| Item 1.01. | Entry into a Material Definitive Agreement |
On January 18, 2024, Acadia Healthcare Company, Inc. (the “Company”) and the Guarantors (as defined below) entered into that certain Amendment No. 2 to Credit Agreement (the “Amendment”) with Bank of America, N.A., as administrative agent (the “Administrative Agent”) and certain lenders party thereto, which amends the Credit Agreement, dated as of March 17, 2021, among the Company, the Administrative Agent and the lenders from time to time party thereto (as previously amended, the “Existing Credit Agreement,” and the Existing Credit Agreement as amended by the Amendment, the “Amended Credit Agreement”). The Existing Credit Agreement provides for a $600 million senior secured revolving credit facility (the “Revolving Facility”) and a $425 million senior secured term loan facility (the “Existing Term Loan Facility”), each maturing on March 17, 2026 unless extended in accordance with the terms of the Existing Credit Agreement.
The Amendment provides for the incurrence of additional senior secured term loans in an aggregate principal amount of $350 million (the “Incremental Term Loans”). Such Incremental Term Loans are structured as an increase of the Existing Term Loan Facility. The maturity date, the leverage-based pricing grid, amortization, mandatory prepayment events and other terms applicable to the Incremental Term Loans are substantially identical to those applicable to the Existing Term Loan Facility that were in effect prior to the Amendment. After giving effect to the Amendment and the Incremental Term Loans, borrowings under the Amended Credit Agreement bear interest at a floating rate equal to, at the option of the Company, (i) adjusted SOFR plus 1.50% or (ii) an alternative base rate plus 0.500% (in each case, subject to future adjustment based on changes to the Company’s consolidated total net leverage ratio).
The proceeds of the Incremental Term Loans are available to the Company for working capital and other general corporate purposes, including the payment of litigation settlements and transaction costs.
Consistent with the Existing Credit Agreement, (i) substantially all of the Company’s existing and subsequently acquired or organized direct or indirect wholly-owned U.S. subsidiaries (subject to certain exceptions) (collectively, the “Guarantors”) are required to guarantee the repayment of the Company’s obligations under the Amended Credit Agreement and (ii) the obligations of the Company and each of the Guarantors with respect to the Amended Credit Agreement are secured by a pledge of substantially all assets of the Company and each Guarantor (excluding real property and certain other customarily excluded assets).
Except as amended by the Amendment, the remaining terms of the Existing Credit Agreement remain in full force and effect. The foregoing description does not constitute a complete summary of the terms of the Amendment and is qualified in its entirety by reference to the full text of the Amendment, which is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.
Some of the financial institutions party to the Amended Credit Agreement and their respective affiliates have performed, and/or may in the future perform, various commercial banking, investment banking and other financial advisory services in the ordinary course of business for the Company and its subsidiaries for which they have received and/or will receive customary fees and commissions.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.
