Evergreen Energy gets favorable ruling in suit by convertibles holders over sale proceeds

By Rebecca Melvin

New York, June 16 - Evergreen Energy Inc. was granted a favorable ruling in a suit filed by holders of the company's 8% convertibles due 2012, but the merits of the litigation have not been resolved, the company said of the court decision that took effect June 11.

It wasn't yet known if the holders planned to appeal the decision.

The Court of Common Pleas of Columbiana County, Ohio, ruled that a temporary restraining order preventing Evergreen from transferring about $2.5 million in funds be lifted.

The court also denied the request of the 2007 convertible holders - the bonds were issued in 2007 - to restrain the $2.5 million of proceeds from the sale of certain Buckeye and company assets or the recovery and use of about $5 million in cash collateral backing certain environmental reclamation bonds.

The ruling also denied placing other restrictions upon the company and its subsidiaries, and it cleared the way for the company to collect and use about $7.5 million of proceeds from the Buckeye sale to retire certain trade debts and to support its working capital needs.

Further, the ruling places no new restrictions on about $2.7 million of proceeds from the sale, currently held in escrow to cover indemnification claims from the buyer, which are scheduled to be released to Evergreen on March 31, 2011.

The 2007 holders disputed a payout that Evergreen was planning to make to retire its outstanding 2009 convertibles notes.

The 2007 holders sued the company, Buckeye Industrial Mining Co. and holders of the 2009 notes, seeking to void all obligations of Buckeye with respect to the 2009 notes, including the security interests granted, to enjoin Buckeye from transferring any of its assets to a third party.

As of May 18, when the company received notice that the plaintiff holders declared the 2007 notes in default, Evergreen had $27.38 million of principal and about $651,000, of outstanding principal and accrued interest on the 2007 notes.

Denver-based Evergreen refines coal into a cleaner solid fuel.

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