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Forest City looks to extend $750 million revolver
By Angela McDaniels
Tacoma, Wash., March 30 - Forest City Enterprises, Inc. is in negotiations with its lenders to extend its $750 million revolving credit facility due March 2010, according to the company's 10-K report for the fiscal year ended Jan. 31 filed with the Securities and Exchange Commission on Monday.
The company anticipates that an extension will result in a reduced commitment from the lenders, increased borrowing costs and modifications to the financial covenants.
If the extension is not made to a level that will support the company's operating cash flows, Forest City plans to raise capital through asset sales, admitting other joint venture equity partners into some of its properties, curtailing all capital expenditures and/or raising funds in a public or private equity offering.
As previously reported, the revolver was amended on Jan. 31 following non-compliance with a non-financial covenant linked to a $15 million purchase of Forest City's putable equity-linked senior notes for $10.6 million. The company said the non-compliance was unintentional.
The amendment increased the borrowing rate to Libor plus 250 basis points, further restricts the company's ability to purchase, acquire, redeem or retire any of its capital stock and prohibits it from paying dividends on its capital stock.
The company said that as of Jan. 31, it was in compliance with all of the revolver's financial covenants and had $365.5 million of borrowings and $65.95 million letters of credit outstanding under the revolver.
KeyBank NA is the administrative agent on the revolver.
Forest City Enterprises is a Cleveland-based diversified real estate company that manages, acquires and develops malls, shopping centers, office properties, apartment buildings and planned communities.
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