An unholy Trinity: USD 125m < 10 mths to resolve....., page-224

Question:
5. No commentary on the breach of debt covenants in September 2019 - when is AJM going to update market or provide assurance that all debt providers have agreed to waive their rights to enforce? Is this going to be another ASX forced disclosure - like January this year?

Answer:
Today is 21st of October, 21 days after end of September.

AJM most likely require to produce the accounts within 30 / 45 days after period end. Once the accounts submitted to the notesholder, they should be the one who decided if there is covenants breach and reply to Management the course of action.

What is the benefit to the company by reporting to the ASIC now in October when clearly there is a frame work around reporting requirement.

That is "includes monthly reports to the Noteholders (Monthly Report) and aquarterly compliance certificate (Quarterly Compliance Certificate). The Monthly Reports containinformation such that the Noteholders were informed with respect to commercial production allowing them to review the likely performance of the Company relative to the above financial covenants. TheQuarterly Compliance Certificate for the September and December quarters (provided in November2018 and January 2019 respectively)."

For your information and to help you understand the full narrative:
Quote from the announcement
Background to responses
In July 2017 AJM announced to ASX that it had completed a US$110m senior secured debt facility for
the construction and commissioning of the Pilgangoora lithium project (Project).
The 30 June 2018 Full Year Statutory Accounts of AJM (released to ASX on 12 September 2018) included
the following disclosure under Non-current Borrowings (Note 18):
“Under the terms of the facility, the Company is required to comply with the following financial
covenants:
• For periods ending on 30 September 2018, the Company shall ensure that the net debt to
defined EBITDA ratio shall not exceed the ratio of 2:1.
• For quarterly reporting periods after 30 September 2018 the net debt to defined EBITDA
ratio shall not exceed the ratio of 1.5:1”
Given the nature of the above covenants, until AJM achieved and maintained commercial production,
it would not be possible for the Company to be in a position to satisfy the EBITDA covenants.
During the period from September 2017 to March 2019 inclusive, the Company regularly provided
updated disclosure to the ASX regarding the timing and status of commercial production (and in turn
its ability to satisfy the above covenants) which included disclosure concerning the delay in achieving
commercial production (from the initial estimate of Q1 2018 until eventually achieved in Q1 2019).
Under the terms of the Facility, AJM is required to make regular disclosure to the lenders under the
Facility (Noteholders). This includes monthly reports to the Noteholders (Monthly Report) and a
quarterly compliance certificate (Quarterly Compliance Certificate). The Monthly Reports contain
information such that the Noteholders were informed with respect to commercial production allowing
them to review the likely performance of the Company relative to the above financial covenants. The
Quarterly Compliance Certificate for the September and December quarters (provided in November
2018 and January 2019 respectively) addressed the issue of the above covenants and the underlying
commercial production.