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| Robert Borchert |
NDCHealth Corp. has amended its credit facility to avoid potential covenant violations after sales declined by 3% to $111 million for the last quarter and EBITDA margins fell to approximately 20% in the quarter from about 30% in most quarters over the past two years.
In the credit agreement, the leverage ratio and fixed-charge ratio were based on trailing 12 months EBITDA. "Based on that we believed that we may not be in compliance with those two covenants," explained Robert Borchert, v.p. of investor relations. "[The amended agreement] provides some additional room under the leverage ratio and changed the definition for the fixed-charge ratio so that it basically would account for cash taxes paid as opposed to total tax expense."
When the company announced its financial results Aug. 9 it noted that based on expectations for the first quarter it may not meet certain covenants related to the credit agreement. "[The company] went immediately and negotiated with the credit group for this amendment which provides us with operating flexibility throughout 2005," Borchert said. "We believe it will also bring us in compliance as we report our fiscal first quarter results."
Merrill Lynch Capital is the administrative agent on the credit. Other lenders include Credit Suisse First Boston, Bank of America and LaSalle Bank. The $225 million credit comprises a $100 million revolver and $125 million term loan. The term loan is priced at LIBOR plus 2 3/4% while the revolver carries a spread of LIBOR plus 2 1/2%. Merrill bankers did not return calls.