Monarch Dental's bank loan expired Monday, company unable to repay

By Sara Rosenberg

New York, July 2 - Monarch Dental Corp. said its credit facility expired on Monday and that it does not have the funds to pay back the $63.1 million outstanding balance.

The company is currently in negotiations with lenders for a waiver or amendment to the credit facility. If a refinancing is not obtained, the company's financial condition and results of operations will be adversely affected, the company said.

The Dallas, Tex. manager of dental offices has been in default under the credit agreement with regard to minimum EBIDTA and minimum net worth covenants. Due to the defaults, lenders imposed the default interest rate, which is equal to Prime plus 600 basis points, Monarch Dental said in a news release. The increase in interest "has negatively impacted the company's liquidity," the release added.

Banc of America Securities LLC has been engaged to help the company explore strategic alternatives, such as selling the company, an equity investment, the issuance of debt or a sale of assets.

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