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Fisher & Paykel bank covenants ease as debt falls

Monday 29th March 2010

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Fisher & Paykel Appliances has passed a key first hurdle with its banking backers as the company reduces corporate debt ahead of schedule following its near-failure last year and bail-out by the Chinese manufacturer, Haier.

The company has been operating under Budget Performance Test criteria with its banking syndicate since renegotiating terms on $575 million of long term debt in May last year. This required both repayment of a $235 million tranche by April 30 and prescribed earnings thresholds to be met over the same period.

The tranche repayment occurred six months early in October.

"As a result of this and other activities, net debt has fallen from a peak of $502 million in May 2009 and is expected to be below $200 million as at 31 March," the company said in a statement.

The banks will now operate a Total Leverage Ratio test to replace the Budget Performance Test, requiring that total leverage must be less than three times, tested monthly, moving to quarterly testing if the ratio falls below 2.5% for three consecutive months.

FPA directors said the progress was a "pleasing step towards normal banking terms".

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