Medical Action gets $76 million amended and restated credit facility

By Jennifer Chiou

New York, June 13 - Medical Action Industries Inc. entered into on June 7 a $76 million amended and restated credit agreement providing for a $51 million secured term loan and a $25 million revolver, according to an 8-K filed with the Securities and Exchange Commission.

JPMorgan Chase Bank, NA acted as administrative agent with Citibank, NA as syndication agent and HSBC Bank USA, NA, Sovereign Bank and Wells Fargo Bank, NA as co-documentation agents.

The loans come due on June 30, 2014.

The filing stated that the term loans amortize in varying quarterly installments commencing on Sept. 30.

As of June 7, $51 million of term loan debt and $19.67 million under the revolver were outstanding.

Borrowings bear interest at reserve adjusted Libor plus 400 basis points. There is a commitment fee of 62.5 bps per year on the daily unused amount of the revolving credit facility.

The agreement contains financial covenants relating to:

• Maximum annual capital expenditures of $4 million;

• A minimum fixed-charge coverage ratio of 1.00 to 1.00 on a rolling four fiscal quarter basis; and

• Minimum EBITDA for certain specified quarterly periods, including $3 million for the fiscal quarter ending June 30, $7.5 million for the two consecutive fiscal quarter period ending Sept. 30, $13.75 million for the three consecutive fiscal quarter period ending Dec. 31, 2012, $18 million for the year ending March 31, 2013 and $21 million for the four consecutive fiscal quarter period ending June 30, 2013.

In other news, the company notified Nasdaq on June 11 that its board has determined that Henry A. Berling does not satisfy the definition of "independent director," and, therefore, the board is not comprised of a majority of independent directors as required under Nasdaq rules. As a result, the board expects to be reduced to five members from six members to stay in compliance.

Medical Action is a Brentwood, N.Y.-based manufacturer and distributor of disposable medical devices.

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