Coram Healthcare Announces Agreement on Terms of Debt Restructuring
DENVER, April 14 /PRNewswire/ -- Coram Healthcare Corporation (NYSE: CRH) announced today that it has reached an agreement with the holders of its Subordinated Rollover Notes (the "Rollover Notes") - Cerberus Partners L.P., Goldman Sachs Credit Partners, L.P., and Foothill Capital Corporation - on an indicative term sheet for the restructuring of the debt represented by the Rollover Notes and the warrants to purchase shares of the Company's stock issued in connection with such Rollover Notes. The restructuring is subject to the execution of definitive documentation and consummation of the restructuring on or prior to June 30, 1998.
The indicative term sheet contemplates that existing debt will be converted into two debt instruments: (a) $150.0 million of Series A Senior Unsecured Notes; and (b) approximately $87.9 million of Series B Unsecured Convertible Notes.
The terms of the instruments are as follows:
Series A Notes:
* Aggregate principal amount of $150 million at 9.875% per annum.
* Maturity on the later of October, 2000 and the maturity date of a new
senior bank credit facility.
* Underachievement of targeted EBITDA performance at either September 30,
1998 or March 31, 1999 results in an interest rate increase of .625% in
each instance.
* Interest is payable quarterly in arrears and may be paid in cash or
paid by the issuance of additional notes at Coram's option. However,
the debt holders can require Coram to pay interest in cash if Coram
exceeds a certain interest coverage ratio.
* Redeemable by Coram at 103% of the principal amount and, in connection
with a change in control or acquisition of Coram, by the debt holders
at 103% of the principal amount, plus accrued interest.
Series B Convertible Notes:
* Aggregate principal amount of approximately $87.9 million at 8.0% per
annum, accruing quarterly in arrears.
* 1O year non-callable.
* Convertible at $3.00 per common share, subject to downward reset based
on prevailing market price at each of April 13, 1999 and October 13,
1999 subject to customary anti-dilution adjustments.
* Interest may be paid in cash or paid by the issuance of additional
notes at Coram's option.
* Redeemable by the debt holders, in connection with a change in control
or acquisition of Coram, at 103% of the then outstanding principal
amount plus accrued interest.
Other Terms:
* All warrants issued or issuable in connection with the Rollover Notes
will be returned and cancelled.
* The holders of the Series A and Series B Notes will have the right to
name one director to Coram's Board of Directors.
The definitive documentation of the restructuring will include certain financial and other covenants.
Wendy Simpson, Executive Vice President and Chief Financial Officer, stated, "In addition to working toward completion of our debt restructuring, Coram is in discussions with commercial banks to obtain an accounts receivable-backed credit line of approximately $60 million for future healthcare acquisitions and other purposes."
"Coram is very pleased with our agreement on the terms of the debt restructuring. These terms give Coram more favorable financing. We thank Cerberus, Foothill and Goldman Sachs for their confidence in Coram's future. Though the process took longer than expected, we are now on solid ground to grow our base business incrementally. We have a number of identified potential acquisitions which will allow us to expand our home care network and move into complimentary lines of business," said Donald J. Amaral, Chairman and Chief Executive Officer.
If the debt restructuring is not consummated on or prior to June 30, 1998 all amounts previously deferred by the debt holders on the Rollover Notes then become due and payable. |
