Bank Covenants? How will they meet with negative margins....
Wells Fargo bank agreement was just signed in May 2012.
7. FINANCIAL COVENANTS.
Borrower covenants and agrees that, until termination of all of the Revolver Commitments and payment in full of the Obligations, Borrower will:
(a) Minimum EBITDA. At all times during a Covenant Testing Period (including the first and last day thereof) ending on or before May 31, 2013, maintain EBITDA, measured for each period set forth below of at least the amount set forth below opposite such period:
3 month period ended May 31, 2012
3 month period ended August 31, 2012
3 month period ended November 30, 2012
3 month period ended February 28, 2013
3 month period ended May 31, 2013
(b) Minimum Fixed Charge Coverage Ratio. At all times during a Covenant Testing Period (including the first and last day thereof) that begins on or after June 30, 2013, maintain a Fixed Charge Coverage Ratio, measured for the 12 month period ending on the last day of each fiscal month during the Covenant Testing Period (including the first and last day thereof) of at least 1.1 to 1.0.
Why so. Could it be 20nM NAND for Barefoot3? Remember it was that hey had to use more expnsive NAND due to inability to receive lower performance NAND in time. Sounds like inventory is for newer products.
They can't meet them, but the banks can't afford to just let them fail either. We're talking tens of millions of bank dollars at risk here. They will find a way to work it out. It's just going to hurt a little for both parties. How long it will hurt is what I want to know. Which is why I want them to give me some clarity as soon as possible so I know what to do with my investment.