Care Enterprises to Buy $2 Million in Stock

Despite its highly leveraged financial position, Care Enterprises Tuesday said it will seek bank financing for the purchase of $2 million of its own class A and B common stock for the company’s new employee stock ownership plan.

The purchases will take place either on the open market or in private transactions that most likely would include company founders Dee R. Bangerter, Lee R. Bangerter and Ted D. Nelson--who together hold about 65% of all shares.

The company, said Mark Kristof, Care Enterprises’ treasurer, will begin making purchases immediately and “a review by legal counsel” will be held if the three founders are among those offering stock for sale.

The Laguna Hills-based nursing home operator currently has 2.8 million shares of its class A common stock and 5.7 million of its class B common shares outstanding. On Tuesday, the class A shares closed on the American Stock Exchange at $6.50, up 75 cents, while the class B stock closed at $7 a share, an increase of 62.5 cents.

Although Care Enterprises has not yet reported earnings for the quarter and year ended Dec. 31, the company posted a substantial third quarter increase in revenues but only a small hike in net income. Hefty interest payments on Care’s long-term debt cut into earnings for the period, officials said.

As previously reported, net earnings during the third quarter were $1.1 million, up from $1 million. Revenues climbed 64% to $171.7 million from $38.1 million. Interest payments on approximately $182 million in debt--amassed to pay for an aggressive expansion program--totaled $14.5 million during the quarter.