Hill International lenders agree to loan covenant default forbearance

By Caroline Salls

Pittsburgh, July 7 - Hill International, Inc. entered into a forbearance agreement with its credit agreement lenders and administrative agent in connection with financial covenant violation defaults, according to an 8-K filed with the Securities and Exchange Commission.

Under the forbearance, lenders Bank of America, NA, Capital One, NA, PrivateBank and Trust Co. and PNC Bank, NA agreed not to act on the defaults until the earlier of Sept. 30 or the occurrence of any event of default not covered by the forbearance agreement.

Bank of America is also the administrative agent.

Hill said it previously secured a default waiver, which expired on June 30. The forbearance agreement began on that date.

During the forbearance period, outstanding borrowings will be limited to $80 million and will bear interest at a fluctuating rate equal to the sum of the highest of the Federal Funds rate plus 50 basis points, the Bank of America prime rate or the Eurodollar Rate plus 100 bps, all plus 300 bps.

In addition, the company will not be permitted to request any Eurodollar rate loans during the forbearance period, and, upon maturity, each Eurodollar rate loan outstanding at June 30 will either be repaid in full or converted to a Base rate loan.

At June 30, Hill said it had $24.2 million in Eurodollar loans outstanding under the credit agreement, with a weighted average interest rate of 4.27%. If those loans had been refinanced on June 30, the weighted average interest rate would have been 6.25%.

The agreement also limits the amount of letters of credit to those outstanding at June 28 and specified letters of credit requested after that date.

Also, Hill cannot make acquisitions, pay dividends or repurchase its common stock without the consent of the lenders.

The company paid a $250,000 forbearance fee.

Total outstanding borrowings under the credit agreement were $72.3 million as of June 30, the 8-K said.

According to the 8-K, the company violated consolidated leverage ratio and consolidated fixed-charge ratio covenants under the credit agreement.

Hill International is a Marlton, N.J.-based provider of fee-based project management and construction claims services.

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