PACKAGING FIRM Smurfit Kappa has received support from its lenders to extend the terms of its debts, which will give the company greater financial headroom.

This follows Smurfit’s announcement on June 9th that it was in talks with lenders to amend its senior debt facilities. The company has net debts of €3.2 billion, most of which is set to expire in 2012 or 2013.

The deal will enable the company to extend the maturity date of a portion of its revolving credit facility and to raise longer-dated capital in bond markets to refinance some of its existing senior bank debt. It will also provide the company with greater headroom in its banking covenants.

“By the ‘early bird’ deadline of 25th June, 2009, Deutsche Bank, as agent for the lenders, had received consents to the proposed amendments to SKG’s [Smurfit Kappa Group] senior credit facility in excess of the required acceptance level,” the company said in a statement yesterday.

The amendment process is due to be completed in early July, after the final consent deadline at the end of June.

“The improvement to SKG’s capital structure post the amendments will allow the group increased financial flexibility and dampens concerns regarding covenant headroom,” NCB stockbrokers said yesterday in its morning note. Earlier this month, the group’s chief financial officer Ian Curley said the proposed amendments would maximise “cash flow generation for continued net debt reduction”.

Pretax profit at the company fell by 67 per cent in the three months to March.

Smurfit’s share price rose 1 per cent, or 4 cents, to €3.71 yesterday.