Rotech Healthcare explores sale
WILMINGTON, Del. – Under pressure from shareholders, Rotech Healthcare has informed the U.S. Bankruptcy Court that, in addition to its plans to reorganize, the company seeks a buyer.
The company has pursued a sale and “other strategic options” for a number of years, it stated in a May 21 press release.
“We want to take the extra step of continuing our sale process to ensure that we have exhausted every possible source of value for our shareholders,” stated CEO Steve Alsene in the release. “Regardless of which path we follow, we remain steadfast in our commitment to pay trade creditors and vendors in full upon emergence from Chapter 11.”
Rotech now plans to file an amended plan and will seek approval of a disclosure statement on June 13.
The company filed for Chapter 11 bankruptcy on April 8. It also filed a pre-arranged plan of reorganization that converts more than $300 million of the company’s 10.5% secured second lien notes into common equity of the recognized company. Shareholders are expected to receive 10 cents per share.
During recent proceedings in bankruptcy court, a judge gave final approval of Rotech’s $30 million debtor-in-possession financing facility, over the objections of a shareholder committee. The DIP financing allows the company to meet its vendor obligations during the process.
Rotech asked the judge to disband the shareholder committee, which was appointed by the U.S. trustee, a Department of Justice representative overseeing the case, arguing that it was an “abuse of discretion,” according to news reports. The judge ruled that the committee could continue to operate in the case.
Rotech has retained Barclays to oversee the sale process.