Magazine article American Banker

Creditors Accept Plan to Get 95% Mercury Finance Stake

Magazine article American Banker

Creditors Accept Plan to Get 95% Mercury Finance Stake

Article excerpt

By DAVID WEIDNER Creditors of Mercury Finance Co. have agreed to an amended plan in which they will become majority owners of the embattled company, Mercury announced Tuesday.

The plan, to be submitted to a bankruptcy judge Monday, calls for the creditors to get a 95% equity stake in the Chicago auto loan company and secured notes worth 75% of their claims against it.

The key change in the new agreement would provide $5 million to settle claims by shareholders against Mercury. An initial proposal by Mercury offered those shareholders more stock.

Mercury said it expects the new agreement to be approved during a confirmation hearing in February.

If it is approved by the court, said William A. Brandt Jr., president and chief executive of Mercury, the plan "will relieve the company of the burdens of its present debt structure and will allow current shareholders to get some limited recovery on their investment."

Calls to Mercury and David S. Kurtz, an attorney for Mercury creditors, were not returned. Mercury said it is still being investigated by the Securities and Exchange Commission and the Federal Bureau of Investigation for alleged accounting irregularities.

Mercury reported after-tax losses of $20 million on sales of $186 million through the first three quarters of 1998 and had liabilities of $737 million in October, according to a filing with the SEC. At least part of the liability total is a $50 million credit line syndicated by BankAmerica Corp. …

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