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Arctic Glacier's secured lenders refuse extension, shares sink

Published: 15:25 12 Sep 2011 BST

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Arctic Glacier Income Fund (TSE:AG.UN) announced Monday its second lien secured lenders, CPPIB Credit Investments and West Face Capital, have refused a further extension of the period of waived compliance under Arctic Glacier's credit facilities.

In August, the makers of packaged ice said it was in breach of certain financial covenants, including those governing maximum leverage ratios, interest coverage ratios, fixed charge coverage ratios, and minimum EBITDA levels, under its credit facilities as of June 30. Lenders waived compliance until early this month.

The company said both CPPIB and West Face have issued a notice of default, but have not accelerated the owed obligations. Arctic Glacier also said it expects its first lien lenders, compelled by this announcement, to make a similar decision.

As a result, the debt-laden company's shares sank 23.08% as of 9:59 am EDT in Toronto, to trade at $0.10. Over the last year, Arctic Glacier's stock has shed 90.91%.

Arctic Glacier was also unable to retire $94.2 million in convertible debentures by their July 31 maturity date, opting to issue 311.3 million units to debenture holders, increasing its outstanding equity to 350.3 million units.

During its second quarter, Arctic Glacier agreed to settle four outstanding direct purchaser actions against it in Ontario and Alberta by Canadian direct purchasers of packaged ice.

The company agreed to pay $2.0 million in out-of-court resolution, so as to "put such legal matters behind the company and move forward," it said.

Still, the Winnipeg, Manitoba-based company is facing several ongoing US state investigations regarding antitrust laws, though there has been no movement for some time, it said.

The lawsuits alleged that Arctic Glacier and a second, Texas-based packaged ice company, Reddy Ice, were operating in an "anti-competitive behaviour" in the U.S. and Canada.

At the end of June, Arctic Glacier had a capital deficiency of $284.9 million.

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