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August 06, 2013 01:00 AM

Ambulance operator Rural/Metro files for bankruptcy

Rachel Landen
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    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.

    Rural/Metro, which serves nearly 700 communities, has been suffering financially due to a decline in revenue brought about by higher rates of uninsured patients as well as a drop in insurance reimbursements. On top of that, the company has been burdened by debt brought on by the firm's 2011 leveraged buyout by New York-based private equity firm Warburg Pincus. Warburg Pincus' $728 million leveraged buyout included $213 million in equity and $515 million in debt.

    Court papers show that Rural/Metro, which reported more than half a billion dollars in assets, will file its reorganization plan by Sept. 15.

    Rural/Metro, which was founded in 1948, provides medical transportation, fire protection and other safety-related services in nearly 700 rural communities, providing more than 1.5 million 911 emergency and hospital-to-hospital transports each year, as well as firefighter responses to more than 63,000 calls annually.

    Follow Rachel Landen on Twitter: @MHrlanden

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        • Midwest
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          • - Luminaries
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          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
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      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
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