NDCHealth Corp. is in technical default on its $225 million credit facility and would need lender approval to access the revolver portion of the credit. Lenders cannot rely on the company's current financial statements as published, due to the restatement and delay of its quarterly results, according to Robert Borchert, v.p. of investor relations at NDC.
The credit is led by Merrill Lynch Capital and comprises a $100 million revolver and $125 million term loan. Credit Suisse First Boston, Bank of America and LaSalle Bank are also on the credit. In addition to the facility, NDC has $200 million of 10 1/2% senior subordinated notes due 2012.
NDC will only be in default if the lenders choose to act or assert their rights, explained Borchert. In the event of default, lenders representing more than 50% of the credit could direct the facility to be terminated. "We will work with our lending institutions to resolve the conditions of default or to gain a waiver either at the time we file our second quarter results and amended SEC filings or shortly thereafter." The company has not specified a time for when that would occur, he said.
"We believe we have sufficient financial resources to meet our ordinary operating capital needs," Borchert said, adding NDC does not need to access the revolver. The company amended its credit in November to modify the total leverage and fixed charge coverage ratios. Prior to that, it had made an amendment in August to avoid potential covenant violations after sales declined (LMW, 8/30). Merrill bankers did not return calls.