Dive Brief:
- Invacare said it filed a plan to reorganize under Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in southern Texas. The maker of wheelchairs and walkers said the action includes two of its U.S. subsidiaries but doesn’t affect its international operations.
- The move is expected to reduce the company’s net debt by 65%, the Elyria, Ohio-based manufacturer said in a statement.
- Global manufacturing and delivery of products will continue uninterrupted to meet increased customer demand, Invacare said.
Dive Insight:
Invacare has struggled with supply chain troubles that led to an order backlog. After announcing a plan to restructure the company’s manufacturing operations early last year, former Chairman and CEO Matthew Monaghan left the company in August. Geoffrey Purtill, general manager for EMEA and APAC, stepped into the CEO role.
Under Purtill, Invacare sold its respiratory assets to Ventec Systems, a subsidiary of React Health, and its Top End sports and recreation wheelchair division to Top End Sports, LLC. The moves were aimed at helping Invacare focus on its lifestyle and mobility categories in a bid to drive profitable growth, it said in November.
In announcing the Chapter 11 reorganization, Invacare said it has reached a restructuring agreement with most of its debt holders, including its term loan lender and all holders of convertible senior secured notes.
The accord provides for $60 million of equity capital to repay some debt obligations and facilitate the company’s transformation plan, Invacare said.
“Invacare has the right leadership, vision and the financial commitment from the sponsorship group to succeed, and we are confident that this Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilize liquidity but also de-lever the balance sheet and better position Invacare for future growth,” Steven Rosen, CEO of Azurite Management, Invacare’s largest shareholder, said in the statement.
Invacare also released preliminary fourth-quarter financial results showing a sequential increase of 6% in net sales to $181 million, from $170 million in the third quarter. The company said its net loss and adjusted earnings before interest, tax, depreciation and amortization improved “significantly,” helped by pricing actions and lower freight costs. Its European business also returned to profitability.
Updated with fourth-quarter financial results.
