Sinoenergy amends 12% notes, 3% convertibles, sets up payment schedule

By Devika Patel

Knoxville, Tenn., Dec. 24 - Sinoenergy Corp. negotiated an agreement with the holders of its $16 million of 12% senior notes due 2012 and its $14 million of 3% guaranteed senior convertible notes due 2012 on Dec. 17, according to an 8-K filed Thursday with the Securities and Exchange Commission.

Under the agreement, the company agreed to repay the approximately $2 million balance remaining on the 12% notes by Dec. 31; it satisfied this obligation on Dec. 23, and the 12% notes are paid in full.

The company also agreed to pay off the $14 million 3% convertibles in two installments, with an initial payment of $5 million due 10 days after the company's planned merger with Skywide Capital Management Ltd. becomes effective. It will repay the balance 30 days after the first installment. Sinoenergy will also be required to pay interest on the convertibles, resulting in a yield to maturity of 13.8% net of payments previously made.

The noteholders reduced the company's remaining obligations to $280,000, which will be paid by Dec. 31; this amount consists of liquidated damages due to the company's failure to register the shares underlying the convertibles.

A provision that would have decreased the convertibles' conversion price if the company did not meet certain income levels was eliminated, as was a provision that reduced the conversion price if the company issued stock or convertibles with a price or conversion price that was lower than the conversion price of the 3% notes.

Based in Qindao, China, Sinoenergy manufactures compressed natural gas vehicle and gas-station equipment and builds compressed natural gas stations in China.

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