Allscripts Closes $650 million of New Senior Secured Credit Facilities
Allscripts announced today that it has closed its new senior secured credit facilities and completed other previously announced capital structure initiatives.
Allscripts recent capital structure initiatives provide the Company with improved capital efficiency as well as enhanced financial flexibility by extending debt maturities, increasing liquidity and lowering the Company's cash interest costs. With the successful completion of these activities, Allscripts is well positioned to maximize its focus on long-term strategic growth initiatives.
Specific capital structure enhancements include:
The closing of $650.0 million of new senior secured credit facilities (the "Senior Credit Facilities") on June 28, 2013 consisting of: a five-year $225 million senior secured term loan; and a five-year $425 million senior secured revolving credit facility. Issuance of $345.0 million of 1.25% cash convertible senior unsecured notes (the "Convertible Notes") due 2020, completed on June 18, 2013. Commenting on today's announcement, Richard J. Poulton, Allscripts Chief Financial Officer said, "These highly successful transactions, consisting of almost $1.0 billion in financing activities, were very well received by institutional investors and lenders and represent an emphatic vote of confidence in Allscripts long-term outlook.
"The closing of the new credit agreement creates additional strength and lends improved efficiency to Allscripts capital structure. In addition to improving our debt maturity profile and reducing our cash interest expense, we have significantly enhanced our financial flexibility. As a result of these activities, the Company will have over $400 million of available liquidity in support of our long-term strategic growth initiatives."
Senior Credit Facilities
As of March 31, 2013, the Company had approximately $544 million of borrowings under its previous senior credit facilities. Certain proceeds under the new Senior Credit Facilities were used to repay the previous senior credit facilities which the Company chose to cancel. In addition, the Company paid down the remaining $39 million of seller notes and deferred purchase price obligations incurred in connection with the Company's acquisition of dbMotion, Ltd.
Borrowings under the new Senior Credit Facilities will bear interest, at the Company's option, at a rate per annum equal to either (1) a floating Eurodollar rate based on LIBOR, or (2) the highest of (a) the prime rate, (b) the federal funds effective rate from time to time plus 0.5%, and (c) the Eurocurrency Rate for a one month interest period plus 1.0%, plus, in each case, the applicable margin. The applicable margin for borrowings under the Company's new Senior Credit Facilities will initially be 1.25% for all loans except for loans based on the Eurocurrency Rate, for which the applicable margin will initially be 2.25%.
Quarterly principal repayments for the term loan commencing on September 30, 2013 will be $2.8 million for each of the first four installments and $5.6 million for each of the next four installments. Additional details on the new Senior Credit Facilities are available in the Company's Current Report on Form 8-K filed today with the Securities and Exchange Commission.
In addition, as disclosed on June 18, 2013, Allscripts completed an unregistered Rule 144A offering of $345 million aggregate principal amount of its 1.25% Cash Convertible Senior Notes due 2020. The Convertible Notes were offered only to qualified institutional buyers (as defined in the Securities Act of 1933, as amended).
The Notes bear interest at a rate of 1.25% per annum from and including June 18, 2013, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2014. The Notes will mature on July 1, 2020, unless earlier repurchased by the Company or converted into cash in accordance with their terms prior to such date.
The conversion rate for the Convertible Notes initially will be 58.1869 shares of common stock per $1,000 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $17.19 per share of the Company's common stock.
The initial conversion price of the Convertible Notes represents a premium of approximately 30% to the $13.22 per share last reported sale price of the Company's common stock on June 12, 2013.
In connection with the pricing of the Convertible Notes, Allscripts entered into a series of transactions for the purpose of effectively increasing the conversion price of the Convertible Notes. Specifically, Allscripts entered into privately negotiated cash convertible note hedge transactions with certain of the initial purchasers of the Convertible Notes or their respective affiliates (the "option counterparties"). The cash convertible note hedge transactions are expected to reduce Allscripts exposure to potential cash payments due upon conversion of the notes in excess of the principal amount thereof. Allscripts also entered into privately negotiated warrant transactions with the option counterparties with an initial strike price of $23.1350 per share, subject to certain adjustments, which represents a premium of approximately 75% to the $13.22 per share last reported sale price of Allscripts common stock on June 12, 2013.
Net proceeds from the sale of the Convertible Notes were approximately $337.2 million, after deducting the initial purchasers' fees but before deducting other estimated expenses.
The Company used approximately $31.6 million of the net proceeds to pay the cost of the above hedging transactions, and the Company used the remainder of the net proceeds to repay a portion of the Company's outstanding indebtedness under its previous senior credit facilities.
Additional details regarding the Convertible Notes are available in the Company's Current Report on Form 8-K filed on June 18 by Allscripts with the Securities and Exchange Commission.
About Allscripts Allscripts (NASDAQ: MDRX) delivers the insights that healthcare providers require to generate world-class outcomes. The company's Electronic Health Record, practice management and other clinical, revenue cycle, connectivity and information solutions create a Connected Community of Health™ for physicians, hospitals and post-acute organizations. To learn more about Allscripts, please visit www.allscripts.com, Twitter, YouTube and It Takes A Community: The Allscripts Blog.
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