27 Legislators Pressure Top Knudsen Bank : Want Meeting to Discuss Financial Solutions

Twenty-seven California assemblymen have asked the lead banker of the troubled Knudsen Foods dairy products company for a meeting to discuss “long-term financial solutions” to Knudsen’s problems.

In a letter dated Aug. 18, the legislators accused Citicorp of “insensitivity” and seemed to suggest that the bank’s actions will influence them on the issue of interstate banking, which Citicorp has lobbied hard to obtain.

At present, out-of-state banks are not permitted to open full-service offices in California. A bill that would permit limited interstate banking has been proposed in the Assembly but will die unless it is approved before adjournment Aug. 29.

Knudsen, the state’s largest dairy company, faces an involuntary bankruptcy action and owes Citicorp more than $150 million. Citicorp, whose spokesmen could not be reached for comment late Wednesday, is lending Knudsen $20 million a week to finance its day-to-day operations. The financing agreement expires Aug. 28, according to the letter.

“The apparent lack of consideration and interest in resolving this most important issue raises additional concerns relative to the performance and commitment of out-of-state banks in responding to California’s needs,” said the letter, whose signers include representatives of California’s farming communities, Assembly Speaker Willie Brown (D-San Francisco) and Assemblyman Mike Roos of Los Angeles, the Democratic majority leader.

Although some who signed the letter said it was intended as a warning to Citicorp, one signer, Assemblyman Charles Caulderon (D-Alhambra), the author of the interstate banking bill, said he does not interpret it as a threat.