The Providence Service Corporation (“Providence” or the “Company”) (Nasdaq: PRSC), the nation’s largest provider of non-emergency medical transportation (“NEMT”) programs and holder of a minority interest in Matrix Medical Network, today announced that the Company has entered into a strategic Conversion Agreement with Coliseum Capital Management, LLC (“Coliseum”), providing initially for the conversion of 738,240 shares of the Company’s 5.5%/8.5% Series A convertible preferred stock held by Coliseum into cash totaling approximately $80.7 million plus approximately 925,600 shares of Providence common stock. Coliseum owns approximately 96.5% of the Company’s preferred stock, or 765,916 preferred shares.

After the initial conversion of Coliseum’s preferred shares, which is expected to occur on June 11, 2020, the Company plans to file a proxy statement to allow for the redemption of the remaining preferred shares, including those held by minority holders.

Pro forma for the conversion of Coliseum’s preferred shares on June 11, 2020, Coliseum will own approximately 13.0% of the Company’s outstanding common shares. The common shares currently owned by Coliseum as well as those issued to Coliseum from the preferred conversion will be subject to a 120 day lock up, after which Coliseum will be permitted to transfer up to 25% of its common shares, per quarter (on a cumulative basis). This transaction is expected to be accretive to Providence’s earnings.

Daniel E. Greenleaf, President and Chief Executive Officer of Providence, commented, “We are extremely pleased to announce this conversion agreement with Coliseum Capital. The conversion of our preferred stock simplifies our capital structure, which will consist of common equity and a manageable level of debt. Additionally, this transaction creates alignment among our stakeholders, removes restrictive covenants, enhances cash flow, addresses a perceived overhang among many of our shareholders and positions us to build greater common share liquidity in an orderly way.” 

Mr. Greenleaf concluded, “We would like to thank Coliseum for a great partnership, which has contributed meaningfully to the Company’s value creation over the last eight years, and we are grateful for Coliseum’s continued support and vote of confidence in our strategy to grow, innovate and lead the nation’s non-emergency medical transportation industry.”

Deutsche Bank Securities Inc. acted as exclusive financial advisor to the Company for this transaction. Gibson, Dunn & Crutcher LLP is acting as legal counsel to the Company.