RHI Entertainment unit secures extensions to forbearance agreements

By Caroline Salls

Pittsburgh, March 11 - RHI Entertainment, Inc. subsidiary RHI Entertainment, LLC's first-lien and second-lien forbearance agreements have been extended to March 31, according to an 8-K filed with the Securities and Exchange Commission.

The agreements were previously scheduled to expire on Feb. 26, but the extensions and temporary default waivers, which were also extended to March 31, were granted under amendments to the subsidiary's first-lien and second-lien credit agreements.

Also under the amendments, RHI Entertainment, LLC's minimum cash balance was reduced to $10.0 million.

In addition, a requirement for delivery of audited financial statements for the fiscal year ended Dec. 31 was added, as was a requirement for delivery of February monthly financial statements, a requirement for delivery of status reports and contractual documentation related to the production of the subsidiary's 2010 slate and a requirement for delivery of documents related to restructuring of some of the company's contractual commitments.

According to the 8-K, each amendment also adds more specified defaults under the credit agreements, including cross defaults resulting from the failure to make deferred purchase price payments in excess of specified thresholds, defaults stemming from the failure to pay rent at the subsidiary's headquarters; defaults stemming from violation of a covenant prohibiting negative pledges, defaults arising from violation of a covenant prohibiting the assignment of receivables; and defaults arising from public admission in SEC filings of an inability to pay debts.

The company said the forbearance agreements are short-term arrangements designed to allow the subsidiary to work with the lenders to develop a longer-term debt restructuring strategy.

If the defaults are not cured by March 31 and the debt is accelerated or the lenders foreclose on collateral, RHI said the subsidiary would likely be forced to file for Chapter 11 bankruptcy.

RHI is a New York-based developer, producer and distributor of new made-for-television movies, miniseries and other television programming.

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