Post by
westcoast1000 on Mar 21, 2016 8:58pm
clarification on terms
Here are the new loan terms:
The Notes are secured by a first priority security interest, lien and mortgage on all of the assets of the Company. Pursuant to the First Amendment, all of the financial and performance covenants of the credit facility and scheduled loan amortization are waived for the fiscal quarters ending March 31, 2016 and June 30, 2016. The Notes bear interest at a rate equal to Libor + 11.5% per annum with interest payments due monthly; the minimum interest rate will be 13.0% per annum. Additionally, from and after March 9, 2016 until June 30, 2016 interest at the rate of eight percent (8%) per annum shall be payable in kind.
In other words, the lender (Morrison has waived interest payments on the old agreement until June 30, and replaced them with a reasonable 8% annually until then. After that the rate is about 13.5% . They have about $80 million in long term debt, so the interest for the remainder of the year will be about $5 million. To put things in perspective, they spent $40 million last year on capital investment.
So, it seems to me Morrison agreed to help the company out with financing at defensible rates, and did not let the company violate the covenants on the debt. That seems proactive and reasonable to me, but what do I know...
Any views out there, other than the semi-hysterical comments of a few days back?
Comment by
Virgal- on Mar 22, 2016 11:22am
Man, that's just three months of extra interest. 8% per anum for 80 million over three months is about a million and a half if I did my math right. that is a decent chunk but it's not going to sink this ship.