U.S. Energy Biogas reaches stipulation that eliminates Countryside royalty interest conversion right

By Caroline Salls

Pittsburgh, Dec. 19 - U.S. Energy Biogas Corp. reached a stipulation with Countryside Power Income Fund that says U.S. Energy Biogas' royalty agreement only provides Countryside a pre-bankruptcy claim and takes away its right to convert its royalty interests into a 49% equity interest in U.S. Energy Biogas, according to a company news release.

In addition, none of Countryside's claims under the royalty agreement will have administrative priority status.

"This is a very important step toward establishing a viable capital structure for USEB and its healthy business operations," U.S. Energy Biogas chairman and parent U.S. Energy's chief executive officer Asher E. Fogel said in the release.

"In particular, USEB no longer will be exposed to a significant equity conversion right, which had represented a significant obstacle to our past efforts to refinance the business."

Under terms of the royalty agreement, U.S. Energy Biogas was required to pay a royalty to Countryside equal to 7% of U.S. Energy Biogas' cash flow distributable to its shareholders, plus 1.8% of U.S. Energy Biogas' gross revenues.

In some circumstances, the royalty agreement also provided that Countryside could convert its royalty interests into a 49% non-voting equity interest in U.S. Energy Biogas.

U.S. Energy Biogas, an Avon, Conn.-based renewable energy business, filed for bankruptcy on Nov. 30. Its Chapter 11 case number is 06-12827.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.