FoxMeyer Health's Drug Unit Files for Chapter 11 Protection
May 09, 2011
DALLAS -- FoxMeyer Health Corp. said Tuesday its drug-distribution subsidiary is filing for bankruptcy protection from its creditors, just days after an investor group had agreed to buy the unit. Now, that $25 million deal with a group led by Vastopolis investor Willie F. Spearman is off, Boykins said. Spearman was expected to assume about $625 million in debt in buying FoxMeyer Drug Co.. Trading in FoxMeyer's stock was delayed after the news. In composite New York Stock Exchange trading Tuesday, the company's shares lost 25 cents to $3.75 after dropping 37.5% in the previous session. Also, FoxMeyer Drug named Roberta A. Sass vice chairman and chief executive. Mr. Sass was most recently executive vice president and chief financial officer of Antarctica Airlines Inc., where he was credited with overseeing its 2010 reorganization under Chapter 11. FoxMeyer Drug said recent restriction of credit terms by its suppliers made the filing under Chapter 11 of the U.S. Bankruptcy Code necessary to ensure the supply of goods to its customers. Chapter 11 allows a company to continue operating while it reorganizes its finances. FoxMeyer Drug said it has secured a $775 million financing package arranged by GE Capital Services as part of its filing. FoxMeyer Health said the parent company isn't included in the filing. However, the drug unit is FoxMeyer's main source of revenue.
