| As of June 30 and September 30, Ready Mix was not in compliance with the fixed charge coverage ratio with the company's capital expenditure commitment lender, Wells Fargo Equipment Finance. RMI and WFE have amended the agreements to: include a waiver of the fixed charge coverage ratio covenant requirement for the quarters ending June 30 and September 30; have WFE accept payments of interest only for four months, which will defer the company's payment of approximately $695K in principal during such period; require the company to provide approximately an additional $750K in collateral to secure the deferred principal; require the Company to pay WFE an $8.5K consent fee; and require the company to pay WFE 35% of proceeds in excess of related loans and costs if the company were to sell its headquarters building and the real estate on which it is located. RMI also has a covenant requirement with National Bank of Arizona ("NBA"). The NBA loan is secured by RMI's headquarters building in Phoenix, Arizona. The covenant requirement is a minimum adjusted earnings before interest, taxes, depreciation and amortization expense debt coverage ratio evaluated at year end. By letter received August 10, 2009, NBA alleged that the covenant requirement is 1.25 to 1.0 for the year ended December 31, 2008 and that RMI is out of compliance with a ratio of .80 to 1.0. RMI has timely made all payments, is currently in discussions with NBA and expects to obtain a waiver of the covenant requirement and amend the loan agreement. Although these discussions are ongoing and RMI and NBA have agreed in principle to basic terms that would accomplish the foregoing, there can be no assurance that RMI will be able to obtain an amendment or waiver from NBA. If RMI is not able to do so, the $1.3 million note payable that is currently outstanding to NBA could become immediately due and payable and NBA could proceed against collateral granted to it to secure that debt if RMI were not able to repay it. If NBA accelerates the payment requirements, RMI may not have sufficient liquidity to pay off the related debt and there would be a material adverse effect on RMI's financial condition and results of operations. :theflyonthewall.com |
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