Rural/Metro Corp., a nationwide ambulance operator owned by Warburg Pincus LLC, won court approval of bankruptcy financing to help fund operations as it seeks to complete a restructuring by year-end.
U.S. Bankruptcy Judge Kevin J. Carey granted the company permission to borrow as much as $40 million on an interim basis from its existing lenders at a hearing today in Wilmington, Delaware. The company will seek approval of the remaining $35 million of the $75 million loan at an Aug. 28 hearing.
Rural/Metro worked out a proposed restructuring deal before bankruptcy with a majority of its lenders and noteholders that would cut its $735 million in funded debt by about half, according to court documents.
Under a timetable in a support agreement with creditors, the reorganization plan needs approval by Dec 20, court papers show. About 75 percent of noteholders and about 51 percent of lenders have pledged support for the deal, Rachel C. Strickland, a lawyer for the company, said after the hearing.
Rural/Metro provides ambulance and firefighting services to about 700 communities in 21 states, according to its website. It offers industrial fire protection to airports, oil refineries and manufacturing plants. FedEx Corp. (FDX:US), Citgo Petroleum Corp. and Textron Inc.’s Bell Helicopter are among its customers.
The company, based in Scottsdale, Arizona, listed more than $500 million in both assets and debt in Chapter 11 papers filed Aug. 4 in U.S. Bankruptcy Court in Wilmington, Delaware.
The company said it sought bankruptcy protection in part because it “experienced significant challenges and disruptions operating its billing and collections functions,” which resulted in “reduced revenue and delayed cash collections.”
Warburg Pincus, the New York-based investment firm, bought Rural/Metro in July 2011 for about $676.5 million, including $236.3 million in debt.
The case is In re Rural/Metro Corp., 13-bk-11952, U.S. Bankruptcy Court, District of Delaware (Wilmington).
-- Editors: Charles Carter, Mary Romano
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