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Entercom Communications Corp. Message Board

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  • pjv2xyw9dww4b5 pjv2xyw9dww4b5 Sep 5, 2010 10:28 PM Flag

    ETM does not pay back their debts.

     

    Under "Liquidity and Capital Resources" in the 03/31/2010 10-Q ( http://sec.gov/Archives/edgar/data/1067837/000110465910026724/a10-5777_110q.htm ) is:

    "On March 11, 2010, we amended our Bank Facility (the “Amendment”). In connection with the Amendment, certain key terms, as defined within the Bank Facility, were revised as follows:

    · Depending on the Consolidated Leverage Ratio (Consolidated Funded Indebtedness to Consolidated Operating Cash Flow), we may elect an interest rate equal to: (1) the Eurodollar Rate plus fees that can range from 0.5% to 2.5%; or (2) the Base Rate plus fees that can range from 0.0% to 1.5%, where the Base Rate is the highest of: (a) the Federal Funds Rate plus 0.5%; (b) the Eurodollar Rate plus 1.0%; and (c) the Prime Rate;

    · During periods when the Consolidated Leverage Ratio exceeds six times, we are: (a) restricted in our ability to take certain actions, including but not limited to, the payment of dividends and the repurchase of our stock; and (b) subject to additional limitations on acquisitions and investments.

    Under the Amendment, Consolidated Leverage Ratio cannot exceed seven times in 2010. This covenant ratio decreases quarterly in 2011 to a ratio of six times as of December 31, 2011."

    Also:

    "The Amendment was treated as a modification to a debt instrument. As a result, in the first quarter of 2010 we recorded deferred financing costs of $5.2 million related to the Amendment that will be amortized under the effective interest rate method over the remaining life of the Bank Facility. In addition, unamortized deferred financing costs of $3.1 million as of the Amendment date will continue to be amortized over the remaining life of the Bank Facility."

    In March, 2010, it cost the company an extra $5.2 million to get the Consolidated Leverage Ratio limit increased to 7 for a while. Notice that the interest rate elections do not work out to particularly high rates, and the $5.2 million fee is less than one per cent of the roughly $700 million debt. The banks were willing to raise the ratio for a while for a fee that is equivalent, worst case ballpark figure, to a 1% interest rate increase--and this was in March. By early 2011, the debt will be smaller, and the interest rate on the refinancing will be no greater than it is now.

    This topic is deleted.
 
ETM
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