Money is a major obstacle to Parks sale Company's heavy debt puts off buyers, lenders

February 09, 1996|By Jay Hancock | Jay Hancock,SUN STAFF

Former Pittsburgh Steeler Franco Harris wants to buy Parks Sausage Co., but don't automatically assume he'll pull an immaculate acquisition, a come-from-behind win that the meat processor badly needs.

The company is deeply in debt. One agreement to sell it already has fallen through.

And Mr. Harris acknowledges the potential transaction faces big challenges.

"It's going to be a tough deal," he said yesterday. "We feel that we're the best people for the job, and we hope there will be some people willing to work with us. It's not going to be easy."

Two days ago, Parks Chairman Raymond V. Haysbert Sr. said that a contract to sell Parks to investors W. Kevin Wright and Anthony S. Fugett had expired.

Parks is now in serious talks with Mr. Harris' company, Super Bakery Inc., and other potential buyers are interested, Mr. Haysbert said.

Mr. Harris said yesterday that he is eager to help Parks financially, to preserve its 210 Baltimore jobs and to build it into a bigger business.

A sale to Mr. Harris and his Super Bakery partner, former Baltimore Colts running back Lydell Mitchell, would maintain Parks' status as the city's biggest black-owned manufacturer.

"I want to do everything I can to preserve and grow this, which I think is a great institution," Mr. Harris said.

"We feel like we'll bring some new directions, some new enthusiasm. And it will be great to be part of the Baltimore environment. The city really seems like it wants to be on the move."

Mr. Harris is famous for the "immaculate reception," an &r improbable, ricochet catch that let the Steelers beat Oakland in the 1972 National Football League playoffs. He said he is "very serious" about wanting to buy Parks.

But Mr. Mitchell, who lives in Baltimore, cautioned that "right now everything is so premature" for any possible deal. "We want to keep things low key and do the things we need to do to make it happen," he said.

A big obstacle looms between potential buyers and the goal line: More than $7 million owed to NationsBank and the city and a substantial but unknown amount of debt owed to suppliers.

Parks, whose sales have declined and whose factory is much bigger than needed, is having trouble paying interest on the notes.

Would-be buyers don't want to assume such a load. Potential buyout lenders are apparently put off by it, too. Mr. Wright's and Mr. Fugett's deal to buy Parks fell apart because the two couldn't obtain financing, Mr. Haysbert said.

As a result, potential buyers have asked the city to reduce or eliminate $2.4 million that Parks owes it, city officials have said.

NationsBank also has been approached, although sources declined to disclose details of the talks. The city is owed a total of some $2.8 million; NationsBank, about $5 million.

A NationsBank spokesman declined to comment on whether the bank would reduce, eliminate or otherwise restructure the debt.

But, said spokesman John Riggin, "We are committed to working with Parks, the city and any potential buyer to help resolve Parks' situation."

Daniel P. Henson III, the city housing commissioner who is involved in the Parks talks, has also declined to talk in detail about the negotiations but said the city would be as flexible as needed.

If no buyout is struck, one possible alternative for Parks is bankruptcy proceedings, interviews indicate.

"It's a situation where things don't look good for Parks now," Mr. Harris said. "I'm not sure what the time frame may be to where they could cease functioning."

Last summer the city extended a $400,000, short-term line of credit to allow Parks to continue operating while it searched for a buyer.

Parks also owes the city $2.4 million for a development loan funded with federal dollars.

"We're surviving," Mr. Haysbert said. But, he added: "There's pressure on for cash."

NationsBank's willingness to bargain may depend on the degree of its aversion to bankruptcy proceedings and how badly it wants to avoid the perception that it threatens the existence of a major, 45-year-old city employer.

Parks was founded in 1951 by Henry G. Parks Jr. in an abandoned Baltimore dairy plant. Its present, $16 million facility was built in 1990.

That was also the year in which Mr. Harris bought a company that sold the Super Donut, billed as a more nutritious variety of the familiar coffee companion.

He changed the company's name to Super Bakery and started increasing sales to schools, hospitals and other institutions, pitching the product's lack of artificial ingredients and its extra minerals, vitamins and protein.

Mr. Harris is majority stock owner. Mr. Mitchell, who played football with Mr. Harris at Penn State, owns a junior share.

Super Bakery has annual sales of more than $10 million, Mr. Harris said. Its headquarters are in Pittsburgh, but it makes its doughnuts, bagels, muffins and cookies by contracting with plants in New York, Indiana and California, he said.

Mr. Harris declined to comment on whether he might put bakery production in some of the Parks plant's extra capacity.

"Things are tough right now [for Parks]," he said. "We're hoping that the city and the bank will work with us to preserve this institution."

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