10/15/1980 Meeting - Laserfiche WebLink

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to ensure positive cash flow right now. He asked what the board's posture would e be if the company were profitable now. Mr. Short said that there would not be the pressure on the board to petition for liquidation. Mr. Delay asked how the creditors' committee would feel if the company were making a profit but it was unclear how they would repay the debts. He asked if the creditors would allow additional time. Mr. Giustina responded that they could as they have a great deal of flexibility. If MSI does not produce a plan, then the creditors' - committee will. Chapter 11 bankruptcy allows alternatives. The creditors could take stock in the company or the debts could be amortized over a five-year period with the balance due in five years. However, they would not be willing to do this if the company is continuing to lose money. Mr. Delay asked about the MSI Amarillo, Texas, operation. Mr. Morgan stated that the Amarillo bank froze the assets and appointed trustees. The Amari 110 area has forced a different emergency service provider each year to go broke for the last four years. People in Texas do not pay medical bills. Mr. Obie asked how long the board has been involved. Mr. Morgan stated that the board was formed in June;, he has been involved for three weeks. Mr. Lieuallen asked what Mr. Leonard's current role is. Mr. Morgan said that Mr. Leonard had tendered verbal resignation as chair of the board of directors this morning. Mr. Morgan stated that a voting trust was established for stock; he votes one-third, Mr. Leonard votes one-third, and the attorneys are holding the other third. Mr. Leonard has the right to draw the same salary and is paid for consulting services. Mr. Lieuallen asked what happened that it will take five years to reoganize. Mr. Morgan stated th.at MSI has been subsidizing their e service for two years. They got out of step with inflation by 1976. There have been many changes in the technology in the past ten years. Inflation in the medical field has been 10 to 15 percent. Ambulances businesses are in trouble allover the United States. Ms. Smith asked if it was possible to continue developing a plan if no decision is made today. Mr. Jarvill stated that the board's decision this morning is based on his legal advice. He said that they cannot continue the status quo and wait for a decision next week because there would not be adequate time for preparation of their plan. The attitudes about the validity of the Touche Ross study are of concern to them. They have used this study as a basis. . If the Touche Ross report is being questioned, he does not know where that will leave them. Due to these concerns, he advised the board to liquidate tomorrow if MSI is not guaranteed an increase today. Retirement of the debt over five years will not be from increased rates; it will be from a return on capital. The number of employees has been cut from more than 80 to 68. Costs have been decreased. . Ms. Smith asked Mr. Jarvill if he was aware of the staff's recom- mendation to delay one week when he gave his legal advice to the board this morning. Mr. Jarvill indicated that he had thought that that might be the case. If the rate increase is granted and more information is obtained so the council decides later they want to lower the rate, then the rates could be lowered as this temporary rate increase will not be binding. Mr. Short stated they are looking at selling the building and receiving a permanent infusion of capital...... In,order to ask people to put in capital they need to have the rates increased. Investors are very concerned about the tenuous situation at this time. e MINUTES--Eugene City Council October 15, 1980 Page 7 - - -