Invacare (NYSE:IVC) announced today that it successfully emerged from Chapter 11 bankruptcy at the end of last week.
Elyria, Ohio-based Invacare began financial restructuring activities that included filing for bankruptcy in February. This saw the company enter into a “Restructuring Support Agreement” (RSA). The RSA covers substantially all of its debt holders. That includes its term loan lender, all holders of convertible senior secured notes and holders of a majority of convertible senior unsecured notes.
The RSA included a reduction of Invacare’s funded debt by approximately $240 million. It also featured a backstop for a rights offering to holders of claims, providing Invacare with $60 million in equity capital.
To effectuate these transactions, Invacare and two U.S.-based subsidiaries commenced voluntary Chapter 11 cases. They did so in the U.S. Bankruptcy Court for the Southern District of Texas. The company said its other businesses “remain strong” and remain excluded from these filings.
On May 5, those two subsidiaries — Freedom Designs and Adaptive Switch Laboratories — successfully emerged from Chapter 11. As a result of its reorganization, Invacare Holdings Corporation becomes the new parent company of Invacare’s global operations.
“This marks the start of a new era for Invacare,” said Geoffrey P. Purtill, president and CEO. “With Chapter 11 behind us, we look to renew our commitment to operational excellence and drive profitable long-term growth in our core lifestyle and mobility & seating product categories. Invacare is well-positioned to capitalize on global tailwinds in the markets we serve.
“Importantly, I want to express my gratitude to our associates for their unyielding commitment to Invacare. We now have a fresh start and a great opportunity to reshape the business for the future and realize our long-term growth potential.”
New structure at Invacare
As part of the financial restructuring, Invacare enacted a series of transactions to recapitalize its balance sheet.
The company successfully executed a $75 million rights offering of new common stock and 9% Series A convertible preferred stock. It also announced an exit term loan facility of $85 million and 7.5% exit-secured convertible notes of $46.5 million. Those mature in 2028.
Invacare also finalized a new North American asset-based lending (ABL) facility with a borrowing capacity of up to $40 million. It borrowed $13.4 million of that facility upon emergence from Chapter 11.
Upon emergence, proceeds from Invacare’s rights offering and ABL facility went towards repaying $35.5 million of a debtor-in-possession (DIP) term loan and $13.8 million of the DIP ABL facility. The company also intends to use proceeds for general corporate purposes. That includes working capital and the payment of restructuring professional fees.
Invacare said its final restructuring enabled it to extinguish $223 million in principal and unpaid interest related to unsecured notes. Those notes include unsecured 2024 Series I, 2024 Series II and 2026 convertible notes.
“We are pleased to have secured new financing which will provide additional flexibility,” said Kathy Leneghan, SVP and CFO. “With a sustainable capital structure and enhanced balance sheet, we can now fully focus our efforts on executing our global transformation plan.”
Changes to the board of directors
Invacare also announced the composition of its new board of directors. It appointed Steven Rosen as chair, while Purtill continues to serve as a director. Rosen serves as co-founder and co-CEO of Resilience Capital Partners.
The company also appointed Marec Edgar, Abraham Han, Peter Kuipers, Kimberly Lody and Randel Owen to the board.
Expired director terms affect Clifford Nastas, Edward Crawford, Petra Danielsohn-Weil, Marc Gibeley, Michael Merrimen and Aron Schwartz. Invacare thanked those individuals for their service. The company continues to operate under its current management team, led by Purtill.
