Knight Energy may lose assets securing 15% note sold to HD Special-Situations

By Devika Patel

Knoxville, Tenn., March 17 - Knight Energy Corp. may lose the assets that secure a $4.25 million 15% senior secured promissory note it sold to HD Special-Situations, LP, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

The company issued the note to HD in October.

On March 12, the investor informed the company in writing that it has begun foreclosure proceedings on the assets that secure the note.

The letter effectively served as a triggering event, accelerating the company's obligations under the note, because HD previously had waived the default but preserved its right to foreclose.

On Feb. 5, HD had notified the company of its default under the note, which was subsequently waived shortly after this letter was delivered to the company.

But on Feb. 24, the investor notified the company that it intended to begin foreclosure proceedings on the assets. On Feb. 27, after negotiations, this notice also was withdrawn, and HD agreed to stop the foreclosure proceedings, while reserving the right to reinitiate those proceedings at its discretion, which it did via the March 12 letter.

The assets have been posted for a foreclosure sale, which will occur at the Stephens County Courthouse in Breckenridge, Texas, by April 7.

As of March 1, the current principal is $4.25 million, plus approximately $135,000 in interest.

Based in Coppell, Texas, Knight Energy acquires, develops, owns, operates and invests in energy-related businesses, assets and investments.

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