Pipeline Data allegedly defaults on $1 million convertible note

By Laura Lutz

Des Moines, July 17 - Iroquois Master Fund Ltd. has alleged that Pipeline Data Inc. defaulted on a $1 million convertible note. Pipeline denies the allegation, according to an 8-K filing with the Securities and Exchange Commission by Pipeline.

Iroquois has filed a breach-of-contract suit in connection with its claim.

On April 10, Pipeline received a notice of default saying that Iroquois had not received interest for its note.

That notice also provided Iroquois's wire details. Pipeline said that the interest had not been paid because it had been unable to obtain that information.

"Prior to this we had written and called Iroquois Master Fund several times for their wire details and had, in fact, paid all of our other lenders on a timely basis. Immediately on receipt of the wire details, we made full payment of the interest due," Pipeline said in the filing.

"We believe in good faith that there was a miscommunication of payment details and a good faith attempt on our part to communicate this to Iroquois Master Fund."

Iroquois sent a second default notice on April 20, seeking penalties and stating their rights under default.

At that time, Pipeline says, it paid a penalty of $3,406.38 to Iroquois.

The 8% note was issued as part of a $37 million private placement of convertible notes that settled on Oct. 2, 2006.

Under the terms of the notes, holders have the right to receive 125% of the principal amount due plus interest and penalties in case of default.

Pipeline, based in Quincy, Mass., provides processing services for major credit card companies.

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