PRT Forest Regeneration Income Fund

PRT Forest Regeneration Income Fund

March 31, 2009 12:43 ET

PRT Provides Updated Financial Outlook for 2009

VICTORIA, BRITISH COLUMBIA--(Marketwire - March 31, 2009) - PRT Forest Regeneration Income Fund (the "Fund") (TSX:PRT.UN) today provided updates on its financial outlook for 2009, and announced the implementation of an interest waiver agreement between the Fund and its operating subsidiary Pacific Regeneration Technologies, Inc (the "Company").

Following on earlier announcements detailing the business outlook for 2009, the Company has forecasted that seedling orders will decline by 20% or more in 2009 relative to 2008. In recent weeks, certain customers have not finalized orders that were previously committed, and based on these changes, management has prepared updated internal forecasts of its financial results and cash flows for 2009 using its best estimates of current market and operating conditions. The Company is currently in compliance with all externally imposed capital requirements which include four main bank covenants. One covenant includes a requirement to maintain a ratio of total debt to adjusted earnings not to exceed 3.5:1 ("debt to earnings"). Based on forecasted financial results for 2009, the Company may not generate sufficient income over the next 12 months to maintain the required debt to earnings ratio. As a result, management has met with PRT's lender and has negotiated a waiver to this covenant for 2009. As a condition of the waiver, no new term debt advances will be authorized by the lender, which could require management to obtain other credit facilities or capital should that become necessary. However, no new term debt advances are currently planned for 2009. The Company expects to maintain compliance with the remaining covenants throughout the year, and will continue to have full access to its operating line of credit.

As announced December 19, 2008 the Fund suspended distributions for 2009. Under the structure of the Fund, the Trust is required to allocate its undistributed earnings to unitholders on an annual basis. The Fund has reviewed opportunities to minimize the impact of non-cash taxable income allocations that may arise in 2009 to taxable unitholders as a result of this decision, and the Trust has agreed to waive the receipt of interest on PRT's intercompany debt with the Fund for 2009 under a forbearance agreement. This interest is used to fund distributions to unitholders under normal operations. As a result of the waiver, the Trust will not accumulate accrued and undistributed earnings in 2009, and, in turn, expects there will be not be a taxable income allocation impact to taxable unitholders.

About the Fund

PRT is the largest producer of container grown forest seedlings in North America, with 14 nursery locations and a capacity to produce over 200 million seedlings annually. Units of the Fund are listed for trading on the Toronto Stock Exchange under the trading symbol PRT.UN.

Forward Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations for customer orders, expectations for cash flows and financial results; and other statements that are not historical fact. Risks and uncertainties include, but are not limited to, future commodity prices and exchange rates, agricultural risks, our ability to grow and supply products in accordance with defined specifications, customer credit risks, liquidity risks, the ability of PRT to comply with its debt covenants, and other risks identified from time to time in the Fund's annual report, and annual information return. These risks and uncertainties may cause actual results to differ materially from the expectations expressed herein. As such, readers are cautioned to not to place undue reliance on forward-looking statements.

Forward-looking statements are based on current expectations and neither the Fund nor PRT assumes any obligation to update such information to reflect later events or developments, except as required by law.

Contact Information

  • PRT Forest Regeneration Income Fund
    Tony Pollard
    VP Finance/CFO
    1-866-553-8733 ext. 229