Pac-West warns available resources may not be enough over next 12 months

By Caroline Salls

Pittsburgh, April 2 - Pac-West Telecomm, Inc.'s available resources may not be enough to satisfy its operating and capital requirements for the next 12 months if it cannot eliminate or reduce continued losses and the company may not be able to comply with covenants under its senior secured credit facility, according to an 8-K report filed with the Securities and Exchange Commission.

Pac-West said its resources may not be sufficient even if it does have access to the senior secured credit facility.

The company said it expects it may not be able to comply with the credit facility covenants as early as the second quarter of this year, which will affect its ability to borrow under the facility. The company said the facility is a critical source of operating funds.

In addition, the company said it will not be able to file its 10-K report for the year ended Dec. 31 because it needs more time to complete the preparation of its financial statements.

In particular, in the course of preparing the 10-K, the company said it determined that some of its long-lived assets may be impaired and it is in the process of obtaining a valuation to determine whether there is an impairment and the magnitude of any impairment.

Pac-West said it does not currently believe that it will be in a position to file its 10-K within the 15 days provided by the Securities Exchange Act of 1934 because of the time that will be required to obtain an independent appraisal on which to base the impairment analysis.

According to the 8-K, as part of Pac-West's financial restructuring, an affiliate of Columbia Ventures Corp. purchased the company's senior secured credit facility from Comerica Bank.

The first tranche of the amended term loan was drawn to fund the purchase in November, and Pac-West drew $1.2 million against the second tranche on Friday. The revolver remained undrawn as of Friday.

Pac-West is a communications company based in Stockton, Calif.

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