Careismatic Brands, LLC Boosts Financial Foundation for Long-Term Growth

Careismatic Brands, LLC (CBI), the world’s largest provider of medical apparel, has initiated a financial restructuring process, revealing its entry into a Restructuring Support Agreement (RSA) with its equity sponsor and an ad hoc group representing approximately 76% of its first lien lenders and 70% of its second lien lenders. This strategic move aims to fortify the company’s balance sheet, paving the way for future success. The initiation of Chapter 11 relief petitions in the United States Bankruptcy Court for the District of New Jersey will allow CBI to reset its financial foundation by eliminating $833 million of prepetition debt and significantly reducing the burden of interest expenses.

Sid Lakhani, CEO of CBI, expressed optimism about the announcement, emphasizing that this development is a crucial step forward in executing key strategic initiatives for long-term profitable growth. With a more robust financial foundation, the company intends to maintain its leadership in the healthcare apparel industry, catering to the community of care well into the future. Lakhani reaffirmed the company’s commitment to leveraging its market-leading brands, unmatched scale, and global infrastructure to provide best-in-class services and products to its customers.

The RSA outlines plans for substantial deleveraging through either a full equitization of the company’s first lien debt or an alternative value-maximizing strategy. It also includes specific milestones, with a 120-day period for the Court to confirm a Chapter 11 plan, subject to certain extensions.

To support the in-court process, CBI will secure $125 million debtor-in-possession (DIP) financing from prepetition first lien lenders, subject to Court approval. This financing is expected to provide additional liquidity to sustain operations during the Chapter 11 process.

To ensure a smooth transition into Chapter 11, CBI has filed customary “First Day Motions” with the Court. The company aims to continue its operations without disruption, including the timely payment of employee wages and benefits, maintaining customer programs, and honoring obligations to vendors.

It’s noteworthy that the international entities of the company are unaffected by this filing and will continue to operate normally.

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