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Coho Defaults on Debt

March 15, 1999
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Coho Defaults on Debt

Coho Energy was notified by its lenders last week that it was in default on an $89.6 million over-balance. The company failed to make the first of five scheduled payments on the balance, which resulted from an overall $239.6 million debt. The lenders reserved all rights, remedies and privileges as a result of the payment default, but Coho said it expects to continue to discuss a financing alternative with the bank group.

In late February, Coho's lenders redetermined the borrowing base of the overall debt to be $150 million. Coho was supposed to make the first payment on the over-balance March 2.

The default comes weeks after Coho failed to come to an agreement with the Hicks, Muse, Tate &amp Furst (Hicks, Muse) on selling its majority interest to the investment firm for $250 million. Hicks, Muse wanted the share price offer to be dropped from $6 to $4 per share, increasing the interest it would acquire from 62% to 71%. Coho considered the option, but was unable to close the deal, leaving it unprotectedto investors.

Based in Dallas, TX, Coho is engaged in oil and gas exploration and development. Through three quarters in 1998, the company experienced a net loss of $71.1 million compared to an income of $4.6 million in the same period of the previous year. The company said the loss is a result of the devaluation of oil and gas properties.

John Norris

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