Annual report pursuant to Section 13 and 15(d)

Credit Facility

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Credit Facility
12 Months Ended
Dec. 31, 2011
Credit Facility [Abstract]  
Credit Facility

6. Credit Facility

On October 12, 2010, the Company entered into a Second and Amended Restated Credit Agreement (the "Credit Facility"). The Credit Facility is unsecured and provides for a maximum aggregate principal borrowing of $75.0 million (with a letter of credit sub-limit equal to $5.0 million). The Credit Facility is scheduled to expire on October 12, 2013. The annual facility fee is 0.50% of the total availability. An additional fee of 0.375% is charged for any unused amounts. The interest rate for borrowings under the Credit Facility is a function of the prime rate (Base Rate) or the Eurodollar rate (Eurodollar), as elected by the Company, plus the applicable margin based on the Leverage Ratio as defined in the Credit Facility.

As of December 31, 2011 the Company had $34.8 million drawn and letters of credit in the amount of $3.8 million outstanding under the Credit Facility. The interest rate for borrowings under the Credit Facility is a function of the prime rate (Base Rate) or Eurodollar rate, as elected by the Company, plus the applicable margin based on the Leverage Ratio, as defined in the Credit Facility, which was 2.25% at December 31, 2011. The interest rate at December 31, 2011 was 4.25%.

On September 28, 2011, the Company entered into a Second Amendment to the Credit Facility (the "Second Amendment"). The Second Amendment permits the Company to borrow up to $1.5 million pursuant to a real estate construction loan extended by American First Bank in Opelousas, Louisiana. The loan proceeds are to be used to construct a building in Opelousas, Louisiana, which will be used as office space by the home health and hospice agencies there.

On September 28, 2011, the Company entered into a Third Amendment to the Credit Facility (the "Third Amendment"). The Third Amendment permits the Company to fund the settlement with the United States of America entered into on September 27, 2011. The Third Amendment revises the Minimum Fixed Charge Coverage and Leverage Ratio covenant requirements in order to remove the settlement amount from the calculation of these covenants. See Note 10 to these consolidated financial statements.

 

On December 8, 2011, the Company entered into a Fourth Amendment to the Credit Facility (the "Fourth Amendment"). The Fourth Amendment permits the Company to increase the sublimit for letters of credit to $7.5 million and provides for a prospective increase to the total line of credit commitment from $75 million to a maximum aggregate principal amount of up to $100 million.

The Company paid $578,000 of credit fees on the Credit Facility during 2011. The Company issued letters of credit as collateral on its workers' compensation insurance. At December 31, 2011 and 2010, outstanding letters of credit under this program were $3.8 million and $2.9 million, respectively.

The Credit Facility contains customary affirmative, negative and financial covenants. For example, the Company is restricted in incurring additional debt, disposing of assets, making investments, allowing fundamental changes to the Company's business or organization, and making certain payments in respect of stock or other ownership interests, such as dividends and stock repurchases. Under the Credit Facility, the Company is also required to meet certain financial covenants with respect to minimum fixed charge coverage, consolidated net worth and leverage ratios. At December 31, 2011, the Company believes it was in compliance with all covenants.

The Credit Facility also contains customary events of default. These include bankruptcy and other insolvency events, cross-defaults to other debt agreements, a change in control involving the Company or any subsidiary guarantor, and the failure to comply with covenants.