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Constar seeks amendment to allow for new second-lien loan or bonds
By Sara Rosenberg
New York, Oct. 29 - Constar International Inc. is currently negotiating amendments to its credit agreement that would allow the company to either obtain a second lien term loan of between $50 and $75 million or to issue between $50 and $150 million of second lien bonds.
Net proceeds from the loan or bond offering would be used to prepay debt under the existing credit facility, including revolver debt, which would in turn increase availability. The increase in availability is subject to a proposed permanent reduction of $10 million.
Furthermore, the amendments would revise financial covenants contained in the credit agreement, putting the company back in compliance with the revised third quarter financial covenants, according to a filing with the Securities and Exchange Commission.
The proposed amendments would change financial covenants from Sept. 30, 2003 through June 30, 2005, including the minimum EBITDA requirement, the maximum senior leverage requirement, the minimum interest coverage requirement and the maximum capital expenditures requirement.
If the second-lien debt is raised by Jan. 30, 2004, the interest expense coverage ratio increases dramatically starting Sept. 30, 2005, the senior leverage ratio decreases dramatically starting Sept. 30, 2005, and the total leverage ratio and the fixed charge coverage ratio are not applicable till Sept. 30, 2005.
If the debt is not obtained by Jan. 30, 2004, the interest expense coverage ratio decreases dramatically starting March 31, 2004, the senior leverage ratio increases dramatically starting March 31, 2004, and the total leverage ratio and the fixed charge coverage ratio are applicable starting March 31, 2004.
Constar is a Philadelphia producer of polyethylene terephthalate plastic containers for food and beverages.
Full details of new covenants at:
http://www.sec.gov/Archives/edgar/data/29806/000119312503069388/d8k.htm
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