Parks Sausage sale falls through Investors linked to Beatrice foods fail to get financing

February 08, 1996|By Jay Hancock | Jay Hancock,SUN STAFF Sun staff researcher Charlene Tag contributed to this story.

A deal to sell venerable Parks Sausage Co. to two investors tied to TLC Beatrice International has fallen apart because the buyers couldn't get financing, Parks Chairman Raymond V. Haysbert Sr. said yesterday.

Parks, Baltimore's biggest black-owned manufacturer, is now negotiating to sell itself to a bakery company headed by former Pittsburgh Steelers football running back Franco Harris, Mr. Haysbert said.

But there's no certainty a deal will be struck.

At the same time, the city is being asked to boost its financial contribution to the struggling manufacturer.

Potential buyers have asked the city to reduce or forgive a $2.4 million loan that was originally funded with federal dollars, said city Housing Commissioner Daniel P. Henson III.

Mr. Henson, who has been closely involved in the Parks negotiations, declined to say whether the city would agree.

said: "We've been willing all along to be as flexible as we have to be to make this deal happen. It will not be because the city is not flexible that the deal doesn't close."

Baltimore Development Corp., the city's quasi-governmental economic agency, has extended Parks a $400,000 short-term line of credit. The loan was guaranteed by Mr. Haysbert and his son, Reginald.

The 210-worker company, which has been cash-strapped for months, is "not going great guns" but should be able to stay in business until a sale is completed, said Mr. Haysbert.

Other potential buyers have made inquiries, he said, and he hopes to finalize a sale this spring.

Last August, Mr. Haysbert agreed to sell Parks to a group headed by W. Kevin Wright, former general counsel to TLC Beatrice, and Anthony S. Fugett, a Baltimorean and Beatrice board member. Beatrice, an international food concern, is the nation's biggest black-owned business.

The deal was supposed to close by Sept. 30. Then the deadline was extended to Oct. 31, and again to Jan. 20, Mr. Haysbert said.

But Mr. Fugett and Mr. Wright, who couldn't be reached for comment, were unable to secure financing, Mr. Haysbert said.

Mr. Wright is a New York lawyer with Winston & Strawn. Mr. Fugett is president and chief executive of ASF Systems Inc., a Baltimore computer equipment firm.

"I think they're out of the picture," Mr. Haysbert said. "They had an exclusive and they had us locked up for months."

Other people familiar with Parks said Mr. Fugett and Mr. Wright still may be interested in buying the company.

Executives from Mr. Harris' F Group, which operates Super Bakery Inc. in Pittsburgh, are inspecting Parks' books but have not signed any contracts, Mr. Haysbert said.

Super Bakery specializes in "nutritional doughnuts" and had sales of about $800,000 in 1994, according to Company Intelligence, a business directory.

Both city and Parks officials want to retain the company as an important, minority-owned city employer. A buyer might purchase only Parks' well-known processed-meat brands and move production jobs somewhere else.

Its role as a Parks creditor gives the city a say in the sale. Like other recent Maryland development deals, a Parks sale may provoke debate on how much public money should be devoted to job creation or job preservation.

Parks' $16 million plant in the Park Circle enterprise zone, built in 1990, pays about $10 an hour to production workers.

Efforts to contact Mr. Harris and other F Group officials were unsuccessful.

For any buyer, Parks' balance sheet will be a key issue. Besides the $2.8 million owed to the city, it owes about $5 million to NationsBank and substantial but undisclosed sums to suppliers.

The company stumbled after its new plant opened. The factory proved too big for Parks' volume. It lost two big sausage customers: Pizza Hut and Domino's Pizza. Annual sales fell from about $28 million in 1990 to $20.5 million in the fiscal year ended last June.

Parks was founded in 1951 by Henry G. Parks Jr. in an abandoned dairy plant near the junction of Pennsylvania and North avenues. The company later moved to Camden Yards, then built its present facility to make way for Oriole Park.

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