Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from of Robert J. Labick, CFA – CJS Securities.
Robert J. Labick, CFA – CJS Securities
First question I wanted to ask relates to the covenants, you obviously are in compliance as of the end of the quarter and you have a $50 million revolver. I wanted to understand, can you use that revolver for working capital purposes and then take your cash and pay down debt on a go forward basis or what other measures are you considering taking to stay in compliance with future covenants?
Fletcher Jay McCusker
In answer to your question, as long as we are in compliance with our covenants, there are no restrictions on our use of the credit line. If we were in breach, we would not be able to draw on it. So that does remain available to us which gives us both our cash and the availability of our credit line for working capital purposes.
I think we tried to address our intent with covenants. They do indeed step down and a lot of the cushion that we had negotiated at this time last year therefore is challenging for us. We continue to monitor this very closely and we will work with our payers because many of these events that we’ve described provide cushion to the covenants. We also will work with our lenders to create some flexibility to those covenants. In this environment, Bob, that comes with a price.
Our research indicates to us to expect if we engage in a negotiation to reset the covenants, that we might be looking at an arrangement fee of some sort and probably some additional yield. We’d be willing to do that I think assuming that was reasonable and we do maintain the option to pay debt down in order to stay in compliance.
Robert J. Labick, CFA – CJS Securities
Just following up on that, are you actively in negotiations right now to amend the waivers or what would be the timing for such amendments to be taken? How long would that take for you to accomplish and when could you get that done?
Fletcher Jay McCusker
We have been involved with a dialog with our lenders which we believe is prudent. We have asked them what would it take to reset the covenants, create some flexibility for us. We can’t respond to today within any accuracy is what that would cost the company. I think the next step in that process, Bob, is to identify the opportunity there and the cost to the company, weight that against paying debt down and it would also give us some more time to see how some of these other payer issues play out.
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