price shortfall. The NYSE told it on January 5, 2016 that delisting would begin, and the filing to remove the units was made on January 21, 2016. The units then traded over the counter as 'DOMR'.

As of January 27, 2016 the Trust was appealing three bankruptcy rulings, including the contract rejection. Winding up could run into early 2017. A distribution to unitholders was possible only if the appeals succeeded, the Trust received value for the royalty interests, and its assets exceeded its liabilities, with no guarantee of any of these. No 2015 audit was planned. On February 1, 2016 the Trust ended the registration of its units, ending its SEC reporting.

Written from the 7 story beats below (2015 to 1 Feb 2016), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2016

1 Feb
DOMINION RESOURCES BLACK WARRIOR TRUST terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice
27 Jan
The NYSE filed to remove the units from listing on January 21, 2016, and they now trade over the counter under 'DOMR'. The Trust plans to file a Form 15 around February 1, 2016 to stop its SEC reporting. The Trust is appealing three bankruptcy court rulings, including the contract rejection, and says termination could run into early 2017. A distribution to unitholders is possible only if the appeals succeed, the Trust receives value for the royalty interests, and its assets exceed its liabilities, and the filing says there is no guarantee of any of these. It also does not plan a 2015 audit or individual letters to unitholders.
listing compliance notice
21 Jan
DOMINION RESOURCES BLACK WARRIOR TRUST's exchange filed to remove a class of its securities from listing.
listing compliance notice
11 Jan
On January 5, 2016 the NYSE told the Trust it would begin delisting the units. Because the Trust had announced it was terminating, it could no longer say it intended to cure the below-$1.00 price problem flagged in November. This follows through on the NYSE's earlier warning.
listing compliance notice
4 Jan
On December 28, 2015 the bankruptcy court rejected the royalty agreement (the Trust's 65% overriding royalty interest in gas from wells operated by Walter's subsidiary), the Trust Agreement and the Administrative Services Agreement, so all three will terminate. A January 4, 2016 press release says the Trust must terminate under its own terms because Walter's missed August and December 2015 payments left it below the required 1.2-to-1.0 ratio of royalty cash to administrative costs for two quarters. The trustee says it is still weighing legal options but intends to wind up the Trust, and expects the NYSE to suspend trading and begin delisting. This is the result of the Walter bankruptcy thread.
security holder rights change

2015

30 Dec
On December 23, 2015 the Trust took on a secured revolving credit line of up to $250,000 from Southwest Bank, which is also its trustee, due December 23, 2016 and bearing interest at 5.0% at the time. It is secured by the Trust's assets, including its overriding royalty interests and its claims in the Walter Energy bankruptcy, and the loan documents list delisting from the NYSE as a default event. The filing says the money is for working capital and expenses approved by the lender.
debt financing
1 Dec
The NYSE told the Trust on November 24, 2015 that its units' average closing price over 30 trading days was below the $1.00 minimum for listing. The filing links this to Walter Energy's bankruptcy: Walter did not pay the Trust's third-quarter royalty payments and had not yet paid the fourth-quarter ones. The units stay listed for now, with a '.BC' (below compliance) tag, but the NYSE says it will start delisting if the Trust cannot say it intends to cure.
listing compliance notice