MARINER POST-ACUTE GETS REORG PLAN APPROVED
March 26, 2002• The Daily Deal • by Soma Biswas
Some technical modifications need to be made, once completed the Judge will confirm the reorganization plan.
A U.S. bankruptcy court judge said March 25 that she would confirm the reorganization plan of Mariner Post-Acute Network Inc. after a number of technical modifications are completed, said John Shaffer, an attorney at Stutman Treistar & Glatt PC, Mariner’s lead bankruptcy counsel.
Judge Mary Walrath of the bankruptcy court for the District of Delaware in Wilmington ruled on the case.
The confirmation of the reorganizaton plan will make way for Mariner to emerge from Chapter 11 in coming weeks after over two years in bankruptcy, said Shaffer.
Mariner Post-Acute Health Network and its subsidiaries, including the Mariner Health Group Inc., filed for bankruptcy on Jan. 18, 2000, blaming lower Medicare reimbursement payments for its problems.
The reorganization plan calls for creditors of both Mariner Post-Acute and the Mariner Health Group to receive equity, cash and debt in the reorganized company.
The secured lenders of Mariner Post-Acute are slated to receive 96% of the equity of the newly reorganized company, and the unsecured creditors will get the remaining 4%.
Creditors will also receive $70 million in cash, on top of $100 million which has already been disbursed. Creditors will also get $200 million of tranche B notes and $150 million of junior secured notes issued by the new company.
The $200 million in tranche B notes are likely to be refinanced by a new lending facility formed by the majority of the original lenders, including Goldman, Sachs & Co. and UBS Warburg. "The lenders like the company, so they’re willing to go into a new facility," said Michael Gries, at Conway Del Genio Gries & Co., Mariner’s restructuring advisor.
Mariner will use its undrawn debtor-in-possession financing of about $100 million, Gries said. The company expects to relist its shares on the Nasdaq, Gries said.
Russell Silberglied of Richards Layton & Finger PA, served as co-counsel to the debtors. Bruce Grohsgal at Pachulski, Stang, Ziehl, Young & Jones PC represented the committee of unsecured creditors.
J.P. Morgan Chase & Co. served as the agent for secured lenders in Mariner Post-Acute, and PNC Bank was the agent for secured lenders for the Mariner Health Group Subsidiary.
Mariner’s biggest divestiture was the sale of its American Pharmaceutical Services Inc. unit to Omnicare, a Covington, Ky.-based geriatric pharmaceutical company for $97 million last December.
Mariner also sold off and shut down a series of unprofitable nursing homes, said Shaffer. The sale and closure of unprofitable facilities and overhead reductions helped to return the company to profitability in 2001, according to the company’s filings.
In the nine months ending on June 30, 2001, Mariner Post-Acute turned a profit of $49.57 million compared with a loss of $9.9 million in 2000. Assets were listed as $1.28 billion and liabilities at $2.7 billion.