Bank Agreement Frees Transierra of All Debt

Transierra Exploration Corp., an Irvine oil and gas driller, is free of all bank debt under an agreement with its banks finalized Monday. The agreement, plus a cash infusion of $1 million from a Chicago company, gives Transierra a clean financial slate, according to company officials.

Under the plan, originally announced last fall, First Interstate Bank of California and Allstate Insurance Co. of Illinois exchanged $23 million in debt for 7.4 million newly issued shares of Transierra stock and certain oil and gas properties, mainly in Oklahoma. The two companies now own about 50% of the Orange County drilling company, according to a Transierra spokesman. Transierra also received $1 million from Chicago Oil and Gas Exchange Inc. under an equity drilling arrangement.

At the peak of the domestic oil drilling boom in 1980, Transierra had a market value of $123 million and predicted it would reach $100 million in annual sales by 1987. But by the spring of 1984, hard hit by falling oil prices and a string of dry holes, and $22.5 million in debt, Chairman M. Douglas Caffey publicly discussed a possible bankruptcy.

Instead, the company negotiated the agreement with its creditors and won a second chance. And Transierra, which lost $1.5 million on revenues of $2.1 million in the first nine months of fiscal 1984, expects to be profitable for the fourth quarter and year ended Oct. 31, 1984, a company spokesman said.

The oil company also signed an agreement with Cullen Center Bank and Trust of Houston to eliminate debts related to its Tec of Texas Inc. subsidiary. That unit, which was in Chapter 11 bankruptcy, recently sold all its oil and gas properties.