Molina Healthcare enters into $250 million five-year revolver

By Marisa Wong

Madison, Wis., June 16 – Molina Healthcare, Inc. entered into a credit agreement on Friday for a $250 million five-year revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

SunTrust Robinson Humphrey, Inc., UBS Securities LLC, Bank of America Merrill Lynch and Wells Fargo Securities, LLC are the joint lead arrangers and joint bookrunners with SunTrust Bank as administrative agent, swingline lender and issuing bank and UBS Securities, Bank of America, NA and Wells Fargo Bank, NA as co-syndication agents.

All amounts outstanding under the credit facility will be due and payable on June 12, 2020.

The company may increase the credit facility to up to $350 million.

Borrowings will bear interest at Libor plus an applicable margin ranging from 150 basis points to 250 bps, depending on the company’s leverage ratio.

In addition, the company is required to pay a quarterly commitment fee of 25 bps to 37.5 bps, also based on the leverage ratio.

Although the credit agreement is not secured by any of the company’s assets, two of the company’s wholly owned subsidiaries, Molina Information Systems, LLC and Molina Medical Management, Inc., have jointly and severally guaranteed the company’s obligations under the facility.

The credit agreement requires the company and its subsidiaries to maintain on a consolidated basis a ratio of total net debt to total EBITDA of not more than 4.00 to 1.00, which declines to 3.50 to 1.00 for each fiscal quarter ending after Sept. 30, 2016; a ratio of EBITDA to interest expense of greater than 3.50 to 1.00; and a ratio of net worth to the applicable statutory net worth requirement for the company and each regulated subsidiary of not less than 1.05 to 1.00.

In addition to SunTrust Bank, the other lenders are Bank of America, Wells Fargo Bank, BOKF, NA dba Bank of Albuquerque, East West Bank, MUFG Union Bank, NA, UBS AG, Stamford Branch and U.S. Bank NA.

The credit facility will be used to finance working capital needs, permitted acquisitions and capital expenditures as well as for other general corporate purposes.

Long Beach, Calif.-based Molina Healthcare is a health management organization that works with Medicaid patients and other government assistance programs.

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