Stone Energy gets noncompliance notice from holders of 6¾% notes

By Jennifer Chiou

New York, Feb. 17 - Stone Energy Corp. said it received notice of noncompliance from holders of more than 25% of its $200 million of 6¾% senior subordinated notes due 2014 due to failure to file its SEC reports and financial statements.

However, under the indenture, the delay in filing reports for the Securities and Exchange Commission does not automatically result in an event of default, the company said.

Stone said it previously informed the trustee of the delay in filing its 2005 third quarter 10-Q and did not receive notice by the trustee.

The company added it believes that it will be in a position to file its financials in mid-March, thus resolving the issue.

Stone added it has 60 days from the receipt of this notice to cure a default, if a default has occurred. If a default has occurred and the company does not cure the default, noteholders may demand the immediate payment of the notes.

If an acceleration were to occur, Stone said it may be unable to meet its payment obligations.

In addition, the acceleration of these 6¾% notes would result in a cross-default under Stone's indenture for its $200 million of 8¼% senior subordinated notes due 2011 and its $186 million bank credit agreement.

Stone Energy is a Lafayette, La.-based independent oil and gas company.

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