Care Enterprises Receives a Reprieve on Its Bank Loans : Wells Fargo, Citibank OK Extension on Interest Payment

After receiving a reprieve from major bank creditors Thursday, ailing Care Enterprises can continue efforts to engineer a swap of $68 million in company bonds and notes and arrange the refinancing of its $35 million in bank loans.

Representatives of Wells Fargo and Citibank gave the company a written agreement that it would extend the due date of a $5-million interest payment on bank loans from Thursday until Jan. 15, said Mark B. Kristof, the firm’s president.

More importantly, Kristof said, the banks agreed to send representatives to New York next week for meetings with most of the bond and note holders, most of whom are Wall Street institutional investors.

The banks and Care are trying to persuade those holders to accept the company’s offer to replace their existing bonds and notes with new bonds and notes containing less stringent financial restrictions. The swap is needed to appease the banks and obtain refinancing, Kristof said.

He said the new debt securities would add $100 of principal value for every $1,000 of existing principal. Interest, however, would not be paid until January, 1989.

So far, debt holders have been reluctant to trade their securities, especially without assurances that the banks will refinance the loans. Under a revised offer sent Tuesday, tendered securities cannot be swapped unless the banks agree to refinance. The revised offer expires Jan. 12.