InSight Health Services Holdings Corp., a Lake Forest-based provider of medical scanning services that’s seeking to trade most of its shares for debt relief, has taken its plan to bankruptcy court.
InSight, which has yearly revenue of $300 million, filed for bankruptcy at the end of May. The company plans to press on with a plan to offer 90% of its common stock to creditors in exchange for $195 million worth of debt due in 2011.
InSight had been trying to sell debt holders on the plan outside bankruptcy court. The plan has the backing of more than two-thirds of its debt holders and all common stockholders, according to InSight.
It’s unclear whether the holdouts forced the company’s hand in filing for bankruptcy.
Chief Executive Bret Jorgensen told the Business Journal back in March that bankruptcy wasn’t “the path we’re on, but if we chose to, we could use that as a tool to force any holdouts to do the exchange.”
InSight said it didn’t expect any interruption of its operations during the bankruptcy proceedings.
The company’s restructuring is “being accomplished through a prepackaged (bankruptcy) plan because of its efficiency,” Jorgensen said in a release. “We expect a quick confirmation of the plan, which preserves trade creditor claims and protects our customers and employees.”
To fund operations during restructuring, InSight is asking the bankruptcy court in Delaware to approve changes to a $30 million loan it has with Bank of America, including a change in default provisions.
Private equity investors J.W. Childs Associates LP of Boston and Halifax Group LLC of Washington, D.C., now own InSight after taking the company private five years ago. J.W. Childs owns 80%, while Halifax owns 20%.
The two are set to own 10% of the company after the restructuring’s completed.
Device Makers Raise Money
Two medical device makers have raised $31 million from venture investors.
The biggest chunk goes to Interventional Spine Inc., an Irvine device maker previously known as Triage Medical Inc. It recently raised $24 million in a third round of financing.
The rest came by way of Endocare Inc., which is based in Irvine and trades on the low-profile Pink Sheets exchange. It sold $7 million of its common stock to Frazier Healthcare Ventures of Seattle.
At Interventional, Ascension Health Ventures LLC of St. Louis was the lead investor. Other investors include MedFocus LLC, an Irvine venture capital firm.
Interventional said it plans to use the money to complete launching its implantable devices, which are used to treat spinal disorders. The company hopes to build a distribution network and acquire other devices.
The company was founded in 2000. Its chief executive is Walter Cuevas, who most recently was chief executive of 3F Therapeutics Inc., a Lake Forest medical device company that was sold in 2006 to ATS Medical Inc. of Plymouth, Minn.
Endocare Chief Executive Craig Davenport said in a release his company’s proceeds would be used to further Endocare’s efforts in prostate and renal cancer cryoablation, or freezing tumors to kill them, and to expand into treating cancers of the lung and liver.
Endocare once was one of the Business Journal’s fastest-growing companies after riding strong sales of its treatment.
The company’s market value has dropped sharply since 2002 and stood at about $80 million at recent check. The company settled charges brought against it by the Securities and Exchange Commission in 2006. This past April, Endocare’s former chief executive and former chief financial officer were indicted over allegations that they defrauded investors of at least $200 million.
Beckman Debt Rating
Beckman Coulter Inc.’s move to pull out of the chase for San Diego’s Biosite Inc. got a thumbs-up from Fitch Ratings. The debt rating agency changed its outlook for the Fullerton maker of medical testing equipment and supplies to stable from negative.
Beckman Coulter had offered to buy Biosite for about $1.6 billion but had its bid topped last month by Inverness Medical Innovations Inc. of Massachusetts.
“The company displayed financial discipline by walking away from the transaction as the price for the target escalated beyond their internal cutoff,” Fitch said in a release.
Bits and Pieces:
Peregrine Pharmaceuticals Inc., a Tustin drug developer, signed a pact with Dios Therapeutics Inc., a Bay area company, to collaborate on a treatment for thyroid-associated opthalmopathy, an eye disorder. Peregrine is set to provide development and manufacturing assistance for Dios’ antibody and has the option to receive cash or a stake in Dios Western Medical Center-Anaheim and Western Medical Center-Santa Ana, hospitals owned by Integrated Healthcare Holdings Inc. of Costa Mesa, now are using Versant RN Residency, software designed to stabilize hospitals’ registered nursing workforce. The hospitals plan to use the software in an effort to increase the number of nursing applicants, train new hires and improve patient care.
