Martha Stewart Living (MSO) Comments on Amendment to Loan Agreement

June 23, 2009 5:09 PM EDT

In a Form 8-K, Martha Stewart Living Omnimedia, Inc. (NYSE: MSO) disclosed that on June 18, 2009, the company and its wholly-owned subsidiary MSLO Emeril Acquisition Sub LLC executed a Waiver and Omnibus Amendment No. 1 to the Loan Agreement dated as of April 4, 2008 with Bank of America, N.A., in its individual capacity and as collateral agent.

The amendment:

1. reduces the tangible net worth requirement to $35,000,000 for the last day of the second fiscal quarter of 2009;
   
2. adds a covenant to the Loan Agreement requiring the Company to maintain unencumbered cash and certain cash equivalents in an amount equal to 125% of the outstanding principal amount of the loan under the Loan Agreement through the day on which the Company delivers a compliance certificate in respect of the third fiscal quarter of 2009 certifying that no default has occurred under the Loan Agreement;
   
3. clarifies that impairment losses in respect of goodwill and intangible assets are added back to net income in calculating the Company’s consolidated earnings before interest, taxes, depreciation and amortization expenses for purposes of the various financial covenants in the Loan Agreement;
   
4. increases the Company’s maximum permitted ratio of (a) its liabilities for borrowed money and other interest-bearing liabilities (less the non-current portion of any subordinated liabilities) to (b) its EBITDA for the preceding four-quarter period to 2.75 to 1.0 for the last day of the second fiscal quarter of 2009; and
   
5. for purposes of measuring compliance with certain covenants in the Loan Agreement, excludes the outstanding principal amount of the loan from the “current portion of long term debt” and “current liabilities”.

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