Rural/Metro Corp., one of the nation's largest ambulance companies with operations mostly in rural areas in 21 states, has filed for Chapter 11 bankruptcy to restructure its finances and save its business.
The proposed restructuring of the privately held, Scottsdale, Ariz.-based company would reduce both Rural/Metro's $735 million in funded debt, as well as its interest payments, by about half. Since electing not to make a $15.6 million July 15 interest payment on unsecured bonds due in 2019, Rural/Metro has been involved in negotiations with creditors.
According to papers filed in U.S. Bankruptcy Court in Wilmington, Del., on Aug. 4, the conversations and agreements have focused on addressing Rural/Metro's “(overleveraged) balance sheet while simultaneously minimizing the impact” on its ability to continue providing emergency services to its customers.
In the short term, secured lenders would provide $75 million in additional financing in order to help the company stay afloat. Additionally, as part of the reorganization, holders of $308 million in notes—with Wells Fargo Bank as trustee—would have those converted to equity, as all current equity interest would be canceled. And those noteholders who support the restructuring have also agreed to invest another $135 million when Rural/Metro emerges from Chapter 11 bankruptcy.