Alliance Imaging announces sale and partial retirement of senior secured notes; will report one-time gain.ORANGE, Calif.--(BUSINESS WIRE)--Nov. 7, 1996-- Various Restrictive Covenants Restrictive covenants Provisions that place constraints on the operations of borrowers, such as restrictions on working capital, fixed assets, future borrowing, and payment of dividends. Removed/Modified Alliance Imaging Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SCAN), the nation's leading provider of hospital-based fixed-site and mobile magnetic resonance imaging magnetic resonance imaging (MRI), noninvasive diagnostic technique that uses nuclear magnetic resonance to produce cross-sectional images of organs and other internal body structures. (MRI 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. ) and computed tomography Computed tomography (CT scan) X rays are aimed at slices of the body (by rotating equipment) and results are assembled with a computer to give a three-dimensional picture of a structure. (CT) services, on Thursday announced that all of its 7.5 percent senior secured notes due in 2003 have been sold by the existing holders to new owners. In addition, the company announced that it prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $5.3 million of the principal amount of the notes at a substantial discount, leaving $20.1 million in principal amount of the notes outstanding. As a result, the company will report an extraordinary gain in the fourth quarter of approximately $1.24 million, or 11 cents per common share, from this early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate.Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. In connection with the sale of the notes, the new holders and the company agreed to the removal or modification of various restrictive covenants contained in the note purchase agreement governing the notes. Alliance initiated this transaction and structured its primary terms. Richard N. Zehner, chairman, president and chief executive officer, stated: "This is a very significant and favorable event for Alliance Imaging. Not only have we realized a gain on the transaction and increased our shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. , but through the partial retirement of the debt, we have improved our debt-to- capitalization ratio." Zehner added, "Additionally, the elimination or modification of various restrictive covenants, including those limiting our ability to grow due to constraints on capital equipment purchases and making acquisitions, may provide management with more flexibility to take advantage of attractive business opportunities." The company noted, however, that to realize the benefits of the covenant modifications, it will be necessary to obtain substantially similar modifications to the nearly identical provisions of its 7.5 percent senior subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before . The company intends to immediately initiate discussions with the holders of its senior subordinated debentures with the view toward obtaining modifications or elimination of these restrictive covenants. However, there can be no assurance that the company will be able to obtain any modifications, or do so on terms acceptable to the company. Alliance Imaging is the leading provider of comprehensive diagnostic imaging and related management services to hospitals and other healthcare providers. Services are provided on either a mobile, shared-user basis or on a full-time single-user basis. The company currently operates its fleet of MRI and CT systems nationwide. CONTACT: Alliance Imaging Inc. Terrence M. White, Senior Vice President 714/921-5656 or Allen & Caron Inc/South Coast Communications Group Marty Tullio (investors) Owen Daley (media) 714/252-8440 |
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