One Equity Partners’ MModal Files Bankruptcy After Buyout
MModal Inc., the biggest U.S. medical-transcription company, sought bankruptcy protection from creditors less than two years after being acquired in a leveraged buyout by JPMorgan Chase & Co. (JPM)’s investment arm.
The company, based in Franklin, Tennessee, listed debt and assets of as much as $1 billion each in Chapter 11 documents filing today in U.S. Bankruptcy Court in Manhattan.
JPMorgan’s One Equity Partners, which manages about $14 billion of private investments for the bank, acquired MModal in August 2012 for $14 a share in a deal valued at $1.1 billion, funding the buyout with debt and equity.
MModal offers hospitals and health-care providers voice-to-text, cloud-based speech recognition and data analytics technology, according to company statements.
The company missed a Feb. 18 interest payment on $250 million in 10.75 percent bonds due in August 2020, as it negotiated with creditors to cut the debt taken on in the buyout. U.S. Bank NA is listed as the largest creditor, as trustee for holders of $265.9 million in notes.
MModal has about $520 million in loans, with a $75 million revolving facility and a $445 million term loan, according to data compiled by Bloomberg.
Moody’s Investor’s Service downgraded the company’s debt ratings, including its senior secured debt to Caa2 from B2 and its senior unsecured debt to C from Caa3, according to a March 11 statement.
The ratings agency said “continuing deterioration in sales and liquidity” would lead to a debt restructuring. Moody’s expects a “very low recovery” on the bonds and a “high” recovery on the revolving and term loans.
The case is In re MModal Inc., 14-bk-10703, U.S. Bankruptcy Court, Southern District of New York (Manhattan.)