Rochester Mayor Tom Richards answered reporters' questions this morning about Rural/Metro's bankruptcy (see video below). The city's ambulance provider recently filed for Chapter 11 bankruptcy protection.
Richards' comments came after an unrelated press conference in which Richards was endorsed for re-election by the Rochester Teachers Association.
Rural/Metro has released its own statement. You can read that below the video:
SCOTTSDALE, Ariz. (Aug. 4, 2013) – Rural/Metro Corporation, a national provider of private ambulance and fire protection services in 21 states and nearly 700 communities, today announced that it has reached an agreement-in-principle on a comprehensive financial restructuring plan that will strengthen the Company’s balance sheet by reducing its funded indebtedness by approximately 50 percent via a conversion of certain debt to equity and cutting its interest expenses in half.
The financial restructuring process will help ensure that Rural/Metro can continue to invest in its business, meet the needs of customers, patients and communities and further improve service. Operations are expected to continue as normal throughout the process.
Scott A. Bartos, Rural/Metro’s new President and Chief Executive Officer, said, “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. The significant infusion of new capital by our lenders underscores their confidence in the value of our business, and will help ensure that we have a strong financial footing to resume growth and investment while honoring our agreements and continuing to provide outstanding service and patient care.”
Mr. Bartos continued, “We remain committed to serving our clients and communities, maintaining our relationships with vendors and supporting our employees whose hard work and dedication are critical to our success. We expect to move through this process quickly and to be a stronger, more competitive and more profitable organization.”
Rural/Metro noted that its capital structure was created under different economic circumstances, and making interest payments on the debt while at the same time investing in operations was more than the Company’s earnings could support. Rural/Metro reached the agreement-in-principle on the terms of a prearranged financial restructuring plan with the majority of its senior lenders and approximately two-thirds of its bondholders. To implement the plan, Rural/Metro has elected to file Chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware. The Company intends to use the process to significantly reduce its debt, renegotiate unprofitable contracts and free up capital for investments to strengthen its business and further improve patient care. The agreement reached includes a significant cash investment from the Company’s bondholders to comprehensively address the Company’s capital expenditure needs and ensure the Company continues to provide industry-leading emergency services to its customers. Rural/Metro anticipates completing its restructuring in the fourth quarter of 2013.
In conjunction with the filing, Rural/Metro has received a commitment for $75 million in debtor-in- possession financing (“DIP Financing”) from certain of the Company’s secured lenders. Following Court approval, this financing, combined with cash generated by the Company’s ongoing operations, will provide Rural/Metro with sufficient liquidity to meet its operational and restructuring needs. The Company’s bondholders have committed to invest $135 million additional dollars of new equity in the fourth quarter of this year to complete the financial restructuring and position the Company for renewed growth.
Court filings and other documents concerning the restructuring process are available on a dedicated website administered by Rural/Metro’s claims agent, Donlin, Recano & Company, Inc., at www.donlinrecano.com/rmc. In addition, you can contact the claims agent directly by calling Rural/Metro’s restructuring hotline at 212-771-1128.
Willkie Farr & Gallagher LLP and Young Conaway Stargatt & Taylor, LLP are serving as legal counsel, Lazard Frères & Co. L.L.C. is serving as investment banker, and Alvarez & Marsal and FTI Consulting, Inc. are serving as financial advisors to Rural/Metro.