Magellan says in "serious" financial difficulty

Fri Mar 27, 2009 7:43am EDT
 
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(Reuters) - Canada's Magellan Aerospace Corp, a supplier of aerospace components, posted fourth-quarter profit, but said it will be in "serious" financial difficulty, if it fails to refinance its credit facility and extend a loan.

The company said it has to re-finance its credit facility and extend the C$50.0 million loan from Edco Capital Corp, or its ability to continue as a going concern will be uncertain.

The company's operating credit facility is due on May 23, and the original loan is due on July 1.

The Ontario-based company posted net income of C$7.4 million ($6.03 million), or 39 Canadian cents a share, compared with a loss of C$5.0 million, or 29 cents a share, a year-ago.

Analysts expected the company to post a loss of 7 Canadian cents a share, according to Reuters Estimates.

Magellan added that due to the current economic environment, it has experienced decreased production expectations on certain product lines and expects this to continue through 2009.

In addition, Magellan sees less use of business aircraft through 2009, bringing the company's extended growth period to an end.

Magellan shares, which have shed about 90 percent of its value in the past six months, closed at 35 Canadian cents Thursday on the Toronto Stock Exchange.

($1=1.228 Canadian Dollar)

(Reporting by R. Manikandan in Bangalore; Editing by Anil D'Silva)