Columbus McKinnon is negotiating a new credit facility with FleetBoston Financial, its existing lead bank, after violating covenants on the current $225 million facility. "We were planning to refinance anyway," said Robert Montgomery, executive v.p. and cfo of Columbus, an Amherst, N.Y.-based manufacturer of handling, lifting and positioning products. "The current agreement expires in March 2003 and we wanted a new one in advance of that." Officials at Fleet did not return calls.
The new facility will include a retroactive waiver of non-compliance for the third fiscal quarter, Montgomery said. The new deal will eliminate the company's past covenant breaches and set in place a new facility, he said, explaining why a new facility is being sought as opposed to an amendment. Most of the existing lenders have indicated they will stay in the bank group, he added. Covenants will not be noticeably more restrictive, Montgomery said, but pricing is a little higher. He did not disclose spreads, but said the facility will be very similar to the existing one.
The current economic climate has hit the business resulting in the non-compliance, Montgomery explained. Standard & Poor's placed the company on credit watch negative, due to weaker than anticipated performance and the expectation that continued softness in both industrial and automotive markets will further delay improvements in credit-protection measures.