Headline News
American HomePatient to Restructure, Go Private
BRENTWOOD, Tenn. — In a move to avoid bankruptcy, American HomePatient announced last week that it would go private following a restructuring of its debt.
Under an agreement with its lenders, AHP, which operates in 33 states, would reincorporate in Nevada. Then Highland Capital Management, which tried to buy the company in 2006, will offer to buy AHP's outstanding stock for 67 cents a share, according to a press release. Dallas-based Highland Capital currently owns 48 percent of the giant provider's stock.
"We are pleased to have an agreement that provides fair value to our stockholders, extends our relationship with our debt holders, and allows American HomePatient and its employees to continue to focus on providing critical services to our customers," Joseph F. Furlong, AHP president and CEO, said in the April 28 release.
After filing for bankruptcy in 2002, the company emerged from an 11-month reorganization in July 2003 with a plan giving it until 2009 to repay its debt.
But AHP defaulted on a $226 million promissory note when it missed its Aug. 1, 2009, repayment date. Since then, the company has been operating under a series of short-term forbearance agreements with NexBank SSB, a Highland Capital affiliate, in which its lenders agreed not to take any action against the company while negotiating a resolution. The parties had been working under the 10th such agreement, which was due to expire May 16.
According to the release:
If the reincorporation in Nevada is not approved, the tender offer and subsequent debt restructuring will not occur. If the tender offer is completed, the Company's senior secured debt will be restructured with a new four-year term. If the tender offer is not completed, the company will remain in default of its obligations to its senior lenders, the consensual long-term restructuring of the company's debt will not occur, and American HomePatient may make a Chapter 11 bankruptcy filing. The outcome for existing stockholders in any bankruptcy would be highly uncertain.
AHP said stockholders would vote on the plan at its annual meeting June 21.
