New Credit Agreement
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): April 5, 2006
OMEGA
HEALTHCARE INVESTORS, INC.
(Exact
name of registrant as specified in charter)
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Maryland
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1-11316
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38-3041398
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(State
of incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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9690
Deereco Road
Suite
100
Timonium,
Maryland 21093
(Address
of principal executive offices / Zip Code)
(410)
427-1700
(Registrant’s
telephone number, including area code)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
Written
communications pursuant to Rule 425 under the Securities Act.
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act.
Pre-commencement
communications pursuant to Rule 14d—2(b) under the Exchange Act.
Pre-commencement
communications pursuant to Rule 13e—4(c) under the Exchange Act.
Item
1.01 Entry into a Material Definitive
Agreement.
On
March
31, 2006, Omega Healthcare Investors, Inc. (“Omega”) entered into a new
four-year $200 million revolving senior secured credit facility (the “New Credit
Facility”).
The
New
Credit Facility is being provided by Bank
of
America, N.A., Banc of America Securities LLC, Deutsche Bank Trust Company
Americas, UBS Securities, LLC and General Electric Capital Corporation (the
“Lenders”) pursuant to a Credit Agreement, dated as of March 31, 2006
(the
“New
Credit Agreement”), among the
Omega
subsidiaries named therein (“Borrowers”), the lenders named therein, and Bank of
America, N.A., as administrative agent.
Omega
and
its subsidiaries have guaranteed the obligations of the Borrowers under the
New
Credit Agreement in favor of the Bank of America, N.A.
The
material terms of the New Credit Facility are as follows:
Interest
Rates and Fees. The
interest rates per annum applicable to the New Credit Facility are the
Eurodollar Rate, or Eurodollar, plus the applicable margin (as defined below)
or, at our option, the base rate, which will be the higher of (i) the rate
of interest publicly announced by the administrative agent as its prime rate
in
effect, and (ii) the federal funds effective rate from time to time plus
0.50% ,
in
each
case, plus the applicable margin (as defined below).
The
applicable margin with respect to the New Credit Facility is determined in
accordance with a performance grid based on our consolidated leverage ratio.
The
applicable margin may range from 2.0% to 0.5% in the case of Eurodollar
advances, from 0.75% to .00% in
the
case of base rate advances, and from 2.0% to 0.5% in the case of letter of
credit fees. The default rate on the New Credit Facility is 3.00% above the
interest rate otherwise applicable to base rate loans. We are also obligated
to
pay a commitment fee of 0.35% on the unused portion of our New Credit Facility
if usage is less than fifty percent and 0.25% on the unused portion of our
New
Credit Facility if usage exceeds fifty percent.
Prepayments. In
certain circumstances set forth in the New Credit Agreement, we may prepay
the
New Credit Facility at any time in whole or in part without fees or
penalty.
Covenants. The
New Credit Facility contains customary affirmative and negative covenants,
including, without limitation, limitations on investments; limitations on liens;
limitations on mergers, consolidations, and transfers of assets; limitations
on
sales of assets; limitations on transactions with affiliates; and limitations
on
our transfer of ownership and management. In addition, the New Credit Facility
contains financial covenants including, without limitation, with respect to
maximum leverage ratio, minimum fixed charge coverage ratio, minimum tangible
net worth and maximum distributions.
Events
of Default. The
New Credit Facility includes customary events of default including, without
limitation, nonpayment of principal, interest, fees or other amounts when due,
covenant defaults, cross-defaults, a change of control, bankruptcy events,
material unsatisfied or unstayed judgments, and loss of real estate investment
trust (“REIT”) status.
Right
to Increase Maximum Borrowings. Pursuant
to the terms of the New Credit Agreement, the Lenders have agreed that in
certain circumstances Omega may increase the revolving commitments under the
New
Credit Facility by up to an additional $100 million, for maximum aggregate
borrowings outstanding of up to $300 million.
Security
and Guarantees. Omega
and its subsidiaries that are not borrowers under the New Credit Facility
guarantee the obligations of our borrower subsidiaries under the New Credit
Facility. All obligations under the New Credit Facility and the related
guarantees are secured by a perfected first priority lien on certain real
properties and all improvements, fixtures, equipment and other personal property
relating thereto of the subsidiaries party to the New Credit Facility, and
an
assignment of leases, rents, sale/refinance proceeds and other proceeds flowing
from the real properties.
At
March
31, 2006, Omega had $4.5 million of borrowings outstanding under the New Credit
Facility.
On
April
4, 2006, Omega issued a press release announcing that it had entered into the
New Credit Facility and terminated its Prior Credit Facility (as defined and
discussed below). A copy of Omega’s press release is attached to this Current
Report on Form 8-K as Exhibit 99.1.
The
New
Credit Agreement is attached to this Current Report on Form 8-K as Exhibit
10.1
and is incorporated herein by reference.
Item
1.02 Termination of a Material Definitive
Agreement.
On
March
31, 2006, Omega terminated its previous $200 million revolving senior secured
credit facility (“Prior Credit Facility”). The Prior Credit Facility was
provided pursuant to that certain credit agreement, dated as of March 22, 2004
(the “Prior Credit Agreement”) with Banc of America Securities LLC as lead
arranger, Bank of America, N.A. as administrative agent and a syndicate of
other
financial institutions as lenders, which included Bank of America, N.A.,
Deutsche Bank AG, UBS Loan Finance LLC and General Electric Healthcare Financial
Services. The Prior Credit Facility initially provided a $125 million
senior secured four-year revolving credit facility and was subsequently
increased by amendment to $200 million. The borrowers under the Prior Credit
Facility were certain of Omega’s subsidiaries that hold borrowing base
properties (the “Prior Borrowers”).
The
material terms of the Prior Credit Facility were as follows:
Interest
Rates and Fees. The
interest rates per annum applicable to the Prior Credit Facility were the
Eurodollar Rate, or Eurodollar, plus the applicable margin (as defined below)
or, at our option, the base rate, which was the higher of (i) the rate of
interest publicly announced by the administrative agent as its prime rate in
effect, and (ii) the federal funds effective rate from time to time plus
0.50%, in each case, plus the applicable margin (as defined below). The
applicable margin with respect to the Prior Credit Facility was determined
in
accordance with a performance grid based on our consolidated leverage ratio.
The
applicable margin ranged from 2.75% to 1.75% in the case of Eurodollar advances,
and from 1.25% to 0.25% in the case of base rate advances. The default rate
on
the Prior Credit Facility was 3.00% above the interest rate otherwise applicable
to base rate loans. The Prior Borrowers were also obligated to pay a commitment
fee of 0.35% on the unused portion of the Prior Credit Facility if usage was
less than fifty percent and 0.25% on the unused portion of the Prior Credit
Facility if usage exceeded fifty percent.
Prepayments. The
Prior Credit Agreement provided for prepayment of the Prior Credit Facility
at
any time in whole or in part without fees or penalty, except that any prepayment
of Eurodollar advances other than at the end of the applicable interest periods
therefore was required to be made with reimbursement for any funding losses
and
redeployment costs of the lenders resulting therefrom.
Covenants. The
Prior Credit Facility contained customary affirmative and negative covenants,
including, without limitation, limitations on investments; limitations on liens;
limitations on mergers, consolidations, and transfers of assets; limitations
on
sales of assets; limitations on transactions with affiliates; and limitations
on
our transfer of ownership and management. In addition, the Prior Credit Facility
contained financial covenants including, without limitation, with respect to
maximum leverage ratio, minimum fixed charge coverage ratio, minimum tangible
net worth and maximum distributions.
Events
of Default. The
Prior Credit Facility included customary events of default including, without
limitation, nonpayment of principal, interest, fees or other amounts when due,
covenant defaults, cross-defaults, bankruptcy events, material unsatisfied
or
unstayed judgments, and loss of REIT status.
Security
and Guarantees. Omega
and its subsidiaries that were not borrowers under the Prior Credit Facility
guaranteed the obligations of the Prior Borrowers under the Prior Credit
Facility. All obligations under the Prior Credit Facility and the related
guarantees were secured by a perfected first priority lien on certain real
properties and all improvements, fixtures, equipment and other personal property
relating thereto of the subsidiaries party to the Prior Credit Facility, and
an
assignment of leases, rents, sale/refinance proceeds and other proceeds flowing
from the real properties.
Omega
and
its subsidiaries terminated the Prior Credit Facility in connection with the
effectiveness of the New Credit Facility, which provides a longer term than
the
term remaining under the Prior Credit Facility and a 125 basis point savings
on
LIBOR-based loans, as compared to LIBOR-based loans under the Prior Credit
Facility.
Omega
did not experience any material early termination penalties due to the
termination of the Prior Credit Facility. Omega
recorded a one-time, non-cash charge of approximately $2.7 million relating
to
the write-off of deferred financing costs associated with the termination of
the
Prior Credit Facility.
Item
2.03 Creation of Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
See
Item
1.01 above, which is incorporated herein by reference, for a discussion of
the
creation of a direct financial obligation under the New Credit Facility.
Item
9.01. Financial Statements and Exhibits.
| 10.1 |
Credit
Agreement, dated as of
March 31, 2006, among OHI Asset, LLC, OHI Asset (ID), LLC, OHI Asset
(LA),
LLC, OHI Asset (TX), LLC, OHI Asset (CA), LLC, Delta Investors I,
LLC,
Delta Investors II, LLC, Texas Lessor- Stonegate, LP, the lenders
named
therein, and Bank of America, N.A.
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| 99.1 |
Press
Release
dated April 4, 2006.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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OMEGA
HEALTHCARE INVESTORS, INC.
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By:/s/
C. Taylor
Pickett
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Name: C.
Taylor
Pickett
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Title:
Chief Executive Officer
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Dated: April
5, 2006