Advanced Marketing Services has announced that it has reached an agreement with its banks to extend the forbearance on its defaults until December 31, 2003.  AMS (also parent of Publishers Group West) went into default when it delayed the filing of its Q1 financials (see 'AMS 10-Q Delay Puts Company in Default').  The delay was connected to a federal investigation of the company (see 'Book Distributor Raided by Feds').

 

The forbearance agreement also limits AMS to $20 million of its $45 million credit line, and raises the acceptable leverage ratio to 4.25 to 1 from 4 to 1.  Perhaps most interesting is the change in the leverage ratio.  Among possible explanations are that profitability is not coming in as expected, or that an adjustment related to the investigation will change the ratio.