Weigh-Tronix says company's future depends on setting new bank covenants

New York, Feb. 19 - Weigh-Tronix, LLC said its ability to continue as a going concern depends on negotiations currently under way to set new levels for the covenants in its credit facility.

Following a series of amendments, the company is now operating under a waiver of defaults on its credit facility that runs through March 22, Weigh-Tronix said in a filing with the Securities and Exchange Commission.

By March 22, the company is required to reach an agreement in writing with its bank lenders on resetting the covenants in its credit facility. Weigh-Tronix must also provide a report on its debt status and a cash budget through April 30, 2002, according to the SEC filing.

To assist in the cash flow analysts and to help asses strategic options, Weigh-Tronix said it has hired financial consultants.

The company said in the SEC filing it "intends to negotiate a Reset Amendment with its senior lenders that will set financial covenants that are attainable by the Company given its business plan and projected future financial performance. There can be no assurance that a Reset Amendment acceptable to the Company will be negotiated. The Company's ability to continue as a going concern is dependent upon its ability to reach an agreement on an appropriate Reset Amendment and to comply with the terms thereof."

As part of the current amendment to its credit facility terms running through March 22, Weigh-Tronix can only draw up to $2.5 million from its revolving credit facility, subject to the existing borrowing base formula and total facility provisions. Borrowings above the $2.5 million are possible but only if the extra is guaranteed by Berkshire Partners.

Weigh-Tronix also said in its SEC filing that on Feb. 7, 2002 it sold the business and assets of its consumer segment, Salter Housewares, to Barclays Private Equity for $16.9 million. Net proceeds of $14.1 million, after fees and expenses of $2.5 million and an escrow of $0.3 million, were used to pay down bank debt.

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