Financial covenants on borrowings and the risk of demands for debt repayment
First written in FY2016. 2 of 4 entries say "Restated". Latest entry: FY2019.
The whole theme swung hardest in 2017: 8 of 55 companies on the "Worse" side.
42 other companies' latest entry also says "Restated".
- FY2019RestatedAnnual report
「Of the borrowings at the end of the current consolidated fiscal year, long-term borrowings of ¥115.7 million, including ¥57.6 million due for repayment within one year, are subject to the following financial covenants.」
The company reaffirmed that long-term borrowings are subject to financial covenants requiring ordinary income before depreciation and amortization to be negative for 2 consecutive fiscal years or the company to have negative net worth, with a 0.3 percentage point interest rate increase upon breach. - FY2018RestatedAnnual report
「If the company breaches a covenant and a creditor requests it, 0.3 percentage points will be added to the applicable interest rate and the rate applicable upon breach, retroactive to the day following the balance-sheet date of the fiscal year in which the breach occurred. ① Ordinary income before depreciation and amortization is negative for 2 consecutive fiscal year-ends on a non-consolidated basis. ② The company has negative net worth at a fiscal year-end on a non-consolidated basis.」
The financial covenant conditions are ordinary income before depreciation and amortization being negative for 2 consecutive fiscal years or negative net worth, with a 0.3 percentage point interest rate increase upon breach. - FY2017ReframedAnnual report
「Of the borrowings at the end of the current consolidated fiscal year, long-term borrowings of ¥230.9 million, including ¥57.6 million due for repayment within one year, are subject to the following financial covenants. If the company breaches a covenant and a creditor requests it, 0.3 percentage points will be added to the applicable interest rate and the rate applicable upon breach, retroactive to the day following the balance-sheet date of the fiscal year in which the breach occurred. ① Ordinary income before depreciation and amortization is negative for 2 consecutive fiscal year-ends on a non-consolidated basis. ② The company has negative net worth at a fiscal year-end on a non-consolidated basis.」
The financial covenants changed from numerical thresholds such as net assets to conditions requiring ordinary income before depreciation and amortization to be negative for 2 consecutive fiscal years or the company to have negative net worth. The company also disclosed the interest rate increase upon breach. - FY2016First statedAnnual report
「If the company breaches any of these covenants and a creditor requests repayment, it may be required to repay all or part of the borrowings immediately. ① If net assets on a non-consolidated basis fall below ¥786.604 million at any fiscal year-end. ② If the total amount of new loans, investments and guarantees extended to third parties without prior approval exceeds ¥71.7 million.」
The company disclosed covenants relating to net assets, limits on loans and other transactions, ordinary income before depreciation and amortization, and negative net worth.