Acadia amends loan terms with Bank of America for acquisition plans

By Susanna Moon

Chicago, Jan. 27 – Acadia Healthcare Co., Inc. amended its credit agreement Monday with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The amendment:

• Added lenders subject to a bail-in action of a public administrative authority of any European Economic Area member country to the definition of defaulting lenders;

• Acknowledged lender liability may be subject to write-down from an EEA Resolution Authority;

• Increased baskets for “excluded property” not required to be subject to a lien to include personal property of less than $500,000 located in a mortgaged building in a special flood hazard area;

• Removed conditions on reallocating a defaulting lender’s participation obligations in letters of credit and swing line loans, subject to an EEA Resolution Authority; and

• Removed some restrictions on the terms of future tranche A incremental facilities as they relate to tranche B facilities.

Upon closing of the acquisition of Priory Group No. 1 Ltd., the amendment will also loosen financial covenants; further increase baskets for excluded property not required to be subject to a lien to include real property acquired after the amendment date with a fair market value of $5 million or less; and expand and loosen the permitted investment baskets to provide increased flexibility for the company to invest in non-wholly owned subsidiaries, joint ventures and foreign subsidiaries, the filing noted.

If the acquisition is completed, the company’s consolidated leverage ratio may not be greater than 6.5 times for the quarter ended Sept. 30, 2015, stepping down eventually to 5 times at the end of the quarter ending Dec. 31, 2018.

If the acquisition goes through, the secured leverage ratio may not be greater than 3.75 times for the quarters ending Sept. 30, 2015 through Sept. 30, 2016 and no more than 3.5 times for the quarters ending Dec. 31, 2016 and each fiscal quarter after that.

Acadia is a Franklin, Tenn.-based provider of inpatient behavioral health care services. Priory is a provider of behavioral health care services in the United Kingdom.

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