Loewen Warns of Possible Liquidation

Loewen Group Inc., North America’s second-largest funeral home chain, warned that it may have to liquidate or reorganize its assets as it reported sharply lower profit in the first quarter. The Vancouver, Canada-based company said it is resolving operational problems caused by its mid-1990s buying spree of cemeteries and funeral homes, but it remains buried under the massive debt produced by that acquisition policy. “We are facing extreme difficulties with our highly leveraged balance sheet and the resulting negative cash flow, which is impeding our ability to improve the operations of our company,” Chairman John Lacey said. Loewen’s earnings plunged 77% to $6.9 million, or 6 cents a share, in the first quarter, as revenue rose slightly to $311 million from $310 million. Higher operating costs and interest expense on Loewen’s $2.1 billion in long-term debt hurt results, as did the company’s switch in recent years from buying funeral homes to an emphasis on cemeteries. Loewen could be forced into bankruptcy if it cannot stem the red ink and refinance $300 million in senior notes due in October. The company won a temporary reprieve from its lenders in March, using assets from the sale of 124 cemeteries to reduce its $2-billion debt. Loewen’s shares closed unchanged at $1 on the NYSE.