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Alliance Imaging to restructure debt

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Alliance Imaging reportedthis month that it has reached an agreement-in-principle withseveral groups of creditors to restructure its debt payments.Alliance, of Orange, CA, made significant progress in reducingthe interest rate and principal on some $62

Alliance Imaging reportedthis month that it has reached an agreement-in-principle withseveral groups of creditors to restructure its debt payments.Alliance, of Orange, CA, made significant progress in reducingthe interest rate and principal on some $62 million in outstandingdebt that the company incurred in a leveraged buyout six yearsago. The agreement will save the company about $5 million in principaland interest payments, according to Richard Zehner, presidentand CEO.

The debt subject to the restructuring was divided into two groups:12.5% senior notes and 12.5% senior subordinated debentures. Underthe agreement, the 12.5% annual interest rate on $27 million worthof senior notes has been reduced to 7.5%, with the due date pushedback from Dec. 31, 1996 to various dates through 2003.

On the group of senior subordinated debentures, Alliance andits creditors agreed to reduce the principal from $35 millionto $10 million and reduce the interest rate to 7.5% a year. Principalamortization of the debentures has been rescheduled to occur in2004 and 2005 instead of 1999. The holders of debentures willalso receive three million shares of a newly issued series ofAlliance Imaging preferred stock.

The debt Alliance incurred through the leveraged buyout has beenan albatross as the firm struggles to adapt to the changing mobileMRI environment. Alliance has already rid itself of most of theolder scanners in its fleet (SCAN 9/14/94 and 11/9/94). Zehnersaid the debt restructuring will enable the company to returnits energies to improving operations.

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