Cubic Energy enters into forbearance, ups coupon on $66 million notes

Noteholders waive defaults, modify covenants on October 2013 notes

By Toni Weeks

San Luis Obispo, Calif., July 14 – Cubic Energy, Inc. entered into on Monday an amendment, forbearance and waiver agreement with the holders of its senior secured notes due Oct. 3, 2016, according to an 8-K filing with the Securities and Exchange Commission.

The company financed $66 million of acquisitions on Oct. 2, 2013 with the 36-month notes.

Under the agreement, holders of the notes waived various defaults and agreed to modify some covenants in the note purchase agreement.

Noteholders also waived their right to receive default interest and registration default interest.

The amendment provides for an increase in the interest rate after March 31 to 20.5% from 15.5% as long as interest will not be payable in cash but will accrue and compound on a quarterly basis.

In addition, the amendment requires the company to consummate a strategic transaction prior to Oct. 17 or enter into an agreement for a strategic transaction that will be completed by Dec. 31. A strategic transaction can include a transaction resulting in a cash payment in full of all amounts owed to the noteholders or a joint venture, strategic alliance or other transaction.

Cubic is an oil and gas exploration and production company based in Dallas.

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