SFK Pulp to Breach Financial Covenant
June 29, 2009 (Press Release) - SFK Pulp announces that, due to difficult market conditions, it will be, as of June 30, 2009, in breach of the interest coverage ratio prescribed in its credit agreement.
Under the terms of this agreement, SFK Pulp is required to maintain an interest coverage ratio of 2.0:1.0.
SFK Pulp is currently in discussions with its lenders to negotiate an amendment and is reasonably confident that it will reach a satisfactory agreement with them in the near term.
SFK Pulp also announces that it will record a US$2.8 million provision in its quarterly results for the period ending June 30, 2009, as a result of Fraser Papers Inc.'s recent filing for protection under the Companies' Creditors Arrangement Act (Canada). This amount represents all of the amounts owed to SFK Pulp by Fraser Papers.
SOURCE: SFK Pulp