OnCure Holdings Inc., the bankrupt provider of services to cancer clinics, agreed to sell itself at a court-supervised auction with a $125 million initial bid from Radiation Therapy Services Inc.
Unless another offer tops the so-called stalking-horse bid, Radiation Therapy is required to complete the deal by Oct. 25, according to documents in U.S. Bankruptcy Court in Wilmington, Delaware.
Under proposed bidding rules, OnCure agreed to pay Radiation Therapy a $1 million breakup fee and as much as $2 million for expenses should another investor win the auction.
The rules “will ensure a competitive and fair bidding process,” OnCure said in court documents filed June 22.
Radiation Therapy agreed to pay $42.5 million in cash and assume debt of $82.5 million, OnCure said in a statement.
OnCure, based in Englewood, Colorado, filed for bankruptcy earlier this month blaming cuts in federal health-insurance payments. At the time, the company said it planned to sell itself to an undisclosed buyer.
Radiation Therapy is owned by Vestar Capital Partners, a New York-based private-equity firm, according to a March 2012 regulatory filing.
The bidding rules and the auction winner must be approved by U.S. Bankruptcy Judge Kevin Gross. The company didn’t say when it would hold the auction.
OnCure listed assets of $179.3 million and debt of $250.4 million in its Chapter 11 filing. OnCure began seeing fewer patients in 2011 and on Jan. 1, the government-run Medicare and Medicaid programs cut reimbursement rates by 7 percent, Chief Executive Officer Bradford Burkett said in a declaration filed June 15.
OnCure is at least the third health-care company to file for bankruptcy with $200 million or more in debt since April. Rotech Healthcare Inc. (ROHIQ:US), a provider of home respiratory products, and Sound Shore Medical Center of Westchester, an affiliate of New York College of Medicine, also blamed Medicare cuts for their bankruptcies.
OnCure employs 370 people and provides services to 32 radiation-treatment centers in Florida and California and one in Indiana. GenStar Capital LLC took over the company in 2006 and owns more than 70 percent of it, according to court records.
The case is In re OnCure Holdings, Inc., 13-bk-11540, U.S Bankruptcy Court, District of Delaware (Wilmington).
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