The finance committee packet is out. The bottom line numbers are truly alarming with a loss of 681k for the month of November alone. This brings the YTD loss to just under 1 million dollars (combined loss of 995,000). The impact on the District cannot be understated. In addition, if the daily dashboard presented on the last page of the document is accurate (it is a sample for 12/29, but I assume that the numbers are actual numbers for that date), then December may be better, but not good enough to make up the difference and get the District to breakeven for the month. In addition, the entire 750k of the Bank of Alameda line of credit authorized by the Board has been drawn upon.
1. Current assets minus current liabilities is less than zero. The current ratio is now less than 1.00 so unless this can be reversed in December to the tune of over a quarter of a million dollars (18,608,387 – 18,868,850 = -260,463), the District is in violation of the Bank of Alameda revised loan documents.
2. The Net Assets line on the balance sheet is 7,746,083 which means that any future cumulative loss of $246,083 over and above the 995k already lost this year will put the total net assets below 7.5 million which is another violation of the Bank of Alameda loan agreements.
3. Although I believe the District received an installment of parcel tax revenues in cash in December, this does not change the current assets picture (receivables decrease by the same amount that cash increases) so using the proceeds to pay off the Bank of Alameda LOC will just delay the inevitable when the District needs access to that liquidity again.
4. This puts the development of the Wound Care center at risk. Best case, another modification to the Bank of Alameda loan documents would need to be made. Worst case, lack of financing will kill the project entirely.
5. The working capital/management attention/state approval process for the the Waters Edge project will be seriously constrained by this development.
I must assume that something in December has changed to give Management optimism that the Hospital is not in imminent danger of default or, as a Board member, I feel blindsided by this development. Even if December has resulted in a reversal (positive) of fortunes, I am staggered by the magnitude of November’s loss and wish that I would have been alerted sooner.