MOLINA HEALTHCARE, INC. (NYSE:MOH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.
Existing Credit Agreement
Molina Healthcare, Inc. (the Company) previously entered into
that certain Credit Agreement, dated as of June 12, 2015 (the
Credit Agreement), by and among the Company, the guarantors
identified therein and in that certain Guarantor Joinder
Agreement dated as of February 16, 2016, the lenders identified
therein, and SunTrust Bank, in its capacities as Administrative
Agent, Issuing Bank and Swingline Lender (SunTrust Bank), with
respect to an unsecured revolving credit facility in the
aggregate principal amount of $250.0 million. A copy of the
Credit Agreement was filed by the Company with the Securities and
Exchange Commission on June 15, 2015 as Exhibit 10.1 to the
Companys Current Report on Form 8-K. Capitalized terms used
herein and not otherwise defined have the meanings given to them
in the Credit Agreement, as amended by the First Amendment (as
defined below).
that certain Credit Agreement, dated as of June 12, 2015 (the
Credit Agreement), by and among the Company, the guarantors
identified therein and in that certain Guarantor Joinder
Agreement dated as of February 16, 2016, the lenders identified
therein, and SunTrust Bank, in its capacities as Administrative
Agent, Issuing Bank and Swingline Lender (SunTrust Bank), with
respect to an unsecured revolving credit facility in the
aggregate principal amount of $250.0 million. A copy of the
Credit Agreement was filed by the Company with the Securities and
Exchange Commission on June 15, 2015 as Exhibit 10.1 to the
Companys Current Report on Form 8-K. Capitalized terms used
herein and not otherwise defined have the meanings given to them
in the Credit Agreement, as amended by the First Amendment (as
defined below).
Amendments to the Credit Agreement
On January 3, 2017 (the Closing Date), the Company entered into
that certain First Amendment to Credit Agreement (the First
Amendment) by and among the Company, the Guarantors party
thereto, the Lenders party thereto and SunTrust Bank. The First
Amendment amended and restated the Credit Agreement in its
entirety (other than the schedules and exhibits thereto) and
provided for, among other things, the following changes thereto:
that certain First Amendment to Credit Agreement (the First
Amendment) by and among the Company, the Guarantors party
thereto, the Lenders party thereto and SunTrust Bank. The First
Amendment amended and restated the Credit Agreement in its
entirety (other than the schedules and exhibits thereto) and
provided for, among other things, the following changes thereto:
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A $250.0 million increase in the Aggregate Revolving
Commitments from $250.0 million to $500.0 million; |
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An extension of the Revolving Commitment Termination Date
to the earliest of (i) January 31, 2022 (as opposed to the June 12, 2020 maturity date in effect prior to the First Amendment), (ii) the date on which the Revolving Commitments are terminated to Section 2.8 of the Credit Agreement and (iii) the date on which all amounts outstanding under the Credit Agreement have been declared or have automatically become due and payable; |
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An amendment to the provision regarding commitment
increases to provide that the amount of all increases to the Aggregate Revolving Commitments plus the aggregate initial principal amount of all Incremental Term Loans shall not exceed $150.0 million (as opposed to the $100.0 million limitation prior to the First Amendment) during the term of the Credit Agreement; |
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The addition of definitions for Bridge Senior Unsecured
Indebtedness, Consolidated Fixed Charge Coverage Ratio, Consolidated Fixed Charges, Designated Non-cash Consideration, Disqualified Stock, Fair Market Value, First Amendment, Non-Recourse Debt, Restricted Investment, Restricted Subsidiary, Specified Cash and Unrestricted Subsidiary; |
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An amendment to the definition of Consolidated Net Leverage
Ratio to permit additional netting of cash proceeds held in escrow of up to $500.0 million for debt incurred from time to time to consummate a Permitted Acquisition or refinance existing indebtedness; |
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An amendment to the Consolidated Net Leverage Ratio
financial covenant to set the ratio at 4.00:1.00 at all times, with no step down; |
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The deletion of the Statutory Net Worth financial covenant;
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An amendment to the definition of Consolidated Adjusted
EBITDA to increase the cap on the amount of costs and synergies attributable to a Permitted Acquisition from 10% to 20%; |
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An amendment to the definition of LC Commitment to increase
the portion of the Aggregate Revolving Commitments that may be used by the Company for the issuance of Letters of Credit in an aggregate face amount not to exceed $100.0 million (as opposed to the $75.0 million limitation prior to the First Amendment); |
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An amendment to the definition of Permitted Acquisition to
provide that a Pro Forma Compliance Certificate is required only if the consideration for the Acquisition exceeds 10% of Consolidated Total Assets immediately prior to giving effect to such Acquisition; |
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An amendment to the limitation on the ability of the
Company to make Restricted Payments to permit additional Restricted Payments and Restricted Investments in an amount equal to 50% of Consolidated Net Income for the period from the closing date of the First Amendment (the Closing Date) through the date of the determination (taken as one period) plus>50% of the net cash proceeds of equity issuances of the Company after the Closing Date plus>returns on unrestricted investments made after the Closing Date plus>returns on unrestricted subsidiaries designated after the Closing Date or redesignated as a Restricted Subsidiary; provided that, at the time of such Restricted Payment, the Consolidated Fixed Charge Coverage Ratio is at least 2.0:1.0 determined on a Pro Forma Basis; |
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An amendment to permit the Company to designate
Unrestricted Subsidiaries; |
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An amendment to the negative covenant with respect to
additional Indebtedness to allow Acquired Indebtedness in an amount not to exceed the greater of $75.0 million and 1.5% of Consolidated Total Assets, as opposed to the $75.0 million threshold in effect prior to the First Amendment; |
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An amendment to the negative covenant with respect to
Indebtedness to allow, subject to certain conditions, the incurrence by the Company of Bridge Senior Unsecured Indebtedness maturing prior to the Revolving Commitment Termination |
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Date so long as such Indebtedness is automatically converted into
long-term Indebtedness maturing no earlier than the date that is
ninety-one (91) days after the Revolving Commitment Termination
Date;
long-term Indebtedness maturing no earlier than the date that is
ninety-one (91) days after the Revolving Commitment Termination
Date;
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An amendment to the negative covenant with respect to
payments on the 2020 Convertible Notes or the 2044 Convertible Notes to delete the requirement that the Company demonstrate liquidity of $150.0 million; |
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An amendment to the negative covenant with respect to Asset
Sales to delete the cap on Asset Sales and to permit the Company to designate non-cash consideration received in connection with an Asset Sale, as cash consideration, in an aggregate amount not to exceed the greater of $200.0 million or 3.5% of Consolidated Total Assets; |
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An increase in the Material Indebtedness threshold from
$30.0 million to $50.0 million and comparable increases in the default thresholds for an ERISA Event and with respect to a judgment or order for the payment of money; |
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An expansion of the definition of HMO Subsidiary to include
any Domestic Subsidiary, substantially all the assets of which consist primarily of the Capital Stock of an HMO Subsidiary; |
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An expansion of the definition of Insurance Subsidiaries to
include any Domestic Subsidiary, substantially all the assets of which consist of Capital Stock of an Insurance Subsidiary; |
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A change to the thresholds in the definition of Material
Domestic Subsidiary to replace the $10.0 million threshold with 1.0% of the Companys consolidated total revenues for a specified 12-month period or 2.0% of Consolidated Total Assets as of a specified date; provided, that if at any time all Domestic Subsidiaries (other than an HMO Subsidiary or Insurance Subsidiary) that are not Guarantors account in the aggregate for greater than 10% of the Companys consolidated total revenues during a specified 12-month period or 10% of Consolidated Total Assets as of a specified date, the Company is required to cause one or more Subsidiaries to join as Guarantors so that immediately thereafter the Domestic Subsidiaries that are not Guarantors do not exceed either of the foregoing thresholds; and |
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The elimination of the requirement that the pro forma
budget for the succeeding Fiscal Year be broken out on a quarterly basis. |
In addition, to the terms of the First Amendment, effective as of
the Closing Date, all Guarantors immediately prior to the Closing
Date other than Molina Information Systems, LLC, d/b/a Molina
Medicaid Solutions, Molina Pathways, LLC and Pathways Health and
Community Support LLC (the Continuing Guarantors) were
automatically and unconditionally released as Guarantors.
the Closing Date, all Guarantors immediately prior to the Closing
Date other than Molina Information Systems, LLC, d/b/a Molina
Medicaid Solutions, Molina Pathways, LLC and Pathways Health and
Community Support LLC (the Continuing Guarantors) were
automatically and unconditionally released as Guarantors.
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Foregoing Summary Not Intended to be Complete
The foregoing summary of the First Amendment does not purport to
be complete and is subject to, and qualified in its entirety by,
the full text of the First Amendment and the exhibits and
schedule thereto. An executed copy of the First Amendment and the
exhibits and schedule thereto is being filed as Exhibit 10.1
hereto and is incorporated herein by reference.
be complete and is subject to, and qualified in its entirety by,
the full text of the First Amendment and the exhibits and
schedule thereto. An executed copy of the First Amendment and the
exhibits and schedule thereto is being filed as Exhibit 10.1
hereto and is incorporated herein by reference.
Item 8.01. Other Events.
Effect of the First Amendment on Guarantees of the Companys
5.375% Senior Notes Due 2022
5.375% Senior Notes Due 2022
On November 10, 2015, the Company issued, in a private placement,
$700.0 million aggregate principal amount of 5.375% Senior Notes
due 2022 (the Original Notes), to the terms and subject to the
conditions set forth in that certain Indenture, dated as of
November 10, 2015, by and among the Company, the guarantors named
therein and U.S. Bank National Association, as trustee (the
Trustee), as supplemented by that certain First Supplemental
Indenture, dated as of February 16, 2016, by and among the
Company, the guarantors named therein and the Trustee (as
supplemented, the Indenture). In connection with the issuance of
the Original Notes, the Company entered into a registration
rights agreement with certain initial purchasers whereby the
Company agreed to offer to exchange the Original Notes and the
note guarantees associated therewith for up to an equal aggregate
principal amount of 5.375% Senior Notes due 2022 (the Exchange
Notes) and the note guarantees associated therewith registered
under the Securities Act of 1933, as amended. On September 16,
2016, the Company announced that it completed such exchange
wherein $700.0 million aggregate principal amount, or 50%, of the
Original Notes and the note guarantees associated therewith were
validly tendered for exchange, and not validly withdrawn, and
accepted for exchange.
$700.0 million aggregate principal amount of 5.375% Senior Notes
due 2022 (the Original Notes), to the terms and subject to the
conditions set forth in that certain Indenture, dated as of
November 10, 2015, by and among the Company, the guarantors named
therein and U.S. Bank National Association, as trustee (the
Trustee), as supplemented by that certain First Supplemental
Indenture, dated as of February 16, 2016, by and among the
Company, the guarantors named therein and the Trustee (as
supplemented, the Indenture). In connection with the issuance of
the Original Notes, the Company entered into a registration
rights agreement with certain initial purchasers whereby the
Company agreed to offer to exchange the Original Notes and the
note guarantees associated therewith for up to an equal aggregate
principal amount of 5.375% Senior Notes due 2022 (the Exchange
Notes) and the note guarantees associated therewith registered
under the Securities Act of 1933, as amended. On September 16,
2016, the Company announced that it completed such exchange
wherein $700.0 million aggregate principal amount, or 50%, of the
Original Notes and the note guarantees associated therewith were
validly tendered for exchange, and not validly withdrawn, and
accepted for exchange.
The Exchange Notes are (and will be) guaranteed by each of the
Companys existing (and future) direct and indirect domestic
restricted subsidiaries that guarantees the Companys obligations
under the Credit Agreement. Section 10.05(a)(6) of the Indenture
provides, in relevant part, that if a guarantor under the
Indenture is released from the underlying guarantee of
indebtedness giving rise to the execution of a subsidiary
guarantee, the subsidiary guarantee shall also be automatically
and unconditionally released as a guarantor under the Indenture.
As discussed above, to the First Amendment and effective as of
the Closing Date, all of the Guarantors other than the Continuing
Guarantors were released as Guarantors under the Credit
Agreement. Accordingly, effective as of the Closing Date, all of
the Guarantors other than the Continuing Guarantors were
automatically and unconditionally released as a guarantor under
the Indenture.
Companys existing (and future) direct and indirect domestic
restricted subsidiaries that guarantees the Companys obligations
under the Credit Agreement. Section 10.05(a)(6) of the Indenture
provides, in relevant part, that if a guarantor under the
Indenture is released from the underlying guarantee of
indebtedness giving rise to the execution of a subsidiary
guarantee, the subsidiary guarantee shall also be automatically
and unconditionally released as a guarantor under the Indenture.
As discussed above, to the First Amendment and effective as of
the Closing Date, all of the Guarantors other than the Continuing
Guarantors were released as Guarantors under the Credit
Agreement. Accordingly, effective as of the Closing Date, all of
the Guarantors other than the Continuing Guarantors were
automatically and unconditionally released as a guarantor under
the Indenture.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
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Exhibit No.
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Description
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10.1
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First Amendment to Credit Agreement, dated as of
January 3, 2017, by and among Molina Healthcare, Inc., the Guarantors party thereto, the Lenders party thereto and SunTrust Bank, in its capacities as Administrative Agent, Issuing Bank and Swingline Lender, including the amended and restated Credit Agreement attached as Exhibit A thereto. |
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About MOLINA HEALTHCARE, INC. (NYSE:MOH)
Molina Healthcare, Inc. offers Medicaid-related solutions for low-income families and individuals, and assists government agencies in their administration of the Medicaid program. The Company operates through three segments: Health Plans, Molina Medicaid Solutions and Other. Its Health Plans segment consists of health plans in approximately 10 states and the Commonwealth of Puerto Rico, and its direct delivery business. Its direct delivery business consists of the operation of primary care clinics in various states in which it operates health plans. Its Molina Medicaid Solutions segment provides design, development, implementation (DDI) and business process outsourcing (BPO) solutions to state governments for their Medicaid management information systems (MMIS). The Other segment includes other businesses, such as its Pathways Health and Community Support LLC (Pathways) behavioral health and social services provider. MOLINA HEALTHCARE, INC. (NYSE:MOH) Recent Trading Information
MOLINA HEALTHCARE, INC. (NYSE:MOH) closed its last trading session up +1.33 at 54.92 with 1,239,461 shares trading hands.
