Financial struggle goes on for Ennstone
IN an update on the company’s current financial position, Ennstone said this week that the board is continuing to explore all available options to realize value for shareholders, including business and asset sales and an injection of new capital.
On 19 November 2008, Ennstone announced a temporary waiver of certain technical breaches of the group’s facilities agreement. That waiver is due to expire this week (18 December), and at the time of writing the Group was understood to be in discussions with its debt providers regarding an extension.
Ennstone admit that they continue to expect to exceed their UK banking facility headroom by the end of December 2008.
Meanwhile, as a result of their deteriorating cash position in the US, Ennstone have now suspended payments of interest charges and finance lease repayments on their US facilities and are in discussions with their US lenders regarding restructuring proposals for the company’s US subsidiary, Ennstone Inc.
As a result, Ennstone are now in breach of their US facilities, and, via cross-default, in breach of their UK facilities.
US and UK debt providers are understood to be considering their position, including potential waivers of the breaches, but, as previously announced, Ennstone will be in breach of their UK and US banking covenants as of 31 December 2008 unless agreements are reached with the lenders.
Notwithstanding these breaches, Ennstone say they are continuing to co-operate fully in ongoing discussions with their UK and US banking syndicates, and add that they are in advanced discussions regarding potential disposals which could provide sufficient liquidity to meet cash requirements in both the UK and the US until the end of January 2009.
Although no assurances can be given that such disposals will be completed, the board says it remains hopeful that funds raised from such disposals will provide sufficient time to agree a restructuring of Ennstone’s banking facilities, or to find the necessary alternative financing.
