Inland Fiber receives notice of default

By Jeff Pines

Washington, May 24 - Inland Fiber Group LLC received a notice of default on May 17 from the trustee of its 9 5/8% senior notes due 2007, the company said in its 10-Q quarterly report filed with the Securities and Exchange Commission Monday.

The company, formerly U.S. Timberlands Klamath Falls LLC, has $225 million of the notes outstanding.

In December, the trustee alleged the company had violated certain covenants in the indenture, which Inland Fiber denied and filed a motion to dismiss. The allegations included transferring assets to affiliates.

The default letter covered certain allegations in the complaint, the company said.

If the trustee wins the court case, it will have the right to demand repayment and accelerate the maturity of the notes. If this happens, Inland Fiber said it is doubtful the company could continue as a going concern.

Inland Fiber expects a decision within a few months from the Court of Chancery of Delaware on the lawsuits surrounding the allegations.

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