Orchid enters amended credit agreement

PRYOR — Orchids Paper Products Co. has entered into a new amendment to its second amended and restated credit agreement with U.S. Bank National Association and other lenders, the Pryor-based company said Thursday.

The new amendment struck the fixed-charge coverage for the period ended June 30, thereby also waiving a requirement for a cash reserve to be funded by that date. Orchids also agreed not to make any dividend or other distribution payment with respect to its equity unless the company achieves a set leverage ratio for two consecutive fiscal quarters.

The company is exploring the refinancing of some or all of its current outstanding indebtedness. Orchids said it is considering a range of possible refinancing alternatives.

Orchids CEO Jeff Schoen said in a statement that the adjustments reflects the lenders’ “strong support.”

“We continue to be confident that the completion of the Barnwell, South Carolina, mill and the increase in sales resulting from the announced new business, both of which occurred in June, bode well for Orchids’ forward-looking prospects, and the expected growth in earnings we believe will bring our financial leverage measures back in line over the subsequent periods,” Schoen said. “In the meantime, debt refinancing alternatives will be considered to meet liquidity requirements which we anticipate would minimize any long-term dilution of shareholders.”