Clinical Care Will Continue without Interruption and with No Expected Impact on Patients, Physicians, Hospitals, Joint Venture Partners or Employees
Obtained Commitment from Lenders to Provide $75 million in Cash
Restructuring to be Implemented through Chapter 11 Process
FORT MYERS, Fla., May 25, 2017 (GLOBE NEWSWIRE) -- 21 st Century Oncology Holdings, Inc. (“21 st CO” or the “Company”), the largest global provider of integrated cancer care services, announced today 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 in providing the best medical healthcare for patients.
“This is a positive development for 21 st Century Oncology and our employees, healthcare partners and the patients who depend on our critical medical services,” said Paul Rundell, the Company’s Interim Chief Executive Officer. “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.”
Chapter 11 Filing
The parties intend to implement the balance sheet restructuring through a Chapter 11 process and today 21 st CO and certain of its U.S. affiliates filed voluntary Chapter 11 petitions to restructure in the U.S. Bankruptcy Court in the Southern District of New York (the “Court”). The Company’s non-U.S. subsidiaries were not included in the filing and are unaffected by the Chapter 11 process.
Business as Usual
During the Chapter 11 process the Company expects to operate its business in the ordinary course, without disruption, and patients can be assured that there will be no change in the way they are treated. Treatment facilities remain open and are operating on normal schedules, and patients’ appointments, treatment schedules and physician partners remain the same.
“Operationally, very little, if anything, should change during the Chapter 11 process,” said Rundell. “Our ability to continue to operate as usual and have no disruption to patients was a critical factor in our decision to use Chapter 11 to implement this debt restructuring.”
As a routine matter, 21 st CO has asked the Court to approve the payment of all employee wages, salaries and benefits in the ordinary course of business and expects the Court to approve this request as soon as possible, ensuring that employees will be paid and benefits will continue without delay.
“The 21 st Century Oncology executive management team and our Board of Directors appreciate the dedication and hard work of our employees and our physician, hospital and joint venture partners,” said Rundell. “We will always be committed to providing the best care possible to patients, and the continued loyalty of our employees and healthcare partners is critical to the long-term success of the Company. I also would like to thank our vendors and suppliers for their continued support during this process.”
DIP Financing and Equity Commitment
In conjunction with the Chapter 11 filing, certain of 21 st CO’s senior lenders have committed to provide up to $75 million in working capital through debtor-in-possession (DIP) financing. Upon approval by the Bankruptcy Court, the DIP 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 21 st CO’s creditors will contribute $75 million of cash equity in the reorganized company. This new cash infusion will be used by the Company to pay off any borrowings under the DIP facility in full and any remaining cash will be used for general corporate purposes.
“This equity commitment by our senior lenders demonstrates their confidence in our business and potential for future success,” said Rundell. “We believe we are taking the necessary steps to allow the Company to invest in key business initiatives and drive future growth. In addition to improving our capital structure, we intend to use the Chapter 11 process to resolve certain legacy litigation liabilities that have been a source of uncertainty. We are confident that this restructuring will be successful and provide us with a fresh start financially and the opportunity to fully focus on our mission of delivering the best healthcare possible to more patients.”
Millstein & Co. is acting as financial advisor to 21 st CO and Alvarez & Marsal Healthcare Industry Group is acting as interim senior management. Kirkland & Ellis is acting as the Company’s legal counsel in connection with the debt restructuring. For more information about the restructuring, please visit http://21co.restructuringinfo.com .
About 21 st Century Oncology Holdings, Inc. 21 st Century Oncology Holdings, Inc. is the largest global provider of integrated cancer care services. The Company offers a comprehensive range of cancer treatment services, focused on delivering academic quality, cost-effective patient care in personal and convenient settings. As of March 31, 2017, the Company operated 179 treatment centers, including 143 centers located in 17 U.S. states and 36 centers located in seven countries in Latin America.
Forward Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. Statements preceded by, followed by or that otherwise include the words “believes”, “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “forecast” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts. Forward-looking statements are based on management’s current expectations or beliefs about the Company’s future plans, expectations and objectives. These forward-looking statements are not historical facts and are subject to risks and uncertainties that could cause the actual results to differ materially from those projected in these forward looking statements including, but not limited to reductions in Medicare reimbursement, healthcare reform, state and federal investigations, claims and litigation matters, decreases in payments by managed care organizations and other commercial payers, liquidity, leverage ratios and compliance with other debt covenants and other risk factors that may be described from time to time in the Company’s filings with the Securities and Exchange Commission. Readers of this release are cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date stated, or if no date is stated, as of the date of this press release. The Company undertakes no obligation to publicly update or revise the forward-looking statements contained herein to reflect changed events or circumstances after the date of this release, unless required by law.
Cautionary Note Regarding the Chapter 11 Cases The Company’s security holders are cautioned that trading in securities of the Company during the pendency of these Chapter 11 cases will be highly speculative and will pose substantial risks. It is possible some or all of the Company’s currently outstanding securities may be cancelled and extinguished upon confirmation of a restructuring plan by the Bankruptcy Court. In such an event, the Company’s security holders would not be entitled to receive or retain any cash, securities or other property on account of their cancelled securities. Trading prices for the Company’s securities may bear little or no relation to actual recovery, if any, by holders thereof in the Company’s Chapter 11 cases. Accordingly, the Company urges extreme caution with respect to existing and future investments in its securities.
Media Contacts Sard Verbinnen & Co. Andrew Cole 212.687.8080 / Steven Goldberg 310.201.2040 21CO-SVC@sardverb.com
