LCI Holdco, LLC, parent company of LifeCare Holdings, has reached an agreement to be acquired by Hospital Acquisition LLC, an acquisition vehicle owned by LifeCare's senior secured lenders. The transaction will strengthen the company's financial health and allow future growth of LifeCare's business.
"The agreement will allow us to dramatically improve our debt structure and enhance our ability to pursue strategic growth opportunities," said LifeCare Holdings chairman and chief executive officer Phillip B. Douglas. "Most importantly, our relationships with referring hospitals and physicians in the communities we serve will continue as normal, as does our commitment to providing compassionate, high quality care to patients recovering from catastrophic illness or injury.
"Thanks to the dedication of our medical staffs and employees, we have been very successful in recent years in maintaining our focus on clinical excellence and outcomes while strengthening our day-to-day operations," Douglas said. "With this restructuring of our corporate debt, our financial position will better reflect the clinical strength and success we've achieved on the hospital level."
To implement the proposed transaction, the company, its wholly-owned direct and indirect subsidiaries and certain affiliates filed Chapter 11 cases in the United States Bankruptcy Court for the District of Delaware. The company has entered into a commitment for a $25 million debtor in possession financing facility arranged by JPMorgan Chase, which is subject to court approval. Additionally, the company enters the Chapter 11 process with ample liquidity, having approximately $20 million of cash on hand. The company has requested an initial hearing before the Bankruptcy Court on December 13, 2012 at which it anticipates receiving Court approval to, among other things, honor and pay employee benefits in the ordinary course. The Chapter 11 filings will have no impact on the relationships between the affiliated hospitals and their medical staffs and payors.
In connection with the sale, the company will be seeking approval of procedures to facilitate other potential interested parties' participation in a Court-supervised sale process.
In addition to Court approval, closing of the transaction is subject to the satisfaction of usual and customary conditions, including obtaining all necessary regulatory consents, which the company expects will be substantially completed within six months.
LifeCare, based in Plano, TX, currently operates 27 long term acute care hospitals located in ten states. Long-term acute care hospitals specialize in the treatment of medically complex patients who typically require extended hospitalization.