Grant Geophysical misses note coupon

New York, Aug. 21 - Grant Geophysical, Inc. said it failed to make the $2.1 million interest payment due Aug. 15 on its 9¾% senior notes maturing 2008.

The Houston, Texas company said it has a 30-day grace period before failure to pay becomes a default.

But Grant Geophysical added in a filing with the Securities and Exchange Commission that it does not expect its cash flow from operations will be sufficient to make the coupon payment within the grace period.

As a result the company is dependent on drawing from its credit facility to make the payment, something it will only be able to do if its majority stockholder Elliott Associates, LP posts additional collateral.

Grant Geophysical said on Aug. 15 it requested Elliott to post $1.0 million of cash collateral so that it could borrow $1.0 million under the supplemental term loan of its Foothill/Elliott credit facility. The request was not granted as of Aug. 19, Grant said. At that point there was $6.8 million outstanding on the facility.

Grant Geophysical also noted that failing to pay interest on its notes is also a default on the Foothill/Elliott credit facility. In addition, it said other defaults have occurred or are expected to occur.

Grant Geophysical also said it failed to file its 10-Q quarterly report by the due date of Aug. 14 because it could not obtain independent auditors to review its financial statements.

Failure to file could also become a default on the notes if the trustee sends a default notice to the company and it then does not file the statements within 45 days. Failure to file is also a default on the credit facility under similar conditions.

Grant Geophysical said that if a default occurs and its lenders decide to accelerate its debt it is unlikely to be able to continue operations without seeking protection from its creditors in a bankruptcy filing.

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