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TORONTO – Canadian replicator Cinram International Income Fund warned Tuesday it could default with lenders if discussions to amend its senior secured credit agreements do not succeed.
Toronto-based Cinram, which makes and distributes packaged media for the major studios, said the attempt to rearrange financial covenants follows its business being undercut as physical video game and DVD sales suffer due to industry softness and a shift of entertainment content to digital platforms.
“It is expected that these factors will result in the fund not being in compliance with its financial covenants for its second quarter and future periods,” Cinram said in a statement.
Failing to amend its credit agreements and meet its financial covenants would produce a default under the terms of those agreements, Cinram added.
Cinram in February 2011 reported its lenders fully backed a proposed refinancing and recapitalization of the company as part of a transaction stick-handled by Goldman Sachs & Co.
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Sir Anthony Hopkins