Primary care provider Cano Health (NYSE:CANO) plunged in pre-market trading after the company initiated bankruptcy proceedings. The company has filed Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware. In addition, Cano has also secured $150 million in financing from its existing lenders, which will be subject to Court approval.
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This new capital is expected to provide sufficient liquidity to the company throughout its restructuring process. Cano has entered into a Restructuring Support Agreement (RSA) with lenders that hold around 86% of its secured revolving and term loan debt and 92% of its senior unsecured notes. This agreement is likely to enable the company to substantially reduce its debt.
The RSA converts the company’s $1 billion secured debt to a combination of new debt and full equity ownership in the company and permits CANO to seek strategic partnerships, including the sale of the company or its assets, to maximize value for all its stakeholders.
Is CANO Stock a Good Buy?
Only two analysts have covered CANO stock over the past three months with Hold and Sell ratings and a Moderate Sell consensus rating. The average CANO price target of $3.75 implies an upside potential of 63% at current levels. Over the past year, CANO has tanked by more than 98%.
