MedCath amends loan, trimming revolver size and modifying covenants

By Sara Rosenberg

New York, Aug. 19 - MedCath Corp. amended its credit facility, reducing the revolver size to $59.5 million from $85 million and revising covenants to provide additional flexibility in connection with an effort to explore strategic alternatives, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

Under the amendment, the fixed-charge coverage ratio was suspended for the fiscal quarters ending Sept. 30 and Dec. 31.

Also, the measuring periods for the quarterly tested financial covenants were shortened from the four fiscal quarters ending on a measuring date to the one, two or three fiscal quarters for the measuring dates on March 31, 2011, June 30, 2011 and Sept. 30, 2011.

In addition, certain definitions were modified to permit additional add-backs for financial covenant calculations, and the amendment permits additional asset dispositions and changes the required use of proceeds from asset sales.

Furthermore, any mandatory prepayment of the revolver will result in the reduction of the revolver size by a corresponding amount.

The amendment was completed on Aug. 13.

Bank of America is the administrative agent on the deal.

MedCath is a Charlotte, N.C.-based owner and operator of hospitals in partnership with physicians.

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