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Promisia Healthcare Limited (NZX: PHL) Banking Covenant Update

Thursday 28th October 2021

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Further to the announcement of 31 August 2021, Promisia Healthcare Limited (NZX: PHL ) can advise that it has now concluded a constructive dialogue with the BNZ regarding its banking covenants.

As previously advised, the company was in breach of its EBITDA / Interest covenant for the quarter ended 30 June 2021. Under this covenant EBITDA was to be at least twice interest costs. Discussions with the BNZ included questioning whether the covenants were set at the appropriate level. In addition, the company advised that at the current levels a further breach of the EBITDA / Interest covenant for the September quarter will occur. The BNZ has advised in writing today that the EBITDA/Interest covenant will remain in place at the same level and, accordingly, the company advises that it has breached the EBITDA/Interest covenant for the quarter ended 30 September 2021. The BNZ has advised that it will not be taking any action at this time in respect of a breach for either the June or September quarters but does reserve all of its rights with respect to the breaches.

In reviewing the June quarterly covenant reporting a breach of the Total Debt / Total Assets Covenant given by the company was also discovered. Under this covenant the company’s total debt is to not exceed 71% of total assets at all times. The company had considered that it complied with this covenant but was calculating this covenant on the basis of total interest-bearing debt. However, the BNZ calculated this covenant on the basis of total liabilities, meaning that all trade creditors, general provisions, lease commitments reported under IFRS16, as well as residual liabilities under occupation right agreements needed to be factored in. This is despite the liabilities under occupation right agreements only needing to be satisfied when a new occupation right agreement is sold.

Using the BNZ’s calculation the Total Debt / Total Assets position for the June quarter was 71.07%. The BNZ has provided a waiver of this covenant for the June quarter and removed this covenant as an ongoing requirement for the company.

For further information please contact Mr Stephen Underwood, Chairman, on Ph 027 499 3387

Please see the link below for details

Banking Covenant Update

Source: Promisia Healthcare Limited

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