Reunion Industries defaults on 13% senior notes

By Caroline Salls

Pittsburgh, Aug. 3 - Reunion Industries, Inc. is in default on its $22.01 million outstanding 13% senior notes after failing to make its $715,423 July 1 interest payment by Aug. 1, according to an 8-K filing with the Securities and Exchange Commission.

With an indenture default, holders of more than 25% of the principal amount of the senior notes may declare the principal and accrued interest on the notes to be immediately due and payable, according to the filing.

However, under a previous agreement, the noteholders cannot start any action to enforce their liens on any collateral for a 180-day period beginning after receipt by senior secured lender Wachovia Bank of written notice of the default and demanding payment acceleration.

The filing said neither the company nor Wachovia Bank has received written notice of any acceleration to date.

The indenture default also may constitute an event of default under the cross default provisions of the company's loan agreement with Wachovia Bank and under the terms of the company's debt to two private capital funds, which enable Wachovia Bank and the funds to declare the principal and interest amounts due them to be immediately due and payable.

Reunion is a Pittsburgh manufacturer of metal and plastic products.

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