Laurus, Tarpon revamp terms of $6 million convertible note after Laurus waives events of default

By Devika Patel

Knoxville, Tenn., Dec. 26 - Tarpon Industries, Inc. has entered into an agreement on Dec. 21 with Laurus Master Fund, Ltd. to waive its events of default on a $6 million secured convertible term note, which was sold in a private placement on Dec. 14, 2005.

As reported in 2005, the three-year note was bought by Laurus and had a coupon of Prime rate plus 200 basis points, subject to an 8% floor. It was to be convertible into common shares at $3.27 each.

In the Dec. 21 agreement, Laurus waived Tarpon's defaults on payments, defaults relating to Steelbank Tubular, Inc. and its delisting from the American Stock Exchange. The fund and the company agreed to renegotiate the note's terms as well.

Laurus and Tarpon extended the note's maturity date to Aug. 9, 2009 from Dec. 13, 2008. The coupon was changed to Prime rate plus 400 bps and $40,000 principal payments on the note will begin on April 1 and be paid on the first business day of each month thereafter until maturity.

The note's conversion price will be lowered to $0.50 per share from $3.27, and the limitations on conversion will be increased to 9.99% of the company's outstanding common shares.

Based in Marysville, Mich., Tarpon manufactures structural and mechanical steel tubing and engineered steel storage rack systems.

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