Saturday, November 3, 2012

Carlyle Group's LifeCare Nightmare Nearly Over?

Carlyle Group affiliate LifeCare Holdings sits in purgatory, given it defaulted on its debt and loan waivers expired November 1.  What will happen?  Carlyle could:

1.  Sell LifeCare
2.  Declare bankruptcy and turn the company over to lenders, who then could sell the company (like Carlyle did with Oriental Trading, just resold by KKR & company to Warren Buffet's Berkshire Hathaway)..

Once Carlyle loses LifeCare, it will jettison its role in owning the New Orleans hospital that lost 25 patients in the horrific aftermath of Hurricane Katrina.  It may be a relief to bury that PEU nightmare.

Update 11-8-12:  Carlyle extended LifeCare's loan waivers until December 15.

Update 11-15-12:  LifeCare paid Rothschild et al $5.7 million instead of making a $5.5 million payment on its debt.  That started Carlyle's strategic default of LifeCare.   Carlyle's planning for a change in control.