PMI amends to change size, eliminate covenants, events of default

By Sara Rosenberg

New York, May 11 - PMI Group Inc. amended its revolving credit facility, reducing the size to $125 million, and eliminating some financial covenants and events of default, according to a 10-Q filed with the Securities and Exchange Commission on Monday.

Specifically, the amendment eliminated the maximum total debt to total capitalization percentage and maximum risk to capital ratio covenants, and the financial strength ratings event of default.

The amendment also revised the minimum adjusted consolidated net worth requirement to not less than $1.2 billion through June 30, $700 million from July 1 through Dec. 31, and $500 million from Jan. 1, 2010 through maturity.

Bank of America is the administrative agent on the deal.

Lenders are being paid a 50 basis point amendment fee.

The amendment was completed on May 8, but will only become effective if certain conditions are satisfied no later than May 29.

Conditions to the effectiveness of the amendment include the sale to the company by PMI Mortgage Insurance Co. of a contingent note received in connection with the sale of PMI Australia, the termination of the existing pledge to the lenders of the capital stock of PMI Mortgage, the pledge by the company to the lenders of the note, and the company's repayment of its borrowing under the facility to $125 million.

If the company is unable to satisfy the conditions, an event of default under the facility will occur on May 30, which would likely result in the company having to repay all outstanding amounts under the facility. The company currently has sufficient funds to repay the credit facility, if necessary.

PMI is a Walnut Creek, Calif.-based provider of residential mortgage insurance and credit enhancement products.

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