Stockholder Offers to Buy All or Part of Tustin Nursing Home Chain

An Ohio nursing home operator said Tuesday he is willing to buy all or part of financially beleaguered Care Enterprises for an unspecified amount of cash and is “available immediately” to negotiate a deal.

Ralph E. Hazelbaker of Columbus said in a prepared statement that he is willing to buy all the assets of Care Enterprises, a Tustin-based nursing home chain, or the company’s Americare properties, which Hazelbaker once owned and operated.

Hazelbaker, who owns slightly more than 3% of Care Enterprises’ stock, said that financing “is available for a reasonable purchase price and at reasonable terms.”

Hazelbaker, who was en route to Albuquerque and couldn’t be reached for comment, said in the statement that his intent was “amicable” and his purchase would help the company “resolve its acute financial crisis and avoid possible bankruptcy action.”

No Enthusiastic Response

Hazelbaker worked for Care Enterprises briefly after selling his Americare nursing home operations to Care Enterprises two years ago for $25 million. He now heads another nursing home firm, Paradigm Corp. of Columbus.

His offer did not receive an enthusiastic response from Mark Mostow, Care Enterprises’ marketing director and the only company executive available for comment Tuesday.

“Care is confident in its ability to work with existing bank lenders and debt holders, and believes it will not need to accept offers like Hazelbaker’s,” he said.

Hazelbaker did not specify how much he would be willing to pay for Care, but one industry observer, Jim McCamant, editor of Medical Technology Stock Letter in Berkeley, said the company could be bought for $20 million.

Care Enterprises’ most pressing problem is a $5-million interest payment due Thursday on $35 million in bank loans, Mostow said.

Revising Its Offer

In a separate announcement Tuesday, Care said it is revising its offer to swap $68 million in company bonds and notes for new bonds and notes with less stringent restrictions. The revisions are designed to entice more debt holders to tender their securities, Mostow said.

Wells Fargo and Citibank, the company’s principal bank lenders, want the bond and note swap to go through before they agree to refinance the loans, Mostow said.

As of Dec. 23, only $6 million in bonds and $30,000 in notes had been tendered to the company under the terms of its original exchange offer. Those securities represent 11.6% and 0.2%, respectively, of the total bonds and notes outstanding. The company needs to receive at least 51% of both types of debt instruments for the swap to go through.

The key part of the revised offer, he said, is a guarantee that the company would accept the tendered debt securities only if the banks refinance the loans. Bond and note holders had wanted the banks to refinance first, and the banks had wanted the debt holders to convert their securities first, Mostow said.

Another key provision in the revised offer prohibits the company from paying interest on the new bonds and notes in the form of common stock. Bond and note holders would get cash instead, Mostow said.

Care Enterprises, one of the nation’s largest nursing home companies, owns or operates 105 nursing home facilities, six pharmacies and 12 home health care facilities nationwide. It posted a $13-million loss for the first nine months of 1987, compared with a $772,000 loss in the same period last year.

Care’s Class B common stock, which carries full voting rights, closed Tuesday unchanged at 87.5 cents per share. Its Class A common stock, which carries a tenth of a vote per share, closed at 37.5 cents a share, down 12.5 cents.

CARE ENTERPRISES AT A GLANCE Based in Tustin, Care Enterprises has grown from a small family business founded in 1964 to one of the largest publicly owned providers of long-term care in the United States. The company operates 105 skilled and intermediate nursing facilities and retirement homes in California, New Mexico, Utah, Arizona, Ohio, West Virginia and Florida.

9 months (in millions) 1987 1986 1985 1984 1983 Revenue $193.8 $264.8 $238.5 $151.6 $102.3 Income (loss) ($13.0) ($9.9) $3.6 ($3.3) $0.95

Assets NA

Number of employees approximately 1,500

Shares outstanding Class A, 5.6 million; Class B, 11.2 million

52-week price range Class A, $4.50-$0.375; Class B, $5.125-$0.75

Tuesday’s prices (Amex) Class A, $0.375, down $0.125

Class B, $0.875, unchanged