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Akumin declares bankruptcy as part of bid to go private

by John R. Fischer, Senior Reporter | October 30, 2023
Business Affairs
Akumin has filed for Chapter 11 bankruptcy as part of its plan to pay off debts and go private.
Outpatient radiology provider Akumin is going private and has declared bankruptcy as part of a restructuring support agreement with alternative investment firm Stonepeak in preparation.

Based in Plantation, Florida, the company provides diagnostic imaging services to about 1,000 hospitals and health systems in 48 states, including MR, CT, X-ray, ultrasound, mammography, nuclear medicine, interventional radiology, and more.

Through its prepackaged Chapter 11 bankruptcy proceedings, the company and its subsidiaries eliminated $470 million in debt, with the loan balance converted into common shares of Akumin stock that will be owned by Stonepeak. Following this, the company will no longer be publicly listed.

Akumin will continue to pay trade creditors, employees, and other partners and continue its operations throughout the process. Akumin and Stonepeak expect the court to approve their agreement, which involves over one-third of Akumin’s common equity, a supermajority of Akumin’s bondholders, and all of its revolving lenders, within the next 45 days.

“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, in a statement.

Stonepeak will invest $130 million into the company as a capital contribution. Akumin’s existing common stockholders will receive a total of $25 million in cash and certain contingent value rights for their shares.

The process will be court-supervised, hence, Akumin voluntarily applied for Chapter 11 status. Over the past year, the company has seen its stock drop more than 80%, according to MarketWatch, and has been in significant debt since spending $820 million to acquire Alliance Healthcare Services. Additionally, it was recently the target of a ransomware attack that forced it to shut down its computer system, leaving it unable to perform scans at its fixed-site locations.

In a Securities and Exchange Commission filing, the Nasdaq told the company that it would suspend trading of its common stock on October 26 due to its failure to maintain a minimum of $2.5 million in stockholder’s equity, a listing requirement. Its stock’s closing bid price has also been below $1 for 30 days, another violation.

Following the company’s announcement of going private, stocks shot up 145% on October 23, but Akumin told investors in its own SEC filing not to trade its stock during the bankruptcy process, as doing so would be seen as “highly speculative” and put it at substantial risk.

The company is the second large radiology provider to file for bankruptcy this year following Envision Healthcare, which filed in May and was recently approved to split into two companies as part of its own restructuring agreement, reported Reuters.

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