Hanger, Austin, Texas, has previously reported in its Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission (SEC) that it will be restating certain previously filed financial statements and other financial data as a result of various accounting issues and related matters. The company has not yet filed financial statements for the third quarter of 2014; the fourth quarter and full year ended December 31, 2014; and the first, second, and third quarters of 2015, and is working to complete its closing processes and file its financial statements for these periods, and to prepare its restated financial statements, as expeditiously as possible. According to the most recent Current Report on Form 8-K that was filed November 12,
Hanger said the earliest it will likely commence making its filings with the SEC is the first quarter 2016 and anticipates that it will not be able to timely file its Annual Report on Form 10-K for the year ending December 31, 2015.
Additionally, Hanger reported that it is not in compliance with New York Stock Exchange (NYSE) listing standards as a result of not yet filing its Annual Report on Form 10-K for the year ending December 31, 2014, and has until March 19, 2016, to return to compliance.
Due to continuing accounting and auditing activities, Hanger said it is not yet able to provide preliminary balance sheet or income statement data for the financial periods noted above. However, the company provided preliminary estimates of certain cash flow data for the periods set forth below.
The company previously reported in its Current Report on Form 8-K filed with the SEC on September 14, 2015, that it had entered into an amendment to its credit agreement with its bank lenders, dated June 17, 2013, that provided for, among other things, the waiver of any default arising from the late filing of its periodic reports required to be filed with the SEC since and including the third quarter of 2014. Under the terms of that amendment, the waiver expired on October 30. Hanger has now entered into a third amendment, and the waiver of default now expires December 18.
Furthermore, Hanger previously entered into the Fourth Supplemental Indenture to amend its indenture among the company, the guarantors, and Wilmington Trust Company, as trustee, pursuant to which Hanger has issued $200,000,000 aggregate principal amount 7 1/8 percent senior notes due 2018. The Fourth Supplemental Indenture amends and waives certain reporting provisions of the Indenture through November 16. Hanger said it is currently evaluating its options with respect to the senior notes following the expiration of the amendment period, which may include seeking a further amendment and waiver of the reporting provisions of the indenture. However, if Hanger is unable to come to satisfactory resolution with the holders of its senior notes, then it may be subject to numerous penalties, including but not limited to the acceleration of all of its debt outstanding pursuant to such agreement. In the event that the debt were to be accelerated, then the company would need to seek alternative financing to satisfy its obligations. This alternative financing may not be available on terms that are favorable to the company, or at all.
Hanger said it currently believes that, based on current levels of operations and anticipated growth, cash generated from operations, together with other available sources of liquidity, including borrowings that may be available under its credit agreement, will be sufficient for at least the next 12 months to fund anticipated capital expenditures, make required routine payments of principal and interest on debt as such payments become due, and pay the additional third-party expenses that the company continues to incur as a result of the ongoing work relating to the filing of its financial statements.
As of October 31, Hanger said had access to cash and cash equivalents in its bank accounts of $66.4 million and had drawn $142 million of its $146.3 million revolving credit line under its credit agreement, with the remaining capacity being fully utilized for the purposes of $4.3 million in outstanding letters of credit.