AMP bids $14 million for bankrupt Perigon Medical

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Thursday, January 31, 2002

INDIANAPOLIS, Ind. - Associated Medical Products, a distributor that caters to the home care and long-term care market, sat poised last month to pay $14 million to acquire bankrupt Perigon Medical Distribution.

Perigon filed for Chapter 11 bankruptcy protection in November.

Officials from Associated Medical Products (AMP) did not return phone calls. But according to bankruptcy documents: "The price offered by the Purchaser represents the most favorable option. In light of the fact that the offer by the purchaser is the best offer that the Debtors have received for the Assets and in light of the fact that the Debtors have already started losing at least $700,000 in revenue per month, the Debtors assert that the sale of the Assets to the Purchaser, or a successful overbidder, is in the best interest of creditors.

The company has locations in Indianapolis, Ind., Los Angeles, Calif., Atlanta, Ga., Baltimore, Md, Portland, Ore., Eau Claire, Wis., and Milwaukee.

Bids for Perigon were scheduled to be opened Jan. 16.

A quick sale is critical if Perigon's value is not to drop even futurer, say industry watchers. Even as the company loses tens of thousands of dollars a month, customers, leery of doing business with a bankrupt company, continue to file orders with other distributors. The uncertainty has also caused Perigon to lose potential business, according to bankruptcy documents.

"That kind of attrition will strangle you at some point in time, and the value goes down exponentially," said one industry source.
In a letter of intent, Associated Medical Products (AMP) has offered to pay $11 million in cash at closing for Perigon and another $3 million within six months.

Perigon formed in 1996 and through 11 acquisitions built its annual revenue to about $65 million. The highly-leveraged company encountered trouble in 2000 when HME managed-care network Legend Healthcare could not pay Perigon $4 million. Because of that default and an inability to borrow additional money, Perigon violated certain bank covenants and loan agreements. The company could not pay its bills in a timely manner and many suppliers put Perigon on credit hold, resulting in further lost sales and reduced cash coming into the company, according to bankruptcy documents. HME

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