Orchids Paper Products amends credit agreement; leverage ratio waived

By Angela McDaniels

Tacoma, Wash., April 17 – Orchids Paper Products Co. amended its credit agreement on April 11 to waive a leverage ratio and make other changes, according to a company news release.

The maximum 12-month rolling leverage ratio is waived in the first two quarters of 2017 and will increase to 5.5 to 1 at Sept. 30 prior to being decreased to 4.5 to 1 at Dec. 31, 2017 and reverting to 3.5 to 1 as originally scheduled.

The funding advance for the Barnwell, S.C., mill building was made concurrent with its actual completion in April, making about $6.7 million available to the company.

The period during which funds may be drawn under the draw loan was extended to Dec. 25, 2017 to support the continued development of the Barnwell, S.C., project.

The maximum 12-month rolling fixed-charge coverage ratio is lowered to 1.0 to 1 and 1.05 to 1 for the quarters ending June 30 and Sept. 30, respectively, prior to reverting to 1.2 to 1 as originally scheduled.

The maintenance capital expenditure was reduced to $4.25 million from about $6 million.

The definition of the fixed-charge coverage ratio was modified. The company said that in combination with waivers and changes to the leverage ratios, these modifications give it the time necessary to reduce its debt levels in an orderly manner through increased earnings from new business, collection of outstanding receivables and other potential actions that the company is exploring.

The covenant changes allow Orchids to focus on its business plan to increase production and sales in the second half of 2017, chief executive officer Jeff Schoen said in the news release.

U.S. Bank NA is the administrative agent.

Orchids makes consumer tissue products and is based in Pryor, Okla.

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