TXCO series D convertible preferred stockholder demands redemption

By Caroline Salls

Pittsburgh, March 20 - TXCO Resources Inc.'s series D convertible preferred stockholder has demanded redemption of 10,000 shares of the preferred stock as a result of the company's violation of the current ratio covenant under its amended and restated credit agreement, according to an 8-K filed with the Securities and Exchange Commission.

Under the terms of the certificates of designations, preferences and rights of the series D convertible preferred stock, any obligation of the company to pay the holder the redemption price is suspended until the earlier of Oct. 31, 2012 or the date that the company satisfies the credit facility obligations, according to the 8-K.

TXCO said it is obligated to pay interest at a rate of 1.5% per month on each unredeemed preferred share until paid in full.

At the time the covenant violation constitutes a triggering event under the certificates of designation, the company said the dividend rate on the series D preferred stock will increase to 12% from 6.5% until the violation is cured.

If it was required to pay the redemption price immediately, TXCO said the price would be $1,404 per share.

TXCO is a San Antonio-based independent oil and gas enterprise.

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