Quest Diagnostics 2007 Annual Report Download - page 94

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Receivables Credit Facility are classified as a current liability on the Company’s consolidated balance sheet. At
December 31, 2007 and 2006, borrowings under the facility totaled $100 million and $300 million, respectively.
Interim Credit Facility
On January 31, 2007, the Company entered into an interim credit facility (“Interim Credit Facility”) and
borrowed $450 million to finance the acquisition of HemoCue and to repay substantially all of HemoCue’s
outstanding debt.
Term and Bridge Loan Credit Facilities
On May 31, 2007, the Company entered into a new five-year term loan facility (the “Term Loan due
2012”), pursuant to which it borrowed $1.6 billion, and a $1.0 billion bridge loan facility (the “Bridge Loan”),
pursuant to which it borrowed $780 million. The Company used the proceeds to finance the acquisition of
AmeriPath, and related transaction costs, to repay substantially all of AmeriPath’s outstanding debt and to repay
the $450 million outstanding under the Interim Credit Facility used to finance the acquisition of HemoCue, as
described above.
The Term Loan due 2012 matures on May 31, 2012 and requires principal repayments of 1.25% of the
amount borrowed on the last day of each calendar quarter starting on September 30, 2007, with the quarterly
payments increasing on September 30, 2009 to 2.5% of the amount borrowed and on September 30, 2011 to
17.5% of the amount borrowed, with the remainder of the outstanding balance due on May 31, 2012. The Term
Loan due 2012 is guaranteed by the Subsidiary Guarantors. Interest under the Term Loan due 2012 is based on
certain published rates plus an applicable margin that will vary over a range from 40 basis points to 125 basis
points based on changes in the Company’s public debt ratings. At the Company’s option, it may elect to enter
into LIBOR-based interest rate contracts for periods up to six months. Interest on any outstanding amounts not
covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by
reference to the prime rate or federal funds rate. As of December 31, 2007, the Company’s borrowing rate for
LIBOR-based loans was LIBOR plus 0.50%.
The Company incurred $7 million of costs associated with the Term Loan due 2012, which is being
amortized over the term of the related debt.
AmeriPath Debt
In connection with the acquisition of AmeriPath, the Company repaid substantially all of AmeriPath’s
outstanding debt and related accrued interest, which approximated $780 million, as well as approximately $31
million representing the tender premium and solicitation fees related to the Company’s tender offer and consent
solicitation for $350 million aggregate principal amount of 10.5% Senior Subordinated Notes of AmeriPath, Inc.
due 2013 (“the AmeriPath subordinated senior notes”), which commenced on May 21, 2007.
In conjunction with the cash tender offer, approximately $348 million in aggregate principal amount, or
99.4% of the $350 million of outstanding AmeriPath subordinated senior notes, was tendered. The Company
made payments totaling $386 million to holders of such notes with respect to the cash tender offer and consent
solicitation including tender premium and related solicitation fees and accrued interest.
Industrial Revenue Bonds
In connection with the acquisition of LabOne in November 2005, the Company assumed $7.2 million of
Industrial Revenue Bonds. Principal is payable annually in equal installments through September 1, 2009. Interest
is payable monthly at a rate adjusted weekly based on LIBOR plus approximately 0.08%. At December 31, 2007
and 2006, the rate was 4.9% and 5.4%, respectively. At December 31, 2007 and 2006, the remaining principal
outstanding was $3.6 million and $5.4 million, respectively. The bonds are secured by the Lenexa, Kansas
laboratory facility and an irrevocable bank letter of credit.
F-24
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)