Student Loan Corporation's latest 10-Q highlighted the importance of the credit agreement between STU and Citibank. STU expected to have a replacement executed by the end of this month:
"Although
the Omnibus Credit Agreement expires on December 31, 2009, existing
borrowings will continue to mature based on their originally contracted
maturities. Additionally, the Company is currently negotiating a new
agreement with CBNA as well as exploring alternative sources of funding
that can be used to replace or supplement the current agreement. The
structure of the potential replacement to the Omnibus Credit Agreement
that currently is being negotiated includes short- and long-term
funding, various financial covenants, commitment and unused liquidity
fees and secured as well as unsecured borrowings. The Company expects a
replacement
will be executed before the expiration of the current Omnibus Credit
Agreement. However, there is no assurance that a suitable replacement
facility will be put in place by year end, and, if not put into place,
whether and when the Company could obtain sufficient alternate sources
of financing on acceptable terms. If a suitable replacement or
replacements, whether from CBNA or otherwise, are not put in place by
year end, the Company will no longer have a guaranteed funding source.
This could have a material adverse effect on, among other things, the
Company's ability to originate new loans, repay its debt obligations,
fund business operations and maintain the current level of
profitability."
Stay tuned...
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