Medical Staffing Network files bankruptcy to complete asset sale

By Caroline Salls

Pittsburgh, July 6 - Medical Staffing Network Holdings, Inc. filed for Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the Southern District of Florida and has entered into an agreement to sell substantially all of its assets for $84.12 million to an entity to be organized and owned by its first-lien secured lenders, according to a company news release.

The lender entity, MSN AcquisitionCo, LLC, will serve as the stalking horse bidder for the asset sale.

Under the asset purchase agreement, MSN AcquisitionCo will purchase substantially all of the company's assets and assume obligations associated with the purchased assets through a court-supervised auction and sale.

The purchase price will be paid by the lenders credit bidding the amount of the first-lien debt owed to them.

Competing bids are expected to be due by Aug. 18, and the sale is expected to close before Aug. 31.

The proposed auction date is Aug. 19.

The initial overbid amount will be $100,000 more than the starting bid.

The purchase agreement does not include a break-up fee.

"The filing of our petition under Chapter 11 is the next step in our efforts to complete the restructuring of our debt and capital in accordance with the terms of the restructuring support agreement that we entered into with our senior secured lenders on June 9, 2010," chairman and chief executive officer Robert Adamson said in the release.

We believe that the filing of our Chapter 11 petition and the signing of the asset purchase agreement move us one step closer to emerging from the restructuring process with a capital structure that will allow us to successfully operate our business in the future."

DIP financing

Medical Staffing said it has secured a commitment from its lenders for a $15 million debtor-in-possession facility to pay the costs of the restructuring process and to assure the company's liquidity. General Electric Capital Corp. is the administrative agent.

The DIP loan obligations will be assumed under the sale agreement.

As previously reported, the DIP facility will mature in 90 days, with the option to extend the facility for an additional 30 days.

Interest will be 10%.

Medical Staffing will pay an upfront fee equal to 3% of the maximum amount of the DIP facility.

The company is seeking interim access to $12 million of the financing.

Debt details

According to the bankruptcy petition, the exact amount of the company's assets and debt was unknown as of Friday. However, the company listed $100 million to $500 million of both assets and debt.

The company listed no unsecured creditors.

Warburg Pincus Private Equity VIII, LP owns 45.4% of Medical Staffing's publicly traded shares.

Based in Boca Raton, Fla., Medical Staffing is a health care staffing company. The Chapter 11 case number is 10-29101.

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