The harder it is to make a profit.
Rural/Metro Corp., a nationwide ambulance operator owned by Warburg Pincus LLC, sought bankruptcy protection after negotiating a proposal with lenders and certain noteholders to cut debt by about half and obtain a new infusion of equity capital.
The creditors’ support ensures the company will continue to provide vital emergency services, Chief Financial Officer Stephen Farber said in court papers filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
R/M operates ambulance services in about 700 communities in 21 states. It will continue to do that as it attempts to restructure, at least for now. If cost cutting is seen as a way to help restore profitability then management will look at unprofitable contracts with an eye to renegotiating those to increase subsidies and maybe reduce coverage. Some communities are likely to be eying this development nervously. In fact some already are,
GREENWOOD, Ind. (WISH) – Greenwood leaders say they have been reassured that a bankruptcy filing by the company that runs the city’s 911 ambulance service will not affect safety.
A Greenwood spokesperson said the city has a contingency plan just in case.
A reporter who was actually a reporter would press the spokesperson for at least some details on the “contingency plan”. What would they do if R/M said that they were pulling out of the area in 30 days?
Rural/Metro missed a July 15 interest payment on senior unsecured notes due in 2019, leading Standard & Poor’s to downgrade the debt and the corporate credit rating. The company has two note issuances, of $200 million and $108 million. S&P estimated that holders would recover no more than 10 percent in the event of a default.
If you’re going to go broke, I guess it pays to do it in a big way. This is not good for R/M’s stock holders. Or it’s parents stock holders either.
Not to mention potentially being a problem for R/M employees and the communities they serve.
I wonder what that means? Hmmm.
Don’t forget that R/M also provides fire services in some areas of the country. In fact, they started out providing fire services and then later spread into EMS.
I’ve long thought that trusting vital services like fire, EMS, and police to private entities was a mistake. It’s one thing to have your trash picked up by a private contractor, quite another for you well being to depend on one.