A Medical Device Daily
InSight Health Services Holdings (IHS; Lake Forest, California) reported that it and its wholly owned subsidiary InSight Health Services Corp. (IHSC) have filed petitions for chapter 11 protection with the U.S. Bankruptcy Court for the District of Delaware.
The previously reported plan of reorganization received the support of holders of more than two-thirds of IHSC outstanding 9-7/8% senior subordinated notes, due 2011, and 100% of InSight's common stockholders.
IHSC said that its operating subsidiaries, such as InSight Health Corp., are not included in the bankruptcy filing and will continue to maintain normal business operations for their patients, employees, customers and trade creditors nationwide.
InSight said that the plan should allow it to complete as quickly as possible the exchange of about $194.5 million of notes for 90% of InSight's common stock.
During the bankruptcy proceedings, InSight said it does not expect any interruption of its operations and will continue to focus its on providing patient services.
InSight has about $13 million in cash as of the date of filing and has secured a commitment from its lender to continue the revolving credit facility of up to $30 million with IHSC's operating subsidiaries. IHSC's $300 million in senior secured floating rate notes, due 2011, will remain outstanding following the restructuring.
The company said that holders of a majority of the senior notes have agreed to support the restructuring.
"We are optimistic about the future of our business because the exchange of $194.5 million of debt for equity will dramatically strengthen our balance sheet," said Bret Jorgensen, InSight's president/CEO. "The restructuring is being accomplished through a prepackaged plan because of its efficiency, and we expect a quick confirmation of the plan, which preserves trade creditor claims and protects our customers and employees. Importantly, the process will not interrupt our normal business operations, our employees or the patients, physicians and hospitals we serve."
Orthobiologics company IsoTis (Irvine, California) said that it has secured a $20 million credit facility with Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services, and Silicon Valley Bank.
The three-year $20 million credit facility has two components: a $10 million term loan and a $10 million revolving line of credit. This credit facility expands on and replaces the $5 million credit facility IsoTis closed on in June 2006 with Silicon Valley Bank. The $10 million term loan will be repaid in equal monthly installments over 30 months, beginning on Jan. 1, 2008. The company would be required to prepay $7.5 million of the term loan on Sept. 1, 2007 if it fails to raise a threshold amount of additional capital by Aug. 31, 2007.
Pieter Wolters, president/CEO of IsoTis said: "The proceeds of the Merrill Lynch Capital credit facility, in combination with the proceeds of other recent transactions, improves our cash position while we are considering the various financing alternatives necessary to fund our current operations."
IsoTis develops products for the treatment of musculoskeletal diseases and disorders. IsoTis' current orthobiologics products are bone graft substitutes that promote the regeneration of bone and are used to repair natural, trauma-related and surgically-created defects common in orthopedic procedures, including spinal fusions.
In other financing news: Aperio Technologies (Vista, California), a provider of digital pathology systems and services to healthcare and the life sciences, reported closing a $10.6 million round of financing. Terms were not disclosed.
The company said it will use the new capital to further expand its sales, marketing and operations efforts, develop new products, and implement its clinical market strategy.
The round was co-led by Galen Partners and Advanced Technology Ventures. Other existing investors also participated.