So, in reading the 10Q I noticed this:
It appears that Kinergy has been profitable, even over the last quarter, in which case there is something significant missing in (at least my) understanding of their production profit...
Kinergy and PAP are collectively required to generate aggregate earnings before interest, taxes, depreciation and amortization, or EBITDA, of $0.5 million, measured at the end of each calendar month, for each three calendar month period and EBITDA of $1.3 million, measured at the end of each calendar month, for each six calendar month period. Further, for all monthly periods, Kinergy and PAP must collectively maintain a fixed-charge coverage ratio (calculated as a twelve-month rolling EBITDA divided by the sum of interest expense, capital expenditures, principal payments of indebtedness, indebtedness from capital leases and taxes paid during such twelve-month rolling period) of at least 2.0 and are prohibited from incurring any additional indebtedness (other than specific intercompany indebtedness) or making any capital expenditures in excess of $0.1 million absent the lender’s prior consent. Kinergy and PAP’s obligations under the credit facility are secured by a first-priority security interest in all of their assets in favor of the lender.
The following table summarizes Kinergy’s financial covenants and actual results for the periods presented (dollars in thousands):
Three Months Ended
September 30, Years Ended
December 31,
2014 2013 2013 2012
EBITDA Requirement – Three Months $ 500 $ 450 $ 450 $ 450
Actual $ 1,217 $ 879 $ 3,252 $ 1,165
Excess $ 717 $ 429 $ 2,802 $ 715
EBITDA Requirement – Six Months $ 1,300 $ 1,100 $ 1,100 $ 1,100
Actual $ 3,140 $ 2,111 $ 4,131 $ 3,282
Excess $ 1,840 $ 1,011 $ 3,031 $ 2,182
Fixed Charge Coverage Ratio Requirement 2.00 2.00 2.00 2.00
Actual 18.60 15.53 8.64 8.84
Excess 16.60 13.53 6.64 6.84