Acadiana Management Group (AMG), a privately owned operator of long-term acute-care (LTAC) hospitals and inpatient rehabilitation services, completed its in-court restructuring and emerged from bankruptcy on May 8, 2018. Stout served as the debtor’s exclusive financial advisor throughout the process.
At its peak, AMG was a top five post-acute hospital system nationally with more than $100 million in annual revenue. The company prospered until the phase-in of a Medicare reimbursement change that dramatically impacted the LTAC industry. As a consequence, in June 2017, AMG filed for bankruptcy in the Western District of Louisiana.
Stout assisted AMG in determining which of its 14 LTAC hospitals were viable in the face of the reimbursement change and then launched a dual-track M&A and new money financing process. Due to overall negative marketing sentiment, third-party options were limited, and, as alternative sources of financing appeared exhausted, the senior lender considered forcing a liquidation. Stout ultimately structured a solution in which management (existing equity) provided $2 million of DIP financing (in conjunction with a signed restructuring support agreement between the debtors and the senior lender threatening liquidation). The new money contributions provided by existing equity consisted of a nominal amount of cash plus the equity in one non-debtor rehabilitation hospital. An existing lender provided $23 million of financing to assist the company in emerging from bankruptcy. As a result of the transaction, existing equity was able to retain 100% ownership while debt and trade claims were reduced from nearly $67 million to approximately $26 million.
In addition to the investment banking role, Stout’s Houston-based operational restructuring team assisted the debtors throughout the process with cash flow reporting, claims and vendor management, and other ancillary services.
Stout’s Investment Banking group provides mergers and acquisitions (M&A) advice, private capital raising, and other financial advisory services for private equity portfolio companies, closely held or family-owned businesses, and divisions of large corporate parents. Stout professionals have significant experience advising in “special situations” where a company is facing an inflection point due to liquidity challenges, debt maturities, or covenant compliance issues resulting from company-specific issues or cyclical and/or secular changes.
Read the full case study "Hospital Chain Owner Retains 100% Ownership After Bankruptcy" and see more information on our services involving special situations and distressed M&A.