Dan River's bank debt levels could not be determined last week after the company announced that it had to obtain an amendment and waiver to its credit facility after failing to meet its maximum leverage ratio covenant. The asset-based deal is closely held by its lenders, who are still looking for par, explained one trader. The bank debt is not supposed to crater because it is an asset-based deal, noted a dealer. Dan River's bonds, however, plummeted on the news to the 39-45 context, according to the trader.
While Dan River anticipated compliance for its third quarter, the company had previously stated that it expected to run up against covenants in the fourth quarter unless business activity improved. The company had only just refinanced its $40 million, five-year term loan and $160 million revolver. Deutsche Bank leads the bank debt. Barry Shea, executive v.p. and cfo, did not return calls by press time.