Insituform Technologies amended its $75 million revolver to contain less restrictive debt covenants in order to ensure compliance for the fourth quarter, said Joseph White, Insituform's cfo. "If you look at what analysts projected earnings are for the fourth quarter, we would potentially break two covenants," White said. "It's always better to be proactive and make sure there is no potential compliance issue with the covenants."
The amendments ease the minimum fixed-charge coverage and maximum leverage ratios. As a result, Insituform paid $169,000 in fees, will be subject to a maximum net debt of $85 million and will be prohibited from purchasing treasury stock unless the fixed coverage ratio is greater than or equal to 1.10 times and the leverage multiple is not more than 2.25 for two consecutive quarters.
Bank of America leads the revolver and U.S. Bank, Wells Fargo and Commerce Bank are in the lending syndicate. White said the banks were very positive about the amendment. The company is only using between $5-6 million of the revolver as letters of credit, he added. The company was in compliance with the covenants at the end of the third quarter, he added.