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EXHIBIT 99.1
[CORAM HEALTHCARE LOGO]
FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION, CONTACT:
AUGUST 8, 2000 Kurt Davis, 303-672-8830
CORAM HEALTHCARE CORPORATION AND CORAM, INC. FILE VOLUNTARY
PETITIONS FOR CHAPTER 11 BANKRUPTCY PROTECTION
TO FACILITATE DEBT RESTRUCTURING
All Subsidiaries to Continue Normal Operations and Continue Fulfilling Payroll,
Vendor and Patient Care Obligations in the Normal Course of Business;
Noteholders in Agreement to Reduce and Convert Outstanding Debt
to Equity Ownership and to Provide DIP Financing
DENVER-AUGUST 8, 2000--As part of its previously announced effort to restructure
its capital obligations, Coram Healthcare Corporation and Coram, Inc. ("Coram
Healthcare") (Coram Healthcare, OTCBB: CRHE) today filed voluntary petitions
with the U.S. Bankruptcy Court for the District of Delaware under Chapter 11 of
the U.S. Bankruptcy Code. The Company elected to seek Court protection in order
to facilitate restructuring of its debt while continuing to maintain normal
business operations in all of the Company's subsidiaries and their branches. The
Company took this step with the full support of the three lenders holding the
Company's principal debt instruments.
Coram Healthcare Corporation and Coram, Inc. are the parent holding
companies of the operating subsidiaries, including all branch offices,
collectively and commonly known as "Coram Healthcare." Because the operating
subsidiaries, including all branch offices, have not filed for bankruptcy
protection, the subsidiaries and their branches are expected to continue
generating positive cash flow and continue paying, in the normal course of
business, all wages, benefits and other employee obligations, as well as all
outstanding and ongoing accounts payable to their contractors and vendors.
"Operationally our Company is sound and generating adequate cash flow
to meet all of its day-to-day obligations to patients, employees and suppliers,"
said Coram Healthcare chairman, president and chief executive officer Daniel D.
Crowley.
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CORAM HEALTHCARE
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"The Company is not having difficulty paying its normal business expenses. All
accounts payable are current and we are not seeking relief from those expenses.
This action is solely for the purpose of reducing and restructuring debt and
maintaining compliance with Stark II so that Coram's financial health can at
long last compare favorably with the undisputed quality of its clinical
services," Mr. Crowley said.
The Company's determination to restructure its debt was based upon its
currently inadequate level of balance sheet equity and its impact on the
Company's ability to remain in compliance with the physician ownership and
referral provisions of the Omnibus Budget Reconciliation Act of 1993, commonly
known as "Stark II." Despite positive cash flow and improving, positive results
from operations, the Company's three-year average balance sheet equity is
expected, in the first quarter of 2001, to fall below the level that Stark II
requires to satisfy the exception for ownership by referring physicians or their
family members of stock in publicly-traded companies. Under the terms of the
Company's plan presented to the Court, it would comply with all provisions of
Stark II now and in the future.
In addition, the Company would not likely be able to repay the $159
million of outstanding Series A notes that are scheduled to mature in May 2001
as well as prepay $92 million in Series B notes that, according to the
covenants, debt holders have the right to require at the same time.
Under the Company's plan of reorganization, the three holders of the
debt instruments have agreed to reduce substantially the Company's indebtedness.
The Company's debt holders have proposed in the plan to forgive approximately
$71 million of the remaining outstanding debt, which would lower the principal
debt obligations to approximately $180 million. The debt holders have agreed to
restructure the Company's indebtedness at a favorable rate of interest. The
forgiven debt would be converted into equity ownership of the enterprise with
the Company's three principal debt holders owning approximately 100 percent of
the equity.
The Company, which has previously reported and continues to achieve
positive cash flow from operations, has also obtained a line of credit on
favorable terms through a commitment for up to $40 million in
debtor-in-possession ("DIP") financing from the principal debt holders. The
Company has requested the Court's permission to access the
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CORAM HEALTHCARE
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DIP financing in the unlikely event that funds are needed to fulfill normal
business obligations and other cash needs during the restructuring process.
If the plan is approved substantially as proposed, the Company is
expected to be capable of producing positive net income. The Company's plan
calls for emergence from bankruptcy as a privately held company before the end
of the fourth quarter of 2000. The Company's proposed restructuring plan
provides no recoveries for the holders of Company common stock currently
outstanding.
"Over the years, Coram's patients, referral sources and suppliers have
been very pleased with the quality of our services, but some have expressed
concern about the company's indebtedness and related poor financial
performance," said Mr. Crowley. "We respectfully hope that they will now support
us as we take this important step that will address those concerns and create a
stronger company to better serve them. We have taken every precaution to see
that patient services and payments to our employees and suppliers will not be
interrupted during this process."
Denver-based Coram Healthcare, through its subsidiaries, including all
branch offices, is a national leader in providing quality home infusion
therapies and support for clinical trials, medical product development and
medical informatics.
Note: Except for historical information, all other statements in this press
release are "forward-looking" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may vary materially
from these forward-looking statements due to important risk factors including
the Company's lack of profitability; uncertainties associated with the outcomes
of certain pending legal proceedings; the Company's significant level of
outstanding indebtedness; the Company's need to obtain additional financing or
equity; uncertainties associated with the dilution that would occur if the
Company's existing debt holders exercise their equity conversion rights; the
Company's limited liquidity; and the Company's dependence upon the prices paid
by third party payors for the Company's services; and certain other factors.
Certain risk factors are described in greater detail in the Company's Form 10-K
Annual Report and 10-Q Quarterly Report on file with the Securities and Exchange
Commission.
