Inland Fiber fails to make interest payment on 9 5/8% notes

By Caroline Salls

Pittsburgh, June 16 - Inland Fiber Group, LLC and Fiber Finance Corp. said Inland Fiber failed to make the semi-annual interest payment on its 9 5/8% senior notes due 2007,which was originally due on May 15, during the grace period that ended on June 14, according to a company news release.

According to the release, the trustee under the notes indenture and holders of at least 40% of the outstanding notes have agreed to refrain from action until July 15.

Additional noteholders may also agree to forbear, the release said.

In a May 13 10-Q filing with the Securities and Exchange Commission, the Klamath Falls, Ore., timber grower said that it has been approached about restructuring the debt but added that continuing litigation with noteholders has "materially interfered" with its ability to pursue a number of the options.

The legal disputes date back to December 2003 when some noteholders complained that the company had violated the indentures by transferring assets. Appeals and amended complaints are ongoing in court. A trial, originally scheduled for June 20, is scheduled for Aug. 1.

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