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Alliance HealthCare Services, Inc. (NYSE:AIQ) (the “Company” or “Alliance”), a leading national provider of outpatient diagnostic imaging and radiation therapy services, announced that the 2
nd amendment (the “Amendment”) to its Credit Agreement dated December 1, 2009 (the “Credit Agreement”) has become effective.
The Amendment modifies the Credit Agreement’s maximum leverage covenant to require that the Company maintain a maximum ratio of consolidated total debt to consolidated Adjusted EBITDA, as defined below, less minority interest expense of 5.00 to 1.00 through September 30, 2014, 4.75 to 1.00 from October 1, 2014 through September 30, 2015, 4.50 to 1.00 from October 1, 2015 through December 31, 2015 and 4.25 to 1.00 thereafter.
On November 5, 2012, in connection with the Amendment, the Company raised $30.0 million from the sale of certain imaging assets, which the Company subsequently leased from the financing parties. The Company offered the money raised in the sale and lease transactions as a mandatory prepayment of outstanding term loans to the lenders under the Credit Agreement (the “Mandatory Prepayment”).
In addition to the Mandatory Prepayment, the Company offered $45.0 million of cash on the Company’s balance sheet to offer to lenders under the Credit Agreement as a voluntary prepayment of outstanding term loans (the “Voluntary Prepayment,” and, together with the Mandatory Prepayment, the “Prepayments”). Lenders under the Credit Agreement had the right to waive acceptance of the Mandatory Prepayment, and the Amendment provided the lenders with the right to waive acceptance of the Voluntary Prepayment. Pursuant to the Amendment, the Company re-offered amounts of the Prepayments declined by lenders until 95% of the Prepayments were applied to prepay borrowings outstanding under the term loan facility. On November 6, 2012, the Company prepaid $74.5 million of outstanding term loans. The Amendment provides that the Prepayments will satisfy all future mandatory amortization payments under the Credit Agreement.