New Credit Accord Announced : Westworld to Sell More Money-Losing Hospitals
Still struggling after divesting more than half its facilities, Westworld Community Healthcare Inc. said Monday that it expects to shed additional money-losing health care facilities in several rural locations.
“We expect that there will be several (divestitures) but we are evaluating their performance right now,” said Glenn Caster, a Westworld vice president. The Lake Forest company is seeking other operators for the facilities it plans to exit. Caster said Westworld has already targeted one location, but he declined to identify the facility.
Founded in 1982, Westworld swelled to 38 hospitals and 133 specialty clinics in 15 states by early 1986. The company, which began its retrenchment amid a deteriorating financial condition last year, now operates 16 hospitals and 40 clinics in eight states.
Westworld also said Monday that it has completed a restated credit agreement with its lenders that will enable the troubled company to defer interest payments on some $70 million in borrowings until June 30.
Caster refused to disclose how much the interest payments on those borrowings will total. The agreement covering Westworld’s revolving credit line, which involves several banks, will probably be renegotiated in June when it expires, he said.
Under terms of the restated credit agreement, Westworld will extend the March 17 deadline that had been set for its bondholders to swap $65 million in existing “junk bond” debt for new debentures whose holders would receive interest payments in Westworld stock.
Caster said no new date has been set, and a swap is not expected before April 1, when a $2.2-million interest payment on $30 million in subordinated notes becomes due. Since the beginning of December, Westworld has been in default on $2.5 million in interest payments due on $35 million in subordinated debentures.
The two debt issues were underwritten two years ago by the New York investment firm of Drexel Burnham Lambert Inc. to help finance Westworld’s expansion binge. So far, Caster said, Westworld has not met with any of its bondholders.
Separately, the company announced the resignation from its board of Walter S. Huff, who for a brief time had served as Westworld’s chairman after the December resignation of company founder Michael Dunn.
Huff, who held no daily responsibilities at Westworld, was succeeded as chairman last month by Stephen Arterburn, who was named president and chief executive Dec. 9, the day Dunn left the company.
Westworld, which plans soon to release 1986 results, said recently that it sustained a $100-million net loss for the 11 months ended Nov. 30. That loss stemmed largely from its retrenchment campaign.
