Pope Talbot (NYSE:POP)
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Pope & Talbot, Inc. (NYSE:POP) today announced that it entered into a
forbearance agreement with its senior secured lenders to extend access
to liquidity provided by the revolving credit facility under its senior
secured credit agreement for six weeks while it continues to explore
options to improve its balance sheet. The forbearance agreement requires
the Company to expand those efforts during the six-week forbearance
period to include soliciting offers to purchase all or substantially all
of the Company’s assets or equity interests.
As Pope & Talbot previously disclosed would be likely, it is out of
compliance with a financial covenant in its senior secured credit
agreement calculated as of June 30, 2007. The covenant requires the
Company to maintain a certain minimum EBITDA —
generally earnings before interest, taxes, depreciation and amortization
with certain additional modifications as set forth in the credit
agreement. The Company was unable to generate the EBITDA required under
its credit agreement for the four-quarter period ended June 30, 2007 and
therefore is in default under the credit agreement. Pope & Talbot
expects to report earnings for the second quarter of 2007 and file its
Form 10-Q quarterly report on August 9, 2007.
Pope & Talbot has entered into a forbearance agreement dated as of July
31, 2007 with its secured lenders. Pursuant to the agreement, the
lenders have agreed that, until September 17, 2007, the Company will
continue to have access to its revolving credit facility with total
availability of $67 million. The agreement also provides for default
rate interest to be paid effective July 1, 2007 and a forbearance fee,
and for the implementation of a mechanism, similar to that which exists
in other corporate asset-based loans, through which cash in the Company’s
deposit accounts will be used to repay borrowings under the revolving
credit facility on a daily basis and correspondingly increase
availability under the facility.
Although the Company may seek further forbearance or other relief from
its senior lenders when the current agreement expires on September 17,
2007, it cannot provide any assurance that it will be successful in
obtaining such further forbearance or other relief, or as to the terms
upon which such forbearance or other relief may be granted. Even if the
Company is successful in obtaining additional covenant relief, it will
continue to be challenged in its ability to maintain adequate levels of
liquidity relative to the size of its operations. Accordingly, the
Company is continuing to explore alternatives to strengthen its balance
sheet and generate cash, including one or more possible asset sales or
other capital infusions, and is analyzing its ability to restructure its
debt and other liabilities. The Company has retained Rothschild Inc. to
assist in those efforts.
Caution Regarding Forward-Looking Statements:
This press announcement and other Company communications may contain
statements relating to future performance of the Company that are
forward-looking statements. These statements relate to the Company's
future plans, objectives, expectations and intentions and may be
identified by words like "believe," "expect," "may," "will," "should,"
"seek," or "anticipate," and similar expressions. The Company cautions
readers that any such forward-looking statements are based on
assumptions that the Company believes are reasonable, but are subject to
a wide range of risks including, but not limited to, risks associated
with future financial results and liquidity including the Company's
continued ability to finance its operations in the normal course, the
continuation of the forbearance agreement without the occurrence of a
termination event thereunder or the potential necessity for additional
forbearance agreements, the possibility that the Company may need to
commence bankruptcy proceedings, fluctuation of the borrowing base and
other limitations that may affect the Company's ability to borrow under
its revolving credit facilities or otherwise, the Company's relationship
with and payment terms provided by its trade creditors, additional
financing requirements, the results of renegotiating certain key
commercial agreements, the effect of commodity and raw material prices,
foreign currency fluctuations, the effect of U.S. housing market
conditions and other uncertainties previously detailed in the Company's
filings with the SEC. Due to these uncertainties, there is an inherent
risk that actual results will differ materially from any forward-looking
statements. The Company is under no obligation to (and expressly
disclaims any such obligation to) update or alter any forward-looking
statements whether as a result of new information, future events or
otherwise.