Jeff Smith 10 a.m., July 29
Reports: Rural/Metro ambulance service near bankruptcy
Wall Street's Warburg Pincus, which controls Bridgepoint, bought out, piled debt on Rural/Metro
Rural/Metro Corp., an ambulance operation serving San Diego County, is near bankruptcy, media are reporting. (This blog, quoting the San Jose Mercury News, reported the deep financial woes July 18.)
The Wall Street Journal, quoting knowledgeable sources, reported July 31 that the Scottsdale firm is preparing to go into the tank. The company missed a $15.6 million debt interest payment on July 15, noted the Journal.
Papers in upstate New York are also reporting that Rural/Metro is on the edge and perhaps headed over it.
This appears to be one more example of the danger of a leveraged buyout. Wall Street's Warburg Pincus bought the firm in 2011, putting in $213 million of its own money and piling on $515 million of debt, according to the Journal. Now Rural/Metro is squeezed between higher debt expenses and shrinking revenue.
Warburg Pincus controls 63.93% of San Diego's for-profit Bridgepoint Education. After a U.S. Senate committee studied Bridgepoint, Sen. Tom Harkin called it "an absolute scam." However, in this case, Warburg did not pile debt on the company. Warburg got in early.
More like this:
- Goldsmith's office warns against city reclaiming control of emergency medical services — Sept. 18, 2013
- Rural/Metro ambulance service has deep financial problems — July 18, 2013
- After losing millions of dollars, contract for ambulance services finally goes to bid — Dec. 27, 2012
- Senate Committee Lashes Bridgepoint Education — July 30, 2012
- Bridgepoint's Major Shareholder to Sell; Stock Down — July 25, 2011