INDIANAPOLIS, IN -- June 24, 1996 -- Fruehauf Trailer
Corporation (NYSE:FTC) today announced that it has completed the
sale of the Company's foreign assets, excluding Mexico, generating
proceeds of approximately $20.3 million.
The Company has made the $4.6 million interest payment on its
Senior Notes originally scheduled for May 1, 1996 and as a result
has cured the nonpayment default. After payment of transaction fees
and adjustments, proceeds of approximately $7.5 million will be used
in an offer to repurchase the Company's Senior Notes. This
repurchase represents approximately 12 percent of the Senior Notes,
leaving approximately $55 million outstanding.
In the sale transaction, the Company retained $6.0 million for
general corporate purposes. The sale also provides the Company an
expansion of working capital availability under the revolving credit
facility of up to $1.0 million. Furthermore, the Company has
entered into a new loan facility of $3.5 million for the payment of
trailing liabilities. These three actions have provided the Company
with increased liquidity and financial flexibility.
Thomas B. Roller, President and Chief Executive Officer,
commented, "The completion of the foreign asset sale is an important
component of our strategic plan to deleverage the Company and allows
us to fully focus on our core North American operations. While we
no longer have a direct financial interest, we will continue the
longstanding and beneficial technology sharing arrangements with
these affiliates that have served us so well in the past."
Fruehauf Trailer Corporation is one of the leading manufacturers
of truck trailers, producing, marketing, and servicing the
industry's widest range of dry freight van, refrigerated van,
platform, dump and liquid and dry bulk tank trailers. Among the
largest suppliers of trailer parts in North America, Fruehauf
products are sold throughout the truck trailer industry's largest
Company-owned dealer and authorized independent dealer network in
North America.
CONTACT: Fruehauf Trailer Corp., Indianapolis
Michael D. Picchi, 317/630-3000
NEW YORK, June 24, 1996 - Riddell Sports Inc. (Nasdaq:
RIDL) today announced that the bankruptcy trustees of MacGregor
Sporting Goods, Inc. (now known as M Holdings Inc.) ("MAC I") and
MGS Acquisition, Inc. withdrew their motion to approve the
previously announced settlement of the two "fraudulent transfer"
suits in which Riddell and certain others were named defendants.
The trustees withdrawal was made after the Creditors' Committee
proposed a Plan of Reorganization of MAC I. This plan was recently
proposed in opposition to the settlement entered into by the court-
appointed trustees and Riddell, and seeks to replace the trustees
and continue the fraudulent transfer litigations.
The proposed Creditors' Committee Plan is subject to acceptance
by the creditors and court approval. The Company does not
anticipate that an adjustment to the reserve previously established
for these actions will be made due to this event, but cautions that
there can be no assurance that the matters will ultimately be
resolved at an amount within the reserve.
The Company entered into the settlement as an alternative to the
expense of litigation, and while disappointed that the settlement
will not be submitted by the trustees for court approval, the
Company remains confident that the fraudulent transfer cases are
without merit and intends to vigorously defend against them.
Riddell Sports Inc. is the world's leading manufacturer of
football equipment. The Company sells sporting goods products
(including mini- and full-size helmets made for display purposes for
collectors), shoulder pads and other sports protective equipment
under the Riddell and ProEdge brands and provides reconditioning
services under the Riddell/All-American name. The Company also
licenses the Riddell and MacGregor trademarks for use on athletic
footwear, leisure apparel and sports equipment.
CONTACT: Lisa Marroni of Riddell Sports, 212-826-4300
Foreclosure. On May 30, 1996, The Bank of New York, as Trustee
for the holders of the 103/8% Secured Notes Due 1995 of Olympia &
York Maiden Lane Finance Corp. (the "Issuer"), notified the holders
that the Supreme Court of the State of New York had issued a
decision granting the Trustee's motion for a judgment of foreclosure
and sale, and that the Trustee had presented to the Court a proposed
Order and Judgment of Foreclosure and Sale (collectively, the
"Order") for the Court's signature. The Trustee and the Committee
are pleased to announce that the Court has signed the proposed Order
which Order was entered today, June 24, 1996. Pursuant to the
Order, 59 Maiden Lane (the "Property") may be sold at public auction
at the Rotunda of 60 Centre St. by the Referee appointed by the
Court; and the Referee must give public notice of the time and place
of the sale. No date for the sale has been selected as yet.
Home Insurance. In the May 30 notice, the holders were also
advised that The Home Insurance Company, which leases 583,000 square
feet at 59 Maiden Lane, or 55% of the total building, and the New
Hampshire Insurance Department had met recently with the Trustee and
the Committee to discuss Home's financial situation, and that Home
submitted a proposal to restructure its lease. The proposal
includes the following terms: (i) reducing the premises leased by
returning 13 floors to the landlord; (ii) terminating the lease on
December 31, 1997; and (iii) making a single upfront payment of $24
million, plus an assignment of certain sublease rental payments of
approximately $207,000 per month, which total $8.2 million.
Inasmuch as the Committee does not believe that the foregoing
proposal can be a realistic starting point for meaningful
discussions concerning the lease, the Committee has not responded to
date to the proposal. The Committee understands that Olympia & York
is of the same view and also has not responded to Home's proposal.
Home's current annual base rent (excluding electric inclusion and
additional rent) is $31,179,619.
On June 1, 1996, Home failed to pay the monthly rent that was
due and owing under its lease with Olympia & York. On June 10,
1996, the Trustee sent Home a Notice of Default. Home has
challenged the validity of the Trustee's Notice on the grounds that
the Trustee is not the landlord of the property. Rather than
engaging in a prolonged legal debate on this issue, the Trustee
requested Olympia & York to send a Notice of Default to Home.
Olympia & York sent a Notice of Default to Home on June 18, 1996.
Under the terms of Home's lease, the landlord can exercise rights
and remedies against Home if Home fails to pay the rent within 10
days from the giving of the Notice of Default. The June rent has
not been paid to date. On June 20, 1996, Home issued a press
release in which it announced that it had "stopped paying rent for
its 59 Maiden Lane headquarters."
Olympia & York has retained the law firm of Bachner, Tally,
Polevoy & Misher LLP to represent it in connection with any actions
taken against Home in this matter. Olympia & York has promised to
coordinate with the Trustee in connection with any action against
Home.
Restructuring of the Notes. As previously reported, the
Committee and the Trustee have been in discussions with Olympia &
York, from time to time, concerning a consensual restructuring of
the debt evidenced by the Notes. At the present time, the Committee
does not believe that a consensual restructuring is likely to occur
with Olympia & York's current management. Separately, twenty
Olympia & York affiliated companies have commenced cases with the
United States Bankruptcy Court for the Southern District of New York
under Chapter 11 of the Bankruptcy Code. By orders of the
Bankruptcy Court, those cases have been consolidated for procedural
purposes only and are being jointly administered by the Bankruptcy
Court (the "Affiliated Cases"). Neither the Issuer nor Olympia &
York Maiden Lane Company, L.L.C., the Owner of 59 Maiden Lane, have
commenced cases under Chapter 11 of the Code. However, O&Y (U.S.)
Development Company, L.P. and O&Y (U.S.) Development General Partner
Corp., owners of all of the membership interests in the Owner, are
among the twenty Olympia & York companies whose cases are being
administered in the Affiliated Cases. A Plan of Reorganization and
Disclosure Statement were filed in the Affiliated Cases and provide
for the liquidation of all "non-core" properties, including 59
Maiden Lane, by one of three liquidating trusts to be formed under
the Plan.
In light of the impending foreclosure sale, the Home situation,
the nature of the discussions with Olympia & York and the treatment
of 59 Maiden Lane under the Affiliated Cases' Plan, the Committee
has been principally focusing on the possibility of the filing of an
involuntary bankruptcy petition against the Issuer. The terms of a
draft plan of reorganization being discussed by the Committee would
allow for one of two options: either the transfer of the ownership
of the Property to a real estate investment trust ("REIT"), whose
equity interests would be owned solely by the Noteholders, which
interests would be distributed to the holders in exchange for their
Notes, or the Property would be sold in a public auction, and the
net sales proceeds distributed to the holders.
Transfer Taxes. One of the considerations in choosing between
the two options relates to the possible imposition of New York State
and New York City transfer taxes in connection with any sale or
transfer of the Property. Normally, the N.Y.S. transfer tax is
imposed at the rate of 0.4% of the consideration for the transfer,
while the N.Y.C. tax is imposed at a rate of 2.625%. While,
ordinarily, the transfer tax would be assessed against the sales
price or market value of the property transferred, if the Trustee
were to bid-in the debt, the consideration against which the tax
would be imposed would be at least the amount of the outstanding
debt, for N.Y.S. (but not N.Y.C.) tax purposes. In other words,
since the total amount of principal and interest outstanding exceeds
$200,000,000, the N.Y.S. tax alone would be at least $800,000.
Pursuant to the Bankruptcy Code, transfer taxes are typically not
imposed in connection with transfers made pursuant to a confirmed
plan of reorganization. While the Property is owned by the Owner,
not the Issuer, in a similar situation involving a former Olympia &
York property, the Committee understands that the taxing authorities
did not impose taxes on the transfer of the property notwithstanding
that only the issuer of the debt securities, not the property owner,
reorganized under Chapter 11. Obviously, no assurances can be given
that the taxing authorities will take the same position with respect
to a transfer of the Property if only the Issuer went through a
bankruptcy proceeding, not the Owner. A double bankruptcy, of both
the Issuer and the Owner, should exempt any transfer from these
taxes, but without O&Y's cooperation, there might be practical
difficulties in accomplishing the same.
No decision has been made to date as to either of these options,
i.e., transferring the Property to a REIT or selling the Property to
a third party, or as to the filing of an involuntary petition. The
Trustee and the Committee await the views of the Noteholders at the
June 25, 1996, meeting previously scheduled on this and other
issues.
Cash Collateral. On another matter, in the May 30 notice, the
Trustee reported that it held at the time approximately $20 million
in cash. That amount fluctuates regularly as additional rental
income is received and operating expenses are paid. On June 21,
that amount had declined to approximately $ 16.6 million due, in
part, to the prepayment by the Trustee of the semi-annual real
estate taxes which are payable on July 1, and to Home's non-payment
of the June 1 rent. Due to the prepayment of taxes, the holders
were able to benefit from a special 5% discount offered by the City,
which totaled over $13,000.
Financial Statements. Olympia & York has not delivered to the
Trustee any audited or unaudited financial statements during the
past four years. In connection with tax certiorari proceedings filed
by O&Y with respect to 59 Maiden Lane, O&Y's accountants, Margolin,
Winer & Evens LLP, have prepared Schedules of Income and Expenses
for calendar years 1994-5. The schedules show that for the 1995
calendar year, total gross income was $52,428,303 and total
expenses, including real estate taxes (but not including debt
service payments on the Notes) was $21,567,519, leaving net income
of $30,860,784 for the year.
Federal Reserve Bank. In addition to the $16.6 million in cash
described above, the Trustee is holding a U.S. Treasury security in
the face amount of $10,455,000, which represents collateral
delivered by O&Y to secure payment of certain obligations owing to
the Federal Reserve Bank ("FRB"), a tenant at 59 Maiden Lane, during
the 1997 calendar year, in the event of a lease termination or a
partial or total taking of the leased premises. That collateral was
delivered by O&Y pursuant to a Lease Amendment under which FRB
prepaid to O&Y its 1997 rent obligation of $9.6 million back in
1988. If neither a lease termination nor a partial or total taking
of the leased premises occurs during 1997, the Trustee would be
entitled to receive and apply the collateral, on behalf of the
holders, at any time after December 31, 1997, in which case the
Noteholders would then receive the equivalent of the FRB lease
payment for calendar year 1997.
Under the Lease Amendment. O&Y was also obligated to reimburse
FRB $1.2 million in March of this year and $1.2 million in March of
1998 for certain tenant improvements made and to be made by FRB on
the Property. That obligation was supported by a Letter of Credit
issued by Swiss Bank in the amount of $2.4 million which covered
both the March 1996 and the March 1998 payment obligations. In late
February of this year, O&Y requested that the Trustee pay the $1.2
million to FRB from the cash flow generated by the Property. The
Trustee, with the support of the Committee, rejected O&Y's request.
Instead, FRB drew down the entire $2.4 million under its Letter of
Credit, which extinguished the Owner's reimbursement obligations
under FRB's lease for both 1996 and 1998.
CONTACT: Mike Pascale of Abernathy MacGregor Scanlon, 212-371-5999