Centerline credit agreement non-compliance waivers extended to Friday

By Caroline Salls

Pittsburgh, Feb. 12 - Centerline Holding Co. and Centerline Capital Group Inc. entered into an eighth amendment to a waiver related to their second amended and restated revolving credit and term loan agreement, according to an 8-K filed Tuesday with the Securities and Exchange Commission.

Bank of America, NA is the issuing bank and administrative agent on the loan agreement, Banc of America Securities, LLC and Citicorp USA, Inc. are co-lead arrangers, and Banc of America Securities, LLC is the book manager.

Under the eighth amendment, the company's non-compliance with a consolidated EBITDA-to-fixed-charge coverage ratio covenant for the quarters ended Sept. 30, 2011, March 31, 2012, June 30, 2012 and Sept. 30 was waived until Feb. 15.

In addition, a waiver was granted until Feb. 15 of Centerline's non-compliance with a total debt consolidated EBITDA ratio covenant for the quarters ended June 30, 2012 and Sept. 30.

Non-compliance expected

According to the 8-K, the company does not expect to be in compliance with the ratios in question in future periods.

As a result, Centerline said it is in discussions with the lenders to amend the covenants in a way that would allow the company to regain compliance before the expiration of the waivers.

If it is unable to reach an agreement on the proposed amendment, Centerline said it cannot guarantee that it would be able to avoid defaults or acceleration or that its efforts would not involve a substantial restructuring or alteration of its business operations or capital structure.

In addition, the company said a credit agreement default would trigger a cross default on its mortgage banking warehouse facilities, which could eliminate its ability to originate mortgage loans.

If it does not comply with the covenants and obligations in the credit agreement or its other loan agreements and the lenders accelerate the debt, Centerline said it may file bankruptcy to preserve its enterprise value.

Centerline is a New York-based provider of real estate finance and asset management services for multifamily housing.

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