Metallurg misses $5.5 million interest payment on 11% senior notes

By Jeff Pines

Washington, June 1 - Metallurg Inc., a wholly owed unit of Metallurg Holdings, Inc., missed a $5.5 million interest payment due June 1 on its $100 million of 11% senior notes due 2007.

The news came in a Tuesday 8-K filing with the Securities and Exchange Commission.

Metallurg has a 30-day grace period to make the payment or risk a default on the notes and the company's revolver with Fleet National Bank. At March 31, there was $20.8 million outstanding on the revolver.

The company is negotiating with prospective lenders to refinance the Fleet facility.

If either the notes or the revolver become due immediately because of a default, Metallurg Holdings would also default on its 12¾% senior discount notes due 2008.

Neither Metallurg Holdings nor its subsidiary have filed their 10-K annual reports, or their 10-Qs for the quarter ended March 31. Not filing the forms is a default under the indentures of their notes.

The company has 30 days to fix the problems.

All of Metallurg's common stock secures the 12¾% senior discount notes.

Metallurg Holdings, a New York-based specialty metals company, said it and its subsidiary may have to file for Chapter 11 if it cannot resolve its liquidity problems.

Compass Advisers, LLP is advising the company.

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