Meadowbrook Insurance Group, Inc. announced that it has obtained a waiver from members of the lending group under its bank credit facility (the “Facility”) on certain defaulted loan covenants.
As reported previously, the Company was in default on two of its financial covenants under the Facility as of June 30, 2013, including its net worth covenant. The defaults were triggered by an after-tax non-cash goodwill impairment of $101.5 million the Company recorded in the second quarter, which directly impacted the Company’s book value.
Karen M. Spaun, the Company’s Chief Financial Officer, stated: “We are continuing to work with our bank group to negotiate an amendment to the credit facility to adjust the financial covenants. Absent the non-cash goodwill impairment, we would have been in compliance with all of our financial covenants.”
The waiver is effective until September 20, 2013, and includes specific authorization for the Company to pay its scheduled common stock dividend on Monday, August 26, 2013. The Company is progressing in its discussions with its lenders to re-set the covenants to reflect the impact of the goodwill charge. The Company expects to execute and announce an amendment to its Facility in the coming weeks.
