Forest City Enterprises amends line of credit following unintentional non-compliance with notes purchase

By Jennifer Chiou

New York, Feb. 5 - Forest City Enterprises Inc. entered into a second amendment to its credit agreement related to unintentional non-compliance with a non-financial covenant of the line of credit linked to a $15 million purchase of its putable equity-linked senior notes for $10.6 million, according to an 8-K filing with the Securities and Exchange Commission.

"It is gratifying that our lenders understood that the noncompliance was unintentional and responded with good-faith discussions that allowed us to promptly secure the needed waiver," Forest City president and chief executive officer Charles A. Ratner said in a news release.

The company entered into the amendment - effective as of Jan. 30 - with a 14-member bank group, including KeyBank NA as the administrative agent, National City Bank as syndication agent and Bank of America, NA as documentation agent.

Forest City said that the second amendment increases the borrowing rate under the credit agreement to prime plus 150 basis points or Libor plus 250 bps and modifies the definition of Base rate. It also further restricts the company's ability to purchase, acquire, redeem or retire any of its capital stock and prohibits it from paying any dividends on its capital stock.

As of Jan. 30, the company has total borrowings of $365.5 million under the credit agreement.

Forest City Enterprises is a Cleveland-based diversified real estate company that manages, acquires and develops malls, shopping centers, office properties, apartment buildings and planned communities.

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