OnCure files bankruptcy; lenders and noteholders support restructuring

By Caroline Salls

Pittsburgh, June 17 - OnCure Holdings, Inc. filed Chapter 11 bankruptcy Friday in the U.S. Bankruptcy Court for the District of Delaware.

In a statement filed with the court, OnCure president and chief executive officer Bradford C. Burkett said overall declines in patient census counts and decreases in Medicare and Medicaid reimbursement rates, which account for almost half of the net revenue of the debtors' affiliated physician groups, led to increasingly poor financial performance.

On June 14, the company entered into a restructuring support agreement under which 100% of its credit agreement lenders and holders of about 73% of its senior secured notes agreed to support a standalone restructuring, subject to an auction process for a sale of substantially all of the company's assets or the equity of reorganized OnCure under a Chapter 11 plan.

In addition, Burkett said OnCure has reached an agreement in principle with a third-party purchaser regarding a proposed $126.5 million acquisition.

The agreement is subject to negotiation and execution of definitive documentation. The company said it hoped to file a copy of the acquisition agreement and proposed bidding procedures with the court by the June 18 first-day bankruptcy hearing.

DIP financing

In connection with the bankruptcy filing, the company obtained a commitment for $25 million in debtor-in-possession financing. Wells Fargo Bank, NA is the administrative agent.

The financing will mature six months from the bankruptcy filing date.

Interest will be Libor plus 800 basis points with a 1.25% Libor floor.

Debt details

According to court documents, OnCure had $179.33 million in assets and $250.38 million of debt at Dec. 31.

The company's largest unsecured creditor is Genstar Capital, LLC of San Francisco, with a $2.13 million management fee claim.

Genstar Capital Partners IV, LP owns 72.83% of the company's voting securities and Caisse de Depot et Placement du Quebec owns 16.29%.

The company is represented by Richards, Layton & Finger, PA.

OnCure is an Englewood, Colo.-based provider of business management services and medical equipment to oncology physician groups that treat cancer patients. The Chapter 11 case number is 13-11540.

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