OTC National Market System Drops Westworld Listing
Shares of Westworld Community Healthcare have been dropped from the national over-the-counter stock market automated quotation system because of deficient shareholders’ equity, NASDAQ officials confirmed Tuesday.
The action, which took effect before the market opened Tuesday, is just the latest in a series of financial setbacks for Westworld. Once a fast-growing niche player in the rural health care business, the Lake Forest-based company is now scaling back its operations in a bid for survival
Companies whose stocks are traded on the national over-the-counter market system must maintain at least $375,000 in shareholders’ equity. Because Westworld’s net worth has fallen below that amount, its stock was dropped from the system, a NASDAQ spokeswoman said.
“We had no expectation of a delisting today,” said Glenn Caster, a Westworld spokesman. “I don’t know why we were delisted. We had requested a meeting with them, and we met with them, but this took us by surprise.”
Caster said that because Westworld is still preparing its year-end financial statements, it would be impossible to say what its shareholders’ equity amounts to. “There have been no financial reports, and I have no numbers yet,” he said.
Staggering under heavy, acquisition-related debt and hard hit by depressed economies in many rural areas, Westworld this month is expected to report its first-ever yearly loss. The company reported 1985 net earnings of $3.5 million.
Although company officials have declined to make specific projections, they have acknowledged that Westworld will report “substantial” write-offs for the year and quarter that ended Dec. 31.
And as earnings have evaporated, so has Wall Street’s confidence in Westworld stock. One broker on Tuesday quoted the battered issue at a bid price of 75 cents a share. Its all-time high was $17.50 a share, reached in late 1985.
Westworld, which burst onto the scene in 1982, expanded rapidly to 38 rural hospitals and dozens of clinics in 15 states by early 1986, when its troubles began to surface. The company currently is attempting to sell or close 22 unprofitable hospitals.
Since the beginning of December, Westworld has been in default on $2.5 million in interest payments due to the holders of $35 million in high-yield “junk bonds” underwritten by Drexel Burnham Lambert. Westworld’s total bond debt stands at $65 million in notes and debentures.
Because the company cannot make the interest payments on that debt, it has been pursuing a bond swap scheme, which would involve exchanging the current debt for new debentures. Holders of the new debentures would most likely receive interest payments in Westworld stock, the company said.
