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Gentiva® Health Services Announces Credit Agreement Amendment

Stocks in this article: GTIV

ATLANTA, March 6, 2012 /PRNewswire/ -- Gentiva Health Services, Inc. (Nasdaq: GTIV) announced today that it obtained an amendment to its senior secured credit agreement to increase financial covenant flexibility through the remaining term of the facility.

Key terms of the amendment include: 

  • Maximum consolidated leverage ratio was increased to 6.25 to 1.00 for the quarters ending March 31, 2012 through September 30, 2014 and 5.75 to 1.00 thereafter.  The previously required ratio was 4.50 to 1.00 through September 30, 2012, 3.75 to 1.00 from December 31, 2012 through September 30, 2013 and 3.00 to 1.00 thereafter. 
  • Minimum interest coverage was reduced to 2.00 to 1.00 for the quarters ending March 31, 2012 through June 30, 2013, 1.75 to 1.00 from September 30, 2013 through June 30, 2014 and 2.00 to 1.00 thereafter. Additionally, the definition of consolidated interest charges was modified to only reflect cash interest paid compared to the prior covenant which also included non-cash interest charges. 
  • Interest rates applicable to outstanding term A and B loans under the credit agreement were each increased by 175 basis points per annum.  The LIBOR floor remained at 1.25 percent for each of the term loans.  At current LIBOR rates, the Company's annual interest rate on the term loan A facility was increased from 4.50 percent to 6.25 percent and the annual interest rate on the term loan B facility was increased from 4.75 percent to 6.50 percent for Eurodollar loans. 

As a result of the amendment, the Company modified the definition of Consolidated EBITDA in the credit agreement to further allow the add-back of certain costs associated with non-recurring cash charges, the Company's cost realignment initiative and legal settlements.  Additionally, the amendment provided the Company with the ability to make discounted prepayments of outstanding term loans through a Dutch auction process.

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