Natus not in compliance with Wells Fargo $10 million credit agreement

By Lisa Kerner

Erie, Pa., May 22 - Natus Medical Inc. was notified by Wells Fargo Bank that it is not in compliance with a credit agreement dated Jan. 4 under which the company borrowed $10 million to complete the acquisition of Bio-logic Systems Corp.

A financial covenant in the Credit Agreement requires Natus to satisfy a ratio of total liabilities to tangible net worth, which it failed to do as evidenced by its quarterly financial results.

Natus said while it doesn't dispute the bank's claim, it believed the covenant did not apply until a later date.

As of March 31, $9.375 million in principal amount was outstanding, according to an 8-K filing. The loan is repayable over a four-year period and Wells Fargo has the right to accelerate the payment of the outstanding indebtedness upon defaults.

Wells Fargo has granted Natus a waiver of the provisions of the financial covenant until June 30.

Both Natus and Wells Fargo are considering an amendment to the credit agreement that will revise the covenant.

Based in San Carlos, Calif., Natus provides health care products used for screening, detection, treatment, monitoring and tracking of medical ailments.

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