Cygnus Oil required to redeem some 7.5% convertibles due to alleged default

By Sheri Kasprzak

New York, Feb. 15 - Cygnus Oil and Gas Corp. will be forced to redeem a portion of its $22 million in outstanding 7.5% senior convertible notes after an alleged default.

Kings Road Holdings II LLC, under the default provisions of the note, is requiring Cygnus to redeem its portion of the note for $13.75 million, 125% of the principal. The company must also pay outstanding interest.

Cygnus allegedly defaulted on the notes when it failed to make $412,500 in interest payments, according to an 8-K the company filed Thursday with the Securities and Exchange Commission.

Houston-based Cygnus is an oil and natural gas exploration and development company.

On Thursday, the company's stock dipped by one-tenth of a cent to close at $0.049 (OTCBB: CYNS).

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