Banks put money on Chorus promise

TOM PULLAR-STRECKER
Last updated 09:38 25/07/2014

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Banks have cut Chorus some extra slack in return for a promise that it won't pay shareholders any dividends until at least next June.

The telecommunications network operator has also committed to keeping its total bank borrowings below $1.2 billion until it learns the final price it will allowed to charge for access to its copper network.

Its total debt at March 31 was $1.8b, comprising $1.14b in bank debt and $677 million in European Medium Term Notes.

Chorus' lenders agreed to give it an eight-month extension to a $575m overdraft, which will now be available until next July.

They will also increase the company's covenant levels from 3.75 to 4.25 times its earnings before interest, tax depreciation and amortisation, at least until final regulated copper pricing is set by the Commerce Commission.

Chorus chief financial officer Andrew Carroll said the amendments to its loans would give the company "significant additional financial flexibility and funding certainty" as it adapted the business to cope with copper-network price cuts that will take effect in December.

Chorus is challenging the price cuts through a regulatory review and through the Appeal Court.

"The changes we have agreed with the banks reflect Chorus' focus on achieving financial stability, particularly with the Commerce Commission's pricing review processes now scheduled to continue through to April next year," Carroll said.

Chorus' bank facilities now comprise a $575m overdraft maturing in July 2016 and a $675m facility maturing in November 2017, both supported by 10 banks, and a $250m facility from four banks which can be drawn down until May 2019.

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