DS Waters JV Needs More Time For Filing

DS Waters Enterprises is seeking a waiver from its lenders on a covenant requiring the company to deliver its audited financial statements for 2003 within 120 days after year-end.

  • 02 Apr 2004
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DS Waters Enterprises is seeking a waiver from its lenders on a covenant requiring the company to deliver its audited financial statements for 2003 within 120 days after year-end. The newly formed joint-venture of Groupe Danone and Suntory needs more time to combine its accounting processes. "The waiver is a mere formality. We have brought together eight different sets of books and are combining them into one. After integration, there has to be a conforming of accounting policies," explained Dan Redfern, cfo of DS Waters. "We asked for the waiver so we would have the comfort to have the necessary time to get a very thorough set of initial financial statements for DS Waters," he added.

DS Waters currently has a $100 million undrawn revolver and a $400 million term loan led by Citigroup and J.P. Morgan. The bank debt has slipped from its premium levels in the secondary market. Market participants said the debt traded up as high as the 1011/2-102 range compared to the 991/2 context where the paper is currently quoted. But Redfern stated, "We have strong cash flow and liquidity, and can easily service our debt." Pricing for the revolver is LIBOR plus 23/4%, and the term loan is priced at LIBOR plus 31/2%. DS Waters will need to get support from the majority of its creditors within the next two weeks in order to be able to obtain the waiver.

DS Waters' operating results fell below expectations within a short period of time after the integration last September. The decline is due to a net loss of 45,000 contracts, increased competition from retail outlets selling water coolers and higher-than-expected costs related to the integration of the bottled water companies, explained David Kang, a Standard & Poor's credit analyst.

  • 02 Apr 2004

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