REV Group has obtained financial covenant relief requested under an amendment to the company’s existing $175 million term loan agreement and provided an update on recreation manufacturing operations.
Effective April 30, the company’s amended agreement eliminates the requirement for quarterly compliance with the net leverage ratio covenant test and replaces it with an updated fixed charge coverage ratio test minimum of 1.25 times through the end of fiscal 2020.
At the end of the fiscal 2021 first quarter, the agreement’s fixed charge coverage ratio will revert to a quarterly net leverage ratio test of less than 5.25 times, which will be reduced by 0.25 times each fiscal quarter thereafter until it reaches 4.25 times by the end of the fiscal 2022 first quarter.
“This amendment further solidifies our liquidity position to address the current economic environment. We believe we are now very well situated to take advantage of our market leading position as the U.S. economy begins to re-open and recover,” said Rod Rushing, REV Group president and CEO. “Today we are also excited to announce our plan to return to normal production at our four RV facilities in Indiana and California after a temporary suspension began in late March.”
Production and delivery activities commenced during the weeks of April 20 and 27 at Midwest Automotive Design and Renegade RV, respectively. Under current conditions, production of American Coach, Fleetwood RV and Holiday Rambler motorhomes are scheduled to begin on May 4. Lance Camper, located in Lancaster, Calif., has a tentative restart date of May 18. Production at each facility is scheduled to grow at a pace commensurate with material availability and customer demand.
“Enhanced health and safety protocols that are consistent with CDC recommendations, and currently in use at all REV facilities, have been implemented at our Recreation plants to protect employee safety as they return to work,” said Rushing.