Amerika Samoa Bank Letter Waiving Loan Covenant Breaches for Elandia, Inc. and AST Telecom, LLC (April 17, 2007)
Amerika Samoa Bank notified Elandia, Inc. and its subsidiary AST Telecom, LLC that they breached certain financial covenants under a loan agreement dated October 30, 2006. Despite these breaches, the bank has agreed to permanently waive the defaults and will not demand immediate repayment of the loan. The bank will review the loan covenants by April 30, 2007, to accommodate future acquisitions and borrowing needs, but reserves its rights regarding any future breaches. This letter does not waive any other rights the bank may have under the agreement.
AMERIKA SAMOA BANK
17 April, 2007
Mr M Rollins
Chief Financial Officer
Elandia, Inc.
1500 Cordova Road, Suite 312
Fort Lauderdale, FL 33316
U.S.A.
Dear Mr Rollins
NOTICE OF EVENT OF DEFAULT- AST Telecom, LLC (and Parent)
I refer to our loan documentation dated 30 October 2006.
The following events of default has occurred and the Bank is entitled to exercise the rights given to it upon default:
| • The Interest Cover ratio to be no less than 1.50 times. | ||
| Calculated as: EBIT | ||
| Interest Expense | ||
Based on the audited financial statements for the year ended 31 December 2006, the above covenant was breached, with calculation as follows:
(2,088)
743
= (2.81)
| • The Debt Service Cover to be no more than 2.50 to 1. | ||
| Calculated as: Total Debt | ||
| EBITDA | ||
Based on the audited financial statements for the year ended 31 December 2006, the above covenant was breached, with calculation as follows:
5,013
1,882
= 2.66:1
| • The Current Ratio to be no less than 1.00 to 1. | ||
| Calculated as: Current Assets | ||
| Current Liabilities | ||
Based on the audited financial statements for the year ended 31 December 2006, the above covenant was breached, with calculation as follows:
11,229
19,622
= 0.57:1
The Bank acknowledges the breach of notification obligations with respect to the purchase of “Latin Node” and the implications with respect to section 8.1(e) of the loan agreement and section 5 of the continuing guarantee dated 30 October 2006.
In agreement with the borrower and to accommodate the borrowers request for review of the current covenants to allow for future acquisitions and borrowing requirements, the Bank will conduct a review of these covenants and conditions by 30 April 2007.
In light of its continuing relationship with the borrower, the Bank will permanently waive the breaches noted above and will not demand immediate re-payment of the loan on this occasion but reserves its rights in relation to any other breaches of covenant that may occur in the future (including, without limitation, any other breaches of the Interest Cover Ratio).
This letter does not affect any other rights that we may have.
Yours sincerely
/s/ Andrew Chambers
Andrew Chambers
Manager Commercial Banking
ANZ Amerika Samoa Bank
