Coho Energy was notified by its lenders last week that it wasin default on an $89.6 million over-balance. The company failed tomake the first of five scheduled payments on the balance, whichresulted from an overall $239.6 million debt. The lenders reservedall rights, remedies and privileges as a result of the paymentdefault, but Coho said it expects to continue to discuss afinancing alternative with the bank group.

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

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

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

John Norris

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