Radnor extends loan, forbearance agreements to Aug. 2

By Caroline Salls

Pittsburgh, July 28 - Radnor Holdings Corp. entered into a second amendment on its loans with National City Business Credit, Inc.; Bank of America, NA; KeyBank, NA; and National City Bank that extends the term of the loan agreement to Aug. 2 from July 27, according to an 8-K filing with the Securities and Exchange Commission.

The company also agreed to extend its forbearance, standstill and amendment agreement with Special Value Expansion Fund, LLC; Special Value Opportunities Fund, LLC; and Tennenbaum Capital Partners, LLC to Aug. 2.

In addition, the audit committee for Radnor's board of directors, upon recommendation of the company's management, determined that the consolidated financial statements for the three years ended Dec. 30, 2005 and its interim condensed consolidated financial statements for the periods ended April 1, 2005, July 1, 2005 and Sept. 30, 2005 should no longer be relied upon due to an error in the company's accounting treatment for inventory tolling arrangements.

According to the filing, the error related to an overstatement of inventory and an understatement of liability for inventory on consignment with the company's foodservice packaging operations under some of its tolling arrangements.

Radnor said it has not yet finalized its analysis of the necessary adjustments, but it expects that the cumulative effect of this error will reduce retained earnings by about $4 million through Dec. 30, 2005.

The filing said the audit committee has discussed the restatement with the company's current independent registered accounting firm, and Radnor management has conducted preliminary discussions with its previous independent registered accounting firm.

As previously reported, on July 15, Radnor failed to make an interest payment to lenders under its credit facility with Tennenbaum Capital Partners, LLC.

In addition, on July 1, WinCup Holdings, Inc., a wholly owned subsidiary of the company, failed to make a scheduled principal and interest payment on a promissory note with Polar Plastics Inc., and a notice of default was received on July 7. The amount outstanding under the unsecured note has not been accelerated.

Radnor is a Radnor, Pa.-based foam cup, container and expandable polystyrene bead manufacturer.

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