Oncure Exploring Options Leading up to May Coupon

Cancer treatment center operator Oncure Medical is weighing its options including a sale of the company, a sale of certain assets, or a debt restructuring leading up to a May interest payment, according to sources. Jefferies is advising the company while GLC Advisors has been representing bondholders since late last year to work on a solution, according to multiple sources.

Professionals following the credit say bondholders could get better value in sale of the company, though it’s uncertain which strategic is poised to make such an acquisition. A debt-for-equity restructuring could also be a solution if a buyer does not come forward, sources have speculated.

Oncure’s distressed issue of $210 million issue of 11.75% notes last traded at 48 cents on the dollar, according to trade data, and has been under pressure since 12 months ago, when the market started to digest the fact reimbursement cuts that were coming for radiation oncology. The bonds were trading in the mid-80s early 2012, but by March were in the 60s. Later on July 6, Centers for Medicare and Medicaid Services proposed an aggregate payment reduction of 15% for radiation oncology. The eventual cut effective Jan. 1 was 7%, according to the CMS report.

Oncure signed a supplemental indenture so they don’t have to publicly report, as the company hasn’t put out a quarterly report since August for its six months ended June 30.

Moody’s withdrew its rating Jan. 28 when the notes and corporate rating was a Caa3 and high probability of default. On Sept. 20, Standard & Poor's Ratings withdrew its rating, including it B- corporate at the company’s request.

Even by the time of its last financial disclosure, Oncure’s losses were increasing, with a $5.8 million loss for the six months ended June 30, versus $4 million the same period year prior.
OnCure, a subsidiary of Oncure Holdings, operates radiation oncology treatment centers for cancer patients at 37 centers throughout California, Florida and Indiana.

The Englewood, Co.-based OnCure Medical completed the offering of secured notes via Jefferies in 2010. The Privately-held company is owned by Genstar Capital, Ares Management, Caisse de Depot and management. - Max Frumes



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