KEY POINTS:
Meat exporter PPCS is increasing the interest paid on one of its bonds after it breached its banking covenants amid ongoing investor nervousness.
The farmer-owned co-operative received a waiver from its banks and the bond trustee, relating to a blow-out in its interest coverage ratios on its banking facilities and two bonds as at the end of August.
PPCS had warned in June that it was likely to do so unless the New Zealand dollar dropped dramatically and trading conditions improved.
As a result of the breach, interest on the NZX-listed December 2010 bonds will step up by 1.25 per cent to 11.5 per cent from September 15, until it satisfies the interest coverage ratio.
The interest rate on the March 2009 bonds is unchanged. Interest payments will be made on their normal due date.
Both bonds were trading at a yield of 19 per cent on the market.
PPCS was due to release its audited annual results on October 29.
In the first half, it reported a net loss before interest, tax and non-recurring items of $8 million, a 42 per cent improvement on a $13.7m loss for the same period a year earlier.
The first half of each financial year is traditionally the period of lowest profitability in the meat industry.
PPCS is responsible for 32 per cent of New Zealand's sheep meat exports, 31 per cent of beef exports and 58 per cent of venison exports. It owns 24 processing plants, and employs about 9000 staff at the peak of the processing season.
- NZPA
