Hanger credit agreement default event waived; borrowing frozen for now

By Wendy Van Sickle

Columbus, Ohio, Sept. 14 – Hanger, Inc. entered into an amendment to its credit agreement dated June 17, 2013 with Bank of America, NA as administrative agent that waives events of default relating to the company’s failure to supply certain financial information, according to an 8-K filing with the Securities and Exchange Commission.

The amendment also adjusted financial covenants under the credit agreement, freezing the company’s borrowing until it comes into compliance with certain requirements.

The agreement is the result of Hanger’s failure to deliver certain financial information, required by a previous amendment, for the periods ended Sept. 30, 2014, Dec. 31, 2014, March 31 and June 30. The second amendment waives the events of default related to the company’s not producing the information and not giving timely notice that it would not be supplying the information, but provides that failure to deliver the information by Oct. 30 will constitute an event of default.

Until information has been delivered to the administrative agent showing Hanger would have been in compliance with financial covenants for the quarters in question along with projections showing the company in compliance for each quarter remaining through the agreement’s June 17, 2018 maturity, the company may not draw any additional borrowings under the facility. In addition, certain baskets and exceptions to the restrictive covenants in the credit agreement have been reduced or eliminated.

The company currently has $146.3 million of revolving loans drawn under the facility, which has a $200 million capacity and is available in the form of revolving loans, swingline loans and/or letters of credit.

Friday’s amendment also allows Hanger to add certain professional fees and expenses into its calculation of consolidated EBITDA.

In connection with the agreement, the company will pay an amendment fee pay to the agent equal to 5 basis points of the outstanding principal amount of the term loan held by each consenting lender plus the amount of such lender’s revolving commitments.

Hanger is an Austin, Texas-based provider of orthotic and prosthetic patient care and products.

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