Contract signed for sale of Parks Agreement requires company to file for Chapter 11 protection

Harris will provide cash

If bankruptcy court approves, plant could reopen within weeks

June 22, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

Franco Harris yesterday signed an agreement to buy Parks Sausage Co. that will require the shut-down company to file for Chapter 11 bankruptcy protection while it operates with a cash infusion from the former football star.

Lawyers for Parks set the plan in motion last night when they filed for Chapter 11 protection with an after-hours clerk.

The two sides will seek approval in federal bankruptcy court Monday for an interim funding package to reopen the company. Later next week, they will ask the court to approve the purchase.

"We hope to begin operations within the next couple of weeks," said Ira C. Cooke, one of Harris' attorneys.

Lawyers would not disclose the terms of the deal, but they said the sale will become final in late July or early August.

"I am very excited about the opportunity presented by Parks," Harris said in a statement.

Harris and Lydell Mitchell, a former Baltimore Colts player and Harris' partner in the venture, could not be reached for comment.

Raymond V. Haysbert Sr., Parks' chair-man and a veteran of the 45-year-old company, said in a statement: "We are pleased that the Parks Sausage tradition will be continued in Baltimore under the direction of Franco Harris."

Parks Sausage, the city's largest black-owned manufacturing company, closed its doors May 24 when it could no longer meet its payroll. The company sent home all but a few of its 219 employees -- about 150 of whom worked in the company's Park Heights plant.

Parks is about $10 million in debt. It owes the Baltimore roughly $2.8 million -- $2.4 million from a federal housing loan that must be repaid to the city and a $400,000 line of credit extended by the Baltimore Development Corp.

Parks owes NationsBank roughly $5 million and a number of other creditors about $2.2 million.

Mark Friedman, one of Haysbert's attorneys, said the creditors "have agreed to work with the buyer." He said the details are contained in the purchase agreement.

Cooke would say only: "NationsBank, the city of Baltimore and the state have been most cooperative."

Mayor Kurt L. Schmoke could not be reached for comment yesterday. He had said the city would be willing to restructure the debt for a new owner.

Told of the agreement, John Riggin, a spokesman for NationsBank, said, "This is the first of I've heard of it."

James T. Brady, secretary of the state's Department of Business and Economic Development, said he was pleased by the announcement: "We will sit down with them next week to determine what we can do [to help]."

Cooke said Harris will assume control of the company under a corporation known as Parks LLC.

Harris, majority owner of Pittsburgh-based Super Bakery Inc., will provide the cash to reopen Parks after the court provides preliminary approval of the bankruptcy protection, probably within seven to 10 days, Cooke said.

Final approval is expected to come several weeks later, according to Cooke.

He said he didn't know how much money Harris will provide or how many employees the company will start with.

"Whatever it takes," he said. "We believe the plan filed in bankruptcy court will be an excellent one to ensure the retention of Parks Sausage in Baltimore."

Friedman said he believed the amount would be less than $1 million. "It's not going to be run at full capacity, pending the closing [of the sale]," he said.

He also said Parks would pay off some of its creditors with proceeds from sales of properties and equipment that Harris will not buy.

Harris is interested primarily in the Baltimore plant and not in distribution centers in Philadelphia, New York and New Jersey.

"Most of the equipment there, he's not going to be buying," Friedman said. "He has a different distribution" method in mind.

Haysbert, who had personally guaranteed the $400,000 BDC line of credit, will remain with the company in a consulting role under the terms of the deal. Other details were not available late yesterday.

In an interview, Haysbert, who saw the collapse of a previous attempt earlier this year, said he had almost lost hope about two weeks ago, when a letter of intent from Harris expired. "That was a low point," he said.

Haysbert, who knew company founder Henry Parks from 1952 until Parks' death in 1989, said he could have sold the company to others who would not have fought to keep the jobs in Baltimore.

"I'm sure that, as he looks down from heaven, that he regrets that it had gotten to this particular stage," Haysbert said.

"But he was a good enough businessman to recognize that there are more tomorrows than yesterdays."

Pub Date: 6/22/96

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