ProSomnus, Inc. announced it has initiated a voluntary restructuring process under Chapter 11 of the U.S. Bankruptcy Code to reorganize and strengthen its capital structure going forward, improve financial flexibility and better position the company for long-term success. In connection with this process, the Company has secured the support of multiple existing key investors and lenders under a plan that is designed to deliver an aggregate of approximately $20 million of new capital into the Company. Such Capital will support ongoing operations and the development of strategic initiatives, including the company’s next-generation sensor device.
In connection with this restructuring, ProSomnus intends to retain the ability to fully maintain ongoing operations, including the payment of the Company’s employees, customers, and vendors in the ordinary course of business during and after the restructuring.
“The voluntary restructuring announced today will enable us to move ahead as a stronger company,” said Len Liptak, Chief Executive Officer for ProSomnus Sleep Technologies. “This very difficult decision was reached after conducting several extensive processes to identify alternatives. Reestablishing a healthy financial foundation for our company, with the support of our lenders, we expect to leave the process with more cash, less debt, less expense, and more time to focus on devices, customers and patients. This renewed foundation will place ProSomnus in a position to realize our mission and develop our next-generation sensor device technology. I am grateful for the support of our customers, suppliers, and employees as we work through this process.”
Minimal Expected Operational Impact to the Business
Importantly, the terms of this financial restructuring enable the Company to maintain normal business operations for customers and suppliers during and after this restructuring process. The Company expects customers to continue experiencing its best-in-class, rapid turnaround times, predictable on-time order fulfillment, and exceptional device quality and performance. ProSomnus expects to continue purchasing supplies from vendors commensurate with demand for our devices.
Improvements to Financial Condition
The restructuring plan, which is expected to deliver an aggregate of $20 million of new capital, is being led by SMC Holdings II, LP, CETUS Capital VI, LP, Destinations Global Fixed Income Opportunities Fund, Cedarview Opportunities Masters Fund, LP and Riverpark Strategic Income Fund, each existing lenders to and investors in the Company, each of which has also consented to convert the Company’s current debt owed into equity upon exit from the restructuring. Further, the amount of existing senior secured debt will be reduced, and amortization of scheduled repayments will be deferred. Under the restructuring plan the Company expects to reduce its debt by approximately 60%.
Amounts due to employees, trade creditors, vendors and customers are not expected to be impacted by the restructuring. The completion of the restructuring plan will result in the Company becoming a private company, thereby eliminating $4 million to $6 million of annual recurring public company costs its public company obligations. In aggregate, the reduced public company expenses, along with the capital infusion, is expected to allow the Company to direct greater resources and capital to support and grow operations as it continues to offer patients and customers a viable alternative to current sleep apnea treatments.
Source: ProSomnus
