American Shared Hospital Services Enters Credit Amendment; $2M Subordinated Note

What Happened

• On July 22, 2026, American Shared Hospital Services (AMERICAN SHARED HOSPITAL SERVICES, “the Company”) entered a Third Amendment to its Credit Agreement with Fifth Third Bank that (i) provides lender forbearance on certain defaults through June 30, 2027, and (ii) imposes cash, reporting and operational restrictions on the Company.
• The Company also closed a $2,000,000 subordinated Promissory Note with RCS/TIG Holdings LLC (managed by Board member Raymond Stachowiak). The note bears 10% interest (capitalized) and matures July 21, 2027; the proceeds were deposited into a blocked account required by the Credit Agreement. A warrant to purchase 220,000 shares at $1.45/share was issued.

Key Details

• Forbearance/Standstill: Lender agreed not to exercise certain remedies for Events of Default identified previously, from July 22, 2026 through June 30, 2027, unless forbearance termination events occur. During the Standstill Period certain covenants (Minimum Unrestricted Cash, Fixed Charge Coverage Ratio, Total Funded Debt) are suspended.
• Borrower restrictions and payments: No new revolving advances allowed; monthly prepayment of obligations from Excess Cash Flow above $5,000,000; monthly interest on Term Loan and Delayed Draw Term Loan starting July 22, 2026; quarterly principal payments beginning Oct 10, 2026 — $125,000 on the Term Loan and $75,000 on the Delayed Draw Term Loan.
• Collateral and cash controls: Company must keep at least $2,000,000 in Qualifying Subordinated Debt proceeds in a blocked account with the lender; limits third‑party account balances and requires weekly account certificates and cash flow forecasts; restrictions on investments, capital expenditures and certain foreign transactions (with a specific carve‑out for an ASHS Mexico Gamma Knife purchase up to $2.0M).
• Subordinated note and warrant: $2,000,000 promissory note at 10% interest (interest capitalized), secured by Company assets but subordinated to the lender; warrant exercisable through July 21, 2027 for up to 220,000 shares at $1.45; intercreditor agreement limits subordinated lender rights. The transaction was reviewed and approved by the disinterested directors and Audit Committee.

Why It Matters

• The amendment reduces the immediate risk of lender enforcement by obtaining a defined forbearance period, giving the Company time to pursue a sale or other restructuring actions required under the amendment.
• It increases near‑term liquidity via a $2M subordinated loan but adds tighter cash controls, mandatory repayments from excess cash flow, scheduled loan payments and limits on operations that could constrain flexibility.
• Investors should monitor the Company’s cash levels, compliance with the amendment’s reporting and milestone requirements, progress on any asset sale, and potential dilution if the warrant is exercised; if the standstill ends or is terminated, all obligations become immediately due.

Exhibits filed include the Third Amendment, the Note and Warrant Purchase Agreement, and the Promissory Note and Security Agreement (see 8‑K exhibits).