What Haysberts get from the Parks deal 6% stake, consultancies and 0.5% of the gross

July 02, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

The father-and-son team that closed Parks Sausage Co. in May when the company ran out of money will not walk away from the sale of Parks empty-handed.

As part of a deal that includes more than $2 million in debt forgiveness by the city, company Chairman Raymond V. Haysbert Sr. would serve as a consultant for the company for 15 hours a week over seven years.

In return, he would get $50,000 -- $25,000 this year and $25,000 next year. Haysbert would also receive a 4 percent stake in the company. And he would earn 0.5 percent of Parks' gross revenues over the next seven years, but not more than $110,000 annually, according to records filed in federal bankruptcy court.

If, for instance, the company matched its 1995 sales of $20

million in future years, Haysbert would get $100,000.

His son, company President Reginald Haysbert, would serve as a consultant for 20 hours a week over an eight-week period. He would receive a total of $150,000 over two years and a 2 percent stake in the company.

Also, the Haysberts stand to receive an as-yet undetermined portion of the $1.7 million "purchase price."

The Haysberts, who would be barred from competing against Parks, could not be reached yesterday. Franco Harris, the majority owner of Pittsburgh-based Super Bakery Inc. and former football star who is buying the plant, did not return a call seeking comment.

Mark Friedman, a lawyer who represents the Haysberts, said Harris wanted to take advantage of the Haysberts' years of expertise. He also said the Haysberts had sacrificed income during several years when the company was not doing well.

After the Haysberts closed the company's doors and sent home about 219 employees on May 24, the Haysberts and Harris reached an agreement last month.

Parks set the plan into motion by filing for Chapter 11 protection in federal bankruptcy court. A federal bankruptcy judge last week approved a plan for Harris to lend the company between $225,000 and $575,000 to restart the company. The judge is scheduled to consider the sale to Harris on July 24.

As part of the agreement to sell the company, NationsBank has agreed to accept $3 million to satisfy a $5 million obligation.

Baltimore City will take $500,000 to satisfy a $2.4 million obligation created by a federal loan that was to have been repaid to the city. Housing Commissioner Daniel P. Henson III said the city was determined to keep Parks in Baltimore as an African-American-owned company.

Baltimore Development Corp., the city's quasi-public development agency, would forgive interest charges on an additional $400,000 debt, and accept either $300,000 immediately or payment at an annual interest rate of 5 percent over 10 years.

That loan was personally guaranteed by the Haysberts.

In addition to satisfying the roughly $3.8 million of secured debt, Harris would pay a "purchase price" of $1.7 million. Friedman said the Haysberts will receive very little of that amount -- probably less than one-third -- with most going to satisfy creditors.

Friedman said the notion that the Haysberts are capitalizing on the sale would be a "real distortion." He said Raymond Haysbert last fall put $200,000 into the struggling business, money that he probably will never recover.

He also said the father and son had gone without payment of reasonable salaries in hard times, with Raymond giving up his $35,000 for stretches and Reginald giving up his $100,000.

Friedman said the Haysberts had struggled to find a buyer who would keep the business in Baltimore and would not have settled for anything else.

The father and son did not trade on the Parks name, which produced one of the most recognizable advertising slogans ever: "More Parks Sausages, Mom Please."

"If they had hunted for buyers, peddling the name, they could have done better for themselves," Friedman said. He also said the Haysberts have a great deal of institutional memory -- from the recipes of products to local contacts -- that would be especially valuable to Harris.

"There are a lot of examples where buyers of companies see values in the talents of departed executives and want to make sure they can utilize that," he said.

Finally, he said, any analysis of the deal must include Parks' history with the city. He noted that Parks moved from Camden Yards to make room for the Baltimore Orioles' stadium.

zTC The company built a plant that was too large and suffered in following years because of it. "Parks didn't want this plant," Friedman said. "They were evicted."

Pub Date: 7/02/96

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