Boca Raton, FL, March 22, 2006--In a Securities and Exchange Commission filing, Q.E.P. Co., said it became aware it was in violation of financial covenants under its credit facility, according to the South Florida Business Journal
The Boca Raton-based flooring adhesives and specialty tools firm said during the course of preparing for the audit for its fiscal year ended Feb. 28, it determined, March 14, it was in violation of financial covenants under its credit facility with its senior lenders.
The credit facility, Q.E.P. explained, required it to maintain a certain senior debt to trailing earnings before interest, taxes, depreciation and amortization ratio and a certain fixed charge coverage ratio.
A violation of the financial covenants would, unless waived by lenders, constitute a default under the credit facility. Q.E.P. said this would give lenders the right to prohibit additional borrowing under the credit facility, accelerate the Q.E.P.'s indebtedness thereunder and take other actions as provided for in the credit facility.
As of March 14, Q.E.P. said it had $26.4 million of borrowings outstanding under the credit facility.
However, the same day it filed its SEC statement, Q.E.P. said its lenders granted it a waiver on its non-compliance.
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