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LifeCare gets interim approval for cash collateral, $25 million DIP
By Jim Witters
Wilmington, Del., Dec. 13 - LCI Holdco, LLC, parent company of LifeCare Holdings, Inc., received interim approval for $25 million in debtor-in-possession financing and use of $20 million in cash collateral as the company moves toward a sale.
The approvals came during a Dec. 13 hearing in the U.S. Bankruptcy Court for the District of Delaware.
DIP details
As previously reported, LCI's DIP financing is through JPMorgan Chase.
The facility includes a $15 million term loan and a $10 million revolving facility.
The DIP loans will mature in six months, with the possibility of a 90-day extension.
Interest on the term loans will be either Base rate plus 800 basis points or Eurodollar plus 900 bps, and interest on revolving loans will be either Base rate plus 350 bps or Eurodollar plus 450 bps.
A final DIP hearing is scheduled for 2 p.m. ET on Jan. 10.
Case details
LCI attorney Kenneth S. Ziman said LifeCare operates 27 long-term acute-care facilities in 10 states and employs about 4,500 workers.
About 75% of the company's revenue comes from the federal Medicaid program, he said.
The proposed purchaser of the company, Hospital Acquisition LLC, is owned by LifeCare's senior secured lenders.
Hospital Acquisition's offer includes a $320 million credit bid, plus cash to cover administrative expenses, Ziman said.
But, to encourage potential third-party bidders, the lenders that are part of Hospital Acquisition may provide financing to other entities, he told the court.
Ziman said the debtors hope to sell the entire company to one buyer or to a consortium that will take all the assets.
The debtors anticipate no return to unsecured lenders, with the case likely to convert to Chapter 7 following the anticipated March sale, Ziman said. No Chapter 11 plan is contemplated.
LifeCare is a Plano, Texas-based health care consulting and management services company. The Chapter 11 case number is 12-13319.
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