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City braces for possibility of ambulance crash


For at least a year, public safety activists have been issuing dire warnings that Laidlaw, the corporate giant that provides this city's bus, ambulance and toxic waste disposal services, is headed for bankruptcy.

The city, they have insisted, should have contingency plans to ensure that these services continue if the bottom falls out.

Recent developments have borne them out.

With losses of a whopping $1.12 billion in 1999, the company is strapped with a $1.6 billion debt. Laidlaw stock, once as high as $27 a share, has dropped off the cliff to as low as 31 cents a share in recent weeks.

The company is on the verge of being dropped from the New York Stock Exchange, and Standard & Poor's has dropped it from its 500 index, cut its corporate credit rating to a "D" (default), and is advising investers to avoid Laidlaw stock.

The Canadian-based company, meanwhile, is trying to divest itself of Safety-Kleen and American Medical Response, the companies that provide chemical waste disposal and ambulance service for El Paso County. Both divisions have been a huge drain on Laidlaw profits and are listed on the company books as "discontinued operations."

Serious problems

The extent of Laidlaw's problems were made strikingly evident when, two months ago, the company announced a "moratorium" on interest payments for its bank and public debt interest payments, along with suspension of dividend payments on common and preferred stocks.

"A move like that signals serious financial difficulty," said local stockbroker Doug Gardner, who also hosts a KGFT radio program called You and Your Money. "It means that revenue is insufficient to maintain operating viability. Laidlaw is clearly a company on the verge of bankruptcy and total reorganization."

Laidlaw VP for Communications Tag Watson, declined comment on the possibility of bankruptcy. "I have no comment on that other than to say that the directors are looking into debt restructuring options," he said.

The company's financial status was of enough concern to Colorado Springs Transit Service that it recently formed a contingency plan for continued operations. Laidlaw manages the city's bus system, but the city owns all the buses and pays the salaries of most transit employees.

"Laidlaw is a vast and complicated corporate structure," explained City Transit Manager Sherre Ritenour. "We've put an emergency plan in place in case something catastrophic causes Laidlaw to shut its doors. City employees would continue coming to work while we looked for someone new to run the system.

"It would probably mean a temporary decrease in services, but it wouldn't be all that difficult a transition. We put that contract up for bid every three to five years anyway, and Laidlaw is in the third year of their contract now."

Getting ready

Contingencies to ensure ambulance service is not disrupted have also been discussed. Laidlaw owns 44 percent of American Medical Response, which has a five-year contract to be the sole provider of ambulance service for El Paso County.

That contract is overseen by the Emergency Services Agency, a city/county board that is independent of city and county government and is chaired by Springs fire chief Manuel Navarro.

This week, Navarro seemed surprised when hearing the extent of Laidlaw's difficulties and said he doesn't know if continued deterioration would threaten the viability of AMR's service.

Last April, repeated warnings about a possible Laidlaw bankruptcy forced the ESA board to formulate a contingency plan for continued operations. Navarro said that AMR has posted a $500,000 performance bond and that the city would take over at least some of AMR's local assets if the company could no longer perform to standard.

"This would let us retain at least some short-term service," he said, "but certainly not the level provided by AMR. The real problem here would be coming up with a 24-hour/seven-day staff."

But critics have complained that the plan stipulates little more than that the ESA board will call an emergency meeting to consider possible responses if ambulance service is lost.

"We need a more specific plan than that," said Sallie Clark, a Westside activist who lost a mayoral bid last year and plans to run for the city council next year.

"We're talking about life and death emergencies here, not just bus service. The $500,000 bond would last us maybe three weeks. Is that enough time to provide another provider?"

Bleak times ahead

Though the city is now preparing in the event that Laidlaw goes belly up, Kathy Claes the administrative coordinator of solid waste management for El Paso County, feels that as far as the county is concerned, contingency plans aren't needed.

Safety-Kleen, which has provided chemical waste disposal for the county for the past nine years, declared Chapter 11 bankruptcy on June 9. It faces a string of environmental lawsuits and is under investigation by the Secrities and Exchange Commission for "accounting irregularities" and its top three executives were fired without explanation.

Claes said, however, that the county is not concerned. "We've been assured by Safety-Kleen that filing for Chapter 11 is only a reorganization move," she said.

But Peter Chapman, a New Jersey financial analyst who compiles subscription newsletters that track billion-dollar bankruptcy cases -- including one specifically on Safety-Kleen -- sees bleak times ahead.

"Given the amount of Safety-Kleen debt for which Laidlaw is liable," he said in a telephone interview last week, "Safety-Kleen's tumble into Chapter 11 is likely to be followed by an insolvency proceeding by Laidlaw -- probably this fall."

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