Spinrite Income Fund

Spinrite Income Fund

November 10, 2006 17:29 ET

Spinrite Income Fund Announces Amended and Restated Credit Facility

LISTOWEL, ONTARIO--(CCNMatthews - Nov. 10, 2006) - Spinrite Income Fund (TSX:SNF) today announced that it has reached an agreement with its lending syndicate on an amended and restated senior credit facility. The amendment will provide for a number of significant changes to the credit facility including:

1. A reduction in the term of the agreement with the expiry date changed from February 8, 2008 to December 31, 2007.

2. Distributions to unitholders will not take place during the term of the credit agreement.

3. A monthly repayment schedule in an amount equal to 100% of distributable cash plus any proceeds from the liquidation of fancy yarn inventory.

4. A reduction in the borrowing limit on the operating credit facility from $15 million to $8 million.

5. A change in the calculation of the borrowing base for the operating credit facility whereby borrowings against non-fancy yarn inventory will be limited to $3 million and borrowings against fancy yarn inventory will be prohibited.

6. The classification of certain write-downs of fancy yarn inventory and other costs as extraordinary and non-recurring, thereby adding them back to EBITDA for covenant calculations.

7. An amendment to the Total Funded Debt to EBITDA ratio covenant to the following:

a. 5.00:1.00 for the third quarter of 2006;
b. 5.25:1.00 for the fourth quarter of 2006;
c. 5.00:1.00 for the first quarter of 2007;
d. 3.75:1.00 for the second quarter of 2007;
e. 3.25:1.00 for the third quarter of 2007; and
f. 2.75:1.00 for the fourth quarter of 2007.

8. A change in the Interest Coverage ratio covenant from 3.50:1.00 to 3.00:1.00.

9. A reduction of the maximum annual capital expenditure limit from $2 million to $850,000.

The Fund has agreed to pay a one-time administration fee of $400,000 plus out-of-pocket costs to its lenders in consideration for the amendment with 25% due on closing and the remainder payable in three quarterly instalments beginning February 2007.

Management believes that the changes to the credit agreement will provide the Fund with flexibility in meeting its debt covenants without inhibiting the operation of the business.

The complete amended and restated credit agreement can be found at www.sedar.com.

About Spinrite Income Fund

Spinrite Income Fund is an open-ended, limited purpose trust established under the laws of the Province of Ontario, which indirectly holds an 80% interest in Spinrite Limited Partnership ("Spinrite"). Spinrite is the largest producer and marketer of craft yarn in Canada and one of the largest in the United States. Established in 1952, Spinrite researches, develops, manufactures and markets a broad variety of consumer craft yarns. The company also supports its market with patterns that provide customers with creative ideas for knitted products. Spinrite has approximately 500 employees at its fully integrated manufacturing and distribution centre in Listowel, Ontario.

Forward-Looking Statements

This press release may contain forward-looking statements relating to expected future events and financial and operating results of the Fund that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in the Fund's prospectus filed with the Canadian securities regulatory authorities. Due to the potential impact of these factors, the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

Contact Information

  • Spinrite Income Fund
    Ryan Newell
    Chief Financial Officer
    (519) 291-3780, ext. 278
    (519) 291-3232 (FAX)
    Email: rnewell@spinriteyarns.com