On March 16, SMF announced it expected a substantial reduction in sales revenue and earnings for 2012s first quarter and future periods, and expected to report a loss for 2012s first and second quarters because of necessary changes made to its pricing structure.

According to a company statement issued Monday, principal lender Wells Fargo Bank, N.A., informed SMF it wont make any further revolving loans to the company under their loan agreement. The current balance owed to Wells Fargo under the loan agreement is $11.2 million, including $8 million in revolving loans, a $2.2 million unpaid balance of a term loan and a $1 million mortgage loan.

SMF expects the lender will consent to or support the companies use of the lenders cash collateral to continue to operate only those portions of the companies business that have a discernible value as an ongoing enterprise. As a result, the company expects that it will be required to promptly commence the liquidation of the assets of those portions of the companies business that are not believed to have a going concern value.

Efforts to reduce operating losses by increasing revenue and decreasing expenses have been unsuccessful, SMF reported. Competitive pressures have prevented the company from increasing prices, and despite layoffs and other cost cutting measures, expenses have not been reduced in an amount sufficient to offset the decreased revenue since the change in pricing structure, SMF said. The company does, however, intend to continue to pursue strategic alternatives after the voluntary petitions for those portions of the companies business that have a discernible value as an ongoing enterprise.

Ft. Lauderdale, Fla.-based SMF provides petroleum product distribution services, transportation logistics and emergency response services to a variety of industries through 34 locations in 11 states.

SMFs spokesman did not respond to Lube Reports calls by deadline.