American HomePatient to Restructure, Go Private

BRENTWOOD, Tenn. — In a move to avoid bankruptcy, American
HomePatient announced last week that it would go private following
a restructuring of its debt.

Under an agreement with its lenders, AHP, which operates in 33
states, would reincorporate in Nevada. Then Highland Capital
Management, which
tried to buy the company in 2006, will offer to buy AHP’s
outstanding stock for 67 cents a share, according to a press
release. Dallas-based Highland Capital currently owns 48 percent of
the giant provider’s stock.

“We are pleased to have an agreement that provides fair value to
our stockholders, extends our relationship with our debt holders,
and allows American HomePatient and its employees to continue to
focus on providing critical services to our customers,” Joseph F.
Furlong, AHP president and CEO, said in the April 28 release.

After filing for bankruptcy in 2002, the company emerged from an
11-month reorganization in July 2003 with a plan giving it until
2009 to repay its debt.

But AHP defaulted on a $226 million promissory note when it
missed its Aug. 1, 2009, repayment date. Since then, the company
has been operating under a series of short-term forbearance
agreements with NexBank SSB, a Highland Capital affiliate, in which
its lenders agreed not to take any action against the company while
negotiating a resolution. The parties had been working under the
10th such agreement, which was due to expire May 16.

According to the release:

If the reincorporation in Nevada is not approved, the tender
offer and subsequent debt restructuring will not occur. If the
tender offer is completed, the Company’s senior secured debt will
be restructured with a new four-year term. If the tender offer is
not completed, the company will remain in default of its
obligations to its senior lenders, the consensual long-term
restructuring of the company’s debt will not occur, and American
HomePatient may make a Chapter 11 bankruptcy filing. The outcome
for existing stockholders in any bankruptcy would be highly
uncertain.

AHP said stockholders would vote on the plan at its annual
meeting June 21.