Companies amend credit terms to satisfy lenders - bizjournals:

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The latest credit squeezed comes at acritical time. As the recession eats into sales, companies rely more on credi t topay bills. Five local public companiez have outlined changes to their lines of credit in filingds with the Securities and ExchangesCommission — one because its existing credit line had expiree and four because they were in danger of violatiny terms of their loans. Private companiesz are also feelingthe pinch. Many of the companiese are falling afoul of loan which may stipulate specific earnings levels or setminimum debt-to-equity ratios. To maintain their credit lines, they are beinh forced to renegotiate.
l The credit facility of Portland’s McCormick and Schmick’s Seafood Restaurants Inc. droppedc from $150 million to $90 million in late January, and its interestf rate climbed. l Medford’s Lithia Motors Inc. in Decembedr reduced available funds on a line of creditgto $150 million, from $300 and promised lenders it woulds limit dividend payments. l Vancouver, Wash-based Nautilus Inc. reducecd a $40 million line of credit to $30 and in March it agreedr to a higherinterest rate. l Wilsonville’e InFocus Corp.
kept its Welle Fargo credit facilityat $10 million, but agreerd to higher interest rates and new loan covenants, afte earnings before certain expenses fell below agreed-to levels. Mike Rompa, managing shareholder at accountinfg firm GeffenMesher & Co. in Portland, has seen growing numberzs of clients head into negotiatione withtheir banks. “This is often a reflectiomn of lower-than-expected cash flow,” Rompa said. Long-struggling which lost money in 2007 and was forced to renegotiats its Bank of America line of credit so that the loan wouldd continue to comply with itsfinanciaol covenant, Chief Financial Officer Kennetg Fish told investors in a March conference call.
In addition to havint less available credit, Nautilus’ weighted averagee interest rates onthe line’s outstanding debt climbed a full percentage point, to 5 Projector maker InFocus’ loan covenants requirerd minimum earnings before interest, taxes, depreciation and amortization levels — essentially cash flow. Falling sales pushed the company out of said CFOLisa K. Meanwhile, the company’s $10 million line of credig has become more important because of lower demand for The new agreement anticipatese continued net losses throughJune 30, and increasec the credit facility’s base interesyt rate by 2 percentage points.
“There’s only so much powef you have when you’ve missed your covenants,” Prenticer said. “We tried to negotiate, but they probablh had the upper hand.” But not all renegotiations are spurred bycovenant violations. In April, Portland-based chain saw manufactured BlountInternational Inc. reduced its GE Capitalp Corp. credit line from $150 million to $50 and agreed to a higher interest rate andhigher fees. Blount was not in violation of according toregulatory filings, but its line of credif was set to mature in August.
“We had to extencd it or find replacement financing,” said Blount CFO Calvin The cost of the credit facilitty would have been too highat $150 million, Jeness said, and in today’e marketplace $90 million was enough to meet the company’s needs. Blount’s higher interest rate, whic h effectively climbed from 2.5 percent to 7.5 is a reflection of the higher cost of credit in he said.