Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 21, 1992 TAG: 9201210084
SECTION: BUSINESS PAGE: A3 EDITION: METRO
SOURCE: GEORGE KEGLEY BUSINESS EDITOR
DATELINE: LENGTH: Medium
KRISCH SCALES BACK
Krisch American Inns Inc. said Monday it has launched a major financial restructuring aimed at negotiating new terms for loans on two hotels and selling two other properties.The moves come in reaction to a sharp decline in business travel caused by the recession and the aftermath of the Persian Gulf War, which hurt operations last year, said Ben Richardson, senior vice president and general counsel for the Roanoke-based company.
Krisch President Samuel J. Krisch said the company is "doing everything we can to improve operations, restructure or discontinue unprofitable parts of our business and emphasize profitable operations." The company reduced its work force last year.
When Krisch was was unable to make January payments on a Sheraton Inn in Newark, Del., and a Holiday Inn in Suffolk, it asked lenders for a moratorium on payments until its cash flow improves. As negotiations for the Suffolk and Delaware properties continue, Richardson said, "it may cost more to keep them than to let them go."
Krisch American said it plans to sell its unprofitable Ramada Inn at Wytheville to a partnership of company principals and it is trying to sell its Days Inn in Alexandria.
If the company loses these two properties and the other two are sold, Krisch American would retain only a Hampton Inn in suburban Baltimore and a 49 percent interest in Sugar Bay Plantation Resort, under construction in the Virgin Islands.
The outcome of the negotiations may not be known until June, Richardson said.
Krisch American also said it has agreed to turn over to a subsidiary of Westinghouse Credit Corp. its interest in a joint venture in nine hotels in Missouri, Texas, Alabama and Louisiana.
The company's interest in another Texas hotel has been sold. Two large hotels in New Orleans and Kansas City were conveyed to Westinghouse for the release of debts.
The company paid only a small amount for its interest in most of these properties "so we're not hurting there," Richardson said.
Krisch Hotels, an affiliated private company that manages 35 hotels including the Krisch American properties, "will be doing some downsizing also," he said.
Another private company owned by principals of Krisch American runs four local Holiday Inns: in Salem, near Roanoke Regional Airport, opposite the Roanoke Civic Center and on Franklin Road.
The company's finances depend on "a general upturn in the economy when salesmen are traveling again. Everybody has cut back on travel," Richardson said. However, he said, leisure travel was "generally up" last year.
Krisch American has had losses as the lodging industry has been beset by financial problems for the past several years. Prime Motor Inns, once the owner of part of the Krisch hotels, and Days Inn have been in bankruptcy reorganization.
Krisch American's stock dropped to a low of 50 cents a share after the company on Friday announced its restructuring plan to the financial community.
The stock price "has been telling us things are not going well," said Bill Nash of Scott & Stringfellow Investment Corp.