Medical Staffing could face bankruptcy amid credit agreement defaults

By Caroline Salls

Pittsburgh, March 24 - Medical Staffing Network Holdings, Inc. could be forced to file for Chapter 11 bankruptcy if it cannot obtain a waiver of credit agreement defaults or restructure the credit agreement debt, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, the company's forbearance agreement with its first-lien lenders expired on Feb. 1, and it is not in compliance with some of the financial covenants on its first-lien and second-lien credit agreements.

Because of the default on the first-lien agreement, Medical Staffing said the first-lien lenders have terminated its ability to borrow on the revolver portion of that credit agreement.

The company said it has been negotiating with its senior lenders regarding the ongoing financial covenant violations since Feb. 1, and it has hired financial and legal advisers to explore strategic options to restructure its capital structure and debt.

In addition, based on currently projected cash inflows generated from operations, Medical Staffing said it may be unable to pay future scheduled interest and principal payments due to its senior lenders.

Because the lenders have a lien on substantially all of the company's assets to secure the obligations, Medical Staffing said the lenders could enforce their right to sell the company's assets to repay their obligations.

Medical Staffing said it is in discussions with its lenders regarding funding for future liquidity needs.

According to the 8-K, revenues from the company's primary business are under intense pressure because of high unemployment rates, an economy in recession, weak hospital admissions and other challenging healthcare staffing industry dynamics that have resulted in a reduction of demand for temporary nurses.

Medical Staffing is a Boca Raton, Fla.-based health care staffing company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.