Even its skeptics doubt we'll see Tenet Healthcare ( THC) filing for Chapter 11 this weekend. Wall Street has been rife with speculation that various sickly companies will be tempted to file for bankruptcy protection before a strict new law takes effect Monday. The new measure gives companies just 18 months in which management alone can submit a reorganization plan, eliminating extensions that have at times stretched out for years. The law also caps executive bonuses at 10 times the amount offered to regular workers. Tenet, which has been trying to turn its fortunes around for three years and just suffered additional setbacks in the recent Gulf Coast hurricanes, has struck some observers as a prime candidate. But the company's $1.6 billion cash cushion and continued turnaround efforts suggest an immediate filing is unlikely. "The impression I get from all of their news releases and so forth is that they are still fighting the good fight and think that somehow they're going to survive," says Argus Credit Research analyst William Eddleman, who has a sell recommendation on Tenet's bonds. "And the company does have access to the capital markets, which gives them a breather to some extent." Tenet didn't reply to requests for comment. Its stock, a $50 highflier before scandal engulfed the company three years ago, rose 13 cents Friday to $10.04.
What We Know
To be sure, Tenet has already shown the need for vast amounts of time to hammer out a successful turnaround strategy. And the company has a record of paying its executives handsomely whether they succeed or not. For 2004, which brought a $1.8 billion loss from continuing operations, Tenet paid CEO Trevor Fetter $4.8 million in total compensation. The same year, profitable HCA ( HCA) paid its own CEO $1.95 million. Fetter took home his sweet paycheck in a year when the company was shedding hospitals, leaving it with less revenue to cover its $4.8 billion debt load.