Magazine article American Banker

Gem Dandy of a Deal Pays $6.4 Million Debt to Citibank

Magazine article American Banker

Gem Dandy of a Deal Pays $6.4 Million Debt to Citibank

Article excerpt

Gen Dandy of a Deal Pays $6.4 Million Debt to Citibank

If New York banks gear up for another round of "toaster wars' in the ever intense search for consumer deposits, Citibank may well have something much more valuable than home appliances to use as lures for new accounts.

On its way to Citibank's New York vaults are 12 "grocery box-sized cartons' of sapphires, weighing all together 300 to 400 pounds, said InterGem Inc. president Steve Droullard. The stones, which are in various stages of processing, represent the settlement of a loan the bank's Denver office called in last year from the Aurora, Colo.-based gem company.

Among the gems, which are being escorted by Wells Fargo guards on a commercial flight, are, roughly: finished jewelry, worth $600,000; cut gems with a value of about $2.5 million; uncut gems worth another $2.5 million; and something under $800,000 worth of unprocessed gravel that contains saphires.

Mr. Droullard hates to see the gems go--they have a wholesale value of perhaps $13 million, he said, and they represent virtually all of the company's remaining assets--but at least now, he added, InterGem can get back to business, something it hasn't been able to do for more than a year now.

"We're back to square one now,' he said. "But at least we are starting out debt-free and with our overhead cut down.'

It wasn't possible to obtain comment from Citibank. Mr. Droullard said he assumes the gems will be marketed, but he added: "It's not that easy' to market the unfinished gems.

InterGem's troubles began in 1980 when the company was a year old and perfectly positioned to take advantage of what was almost a national mania to own hard assets, such as gold and silver. "We were a supplier for a very liquid commodity then,' said Mr. Droullard. The company purchased a mine in Montana--the only domestic source for sapphires--and was able to sell everything it pulled out of the ground. …

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