Xstrata could breach banking covenants
Analysts warn that falling coal prices could, in turn, push Xstrata to breach debt covenants
Mining group Xstrata has the potential to breach banking covenants, analysts
Tumbling coal prices could hit the Xstrata’s revenues for 2008 and 2009,
which could force it to breach debt covenants of three times gross debt to
EBITDA on $10bn (£6.7bn) of bank loans, reported the Telegraph.
‘There is a possibility that Xstrata may breach this covenant in December
2009 earnings, ‘wrote UBS analysts Grant Spore and Paul Galloway.
‘We believe that consensus earnings before interest, tax, depreciation and
amortisation for 2008/09 of around $11.1bn are still too high and are likely to
come down further in the next few weeks.’