Evergreen Energy retires all 2009 convertible notes; 2007 noteholders file suit against Buckeye

By Jennifer Chiou

New York, April 7 - Evergreen Energy, Inc. used $19 million of the proceeds from a $32.9 million asset sale to retire its outstanding 2009 convertible notes, according to an 8-K filing with the Securities and Exchange Commission.

On April 1, Evergreen announced the completion of the sale of its subsidiary Buckeye Industrial Mining Co. under the purchase agreement with Rosebud Mining Co.

The sale included the release of $5 million of cash reclamation bonds.

Following the sale and convertibles repayment, some holders of Evergreen's outstanding 2007 convertibles began litigation against Buckeye and holders of the 2009 convertibles.

Under the litigation, suing holders are looking to:

• Void all obligations of Buckeye for the 2009 convertibles, including the security interests granted in connection with the convertibles;

• Enjoin Buckeye from paying the 2009 convertibles with the proceeds of the asset sale; and

• Enjoin Buckeye from transferring any of its assets to a third party.

The filing added that the court has issued a temporary restraining order that limits Evergreen's ability to use, for working capital or other purposes, the portion of the proceeds received at the time of the closing.

Evergreen added that it is "vigorously defending this litigation."

Evergreen Energy, based in Denver, refines coal into a cleaner solid fuel.

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