Ultimate Electronics expects covenants violations; operating under going concern warning

By Sara Rosenberg

New York, Dec. 13 - Ultimate Electronics Inc. anticipates violating covenants under its credit facility based on weak fourth quarter sales trends, and although it plans on seeking a waiver, the combination of the potential default, a new requirement for additional reserves under its revolver and continued sales decline has raised substantial doubt about its ability to continue as a going concern, according to a company news release.

On Dec. 10, the company was notified by its revolver lenders that they would be requiring significant additional reserves against availability of funds under the facility, starting Dec. 10 and increasing those reserves through Jan. 31, 2005.

The company is examining all of its strategic alternatives including a potential reorganization of its business.

Due to these events, Ultimate Electronics has requested an extension to file its 10-Q for the quarter ended Oct. 31 but expects to file the form before Wednesday.

Ultimate Electronics is a Thornton, Colo.-based specialty retailer of home entertainment and consumer electronics products.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.