RE:Another slice of cold pizza served upYea, they really need to figure something out.
$727,000 of the reserve was used for dividend payments, which excludes the one time $111,000 payment.
Dec 31, 2018 stated reserve is $4.2mm. That's around 5.777 years assuming nothing changes. Likely, if the payout ratio worsens and remains above 100% for another few quarters they might cut. They don't specify what "siginficantly reduced" means.
However, debt covenants will also be a factor, but at the moment it does not appear to be an issue.
Debt facility matures April 24, 2020, so they'll probably renew later this year - rates are higher at this time compared to 2015.
"the Partnership has agreed to a financial covenant in which, on a four quarter rolling basis,
Distributions may not exceed Distributable Cash Flow for such period plus the aggregate amount of Distributable Cash Flow for prior Distribution Periods not distributed, which as at December 31, 2018 was $8,026,000 (December 31, 2017 - $7,823,000). In addition, the Partnership is required to maintain a funded debt-to-EBITDA ratio not to exceed 2.0:1 on a four quarter rolling average. The funded debt-to-EBITDA ratio for the four quarters ended December 31, 2018 is 1.35:1 (December 31, 2017 1.34:1). The Partnership is presently making interest-only payments on the credit facility. The funded debt-to-EBITDA ratio for the four quarters ended December 31, 2018 is 1.35:1 (December 31, 2017 – 1.34:1). The Partnership is presently making interest-only payments on the credit facility. The funded debt-to-EBITDA ratio for the last four quarters’ rolling average continues to be below 1.5:1; therefore the credit spread is 0.875%. If, in the future, the ratio increases above 1.5:1, the credit spread will change as follows:"