Silicon Graphics alters loan agreement a seventh time

For the seventh time in just over two year, Silicon Graphics has modified the terms of a credit agreement it has that is administered by Morgan Stanley. The latest amendment made it possible for Silicon Graphics to defer interest payments due over the next two years by adding their amount to the principal amount, unless certain levels of consolidated earnings before deductions for interest, taxes, depreciation and amortization (EBITDA) are reached.

Another new covenant was added regarded minimum required levels of EBITDA, which grow over the next two years. As of March 27, the company must achieve $1 million of EBITDA; $5 million, by June 26; and $10 million by Sept. 25 and fiscal quarter afterwards.

The latest amendment also tightened financial reporting requirements by the company to its creditors. In August, the Silicon Graphics agreed to provide its lenders with a “minimum thirteen week cash forecast on a monthly basis” and to offer them monthly conference calls with management and any financial advisers. The latest amendment says that the company must offer lenders “bi-weekly conference calls.”

 

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