Children's clothing company Pumpkin Patch is back in talks with its banks, and considering whether further restructuring provisions are required.
In a market update yesterday, chairman Peter Schuyt reaffirmed earlier guidance that normalised trading of earnings before interest, tax, depreciation and amortisation, for its year ended July, would be in a range of $2.8million to $3.4million.
In July last year, Pumpkin Patch issued an earnings downgrade and also told the market negotiations were under way for ''revised terms and conditions'' of its banking facilities.
Having risked breaching its banking covenants in November 2014, Pumpkin Patch was then unable to find a buyer or recapitalise in 2015 and set about restructuring itself.
As at July 31 bank debt stood at $46million and inventory was $49million, with the company having ''significantly improved'' its inventory-age profile, Mr Schuyt said.
As part of the annual review of banking facilities, Pumpkin Patch was in ongoing discussions with its banks on the suitability
of the terms of the debt facilities and conditions.
''Some additional flexibility is being sought,'' he said in a statement. The discussions covered the current operating environment and capital expenditure requirements for the company's strategic plan.
He expected the review to be completed in mid-September.
From 42c per share two years ago, Pumpkin Patch's shares have recently been trading flat at 7.5c, or down 48% on a year ago.
Mr Schuyt noted while the company was making progress, it remained exposed because of the current strength of the New Zealand dollar against the Australian dollar.
