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Financial restructuring to fortify balance sheet and provide liquidity runway for next stage of growth
Approvals received from key stakeholders across capital structure; transaction will be implemented through prepackaged court-supervised process; Expected to obtain court approval within the next 45 days
Business will continue to operate as usual without interruption; trade creditors, employees, and other partners expected to continue to be paid in ordinary course
PLANTATION, FLORIDA, October 20, 2023 — Akumin Inc. ("Akumin" or the "Company") (NASDAQ:AKU, TSX:AKU) announced today that it has reached an agreement with Stonepeak, a leading alternative investment firm specializing in infrastructure and real assets, and the Company's stakeholders on the terms of a financial restructuring that will substantially improve the Company's balance sheet and provide ample liquidity to position Akumin for future success. The contemplated transaction will result in Akumin no longer being publicly listed.
To effect the transaction in a timely and efficient manner, the Company and certain of its subsidiaries will commence prepackaged chapter 11 cases in the Southern District of Texas. The Company expects to obtain court approval of the transaction within the next 45 days and complete the transaction after receiving certain regulatory approvals. Throughout the process, Akumin's operations are expected to continue as normal. The Company expects to continue to pay trade creditors, employees, and other partners in the ordinary course of business.
"Today's announcement marks the successful culmination of a thorough strategic review process to ensure we have the right capital structure in place to support our long-term success. As a result of this transaction, Akumin will move forward as a private company with increased financial flexibility and a strengthened balance sheet, better positioned to execute on our strategic plan to become the outpatient partner of choice for hospitals and health systems," said Riadh Zine, Chairman and Chief Executive Officer of Akumin. "We are pleased to enter this agreement with Stonepeak, which we believe will enable us to maximize the value of our business and create the best path forward for all of our stakeholders."
He continued, "The overwhelming support of our financial partners for this transaction is a testament to the strength of the foundation we have built and their confidence in our future. Akumin has significant scale, extensive and long-standing relationships with hospitals and health systems, a unique service offering, technological expertise in autonomous workflow for healthcare service delivery and a deep bench of talent. We thank our customers, partners, vendors and team members for their continued support of Akumin in its commitment to enhancing patient experiences and outcomes."
"Stonepeak is committed to working closely with Akumin as it moves through this process," said James Wyper, Senior Managing Director at Stonepeak. "The critical nature of the services Akumin provides to health systems, hospitals, physician groups, and patients all across the country gives us confidence in the inherent value of the business, and we believe that this path forward will fortify the Company's balance sheet as it looks towards its next phase of growth."
The contemplated transaction will result in the existing Stonepeak Note, totaling approximately $470 million, being cancelled and converted into Common Shares of the Company. In addition, Stonepeak will invest $130 million in new money into the Company as a capital contribution.
To facilitate the transaction, the Company and Stonepeak have executed a Restructuring Support Agreement with over one-third of the Company's common equity, a supermajority of the Company's bondholders, and all of the Company's revolving lenders. The Restructuring Support Agreement provides that, other than those notes which are exchanged for cash via the reverse Dutch election opportunity described below, the Company's senior secured notes due 2025 will be exchanged for new senior secured notes with a maturity of August 1, 2027 and an increased interest rate, among other changes in terms. Additionally, the Company's senior secured notes due 2028 will be exchanged for new senior secured notes with the same maturity date but an increased interest rate, among other changes in terms.
As part of the transaction, Akumin's existing common stockholders will receive a total of $25 million in cash as well as certain contingent value rights ("CVRs") for their shares.
The transaction will be implemented through a court-supervised process and as such, the Company and certain of its subsidiaries will commence prepackaged chapter 11 cases in the Southern District of Texas. In the event Stonepeak provides debtor-in-possession (DIP) financing or any other new money contributions at or prior to the closing of the transaction, such DIP facilities and new money will convert to equity at closing and reduce the $130 million investment amount on a dollar-for-dollar basis. Stonepeak will also make $60 million of the proceeds from its investment available for a reverse Dutch election opportunity for the Company's notes due 2025 and the notes due 2028.
Additional details regarding the transaction, including more information about the CVRs, are included in a Form 8-K that is being filed with the SEC concurrently with this release.
