BearingPoint looking at new $100 million revolver

New York, April 20 - BearingPoint Inc. said it has an indicative term sheet for a new $100 million five-year revolver.

But it added that the lender has not yet completed due diligence and the terms and conditions have not been agreed.

The company disclosed the planned new financing in an 8-K filing with the Securities and Exchange Commission.

BearingPoint also launched a $250 million convertible bond offering in the Regulation D market; sources in the convertible market said Morgan Stanley would be lead placement agent for the deal.

No other information was available on the series C convertible issue.

McLean, Va.-based BearingPoint, formerly KPMG Consulting Inc., said proceeds would be used to collateralize and/or replace letters of credit under its existing credit facility, which may involve terminating the credit facility, to support letters of credit or surety bonds otherwise in respect to its state and local business and for general corporate purposes.

On Wednesday in a SEC filing, BearingPoint said that a previously reported "triggering event," resulting from a combination of various factors including downgrades in its credit rating in December, would result in an estimated impairment charge of $250 million to $400 million to fourth quarter results, which are being restated.

The company has made a notice of late filing for its 2004 annual report at the SEC as well.

BearingPoint also said in a filing with the SEC that on Tuesday its senior management decided that previous financial reports should not be relied on, specifically the 10-Q filings for the first three quarters of fiscal 2004, its 10-K for the six-month transition period ending December 2003 and its 10-K for the year to June 30, 2003.

The company added that it has not yet determined the size of the errors but noted that given the "low levels" of net income in some of the periods affected the changes are "highly likely" to be material and will require restatements.

Although it does not yet have figures for the first quarter of 2005, BearingPoint anticipates reporting a net loss and also expects to report a net loss for all of 2005. It does not foresee generating cash from operations during the year, either.

Cash needs for the remainder of the year will require the company to come up with an additional $250 million to $400 million.

"We will need to meet this through a combination of capital raising, credit arrangements and cost-cutting activities," BearingPoint said. At March 31, its cash balance was approximately $200 million.

BearingPoint said it expects to terminate its current credit facility that matures on May 22, 2005 by April 29. It has already given notice to its bank lenders that it will be unable to deliver its audited financial statements by that date, as required by the terms of the facility. Because of the failure to deliver the figures, the company will be unable to access the facility.

As of April 19 there were no borrowings and $88.1 million of letters of credit outstanding. Those guarantees will have to be collateralized with cash if the facility is terminated. Further cash will be needed as surety bonds for some clients, for a total outlay of $128 million.

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