Farm Pride operating “as usual” despite lending covenant breach

Posted by Daniel Palmer on 13th January 2010

Australian egg marketer Farm Pride has informed shareholders that it has received a notice from its bankers relating to a breach of one of its lending covenants.

The ASX-listed egg firm looked to quell concerns about their future, however, saying they were hopeful a new agreement could be reached soon.

“The Company is in discussions with its Bankers and in the process of finalising details relating to a new Business Finance Agreement on existing terms and conditions,” they informed shareholders in a statement released to the ASX. “Given the tenor of recent discussions there is no reason to believe a new agreement will not be finalised over the next few weeks.”

“The company is operating on a “business as usual” basis whilst a new agreement is finalised.”

Farm Pride has had a difficult year with current financial difficulties following a breach to its interest covenant on outstanding loans at the end of June. The company looked as if they may have addressed the funding issues in October, announcing that it had increased its short-term facilities and renegotiated its business finance facility. However, their investment in free range – brought about by a transition period in the egg industry away from caged eggs – continues to leave them with debt worries.