Correspondence

The Chairman

New Zealand Shareholders Assn

C/- P O Box 6310

Auckland

 

Dear Mr Sheppard

 

Your letter of 2 June 2009 for the attention of our Chairman Sir Selwyn Cushing has been referred to the writer for response.

There are two key financial ratio requirements contained in our Bank Facility

Agreement.

 

1.       Net senior Debt to EBITDA

 

2.       EBITDA to Net Senior Interest

 

As at 30 June 2008 and 31 March 2009 (the latest reporting date) the Company comfortably complied with the above ratio requirements set out in the Facility Agreement.

It would appear that your calculation of Net Senior Debt to EBITDA as at 30 June 2008 for the Company has excluded the Cash held at bank of $7.8m.

 

There are two secondary ratio requirements in the facility agreement which relate to minimum requirements in terms of Charging Group Assets and EBITDA relative to Total Group Assets and EBITDA. These ratios have arisen due to our inability to provide the Bank with security over all of the assets owned in China and Italy due to legislation in the countries concerned. The Company has no difficulty in complying with these particular ratio requirements.

There are no other ratio requirements under our facility agreement.

 

Since 30 June 2008 the Company has reduced its net bank borrowings after allowing for the payment of dividends in October 2008 and May 2009.

 

In conclusion I confirm that the Board of Skellerup Holdings Limited is extremely conscious of its requirement under the NZSX continuous disclosure regime to keep shareholders and the market fully informed should there be any material change in the Company’s future prospects to those that have already been disclosed to the market.

 

Yours faithfully

 

 

Jim Greenwood

Company Secretary