Care Enterprises, the financially struggling operator of one of the nation's largest nursing home chains, said Friday that a plan to keep the company out of bankruptcy proceedings began to unravel this week.
In a filing with the Securities and Exchange Commission, the company disclosed that an unidentified lender on whom Care had been counting for help in refinancing its debt bowed out Tuesday.
Care's offices in Laguna Hills were closed Friday, and company officials could not be reached for comment.
$5 Million Payment Due
In an earlier SEC filing, the nursing home operator said it owed Wells Fargo Bank and Citibank $35 million and will be unable make a required $5 million loan payment due Dec. 31. The company has said it may have to file for protection for creditors under federal bankruptcy laws unless it can negotiate a new bank loan agreement.
Care had been counting on the unidentified lender to assume a significant portion of the $35 million it owes Wells Fargo and Citibank.
The company said it was notified Tuesday that the prospective lender had decided not to participate in the proposed refinancing of the company's debt.
"As a result, the company must seek a refinancing or restructuring of its existing credit facility from its existing bank lenders to avoid a payment default which would force the company to seek protection under the federal bankruptcy laws," Care said in Friday's filing. "There is no assurance that such a refinancing or restructuring can be arranged."
$10 Million Loss in '86
Care already has asked the owners of $68 million of its bonds and notes to swap them for bonds and notes with more lenient financial provisions.
The company lost $10 million last year, and the provisions of the existing debt securities prevent Care from refinancing its bank debt unless it maintains a specified level of earnings.
Care, which operates 106 nursing and retirement homes nationwide, blamed most of last year's loss on the cost of a lawsuit against an Ohio nursing home chain.