Bank sues SemGroup founder over loan

By Don Mecoy

Published: July 26, 2008

TULSA — Bank of America sued SemGroup LP founder Tom Kivisto on Friday seeking $12.9 million after he defaulted on a personal loan secured by his trust's interests in the bankrupt Tulsa energy company.

Bank of America approved a two-year $15 million loan to Kivisto on May 26, 2006. When the loan came due in May, the maturity date was changed to Aug. 24.

However, Kivisto's removal as chief executive officer of the company and the huge decline in the stock of the subsidiary SemGroup Energy Partners constituted a default on the loan, the lawsuit filed in Tulsa Federal District Court claims.

Kivisto co-founded SemGroup LP in 2000 and oversaw its major expansion as it completed more than 40 acquisitions. SemGroup placed him on a leave of absence as the scope of the company's unmanageable debt became public last week.

Kivisto last week also resigned from the board of Tulsa-based BOK Financial Corp., parent of Bank of Oklahoma. BOK on Thursday reported that it will take a $71 million charge on its second-quarter earnings related to its loans and derivative contracts with SemGroup. BOK previously charged off $16 million of SemGroup business.

That charge, after accounting for taxes, likely will push BOK's second-quarter net income from a $44 million profit to a narrow loss.

The $87 million in charges reflects BOK's expectation that it will recoup less than half of the $147 million it is owed by SemGroup, Chief Financial Officer Steven Nell said.

Financial advisers provided two estimates of SemGroup's assets, Nell said. The lower value was based on the company's liquidation, and the other was based on the company continuing as a going concern. BOK picked the smaller amount, Nell said.

Moody's Investors Service has lowered its estimate of what creditors will get from the bankruptcy proceedings to 50 percent from its earlier 65 percent estimate.

Meanwhile, BOK Chairman George Kaiser personally provided his company with a new $188 million credit facility to replace a credit facility the corporation canceled Monday.

"With the SemGroup deal being as big as it was, there was some fear that we would violate one of the covenants in the bank group,” Nell said. "We just didn't want that to occur.”

A covenant violation wasn't likely, and BOK remains strongly capitalized, Nell said.

Kivisto owes $290 million to SemGroup for oil trading activities conducted through his personal company, according to bankruptcy documents.

Creditors raised the possibility in court filings that some SemGroup trading might have involved fraud. Moody's Vice President Andrew Oram said SemGroup's bankruptcy filing "brought to light additional hedging liabilities that had not been reflected” previously.

SemGroup, which buys and sells crude oil, used futures contracts to protect itself from sudden price changes. However, the company was forced to make billions of dollars in margin calls over the past 18 months to cover massive, ill-timed bets that oil prices would fall.

The U.S. Securities and Exchange Commission is investigating the public company's disclosures about SemGroup's financial collapse.

On the day that the public company's stock lost more than half its value, it issued a statement that SemGroup's "liquidity crisis” could force it into bankruptcy.

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