Healthways Completes Refinancing of Senior Credit Facilities; Lowers 2012 EPS Guidance
Healthways (NASDAQ: HWAY) today announced that the Company has successfully completed the refinancing of its Senior Credit Facilities as of June 8, 2012. The previous facilities, which were set to expire in December 2013, have been replaced with facilities consisting of a five-year Term Loan A of $200 million and a five-year revolving credit facility of $200 million.
The new facilities are priced initially at Libor plus a margin of 2.50%. The Term Loan A will amortize at 5% per year for years one and two, 7.5% for year three and 10% per year for years four and five. At the closing of the facilities, the revolving credit facility had an initial balance of $106 million.
As previously communicated, Healthways earnings guidance for 2012 specifically excluded the potential financial impact of a refinancing event based upon the uncertainty of both timing and terms of entering into new credit facilities. The Company expects that the overall incremental interest expense of this refinancing will reduce 2012 net income per diluted share by approximately $0.04. Approximately two-thirds of the incremental expense reflects an increase in borrowing costs, and one-third relates to the write-off of previously deferred loan costs. Therefore the Company is modifying its 2012 earnings guidance from a range of $0.42 to $0.54 per diluted share to a range of $0.38 to $0.50 per diluted share.
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