City approves Parks debt deal All but $500,000 of $2.4 million loan to be forgiven

July 18, 1996|By Sean Somerville and Robert Matthews | Sean Somerville and Robert Matthews,SUN STAFF

The deal to sell Parks Sausage Co. to Franco Harris cleared a hurdle yesterday when the city's Board of Estimates agreed to forgive all but $500,000 of a $2.4 million debt for the former football star and Pittsburgh businessman.

Housing Commissioner Daniel P. Henson III said the plan also won quick approval from the ordinarily slow-moving U.S. Department of Housing and Urban Development.

"We got HUD approval in about less than a week," Henson said.

The federal agency's consent was required because it provided the $2 million grant to the city in 1988. The city lent the money to Parks. Parks was supposed to repay the principal, plus $400,000 in interest to the city.

The city's willingness to accept 21 cents on the dollar for repayment of the Urban Development Action Grant is part of a debt-forgiveness plan intended to help the owners of Parks Sausage sell the financially troubled company to Harris.

Under the plan, Parks would pay back the $500,000 loan out of the company's profits over 10 years with no interest.

An agreement between Harris and Parks Chairman Raymond Haysbert also calls for the Baltimore Development Corp., the city's economic development agency, to forgive $50,000 in interest charges on a $400,000 loan. Instead, Parks would pay 5 percent interest on the $400,000 principal over 10 years.

NationsBank, which is owed about $5.4 million by Parks, would accept $3 million to satisfy its obligation.

After the deal, Haysbert and his son, Reginald, the company's president, would serve as consultants and receive 6 percent of the company's stock. For the deal to become reality, Harris must obtain $4.5 million in financing at a prevailing rate over 10 years.

Harris and Haysbert, who could not be reached for comment, are running the company on a short-term basis as part of a plan approved by a federal bankruptcy judge.

The plan called for Harris to lend the company between $225,000 and $575,000 to preserve its assets. The judge is scheduled to consider the sale to Harris on July 24.

Parks, the city's largest black-owned manufacturer, shut its doors May 24.

The closure left 219 people -- about 130 in Baltimore -- who worked for Parks out of work, according to Raymond Haysbert. Although now privately held, Parks was the first black-owned company in the nation to be publicly traded.

The company filed for Chapter 11 bankruptcy protection last month as part of the Harris deal.

Pub Date: 7/18/96

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.