West Palm Beach, Fla – HearUSA announced that Audiology Distribution, LLC, a wholly owned subsidiary of Siemens Hearing Instruments Inc, submitted the highest and best bid for the purchase of HearUSA in the July 29, 2011 Section 363 auction conducted under bidding procedures established for HearUSA’s Chapter 11 bankruptcy proceedings.
The U.S. Bankruptcy Court for the Southern District of Florida, West Palm Beach Division, approved the sale as of August 1, 2011. The press release states that the transaction is expected to close within 30 days of the final sale order.
The bid by Audiology Distribution includes aggregate consideration of approximately $129 million plus a waiver by Siemens of distribution on 6.4 million shares of HearUSA common stock owned by Siemens.
For purposes of the bidding, the company estimated the value of the waiver of distribution to be in the range of $6 to $7 million, subject to final reconciliation of assumed liabilities, excluded liabilities, taxes, and common stock dilution effects of the transaction.
The estimated $129 million purchase price is comprised of $66.8 million in cash, which includes repayment or assumption of the $10 million debtor-in-possession (DIP) financing provided by the stalking horse bidder, William Demant Holdings A/S, plus the payment of cure costs for assumed contracts, the assumption of various liabilities of the company and certain of its subsidiaries, and the assumption of the company’s existing supply agreement with Siemens.
In a separate statement to shareholders, William Demant wrote, "By HearUSA’s completion of the transaction with the highest bidder (closing), the agreement entered into prior to the auction process, when William Demant was selected as stalking horse bidder, will expire. As a consequence of this, HearUSA will be obliged to pay William Demant a break-up fee of $2 million and to repay the bridge financing of $10 million (DIP loan) made available during the bankruptcy proceedings. The outcome will not affect William Demant’s previously announced expectations of the year."
The HearUSA press release further states that the cash portion of the purchase price in excess of the repayment or assumption of the DIP financing will be used to pay the company’s remaining unsecured creditor claims and wind up costs of the company, with the balance to be distributed to equity holders of the company.