CHS Sells 9 Hospitals and News on Other Financially Challenged U.S. Companies for March 5

The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

Community Health Systems Inc., Franklin, Tenn., sold nine of its hospitals to Capella Healthcare, a privately-held concern, for $315 million. Capella is also headquartered in Franklin.

Countrywide Financial Corp., Calabasas, Ca., announced a sharp increase in late payments on adjustable home mortgages held as investments, saying that at the end of last year payments at least ninety days past due reached 5.4% of loans. This is up from 0.6% one year earlier.

Deerfield Capital Corp.’s stock price tumbled as much as 58% in recent trading after the Rosemont, Ill. investment company announced that it sold certain non-agency residential mortgage-backed securities at a loss of about $153 million. Some of Deerfield, Ill.’s banks had stopped lending money on the non-agency bonds or increased equity requirements.

Entravision Communications Corp., Santa Monica, Calif., reported a fourth quarter net loss of $48 million. Revenue fell 2.5%–to $62.5 million. For the year, it lost $44.1 million on a 2% decline in revenue–to $250 million.

LeapFrog Enterprises Inc., an Emeryville, Ca. maker of educational toys, reported a fourth quarter net loss of $32.6 million on a 1% slide in revenue–to $181 million. For the year, the firm lost $101 million on a 12% decline in revenue–to $442 million. The fiscal loss was within expectations. LeapFrog, which has slashed its advertising spending by 15% to reduce costs, expects better results in the second half of the year after new products are available.

MarkWest Energy Partners LP, Denver, Co., reported a fourth quarter net loss of $23.8 million. Revenue increased 6%–to $146 million. For the year, net income tumbled 94%–to $4.4 million, while revenue fell 4%–to $603 million. The quarter and year included charges of $7.4 million and $7.9 million respectively related mostly to asset disposal.

Pacific Lumber’s joint disclosure statement won approval from the U.S. Bankruptcy Court. Now creditors will vote on three rival reorganization plans later in March. Ballots must be submitted by 3/25 and a confirmation hearing is set for 4/8.

PlanetOut Inc., a San Francisco, Ca. Web media firm aimed at the gay and lesbian demographic, reported a fiscal 2007 loss of $51.2 million, compared to a $3.7 million loss in the year earlier. Results in the recent year included impairment charges of $25.9 million. Sales fell 10% to $53 million. Back in January, PlanetOut retained Allen & Co. to help it work out a business strategy, including the possibility of putting the firm up for sale.

Sentinel Management Group Inc.’s trustee filed litigation against Bank of New York Mellon Corp., claiming that the bank helped push it into Chapter 11. Sentinel is seeking $550 million.

Sirva Inc., a relocation services company, won approval from the U.S. Bankruptcy Court to borrow on a $150 million bankruptcy loan to fund operations as it reorganizes under Chapter 11.

Telephone and Data Systems Inc., Chicago, Ill., reported a fourth quarter net loss of $56.3 million. Revenue increased 11% to $1.2 billion. For the year, net income surged 138% to $386 million, on an 11% revenue increase to $4.8 billion. The quarter and year included investment-sale gains of $46.2 million and $433 million respectively. Also, Telephone and Data’s 81%-owned U.S. Cellular Corp. unit reported its fourth quarter net income fell 46% to $29 million. Revenue rose 14% to $1 billion. For the year, net income jumped 75% to $315 million, on a 14% increase in revenue to more than $3.9 billion. The quarter and year included investment gains of $6.3 million and $138 million respectively.

Thornburg Mortgage Inc.’s shares lost more than half their value after the Santa Fe, N.M. real-estate investment trust revealed that it hasn’t been able to meet incoming margin calls and now faces a shortage of cash. According to some analysts, if Thornburg can’t sell assets or raise capital it could risk a bankruptcy filing.