(Alliance News) - Low & Bonar PLC on Thursday said its lenders have agreed to waive financial covenants, provided its acquisition by FV Beteiligungs-GmbH goes ahead.
Shares in Low & Bonar were down 5.3% at 14.00 pence in London in morning trading.
Low & Bonar agreed to a GBP107.0 million offer from FV, a subsidiary of German diversified group of companies Freudenberg SE, on September 20.
The UK performance materials company described third-quarter trading conditions as "difficult". Combined weaker trading and "a deterioration in outlook" mean that Low & Bonar now has "less flexibility in managing supplier credit terms than has been the case historically".
As such, Low & Bonar has spoken with its lenders and agreed amendments to its financing agreements. This includes the waiver of financial covenants previously set to be tested on November 30.
However, if the Freudenberg offer "were to lapse or be withdrawn" before that date, then the covenants will be reinstated and tested based on Low & Bonar's financial position on November 30.
If the offer lapses after that date, "those covenants will be reinstated and tested within 14 days of such lapse or withdrawal with respect to the financial position as at the previous month-end." Moreover, if the offer fails to complete by June 20, 2020 then Low & Bonar's schedules covenant test with figures as of May 31, 2020 will go ahead.
Low & Bonar said that it may not be able to comply with its financial covenants if tested, given its "current performance as well as the challenging outlook".
By Anna Farley; email@example.com
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