Rural/Metro reduces debt by 50%, emerges from Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Dec. 31 - Rural/Metro Corp. emerged from Chapter 11 bankruptcy on Dec. 31 as a reorganized company, according to a news release.

As previously reported, Rural/Metro's plan of reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware on Dec. 17.

Through its financial restructuring, the company said it reduced its financial debt by about 50%.

In addition, Rural/Metro's bondholders will provide it with a $135 million new equity capital infusion through a rights offering to help position the company for renewed growth.

The rights offering capital will be used to pay all debtor-in-possession financing claims in full in cash and fund other plan payments, including the $50 million prepayment of secured lender claims. The capital will also be used for ordinary course operations and general corporate purposes of reorganized Rural/Metro.

"As a stronger and more competitive company, we will continue to invest in infrastructure and technology and advance our commitment to providing state-of-the-art medical transportation and fire services," president and chief executive officer Scott A. Bartos said in the release.

Treatment of creditors under the confirmed plan includes:

• DIP financing claims, administrative expense claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• The company's senior secured credit facility will be paid down by $50 million. Holders of secured lender claims will also receive a share of a cash payment for secured lender fee claims.

Holders of claims for revolving loans will also receive a share of converted term loan obligations, and holders of term loan claims will receive a share of existing term loan obligations;

• The company's senior notes will be converted into 100% of the common stock of the holding company, subject to dilution by warrants and by a management incentive plan;

• Holders of other unsecured claims will have the option to receive either a share of 100% of the new common stock or a share of other unsecured cash; and

• Existing common stock interests will be canceled, and holders of those interests and existing securities laws claims will receive no distribution.

Rural/Metro, a Scottsdale, Ariz.-based provider of emergency and non-emergency ambulance services and private fire protection, filed for bankruptcy on Aug. 5. The Chapter 11 case number is 13-11952.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.