Ausgroup breaches debt covenants

Loss-making engineering services company AusGroup has breached a key financial covenant after its total equity fell below $160 million.

The Singapore-listed company announced today it would seek a waiver from holders of its unsecured notes, adding there was no assurance this would be granted, or that it would be granted on acceptable terms.

The announcement comes just a few days after the company disclosed a net loss of $31.5 million for the March quarter, taking its accumulated loss to $93.9 million for the nine months to March 2016.

Led by Perth-based chairman Stuart Kenny, the company said its business was being hit by the rapid decline in capital expenditure in the oil and gas sector and falling margins.

It was also adversely affected by the environmental and regulatory approval process for its Port Melville fuel facility north of Darwin.

The facility was completed and commissioned in July 2015 but full port operations have not commenced.

In its March quarter report, released on Friday, the company said current liabilities exceeded current assets by $66.4 million.

To try and address this problem, it was pursuing the renegotiation of its debt facilities and sale of certain assets, including its MAS scaffolding and access business, which is already on the market.

The company also said it was in breach of its lending agreement with DBS Bank but the bank had granted  a waiver.