Tidelands holders waive default on $5.6 million convertible debentures

By Sheri Kasprzak

New York, Sept. 29 - Tidelands Oil & Gas Corp. said the holders of $5,597,687 in outstanding convertible debentures have waived default on the holdings in exchange for common stock.

Earlier this month, Palisades Master Fund, Ltd. demanded immediate payment of the debenture, alleging a default event. The default, according to an 8-K filed Friday by Tidelands with the Securities and Exchange Commission, was triggered when the company defaulted on $6.57 million in convertible debentures held by RHP Master Fund, Ltd.

In exchange for the waiver, Palisades and the other holders - Crescent International Ltd.; Double U Master Fund, LP; JGB Capital, LP; and Nite Capital, LP - will receive a total of 2,828,304 common shares.

The debentures were issued Jan. 20, 2006 in principal of $6,569,750 for proceeds of $5,396,098. The zero-coupon debentures were priced at 82, are due Jan. 20, 2008 and are convertible at $0.87 each.

Tidelands, based in San Antonio, transports and stores natural gas and natural gas liquids.

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