Comp Care Reports Collapse of Key Merger Deal : Financing: Failure of a planned deal with First Hospital Corp. pushes Comprehensive Care Corp. of Irvine one step closer to filing for bankruptcy protection from creditors.

Comprehensive Care Corp. announced Friday that a crucial merger has fallen apart, pushing the nation’s largest alcohol and drug treatment center one step closer to filing for bankruptcy protection from creditors.

First Hospital Corp. of Norfolk, Va., withdrew from the merger--approved by shareholders last month--after one of its bankers refused to provide financing for the deal because of Comp Care’s deteriorating condition.

On Wednesday Comp Care posted a $4.7-million loss for the first quarter ended Aug. 31, news that caused the company’s stock to plunge 57% to $3.625 from $8.375. The company’s battered stock, which recovered slightly Thursday, fell 87 1/2 cents on Friday to $3.875.

Marilyn MacNiven-Young, vice president and general counsel of Comp Care, said the company is weighing several options, including selling assets or searching for another merger partner. She said filing for Chapter 11 bankruptcy protection is not now under consideration.

But analysts said they consider bankruptcy to be a strong possibility for Comp Care if it cannot renegotiate its bank debt.

Termination of the merger agreement “leaves Comp Care in a very precarious position,” said Margo Vignola, analyst with Salomon Bros., the New York investment banker. “If the banks decide to speed up their credit demands, it could dump them (Comp Care) into Chapter 11.”

Comp Care said in a filing with the Securities and Exchange Commission this week that it could not remain open in its present form unless it finds a merger partner or gets an extension on its considerable debt obligations.

“The continuation of (Comp Care) is dependent upon either the completion of a reorganization . . . or resolution of short-term operating and liquidity problems,” Comp Care said in the SEC filing.

Comp Care’s announcement Friday did not contain any indication that the beleaguered company, which employs about 4,500 people, has found a way to repay the $23 million in debt that was due Oct. 18.

“This was a company that was having its problems a year ago but was viable. If you breathed bankruptcy a year ago, people would have laughed,” Vignola said. “Not now.”

Some analysts speculated that First Hospital might try to buy Comp Care anyway, albeit at a much lower price than the recent offer of $3 a share in cash plus notes and shares of First Hospital stock. While the company has piled up $10 million in debts in the past six months, Comp Care still owns considerable assets, including 22 health-care facilities.

“I suspect they may make a subsequent offer,” said Jeffrey Kilpatrick, president of Newport Securities Corp., a Costa Mesa brokerage. “They could come up with some other possible transaction but it’s hard to say what.”

MacNiven-Young agreed First Hospital may try to renegotiate a merger.

“They are very committed to doing a transaction,” she said. “I believe they are as disappointed at the outcome and as shocked at the outcome as we are.”

Executives at First Hospital were unavailable for comment. Comp Care has scheduled a board of directors meeting for Tuesday.