DENVER, April 26, 2000 (PRIMEZONE) -- Coram Healthcare Corporation (OTCBB:CRHE) today announced that it has entered into an agreement with Aetna U.S. Healthcare Inc. settling all legal claims arising from a contract dispute between the companies and dismissing the litigation that had been pending.
The lawsuit was amicably resolved with the parties agreeing to keep the terms confidential. The companies also are prepared to make good faith efforts to negotiate a new contract for home infusion services.
"This settlement will allow us to focus all of our energy and resources on providing quality care for patients and on the key operating and financial initiatives that will give Coram Healthcare the opportunity to succeed as we go forward," said Coram Healthcare President, Chairman and Chief Executive Officer Daniel D. Crowley. "The legal dispute has overshadowed many positive things occurring at Coram. Eliminating this distraction should provide reassurance to our patients, referring providers, vendors and employees."
Mr. Crowley added: "It is important that we were able to resolve our differences amicably and now be able to negotiate a possible new home infusion services contract with Aetna U.S. Healthcare. We appreciate Aetna's willingness to work with us toward a mutually beneficial resolution."
With the resolution of this matter, the forbearance period on Coram's interest obligations on its Series A and B notes has ended and quarterly debt service obligations of approximately $5.3 million will resume. As of March 31, 2000, the aggregate principal amounts outstanding under the Series A and B notes were $168.4 million and $92.1 million, respectively.
"The next major corporate initiative is to create a capital structure that will position Coram on a stronger financial foundation by reducing debt," said Mr. Crowley. "We believe one of the ways to accomplish this is to convert a significant portion of the debt to equity. Along these lines, we have met with the debt holders to discuss this topic and we are retaining legal and financial advisors to assist the Company in evaluating alternatives. While the meetings with debt holders have been positive and we remain hopeful that a conversion can be accomplished, there can be no assurances that we will ultimately be successful. As discussed in our recent 10-K Annual Report filed with the Securities and Exchange Commission, we believe it is important to have at least $75 million in shareholders' equity by the end of this year. It is possible under the circumstances that to accomplish this, there may be significant dilution of the equity of current shareholders."
Denver-based Coram Healthcare, through its subsidiaries, is a national leader in providing quality home infusion therapies. Company subsidiaries also provide support for clinical trials, medical product development and medical informatics, as well as specialty pharmacy benefit management and mail order services.
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 payers 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, as amended, Form 10-Q Quarterly Reports, and Form 8-K Current Reports on file with the Securities and Exchange Commission.