ZaZa unable to make interest payments on 9% convertibles, 10% notes

By Tali Rackner

Norfolk, Va., Sept. 4 – ZaZa Energy Corp. failed to make the required interest payment on its 9% convertible senior notes due 2017 during the 30-day grace period ended Aug. 31, prompting the notes to become immediately due and payable, according to an 8-K filing with the Securities and Exchange Commission.

Because of the failure to make the interest payment due on Aug. 1, the convertible notes began accruing defaulted interest on Aug. 2 at a rate equal to 2% per annum in addition to the currently applicable rate of 9%.

As of Aug. 31, there was $42.1 million, including accrued interest, outstanding under the issue.

In addition, ZaZa did not make the interest payment due to holders of its 10% senior secured notes due 2017 on Aug. 21, causing an event of default.

There was previously an event of default on the notes when the company was unable to fulfill its obligation to prepay roughly $13.9 million principal amount outstanding under the notes on July 15. The interest rate was increased to 13% on July 16.

ZaZa is continuing to work with the holders of the senior secured notes and the convertible senior notes to develop a solution to liquidity challenges, the filing said. However, the company gave no assurance that a mutually acceptable resolution will be agreed to or, if so, on what terms.

Houston-based ZaZa is an onshore oil and gas exploration and development company.

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