We are advising an ad hoc group of first-lien lenders and unsecured noteholders in connection with Air Methods’ chapter 11 restructuring

Davis Polk is advising an ad hoc group of first-lien lenders and unsecured noteholders in connection with the chapter 11 restructuring and recapitalization of Air Methods Corporation. The restructuring, which is already supported by 71.6% of the aggregate first term loan holders, 66.8% of the aggregate unsecured note holders and the company’s financial sponsor, will reduce the company’s funded debt by approximately $1.7 billion. 

Air Methods and the consenting parties entered into a restructuring support agreement on October 23, 2023, and Air Methods then commenced solicitation of votes on a plan of reorganization. Air Methods filed its chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas on October 24, 2023. At the first-day hearing, Judge Marvin Isgur approved the interim debtor-in-possession (DIP) order and other first-day relief.

In connection with the restructuring, members of the ad hoc lender group have agreed to backstop an $80 million new-money DIP financing facility. The DIP package also includes a roll-up of prepetition term loans of up to $75 million, which rolled-up loans will be converted into exit term loans upon emergence from bankruptcy. The DIP financing is open to all first-lien lenders. The restructuring further contemplates (i) an up to $200 million debt rights offering for exit term loans with a stapled equity feature, (ii) an equity rights offering to provide incremental liquidity and (iii) a private placement to finance an up-to $135 million (reduced dollar-for-dollar for any amounts funded under the equity rights offering) cash-out option for lenders to receive cash at a 10% discount to plan equity value in lieu of equity, each of which is backstopped (or, in the case of the private placement, fully committed) by members of the ad hoc lender group.

Air Methods is the nation’s leading air medical service, delivering lifesaving care to more than 100,000 people every year. With more than 40 years of air medical experience, Air Methods is the preferred partner for hospitals and one of the nation’s largest community-based providers of air medical services.

The Davis Polk restructuring team includes partners Damian S. Schaible and Adam L. Shpeen, counsel Stephen D. Piraino and Robert (Bodie) Stewart and associates David Kratzer and Hailey W. Klabo. The finance team includes counsel Jon Finelli and associates Timothy H. Oyen and Carly (Yoona) Cha. Associates Moses Farzan Nekou and Kerim K. Aksoy are providing capital markets advice. Partner Corey M. Goodman is providing tax advice. All members of the Davis Polk team are based in the New York office.