Speymill Deutsche Immobilien Co (LON:SDIC) warns it is likely to breach debt service and interest ratio covenants at the next calculation at the end of June.
The firm said the board had undertaken a thorough review of the company's financing position following the one debt service cover ratio covenant breach identified previously.
A statement says: "It has become evident that the company is likely to remain in breach of the DSCR covenant on the one loan facility and it is anticipated that the interest cover ratio covenant on two other facilities is likely to be breached at the next calculation date which is 30 June."
The company says current cash forecasts indicate that it will not be in a position to meet payments on three of the five financing packages for which amortisation is payable.
The company is applying for a deferral of these payments with its lenders as negotiations on a revised, long term funding solution are progressed.
A long term solution is anticipated to include a recapitalisation through an equity fundraising and the internalisation of the management, investment advisory and property management functions - 'internalisation'.
The statement says the board has reached an advanced stage in negotiating heads of terms with Speymill plc in relation to the termination of the investment management agreement and the acquisition of the company's investment adviser, GOAL service GmbH.
It says internalisation is an important step towards achieving an overall funding solution as it is anticipated that it will enable the company to realise a substantial level of cost saving, with an immediate impact on the level of monthly cash outflows.
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