Buckeye Technologies was able to get loosened financial covenants for its credit facility agreement through the end of the deal's term in response to economic conditions that prevented the company from meeting the deal's original terms, explained Gayle Powelson, senior v.p. and cfo. Covenants related to debt-to-EBITDA and other performance targets were softened so that the Memphis, Tenn.-based company could be in compliance with the credit agreement, she said. Pricing on the $215 million revolver did not change, Powelson noted, stating that the spread is based on a grid tied to leverage, presently set at LIBOR plus 33/4%. The manufacturer and marketer of specialty cellulose and absorbent products has $207.5 million drawn on the facility as of June 30.
Buckeye's EBITDA for the quarter ending June 30 was $22.1 million. "Our focus remains on debt reduction. During the year we just completed, we reduced our net debt by $25.4 million (from $630.4 million to $605 million)," Buckeye's chairman, David Ferraro, stated in a release for the company's fiscal fourth quarter results ending June 30. Powelson did not cite specific factors affecting the company's performance.
Fleet Securities leads the credit and has been very receptive to Buckeye's amendment needs, Powelson explained. "Buckeye values its relationship with its lenders, particularly its relationship with Fleet," she added. This is the credit's fourth amendment since the deal's institution in April of 2001. Bank of America, Wachovia Securities and TD Securities are also top tier lenders to the deal, she noted.