In a motion to restructure its finances in the US, Invacare filed for Chapter 11 bankruptcy to strengthen its position for the long term.
Invacare Corporation, manufacturer and distributor of medical equipment used in non-acute care settings, announced that it has voluntarily filed for Chapter 11 bankruptcy to strengthen the company and position it for long-term success.
To facilitate its financial restructuring, the company has entered into a Restructuring Support Agreement (RSA) with substantially all of its debt holders, including its term loan lender, all of the holders of convertible senior secured notes, and holders of a majority of its convertible senior unsecured notes.
The agreement provides a significant reduction of the company’s debt balance and substantial new money investment, enhancing the company’s liquidity and enabling it to invest for future growth.
Specifically, the transactions agreed to in the RSA contemplate substantially reducing the company’s funded debt by approximately $240 million. In addition, the RSA includes a backstop for a rights offering to holders of claims on account of the company’s unsecured notes and holders of general unsecured claims, providing the company with $60 million of equity capital to repay certain of its debt obligations and facilitate the company’s transformation plan.
Invacare and two of its US-based subsidiaries commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas. Invacare’s other businesses throughout the rest of the world remain strong and are not included in these filings. The company does not anticipate these filings to impact its ability to manufacture and deliver products to its customers globally.
“The actions announced today mark a big step forward for Invacare. Having the full support of our secured term loan lender and a majority of our convertible noteholders will enable the prearranged filings to proceed efficiently,” said Geoff Purtill, president and chief executive officer at Invacare. “The company expects to emerge with significantly less debt on its balance sheet and will secure additional liquidity to support long-term growth.”
Upon emergence from Chapter 11, the company expects to be financially positioned to seize opportunities and capitalize on a significant upward shift in market demand. The company intends to deliver improved profitability and free cash flow in 2023 and beyond while building on its legacy as a leader and innovator in the lifestyle, mobility, and seating markets.
“Invacare has the right leadership, vision, and the financial commitment from the sponsorship group to succeed, and we are confident that this Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilize liquidity but also de-lever the balance sheet and better position Invacare for future growth,” said Steven Rosen, CEO of Azurite Management, the largest shareholder of Invacare.