Galaxy Energy enters into waiver agreement on convertible notes ahead of asset sale

By Sheri Kasprzak

New York, Nov. 30 - Galaxy Energy Corp. has entered into an agreement to waive a default event on senior secured convertible notes issued in 2004 and 2005 so the company can conduct a sale of its assets in the Powder River Basin.

The investors - HFTP Investment LLC; Gaia Offshore Master Fund, Ltd.; Caerus Fund Ltd.; Promethean II Master, LP; AG Offshore Convertibles, Ltd.; and Leonardo, LP - agreed to waive the default that the sale of the assets would cause on the notes.

Galaxy intends to sell its assets in the Powder River Basin by Feb. 28, 2007 to PetroHunter Energy Corp.

In exchange for the agreement, the investors will receive 1 million shares of PetroHunter Energy and 10 million shares of Galaxy once the assets sale with PetroHunter is completed.

Also, Galaxy will settle all of its outstanding senior and subordinated convertible debt using the cash consideration it receives from the sale.

The 2004 notes were issued Aug. 19, 2004 in principal of $15 million and the 2005 notes on May 31, 2005 in principal of $10 million.

Denver-based Galaxy is an oil and natural gas exploration and production company.

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