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Holders of Maverick's secured convertible debentures may foreclose on company's assets
By Devika Patel
Knoxville, Tenn., Dec. 7 - Maverick Oil and Gas, Inc. has been notified by holders of its secured convertible debentures that it is in default of its obligations under the notes' terms, according to an 8-K filed Friday with the Securities and Exchange Commission.
The filing said that the company received the notices on Dec. 3.
The noteholders informed the company that, under the pledge and security agreement dated July 30, an event of default occurred because Maverick admitted in writing that it was unable to pay its debts. The statements were made in an 8-K filed on Dec. 3 with the Securities and Exchange Commission, according to the filing.
The notices indicated that the company has an obligation to redeem the debentures and that each holder was exercising his or her right to require all unpaid amounts of interest at a default rate of 15%.
The 8-K said that, as of Nov. 30, there were $28.6 million in principal and interest outstanding on the notes and that the company does not have the capital to pay that amount.
The company said in the 8-K that, based on conversations with the holders, it believes they intend to foreclose on the company's subsidiaries, Maverick Woodruff County, LLC and Maverick Operating Co., LLC, and seismic data and other files related to its Fayetteville Shale oil and gas operations.
The company said in the filing it expects this foreclosure would completely satisfy its debt obligations and leave it with a modest amount of cash resources to find other business opportunities and financing but noted that there is no assurance that the holders will take this course of action and not foreclose on all of its assets securing the notes in the agreement.
Dallas-based Maverick is an oil and natural gas exploration, exploitation, development and production company.
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