The covenants for its banking facility were breached on 31 December 2016 and the company said it was working with finance advisors to address the issue. Possible avenues to address the problem included securing a waiver or amending relevant financial agreements with the bank.
The covenants pertain to Wellard’s working capital and a range of secured loan facilities.
This is not the first time that Wellard has breached its banking covenants. Earlier in December 2016, Wellard confirmed it had breached banking covenants and had obtained waivers and extensions to rectify the breach.
The financial trouble comes at a time when Wellard faces headwinds in the market. In the company’s full-year financial results to 30 June 2016, unprecedented rain in northern Australia and trade difficulties in south-east Asia dented revenue to the tune of AU$16.3m.
With Wellard beleaguered by market and banking woes, CEO and managing director Mauro Balzarini said trading conditions in the first half of 2017 would result in a loss. However, he has suggested trading conditions are set to improve thereafter and the business is expected to produce a profit in the second half of the year.