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Alliance HealthCare Services, Inc.
, a leading national provider
of outpatient diagnostic imaging and radiation therapy services, announced
that it has obtained commitments from lenders with respect to a new senior
secured credit agreement.
Howard Aihara, executive vice president and chief financial officer stated,
“Our ability to refinance our new senior secured term loan on such favorable
terms is a clear testament to the improvements in our business performance and
the strength of our balance sheet. The financing represents yet another
positive step in our ongoing effort to maximize the efficiency of our capital
structure, while providing the flexibility and cash flow necessary to execute
upon our strategic initiatives, including ongoing reduction of our debt. This
new facility will allow us to significantly reduce our interest rate and
associated interest expense on an ongoing basis, which will translate into
increased cash flow for the current fiscal year and beyond. The Company
intends to use the net proceeds from this new term loan agreement to finance
the repayment of our existing credit agreement and to redeem a portion of our
outstanding senior notes. We are appreciative of the support we received from
our lead bank, Credit Suisse, our existing lenders who renewed their
commitments and a significant number of new lenders.”
Debt Refinancing Highlights
* Debt refinancing will save the Company $12 million in cash interest
expense annually and approximately $7 million in 2013
* Company increases full year guidance for decrease in net debt by $7
million
* Interest rate decreases to LIBOR plus 3.25% with 1.00% LIBOR floor
representing cash savings of approximately $9 million annually
* The prior Credit Agreement had interest rate of LIBOR plus 5.25% with
2.00% LIBOR floor
* Significant over-subscription allowed Alliance to upsize term loan from
$340 million to $420 million; $80 million upsize to be used to call $80
million of 8.0% Senior Notes, further reducing annual cash interest
expense by $3 million
Senior Secured Term Loan Refinancing
Alliance's new senior secured credit agreement will be comprised of a $420
million term loan maturing June 2019 and a $50 million revolving credit
facility maturing June 2018. Interest on the term loan is expected to be
calculated, at Alliance's option, at a base rate plus a 2.25% margin or LIBOR
plus a 3.25% margin, subject to a 1.00% LIBOR floor. Prior to the refinancing
of its senior secured term loan, Alliance was paying either a base rate plus a
4.25% margin or LIBOR plus a 5.25% margin with a 2.00% LIBOR floor. Excluding
the $80 million upsize in the term loan, the change in interest rate on the
term loan would save Alliance approximately $9 million in cash interest on an
annualized basis.
Interest on the revolving credit facility is expected to be calculated, at
Alliance's option, at a base rate plus an applicable margin of between 2.00%
and 2.25% or LIBOR plus an applicable margin of between 3.00% and 3.25%,
subject to a 1.00% LIBOR floor. The applicable margins under the revolving
credit facility will be based on Alliance's applicable leverage ratio as
calculated under the new senior secured credit agreement. Alliance will pay a
0.50% upfront fee on the amount of the revolving credit facility, and the term
loan will be funded at 99.5% of the principal amount. Alliance will also pay a
0.50% per annum fee on the unused amount of the revolving credit facility,
subject to a step-down to 0.375% based on Alliance's applicable leverage
ratio. Closing of the new senior secured credit agreement is subject to
completion of satisfactory documentation and satisfaction of other closing
conditions.
Alliance intends to use the net proceeds from the new senior secured credit
agreement to finance the repayment of the $325 million outstanding aggregate
principal balance of its existing credit agreement and to call for redemption
$80 million in principal amount of its 8% Senior Notes. Alliance expects to
use the remaining borrowings under the new senior secured credit agreement to
pay fees and expenses related to the new senior secured term loan and to pay
the call premium related to the redemption of the 8% Senior Notes. Alliance's
new senior secured credit agreement is expected to close on or about June 3,
2013. The redemption will be effected pursuant to the terms of the indenture
governing the 8% Senior Notes, and Alliance intends to initiate the redemption
on or around the date of closing of the new senior secured term loan.
Full Year 2013 Guidance Update
As a result of the decrease in interest rates under the new senior secured
term loan, Alliance is updating its guidance impacted by the increase in cash
flow. On an annualized basis, the Company expects to lower interest expense by
approximately $12 million and expects 2013 interest expense to decrease by $7
million, based on the closing date of the facility. The Company's guidance for
decrease in total long-term debt, net of the change in cash and cash
equivalents, excluding fees and expenses related to the refinancing, is now
expected to range from $32 to $42 million, which is an increase from the prior
range of $25 to $35 million. There are no other changes in Alliance's
previously announced 2013 guidance expected to result from the new senior
secured credit agreement.
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