Refinancing of Bond Issue Eases Karcher Money Woes

Carl N. Karcher’s personal finances got another boost Thursday when the Anaheim Housing Authority and Citicorp Real Estate completed refinancing of a $26-million bond issue that Karcher had guaranteed.

The bond issue, which was in default, had been used to pay for construction of the Park Vista apartment project near Carl Karcher Enterprises’ Anaheim headquarters. The 390-unit apartment complex, built during the late 1980s, was a consistent money loser because expenses outstripped rental receipts.

Besides guaranteeing the bonds personally, Karcher also pumped additional money into the project to “do it up right,” said Andrew Puzder, Karcher’s personal attorney.

Dan Sanford, a Citicorp Real Estate Inc. spokesman, said that Karcher “paid out buckets of money.” Karcher will benefit from the refinancing, Sanford said, because the reduced interest rate on the bonds will make the apartments profitable.

“The property that lost over $500,000 a year will turn into one with a positive cash flow of over $500,000,” Sanford said. “Some of that (eventually) will flow through to Karcher.”

The refinancing was welcome news for Karcher, who has been struggling to deal with a string of financial setbacks.

On Wednesday, an Orange County investor group agreed to help Karcher, who founded the Carl’s Jr. fast-food chain in 1941, restructure a delinquent $25-million personal loan from Union Bank that Karcher secured with 3.9 million shares of stock in Karcher Enterprises, parent company of Carl’s Jr. Karcher hopes to complete that deal by Dec. 10.

In October, local investors agreed to help Karcher restructure a $4.8-million bank loan that also was in default.

“In the past 60 days, Carl Karcher has eliminated $56 million in debt,” Puzder said. “That’s a dramatic improvement.”

* CARL’S JR. PROFIT UP: Carl Karcher Enterprises in Anaheim posted gains in third-quarter earnings but sales at its restaurants dropped. D3