Allis-Chalmers Energy Inc., Houston, (NYSE: ALY) has amended its $90-million revolving credit agreement to relax the leverage and the interest coverage covenants.
The maximum permitted leverage ratio, which is defined as the ratio of consolidated funded debt to EBITDA for the prior four quarters, was increased to 4.75-to-1 for each quarter through June 30, 2010, from the previous covenant of 4-to-1. The maximum leverage ratio covenant decreases to 4-to-1 as of Sept. 30, 2010.
The minimum required interest coverage ratio, which is defined as the ratio of consolidated EBITDA to consolidated interest expense for the previous four quarters, was decreased to 2-to-1 for each quarter through June 30, 2010, from the previous covenant of 2.75-to-1. The minimum interest coverage ratio increases to 2.75-to-1 as of Sept. 30, 2010.
In addition, permitted maximum capex was reduced to $85 million for 2009 compared to the previous limit of $120 million. The lower limit is consistent with the company’s reduced capex plans for 2009.
Allis-Chalmers chairman and chief executive Micki Hidayatallah says, “We are in compliance with all our debt agreements. However, in this challenging environment we wanted to proactively modify certain financial covenants in our bank revolver to provide additional flexibility. For the twelve months ended Dec. 31, 2008, our actual leverage ratio as defined in the credit agreement was 3.14, while our actual interest coverage ratio was 3.96. Currently, we have $38.5 million in outstanding borrowings and $5.1 million in outstanding letters of credit under our $90 million revolver.”
Allis-Chalmers provides oilfield services domestically primarily in Texas, Louisiana, New Mexico, Colorado, Oklahoma, Mississippi, Wyoming, Arkansas, West Virginia, offshore in the Gulf of Mexico, and internationally, primarily in Argentina, Brazil and Mexico.
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