Centric Health extends revolver until 2018, cuts interest by 175 bps

By Susanna Moon

Chicago, March 23 – Centric Health Corp. said it is extended its revolving credit facility for two years until March 22, 2018 at reduced pricing.

As a result of “significant deleveraging” before the extension, interest will be reduced by about 175 basis points, according to a company notice.

The cost of borrowing will be set at 3.8% and will be repriced quarterly based on the company’s total debt to EBITDA ratio.

The facility's capacity remains at C$35 million, including a C$3 million swingline facility, “an amount that the company expects is adequate to meet its operating needs,” with another C$15 million accordion, subject to lender approval.

The revolver was scheduled to mature on June 9, 2016.

The company also is offering to extend its 5.5% convertible notes due April 30, 2016 until July 31, 2017. Holders of more than half the outstanding convertibles intend to accept the company’s offer.

The company also notified Alaris of its plans to fully repay the $8.4 million promissory note on March 23, 2016.

So far this year, the company has repaid more than C$200 million of debt, reducing its outstanding debt as of Dec. 31, 2015 by more than two-thirds, lowering its total net debt to adjusted EBITDA ratio to 5.7 times from 9.7 times, and reducing its annual interest expense by C$18.5 million before any adjustments related to the offer to extend the 5.5% convertibles, the release noted.

“These additional actions provide Centric Health with the working capital and further financial flexibility to invest in our significant growth opportunities, both organic and through strategic tuck-in acquisitions, as we pursue our objective of long-term sustainable growth and free cash flow generation,” David Cutler, the company’s president and chief executive officer, said in the press release.

“With the extension of the revolving credit facility complete, we are now actively evaluating alternatives for the remainder of our convertible debt.”

Centric is a Toronto-based provider of health care services.

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