SYRACUSE — Rural/Metro Corporation, a national provider of ambulance and fire-protection services for 700 communities, including several in Central New York, on Sunday announced it has filed for Chapter 11 bankruptcy protection.
The Scottsdale, Ariz.–based company filed its Chapter 11 petitions in the U.S. Bankruptcy Court in Delaware, the company said in a news release.
The bankruptcy filing will have no impact on Rural/Metro’s service in Central New York, says Melissa Fleischmann, public-relations manager for Rural/Metro Medical Services in Syracuse.
The local office is located at 488 W. Onondaga St. in Syracuse.
The filing comes as Rural/Metro reached an agreement-in-principle on a “comprehensive financial-restructuring plan that will strengthen the company’s balance sheet by reducing its funded indebtedness by approximately 50 percent via a conversion of certain debt to equity and cutting its interest expenses in half,” the company said in its news release.
The financial-restructuring will help Rural/Metro to continue investing in its business, meeting the needs of customers, patients, and communities, and improve service, the company said.
The agreement is “good news” for Rural/Metro, its clients, and the communities it serves, Scott Bartos, president and CEO of Rural/Metro, said in the release.
“We have a solution that keeps our operations moving forward while cutting our debt in half. The significant infusion of new capital by our lenders underscores their confidence in the value of our business, and will help ensure that we have a strong financial footing to resume growth and investment while honoring our agreements and continuing to provide outstanding service and patient care,” Bartos said.
Rural/Metro created its capital structure under “different economic circumstance,” the company said. Now, making interest payments on debt while investing in operations “was more than the company’s earnings could support,” Rural/Metro said.
Rural/Metro reached the agreement-in-principle on the terms of a prearranged financial restructuring plan with the majority of its senior lenders and approximately two-thirds of its bondholders.
The company will use the bankruptcy filing to “implement the plan.”
It intends to “significantly” reduce its debt, renegotiate unprofitable contracts, and free up capital for investments to strengthen its business and further improve patient care, Rural/Metro said.
The agreement includes a significant cash investment from the firm’s bondholders to address its capital-expenditure needs and ensure the company continues to provide emergency services to its customers.
Rural/Metro anticipates completing its restructuring in the fourth quarter of this year.
In Central New York, Rural/Metro ambulances serve a six-county region, including Onondaga, Cayuga, and Madison counties. The firm employs about more than 300 people, a mix of full- and part-time employees, in the region.
Warburg Pincus, a New York City–based private-equity firm providing investments in information technology, health care, media, communications, energy, financial and business services, owns Rural/Metro Corp.
The firm has more than $40 billion in assets under management, according to its website.
Contact Reinhardt at ereinhardt@cnybj.com