GF to close facilities, reduce workforce to save money
By MEREDITH BONNER
HHBR Editor
Graham-Field Health Products (GF; Hauppauge, NY) is in financial trouble, and as a result, the company said it is planning to reduce its workforce and close some facilities to reduce expenses. In addition, the company’s auditors, Ernst & Young, said GF might not be able to continue as a viable business.
GF has been burdened recently by steady losses, debt, and rising expenses. According to a filing last week with the Securities and Exchange Commission (SEC; Washington), Ernst & Young officials said GF’s deteriorating "conditions raise substantial doubt about the company’s ability to continue as a going concern."
As a result, GF plans to cut jobs, close some facilities, reduce its inventory of 45,000 products, and tighten its credit to vendors. Joseph McDonnell, a GF spokesman, told Newsday the company has not decided how many jobs will be cut or where or when the reductions will occur.
GF, which has lost money each of the past three years, disagreed with the auditor’s assessment, reported Newsday, despite the reduction plans.
"GF is not in danger of bankruptcy," said McDonnell. The company has "improved its cash position by reaching a credit agreement with banks" for a $50-million credit line.
In the filing, GF said many of its problems occurred because of intense competition in the healthcare industry and the firm’s failure to integrate effectively companies it acquired in 1996 and 1997, during which GF bought eight companies, including Fuqua Enterprises (Atlanta).
The filing also revealed some other problems, including 15 lawsuits filed by investors accusing GF of inflating its stock price. The company’s administrative expenses and interest payments are rising. And GF might have to sell some of its assets if it doesn’t get an additional $5 million to $10 million in needed loans, the filing said.
GF has faced problems for several years, but the difficulties have increased in the past year. Since last summer, the struggling company has had four CEOs, including John McGregor, who was hired in March to turn the company around, reported Newsday.
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