Centerline expects covenant non-compliance upon waiver expiration

By Sara Rosenberg

New York, July 20 - Centerline Holding Co. anticipates being unable to comply with the fixed charges or total leverage ratios under its credit facility once its current waiver expires on Oct. 5, according to an 8-K filed with the Securities and Exchange Commission on Friday.

The company said it would pursue any options available to avoid the consequences of the covenant breach, such as getting additional waivers, extending, modifying or restructuring the debt obligations, disposing of assets, and pursuing other strategic and financial alternatives.

A default under the credit agreement would result in a cross default under the company's mortgage banking warehouse facilities, which could eliminate its ability to originate mortgage loans. This inability to make loans would have a material adverse effect on Centerline's business.

The company warned that if it defaults on the credit facility and lenders choose to exercise their rights, it may need to seek bankruptcy protection.

Bank of America is the administrative agent on the credit facility.

Centerline is a New York-based provider of real estate finance and asset management services for multifamily housing.

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