LAKE FOREST, Ill. — Tenneco is seeking to amend a financial covenant in its senior secured credit facility for the fourth quarter of 2008, in response to further rapidly deteriorating economic and industry conditions globally. As a precautionary step, the company is seeking an amendment to increase its leverage covenant ratio (net debt/EBITDA) to a maximum ratio of 4.25 from the current maximum ratio of 4.0.
“We are requesting some flexibility on our leverage ratio due to worsening industry conditions, which are ongoing in North America and have now spread to markets worldwide,” said Gregg Sherrill, chairman and CEO, Tenneco. “Relaxing the leverage ratio, which measures our debt to earnings, will provide cushion if needed to ensure compliance at the end of the quarter as we continue to aggressively manage costs and preserve cash.”
The company expects to meet with its lenders to evaluate a more comprehensive amendment early in 2009.