Is this person correct? Read for yourself:
While I am not an expert in corporate finance, I am concerned about AHBelo's cash flow and its loan obligations to its lenders.The information I am going to refer to is in the company's annualreport (10-k report), available on the web at http://phx.corporate-ir.net/phoenix.zhtml?c=219524&p=irol-sec
Here is a summary of that it says regarding its credit arrangements with the banks:
-- On February 4, 2008, the Company entered into a $100 million credit agreement with JP Morgan Chase Bank, J.P. Morgan Securities, Banc of America Securities and Bank of America. At that time the company had no debt.
-- As of September 30, 2008, the Company was not in compliance with the credit agreement. The company has used $10 million of its line of credit.
-- During the fourth quarter of 2008, the Company's bank group approved an amendment credit agreement. (In part reducing the line of credit to $50 million.)
-- On January 30, 2009, the Company amended its credit agreement again. Among other matters, the amended credit document creates a line of credit secured by the Company's accounts receivable, inventory, real property and other assets; and sets earning benchmarks that the company must meet.Under the credit agreement the Company must meet the minimum adjusted EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) as outlined below:
For the six months ended March 31, 2009: -$4,000,000 (a negative number)
For the nine months ended June 30, 2009: $6,500,000
For the 12 months ended September 30, 2009: $15,000,000
For the 12 months ended December 31, 2009: $22,500,000
The key question is whether the company and meet these benchmarks. If it doesn't, several things could occur:
-- AH Belo renegotiates its credit agreement
-- The banks foreclose on AH Belo's property
-- The company goes into bankruptcy
My question: How realistic is it that AHBelo will meet any of those goals? Do we hit the wall at the end of the month?
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