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National Coal amendment eases covenants for 12% notes through Dec. 31
By Angela McDaniels
Tacoma, Wash., May 11 - National Coal Corp. obtained an amendment to some covenants under its 12% senior secured notes due 2012 through Dec. 31, 2009, according to its 10-Q report for the first quarter filed with the Securities and Exchange Commission on Monday.
The changes are as follows:
• The debt-to-EBITDA ratio requirement was eliminated for 2009;
• In lieu of paying interest due March 29, the company elected to borrow the full amount of the interest from the holders in the form of a $1.8 million payment-in-kind loan;
• The fixed charge coverage ratio minimum requirement was reduced to 0.65 to 1.00 for the first quarter and to 0.75 to 1.00 for the second, third and fourth quarters. This ratio was originally 1.00 to 1.00;
• The current ratio minimum requirement was reduced to 0.65 to 1.00 for the first quarter and to 0.80 to 1.00 for the second, third and fourth quarters. This ratio was originally 1.00 to 1.00; and
• The minimum EBITDA requirement was reduced to $2 million for the first quarter and $2.25 million for the second, third and fourth quarters. This requirement was originally $3 million.
The amendment was reached March 26. The company paid a $300,000 amendment fee.
As previously reported, the company received waivers for covenants under the notes that were in default for the third quarter and obtained amended terms for some covenants through June 30.
The waivers were received Nov. 12.
The company said the covenant violations were due primarily to loss of production and revenues associated with the failure of dragline equipment at a surface mine in Alabama.
National Coal is a Knoxville, Tenn.-based coal producer.
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