21st Century Oncology Holdings (f/k/a Radiation Therapy Services Holdings) and more than 50 affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 17-22770. The Company, which operates cancer treatment centers, is represented by Christopher Marcus of Kirkland & Ellis. The Company also announced that it has reached an agreement in principle with its senior lenders and bondholders on the terms of a comprehensive debt restructuring that is expected to reduce the Company’s long-term net debt by more than $500 million, including a new cash equity infusion of $75 million from a group of investors. Once implemented, the debt restructuring will improve the Company’s financial flexibility and enhance its ability to work with its physician and hospital partners.
Paul Rundell, 21st Century Oncology Holdings’ Interim C.E.O., comments, “We are a fundamentally strong and profitable business; however, we simply have too much debt given the size of the business and the way industry dynamics, particularly the challenging reimbursement environment, have affected our ability to maximize revenue in the aftermath of these unprecedented, ongoing changes. As a result, in recent months we have been engaged in discussions with our key creditors to reduce our overall debt level. We are encouraged by the progress we’ve made in these advanced discussions and are optimistic that we can finalize the restructuring agreement in short order. We expect it to form the basis of a consensual Plan of Reorganization that gives us the necessary flexibility to make investments that will allow us to remain at the forefront of patient care, which is always our top priority.”
In conjunction with the Chapter 11 filing, certain of 21st Century Oncology Holdings’ senior lenders have committed to provide up to $75 million in working capital through debtor-in-possession financing. Upon Court approval, the D.I.P. facility, together with the Company’s available cash reserves and cash provided by operations, is expected to provide sufficient liquidity for the Company to continue operating its business without interruption and to meet its obligations. Upon emergence from the Chapter 11 process and subject to certain conditions, certain of 21st Century Oncology Holdings’ creditors will contribute $75 million of cash equity in the reorganized company.
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