ORLANDO, Fla.--(BUSINESS WIRE)--On April 6, 2018, Rotech Healthcare Inc. entered into a new $185 million credit agreement with a diversified group of lenders including SunTrust Bank as administrative agent and issuing lender and SunTrust Robinson Humphrey, Inc., Regions Bank and Fifth Third Bank, as joint lead arrangers and bookrunners (the "Credit Agreement"). The Credit Agreement is comprised of a $160 million five year term loan and a $25 million revolving credit facility. The proceeds of this transaction were used to repay the Company’s exiting First Lien Credit Agreement that was set to expire in September of this year. At close the Company will have in excess of $40 million in cash and undrawn revolver.
In conjunction with this transaction, the Company entered into a new 5 ½ year credit agreement with the lenders’ in the Company’s Second Lien Credit Agreement. Under this new credit agreement the existing Second Lien Credit Agreement lenders exchanged the principal and all accrued and unpaid interest outstanding under the existing Second Lien Credit Agreement for a new term loan. All interest on this new credit agreement will be payment-in-kind. As a result, the Company will substantially reduce its annual cash interest payments.
“I am pleased with the completed refinancing and want to thank SunTrust, Regions and Fifth Third for leading this effort,” said Tim Pigg, Chief Executive Officer of Rotech. “These new credit agreements provide Rotech with sufficient capital over the next 5 years to continue our growth strategies.” Mr. Pigg went on to say, “In 2017 we grew our 3 major product lines by 18 to 32% as we picked up market share from competitors. Lower prices caused by Competitive Bidding have caused over 12,000 DME providers to liquidate their businesses in the last two years, in many cases stranding their patients and creating massive access to care issues. We are continuing to work with our industry group and CMS on actions to stabilize the industry’s pricing in an effort to begin to reverse the access to care issues caused by Competitive Bidding. We remain hopeful that some of these actions will be implemented later this year.”