Advanced Glassfiber expects to fail bank covenant tests in quarter ending June 30

New York, April 5 - Advanced Glassfiber Yarns LLC said it expects to be out of compliance with covenants in its bank credit facility for the quarter ending June 30.

The Aiken, S.C. supplier of glass yarns said in a filing with the Securities and Exchange Commission that the forecast is based on its current level of performance.

The company also warned that if it is not in compliance with covenants its bank lenders may be able to block the $7.4 million interest payment due July 15 on its 9 7/8% senior subordinated notes maturing in 2009.

Advanced Glassfiber has already obtained a waiver of the fixed charge coverage ratio covenant in its credit facility and modified the leverage ratio for the quarters ending Dec. 31, 2001 and March 30, 2002.

Without the waiver, the company said it would have been out of compliance.

In return, Advanced Glassfiber is paying interest rates 100 basis points higher, has its revolving credit facility borrowings capped at $50 million and its capital spending is limited for the two quarters. It is also barred from making cash distributions to its members until it is back in compliance with the original covenants.

At March 27, the company had $187.5 million borrowed on its credit facility with $18.2 million of availability.

As previously disclosed, Advanced Glassfiber has hired Credit Suisse First Boston as financial advisor to explore strategic alternatives including restructuring its debt and negotiating with bank lenders.

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