Healthways amends $400 million facility, agrees to temporary rate bump

By Susanna Moon

Chicago, Feb. 7 - Healthways, Inc. amended its revolving loans and term loan with a temporary bump up in the interest rate by 25 basis points to Libor plus 325 bps through Dec. 31, 2013.

The company amended the loan terms on Tuesday with SunTrust Bank, as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also revises the definition of "consolidated EBITDA" to permit adding back of cash restructuring charges, the definitions of "permitted subordinated debt" and "restricted payment" and the negative covenant regarding restricted payments to allow making permitted interest payments for permitted subordinated debt.

The company also extended the step-down dates for the leverage ratio required under the loan terms.

Leverage must be no more than 4 times for each fiscal quarter ending after March 31, 2012 to Sept. 30, 2013, no more than 3.75 times for the fiscal quarter ending Dec. 31, 2013 and no more than 3.5 times for each fiscal quarter ending after March 30, 2014.

Loan terms

The company said on June 11, 2012 that it closed on the $400 million five-year credit facility, which initially priced at Libor plus 250 bps.

The facility consisted of a $200 million term loan A and a $200 million revolver.

Pricing on the facility ranged from Libor plus 175 bps to 300 bps and the revolver unused fee ranged from 30 bps to 50 bps, based on leverage, according to a previous 8-K filing with the SEC. The initial unused fee was 37.5 bps.

Sun Trust Robinson Humphrey Inc., U.S. Bank and Fifth Third Bank were the joint lead arrangers and bookrunners on the deal.

Amortization on the term loan was 5% in years one and two, 7.5% in year three and 10% in years four and five.

Proceeds were used to replace an existing credit facility that was set to mature in December 2013.

At close on June 8, 2012, there was $106 million drawn under the revolver.

Healthways is a Franklin, Tenn.-based provider of well-being improvement solutions.

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