Financial Indicators Not Promising
IT WAS RECENTLY REPORTED, but not very publicly, that Rural/Metro Ambulance service missed the interest payment that was due Monday on a 2019 bond issue.
This follows an industry report from Moody's Investor's Service on May 30 where they downgraded Rural/Metro's credit rating to junk status. Moody's also increased their probability of default. (Read Moody's press release HERE.)
One of Rural/Metro's major contracts is with Santa Clara County, California, and in a related article, the San Jose Mercury News reported Thursday afternoon:
Scottsdale, Ariz.-based Rural/Metro Corp. missed a crucial bond payment this week, sending county officials scrambling to make sure backup plans are in place, should the situation deteriorate and a new provider is needed in a hurry.
"Obviously their current situation — regardless of how you look at it — is troubling, to say the least," said the county's Chief Operating Officer Gary Graves. "When their debt is downgraded to junk, that's not a good thing."
An emailed statement sent by Michael Simonsen, Rural/Metro's California director of public affairs, said the company "continues to take action to align our operations and capital structure with the realities of our business." It went on to say, "our Board and management team recently elected not to make the interest payment due on July 15 for our unsecured bonds due in 2019." It added that while "senior lenders" are being kept informed," the company had no further comment.
You may recall that it was just this past Tuesday that the EMS workers in the Buffalo, New York, region went on a one-day strike over what they considered low pay. (See Firegeezer report HERE.)
Since 2010 R/M has gone through 4 CEO's and two years ago in March 2011 the company was purchased by the private equity firm of Warburg Pincus.
Rural/Metro Corporation WEBSITE.
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