Prospect Global unable to get extension to pay $154.8 million of debt

Lender Karlsson could foreclose on assets; bankruptcy may be necessary

By Devika Patel

Knoxville, Tenn., May 30 - Prospect Global Resources Inc. will not be able to extend the date by which it must prepay its $154.8 million of senior secured debt owed to the Karlsson Group for $15 million, according to an 8-K filed Friday with the Securities and Exchange Commission.

The debt was due on May 23, and on May 24 the company defaulted on the debt, entitling Karlsson to accelerate the obligations and foreclose on substantially all of the company's assets.

As a result, the holders of Prospect Global's $7.5 million of senior unsecured debt are entitled to accelerate that debt as well.

The company says it has no cash for operations and has terminated all employees other than executive vice chairman Chad Brownstein and interim president, chief executive officer and chief financial officer Gregory Dangler, who are working without compensation.

The company said in the filing that its board and management are exploring alternatives, which may result in a bankruptcy filing.

Based in Denver, Prospect Global is a resource exploration company.

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