On February 10, Hanger, Austin, Texas, entered into an agreement that modified its credit agreement dated June 17, 2013, for which Bank of America is the agent. This credit agreement was previously amended three times: June 19, September 11, and November 13, 2015. This latest agreement, called the Fourth Amendment and Waiver, waives defaults and events of default under the credit agreement and modifies certain terms and covenants in the credit agreement, including temporarily increasing the applicable interest rates, with some of the modifications terminating once the company meets various conditions described more fully below.
The fourth amendment waives the events of default due to the company’s failure to deliver financial information to the agent for the periods ended September 30 and December 31, 2014; March 31, June 30, and September 30, 2015, as required by the Third Amendment and Waiver. The fourth amendment also waives certain potential default events arising from the company’s anticipated failure to timely deliver financial information and other materials for the period ended December 31, 2015. Additionally, the fourth amendment states that Hangers’ failure to deliver the financial information to the agent by May 16, 2016, shall be an additional event of default under the credit agreement.
The company is also subject to additional restrictions and provisions until it has delivered to the agent (a) financial information demonstrating that it would have been in compliance with the financial covenants in the credit agreement for the fiscal quarters ended September 30 and December 31, 2014, and March 31 and June 30, 2015, and the correctness of a representation in the Third Amendment and Waiver regarding its compliance with an adjusted leverage ratio as of the end of the fiscal quarter ended September 30, 2015; (b) the December 31, 2015, financial information; and (c) projections for each fiscal quarter remaining during the term of the credit agreement, through June 17, 2018, demonstrating that the company will be in compliance with the financial covenants in the credit agreement as of the end of each fiscal quarter remaining during the term of the credit agreement. These additional restrictions and provisions include: the amount that the company can borrow under the credit agreement in the form of revolving loans, swing line loans, and/or letters of credit has been reduced from $146.3 million to $138 million; certain baskets and exceptions to the restrictive covenants in the credit agreement have been reduced or eliminated; and the company will be required to deliver to the agent monthly consolidated cash flow forecasts and reconciliation reports.
Hanger will pay each consenting lender an amendment fee of 45 basis points of the outstanding principal amount of the term loan held by such consenting lender plus the amount of such lender’s revolving commitments.