ThermoEnergy may be in default on 10% convertible note sold to Quercus

By Devika Patel

Knoxville, Tenn., May 5 - ThermoEnergy Corp. received an acceleration notice and a demand for payment from Quercus Trust, the holder of the company's $2 million in 10% convertible promissory note due 2013, on April 13, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

Quercus is asserting that the company is in default on the notes, and claims the Little Rock, Ark., company skipped a Dec. 31 an interest payment. It also maintains that certain representations, warranties or other statements made by the company to Quercus in connection with the note were materially false and misleading.

Although the interest payment was late, the company insisted in the filing that it has paid all interest due in shares, and it disputes Quercus' assertion that any of the company's representations, warranties or other statements was false or misleading.

ThermoEnergy designs renewable energy and power-generation facilities using technologies that convert municipal and industrial wastewater into biofuel. Quercus is suing the company over two other investment disputes.

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