Omega Healthcare expands revolving credit facility, adds term loan

By Marisa Wong

Madison, Wis., April 6 – Omega Healthcare Investors, Inc. amended its credit agreement to increase the aggregate commitment amount under its revolving credit facility to $1.25 billion from $1 billion and to provide for an incremental term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

Omega entered into the first amendment to the credit agreement, dated June 27, 2014 with Bank of America, NA as administrative agent, on April 1.

The amended credit agreement now provides for a $1.25 billion senior unsecured revolver, a $200 million senior unsecured term loan and a $200 million senior unsecured incremental term loan.

Omega may increase commitments under the facilities by up to an additional $250 million, for maximum aggregate commitments of up to $1.9 billion.

The revolver matures on June 27, 2018, subject to a one-time, one-year extension option. The existing term loan matures on June 27, 2019. The new incremental term loan matures on June 27, 2017, subject to two one-year extension options.

The entire amount of the existing term loan was advanced on June 27, 2014. The term loan does not amortize and is due and payable in full at maturity.

The entire amount of the incremental term loan was advanced on April 1. The new term loan also does not amortize and is due and payable at maturity.

Loan proceeds may be used to finance acquisitions and to fund working capital, capital expenditures and other general corporate purposes.

Interest is equal to Libor plus an applicable margin based on the company’s investment-grade non-credit-enhanced senior unsecured long-term ratings.

The applicable margin for the revolver ranges from 92.5 basis points to 170 bps. Letter-of-credit fees range from 92.5 bps to 170 bps, based on the same performance grid.

The applicable margin for the term loans may range from 100 bps to 195 bps.

The facilities may be prepaid at any time in whole or in part.

In addition, the credit agreement contains financial covenants, including those relating to maximum total leverage, maximum secured leverage, maximum unsecured leverage, minimum fixed-charge coverage, minimum consolidated tangible net worth, minimum unsecured debt yield, minimum unsecured interest coverage and maximum distributions.

As of April 1, Omega had about $320 million of borrowings outstanding under the revolver, $200 million of borrowings outstanding under the existing term loan and $200 million of borrowings outstanding under the incremental term loan.

OHI Healthcare term loan

Also on April 1, OHI Healthcare Properties LP entered into a $100 million senior term loan facility with Bank of America as administrative agent.

The term loan matures on June 27, 2017, subject to two one-year extension options.

Borrowings may be used to finance acquisitions and to fund working capital, capital expenditures and other general corporate purposes.

Interest is equal to Libor plus an applicable margin based on Omega’s or OHI Healthcare Properties’ non-credit-enhanced senior unsecured long-term debt ratings. The applicable margin ranges from 100 bps to 195 bps.

The credit agreement also contains financial covenants relating to maximum total leverage, maximum secured leverage, maximum unsecured leverage, minimum fixed-charge coverage, minimum consolidated tangible net worth, minimum unsecured debt yield, minimum unsecured interest coverage and maximum distributions.

At closing, OHI Healthcare Properties borrowed $100 million under the term loan.

Omega is a Hunt Valley, Md.-based real estate investment trust investing in and providing financing to the long-term-care industry.

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