Hanger, Inc. entered into a Credit Agreement by and among the Company, the various financial institutions party thereto as lenders and issuers, and Bank of America, N.A., as agent.
The Credit Agreement provides for (i) a revolving credit facility with an initial maximum aggregate amount of availability of $100 million that matures in March 2023 and (ii) a $505 million term loan facility due in quarterly principal installments commencing June 29, 2018, with all remaining outstanding principal due at maturity in March 2025.
Availability under the revolving credit facility is reduced by outstanding letters of credit, which were approximately $5.93 million as of March 6, 2018. The Company may (a) increase the aggregate principal amount of any outstanding tranche of term loans or add one or more additional tranches of term loans under the loan documents, and/or (b) increase the aggregate principal amount of revolving commitments or add one or more additional revolving loan facilities under the loan documents by an aggregate amount of up to the sum of (1) $125 million and (2) an amount such that, after giving effect to such incurrences of such amount (but excluding the cash proceeds of such incremental facilities and certain other indebtedness, and treating all commitments in respect of revolving indebtedness as fully drawn), the consolidated first lien net leverage ratio is equal to or less than 3.80 to 1.00, if certain conditions are satisfied, including the absence of a default or an event of default under the Credit Agreement at the time of the increase and that the Company obtains the consent of each lender providing any incremental facility.
On March 6, 2018, the Company borrowed $505 million under the term loan facility. The Company did not have any borrowings under the revolving credit facility as of March 6, 2018.
Proceeds from the borrowings under the Credit Agreement were used in part to repay in full all previously existing Company loans under (i) the Credit Agreement, dated as of June 17, 2013, by and among the Company, various lenders from time to time party thereto, and Bank of America, N.A., as agent, as amended, restated, supplemented or otherwise modified from time to time, and (ii) the Credit Agreement, dated as of August 1, 2016, by and among the Company, various lenders from time to time party thereto, and Wilmington Trust, National Association, as agent, as amended, restated, supplemented or otherwise modified from time to time. Proceeds were also used to pay various transaction costs and expenses and accrued and unpaid interest and expenses. The Company expects that the remainder of the proceeds will be used to provide ongoing working capital and capital for other general corporate purposes of the Company and its subsidiaries.