TORONTO, Aug. 10, 2011 /PRNewswire/ - Cinram International Income Fund (TSX: CRW.UN) (together with its subsidiaries, "Cinram" or the "Fund") today announced that it has formally made a proposal to its lenders to amend certain terms of its senior secured credit agreements. The proposal was negotiated with representatives of, and is supported by members of Cinram's lenders' steering committee.
The proposed amendment would revise the financial covenants with which Cinram must comply under the terms of its credit agreements, including those governing leverage and interest coverage. The revisions would apply through 2012, in order to address the negative impact resulting from the adverse conditions experienced in the first half of 2011. Other key terms of the proposed amendments include modifications to the covenants with respect to certain expenditures, increased pricing on the first and second lien debt and revolving line of credit, and a commitment to appoint additional board members and financial advisors.
The proposed amendments are designed to support Cinram's continuing initiatives to grow the business of the Fund and create value for its stakeholders.
The Fund is confident that, given the support of members of the lenders' steering committee, the approval of the lenders will be obtained. However, there can be no assurance that the proposed amendments will be approved. If not approved it is expected that the Fund will not be in compliance with its financial covenants for its second quarter and future periods, which would result in a default under the terms of those agreements.
Cinram International Inc., an indirect, wholly-owned subsidiary of the Fund, is one of the world's largest providers of pre-recorded multimedia products and related logistics services. With facilities in North America and Europe, Cinram International Inc. manufactures and distributes pre-recorded DVDs, audio CDs, and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. Cinram now also provides distribution and logistics services to the telecommunications industry in North America through its wireless subsidiaries. The Fund's units are listed on the Toronto Stock Exchange under the symbol CRW.UN. For more information, visit our website at www.cinram.com.
Certain statements included in this release constitute "forward-looking statements" within the meaning of applicable securities laws. Such forward-looking statements include statements concerning the possible effects of the transactions described herein, and the likelihood of their successful completion. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, or results of the multimedia duplication/ replication industry, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Such factors include, among others, the following: the Fund's ability to retain major customers; general economic and business conditions, which will, among other things, impact the demand for the Fund's products and services; multimedia replication industry conditions and capacity; the ability of the Fund to implement its business strategy; the Fund's ability to invest successfully in new technologies and other factors which are described in the Fund's filings with the securities commissions. These risks may affect the achievement of the expected results of the transactions described herein. There can be no assurance that the said transactions will be successfully completed or that, if completed, the expected consequences will result in whole or in part, and the deviations from such expectations may be material.
SOURCE Cinram International Income Fund