Tunstall Healthcare asks lenders for covenant extension

click to enlargeBreaking News. A report in S&P Capital IQ LCD (McGraw-Hill Financial) published Thursday (subscription required), states that Tunstall Healthcare Group has asked its lenders to extend for one year the step-down provisions in its loan covenants, from this December to December 2015. ‘Step-down’ is the process whereby a company begins to de-leverage over time by reducing the ratio of debt to earnings before interest, taxes, depreciation and amortization–EBITDA) and thereby add value to the company for its lenders.  Responses are due by mid-November.

The extension request indicates that the decline in UK and US revenues evident in our July report on their FY 2013 results continue, as do the perils of leveraged debt. Charterhouse Capital Partners, their owner since 2008, just invested an additional £20m in the company in addition to their original purchase price of £514 million, with £242 million of it in debt. This can be viewed as they present–“to strengthen its financial position and support the implementation of the Group’s growth strategy”–or as a lifeline (a rather short one) to keep operations going until the new management in place on both sides of the Atlantic can improve results and especially recover the business that Tunstall ostensibly bought with AMAC.

Tunstall seeks covenant reset (PDF)  Hat tip to one of our reliable sources for access to this subscription site. It should be noted that as of Thursday evening (NY), there has been no additional reporting to LCD.

Previously in TTA: Tunstall secures additional £20 million from Charterhouse: implications? (6 Oct)Tunstall’s unhappy lenders and the consequences of debt service (22 May)

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