Yesterday, Reddy Ice Holdings, Inc. (PINK:RDDY) dropped to a new low after filing an 8-K concerning the company’s revolving credit facility.
According to the 8-K form, the Mar. 27 amendment eliminates the minimum liquidity covenant through July 15, 2013 and allows RDDY to get a term loan of up to $10 million but no less than $8 million. The amendment alone cost RDDY a $2 million non-refundable fee to Macquarie Bank.[BANNER]
The information led to a massive sell-off. RDDY lost more than half of its value closing down 59.68% at $0.125. The volume was approximately 2.6 million shares; less than the crash from November, but still very significant.
The 8-K also revealed that on Mar. 30 the company obtained a waiver from the bank to waive any default or event of default that may occur due to RDDY’s failure to deliver its 2011 statements by Mar. 30, or as a result of the statements containing an impermissible qualification relative to substantial doubts about its ability to continue as a going concern.
The recent developments led to S&P lowering RDDY’s ratings. The corporate credit rating was downgraded from CCC+ to CC with a negative outlook. Barring some surprise development, RDDY may be in for even tougher times.
