Friday, February 13, 2009
Bank of Voorhees
By Martin Arnold and Anousha Sakoui
Published: February 12 2009 18:01
Friday the 13th marks doomsday for many leveraged companies as they prepare to confirm to lenders whether or not they have breached covenants on their debt.
Most companies financed with riskier loans are given 45 days from the end of a quarter to confirm that they have met covenants. Debt specialists and private equity funds expect on Friday to mark the point from which a flood of covenant breaches will start coming through.
”I would be very surprised if there are many businesses that meet the forecasts set at the time the debt was arranged,” said Richard Basham, co-head of European loans and leverage finance at Citi.
“Most leveraged companies are likely to be facing the likelihood of breaching covenants or, worse, suffering liquidity issues.”