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Petrol reaches agreement with noteholders, plans to sell collateral
By Devika Patel
Knoxville, Tenn., May 2 - Petrol Oil and Gas, Inc. entered into a foreclosure agreement with LV Administrative Services, Inc., the agent for the holders of the company's secured term notes, according to an 8-K filed Friday with the Securities and Exchange Commission.
As previously reported, the company was notified on April 9 by LV Administrative Services that it was in default on the notes.
Laurus Master Fund, Ltd., Valens Offshore SPV I, Ltd., Valens U.S. SPV I, LLC, Calliope Capital Corp. and Pallas Production Corp. are the holders of Petrol's $8 million secured convertible term note, which was sold in October 2004; its $10 million secured term note, which was sold in October 2005; its $5 million secured term note, which was sold in March 2006; and its $10 million secured term note, which was sold in May 2006.
The notes are collateralized by substantially all of the company's assets, a portion of which is the "Petrol-Neodesha Project," located in Neosho and Wilson Counties, Kansas, consisting of, among other collateral, mortgages and real, personal property and fixed and mixed assets used in connection with the Petrol-Neodesha Project.
The foreclosure agreement allows the noteholders to foreclose on the Neodesha property. Petrol has agreed to reasonably assist LV Administrative Services and the holders in the completion of the foreclosure sale.
As part of the agreement, Petrol will cancel all outstanding warrants that were issued to the holders and replace them with new warrants for 1 million common shares, with an initial exercise price of $0.20 per share.
Based in Overland Park, Kan., Petrol is an oil and natural gas exploration company.
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