Acadia amends credit agreement to add $235 million term loans

By Marisa Wong

Madison, Wis., Dec. 15 – Acadia Healthcare Co., Inc. amended its amended and restated credit agreement dated Dec. 31, 2012 to incur $235 million of additional term loans, according to an 8-K filing with the Securities and Exchange Commission.

Acadia entered into a sixth amendment to its credit agreement on Dec. 15.

A portion of the additional term loan advance was used to prepay the company’s outstanding revolving loans.

The amendment also specifically permits the company’s acquisition of CRC Health Group, Inc. In connection with the acquisition, the credit agreement amendment imposes a temporary reserve on the company’s revolving credit facility in the amount of $110 million in order to preserve these amounts for later borrowings to partially fund the consideration for the acquisition.

In addition, the amendment permits the incurrence of an additional incremental term loan and permits the issuance of additional senior unsecured debt or senior unsecured bridge debt to partially fund the consideration for the CRC acquisition.

The company’s baskets for permitted investments were also increased to give the company more flexibility to invest in non-wholly owned subsidiaries, joint ventures and foreign subsidiaries.

Further, the amendment permits the company to add one or more foreign borrowers or request revolving loans and letters of credit in foreign currencies.

Under the amended credit agreement, the company is required to make quarterly term loan principal repayments of $1,875,000 for Dec. 31, $6,687,500 for March 31 to Dec. 31, 2015, $10,031,250 for March 31, 2016 to Dec. 31, 2016, $13,375,000 for March 31, 2017 to Dec. 31, 2017 and $16,718,750 for March 31, 2018 to Dec. 31, 2018, with the remaining balance due on the Feb. 13, 2019 maturity date.

On Dec. 15, prior to the execution of the sixth amendment, the company made the Dec. 31 quarterly term loan principal payment of $1,875,000.

Borrowings under the amended credit agreement bear interest at a rate tied to Acadia’s consolidated leverage ratio. The applicable rate for Libor loans was 275 basis points at Sept. 30.

In addition, the company is required to pay a commitment fee on undrawn amounts under the revolving line of credit. The company paid a 50-bps commitment fee for the period from Jan. 1, 2013 through Feb. 12, 2014 and a 40-bps fee for undrawn amounts for the period from Feb. 13, 2014 through the amendment date.

The credit agreement requires the company to comply with financial covenants, including a fixed-charge coverage ratio, consolidated leverage ratio and consolidated senior secured leverage ratio. As of Sept. 30, the company was in compliance with these covenants.

If the CRC acquisition is consummated, the maximum covenant levels for the company’s consolidated leverage ratio will be increased for each fiscal quarter to the following levels: 5.75 times for Sept. 30; 5.5 times for Dec. 31; 6.75 times for March 31 through June 30, 2015; 6.5 times for Sept. 30, 2015; 6 times for Dec. 31, 2015 through Sept. 30, 2016; 5.5 times for Dec. 31, 2016 through Sept. 30, 2017; 5 times for Dec. 31, 2017 through Sept. 30, 2018; and 4.5 times after that. Similarly, if the acquisition is completed, the maximum covenant levels for the company’s consolidated senior secured leverage ratio will be increased for each fiscal quarter to 3.75 times from June 30, 2014 through Sept. 30, 2015 and 3.5 times for Dec. 31, 2015 and each quarter after that.

Acadia is a Franklin, Tenn.-based provider of inpatient behavioral health care services. CRC is a Cupertino, Calif.-based operator of addiction recovery centers.

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