Vencor addresses capital structure issues.Fighting to stay afloat, Vencor Inc. has received an extension on its bank credit waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. , is in discussions with Ventas, its real estate arm, to obtain rent concessions, and has delayed filing of its 1998 annual report. The Louisville, Kentucky-based nursing home chain's senior bank lenders have granted Vencor a further waiver, through May 28, of breaches by Vencor of certain financial covenants under its bank credit facility. Pursuant to the waiver, the aggregate commitment under the revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. portion of the facility has been permanently reduced to $125 million from $300 million. During the waiver period, borrowings under the revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to will be limited to $55 million. Meanwhile, Vencor is in discussions with Ventas Inc. concerning possible reductions in the rental payments due under the master leases covering about 250 of Vencor's facilities. The leases were entered into as part of the reorganization of Ventas and the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of Vencor to Ventas shareholders on May 1, 1998. In view of the ongoing discussions, the companies have agreed to postpone, through April 12, any claims either may have against the other, including any claims Ventas would have for Vencor's decision not to pay rent due on April 1. Finally, Vencor announced that the filing of its 1998 annual report would be delayed until April 15. The company cited two reasons. First, significant operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in the fourth quarter of 1998 and lower expectations of future operating results and cash flows have led Vencor to believe that the value of its long-lived assets, including property, equipment, and goodwill, are impaired. Vencor said it needed more time to complete the appropriate valuation calculations. Second, Vencor said it needed more time to confirm that the master leases with Ventas were properly accounted for as operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. . If they weren't, Vencor would have to restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its financial statements for the second and third quarters of 1998. Both of these events could have a material adverse effect on the company's results, Vencor said. |
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