Endologix has announced that, after evaluating a variety of strategic options, it has initiated a voluntary Chapter 11 case and simultaneously filed a consensual plan of reorganization supported by Deerfield Partners as its largest creditor.
According to a press release, the company believes these actions provide the best path to address financial challenges resulting from COVID-19 and the related delays in elective medical procedures and to realize the full benefits of operational enhancements made over the past two years. Under the terms of the plan, Endologix will become a private company.
“We are excited to begin a new chapter for our organization now characterized by financial stability. Although COVID-19 has presented a delay in many abdominal aortic aneurysm [AAA] procedures that, in turn, has negatively impacted our revenue, we remain confident we have taken the right steps to ensure we are consistently providing valued support to customers and the patients we serve with the highest quality products and the most talented and committed employees in the industry,” said John Onopchenko, Endologix CEO.
He continued: “The path we are now taking to strengthen our balance sheet and transition to private ownership will allow us to accelerate our progress with our strong patient-first business focus, an enduring spirit of innovation, and an unrelenting commitment to advancing our life-saving products supported by industry-leading evidence.”
Under the terms of the proposed plan of financial reorganization, Endologix will eliminate approximately $180 million of debt from its balance sheet on a net basis, including approximately $130 million of debt currently held by Deerfield that will convert to equity in the reorganized company.
The company also expects to gain access to $110.8 million of new financing through this process, including $30.8 million in debtor-in-possession (DIP) financing from Deerfield, an additional $30 million in exit financing from Deerfield, and $50 million in rolled over debt from the company’s current first lien debt.