Rock-Tenn amends loan; changing size and financial covenants

By Sara Rosenberg

New York, April 2 - Rock-Tenn Co. amended its credit facility, reducing the available borrowing capacity to $125 million from $300 million, reducing the minimum fixed charge coverage ratio to 1.75:1 from 2:1 and increasing the maximum funded debt to EBITDA ratio to 4:1 from 3.5:1 through Sept. 30, 2004 and to 3.75:1 thereafter.

In addition, under the amendment, the cash costs of certain plant closings are excluded from the fixed charge and funded debt to EBITDA covenant calculations and pension plan charges and credits taken to other comprehensive income after Sept. 30, 2001 are excluded from the calculation of the minimum consolidated net worth covenant.

The Norcross, Ga. packaging company also announced the renewal of its $125 million asset securitization facility through March 29, 2004.

"As a result of our recent issuance of $100 million of 10-year notes at an interest rate of 5.625%, we decided to reduce the bank credit facility from $300 million to $125 million. We amended the covenants in the facility to provide additional financial flexibility. Our combined credit availability under these two facilities is expected to exceed $75 million as of March 31, 2003," explained Steve Voorhees, executive vice president and chief financial officer, in a news release.

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