Cash Systems receives waivers of convertible notes EBITDA threshold default

By Caroline Salls

Pittsburgh, Aug. 9 - Cash Systems, Inc. has obtained waivers of a default on its $20 million of senior secured convertible notes, according to an 8-K filed with the Securities and Exchange Commission.

Specifically, the noteholders have agreed to waive any default arising from the company's failure to meet quarterly financial thresholds on consolidated EBITDA until Aug. 20.

Cash Systems said the waivers are designed to give the company and the noteholders enough time to negotiate a related amendment to the note indenture that will modify the quarterly consolidated EBITDA financial threshold, increase the interest rate on the notes to 7.5% from 6.5%, give noteholders the right to require the company to redeem a portion of the notes at face value on Oct. 10, 2008 and to redeem some of the notes at 130% of face value on the same date.

The amendments will also change the exercise price of the warrants that were issued with the notes and allow issuance of additional warrants.

If the company and the noteholders do not reach an amendment agreement by Aug. 20, the company said it will be in default on the notes.

In addition, if Cash Systems is unable to secure alternative financing or raise additional capital to repay the outstanding balance on the notes at maturity, the noteholders would be entitled to foreclose on substantially all of the company's assets.

Based in Burnsville, Minn., Cash Systems provides automated teller machines.

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