Clarifying Covenants

REGARDING "Debt-Ridden Ineos Arranges Waivers of Loan Covenants" (C&EN, Nov. 24, page 9), it is important that your readers are clear that Ineos has asked for a waiver on its banking "covenants" for two quarters, not the "payment of its bank loans." Ineos will continue to pay its loans, unlike the suggestion in the article that it is seeking to delay payments. There is a fundamental difference between the two, and it is important that the article is corrected.

All bank contracts include a set of rules generally called covenants. Some covenants are financial performance tests at the end of each quarter. Covenants are set at the beginning of agreements that can last years, and it is not uncommon for waivers or amendments to be agreed to if economic circumstances change. A request to waive these covenants for two quarters does not reflect a company's ability to meet its debt repayments or its commitment to do so.

Ineos has not breached any covenants; the business remains highly profitable and cash generative. Ineos reported strong trading performance in the third quarter despite the difficult economic climate. Liquidity remains strong, the company has a good cash position and will continue to meet the payments on its loans.

Richard Longden
Communications Manager
Ineos, U.K.