OKLAHOMA CITY, August 3, 2015 – Foundation HealthCare Inc. (OTCQB: FDNH), announced today it had reached an agreement with Bank SNB and Texas Capital Bank on the terms of a $10 million acquisition line and an additional uncommitted $10 million incremental credit facility. The agreement is non-binding until the final loan documents are executed.
“The acquisition line of credit enables Foundation to act quickly in the acquisition of majority interests in surgical hospitals in selected target markets,” said Stanton Nelson CEO of Foundation HealthCare. “Our strong financial performance over the last several quarters coupled with the adherence to our strategic plan to acquire and expand majority owned surgical hospital and divest minority owned investments has positioned us well for new acquisitions.”
“Our banks are well aware of our plans and continue to provide appropriate credit facilities to fund that growth,” added Nelson.
As previously reported, Foundation used a portion of the proceeds from the sale of its minority interest in a Sherman, Texas hospital to reduce its term debt with Bank SNB and Texas Capital Bank by $7 million. Foundation expects to further reduce the term debt by approximately $3 million by the end of the year from additional proceeds related to the Sherman sale.
The terms of the new line of credit facility include:
- A $10.0 million acquisition revolving loan for permitted acquisitions of the assets of, or equity interests in, health care facilities.
- An additional $10.0 million incremental credit facility subject to credit approval of the lenders participating in the credit facility.
- A requirement that the aggregate total of the loans shall not exceed three times adjusted EBITDA (operating earnings before interest, income taxes, depreciation and amortizations) based on Foundation’s most recent compliance certificate filed with the banks.
- Foundation will use 75% of the proceeds of the next distributions related to the Sherman Hospital sale (total proceeds are expected to be $4.0 million) to further reduce the term loan.
- Extending the maturity date of the current $2.5 million Revolving Loan by 24 months.
- Once draws on the acquisition line of credit equal or exceed $5.0 million, the loan will be converted to a term loan with level amortization maturing June 30, 2021.
- Any acquisition to be completed using proceeds from the acquisition line of credit facility is subject to approval by Bank SNB including satisfactory completion of Bank SNB’s due diligence regarding the business and properties to be acquired using the proceeds of the advance.
- The rate for the new credit facility will be the same revolving rate in effect for Foundation’s existing credit facility which is currently LIBOR plus 3.25%.
About Foundation HealthCare
Headquartered in Oklahoma City, Okla., Foundation HealthCare owns and/or operates three surgical hospitals and ten surgery centers in seven states. Foundation HealthCare’s management provides expertise and focuses on the growth of each hospital by incorporating additional ancillary services in their markets. These additional service lines, such as out-patient surgery, oncology, imaging, physical therapy, hyperbarics, and sleep labs, truly make the Foundation specialty hospital environment unique.
The Company is also an industry leading ASC management and development company focused on partnering with physicians and employees to create an outstanding patient experience, while maximizing partner and shareholder value.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on the Company’s current expectations, forecasts and assumptions. Forward-looking statements involve risks and uncertainties that could cause actual outcomes and results to differ materially from the Company’s expectations, forecasts and assumptions. These risks and uncertainties include risks and uncertainties not in the control of the Company, including, without limitation, the risk that Company will maintain enough liquidity to execute its business plan, continue as a going concern and other risks including those enumerated and described in the Company’s filings with the Securities and Exchange Commission, which filings are available on the SEC’s website at www.sec.gov. Unless otherwise required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Primary contact: Grady Epperly, 405-608-1754 (grady.epperly@FDNH.com)
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