U.S. Concrete debt refinancing doubtful before maturity, payment date

By Caroline Salls

Pittsburgh, March 16 - U.S. Concrete, Inc. said there is "substantial uncertainty" that it will be able to extend or refinance its debt before the April 1 interest payment date on its 8 3/8% notes given the negative conditions in the economy and credit markets and the company's market, according to a 10-K filed with the Securities and Exchange Commission.

The company said it is obligated to make an $11.4 million interest payment on the notes on April 1, and would have 30 days to cure a payment default.

If U.S. Concrete does default on the payment, the noteholders could accelerate payment on the notes and an event of default would be triggered on its credit agreement.

If the notes and credit agreement are accelerated, the company said its lenders would have the right to prohibit payments on the 8 3/8% notes for up to 180 days.

Although a recent credit agreement amendment gave the company additional access to liquidity, U.S. Concrete said the inclement weather in the regions in which it operates and the overall continued decline in activity has decreased the availability under the credit agreement to $26.6 million as of March 12.

The company said it has been forced to take actions to conserve cash, including delaying payments to some vendors and suppliers.

In addition, if the available liquidity under the credit agreement falls below $20 million, U.S. Concrete said it will not be in compliance with the minimum fixed-charge coverage ratio of 1 to 1, which could trigger a default on the credit agreement and demand for payment.

According to the 10-K, there was $21.4 million outstanding at March 15 under the credit agreement. In addition, if Superior is not able to renegotiate its credit agreement, which is scheduled to mature on April 1, the company would owe $6.6 million on that agreement, as well as the amount of the notes interest payment.

U.S. Concrete said it may not be able to repay or refinance the debt under these circumstances, and it may not have enough assets to make the payments when due.

If its debt instruments were accelerated or if it defaulted on the fixed-coverage ratio, the company said it could be forced to file for Chapter 11 bankruptcy.

U.S. Concrete is a Houston-based cement manufacturer.

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