A Medical Device Daily
Arcadia Resources (Indianapolis), a provider of consumer healthcare services under the Arcadia HealthCare brand, said it has completed a restructuring of $24 million of its outstanding debt, extending the maturity to April 2012, and raising an additional $3 million in working capital.
The company has restructured about $24 million in principal amount (plus accrued interest) of secured and unsecured promissory notes and received an additional $3 million in loans, principally from its two largest shareholders.
The restructured notes, previously set to mature October 2009, have been exchanged for new promissory notes totaling roughly $27 million, inclusive of the $3 million working capital loan. The new notes have a maturity of April 2012, accrue simple interest at the rate of 10% per annum, and quarterly interest payments may be made in cash or additional promissory notes, at the company's election.
"We are pleased that two of our major shareholders and lenders have shown continued confidence in Arcadia's future by agreeing to extend new debt and restructure existing debt in a very difficult credit environment," said Marvin Richardson, president/CEO. "In addition to providing additional capital to fund our growth, the extension of the debt maturities provides us with the horizon and financial flexibility we need to execute on our strategic plan."
Richardson added that key components of the plan include focusing the company's business model, selling non-core business units, and using the proceeds to pay down debt and further improve its balance sheet.
"We are well underway on this effort, and are in the advanced stages of negotiation and due diligence with various parties with the hopes of completing several asset sales over the course of the next 120 days."
Arcadia reported that terms of the new promissory notes provide that the first $2 million in net proceeds from asset sales will be retained by the company, with additional net proceeds apportioned between the debt holders and Arcadia.
In connection with the debt restructuring, the debt holders also agreed to exchange, exercise and cancel outstanding warrants held by them. In consideration of the debt exchange and new financing arrangements, Arcadia agreed to issue new shares of common stock.
The company also reported that all of the warrants issued in connection with its May 2007 private equity placement have been exchanged for common stock as part of the debt restructuring. Each of the holders of these warrants will exchange one warrant for one share of newly issued common stock. A total of 2,754,726 shares of new common stock will be issued in connection with this exchange.
"The debt restructuring was a critical milestone that gives us added flexibility and puts us in a stronger position in both the short and long term," said CFO Matthew Middendorf. "We are also working with Comerica Bank to renew our existing senior credit facility, which matures in October 2009."