Vision Twenty-One bidder walks away from buyout

By KRIS HUNDLEY

© St. Petersburg Times, published June 21, 2000

A Connecticut company has called off its acquisition of rival Vision Twenty-One Inc., leaving the future of the struggling Largo eye care company in doubt.

OptiCare Health Systems Inc. of Waterbury, Conn., said Tuesday it has terminated the deal because of the failure of Vision Twenty-One and its bankers to agree on continued financing.

Vision Twenty-One promptly denied that allegation and said OptiCare was in default, having failed to line up $30-million in financing to complete the deal. Despite being snubbed by its suitor, Vision Twenty-One took a defiant tone in a news release: It gave OptiCare a deadline of June 29 to come up with financing for the deal the potential buyer had already called off.

"OptiCare's release was pretty irresponsible," said Theodore Gillette, Vision Twenty-One's president and chief executive. "We strongly supported the transaction with OptiCare, but if it doesn't come to pass, we'll be working quickly on a backup plan to continue operating the company independently."

OptiCare had offered to buy Vision Twenty-One in early February, intending to swap 0.402 shares of OptiCare stock for each share of Vision Twenty-One. OptiCare also agreed to assume $60-million in debt.

Since the deal was announced, shares in both companies have declined. OptiCare, which was at $3.50 per share in early February, closed Tuesday at $2.38, up 13 cents. Vision Twenty-One's shares, at nearly $2 per share in February, closed at 38 cents, down 13 cents.

Vision Twenty-One, which was founded by Gillette in 1984, lost more than $79-million last year and $4.6-million in the quarter ended March 31. The company, which originated as a physician practice management company, has sold off almost all of its doctors' practices and is focusing on managed care contracts as well as its nine refractive surgery centers.

"Our operating groups are very competitive in their markets," Gillette said. "We're just a company with too much debt."

Vision Twenty-One, which has pared back its local work force from nearly 100 in early February to about 35 employees, will now try to restructure its debt or sell assets, Gillette said. Though OptiCare said it remains interested in some of Vision Twenty-One's assets, Gillette said he expects there will be plenty of bidders.

"We won't be so quick to part with them," he said. "Now we're down to the good stuff."

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