This article is from the Australian Property Journal archive
DEVINE is in danger of breaching its debt covenant with ANZ after revealing it expects to a book a loss before tax of $34 million for FY15.
The latest downgrade is significantly worse than Devine’s previous guidance provided on 1 December 2015, which indicated it was likely to report a loss before tax of greater than $11 million for the year ended 31 December 2015.
The company went into a trading halt last week after reviewing its book and it was lifted yesterday.
Devine shares ended trading day at 50.5 cents, down 16.5 cents or 24.63% on news of the significant profit loss.
In a statement, Devine said following further reviews of its books, it now expects to report a loss before tax of $34 million.
Devine blamed the deterioration largely on the performance of Devine Constructions.
“The strategic review of Devine’s business, initiated in January 2016, has been paused pending the finalisation and announcement of the FY15 financial results.
“As indicated in the Target’s Statement prepared by Devine in response to CIMIC’s off market takeover bid, Devine is required to comply with certain financial and other covenants under its multi-option facility agreement with ANZ.
“In the Target’s Statement it was noted that there could be no assurance that Devine will continue to satisfy its covenants.
“As a consequence of the downgrade Devine is announcing, Devine expects to be in breach of a covenant relating to the Devine Group’s consolidated net tangible assets,” the company warned.
A breach of covenant will entitle ANZ to require repayment of the facility on demand.
Devine said it is engaging with ANZ in relation to the potential covenant breach and also the dates on which covenants regarding loan to value, interest cover and debt to EBITDA ratios will next be tested, currently 29 February 2016.
Devine said it does not expect to be able to comply with these ratios at 29 February 2016.
Australian Property Journal
