Foundation HealthCare announced 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 terms of the new line of credit facility include:

  • A $10 million acquisition revolving loan for permitted acquisitions of the assets of, or equity interests in, health care facilities.
  • An additional $10 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 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 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%.

Stanton Nelson, Foundation’s CEO, stated, “The acquisition line of credit enables Foundation to act quickly in the acquisition of majority interests in surgical hospitals in selected target markets. 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.”
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