The withdrawal last week of a potential new lender to help underwrite its $35 million in bank debt will not destroy Care Enterprises' bid to stave off bankruptcy, officials of the struggling nursing home operator said Monday.
Mark Kristof, treasurer of Laguna Hills-based Care Enterprises, said Wells Fargo and Citibank, the company's current lenders, "would have welcomed" a third lender to carry part of the risk. But he does not anticipate that the loss of the unidentified lender will destroy the company's chances to refinance its bank loans and obtain an extended line of credit.
Unless the refinancing is accomplished, Care officials have said, the company will be unable to make payments that come due on its debt and might be forced to enter a bankruptcy proceeding.
Kristof said Wells Fargo and Citibank "have been telling us all along that they are willing to work toward a refinancing regardless whether another lender is brought into this."
He nonetheless acknowledged that the loss of the third lender, which he said had considered giving Care Enterprises an additional $22-million line of credit, will hurt the refinancing negotiations.
"We had been working with Wells Fargo and Citibank on the assumption that the third lender would come in," he said.
He estimated that without the third lender, the company's refinancing plan will be hammered out by the end, rather than the middle, of December.
When the third lender pulled out last Tuesday, Kristof said, "they didn't give us reasons." He said the lender decided not to participate in a new financing package after talking to Care Enterprises management, accountants and "all manner of people who could give them input on the industry."
Care Enterprises filed a document last week with the Securities and Exchange Commission that amended an offering circular disseminated earlier to owners of its bonds and notes. The amendment described the withdrawal of the third lender.
The company has asked the owners of $68 million of its notes and bonds to swap them for securities carrying slightly higher interest rates but without restrictions that currently prohibit the company from refinancing.