Invacare amends loan terms to lift leverage ratios through September

By Susanna Moon

Chicago, Feb. 3 - Invacare Corp. said it amended its credit agreement to provide more flexibility on its maximum leverage ratio financial covenant through Sept. 30, 2014.

The revolving credit facility also was downsized to $100 million from $250 million through the maturity date of the facility in October 2015, and the facility's swingline loan, optional currency and foreign borrower sublimits also were reduced.

The amended agreement also adds 25 basis points to the spread for setting interest.

The company amended the agreement on Friday with PNC Bank, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

Under the amended terms, the maximum leverage ratio will be raised for the first three quarters of 2014, with quarterly ratios as follows: 4.75 times for the quarter ending March 31, 4.5 times for the quarter ending June 30, 4 times for the quarter ending Sept. 30, 2014 and 3.5 times for the quarter ending Dec. 31, 2014.

The minimum interest coverage ratio of 3.5 times remains unchanged.

In calculating the company's EBITDA to determine the leverage and interest coverage ratios, the amended agreement allows the company to add back to EBITDA up to $20 million for one-time cash restructuring charges incurred after May 30, which is an incremental increase of $5 million from the previous terms.

More amendment terms

The allowances under the facility for capital expenditures were reduced to $25 million annually, and there were also cuts for dividends, other debt and liens.

The company also must adhere to further restrictions on acquisitions, share repurchases, certain investments and repurchases of convertible debt until after the company confirms compliance with the amended agreement following the quarter ending Dec. 31.

"In partnership with our lenders, we are pleased to have completed this amendment to our credit agreement. The company is actively managing its capital structure and reducing debt levels as we work through the phase of the consent decree with the United States Food and Drug Administration that limits production at our Taylor Street wheelchair manufacturing facility in Elyria, Ohio," Gerald B. Blouch, president and chief executive officer, said in a company press release.

"Over the first nine months of 2013, we reduced our debt outstanding by $179.2 million to a total debt outstanding of $58.9 million as of Sept. 30, 2013. We are confident that we will successfully exit this challenging period and begin to regain our custom power wheelchair market share. We would like to thank our lenders for their continued support."

Invacare is based in Elyria, Ohio, and makes home and long-term care medical products.

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