The deal will assist Baxi’s negotiations on creating the third biggest boiler maker in Europe through a merger with De Dietrich Remeha.
Heating Finance, the company set up in 2004 to allow the buy-out of Baxi in 2004, announced on June 12 that it might be in breach of its cashflow cover and leverage covenants under the original credit agreement when those covenants were tested on June 30.
It added that in the event the discussions with De Dietrich Remeha did not lead to an agreed transaction by June 27 it might not be able to repay the instalments of principal of
£20,719,251.34 and €1,595,000 respectively due on 27 June 2009 under the Credit Agreement.
Baxi has now received an undertaking from most lenders not to accelerate their facilities or otherwise take enforcement action in relation to any of their facilities under the Credit Agreement on or before 31 August 2009.
Baxi has received support from lenders under the Credit Agreement holding a sufficient amount of commitments to mean that any such acceleration or other enforcement action would not be possible.
It has also announces it has received from the requisite majority of lenders under the Credit Agreement a waiver until 31 August 2009 of any breach of its cashflow cover and leverage covenants referred to above.
It has also announced it has received the agreement of the requisite majority of the holders of the Notes to the waiver of the cross default under the Notes which would otherwise be caused by any default under the Credit Agreement, and of any default that may arise from seeking an undertaking from its senior lenders.
Baxi is in discussions with smaller Dutch rival De Dietrich Remeha over a merger to boost its capital position and create a company with a turnover of €1.8 billion and 6,400 employees.
The proposed merger will be structured as a share swap in which Baxi's shareholders - private equity firms BC Partners and Electra Partners - will invest around €100 million of additional equity in the new group as minority partners, with Remeha Group holding the majority.