HearUSA, a national hearing care provider network, is selling its assets ro an affiliate of a Danish hearing care company to pull the company out of Chapter 11 bankruptcy.
The West Palm Beach, Fla.-based company provides hearing care for national managed care organizations through a network of more than 1,800 hearing care provider locations, including 134 company-owned centers, and is the administrator of the AARP Hearing Care Program.
The company is selling its assets to an affiliate of William Demant Holdings A/S, an international hearing care company with headquarters in Denmark. The sale will be facilitated with court assistance under Chapter 11 of the U.S. Bankruptcy Code pursuant to a voluntary petition filed by the company in the Southern District of Florida. HearUSA will continue to operate and conduct business as usual pending the closing of the sale.
[See related story: HearUSA faces NYSE delisting]
“After exploring a range of possible alternatives to meet our liquidity needs to operate our business, management and the board of directors of HearUSA concluded that a court-supervised sale of our assets is in the best interest of the company and its stakeholders,” said Gino Chouinard, interim chief executive officer, president and chief operating officer. “We are committed to continuing our business operations with minimal impact throughout the process and will continue to serve our customers with the high standard of care they have come to expect from us.”
Chouinard has replaced Stephen J. Hansbrough, who resigned on May 9 as chief executive officer and chairman of the board of directors.
The company announced that it has entered into an asset purchase agreement in which William Demant will serve as the stalking horse bidder under section 363 of the U.S. Bankruptcy Code. The agreement contemplates a purchase price of $80 million, including $10 million debtor-in-possession financing, plus the assumption of certain liabilities and the payment of certain cure amounts.
HearUSA has entered into the debtor-in-possession financing agreement with William Demant to provide funds sufficient to operate the business during the bankruptcy proceedings and through final sale. The asset purchase agreement provides that if William Demant is the successful bidder, it will assume repayment of the $10 million loan.
Both the asset purchase agreement and the debtor-in-possession financing agreement were filed with the court.
“We believe the DIP financing agreement with William Demant will provide the resources we need to satisfy our obligations to employees, suppliers and customers, and to meet our obligations under our managed care contracts. We are committed to make this a seamless process for all of our stakeholders,” said Chouinard.
To ensure that day-to-day operations continue as usual, HearUSA has filed “first day” motions seeking assurances from the court that employees will continue to receive their usual pay and benefits on an uninterrupted basis, that the company can honor its agreements, and that customers will continue receiving goods and services as they normally would. The company said that as part of the Chapter 11 process, it will seek to obtain the “highest and best” offer for its assets. It will hold a court-supervised competitive auction for its assets with William Demant’s stalking horse bid as the floor, and seek court approval to close a final transaction. The transaction is expected to close within a matter of months.
HearUSA has retained Sonenshine Partners and Berger Singerman, subject to bankruptcy court approval, as its advisors in the bankruptcy and sale process.