Struggling to avoid bankruptcy, HealthSouth Corp., Birmingham, Ala., scrambled to arrange financing to overcome an immediate hurdle -- an April 1 deadline to repay about $345 million in convertible securities. The company, accused by federal agencies of perpetrating massive accounting fraud, said it is exploring potential markets for its stock after the New York Stock Exchange announced plans to delist HealthSouth. Meanwhile, venture capitalist Betsy Atkins, recruited to the HealthSouth board to boost credibility, resigned abruptly after about three weeks on the job. Atkins had been named to head the board committee investigating the alleged accounting fraud. Lenders froze HealthSouth's $1.25 billion credit line last week after federal agencies accused the company and founder Richard Scrushy of overstating earnings by as much as $1.4 billion over a three-year period. Scrushy has been placed on administrative leave. Former CFO Weston Smith pleaded guilty last week to four criminal charges and is cooperating with federal authorities. HealthSouth has hired a slate of experts to help shepherd the company through its travails, including corporate turnaround firm Alvarez & Marsal; the law firm of Skadden, Arps, Slate, Meagher & Flom; and a forensic auditing team from PricewaterhouseCoopers. -- by Michael Romano
After fraud charges, financial woes hit HealthSouth
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