InfuSystem Holdings, Inc. (NYSEMKT:INFU) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement. |
On June28, 2017, InfuSystem Holdings, Inc. (the Company), and its
direct and indirect subsidiaries, entered into a Third Amendment
to the Credit Agreement (the Third Amendment) with JPMorgan Chase
Bank, N.A., as lender (the Lender), which amends the credit
agreement among the Company, its direct and indirect
subsidiaries, and the Lender, entered into on March23, 2015 (the
Credit Agreement). All capitalized terms used herein are defined
in either the Third Amendment or the Credit Agreement.
The Third Amendment amends the Credit Agreement to, among other
things:
(i) |
restates the chart within the definition of Applicable Rate in Section1.01 of the Credit Agreement as follows: |
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CBFR Spread |
Eurodollar Spread |
Commitment Fee Rate |
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-1.00% | 2.00% | 0.25% | |||
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-0.75% | 2.25% | 0.25% | |||
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-0.50% | 2.50% | 0.25% | |||
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0.00% | 2.75% | 0.25% | |||
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0.25% | 3.00% | 0.25% |
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and further amends the definition of Applicable Rate in Section1.01 of the Credit Agreement by adding the following to the end thereof: The Applicable Rate will be set at Level V as of the Third Amendment Effective Date, and adjusted for the first time thereafter based on the financial statements required to be delivered hereunder for the fiscal quarter ending June30, 2017.; |
(ii) |
amend the definition of Fixed Charge Coverage Ratio in Section1.01 of the Credit Agreement by adding the phrase (it is acknowledged that, at all times, such unfinanced portion is either a deduction to EBITDA or, if unfinanced portion is ever interpreted to be a negative number, then zero) to follow the phrase therein that reads means, for any period, the ratio of (a)EBITDA minus the unfinanced portion of Capital Expenditures.; |
(iii) |
amend clause (vi)in the definition of EBITDA in Section1.01 of the Credit Agreement by replacing the phrase therein that reads in the fiscal quarter ending December31, 2016 with the phrase prior to December31, 2017.; |
(iv) |
amend clause (f)(ii) in the definition of Permitted Acquisition in Section1.01 of the Credit Agreement by (a)replacing the reference therein to $10,000,000 with $5,000,000 and (b)by replacing the reference therein to $25,000,000 with $12,500,000.; |
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(v) |
restate the definition of Net Worth in Section1.01 of the Credit Agreement as follows: |
Net Worth means at any time total assets minus total
liabilities, plus, to the extent deducted in determining the
foregoing amount, non-cash reserves taken for deferred tax assets
and non-cash impairment of capitalized software development
costs, all as determined for the Company and its Subsidiaries, on
a consolidated basis in accordance with GAAP.
(vi) |
add the following definition of Excess Cash Flow to Section1.01 of the Credit Agreement as follows: |
Excess Cash Flow means, for any fiscal year of the Company,
(a)EBITDA for such fiscal year, minus (b)Capital Expenditures
made or incurred during such fiscal year minus (c)Fixed Charges
for such fiscal year.
(vii) |
add the following definitions of Third Amendment, and Third Amendment Effective Date to Section1.01 of the Credit Agreement as follows: |
Third Amendment means the Third Amendment to this Agreement
among the parties hereto.
Third Amendment Effective Date means the effective date of
the Third Amendment.
(viii) |
restate Section2.08(b) of the Credit Agreement as follows: |
(b) The Borrowers hereby unconditionally agree that the Term
A Loans and the Term B Loans shall be replaced and refinanced in
full as of the First Amendment Effective Date with a Term Loan in
an aggregate amount equal to $32,000,000 made under
Section2.01(d), the Borrowers acknowledge and agree that the
principal balance of such Term Loan as of the Third Amendment
Effective Date is $30,665,999.98, and the Borrowers hereby
unconditionally promise to pay to the Lender the principal amount
of the Term Loans made under Section2.01(d) after the Third
Amendment Effective Date as follows: (i)on June30, 2017,
September30, 2017 and December31, 2017 in principal installments
each in the amount of $577,500 (as adjusted from time to time to
Section2.09(d) or 2.16(b)), (ii) commencing with the last
Business Day of March, 2018 and on the last Business Day of each
March, June, September and December thereafter, in consecutive
quarterly principal installments each in the amount of $766,650
(as adjusted from time to time to Section2.09(d) or 2.16(b)) and
(iii)to the extent not previously paid, all unpaid Term Loans
shall be paid in full in cash by the Borrowers on the Term
Maturity Date.
(ix) |
restate Section2.09(d) of the Credit Agreement as follows: |
(d) All prepayments required to be made to Section2.09(c)
shall be applied, first to prepay the Term Loans (and in the
event Term Loans of more than one Classshall be outstanding at
the time, shall be allocated among the Term Loans pro rata based
on the aggregate principal amounts of outstanding Term Loans of
each such Class), and such prepayments of the Term Loans shall
be
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applied to reduce the remaining scheduled repayments of Term
Loans of each Classin the inverse order of maturity (with any
prepayments applied first to the payment at final maturity),
second to prepay the Revolving Loans without a corresponding
reduction in the Revolving Commitment and third to cash
collateralize outstanding LC Exposure. Within each such category,
such prepayments shall be applied first to CBFR Loans and then to
Eurodollar Loans in order of Interest Period maturities
(beginning with the earliest to mature).
All prepayments required to be made to Section2.09(f) shall
be applied, first to prepay the Revolving Loans without a
corresponding reduction in the Revolving Commitment, second to
prepay the Term Loans (and in the event Term Loans of more than
one Classshall be outstanding at the time, shall be allocated
among the Term Loans pro rata based on the aggregate principal
amounts of outstanding Term Loans of each such Class), and such
prepayments of the Term Loans shall be applied to reduce the
remaining scheduled repayments of Term Loans of each Classin the
inverse order of maturity (with any prepayments applied first to
the payment at final maturity), and third to cash collateralize
outstanding LC Exposure. Within each such category, such
prepayments shall be applied first to CBFR Loans and then to
Eurodollar Loans in order of Interest Period maturities
(beginning with the earliest to mature).
(x) |
add a new Section2.09(f) to the Credit Agreement as follows: |
(f) Until the latest of the Revolving Credit Maturity Date,
the Term A Maturity Date, the Term B Maturity Date or the Term
Maturity Date, as the case may be, the Borrowers shall prepay the
Obligations as set forth in Section2.09(d) on the date that is
ten days after the earlier of (i)the date on which the Companys
annual audited financial statements for the immediately preceding
fiscal year are delivered to Section5.01 or (ii)the date on which
such annual audited financial statements were required to be
delivered to Section5.01, in an amount equal to: (I)seventy-five
percent (75%) of the Companys Excess Cash Flow for the
immediately preceding fiscal year if the Companys Leverage Ratio
is greater than or equal to 2.5 to 1.0 for the immediately
preceding fiscal year, (II)fifty percent (50%) of the Companys
Excess Cash Flow for the immediately preceding fiscal year if the
Companys Leverage Ratio is less than 2.5 to 1.0 but greater than
or equal to 2.0 to 1.0 for the immediately preceding fiscal year,
or (III)zero percent (0%) of the Companys Excess Cash Flow for
the immediately preceding fiscal year if the Companys Leverage
Ratio is less than 2.0 to 1.0 for the immediately preceding
fiscal year. Each Excess Cash Flow prepayment shall be
accompanied by a certificate signed by a Financial Officer of the
Company certifying the manner in which Excess Cash Flow and the
resulting prepayment was calculated, which certificate shall be
in form and substance satisfactory to the Lender.
(xi) |
restate Section3.05(b) of the Credit Agreement as follows: |
(b) Each Loan Party and each Subsidiary owns, or is licensed
to use, all trademarks, tradenames, copyrights, patents and other
intellectual property necessary to its business as currently
conducted. A correct and complete list of all trademarks,
tradenames, copyrights, patents and other intellectual property
owned by any Loan Party or any Subsidiary, as of the Third
Amendment Effective Date, is set forth on Schedule 3.05, and the
use thereof by each Loan Party and each Subsidiary does not
infringe in any material respect upon the rights of any other
Person, and each Loan Partys and each Subsidiarys rights thereto
are not subject to any licensing agreement or similar
arrangement.
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(xii) |
amend Sections 3.15, 3.16, 3.17 and 3.24(b) of the Credit Agreement by replacing each reference therein to Effective Date with Third Amendment Effective Date.; |
(xiii) |
amend Section6.01(b) of the Credit Agreement by replacing the reference therein to on the date hereof with on the Third Amendment Effective Date.; |
(xiv) |
amend Sections 6.01(c), (d), and (e)of the Credit Agreement by adding the following to the end of each clause: provided however, notwithstanding anything to the contrary, no Indebtedness on or after the Third Amendment Effective Date may be incurred under this clause without the prior written approval of the Lender.; |
(xv) |
amend Section6.04(c) of the Credit Agreement by replacing the reference therein to $5,000,000 with $2,500,000.; |
(xvi) |
restate Sections 6.12(a) and (b)of the Credit Agreement as follows: |
(a) Leverage Ratio. The Borrowers will not permit the
Leverage Ratio to exceed (i) 4.0 to 1.0 at any time on or after
the Effective Date but prior to December31, 2017, (ii) 3.75 to
1.0 at any time on or after December31, 2017 but prior to June30,
2018, (iii) 3.50 to 1.0 at any time on or after June30, 2018 but
prior to December31, 2018, or (iv) 3.00 to 1.00 at any time on or
after December31, 2018.
(b) Fixed Charge Coverage Ratio. The Borrowers will
not permit the Fixed Charge Coverage Ratio to be less than (i)
1.15:1.0 at any time on or after the Effective Date but prior to
March31, 2018, or (ii) 1.25:1.0 at any time on or after March31,
2018.
(xvii) |
replace schedules 3.05 and 6.01 with updated schedules as provided to Lender. |
Simultaneous with the execution of Third Amendment, the Company
entered into a Patent and Trademark Security Agreement, which
replaces the Patent and Trademark Security Agreement entered into
on March23, 2015 at the time the Company entered into the Credit
Agreement. The new Patent and Trademark Security Agreement was
revised to make reference to the Third Amendment and the Company
has provided the Lender with updated schedules listing the
Companys trademarks, patents, applications for trademarks and
patents, and other intellectual properties owned or licensed.
As a result of the changes to the definition of Leverage Ratio
and Fixed Charge Coverage Ratio within the Third Amendment, the
Company will have increased flexibility to effect the changes
necessary to return the Company to a strong financial position.
The change to the definition of Applicable Rate will effectively
increase the Companys interest rate under the Credit Agreement by
50 basis points in the near term, while allowing for the Company
to reduce that rate as its Leverage Ratio declines. The addition
of the provision that requires the prepayment of a percentage of
the Companys annual Excess Cash Flow will ensure the Companys
primary goal remains to reduce the total debt outstanding.
The foregoing description of the Third Amendment does not purport
to be complete and is qualified in its entirety by reference to
the complete text of the Third Amendment, which is filed
herewith, as well as the complete text of the Credit Agreement,
which was filed with the Securities and Exchange Commission on
May12, 2015 as Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q.
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Item2.03. |
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information in Item 1.01 of the Current Report on Form 8-K is
hereby incorporated by reference into this Item 2.03.
Item8.01 |
Other Events. |
On June29, 2017, the Company issued a press release to provide
additional information on the Third Amendment to the Credit
Agreement. A copy of the press release is furnished herewith as
Exhibit 99.1 and is incorporated in this Item 8.01 by reference.
Item9.01 |
Financial Statements and Exhibits. |
(d) |
Exhibits: |
10.1 Third Amendment to the Credit Agreement, dated as of June28,
2017, among InfuSystem Holdings, Inc., and its direct and
indirect subsidiaries, with JPMorgan Chase Bank, N.A., as Lender.
10.2 Patent and Trademark Security Agreement, dated as of June28,
2017, among InfuSystem Holdings, Inc., and its direct and
indirect subsidiaries, with JPMorgan Chase Bank, N.A., as Lender.
99.1 Press Release of InfuSystem Holdings, Inc., dated June29,
2017.
InfuSystem Holdings, Inc ExhibitEX-10.1 2 d419642dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT,…To view the full exhibit click here About InfuSystem Holdings, Inc. (NYSEMKT:INFU)
InfuSystem Holdings, Inc. is a provider of infusion pumps and related products and services for patients in the home, oncology clinics, ambulatory surgery centers and other sites of care. The Company delivers local, field-based customer support and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, Texas and Ontario, Canada. Its service is to supply electronic ambulatory infusion pumps and associated disposable supply kits to oncology clinics, infusion clinics and hospital outpatient chemotherapy clinics for the treatment of a range of cancers, including colorectal cancer, pain management and other disease states. It sells or rents new and pre-owned pole mounted and ambulatory infusion pumps to, and provides biomedical recertification, maintenance and repair services for oncology practices, as well as other alternate site settings, including home care and home infusion providers, skilled nursing facilities, pain centers and others.
