Residential developer Devine Limited has been given until the end of March to find a solution to its debt problems with lead banker ANZ giving the company a short reprieve after a possible breach of its debt covenants.
Devine announced to the ASX yesterday that ANZ has agreed to extend the date for testing of the relevant covenants for a month.
In its announcement the company said: "Under the terms of the Multi-Option Facility, if, on any testing date for the various covenants, Devine is in breach of a covenant and that breach is not waived, ANZ may declare amounts owing under the facility to be payable on demand.""Devine advises that ANZ has agreed to extend the date for testing of the relevant covenants from 29 February 2016 until 31 March 2016. Devine will continue to work with ANZ to identify possible remedies for the breach."The company is due to announce its financial results tomorrow (Friday).
After previously advising it was expecting to report a loss before tax of more than $11 million for the year ended December 31, it recently revised the guidance to a loss before tax of $34 million.
"The deterioration is substantially a result of the performance of Devine Constructions," the company said. "As a consequence of the downgrade, Devine is announcing today, Devine expects to be in breach of a covenant relating to the Devine Group's consolidated net tangible assets," the statement said.
CIMIC (formerly known as Leighton Properties), which has held a 50% interest in Devine for many years, moved last year to take full control of the company with an initial takeover offer at 75 cents. This was later increased to 81 cents. While the independent expert KPMG stated the offer was 'not fair' the board recommended the offer.
While take up of the offer has been slow - CIMIC has not yet reached 60% shareholding - the company has stamped its authority on the company with the appointment of a new CEO, CFO and Board this year.