Invacare Corp., a manufacturer and distributor of medical equipment used in non-acute care settings, announced it has filed for bankruptcy.
The company entered into a Restructuring Support Agreement with substantially all of its debt holders, including its term loan lender, all of the holders of convertible senior secured notes, and holders of a majority of its convertible senior unsecured notes. The agreement provides for a significant reduction of the company’s debt balance and a substantial new money investment, which will enhance the company’s liquidity, thereby enabling it to invest for future growth. Specifically, the transactions agreed to in the RSA contemplate a substantial reduction of the company’s funded debt by approximately $240 million. In addition, the RSA includes a backstop for a rights offering to holders of claims on account of the company’s unsecured notes and holders of general unsecured claims, providing the company with $60 million of equity capital to repay certain of its debt obligations and facilitate the company’s transformation plan.
To effectuate the transactions contemplated by the Agreement, Invacare and two of its U.S. based subsidiaries commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas. Invacare’s other businesses throughout the rest of the world remain strong and are not included in these filings. The company does not anticipate these filings to impact its ability to manufacture and deliver products to its customers globally.
“The actions . . . mark a big step forward for Invacare,” says Geoff Purtill, president and CEO of Invacare. “Having the full support of our secured term loan lender and a majority of our convertible noteholders will enable the prearranged filings to proceed efficiently. The company expects to emerge with significantly less debt on its balance sheet and will secure additional liquidity to support long-term growth. We have a clear vision for the future, and we are working expeditiously towards our goals."
Upon emergence from Chapter 11, the company expects to be financially positioned to seize opportunities and capitalize on a significant upward shift in market demand. The company intends to deliver improved profitability and free cash flow in 2023 and beyond, while building on its legacy as a leader and innovator in the lifestyle and mobility & seating markets.