Bankrupt mill/mall awaits OK

November 01, 1994|By Ivan Penn | Ivan Penn,Sun Staff Writer

Owners of the Historic Savage Mill and their creditors are awaiting approval of a bankruptcy reorganization plan that could protect $900,000 in state and county loans.

The money was part of a $5 million renovation in 1986 that turned the textile mill into a mall that includes retail stores and antique and artisan shops. Howard County gave the mill a $900,000 loan -- $300,000 of its own money and $600,000 borrowed from the state.

The county and the state secured the loan, allowing the government and other creditors to sell the mill if its owners could not repay the mill's debt. Owners of the mill also guaranteed the government loans.

"We're pretty well protected -- as protected as we can be," County Executive Charles I. Ecker said. "But we are concerned."

The Savage Mill mall was forced into Chapter 11 bankruptcy Oct. 24 after Allied Capital Corp. and Allied Capital Corp. II of Washington refused to extend an Oct. 1 deadline on a $4 million loan, the mill's largest debt.

Part of the mill's debt includes more than $300,000 in unsecured loans from the state Department of Economic Development, Provident Bank of Maryland and the Baltimore Gas and Electric Co.

Jay Winer, general partner of Savage Mill Limited Partnership, said the mill, at Foundry Street and Gorman Road, is not likely to close. The bankruptcy filing was simply a move to "protect" the mill from closing, he said.

No job cuts or store closings are predicted.

"We don't expect any changes in the operations of the mill at all," Mr. Winer said.

"Things have been going very well."

The mill, with total assets of $6.2 million, is seeking a seven-year extension on the loan from the Allied Capital companies in U.S. District Court in Baltimore.

"The loans were essentially current right up to the bankruptcy," John Carlton, an attorney representing the mill.

"Savage Mill felt comfortable that under future projections, they could pay all of their creditors."

In March, the Allied Capital companies purchased the loan notes from First Union Bank, which established the Oct. 1 deadline.

As part of the loan contract, that deadline permitted the Allied Capital companies to call for full payment of the loan.

Since last July, the mill's owners said they have sought an extension of the loan -- a $2.8 million note and a $1.5 million note -- but the Allied Capital companies refused the proposals and wanted full payment.

"This is not an unusual move in today's climate," said Richard Story, executive director of the Howard County Economic Development Authority. "But it is a fairly hostile action."

David Gladstone, chairman of the Allied Capital companies, said his firms offered the owners of the mill a discount if the loan was paid in full and also offered a discount on an extended payment plan, but they refused.

"We're trying to be fair and listen to their concerns," Mr. Gladstone said. "We've sat down with these folks several times. It just didn't seem to be going in the right direction. They wanted to use bankruptcy as part of their negotiations."

With 60 tenants -- four new ones last month -- the mill is 85 percent occupied, he said. The mill also has about 250 antique dealers who sublease small spaces.

"Our specific interest is the continued welfare of the Savage Mill as an entity and of the tenants there," Mr. Story said.

"All the ingredients are in place for Savage Mill to be a marvelous shopping experience."

The 130-year old mill, with high ceilings and elongated windows, also is an elegant banquet facility that holds 300 people.

The owners say about 350,000 customers passed through the 12-building textile complex last year.

Tenants, such as Joan Becker, partner in Vibrant Handknits sweater shop, said they believe the mill will continue to prosper.

"We're not even a little bit concerned," Ms. Becker said. "We plan on always being here."

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