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Genesis Care Pty Ltd – Global Oncology-Focused Healthcare Business, Majority Owned by State Run China Resources Group and KKR, Files for Bankruptcy with Over $1bn of Debt; Will Look to “Separate” Struggling US Operations (the Former 21st Century Oncology)

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[Just filed. Developing story.] June 1, 2023 – Genesis Care Pty Ltd and 53 affiliated debtors (together “Genesis Care*” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case No. 23-90614 (Judge David R. Jones). The Debtors, "a leading integrated cancer care provider in the United States, Australia, Spain, and the United Kingdom," are represented by Matthew D. Cavenaugh of Jackson Walker LLP. Further Board authorized appointments include: (i) Kirkland & Ellis LLP as general bankruptcy counsel, (ii) Alvarez & Marsal as restructuring advisor, (iii) PJT Partners as investment bankers and (iv) Kroll Restructuring Administration as claims agent.

* The Debtors are 36.4% owned by state run China Resources Group and 30% by KKR (which also owns recent Chapter 11 filer Envision Healthcare), see shareholder table below. Both position are interesting, with KKR initially buying a 49.6% stake in the Debtors in 2012, selling that stake in 2016  and then reinvesting in 2018. The state-controlled China Resources Group, or "CR," acquired its stake as part of KKR's 2016 exit, viewed the acquisition as an opportunity "to expand into China where access to cutting-edge therapies–particularly for cancer–lag because of an approval backlog."

The Debtors’ lead petition notes between 50,000 and 100,000 creditors; estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn. 

In May of 2020, the Debtors closed on their reported $1.5bn acquisition of U.S.- based 21st Century Oncology (itself a bankruptcy survivor, emerging in 2019). Debt incurred to finance that acquisition has proved difficult to refinance in current markets, especially given lackluster operational results at the U.S. subsidiary. The WSJ noted (citing earlier S&P Global downgrades) "rising borrowing costs, sluggish recovery in patient volumes and a slower recovery in the U.S…[and added] ….GenesisCare had $154 million in cash as of September, but its liquidity has been getting worse since then…"

In a press release announcing the filing, the Debtors note that they have embarked on a: "….comprehensive transformation process intended to position the business for long-term growth….As part of the business transformation, GenesisCare intends to explore separation of its U.S. business from its businesses in Australia, Spain, and the UK, creating two platforms. This will enable each of the businesses to grow and operate sustainably and continue to deliver high-quality patient care while maximising value for all stakeholders. 

David Young, the recently appointed Chief Executive Officer of GenesisCare, commented "…the past three years have presented significant operational and financial challenges, requiring a comprehensive restructuring of the operations and balance sheet of the company. We are grateful for the demonstration of confidence in our doctors and our underlying business, represented by the commitment of substantial new financing from the lender group."

DIP Financing

The press release notes that the the Debtors "have secured commitments, subject to Court approval, for a debtor-in-possession (DIP) financing facility providing US$200 million (A$300 million) in new money from existing lenders to support its business operations. This facility will allow GenesisCare to continue meeting its obligations across the entire enterprise―including to patients, doctors, employees, hospital and health service partners and suppliers―while financially restructuring and reorganising the business."

Key Prepetition Shareholders

The Debtors' lead petition notes:

  • Asia Pacific Healthcare Investments Limited [Hong Kong, this is the China Resources Group affiliate]: 36.4%
  • Asia GCMIV Holdings II PTE Ltd. [Singapore, this is the KKR affiliate]: 30.0%
  • Doctors and Doctor Entities: 20.0%
  • Management and Management Entities: 13.6%

About the Debtors

According to the Debtors: “One of the world's largest integrated oncology networks, GenesisCare includes 300+ locations in the U.S., the UK, Australia, and Spain. With investments in advanced technology and expanded access to clinical trials, more than 5,500 highly trained GenesisCare physicians and support staff offer comprehensive, coordinated care in radiation oncology, medical oncology, hematology, urology, diagnostics, and surgical oncology.“

 

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The post Genesis Care Pty Ltd – Global Oncology-Focused Healthcare Business, Majority Owned by State Run China Resources Group and KKR, Files for Bankruptcy with Over $1bn of Debt; Will Look to “Separate” Struggling US Operations (the Former 21st Century Oncology) appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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