Intermark May Miss Payments to Bondholders
Hard hit by losses, the recession and a liquidity crunch, troubled Intermark of La Jolla disclosed Monday it may not be able to make September and October interest payments to bondholders unless the company can raise cash quickly by selling assets or raising equity capital.
Intermark officials disclosed the liquidity problem Monday as the company reported a $4.2 million first-quarter loss on $60.2 million in revenue. The company lost $17.7 million on operations over the quarter, but the figure was mitigated by a $12.2-million extraordinary credit, a tax loss carry-forward.
For the same period last year, Intermark lost $6.1 million on $91.2 million in revenue. The decline in year-to-year revenue is due to Intermark’s June sale of its 52% voting interest in Pier 1 Imports. The stock sale was done at the insistence of Intermark’s lenders.
Intermark, a conglomerate that owns majority interests in 10 “partner companies,” also reported that it expects to report losses for the rest of the fiscal year because of several negative factors, vice president of finance Vern Lo Forti said.
The factors include the poor operating performances of most of its partner companies, including Fuqua Industries, Intermark’s largest holding. Also, seasonality will depress the results this quarter at Liquor Barn, a retail chain. Third, Intermark’s results continue to be adversely affected by write-downs of acquisition costs at Western Sizzlin, a steakhouse chain.
For fiscal 1991 ended March 31, Intermark reported a loss of $67 million on revenue of $407 million. The losses have depleted Intermark shareholder equity to about $35 million, Lo Forti said.
In a regulatory filing today with the Securities and Exchange Commission, Intermark is reporting that it will “have to sell assets or raise equity capital to satisfy its liquidity needs,” Lo Forti said. Specifically, Intermark may not be able to make a $900,000 payment to Intermark bondholders Sept. 15 and a $2.9-million payment Oct. 1.
“We’ll have some difficulty making those without some infusion of cash,” Lo Forti said, adding that Intermark’s prime objective for raising cash is to refinance its National Airmotive debt.
Intermark stock closed at $1.125, unchanged in American Stock Exchange trading Monday.
