CPC Bids $1 Billion for Debt-Wracked Charter Medical : Hospitals: The move by the Laguna Hills-based firm would create the nation’s largest provider of psychiatric services, but the Georgia company is cool to the offer.

In a bid to become the nation’s largest provider of psychiatric services, Laguna Hills-based Community Psychiatric Centers has made an unsolicited, $1.1-billion buyout offer for troubled Charter Medical Corp. of Macon, Ga.

A combination of the two companies would created a psychiatric hospital giant with 139 hospitals nationwide and combined annual revenues of $1.56 billion. CPC’s operations are concentrated in the West, and Charter’s are primarily in the East and Southeast.

“By merging with Charter we can with a single stroke become the only true national provider of psychiatric health-care services,” said James W. Conte, chairman and chief financial officer of CPC.

But Charter reacted coolly to the offer. A spokesman for Charter termed the buyout proposal “highly conditional” and “unrealistic.” And he said the attempted acquisition by CPC would result in “destabilization” of Charter.

The offer comes at a time when Charter is trying to implement a restructuring of its $1.7-billion debt. The company, which lost $311 million in its last fiscal year and $46.5 million in the last quarter, has been struggling under a huge debt load since it underwent a management-led leveraged buyout in 1988.

The proposal takeover is a bold effort by CPC, which is about a third of the size of Charter, to become the nation’s largest psychiatric care company. If succesful, the takeover would be the largest ever by an Orange County-based company.

Industry analysts said it was unclear whether CPC would be successful if Charter’s management resists its overture, but said it was financially strong enough to make such a combination work.

“Any company that is having as much trouble as Charter is clearly on the sales block,” Rae Alperstein, analyst with Kemper Securities Group in Los Angeles, said.

“Community has been looking for acquisitions and is a well-managed company with a lot of cash. By making this offer, it is forcing the hand of Charter’s management.”

But Charter’s spokesman said the company feared that CPC’s offer would cause a delay in the restructuring. Still the spokesman said that Charter’s board “will meet soon” to consider the offer from CPC, its largest competitor.

In a letter to Charter, Conte said CPC’s offer was contingent on a review of Charter’s books. He said the buyout offer would expire April 1 and CPC reserved the right to withdraw it at any time.

Conte said CPC made its offer public Thursday because it had been unable to get Charter to engage in “meaningful discussions.” He said he had previously met with Charter Chairman William A. Fickling Jr. and expressed interest in acquiring Charter.

“We haven’t had much luck going through the front door,” Conte said.

Conte said CPC proposed to pay for Charter with a combination of cash and common stock. He said CPC’s offer would be much better for Charter’s shareholders and creditors than the proposed restructuring plan.

While CPC said few of the two company’s market areas overlap, the Charter spokesman said Charter considers CPC to be its largest direct competitor and believes that the merger proposal raises anti-trust questions.

“Given the obvious and serious antitrust problems in over 20 markets as well as the incompatibility of approaches in the delivery of mental health care, we believe that CPC must be aware that their proposal is unrealistic,” the Charter spokesman said.

Taken private in a leveraged buyout three years ago, the once-profitable Charter has been battered by insurers’ efforts to reduce medical costs by limiting hospitalization for treatment of mental illness. Analysts said that in the last year, the company has suffered from a backlash against its aggressive media advertising in pursuit of the adolescent market.