Blue Star unlikely to meet forecasts, may breach banking covenants
"Directors acknowledge that continued compliance with the requirements of the renegotiated SSCFA (senior secured credit facilities agreement with Blue Star's banks) and the ability to maintain adequate liquidity represent material uncertainties in relation to the group's ability to continue as a going concern," the company says.
Last August's deal, under which bondholders agreed to swap the $137.3 million in principal and interest they were owed for a deal with a then net present value of $44 million, was supposed to remove Blue Star from being at the mercy of its banks.
Now, the company says "there is risk that a number of the covenant requirements" will be breached.
While Blue Star reported a net profit of $12.5 million for the six months ended December but that was after last year's debt forgiveness and other alterations to the terms of its capital bonds valued at $112.3 million for the six months.
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