Daily News: May 30, 2017

WSFS, Morgan Stanley Provide 21st Century Oncology DIP Financing


21st Century Oncology Holdings, a global provider of integrated cancer care services, intends to implement a balance sheet restructuring through a Chapter 11 process in the U.S. Bankruptcy Court in the Southern District of New York.

The company reached an agreement 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 in debtor-in-possession working capital from a group of investors.

According to related court documents, Wilmington Savings Fund Society served as an administrative and collateral agent for 21st CO’s MDL credit agreement dated March 6, 2017, and Morgan Stanley has served as administrative agent, collateral agent, issuing bank and swingline lender for the company’s April 30, 2015 credit agreement.

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.

Upon emergence from the Chapter 11 process and subject to certain conditions, certain of 21st 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.

Millstein is acting as financial advisor to 21st 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.

“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,” said Paul Rundell, the company’s interim CEO.

“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.”