TUCSON, Ariz., March 14, 2011 /PRNewswire/ -- The Providence Service Corporation (Nasdaq: PRSC) today announced that it has refinanced its existing credit facility with a new senior secured credit facility in an aggregate principal amount of $140.0 million.
The new credit facility is comprised of a $100 million, five year term loan facility and a $40 million, five year revolving credit facility. Additionally, the Company may request the amount of the term loan facility and/or revolving credit facility be increased by an aggregate amount of up to $85 million, with either additional commitments from lenders under the senior credit facility or new commitments from other financial institutions. Providence may not be able to access additional funds under this option as no lender is obligated to participate in any such increase under the senior credit facility.
In addition to refinancing the Company's existing debt obligations, the proceeds of the new senior secured credit facility may be used to fund ongoing working capital requirements, make capital expenditures such as acquisitions, repay Providence's 6.5% Convertible Senior Subordinated Notes due 2014 and for other general corporate purposes.
"This new credit agreement is the latest step in our commitment to reduce debt and improve our capital structure while providing for additional financial flexibility," said Fletcher McCusker, Chairman and CEO.
Interest accrues on the outstanding principal amount of the loans at a rate per annum of LIBOR plus an applicable margin, which ranges from 2.25% to 3.00% and is payable quarterly based on the Company's consolidated leverage ratio as defined in the credit agreement governing the facility. At the Company's election, interest can accrue at an alternative base rate plus an applicable margin ranging from 1.25% to 2.00%.
The Company is also obligated to pay a commitment fee on the unused portion of each lender's commitment under the revolving credit facility and pay letter of credit fees on the maximum amount available to be drawn under each letter of credit outstanding under the revolving credit facility. The commitment fee ranges from 0.35% to 0.50% and the letter of credit fee ranges from 2.25% to 3.00%, in each case, payable quarterly based on the consolidated leverage ratio of the Company.
As previously announced, as a result of the transaction, the Company expects to record a non-cash charge of approximately $2.4 million relating to the write-off of unamortized deferred financing fees and will expense approximately $0.4 million of the anticipated refinancing related costs.
The debt financing was led by Bank of America, N.A. and SunTrust Bank.
The final agreement will be filed with the Securities and Exchange Commission as part of the Company's Form 10-K and will be available at www.provcorp.com in the investor section under "SEC filings."
The Providence Service Corporation, through its owned and managed entities, provides home and community based social services and non-emergency transportation services management to government sponsored clients under programs such as welfare, juvenile justice, Medicaid and corrections. Providence does not own or operate beds, treatment facilities, hospitals or group homes, preferring to provide social services in the client's own home or other community setting. It provides its non-emergency transportation services management through local transportation providers rather than owning its own fleet of vehicles. The Company provides a range of services through its direct entities to approximately 58,000 clients through 704 active contracts at December 31, 2010, with an estimated nearly 8.2 million individuals eligible to receive the Company's non-emergency transportation services. Combined, the Company has an approximately $1 billion book of business including managed entities.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "believe," "demonstrate," "expect," "estimate," "anticipate," "may," "should" and "likely" and similar expressions identify forward-looking statements. In addition, statements that are not historical should also be considered forward-looking statements. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date the statement was made. Such forward-looking statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. These factors include, but are not limited to the global credit crisis, capital market conditions, and other risks detailed in Providence's filings with the Securities and Exchange Commission, including its latest Annual Report on Form 10-K. Providence is under no obligation to (and expressly disclaims any such obligation to) update any of the information in this press release if any forward-looking statement later turns out to be inaccurate whether as a result of new information, future events or otherwise.
SOURCE The Providence Service Corporation