Fletcher Building lenders agree to extend waivers for breach of financial covenants
By Jonathan Underhill
March 29 (BusinessDesk) - Fletcher Building gained a two-month extension to waivers from its US noteholders and bank syndicate that were granted after it breached lending covenants, suggesting the company wasn't able to negotiate new terms by its March 31 deadline.
The waivers were initially put in place until the end of this month and Fletcher had previously set that as the deadline to agree on amendments to its lending terms. Fletcher has been in talks with the bank syndicate and US private placement market noteholders since obtaining the waivers and chief executive Ross Taylor expects the new terms will nudge up the interest rates on the debt.
"Progress has been made in discussions with the lenders on amendments to the funding arrangements and the company will provide a further update once these are finalised," it said in a statement today. "As with the initial waiver, if new terms are not agreed by 31 May, a further extension would need to be agreed with the lenders."
The breach of covenants came from the provision for losses by Fletcher's Building and Interiors (B+I) business, which resulted in a first-half loss of $273 million. B+I's operating loss was $631 million. The results showed the blowout in the company's debt ratios that put it outside its lending agreements. Net debt to ebitda, on a rolling 12-month basis, soared to 20.4 times from 2.2 times. Excluding B+I, the ratio was unchanged from a year earlier at 2.2 times.
Fletcher affirmed its guidance for full-year earnings before interest and tax, before one-time items and excluding B+I of $680 million to $720 million. The estimated full-year ebit loss for B+I was unchanged at $660 million.
Its shares last traded at $6.16 and have dropped 21 percent this year while the S&P/NZX 50 Index is little changed.