Microgy, Microgy Grand default on tax-exempt bonds, seek forbearance

By Angela McDaniels

Tacoma, Wash., Dec. 9 - Microgy Holdings, LLC and Microgy Grand Island, LLC are seeking forbearance agreements from bondholders after failing to make interest payments due on Dec. 1, according to an 8-K filed with the Securities and Exchange Commission by parent company Environmental Power Corp.

The non-payments are events of default. They were attributed to cash constraints.

Microgy Holdings did not make the interest payments on its $31.21 million of tax-exempt bonds issued through the California Statewide Communities Development Authority and its $44.995 million of tax-exempt bonds issued through the Gulf Coast Industrial Development Authority of Texas, and Microgy Grand Island failed to make the payment on its $7 million of tax-exempt bonds issued through the City of Grand Island, Neb.

Trustee Wells Fargo Bank, NA made draws on the debt service reserve funds for the bonds in order to make the interest payments, which totaled $53,646 for the California bonds, $1.56 million for the Texas bonds and $245,000 for the Nebraska bonds.

The draws on the debt service reserves count as additional events of default under the California and Texas bonds.

Neither the trustee nor the bondholders have exercised any of the remedies available to them, which could include acceleration of all amounts owed under the outstanding bonds.

Environmental Power is based in Tarrytown, N.Y.

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