Alliance HealthCare relaxes covenants, agrees to increased pricing

By Susanna Moon

Chicago, Sept. 30 - Alliance HealthCare Services Inc. amended its credit agreement and modified financial covenants Tuesday with Deutsche Bank Trust Co. Americas as administrative agent to provide more flexibility, according to an 8-K filing with the Securities and Exchange Commission.

The company must now maintain a maximum ratio of consolidated total debt to consolidated adjusted EBITDA of 5.25 times through June 30, 2012, of 5 times through June 30, 2013 and of 4 times after that.

The minimum ratio of consolidated adjusted EBITDA to consolidated interest expense is 2.25 times through Dec. 31, 2012, 2.5 times through Dec. 31, 2014 and 2.75 times after that.

As of June 30, the company's ratio of consolidated total debt to consolidated adjusted EBITDA was 4.48 times, and its ratio of consolidated adjusted EBITDA to consolidated interest expense was 3.26 times.

In return, quarterly amortization payments on the term loan were raised to $3.0 million from $1.15 million, and the annual excess cash flow sweep percentage was increased to 75% from 50%.

The company said it also agreed to lower the maximum amount of availability under its revolving credit facility to $70.0 million from $120.0 million and to increase margins on its borrowings under the credit facility.

The margin on revolver interest was raised to 475 basis points to 525 bps over Libor. The margin on the term loans was increased to 525 bps over Libor.

In addition, Alliance HealthCare will not be able to draw from the revolver unless the company can meet the leverage ratio on a pro forma basis after new borrowings, the release noted.

In connection with the amendment, the company paid down $25.0 million of debt outstanding under the term loan. As of Sept. 27, there was $427.0 million outstanding under the term loan and no borrowings under the revolving credit facility.

Alliance Healthcare is a Newport Beach, Calif.-based provider of outpatient diagnostic imaging and radiation therapy services.

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