Fountain submits plan to Amex
WASHINGTON, N.C. – Fountain Powerboats Industries, Inc. has submitted a plan to the American Stock Exchange seeking to regain compliance with the organization’s listing standards, according to a release.
On June 11, 2008, Fountain received notice from the American Stock Exchange that it is not in compliance with one of the Amex standards for the continued listing of the company’s common stock. Specifically referencing Part 10 of the Amex Company Guide, the statement said that “…the Company is not in compliance with Section 1003(a)(iv) of the Company Guide in that it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, whether such company will be able to continue operations and/or meet its obligations as they mature.”
And as a result of the circumstances described above, the notice stated that Fountain had become subject to Amex’s suspension and delisting procedures set forth in Section 1009 of the Company Guide. The boat builder was told it must submit a plan to Amex, addressing how it intends to regain compliance, including specific milestones, quarterly financial projections and details related to any strategic initiatives it plans to complete, according to a press release.
On July 18, 2008, after evaluating its 2009 budget projections, the impact of its new Baja line (which the company says it expects will give it additional products and a larger dealer network), the increased cost competitiveness of our products in international markets due to favorable currency rates for foreign customers, and other factors, it submitted a plan to Amex that summarizes management’s plans and strategies for dealing with the issues raised in Amex’s notice.
The Plan also described discussions with the boat builder’s primary lender, Regions Bank, regarding the $14.5 million term loan, which it had reclassified as a current liability in its December 31, 2007 and March 31, 2008 financial statements because of the company’s noncompliance with certain loan covenants.
“While we have not defaulted on any loan payments to our lender and we currently have a $2 million unused line of credit, the reclassification resulted in a significant working capital deficit at the end of each of those periods,” the company said in its release. “Based on our discussions with Regions Bank, we currently expect that it will grant a waiver of the violation of the loan covenants at June 30, 2008, and redefine our loan covenants for fiscal 2009, which would permit the term loan to be classified again as long-term debt. However, it has not yet committed to grant a waiver or change our loan covenants pending its consideration of a number of matters, including its continuing review and analysis of our fiscal 2008 results and fiscal 2009 budget projections. If we are able to reclassify our term loan and meet the operating projections set forth in our 2009 budget, we believe we will have access to funds to deal with any working capital issues not related to our loan covenants.
“While we are not able to predict Amex’s decision with respect to our plan, we believe we have provided Amex with a reasonable basis to conclude that any past failures to comply with listing standards described in Amex’s notice are not necessarily indicative of a future inability to comply. However, if our plan is not accepted by Amex, we will be subject to delisting proceedings. Likewise, even if our plan is accepted by Amex, but we do not make progress consistent with the plan during the plan period, or are not in compliance with all continued listing standards of the Company Guide by December 11, 2008, Amex may initiate delisting proceedings.”
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