R1 RCM INC. : Conclusion of a material definitive agreement, termination of a material definitive arrangement, creation of a direct financial obligation or obligation under an off-balance sheet arrangement of a registrant, financial statements and supporting documents (Form 8 -K)
Item 1.01 Conclusion of a Material Definitive Agreement
Amended and updated credit agreement
July 1, 2021, R1 RCM Inc.(the "Company") and certain of its subsidiaries entered into an amended and restated senior credit agreement (the "A&R Credit Agreement") with Bank of America, N.A., as administrative agent, and the lenders named therein, governing the Company's amended and restated senior secured credit facilities (the "Senior Secured Credit Facilities"), consisting of a $700.0 millionsenior secured term loan facility (the "Senior Term Loan") and a $450.0 millionsenior secured revolving credit facility (the "Senior Revolver"). The proceeds from the new Senior Secured Credit Facilities will be used, in addition to cash on hand, (1) to refinance, in full, all existing indebtedness under the Credit Agreement, dated as of June 26, 2019, by and among the Company and certain of its subsidiaries, Bank of America, N.A., as administrative agent, and the lenders named therein, and amend and restate all commitments thereunder (the "Refinancing"), (2) to pay certain fees and expenses incurred in connection with the entry into the A&R Credit Agreement and the Refinancing, (3) to fund the Company's previously announced acquisition of all of the equity interests of iVinci Partners, LLC, a Delawarelimited liability company, also known as VisitPay, and to pay the fees, premiums, expenses and other transaction costs incurred in connection therewith, and (4) to finance working capital needs of the Company and its subsidiaries for general corporate purposes. The Senior Term Loan has a five-year maturity and the Senior Revolver has a five-year maturity. The A&R Credit Agreement provides that the Company may make one or more offers to the lenders, and consummate transactions with individual lenders that accept the terms contained in such offers, to extend the maturity date of the lender's term loans and/or revolving commitments, subject to certain conditions, and any extended term loans or revolving commitments will constitute a separate class of term loans or revolving commitments. All of the Company's obligations under the Senior Secured Credit Facilities are guaranteed by the subsidiary guarantors named therein (the "Subsidiary Guarantors"). Pursuant to (1) the Security Agreement, dated as of June 26, 2019(the "Security Agreement"), among the Company, the Subsidiary Guarantorsand Bank of America, N.A., as administrative agent, and (2) the Guaranty, dated as of June 26, 2019(the "Guaranty"), among the Company, the Subsidiary Guarantorsand Bank of America, N.A., as administrative agent, subject to certain exceptions, the obligations under the Senior Secured Credit Facilities are secured by a pledge of 100% of the capital stock of certain domestic subsidiaries owned by the Company and a security interest in substantially all of the Company's tangible and intangible assets and the tangible and intangible assets of each Subsidiary Guarantor. The Senior Revolver includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the "swing loans." Any issuance of letters of credit or making of a swing loan will reduce the amount available under the Senior Revolver. Upon closing, the aggregate borrowings incurred under the Senior Revolver are $120,000,000. At the Company's option, the Company may add one or more new term loan facilities or increase the commitments under the Senior Revolver or request to add one or more series of junior lien term loans or notes, subordinated term loans or notes or senior unsecured term loans or notes, or any bridge facility in an unlimited amount so long as certain conditions, including compliance with the applicable financial covenants for such period (on a junior or unsecured basis), in each case on a pro forma basis, are satisfied. Borrowings under the Senior Secured Credit Facilities bear interest, at the Company's option, at: (i) an ABR rate equal to the greater of (a) the prime rate of Bank of America, N.A., (b) the federal funds rate plus 0.5% per annum, and (c) the Eurodollar rate for an interest period of one-month beginning on such day plus 100 basis points, plus the applicable Base Rate Margin (as set forth below) (provided that the Eurodollar rate applicable to the Senior Term Loan shall not be less than 0.00% per annum); or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the Senior Term Loan shall not be less than 0.00% per annum), plus the applicable LIBOR Rate Margin (as set forth below). The Company is also required to pay an unused commitment fee to the lenders under the Senior Revolver at the Unused Commitment Fee Rate(as set forth below) of the average daily unutilized commitments. The Company must also pay customary letter of credit fees, including a fronting fee as well as administration fees. --------------------------------------------------------------------------------
As set forth herein, the base rate margin, LIBOR rate margin and unused liability apply.
Total Net Leverage Ratio Base Rate Margin LIBOR Rate Margin Unused Commitment Fee Rate ? 2.50:1.00 1.25% 2.25% 0.40% < 2.50:1.00 but ? 2.00:1.00 1.00% 2.00% 0.35% < 2.00:1.00 but ? 1.50:1.00 0.75% 1.75% 0.30% < 1.50:1.00 but ? 1.00:1.00 0.50% 1.50% 0.25% < 1.00:1.00 0.25% 1.25% 0.20% The A&R Credit Agreement requires the Company to make mandatory prepayments, subject to certain exceptions, with: (i) 100% of net cash proceeds of all non-ordinary course assets sales or other dispositions of property or casualty events, subject to certain exceptions and thresholds and (ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the A&R Credit Agreement. Commencing
December 31, 2021, the Company is required to repay the Senior Term Loan portion of the Senior Secured Credit Facilities in quarterly principal installments of $4,375,000through September 30, 2023and $8,750,000through September 30, 2026, with the balance payable at maturity. The A&R Credit Agreement contains two financial covenants. (1) The Company is required to maintain at the end of each fiscal quarter, commencing with the quarter ending September 30, 2021, a consolidated total net leverage ratio of not more than 4.50 to 1.00. This consolidated ratio will step down in increments to 4.00 to 1.00 commencing with the fiscal quarter ending September 30, 2022and 3.50 to 1.00 commencing with the fiscal quarter ending September 30, 2023. (2) The Company is required to maintain at the end of each such fiscal quarter, a consolidated interest coverage ratio of not less than 3.00 to 1.00. The A&R Credit Agreement also contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company's ability and the ability of its subsidiaries to: (i) incur additional indebtedness; (ii) create liens on assets; (iii) engage in mergers or consolidations; (iv) sell assets; . . . Item 1.02 Termination of a Material Definitive Agreement
The information set forth under “Section 1.01 Entry into a Material Definitive Agreement” is incorporated into this Section 1.02 by reference.
Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under “Section 1.01 Entry into a Material Definitive Agreement” is incorporated into this Section 2.03 by reference.
Item 9.01 Financial statements and supporting documents
The following exhibits are provided as part of this current report on Form 8-K:
Part Number Description
10.1 Amended and Restated Credit Agreement, dated as
R1 RCM Inc., the other parties party thereto
as Credit Parties (as
Bank of America, N.A., as
administrative agent and the
financial institutions party thereto as lenders. 104 Cover Page Interactive Data File - the cover page
IXBRL beacons are integrated
within the Inline XBRL document.
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