Investor Group Drops SafeGuard Alliance

An investment group ended its effort to infuse $40 million in SafeGuard Health Enterprises Inc. and take control of the dental care insurer, the Aliso Viejo company said Wednesday.

The company also said that it has failed to make a payment due Jan. 28 on its line of credit, but its two lenders have not declared a default yet. The company and its lenders are continuing to negotiate the terms.

The investment group, led by CAI Partners and Co. II LP and Jack R. Anderson, terminated the agreement reached in June, but SafeGuard said the group has advised the company that it is still interested in buying the company “on mutually satisfactory terms.”

SafeGuard said that in the meantime it will look at other options. It hired an investment banker, which it didn’t identify, to help it.

The company also is talking with regulators. It is restating its financial statements for 1998 and 1997 and for the first nine months last year.