My take: The new management team is providing a lot of good positive feedback to the lenders and the lenders have agreed to reduce the financial test and are willing to accept a much more simple. Cash in the bank kind of test.
SRZ management will continue to keep the lenders in confidence and will share their cash flow projections making the situation more manageable. The original cash in the bank policy was 50 million(with all the financial tests) now its 5 million (with no financial test!!) just additional cash projection sharing.. So a great big Thumbs up to the new management team.
There is additional 17 million asset sale which has been disclosed already.
SRZ will be sharing their plans with regards to Cash flows with the lenders by June 1,2009. (I dont think these projections will be made public as the company no longer needs to disclose all this as the agreement is stable till Dec 2,2009 and had been mentioned specifically in previous SEC filings.)
There is a mention that anything more than 35 million of unrestricted cash flow by end of the year will be used to payback the lenders so we can expect net cash balances to be atleast 35 million by end of year (Dec 2008 quarter number is 29.5 million)
All said and done the tight restrictions leave no chance for the management to wiggle and hence the rights of the shareholders and the bond holders will be protected and enhanced.
A strong buy considering the fact that SRZ has a market cap of 94 million and BKD is about 1 billion while their sales figures are comparable (before the sale of Greystone). SRZ is no longer in default with its loan covenants.
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