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|HANGER, INC. filed this Form 8-K on 06/23/2017|
2015, the Third Amendment and Waiver dated as of November 13, 2015, the Fourth Amendment and Waiver dated as of February 10, 2016, and the Fifth Amendment and Waiver dated as of July 15, 2016 (as amended, the Credit Agreement). The Sixth Amendment, which became effective June 23, 2017, extends the deadline by which the Company must deliver to the Agent the Required Financial Information (as defined in the Fifth Amendment and Waiver) from August 15, 2017 to February 15, 2018.
In addition, the Sixth Amendment amends the definition of Consolidated EBITDA in the Credit Agreement to provide that the amount of professional fees and expenses that may be added back to Consolidated EBITDA (other than certain professional fees and expenses reimbursed by the Company and the subsidiary guarantors under the Credit Agreement in accordance with the Second Amendment and Waiver, the entire aggregate amount of which may be added back) for any period of four consecutive fiscal quarters shall not exceed, for the period of four consecutive fiscal quarters ending on or prior to (1) March 31, 2016, $30,000,000, (2) June 30, 2016, $36,000,000, (3) September 30, 2016, $35,000,000, (4) December 31, 2016, $31,000,000, (5) March 31, 2017, $25,000,000, (6) June 30, 2017, $37,000,000, (7) September 30, 2017, $35,000,000, (8) December 31, 2017, $31,000,000, and (9) March 31, 2018, $25,000,000; provided that, with respect to the applicable four consecutive fiscal quarter period, the amounts set forth in (6), (7), (8), and (9) above shall be reduced by an amount, if any, equal to the amount by which the Prior Period Adjustment Period (defined below) exceeds $815,000. The Sixth Amendment also amends the reporting requirements in the Credit Agreement to require the Company to deliver to the Agent a certificate with each of the Companys annual audited and quarterly unaudited financial statements stating the amount of professional fees and expenses incurred by the Company and the subsidiary guarantors from and after March 31, 2017 that are to be allocated to any fiscal quarter ended on or prior to March 31, 2017 as adjustments in accordance with GAAP (as defined in the Credit Agreement) of such professional fee and expense amounts previously included within the underlying financial statements provided to the lenders with the Companys compliance certificate relating to the period ended March 31, 2017 (such amount, the Prior Period Adjustment Amount).
The Sixth Amendment amends the maximum permitted leverage ratio covenant in the Credit Agreement (defined as the ratio of (a) the principal amount of consolidated indebtedness minus the lesser of (1) $30,000,000 and (2) the consolidated aggregate amount of unrestricted cash and cash equivalents, to (b) the consolidated net income before interest expense, taxes, depreciation and amortization expense, certain non-cash charges and certain other items (EBITDA)) to be, as of the end of the Companys fiscal quarter ending on (i) June 30, 2016, 5.00:1.00, (ii) September 30, 2016, 5.75:1.00, and (iii) any date thereafter, 5.00:1.00. The Sixth Amendment also amends the minimum interest coverage ratio covenant in the Credit Agreement (defined as, with certain adjustments, the ratio of the Companys EBITDA to the Companys consolidated interest expense) to be, as of the end of the Companys fiscal quarter ending (i) on June 30, 2016, 3.50:1.00, (ii) on September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017 and December 31, 2017, 2.25:1.00, and (iii) thereafter, 2.00:1.00.
The Company is otherwise required to comply with all other obligations and covenants contained in the Credit Amendment, as amended through the Sixth Amendment, including the timely delivery to the lenders of future financial statements and related information.
In connection with the entry into the Sixth Amendment, the Company will pay the Agent for the account of each consenting lender an amendment fee in an amount equal to 50 basis points of the outstanding principal amount of the term loan held by such consenting lender plus the amount of such lenders revolving commitment.
Effective January 1, 2017, borrowings under the Credit Agreement bear interest at a variable rate per annum equal to (i) LIBOR plus 5.25% or (ii) the base rate (which is the highest of (a) the administrative agents prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus 4.25%. If the Company fails to deliver the Required Financial Information to the Agent on or before June 30, 2017, then the applicable interest rate for loans under the Credit Agreement will increase by an additional 0.50% per annum, effective July 1, 2017. Upon (a) the Company delivering to the Agent the Required Financial Information and (b) the Company achieving a Leverage Ratio, for the