Risk of Breaching Financial Covenants and Losing the Benefit of Time
First written in FY2019-Q3. 1 of 3 entries say "Mitigated", first in FY2020-Q1. Latest entry: FY2026-H1.
- FY2026-H1Financial covenants established under a new syndicated loanAnnual report
「Financial covenants ① Maintain total net assets on the balance sheet at each fiscal year-end at no less than 75% of total net assets at the end of the immediately preceding fiscal year ② Do not report a loss in ordinary income shown on the income statement for 2 consecutive fiscal years」
Financial covenants have been established under the newly executed syndicated loan agreement, requiring the company to maintain net assets at 75% or more and avoid losses in ordinary income for 2 consecutive periods. - FY2020-Q1MitigatedAnnual report
「The company breached the financial covenants under its loan agreements at the end of the previous consolidated fiscal year. Following negotiations with the financial institutions for a waiver of the covenants and amendments to the loan agreements, the parties reached an agreement, and the financial institutions provided written waivers of the exercise of their rights concerning the loss of the benefit of time. The breaches have now been remedied.」
The disclosure states that an actual breach of the financial covenants occurred at the end of the previous consolidated fiscal year, but that the breach had been remedied as of the end of the quarter following an agreement with the financial institutions and written waivers of the exercise of their rights. - FY2019-Q3First statedAnnual report
「During the consolidated fiscal year ended 31 March 2019, the company was at risk of breaching financial covenants under loan agreements with the financial institutions listed below. If the covenants are breached, the company may lose the benefit of time with respect to all contractual obligations.」
The borrowings from Musashino Bank and MUFG Bank are subject to financial covenants, including maintaining net assets at no less than 75% of the reference amount and avoiding losses in ordinary income for 2 consecutive periods. The risk of losing the benefit of time if the covenants are breached is described, and the company is discussing the continuation of financing with the financial institutions, but the disclosure does not state that an actual breach has occurred.