Insight Imaging to restructure floating-rate notes via Chapter 11 plan

By Caroline Salls

Pittsburgh, Dec. 2 - InSight Health Services Holdings Corp. (Insight Imaging) has reached an agreement in principle with holders of a significant majority in principal amount of its outstanding senior secured floating-rate notes due 2011 regarding a restructuring of the notes, according to a company news release.

As a result, the company has entered into a restructuring support agreement under which the noteholders will support a jointly agreed pre-packaged plan of reorganization to be filed with a bankruptcy court.

Under the terms of the plan, all of the notes will be exchanged for all of the common stock of the reorganized company upon InSight's exit from bankruptcy, resulting in the elimination of 100% of the notes from the company's balance sheet.

The supporting noteholders have also agreed to support a debtor-in-possession financing facility. InSight said it is in talks with current revolving credit facility administrative agent Bank of America, NA regarding the DIP facility.

In addition, Insight Imaging announced that holders of more than 75% of the outstanding principal amount of the notes, the indenture trustee and the collateral agent have agreed not to exercise their rights related to defaults stemming from the company's failure to make a Nov. 1 interest payment and the expiration of the 30-day grace period for making the payment.

The forbearance period will run through Dec. 10, by which the company said it expects to have filed its pre-packaged plan.

Bank of America has also extended the forbearance agreement under the company's revolver to Dec. 15 from Dec. 1.

"This restructuring is being undertaken to eliminate more than $290 million of debt, substantially improving our cash and liquidity position," Insight Imaging president and chief executive officer Kip Hallman said in the release.

"We intend to complete the reorganization as quickly as possible. In the meantime, we will continue to operate our business as usual to provide quality services to our customers and our patients.

"We look forward to emerging as a much stronger business, with a capital structure that will enable us to maximize the long-term value of the company."

InSight is a Lake Forest, Calif., provider of diagnostic imaging services.

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