In May 2009, Fisher & Paykel completed the renegotiation of its long term debt facilities of $575 million. According to the company’s directors, Fisher & Paykel has significantly reduced this debt and is on track to change back to normal banking terms.
In releases to the Australian Securities Exchange (ASX) and New Zealand Exchange (NZL) this morning, the directors of Fisher & Paykel Limited have advised that the company’s funding banks have agreed to revert to a Total Leverage Ratio covenant in recognition of the company’s reduced debt levels.
The long term debt facilities that were implemented in 2009 required the repayment of a $235 million Amortising tranche by 30 April 2010 and included a Budget Performance Test, where prescribed earnings thresholds had to be met.
According to Stuart Broadhurst, CEO and managing director, the company fully repaid this amount well in advance.
“The company fully repaid the $235 million Amortising tranche six months early in October 2009,” he said.
“As a result of this and other activities, net debt has fallen from a peak of $502 million in May 2009 and is expected to be below $200 million at 21 March 2010.”
Due to this strong performance, a Total Leverage Ratio has superseded the Budget Performance Test as of 1 March 2010. This Total Leverage Ratio must be less than three times and is to be tested monthly. Broadhurst said that this will be tested quarterly if the ratio is below 2.5 times for three consecutive months.
“The directors are pleased with the progress that the company has made in reducing debt levels and see the earlier than planned restoration of the Total Leverage Ratio as a pleasing step towards normal banking terms,” he said.