OCA DIP amendment approved, increasing line of credit by $5 million; waiving default

By Caroline Salls

Pittsburgh, Aug. 10 - OCA, Inc. obtained court approval of an amendment to its debtor-in-possession financing that waives an event of default arising from a material adverse deviation and increases the line of credit under the DIP facility by $5 million, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Louisiana.

According to the motion, the default occurred as a result of the company's collections for the two-week period ending July 7 being less than the permitted deviation from the collections forecast for the period.

In addition, there will be an event of default on Aug. 11 as a result of the plan not being effective as of that date.

Without a waiver of the event of default and a resolution of the prospective event of default, there would be no more borrowings under the DIP facility.

OCA said it must have access to borrowings under the DIP facility to pay the expenses, including the distribution of the additional amounts due for the first quarter of 2006 to its affiliated practices to be made on Aug. 10.

In connection with the request for an increase in the line of credit, the company has recently become aware of the potential of building its businesses by investing in the practice of various doctors or their professional entities so they can become affiliated practices.

The company said this investment will greatly benefit it and its chance for success following the confirmation of the plan, but it must move quickly.

The increase would also be used to fund additional working capital needs.

On Tuesday, the company's official committee of equity security holders objected to the DIP amendment, saying it is contrary to the company's business plan because the investment in practices was not included in OCA's disclosure statement.

OCA, a Metairie, La., provider of business services to orthodontic and dental practices, filed for bankruptcy on March 14. The Chapter 11 case number is 06-10179.

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