Merry-Go-Round plan opposed by Texas investor

April 06, 1995|By Jay Hancock | Jay Hancock,Sun Staff Writer

A Texas investor who controls 106,000 shares of stock in Merry-Go-Round Enterprises Inc. has objected to the Joppa-based retailer's tentative plan of bankruptcy reorganization.

But Edwin A. Allseitz Jr.'s filing in U.S. Bankruptcy Court in Baltimore is not expected to derail a reorganization scheme that the company's major creditors and shareholder committee have tentatively approved.

Mr. Allseitz, a Dickinson, Texas, stockbroker, argued that the existing plan would unfairly profit Merry-Go-Round's creditors at the expense of shareholders.

The company's plan would give creditors up to $130 million in cash and paper and 75 percent of the stock. That is far more stock than what is needed to repay creditors' estimated claims plus interest of $296 million, Mr. Allseitz said.

Merry-Go-Round's value is higher than what the company's reorganization plan would indicate, Mr. Allseitz argued. He said a slump in the apparel industry has temporarily depressed Merry-Go-Round's sales.

Mr. Allseitz offered an alternative reorganization plan under which present shareholders would retain 71 percent of the ownership in a reorganized company.

For the year ended Jan. 29, Merry-Go-Round had operating losses of $52.5 million on $782.8 million in sales.

Its stock closed yesterday at $1, up 12.5 cents.

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