Toronto-based software company Dye & Durham Ltd. is racing against the clock to avoid a default on its senior credit agreement, giving it less than 30 days to file its delayed audited financial statements.
Imminent Default Threat
The beleaguered real estate software provider announced Tuesday that it failed to deliver its audited first-quarter results for the period ended September 30 on time. This triggered a 30-day "cure" period under its senior credit agreement, giving the company until December 17 to file the documents before an event of default occurs.
If Dye & Durham cannot meet this deadline, lenders could exercise certain rights defined in the agreement. The company is actively seeking a waiver from its lenders to extend the filing deadline but has not yet secured one.
Background of Financial Delays
This isn't the first time Dye & Durham has faced filing challenges. In September, the company obtained a waiver giving it until December 1 to file its annual results for the fiscal year ended June 30 without triggering default. However, that agreement didn't waive the requirement to file first-quarter results by November 14.
The company reported preliminary unaudited results last week that were weaker than expected, causing the stock to crash for the third time in a month. D&D said it expects to file its year-end statements before its annual meeting, which has been delayed to December 31.
Broader Turmoil and Strategic Review
Dye & Durham's current crisis follows a brutal year marked by leadership changes and activist investor campaigns. The company has launched a cost-saving program and committed to a strategic review that could result in the sale of some or all of the business.
Recent developments have further shaken investor confidence. In October, former CEO Matt Proud withdrew his offer to buy the company for $10.25 per share, and CIBC Capital Markets backed out of leading the strategic review. The stock has since plunged to all-time lows.
Adding to the company's challenges, S&P Global Ratings and Moody's Ratings recently cut their credit ratings on Dye & Durham, citing concerns about leadership and governance issues.
Meanwhile, an ad-hoc group of majority term lenders has organized and hired legal firm Milbank to consider the waiver request, according to debt industry news site Octus.
