Huntway’s Loss Figure Is Increased Sharply : Finances: The Valencia-based liquid asphalt maker says that unless it refinances its debts, it may seek bankrutpcy.
Stating that its former chief financial officer misstated inventories, accounts payable and various other assets, Huntway Partners L.P. dramatically revised its loss for the first nine months of last year, to a $10.9-million loss, compared to $1.9 million it had previously reported.
Because of its financial troubles, Huntway said in its annual filing with the Securities and Exchange Commission that it was trying to restructure its debt and if it fails to do so, the company warned it may have to file for bankruptcy protection.
In the fourth quarter, Huntway said it lost another $3.4 million, so for all of 1992 the Valencia-based producer of liquid asphalt posted a loss of $14.3 million. In contrast, the company had a profit of $3 million during 1991.
The company said it may also consider disposing of assets at its two refineries in California and one in Arizona.
Huntway previously blamed the accounting errors on its former chief financial officer, Douglas C. Hansen, who was fired last December. The company accused Hansen of writing bad checks, and said the SEC and a federal grand jury were investigating Huntway’s finances. At least two shareholder lawsuits have also been filed against the company and its officers.
Huntway’s new chief financial officer, Warren Nelson, said last year’s loss was largely because of higher crude oil prices and lower demand for liquid asphalt, which is used mainly for road construction. He agreed that the misstatements were huge, but said they were not immediately noticed because “I think basically the former CFO was one of the founders and people just trusted him and felt the numbers were correct.”
Hansen, 44, joined the company at its inception in 1979 along with Huntway’s chief executive, Juan Forster. Hansen has not commented publicly on the allegations, and Forster did not return telephone messages left at work and at his Santa Ana home.
Adding to the company’s problems, Huntway also disclosed in its SEC filing that the state of Arizona was demanding that Huntway’s subsidiary, Sunbelt Refining Co., pay a fine of $2.35 million for various alleged violations of environmental regulations. Also, Huntway said Arizona has issued criminal indictments related to record keeping against the company.
Huntway acknowledged in its SEC filing that it has had certain environmental compliance problems, but denied there was any criminal activity. It said that settlement discussions were under way, and Terry Stringer, Huntway’s executive vice president, said in an interview Monday that the negotiated settlement “won’t be close to anything that they asked.” Arizona officials weren’t available for comment Monday.
In revising its financial statements, Huntway also slightly adjusted its revenue for the first nine months of last year, to $77.7 million from $80 million reported previously.
For all of last year, Huntway had revenue of $104.9 million, compared with $115.8 million in 1991.
Huntway said the misstatements mainly consisted of overstatements of inventories and various other asset accounts, and understatements of accounts payable.
The company said there continues to be no evidence that any company funds were improperly diverted for the personal benefit of any officers or employees.
