Sierra Health Services (SIE) restated and amended its credit facility to $185 million after the company violated certain covenants on its $200 million loan, according to Paul Palmer, cfo in Las Vegas. "We wrote off goodwill and other assets and took a significant charge and fell out of compliance with certain covenants," Palmer said. SIE took charges of $141 million for goodwill impairment and $48 million for fixed-asset impairment, according to its 10-Q filed Nov. 14. The form also stated that the waivers included amendments to the credit that required the company to grant its lenders a security interest in certain personal property and reduce availability under the line of credit to $185 million. Syndication closed Dec. 15. Bank of America and First Union co-lead the credit. Bank officials declined to comment. Palmer explained that as of June this year, SIE was not in compliance with the covenants but had received waivers through Oct. 31. By Nov. 8, however, the company received a notice of default after it was unable to reach an agreement on new waivers with its bank group. "We've received all waivers needed and are in full compliance with the new facility," Palmer said. The form also stated that in June, the company had $185 million drawn on its previous $200 million deal.
The new agreement expires Sept. 30, 2003. Pricing on the amended facility is 13/4% over LIBOR plus the greater of 1/2% over the latest federal funds rate or Prime lending rate of B of A. SIE was paying 51/4% over LIBOR as of Nov. 8, before it received the new waivers.