Wednesday, September 19, 2012

Debt Holders Save Carlyle's LifeCare from Immediate Default

The Carlyle Group twisted LifeCare debt holders' arms enough to get LifeCare Holdings a forty-six day extension to restructure its debt.  The Sacramento Bee picked up the company's press release:
LifeCare Holdings, Inc. (the "Company") has obtained loan waivers from its Senior Secured Lenders and more than a majority of its Senior Subordinated Noteholders.  The waivers, which expire on November 1, 2012, provide the Company additional time to continue discussions with its creditors, potential buyers and other interested parties as it pursues longer−term solutions for its debt structure.

Read more here:

This move shows debt holders aren't particularly interested in taking over LifeCare.  Oddly, Carlyle took over Brintons and Mrs. Fields in the same manner it may lose LifeCare. In the Brintons' move Carlyle dumped the pension on the British public.

I'm curious as to how much LifeCare debt Carlyle holds and whether other Carlyle funds have wagers on LifeCare's credit failure?  I hope LifeCare's debt holders understand how much Carlyle co-founder Bill Conway hates a level playing field.

Update 9-22-12:  Conway recently bragged about doing deals at 6% interest.  LifeCare's debt tacked on an extra 2% during the waiver period.