Pfleiderer To Breach Convenants, Warns on Profits

Frankfurt, Germany, June 18, 2009--Pfleiderer AG will breach its covenants and warned on its profits, the maker of engineered wood, surface-finished products and laminate flooring said late on Wednesday.

April and May figures revealed its forecast for a continuation of an improvement seen in the first quarter was wrong, as both sales volumes and price levels were lower than a year ago.

"Since on the cost side, prices of raw materials cannot be expected to fall, Pfleiderer AG now expects its earnings to fall significantly. Based on initial estimates, the EBITDA margin in the second quarter of 2009 will probably be single-digit percentage," it said in a statement.

As a result, the company predicts it will breach its loan covenants and will have to incur higher financing costs after negotiations with its lenders.

"Pfleiderer AG expects that the key financials defined in the context of existing credit agreements may not be fulfilled at the end of this quarter," it continued.
"Therefore, discussions will be held with the banks with which those credit agreements exist in order to achieve a broader framework of corporate financing."