Alliance HealthCare Services, Inc. (NASDAQ:AIQ), a leading national provider of outpatient diagnostic imaging and radiation therapy services, announced that it has obtained commitments from lenders with respect to a $70 million incremental term loan under its existing senior secured credit agreement (the “Credit Agreement”). The Company intends to use the net proceeds from the borrowings under the incremental term loan facility, together with proceeds from borrowings under its revolving credit facility and cash on hand, to redeem all of its outstanding 8% Senior Notes due 2016 (the “Notes”) in December 2013.
Howard Aihara, executive vice president and chief financial officer, stated, “Our ability to raise $70 million of incremental borrowings under our existing senior secured term loan highlights the ongoing improvement in our business performance and the strength of our balance sheet. The redemption of our 8% Senior Notes will save us approximately $5 million annually and will provide additional flexibility and cash flow to execute upon our strategic initiatives, including ongoing reduction of our debt.”
Key Terms of Incremental Term Loan
- Redemption of the Notes, net of the interest expense of the incremental borrowings, will save the Company approximately $5 million in cash interest expense annually
- Interest rate on the incremental term loan will be the same as the existing term loan at LIBOR plus 3.25% with 1.00% LIBOR floor
- All other terms, including maturity, of the incremental term loan will match the terms of the existing term loans
- The incremental term loan will be funded at 99.0% of the principal amount
Incremental Term LoanAlliance’s new $70 million incremental term loan will be funded at 99.0% of principal amount and will mature on the same date as the existing term loan in June 2019. The incremental term loan will be converted to match all the terms of existing term loans upon funding in December. Interest on the incremental term loan will be calculated, at Alliance’s option, at a base rate plus a 2.25% margin or LIBOR plus a 3.25% margin, subject to a 1.00% LIBOR floor. After completing the transaction including redemption of the Notes, Alliance expects to save approximately $5 million in cash interest on an annualized basis. Closing of the incremental term loan under the existing senior secured credit agreement is subject to completion of satisfactory documentation and satisfaction of other closing conditions.