Keystone Consolidated in talks to obtain waiver from lenders

By Carlise Newman

Chicago, May 20 - Keystone Consolidated Industries Inc. said it is negotiating with its revolver and term loan lenders to obtain waivers of financial covenants or amend the loan agreements to cure defaults.

Keystone warned that if it is unsuccessful if cannot give an assurance it would have the liquidity or other financial resources sufficient to repay the revolver or the term loan if noteholders accelerate the debt, the company said in a filing with the Securities and Exchange Commission.

However, the 8% notes cannot be accelerated through Dec. 31 because Keystone, a steel and wire company, has obtained a consent from 67% of the noteholders to forebear from acceleration. If the company is not in financial compliance by Dec. 31, it cannot provide assurance that it will have the resources to repay the notes.

At March 31, unused credit available for borrowing under Dallas-based Keystone's $45 million revolver, which expires in March 2005, EWP's $7 million revolver, which expires in June 2004, and Garden Zone's $4 million revolver, which expires in May 2003 were $6.5 million, $1.7 million, and $324,000, respectively.

Keystone intends to renew or replace the Garden Zone revolver upon its maturity in May 2003. A subsidiary of Contran has agreed to loan Keystone up to $6 million under a revolver that matures on June 30. Through May 15, the company had not borrowed any amounts under the facility.

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