Westworld Reports 11-Month Loss of About $100 Million
Financially stricken Westworld Community Healthcare Inc. on Tuesday reported a net loss of about $100 million for the 11 months ended Nov. 30.
The loss, due largely to the cost of shutting down dozens of its medical facilities nationwide, was announced as Westworld formally launched a debt-exchange plan that its officials hope will allow the troubled company to escape Chapter 11 reorganization proceedings under the U.S. Bankruptcy Code.
Since the beginning of December, Westworld has been in default on $2.5 million in interest payments due holders of $35 million in high-yield “junk bonds” underwritten by Drexel Burnham Lambert.
The 11-month loss compares to net income of $3.5 million reported for the same period a year earlier.
The Lake Forest company’s revenues for the 11 months were $178 million, up 49% from $119.5 million.
Once a high-flying player in the health-care field, Westworld largely traced the disastrous results to charges of about $71 million stemming from the previously announced selling or closing of 23 of the 40 health-care facilities it operates in rural areas around the nation.
On Feb. 10, Westworld was dropped from the national over-the-counter stock market automated quotation system because of deficient shareholders’ equity. The action was just one in a series of financial setbacks for Westworld, which has been scaling back its operations in an effort to survive.
Of the $71 million in losses related to divestitures, the company attributed about $55 million to the write-down of assets associated with those operations closed or sold. Most of the remainder, or about $16 million, is due to the write-down of uncollectible accounts from the closed operations, said Glenn Caster, vice president of Westworld.
Additional Losses
An additional $27 million in losses stems from write-downs of bad debts, plus some operating losses in facilities that Westworld plans to keep, according to Caster. A loss carryforward from prior divestitures and write-downs of uncollectible debts accounted for $2 million more in losses, Caster said.
Westworld expects to report its 12-month results by late February.
The bond swap scheme would allow Westworld to exchange its total long-term bond debt of $65 million in notes and debentures for new securities. Barring a revision of the plan, noteholders have until March 17 to swap existing notes for two new securities. Caster said that holders of the new notes will receive “the same amount of principal, plus some Westworld common stock” at initially reduced interest rates that “fairly quickly gets back to (a graduated) interest rate that’s higher” than under the old notes.
