Rural/Metro files for Chapter 11 bankruptcyPosted: Updated:
NEW YORK (AP) -- Ambulance and fire protection services provider Rural/Metro Corp. said Sunday that it filed for Chapter 11 bankruptcy reorganization, after reaching a deal with its lenders to cut its debt by about half.
The company, which provides services in 21 states, expects to continue its operations throughout the reorganization process. Lenders have agreed to provide the company $75 million in debtor-in-possession financing to meet its operational needs.
Rural/Metro said it will also receive a cash infusion of $135 million as part of its agreement with lenders and bondholders, which will be filed in U.S. Bankruptcy Court for the District of Delaware.
The company noted that its capital structure was created "under different economic circumstances, and making interest payments on the debt while at the same time investing in operations was more than the company's earnings could support."
Rural/Metro, which is based in Scottsdale, Ariz., expects to complete its restructuring by the fourth quarter. It plans to renegotiate unprofitable contracts and free up capital to invest in its business.
Private equity firm Warburg Pincus bought Rural/Metro in 2011 for about $438 million.