Intermark Unit Fails to Make Debt Payment
Intermark, which in April said it would raise cash by selling its Pier 1 Imports common stock holdings, Monday acknowledged that its Triton Group Ltd. subsidiary had failed to make about $9 million in debt interest payments that were due June 1.
The La Jolla-based company has retained Smith Barney, Harris Upham & Co., a New York-based investment banking firm, to advise it on “various alternatives” regarding the company’s debt. Intermark vice president Mitchell R. Woodbury on Monday declined to say if Intermark is considering the sale of other business operations.
Woodbury also declined to say if proceeds from the Pier 1 stock sale would be used to make the two interest payments. “We can’t talk about (the Pier 1 proceeds) yet because we haven’t finalized it,” Woodbury said.
Intermark, which owns substantial shares of nine “partner” companies, has been hit hard in recent months by losses and its own falling stock price. The company has denied that it is in serious financial trouble, but Intermark Chairman Charles R. Scott in April acknowledged that “these are difficult times for companies like Intermark, which are restructuring their balance sheets.”
Intermark has announced it will sell all 12.7 million shares of common stock that the company holds in Pier 1 for $6 net per share. Intermark, which held 36% of Pier 1’s common stock and a majority of its preferred stock, held 52% of Pier 1’s outstanding stock.
But Woodbury on Monday said that Intermark will swap its preferred shares of Pier 1 for shares of an Intermark subsidiary that are now held by Pier 1. Intermark will have “no ownership stake” in Pier 1 when the swap is completed, Woodbury said.
Scott in April linked the sale of stock in Pier 1, which is Intermark’s crown jewel, to “financial pressures” from commercial bankers. Intermark will use a “significant portion” of the proceeds from the Pier 1 stock sale to reduce bank debt of Intermark and its units.
Woodbury described the timing of the Pier 1 sale as “unfortunate” because “it is premature. . . . However, we have received a good deal of pressure from banks to pay down our existing short-term debt, and the sale of Pier 1 is the most viable alternative.” Woodbury linked the banks’ demands to “regulatory pressures.”
Intermark reported a $33.6-million loss on revenue of $1.1 billion for the nine-month period ended Dec. 31. Intermark closed up $.125 on Monday, at $1.625 on the American Stock Exchange.
Triton will miss interest payments on two series of subordinated debt: a $75-million principal amount of 14.625% subordinated debentures due in 2000 and a $50-million principal amount of 14.375% subordinated notes due in 1995.
