American Water Star (AWS) has sent a proposal to Laurus Master Fund in an attempt to settle its current debt level.

The company said yesterday (19 January) that in a letter sent in November, Laurus pointed out that certain defaults had occurred and were continuing under the Forbearance Agreement. Demand for payment of US$6.7m was made.

AWS has subsequently been sent notice from its trustee that its property and fixtures will be auctioned off on 2 March.

The proposed settlement entails US$5m being paid to Laurus once AWS's Phoenix property is refinanced, while existing Laurus warrants will remain in effect and priced as-is. The outstanding balance of US$1.6m will be repaid in share options yet to be determined.

Earlier this week, the troubled company said it would delist from the American Stock Exchange having failed to file its quarterly figures for the three months to 30 September 2005 in time.