Rotech amends credit facility to modify covenants, allow more acquisitions

New York, Nov. 14 - Rotech Healthcare Inc. amended its credit facility to change financial covenants so that it is back in compliance and allow it to make more acquisitions, according to a 10-Q filing with the Securities and Exchange Commission.

The changes, which make up the third amendment to the facility, change the covenants for consolidated total leverage, consolidated interest coverage and consolidated fixed charge coverage, reduce permitted capital expenditures in 2006 and 2007 to $45 million in each year, and increase Rotech's ability to make acquisitions by $10 million for 2006 and each year after that as long as additional conditions are met. In addition, Rotech can now make acquisitions up to a total of $30 million as long as each acquisition is $15 million or more, meets tests and passes a stricter leverage ratio test. The amendment also changes the definition of material acquisition in the EBITDA calculation.

Rotech said that the changes to the financial covenants restored its compliance. It had not been in compliance on Sept. 30. The new ratios as of that date are 3.25 times for consolidated total leverage and consolidated interest coverage and 1 time for consolidated fixed charge coverage.

Rotech Healthcare is an Orlando, Fla.-based provider of home respiratory care and durable medical equipment and services to patients with breathing disorders.

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