Horizon PCS starts talks on covenant amendment after bringing in more subscribers than expected

New York, April 1 - Horizon PCS, Inc. said it has begun talks with its bank lenders over possible failure to comply with its credit facility covenants after the company brought in more subscribers than expected.

Ironically, Horizon said the potential problem has been created by the company's success at bringing in more subscribers than expected, on both a gross basis and net additions.

"Although Horizon PCS ultimately benefits from the revenues generated by new subscribers, Horizon PCS incurs one-time expenses associated with new subscribers, including commissions, handset subsidies, set up costs for the network and marketing expenses," the company explained in a filing with the Securities and Exchange Commission.

Because of these extra expenses, Horizon said it is likely it will not meet the EBITDA (earnings before interest, taxation, depreciation and amortization) covenant for the first quarter of 2002. The company noted that its financial results are not final at this point.

Horizon said in the SEC filing that it has begun discussions with the lead bank in its lending group and if its financial statements show non-compliance intends to immediately enter negotiations to obtain a waiver of the non-compliance and amendments to the covenants.

The company warned that failure to comply with the covenant would be a default under the secured credit facility and would give the lenders the right to pursue remedies.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.