LifeCare Holdings, Inc. Announces Year-e...(the CMS regulatory changes and the incre...),Health

Liquidity and Capital Resources

At December 31, 2007, our outstanding indebtedness consisted of $147.0 million aggregate principal amount of senior subordinated notes due 2013, and a $249.3 million term loan facility that matures in 2012.

The senior secured credit facility requires us to comply on a quarterly basis with certain financial covenants, including an interest coverage ratio test and a maximum leverage ratio test, which will become more restrictive over time. In addition, the senior secured credit facility includes various negative covenants, including limitations on indebtedness, liens, investments, permitted businesses, restricted payments, transactions with affiliates and other matters, as well as certain customary representations and warranties, affirmative covenants and events of default including payment defaults.

The interest rates per annum applicable to loans, other than swingline loans, under our senior secured credit facility, as amended are, at our option, equal to either an alternate base rate or an adjusted LIBOR rate for a one-, two-, three- or six-month interest period, or a nine- or twelve-month period if available, in each case, plus an applicable margin. The applicable margins on the loans, as amended, as of December 31, 2007 are (1) 3.25% for alternate base rate revolving loans, (2) 4.25% for adjusted LIBOR revolving loans, (3) 3.25% for alternate base rate term loans, and (4) 4.25% for adjusted LIBOR term loans. These margins are subject to reduction based upon the ratio of our total indebtedness to our consolidated adjusted EBITDA (as defined in the credit agreement governing our senior secured credit facility, as amended). At December 31, 2007, the interest rate applicable to the $249.9 millio
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