Acadia amends facility for Partnerships acquisition, more flexibility

By Marisa Wong

Madison, Wis., June 17 – Acadia Healthcare Co., Inc. entered into a fifth amendment to its amended and restated credit agreement dated Dec. 31, 2012 to permit its acquisition of Partnerships in Care, according to an 8-K filing with the Securities and Exchange Commission.

The amendment, completed on June 16, gives the company the ability to incur a tranche of term loan B debt in the future through its incremental credit facility and modifies some of the restrictive covenants on miscellaneous investments and incurrence of miscellaneous liens.

The restrictive covenants on investments in joint ventures and foreign subsidiaries were also amended so that the company may now invest, in any given fiscal year, up to 5% of its total assets in both joint ventures and foreign subsidiaries, respectively. This is provided that the aggregate amount of investments in both joint ventures and foreign subsidiaries, respectively, does not exceed 10% of its total assets over the life of the credit facility and provided that the aggregate amount of investments made in both joint ventures and foreign subsidiaries collectively does not exceed 15% of its total assets.

The amendment also provides increased flexibility in terms of the facility’s financial covenants, which include maintaining the following:

• Fixed-charge coverage ratio not less than 1.25 to 1 as of the end of any fiscal quarter;

• Consolidated leverage ratio not greater than (i) if bridge senior debt is not incurred, 5.75 to 1 for the quarters ending June 30 and Sept. 30, 5.5 to 1 for the quarters ending Dec. 31, 2014 through Sept. 30, 2015, 5.25 to 1 for the quarters ending Dec. 31, 2015 through Sept. 30, 2016, 5 to 1 for the quarters ending Dec. 31, 2016 through Sept. 30, 2017 and 4.5 to 1 for the quarters ending Dec. 31, 2017 and after and (ii) if the bridge senior debt is incurred, 7.25 to 1 for the quarters ending June 30 and Sept. 30, 6.5 to 1 for the quarters ending Dec. 31, 2014 through Sept. 30, 2015, 5.75 to 1 for the quarters ending Dec. 31, 2015 through Sept. 30, 2016, 5 to 1 for the quarters ending Dec. 31, 2016 through Sept. 30, 2017 and 4.5 to 1 for the quarters ending Dec. 31, 2017 and after; and

• Consolidated senior secured leverage ratio not greater than 3.75 to 1 for the quarters ending June 30 through Dec. 31, 2014 and 3.5 to 1 for the quarters ending March 31, 2015 and after.

The company was in compliance with all of the covenants above as of March 31, the filing noted.

Borrowings bear interest at a rate tied to the company’s consolidated leverage ratio. The applicable rate for Libor loans ranges from 225 basis points to 325 bps. The applicable rate was Libor plus 275 bps at March 31.

In addition, the company is required to pay a commitment fee on undrawn amounts under the revolving line of credit. The company paid a commitment fee for undrawn amounts of 50 bps for the period from Jan. 1 through Feb. 12 and 40 bps for the period from Feb. 13 through March 31.

The credit facility matures on Feb. 13, 2019.

Acadia is a Franklin, Tenn.-based provider of inpatient behavioral health care services.

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