SELECT MEDICAL CORPORATION (NYSE:SNE) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On March6, 2017, Select Medical Corporation (Select)
entered into a senior secured credit agreement (the Credit
Agreement) that provides for $1.6 billion in senior secured
credit facilities (Senior Secured Credit Facilities)
composed of a $1.15 billion, seven-year term loan (Term
Loan) and a $450 million, five-year revolving credit facility
(Revolving Credit Facility), including a $75 million
sublimit for the issuance of standby letters of credit.
Borrowings under the Senior Secured Credit Facilities are
guaranteed by Select Medical Holdings Corporation (Holdings) and
substantially all of Selects current domestic subsidiaries and
will be guaranteed by Selects future domestic subsidiaries and
secured by substantially all of Selects existing and future
property and assets and by a pledge of Selects capital stock, the
capital stock of Selects domestic subsidiaries and up to 65% of
the capital stock of Selects foreign subsidiaries held directly
by Select or a domestic subsidiary.
Borrowings under the Senior Secured Credit Facilities will bear
interest at a rate equal to:
in the case of the Term Loan, Adjusted LIBO plus 3.50%, or
Alternate Base Rate plus 2.50%; and
in the case of the Revolving Credit Facility, Adjusted LIBO plus
a percentage ranging from 3.00% to 3.25%, or Alternate Base Rate
plus a percentage ranging from 2.00% to 2.25%, in each case based
on Selects leverage ratio.
Adjusted LIBO is defined as, with respect to any interest
period, the London interbank offered rate for such interest
period, adjusted for any applicable statutory reserve
requirements; provided that Adjusted LIBO, when used in reference
to the Term Loan, will at no time be less than 1.00% per annum.
Alternate Base Rate is defined as the highest of (a)the
administrative agents Prime Rate, (b)the NYFRB Rate plus 1/2 of
1.00% and (c)the Adjusted LIBO from time to time for an interest
period of one month, plus 1.00%.
The Term Loan will amortize in equal quarterly installments on
the last business day of each March, June, Septemberand
Decemberin amounts equal to 0.25% of the aggregate original
principal amount of the Term Loan commencing on June30, 2017. The
balance of the Term Loan will be payable on March8, 2024,
provided that if on March1, 2021 (the Tranche B Trigger
Date) any of Selects 6.375% Senior Notes due 2021 are
outstanding, the maturity date for the Term Loan will be the
Tranche B Trigger Date. Similarly, the Revolving Credit Facility
will be payable on March8, 2022, provided that if on February1,
2021 (the Revolving Trigger Date) any of Selects 6.375%
Senior Notes due 2021 are outstanding, the maturity date for the
Revolving Credit Facility will be the Revolving Trigger Date.
Select will be required to prepay borrowings under the Senior
Secured Credit Facilities with (1)50% of the net cash proceeds
received from non-ordinary course asset sales or other
dispositions, or as a result of a casualty or condemnation,
subject to reinvestment provisions and other customary carveouts
and, to the extent required, the payment of certain indebtedness
secured by liens subject to a first lien intercreditor agreement,
(2)50% of the net cash proceeds received from the issuance of
debt obligations other than certain permitted debt obligations,
and (3)50% of excess cash flow (as defined in the Credit
Agreement) if Selects leverage ratio is greater than 4.50 to 1.00
and 25% of excess cash flow if Selects leverage ratio is less
than or equal to 4.50 to 1.00 and greater than 4.00 to 1.00, in
each case, reduced by the aggregate amount of term loans,
revolving loans and certain other debt optionally prepaid
during the applicable fiscal year. Select will not be required
to prepay borrowings with excess cash flow if Selects leverage
ratio is less than or equal to 4.00 to 1.00.
The Senior Secured Credit Facilities require Select, for the
benefit of the lenders under the Revolving Credit Facility, to
maintain a leverage ratio (based upon the ratio of indebtedness
for money borrowed net of cash or cash equivalents to
consolidated EBITDA, as defined in the Credit Agreement), which
is tested quarterly and currently must not be greater than 6.25
to 1.00 and after March31, 2019 must not be greater than 6.00
to 1.00. Failure to comply with this covenant would result in
an event of default under the Revolving Credit Facility and,
absent a waiver or an amendment from the Revolving Lenders,
preclude Select from making further borrowings under the
Revolving Credit Facility and permit the Revolving Lenders to
accelerate all outstanding borrowings under the Revolving
Credit Facilities. Upon termination of the commitments for the
Revolving Credit Facility and acceleration of all outstanding
borrowings thereunder, failure to comply with the covenant also
would constitute an Event of Default with respect to the Term
Loans and holders of the Term Loans then may exercise remedies.
The Senior Secured Credit Facilities also contain a number of
other affirmative and restrictive covenants, including
limitations on mergers, consolidations and dissolutions; sales
of assets; investments and acquisitions; indebtedness; liens;
affiliate transactions; and dividends and restricted payments.
The Senior Secured Credit Facilities contain events of default
for non-payment of principal and interest when due,
cross-default and cross-acceleration provisions and an event of
default that would be triggered by a change of control.
Select used borrowings under the Senior Secured Credit
Facilities to refinance all of its outstanding indebtedness
under its existing senior secured credit facilities and to pay
fees and expenses in connection with the refinancing.
JPMorgan Chase Bank, N.A. is the administrative agent and
collateral agent for the Senior Secured Credit Facilities and
JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC,
Deutsche Bank Securities Inc., RBC Capital Markets, Merrill
Lynch, Pierce, Fenner Smith Incorporated, Goldman Sachs Bank
USA, PNC Capital Markets LLC and Morgan Stanley Senior
Funding,Inc., are acting as joint lead arrangers and joint
bookrunners for the Senior Secured Credit Facilities. Wells
Fargo Securities, LLC and Deutsche Bank Securities Inc. are
acting as co-syndication agents for the Senior Secured Credit
Facilities and RBC Capital Markets, Merrill Lynch, Pierce,
Fenner Smith Incorporated, Goldman Sachs Bank USA, PNC Bank,
National Association and Morgan Stanley Senior Funding,Inc. are
acting as co-documentation agents for the Senior Secured Credit
Facilities.
The foregoing description of the Credit Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Credit Agreement, which is
filed as Exhibit10.1 and incorporated by reference herein.
Item 2.03 Creation of a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information required to be disclosed by this Item 2.03 is
set forth above in Item 1.01 of this Current Report on Form8-K
and is incorporated herein by reference.
Item 9.01 Financial Statements and
Exhibits.
(d)Exhibits.
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ExhibitNumber |
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Description |
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10.1 |
Credit Agreement, dated as ofMarch6, 2017, among Select |
About SELECT MEDICAL CORPORATION (NYSE:SNE)
Sony Corporation (Sony) is engaged in the development, design, manufacture and sale of various kinds of electronic equipment, instruments and devices for consumer, professional and industrial markets, as well as game consoles and software. The Company’s segments include Mobile Communications, Game & Network Services, Imaging Products & Solutions, Home Entertainment & Sound, Devices, Pictures, Music, Financial Services and All Other. It is engaged in the production, acquisition and distribution of motion pictures and television programming and the operation of television and digital networks. It is also engaged in the development, production, manufacture and distribution of recorded music and the management and licensing of the words and music of songs. It is also engaged in various financial services businesses, including life and non-life insurance operations, through its Japanese insurance subsidiaries and banking operations through a Japanese Internet-based banking subsidiary. SELECT MEDICAL CORPORATION (NYSE:SNE) Recent Trading Information
SELECT MEDICAL CORPORATION (NYSE:SNE) closed its last trading session down -0.38 at 31.18 with 537,795 shares trading hands.
