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 6, 2010
RadNet,
Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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0-19019
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13-3326724
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
Number)
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1510
Cotner Avenue
Los
Angeles, California 90025
(Address
of Principal Executive Offices) (Zip Code)
(310)
478-7808
(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 (see General
Instruction A.2. below):
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Written communications pursuant
to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement communications
pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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¨
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Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01
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Entry
into a Material Definitive
Agreement
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Execution
of New Credit Agreement
Overview. On April 6, 2010,
Radnet Management, Inc., (the “Borrower”), a
wholly-owned subsidiary of RadNet, Inc. (the “Company”), entered
into a new Credit and Guaranty Agreement (the “New Credit
Agreement”) with Barclays Capital, Deutsche Bank Securities Inc., GE
Capital Markets, Inc. and RBC Capital Markets, as joint bookrunners and joint
lead arrangers, Barclays Bank PLC, as administrative agent and collateral agent,
and certain other lenders, pursuant to which the Borrower obtained $385 million
in senior secured bank financing, consisting of a $285 million, six-year term
loan facility and a $100 million, five-year revolving credit facility (the
“New Credit
Facilities”). The Company intends to use the net proceeds of
borrowings under the New Credit Facilities together with the net proceeds from
the issuance of notes, described below, to refinance existing credit facilities,
fund certain acquisitions and pay related fees and
expenses. Capitalized terms used but not defined in this section have
the meanings ascribed to them in the New Credit Agreement.
Interest. The New Credit
Facilities will bear interest through maturity at a rate determined by adding
the applicable margin to either (a) the Base Rate, which is the highest of the
(i) Prime Rate, (ii) the rate which is 0.5% in excess of the Federal Funds
Effective Rate, (iii) 3.00% and (iv) 1.00% in excess of the one-month Adjusted
Eurodollar Rate at such time, or (b) the Adjusted Eurodollar Rate, which is the
higher of (i) the London interbank offered rate, adjusted for statutory reserve
requirements, for the respective interest period, as determined by the
administrative agent and (ii) 2.00%. Applicable margin
means (i) (a) with respect to Tranche B Term Loans that are
Eurodollar Rate Loans, 3.75% per annum and (b) with respect to Tranche B Term
Loans that are Base Rate Loans, 2.75% per annum; and (ii) (a) with respect to
Revolving Loans that are Eurodollar Rate Loans, 3.75% per annum and (b) with
respect to Revolving Loans and Swing Line Loans that are Base Rate Loans, 2.75%
per annum.
Prepayments. Commencing on
June 30, 2010, the Borrower will be required to make quarterly amortization
payments on the term loan facility, each in the amount of $712,500, with the
remaining principal balance paid off at maturity. Under the New
Credit Agreement, the Borrower will also be required to make mandatory
prepayments, subject to specified exceptions, from Consolidated Excess Cash
Flow, and upon certain events, including, but not limited to, (i) the receipt of
net cash proceeds from the sale or other disposition of any property or assets
of the Company, the Borrower or any of its subsidiaries, (ii) the receipt of net
cash proceeds from insurance or condemnation proceeds paid on account of any
loss of any property or assets of the Company, the Borrower or any of its
subsidiaries, (iii) the receipt of net cash proceeds from the incurrence of
indebtedness by the Company, the Borrower or any of its subsidiaries (other than
certain indebtedness otherwise permitted under the loan documents relating to
the New Credit Facilities) and (iv) the receipt of net cash proceeds by the
Company, the Borrower or any of its subsidiaries from Extraordinary
Receipts.
Guarantees. The obligations
under the New Credit Facilities are guaranteed by the Company, all of the
Borrower’s current and future domestic subsidiaries and certain affiliates of
the Borrower (collectively, the “Guarantors”).
Covenants. In addition to
certain customary covenants, the New Credit Agreement places limits on the
Company’s and the Guarantors’ ability to declare dividends or redeem or
repurchase capital stock, prepay, redeem or purchase debt, incur liens and
engage in sale-leaseback transactions, make loans and investments, incur
additional indebtedness, amend or otherwise alter debt and other material
agreements, engage in mergers, acquisitions and asset sales, enter into
transactions with affiliates and alter the business currently conducted by the
Company and the Guarantors.
Financial Covenants. The New
Credit Agreement contains financial covenants including a minimum interest
coverage ratio, a maximum total leverage ratio and a limit on annual capital
expenditures. The Borrower’s failure to comply with these covenants could permit
the lenders under the New Credit Facilities to declare all amounts borrowed,
together with accrued interest and fees, to be immediately due and
payable.
Events of Default. In
addition to certain customary events of default, events of default under the New
Credit Facilities include the Borrower’s failure to pay principal or interest
when due, a material breach of any representation or warranty contained in the
loan documents, covenant defaults, events of bankruptcy and a change of
control.
This
summary is not a complete description of all of the terms of the New Credit
Facilities and is qualified in its entirety by reference to the credit agreement
set forth in Exhibit 10.1 hereto, and which is incorporated by reference into
this Item 1.01.
Pledge
and Security Agreement
In connection with the New Credit
Facilities, the Borrower and the Guarantors entered into a Pledge and Security
Agreement, dated as of April 6, 2010, with Barclays Bank PLC, as collateral
agent, pursuant to which the obligations under the New Credit Facilities and the
guarantees described above are secured by perfected first priority security
interests in all of the Borrower’s and the Guarantors’ tangible and intangible
assets, including, but not limited to, pledges of the equity interests of the
Borrower and all of its subsidiaries.
The Pledge and Security Agreement is
filed as Exhibit 4.1 and is incorporated herein by reference into this Item
1.01.
Issuance
of Senior Notes Due 2018 and Execution of Related Indenture
Maturity and Interest. On
April 6, 2010, Radnet Management, Inc. (the “Issuer”), the Company
and the guarantors described below entered into an indenture agreement (the
“Indenture”)
with U.S. Bank National Association as trustee, governing the issuance of $200
million aggregate principal amount of 10⅜% senior
notes due 2018 (the “Notes”) that were
offered and sold pursuant to a private placement. The Notes will
mature on April 1, 2018, and bear interest at the rate of 10⅜% per
year. The Issuer will pay interest on the Notes on April 1 and
October 1, commencing October 1, 2010.
Guarantors. All payments of
the Notes, including principal and interest, are guaranteed jointly and
severally on a senior unsecured basis (the “Guarantees”) by the
Company and all of its current and future domestic wholly-owned restricted
subsidiaries (the “Guarantors”).
Ranking. The Notes and the
Guarantees will be the Issuer’s and each of Guarantor’s respective unsecured senior
obligations and will:
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rank
equally in right of payment with any existing and
future unsecured senior
indebtedness of the Guarantors;
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rank
senior in right of payment to all existing and future subordinated
indebtedness of the Guarantors;
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be
effectively subordinated in right of payment to any secured indebtedness
of the Guarantors (including indebtedness under the New Credit Facilities)
to the extent of the value of the assets securing such indebtedness;
and
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be
structurally subordinated in right of payment to all existing and future
indebtedness and other liabilities of any of the Issuer’s subsidiaries
that is not a guarantor of the
Notes.
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Optional Redemption. The
Issuer may redeem the Notes, in whole or in part, at any time on or after April
1, 2014, at the redemption prices specified under the
Indenture. Prior to April 1, 2013, the Issuer may redeem up to 35% of
aggregate principal amount of the Notes issued under the Indenture from the net
proceeds of one or more equity offerings at a redemption price equal to 110.375%
of the Notes redeemed, plus accrued and unpaid interest, if any. The
Issuer is also permitted to redeem the Notes prior to April
1, 2014, in whole or in part, at a redemption price equal to 100% of the
principal amount redeemed, plus a make-whole premium and accrued and unpaid
interest, if any.
Change of Control and Asset Sales.
If a change in control of the Issuer occurs, the Issuer must give holders
of the Notes the opportunity to sell their Notes at 101% of their face amount,
plus accrued interest. If the Company or one of its restricted
subsidiaries sells assets under certain circumstances, the Issuer will be
required to make an offer to purchase the Notes at their face amount, plus
accrued and unpaid interest to the purchase date.
Restrictive Covenants. The
Indenture contains covenants that limit, among other things, the ability of the
Company and its restricted subsidiaries, including the Issuer, to:
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pay
dividends or make certain other restricted payments or
investments;
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incur
additional indebtedness and issue preferred
stock;
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create
liens (other than permitted liens) securing indebtedness or trade payables
unless the notes are secured on an equal and ratable basis with the
obligations so secured, and, if such liens secure subordinated
indebtedness, the notes are secured by a lien senior to such
liens;
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sell
certain assets or merge with or into other companies or otherwise dispose
of all or substantially all of our
assets;
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enter
into certain transactions with
affiliates;
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create
restrictions on dividends or other payments by our restricted
subsidiaries; and
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create
guarantees of indebtedness by restricted
subsidiaries.
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However,
these limitations are subject to a number of important qualifications and
exceptions, as described in the Indenture.
This
summary is not a complete description of all of the terms of the Notes and is
qualified in its entirety by reference to the Indenture filed as Exhibit 4.2
hereto, and which is incorporated by reference into this Item 1.01.
Registration
Rights Agreement
In
connection with the sale of the Notes, the Company, the Issuer and the
Guarantors entered into a Registration Rights Agreement, dated as of April 6,
2010, with the representatives of the initial purchasers of the
Notes. Pursuant to the registration rights agreement, the Company,
the Issuer and the Guarantors have agreed to file a registration statement in
connection with, and consummate, an exchange offer enabling holders of the Notes
to exchange these Notes for publicly registered exchange notes with nearly
identical terms. If the Company, the Issuer and the Guarantors do not
comply with their registration obligations, the Issuer will be required to pay
liquidated damages to holders of the Notes in specified situations.
The
Registration Rights Agreement is filed as Exhibit 4.3 and is incorporated herein
by reference into this Item 1.01.
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Item 1.02
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Termination of a Material
Definitive Agreement
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In
connection with the issuance of the Notes and entering into the New Credit
Facilities, the Company used the net proceeds from the Notes offering and New
Credit Facilities to repay all outstanding amounts under the Company’s existing
first lien term loan for $242.6 million in aggregate principal amount
outstanding, which would have matured on November 15, 2012, and the Company’s
existing second lien term loan for $170.0 million in aggregate principal amount
outstanding, which would have matured on November 15, 2013.
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Item 2.03
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Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement of a
Registrant
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The information set forth in Item 1.01
of this Current Report on Form 8-K is incorporated herein by reference into this
Item 2.03.
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Item 2.04
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Triggering Events That Accelerate
or Increase a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet
Arrangement
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The information set forth in Items 1.01
and 1.02 of this Current Report on Form 8-K is incorporated herein by reference
into this Item 2.04.
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Item 3.03
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Material Modification to Rights
of Security Holders
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Each of the Indenture and the New
Credit Agreement contains a covenant that, among other things, restricts the
Company’s and its subsidiaries’ and certain of its affiliates’ ability to pay
dividends and distributions or redeem and repurchase capital
stock. The information set forth in Item 1.01 of this Current Report
on Form 8-K is incorporated herein by reference into this Item
3.03.
On April 6, 2010. the Company issued a
press release announcing the completion of its Notes offering and entry into the
New Credit Agreement.
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Item 9.01
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Financial Statements and
Exhibits
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(d)
Exhibits
Exhibit
4.1 – Pledge and Security Agreement, dated as of April 6, 2010, among each of
the grantors party thereto and Barclays Bank PLC.
Exhibit
4.2 – Indenture, dated as of April 6, 2010, among Radnet Management, Inc.,
RadNet, Inc. and the other guarantors party thereto and U.S. Bank National
Association, as trustee.
Exhibit
4.3 – Registration Rights Agreement, dated as of April 6, 2010, among RadNet,
Inc., the other guarantors party thereto, and Deutsche Bank Securities Inc., as
representative of the several initial purchasers of the Notes.
Exhibit
10.1 – Credit and Guaranty Agreement, dated as of April 6, 2010, among Radnet
Management, Inc., as borrower, RadNet, Inc., certain subsidiaries and affiliates
of Radnet Management, Inc., as guarantors, Barclays Capital, Deutsche Bank
Securities Inc., GE Capital Markets, Inc. and Royal Bank of Canada, as joint
bookrunners and joint lead arrangers, Deutsche Bank Securities Inc. and General
Electric Capital Corporation, as co-syndication agents, RBC Capital Markets, as
documentation agent, and Barclays Bank PLC, as administrative agent and
collateral agent.
Exhibit
99.1 – Press Release, issued by RadNet, Inc. on April 6, 2010.
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 hereunto
duly authorized.
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Date:
April 6, 2010
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RadNet,
Inc.
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By:
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/S/ Jeffrey
L. Linden
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Name:
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Jeffrey
L. Linden
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Title:
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Executive
Vice President and General Counsel
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EXHIBIT
INDEX
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Exhibit
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4.1
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Pledge
and Security Agreement, dated as of April 6, 2010, among each of the
grantors party thereto and Barclays Bank PLC.
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4.2
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Indenture,
dated as of April 6, 2010, among Radnet Management, Inc., RadNet, Inc. and
the other guarantors party thereto and U.S. Bank National Association, as
trustee.
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4.3
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Registration
Rights Agreement, dated as of April 6, 2010, among RadNet, Inc., the other
guarantors party thereto, and Deutsche Bank Securities Inc., as
representative of the several initial purchasers of the
Notes.
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10.1
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Credit
and Guaranty Agreement, dated as of April 6, 2010, among Radnet
Management, Inc., as borrower, RadNet, Inc., certain subsidiaries and
affiliates of Radnet Management, Inc., as guarantors, Barclays Capital,
Deutsche Bank Securities Inc., GE Capital Markets, Inc. and Royal Bank of
Canada, as joint bookrunners and joint lead arrangers, Deutsche Bank
Securities Inc. and General Electric Capital Corporation, as
co-syndication agents, RBC Capital Markets, as documentation agent, and
Barclays Bank PLC, as administrative agent and collateral
agent.
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99.1
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Press
Release, issued by RadNet, Inc. on April 6, 2010 (this exhibit is
furnished and not filed).
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