Ennstone: 18 December debt deadline looms close

Ennstone has announced that it is battling on to stave off the imminent prospect of a breach of its banking covenants.

Ennstone announced a temporary waiver of certain technical breaches of its facilities agreement on 19 November… but this waiver only runs through until 18 December which is only two days away.

Discussions with debt providers, with the objective of securing an extension, are under way.

The problem is that with a deteriorating cash position in the US, Ennstone has been forced to suspend payments of interest charges and finance lease repayments on its US facilities.

The group is in discussions with its US lenders regarding restructuring proposals for Ennstone's US subsidiary.

Accordingly, the group is in breach of its US facilities. The consequence of which is that, as a result of cross-default, it is also in breach of its UK facilities.

Ennstone says: “The US and UK debt providers are aware of the current breaches and are currently considering their position including potential waivers of the breaches.

“As previously announced, Ennstone will be in breach of its UK and US banking covenants as of 31 December 2008 unless agreements are reached with the lenders.”

Ennstone is 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 there can be no assurance given that such disposals will be completed, the board is hopeful that the funds raised from such disposals will provide sufficient time to agree a restructuring of the group's banking facilities or to find the necessary alternative financing,” said the Ennstone board today.