Fisher and Paykel Appliances has received approval for a waiver of its budget covenant but will face more scrutiny under a new agreement with its bankers.
The whiteware maker revealed last Thursday it was in talks with its banking syndicate for the second time this year amid a profit warning.
The company breached an agreement with its bankers because its trading performance for the six months ended September 30 was more than 20% below the variance agreed to as part of a capital restructuring in May.
Acting chief executive Stuart Broadhurst said its bankers had agreed to waive the breach and accept a revised budget forecast but the company would be subject to testing for the three months to December 31 and the six months to March 31.
However, Mr Broadhurst said Fisher and Paykel was still on track to reduce its debt to below $200 million by March 31.
The company revealed a ballooning debt problem in February after falling sales and a lower-than-expected dollar.
It entered negotiations with its banks and in May reached an agreement for a $575 million new banking facility to go alongside its $189 million capital raising.
Of that debt, $235 million must be paid back by April 30 next year.
Mr Broadhurst said the partial sale of its East Tamaki facility had allowed it to realise $53 million, of which $34 million would be used to pay off the $235 million amortising facility six months earlier than it had to.
The balance would then be used to start repaying a $290 million term debt facility due to be repaid by April 2012.
Mr Broadhurst said the company planned to reduce the facility by $40 million before the end of March.
The company had been forced to come up with a revised budget after sales revenue in its North American business was hit by increased competition and depressed market conditions in its United States business and higher-than-expected costs at its Mexico factory.
Revenue for the full year from North America was expected to be 12% down and its full-year net profit prediction has been slashed from $11.7 million in its capital-raising prospectus to a loss of between $2 million and $5 million.
Fisher and Paykel's share price closed on Wednesday at 69c, easing to 68c yesterday, up from 65c on Friday in the wake of the profit warning.
The lower pricing has prompted some share shuffling among the bigger institutional investors.
On Monday, the Accident Compensation Corporation reduced its stake from 5.05% to 4.68% while, on Wednesday, Australian fund manager Orbis took advantage of the lower price to increase its stake from 6.77% to 7.85%.
