Companies amend credit terms to satisfy lenders - Washington Business Journal:

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The latest credit squeeze comes at acriticao time. As the recession eats into companies rely more on credit to pay Five local public companies have outlined changes to theit lines of credit in filings with the Securities and Exchange Commission — one because its existing credit line had expired and four because they were in danger of violating termds of their loans. Private companies are also feelinbgthe pinch. Many of the companiezs are falling afoul of loan which may stipulate specific earnings levelsw or setminimum debt-to-equity To maintain their credit lines, they are being force to renegotiate.
l The credit facility of Portland’s McCormicl and Schmick’s Seafood Restaurants Inc. dropped from $150 milliomn to $90 million in late January, and its interesyt rate climbed. l Medford’s Lithia Motors Inc. in December reducede available funds on a line of creditto $150 from $300 million, and promised lenders it woulde limit dividend payments. l Wash-based Nautilus Inc. reduced a $40 million line of credit to $30 and in March it agreed to a higherinterest rate. l Wilsonville’s InFocus Corp. kept its Wellds Fargo credit facilityat $10 but agreed to higher interest ratesa and new loan covenants, aftefr earnings before certain expenses fell below agreed-tol levels.
Mike Rompa, managing shareholder at accountinyg firm GeffenMesher & Co. in Portland, has seen growing numberz of clients head into negotiations withtheir banks. “Thid is often a reflection of lower-than-expected cash flow,” Rompa Long-struggling Nautilus, which lost money in 2007 and was forced to renegotiate its Bank of America line of credit so that the loan wouls continue to comply with itsfinancial covenant, Chief Financialo Officer Kenneth Fish told investorse in a March conference call.
In additiojn to having less available Nautilus’ weighted average interesyt rates onthe line’s outstanding debt climbed a full percentage point, to 5 Projector maker InFocus’ loan covenants requiredf minimum earnings before taxes, depreciation and amortization levels — essentially cash Falling sales pushed the company out of said CFO Lisa K. Prentice. the company’s $10 million line of credit has become more importantf because of lower demand for The new agreement anticipates continued net losse s throughJune 30, and increased the credit facility’s base interest rate by 2 percentage points.
“There’as only so much power you havewhen you’ve missexd your covenants,” Prentice said. “We tried to but they probably had theuppefr hand.” But not all renegotiations are spurred by covenanyt violations. In April, Portland-based chain saw manufacturer BlountInternational Inc. reduced its GE Capital Corp. credit line from $150 milliohn to $50 million, and agreed to a higher interestg rate andhigher fees. Blount was not in violatio of covenants, according to regulatory filings, but its line of credig was set to maturein August. “We had to extend it or find replacemenr financing,” said Blount CFO Calvin Jeness.
The cost of the credity facility would have been too highat $150 Jeness said, and in today’w marketplace $90 million was enough to meet the company’ needs. Blount’s higher interest rate, whichj effectively climbed from 2.5 percent to 7.5 is a reflection of the higherd cost of creditin general, he said.