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K-Sea Transportation in loan amendment talks to avoid covenant breach
By Sara Rosenberg
New York, Oct. 28 - K-Sea Transportation Partners LP is starting conversations with banks about amending its credit facility because of possible non-compliance with the debt to EBITDA ratio, company officials said in a conference call on Wednesday.
The company anticipates that it will be unable to comply with the debt to EBITDA requirement at the end of the third fiscal quarter 2010, although there is a possibility that the breach could happen as early as the second fiscal quarter 2010.
Officials said that the debt to EBITDA requirement is 3.75 times, but the company's actual level will probably be slightly over 4.0 times unless th ere is a larger than expected rebound in EBITDA.
The other covenant contained in the credit facility is a fixed-charge coverage ratio.
Compliance with the fixed-charge coverage ratio is not a major concern at this point. However, officials said in the call that depending on interest rates in the third quarter and the fourth quarter, "it should be close."
For the first fiscal quarter of 2010, the company reported EBITDA of $18.2 million, a decrease of $4.5 million, or 20%, compared to $22.7 million in the same quarter last year.
K-Sea is an East Brunswick, N.J.-based tank barge operator.
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