U.S. Concrete might not meet debt ratio on convertible notes in April

By Caroline Salls

Pittsburgh, Nov. 14 - U.S. Concrete, Inc. might not meet the consolidated secured debt ratio on its convertible notes in April 2012 and may seek relief from the covenant, according to a 10-Q filed with the Securities and Exchange Commission.

If it does not meet this ratio in April 2012 and is unable to obtain an amendment or waiver of default, the company said the amount it can borrow under its credit agreement could be restricted, which could leave it without enough liquidity to fund its operations.

In addition, U.S. Concrete said an event of default would be triggered under the notes indenture if it exceeded the ratio and failed to comply for 30 days after notice of the failure.

As a result, the convertible notes could be accelerated and cross-default provisions in the credit agreement could trigger acceleration of the loan.

Absent a waiver, amendment or adequate liquidity to fund operations, the company said it would need to reduce or delay capital expenditures, sell assets, obtain additional capital or restructure or refinance its debt.

According to the 10-Q, the consolidated secured debt ratio for April 1, 2012 to March 31, 2013 must be 7.50 to 1; the ratio for April 1, 2013 to March 31, 2014 must be 7 to 1; the ratio for April 1, 2014 to March 31, 2015 must be 6.75 to 1; and the ratio from April 1, 2015 on must be 6.50 to 1.

The consolidated secured debt ratio is the ratio of U.S. Concrete's consolidated total debt on the date of determination that constitutes the convertible notes, any other pari passu lien obligations and any debt incurred under the credit agreement to the total amount of consolidated cash flow for the most recent four fiscal quarters, according to the 10-Q.

U.S. Concrete is a Houston-based provider of ready-mixed concrete and concrete-related products and precast concrete products.

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