Ambulance operator Rural/Metro Corp, owned by private equity firm Warburg Pincus, filed for Chapter 11 bankruptcy with the aim of cutting its debts after it missed an interest payment in July, Reuters reported citing court filings.
(Reuters) – Ambulance operator Rural/Metro Corp, owned by private equity firm Warburg Pincus, filed for Chapter 11 bankruptcy with the aim of cutting its debts after it missed an interest payment in July, according to court filings.
The Scottsdale, Arizona-based company also intends to renegotiate unprofitable contracts and free up capital for investments through the bankruptcy process, according to the filings.
The provider of private ambulance and fire protection services declared liabilities and assets each worth more than $500 million.
Rural/Metro reached an agreement with both its senior secured and unsecured debt holders to reduce its debt and interest payments by nearly 50 percent.
Bondholders have also agreed to infuse $135 million in new equity financing once Rural/Metro emerges from Chapter 11, according to a filing.
The company has secured debtor-in-financing (DIP) of $75 million, which would help it continue operations during the bankruptcy process.
“This agreement is good news for Rural/Metro and for the clients and communities we serve. We have a solution that keeps our operations moving forward while cutting our debt in half,” Chief Executive Scott Bartos said.
Rural/Metro anticipates completing its restructuring in the fourth quarter of 2013.
In 2011, affiliates of Warburg Pincus bought Rural/Metro for about $438 million in an all-cash deal excluding debt.
The deal was funded by $525 million in new debt financing, with the reminder of the purchase price coming from Warburg’s affiliates.