Care Enterprises Inc., a nursing home operator based in Tustin, Tuesday extended its offer to exchange $68 million in company debentures and notes because the offer had not received sufficient acceptance from holders of the debentures and notes.
Completion of the swap of debt securities is considered crucial in the company's effort to restructure its finances and avoid bankruptcy.
The company has been negotiating this week with bond holders and their representatives in Boston and New York. In a prepared statement, Care Enterprises said that as of the Tuesday deadline for the exchange offer, only 16.8% of the debentures and .2% of the subordinated notes had been tendered to the company to accomplish the proposed swap.
A lawyer representing the company said 75% of the notes and bonds would have to be made available for the exchange plan to work.
In the statement, Care Enterprises said it was extending the exchange offer until Jan. 19. Meanwhile, the company said it "is continuing discussions with the holders of the debentures and the notes regarding a refinancing of its outstanding bank debt."
Care Enterprises said one of its major objectives is to swap its current bonds and notes for bonds and notes without current restrictions that prevent the refinancing of its $35-million bank debt. Company officials have said that they must refinance because they are unable to make a $5-million principal payment on the debt that originally was due Dec. 31. The banks agreed to extend the due date until Friday.
The company has changed the terms of its original proposal to exchange its debentures and notes. That proposal was introduced by the company in October and also failed to win sufficient approvals by a Dec. 15 deadline, which the company subsequently extended.
A key part of the revised exchange offer calls for holders of the company's debt securities to waive collecting accrued interest on the securities for about a year. In turn, the face value of the notes and debentures would be increased by $100 for each $1,000 in principal.