National Beef in-talks with lenders to amend, waive covenants

By Sara Rosenberg

New York, April 6 - National Beef Packing Co. LLC is in discussions with its bank group about amending or waiving some covenants that become more restrictive at the company's fiscal-2006 year-end so as to avoid potential non-compliance, according to a 10-Q filed with the Securities and Exchange Commission Thursday.

At the fiscal year-end, the company will be subject to a maximum funded debt to EBITDA covenant of 4.50 to 1.00 for the quarter ended May 31, 4.25 to 1.00 for the quarter ended Aug. 31 through Nov. 30, 4.00 to 1.00 for the quarter ended Feb. 28. 2007 through May 31, 2007 and 3.75 to 1.00 for the quarter ended Aug. 31, 2007 and thereafter.

The company will also become subject to a maximum senior secured funded debt-to-EBITDA ratio of 3.25 to 1.00 for the fiscal quarter ended May 31 and 2.75 to 1.00 for the fiscal quarter ended Aug. 31 and thereafter.

There will also be a minimum four-quarter rolling EBITDA of $72 million for the quarter ended May 31, $75 million for the quarter ended Aug. 31 through May 31, 2007 and $85 million for the quarter ended Aug. 31, 2007 and thereafter.

Lastly, the company will be subject to a minimum four-quarter rolling debt service coverage ratio of 2.00 to 1.00.

Until the fiscal year-end comes around, covenants that the company must comply with include a minimum four-quarter rolling EBITDA of $50 million and a minimum borrowing base availability of at least $25 million.

National Beef is a Kansas City-based meatpacker.

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