Carestream Health is taking the planned next step to implement the previously announced recapitalization process with its lenders by voluntarily filing for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Company’s lenders have overwhelmingly voted in favor of a “prepackaged” restructuring plan, which contemplates implementing the agreed recapitalization that has been filed with the Court. The recapitalization contemplated by the prepackaged plan will eliminate approximately $470 million of debt, representing a total debt reduction of $250 million more than the Company’s previously announced recapitalization agreement. This process will significantly strengthen Carestream’s balance sheet and position the Company for continued success.
Carestream expects to continue operating normally throughout the court-supervised process and remains focused on serving its customers and working with suppliers on normal terms. With the overwhelming support of its lenders, the Company expects to move through this process on an expedited basis and complete the recapitalization in approximately 35-45 days. Certain of the Company’s existing lenders have committed to provide a $80 million debtor-in-possession financing facility to reinforce the Company’s liquidity and fund the costs of the process. Carestream entities outside the United States are not part of the Chapter 11 process and are operating as normal.
“We are commencing the final stage of our recapitalization process, which will significantly enhance our ability to navigate a dynamic market,” David C. Westgate, chairman, president and CEO of Carestream, said. “Since announcing our recapitalization process in April, our lenders have remained overwhelmingly supportive, and we have worked constructively with them to complete the transaction. As our talks evolved, we determined the best course of action was to implement the agreement through an expedited court-supervised process. With a clear path to completion, we expect to emerge from this process as a stronger partner to our customers, with significantly reduced debt and new owners who also continue to believe in the future of Carestream.”
“Carestream has strong market opportunities ahead,” Westgate said. “I am confident in the strength of our core business and our ability to maintain market leadership moving forward. I would like to thank our customers and partners for their unwavering support. I also want to thank our talented team across the globe, whose commitment to serving our customers has been steadfast throughout this process.”
Carestream has filed customary motions with the court seeking authorization to support its operations during this process. The company expects suppliers to be unimpaired by this process and intends to pay suppliers in full for goods and services provided before, on or after the Chapter 11 filing date.
Kirkland & Ellis is serving as the company’s legal counsel, Houlihan Lokey Capital is serving as its financial advisor and AlixPartners is serving as its restructuring advisor.
Akin Gump Strauss Hauer & Feld and GLC Advisors are serving as legal counsel and financial advisor, respectively, to a group of the company’s first lien and second lien lenders.
