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After warning the market that it might not be able to meet the conditions of a $50 million loan from US-based Oaktree Capital, Blue Sky Alternative Investments (ASX: BLA) has confirmed it is in breach of a financial covenant in relation to earnings.
The troubled investment group has confirmed to shareholders that it did not meet its obligations to Oaktree at the end of 31 March 2019, as it posted a net loss after tax of $25.7 million for 1H19.
Specifically, the Brisbane-based company was in breach of its minimum recurring cash earnings requirement.
Blue Sky says it has been in "constant" discussions with Oaktree and is attempting to form a new agreement.
"These discussions have been constructive to date and remain ongoing, although agreement has not been reached with Oaktree in relation to a variation or restructure at this stage, and Oaktree has not waived the financial covenant breach," says Blue Sky in a statement to the ASX this morning.
Under the loan agreement, failing to meet its obligations means that Oaktree has the right to accelerate the loan and call for early repayment of the facility.
Blue Sky remains adamant that the decision to accept Oaktree's offer of a seven-year loan facility was the best decision for the company at the time.
"At the time the covenants were agreed, the company was in a transitional state," says Blue Sky.
"It executed the facility with Oaktree to strengthen its capital and liquidity position following a period of significant disruption, and to facilitate the execution of a revised business strategy."
Blue Sky says it will continue to update the market as the Oaktree saga unfolds.
After the company posted the significant first-half loss it appointed a new CEO in Joel Cann and its CFO Elizabeth Walker resigned.
Blue Sky was under siege during 2018 following a bout of bad news stemming from a short-selling report by Glaucus detailing a number of alleged holes in the business of Blue Sky.
Shares in Blue Sky are down 4.76 per cent to $0.20 per share at 10.13am AEST.
More here:
- Former Blue Sky investment director's fund receives backing from Pinnacle
- Doubts linger as Blue Sky issues debt update
- Blue Sky CFO resigns
- Joel Cann takes the reins at Blue Sky
- Blue Sky's restructure continues to hit the bottom line hard
- Blue Sky in the red in H1
- No earnings guidance from Blue Sky with board change underway
- Oaktree saves Blue Sky with $50m investment
- Blue Sky in discussions to receive lifeline from US investment firm
- Rough trot continues for Blue Sky with poor results
- Lenard's back in founder's control after Blue Sky takes flight
- Blue Sky bounces back in June
- Blue Sky darkens on latest $60 million hit and share price freefall
- Blue Sky in trading halt ahead of major review
- Blue Sky confirms KPMG to carry out comprehensive review
- Brisbane's Top 50 Companies 2018 revealed
- Blue Sky turmoil continues with board purge, further share slide
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