Financial Covenant Breach and Going-Concern Risk Due to Deterioration in Financial Condition
First written in FY2020-Q3. 6 of 16 entries say "Mitigated", first in FY2020. Latest entry: FY2024-Q2.
The whole theme swung hardest in 2024: 2 of 6 companies on the "Worse" side.
2 other companies' latest entry also says "Restated".
- FY2024-Q2RestatedAnnual report
「However, in response to this situation, the Company aims to return to profitability at an early stage by advancing a medium-term management plan for the post-COVID era. In addition to securing sufficient working capital through ¥4.6 billion raised in a private placement and ¥3.0 billion raised through a capital-subordinated loan, the Company had agreed with each financial institution to defer repayment of principal on existing borrowings through the end of July 2024. Accordingly, although events or conditions that raise significant doubt about the going-concern assumption exist, the Company determined that no material uncertainty exists regarding the going-concern assumption.」
The operating loss and breach of financial covenants continued. However, the Company reconfirmed its determination that no material uncertainty existed as a result of the ¥4.6 billion capital raise, ¥3.0 billion capital-subordinated loan and agreement to defer repayments through the end of July 2024. - FY2024-Q1MitigatedAnnual report
「In addition to securing sufficient working capital through ¥4.6 billion raised in a private placement and ¥3.0 billion raised through a capital-subordinated loan, the Company had agreed with each financial institution to defer repayment of principal on existing borrowings through the end of July 2024.」
Although the breach of financial covenants and operating loss continued, the Company stated that it determined no material uncertainty existed as a result of the ¥4.6 billion capital raise, ¥3.0 billion capital-subordinated loan and agreement to defer repayments through the end of July 2024. - FY2023MitigatedAnnual report
「In addition to securing sufficient working capital through ¥4.6 billion raised in a private placement in the previous consolidated fiscal year and ¥3.0 billion raised through a capital-subordinated loan, the Company had agreed with each financial institution to defer repayment of principal on existing borrowings through the end of July 2023. Accordingly, although events or conditions that raise significant doubt about the going-concern assumption exist, the Company determined that no material uncertainty exists regarding the going-concern assumption.」
Although the operating loss and breach of financial covenants continued, the Company stated that it determined no material uncertainty existed as a result of the ¥4.6 billion capital raise, ¥3.0 billion capital-subordinated loan and repayment deferrals through the end of July 2023. - FY2023-Q3RestatedAnnual report
「However, in response to this situation, the Company aims to return to profitability at an early stage by advancing a new medium-term management plan for the post-COVID era. In addition to securing sufficient working capital through ¥4.6 billion raised in a private placement and ¥3.0 billion raised through a capital-subordinated loan, the Company had agreed with each financial institution to defer repayment of principal on existing borrowings through March 2023. Accordingly, although events or conditions that raise significant doubt about the going-concern assumption exist, the Company determined that no material uncertainty exists regarding the going-concern assumption.」
While the operating loss continued and the Company remained in breach of financial covenants, it reconfirmed its determination that no material uncertainty existed as a result of the private placement, capital-subordinated loan and agreements with financial institutions to defer repayments. - FY2023-Q1RestatedAnnual report
「However, in response to this situation, the Company aims to return to profitability at an early stage by advancing a new medium-term management plan for the post-COVID era. In addition to securing sufficient working capital through ¥4.6 billion raised in a private placement and ¥3.0 billion raised through a capital-subordinated loan, the Company had agreed with each financial institution to defer repayment of principal on existing borrowings through March 2023. Accordingly, the Company determined that no material uncertainty existed regarding the going-concern assumption.」
While the operating loss and breach of financial covenants remained, the Company reconfirmed its determination that no material uncertainty existed as a result of the private placement, capital-subordinated loan and agreements to defer repayments through March 2023. - FY2022MitigatedAnnual report
「The Company raised approximately ¥4.6 billion through a private placement and ¥3.0 billion through a capital-subordinated loan from Development Bank of Japan Inc. In addition, it had agreed with each financial institution to defer repayment of principal on existing borrowings through March 2023. Accordingly, the Company determined that there were no significant concerns regarding cash management for the time being's working capital and investment funds. Based on the foregoing, although events and conditions that raise significant doubt about the going-concern assumption continued to exist, the Company determined that no material uncertainty existed and discontinued the disclosure in the “Notes on Going Concern.”」
The disclosure of material uncertainty regarding the going-concern assumption was discontinued following the private placement, capital-subordinated loan and agreements to defer repayments through March 2023. However, the significant events themselves were stated to remain. - FY2022-Q3WorsenedAnnual report
「However, these measures and strategies are still being implemented, and material uncertainty regarding the going-concern assumption is recognized at present.」
While the Company was proceeding with a private placement to raise approximately ¥4.6 billion and requesting repayment deferrals from financial institutions, it was stated that material uncertainty regarding the going-concern assumption continued to be recognized because of the spread of the Omicron variant, breaches of financial covenants and the fact that the measures were still being implemented. - FY2022-Q2MitigatedAnnual report
「The Company is working to stabilize management by raising approximately ¥4.6 billion through a private placement and continuing to request that financial institutions defer principal repayments, thereby building up cash on hand. However, because the deterioration in performance caused by the impact of the coronavirus pandemic has resulted in breaches of the financial covenants attached to long-term borrowings, including the syndicated loan agreement, a situation exists that raises significant doubt about the going-concern assumption.」
While the Company built up cash on hand by raising approximately ¥4.6 billion through a private placement, breaches of financial covenants and significant doubt about the going-concern assumption remained. - FY2022-Q1MitigatedAnnual report
「The Company decided to strengthen its financial foundation by welcoming Maruhan Taiheiyo Club Investment and Taiheiyo Club as new partners, executing a capital and business alliance agreement with the proposed allottee, and carrying out the private placement.」
It was stated that the capital and business alliance agreement and private placement after the end of the period provided a certain outlook for strengthening the financial foundation. However, requests for deferrals of principal repayments, breaches of financial covenants and material uncertainty regarding the going-concern assumption remained. - FY2021WorsenedAnnual report
「Concerns arose regarding the Company's ability to fund payments of trade payables and repayments of borrowings and other obligations, and it requested repayment deferrals from financial institutions. In addition, because the Company was in breach of the financial covenants attached to its long-term borrowings, including the syndicated loan agreement, and its convertible bond-type bonds with stock acquisition rights, a situation exists that raises significant doubt about the going-concern assumption.」
Concerns over cash management and requests to financial institutions for repayment deferrals were expressly disclosed, while breaches of the financial covenants attached to long-term borrowings and convertible bond-type bonds with stock acquisition rights, as well as material uncertainty regarding the going-concern assumption, continued through the full fiscal year. - FY2021-Q3WorsenedAnnual report
「As of the end of the current third-quarter consolidated accounting period, concerns have arisen regarding the Company's ability to fund payments of trade payables and repayments of borrowings and other obligations. In addition, there is a risk that it may breach, at the end of the current consolidated fiscal year, the financial covenants attached to its long-term borrowings, including the syndicated loan agreement, and its convertible bond-type bonds with stock acquisition rights. Accordingly, a situation exists that raises significant doubt about the going-concern assumption.」
Concerns over cash management, the risk of breaching financial covenants, and expectations of an operating loss and ordinary loss for the current fiscal year were expressly disclosed, and going-concern risk intensified. - FY2021-Q2WorsenedAnnual report
「As of the end of the current second-quarter consolidated accounting period, there is a risk that the Company may breach, at the end of the current consolidated fiscal year, the financial covenants attached to its long-term borrowings, including the syndicated loan agreement, and its convertible bond-type bonds with stock acquisition rights. In addition, the Company has additional short-term funding needs. Furthermore, on 4 September 2020, 株式会社ひらまつ総合研究所 filed a lawsuit against the Company concerning a past agreement.」
Concerns over a breach of financial covenants continued, while additional short-term funding needs and litigation by an affiliated company emerged, resulting in a state in which material uncertainty regarding the going-concern assumption was recognized. - FY2021-Q1WorsenedAnnual report
「As of the end of the current first-quarter consolidated accounting period, a situation exists that raises significant doubt about the going-concern assumption because there is a risk that, at the end of the current consolidated fiscal year, the Company may breach the financial covenants attached to its long-term borrowings, including the syndicated loan agreement, and its convertible bond-type bonds with stock acquisition rights.」
The risk of breaching financial covenants at fiscal year-end and the situation raising significant doubt about the going-concern assumption continued into the first quarter. - FY2020MitigatedAnnual report
「The Company has obtained agreement from its financial institutions not to exercise their rights to declare a loss of the benefit of time. It has also entered into overdraft agreements with its partner financial institutions totaling ¥2.7 billion, including ¥1.4 billion under agreements concluded since April 2020, for the time being's working capital needs, thereby securing sufficient working capital. Accordingly, the Company has determined that no material uncertainty exists regarding the going-concern assumption.」
After breaching the financial covenants, the Company obtained agreement from its financial institutions not to exercise their rights to declare a loss of the benefit of time and secured working capital through overdraft agreements. It therefore determined that no material uncertainty existed. - FY2020MaterialisedAnnual report
「Thus, as of the end of the current consolidated fiscal year, the Company was in breach of the financial covenants attached to its syndicated loan agreement with financial institutions. In addition, because the convergence of the infectious disease and recovery in demand for eating out are expected to take some time and may have a material adverse effect on performance, a situation exists that raises significant doubt about the going-concern assumption.」
The situation progressed from a risk of breaching the covenants as of the third quarter to an actual breach of the syndicated loan's financial covenants at the end of the fiscal year. Going-concern risk due to delays in the convergence of COVID-19 and the recovery in demand for eating out was also expressly disclosed. - FY2020-Q3First statedAnnual report
「As a result, the Company's financial condition has deteriorated, and as of the end of the current consolidated fiscal year, there is a risk that it may breach the financial covenants attached to the syndicated loan agreement executed with financial institutions. A situation exists that raises significant doubt about the going-concern assumption.」
Large losses and deterioration in financial condition led to the first disclosure of a risk of breaching the syndicated loan's financial covenants at year-end and a situation raising significant doubt about the going-concern assumption.