Court OKs Parks' sale to Harris Judge praises deal to ensure survival of sausage maker

'Now it's our baby'

Ex-football stars expect to complete purchase by Aug. 20

July 25, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

For former Pittsburgh Steeler Franco Harris, this one wasn't even close.

Harris, famous for a game-winning catch dubbed the "immaculate reception," coasted in court yesterday as a federal bankruptcy judge approved his purchase of Parks Sausage Co.

"This is one opportunity I have to be a hero," said U.S. Bankruptcy Judge James F. Schneider, who praised the city of Baltimore, Parks' creditors and Harris for working together to save the 45-year-old company.

In an emotional speech, the judge called the survival of the struggling company a tribute to the "great Henry Parks," the founder. The company, now privately held, boasts that it is the first black-owned company to be publicly traded. Before shutting down two months ago, the company had 220 employees, including roughly 130 in Baltimore. The purchase is expected to be made final by Aug. 20.

Welcoming Harris to Baltimore, Schneider said, "I'm delighted to see you, sir." Turning to Harris' partner, Penn State teammate and former Baltimore Colt Lydell Mitchell, the judge said, "Welcome home to you."

Owner Raymond V. Haysbert, who sought a buyer for several months before shutting down the company in May, said he was relieved. "For all the sacrifice and emphasis put on this, it would have been tragic for it not to work out," he said.

Harris, who has been running the company under a court-approved interim plan, said he was eager to get to work. "We can't wait," said Harris, majority owner of Pittsburgh-based Super Bakery Inc. "Now it's our baby."

To make the deal a reality, three creditors are forgiving more than half of $8.2 million in debt that is secured by collateral.

The city will take $500,000 over 10 years to satisfy a $2.4 million obligation. NationsBank will wipe out a $5.4 million obligation for $3 million. Baltimore Development Corp., the city's economic development agency, has converted a $450,000 past-due debt to a 10-year $400,000 loan.

In addition to assuming $3.8 million in debt, Harris will pay a $1.7 million purchase price.

An unknown portion of the price will pay property taxes, bankruptcy fees and the company's pension fund in full. The amount that's left, plus about $100,000 from the sale of a company building in New Jersey, will go to about 500 holders of $2.4 million in unsecured debt.

Mark Friedman, a lawyer for Parks' current owners, estimated that the unsecured creditors would probably get a little more than 25 cents on the dollar.

The sale, originally scheduled to close Aug. 5, will be made final between Aug. 6 and Aug. 20. "I didn't want people to get hung up on a particular date," Friedman said. He said it might take Harris "a few days to hammer out" language for a financing agreement.

'Economic anchor'

To close the deal, Harris must obtain $4.5 million in financing over 10 years, which he has said is "not a problem."

In yesterday's hearing, lawyers one by one spoke in support of the deal. Paul D. Trinkoff, representing the city, said the purchase would retain jobs and maintain the city's tax base. He called Parks Sausage's plant "the economic anchor of Park Circle" business park. The park, in the Park Heights neighborhood, was the city's first state enterprise zone.

J. Michael Broumas, an attorney for NationsBank, said the bank was taking a "substantial cut" in its debt. "We echo the sense of cooperation. We also find this is a very valuable addition to this city."

Paul M. Nussbaum, an attorney representing unsecured creditors, said they offered "resounding support" for Harris' purchase.

Nussbaum said creditors had questioned consulting agreements in the deal for Haysbert and son, Reginald, the company's president, before signing off.

The elder Haysbert would serve as a consultant to 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. He would also get a 4 percent stake and 0.5 percent of Parks' gross revenues -- but not more than $110,000 annually.

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

"It became quite clear that these gentlemen are quite valuable. The consideration they are receiving is reasonable," Nussbaum said.

Harris expects to return Parks' employees to the Baltimore plant as demand increases. His plans for the work force outside Baltimore are not clear. But he plans to use food brokers, ordinarily a less expensive means of distribution than a company sales force.

Harris also said he may use part of the Baltimore plant to distribute products from his bakery business, which markets nutritious doughnuts to schools, hospitals and other institutions.

Mitchell, Harris' partner, said he was excited about the new management's prospects. "Now we have to make it work," he said.

It was Raymond Haysbert who tried for years to make the struggling company work before it literally ran out of money.

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