Nuplex Industries says it is still talking to its bankers about its cash advance facility, as it announced its half-year profit dropped 76 per cent to $5.96 million as demand dried up.
The 2009 interim dividend has been suspended in order to strengthen the balance sheet and repaydebt, which was in the best long-term interests of the company, the board said.
Nuplex shares fell another 15c to $1.20 yesterday. They were $6.50 in March last year. The maker and marketer of speciality resins and chemicals, with factories in 10 countries, said the profit was after one-off costs totalling $5.6 million.
That included $2.9 million of acquisition due diligence costs and $2.7 million for site remediation at Seven Hills in Australia. The Seven Hills and an Auckland property, which were subject to remediation, remained unsold.
Earnings before interest, tax, depreciation and amortisation (ebitda) were slightly ahead of recent market guidance at $43.4 million, while operating cashflow of $44.3 million was comparable with last year.
The big problem for the company is its multi-currency cash advance facility agreements with its banks.
Nuplex needed to have debt of no more than three times ebitda. It failed to comply as at December 31, said John Hirst, Nuplex Group managing director.
Nuplex was required to report its ebitda based on average exchange rates for the prior calendar year, while senior debt was measured at the rate at period end, he said.
However, the dollar was lower then than the average during the year, increasing the ratio, while over the period, the company actually paid down debt in local currencies.
Nuplex was talking to its banks to seek an amendment to the covenant ratio.
