Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, April 22, 1993 TAG: 9304220110
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE: LENGTH: Medium
If that happens, Krisch American will have no operating assets, according to the Roanoke company's annual report to shareholders.
Krisch said it has not been able to negotiate restructuring of its loan with Westinghouse Credit Corp. for the $52 million resort. Westinghouse is a 51 percent majority partner in the venture.
"It doesn't look good at present . . . but we're still in there fighting," said Ben Richardson, senior vice president and general counsel of the hotel and motel company. Krisch American will negotiate with Westinghouse Credit again next week, he added.
Under current loan terms, it appears likely Krisch American will not be able to pay interest on the debt for all of 1993 and would be required to turn over the property to Westinghouse, according to the company's annual report, dated April 5.
However, the resort's financial situation is not expected to affect the liquidity, financial condition or operations of the company in the near term under current structure and financing, the report said.
In its first four months, Sugar Bay had an occupancy rate of 50 percent, "a relatively strong occupancy for a newly opened property," the report said. The resort had revenues of about $2.8 million and a net loss of $1.6 million for the four months ending Dec. 31.
Principals of Krisch American also manage eight hotels through Krisch Hotels, a private company. That business last year went through a major loan restructuring with Westinghouse Credit.
The hotel group avoided foreclosure by deeding a dozen hotels to Westinghouse Credit. Krisch American defaulted on loan payments for notes totaling $6.4 million.
After the hotel industry's financial crisis in the 1980s, the business at its eight units "is up a little bit," said Sam Krisch, president of Krisch American and Krisch Hotels. The industry, however, is still having problems, he said.
A resort the size of 300-room Sugar Bay "needs a large bankroll to carry it . . . It has a tremendous monthly payroll," Richardson said.
Westinghouse "gave us a number of breaks and we hope they'll give one more," he said. Sugar Bay "will keep running, but we may not be running it."
Krisch American lost $1.1 million, or 19 cents a share, last year, about half of its 1991 loss of $2.1 million or 35 cents per share.
During its financial problems, its stock price has fallen to 12 cents a share and the low bid was 5 cents a share in the last quarter of 1992.
In the annual report, Krisch and his father, Krisch American Chairman Joel Krisch, said the company achieved goals of debt restructuring by discontinuing or selling unprofitable hotels and opening Sugar Bay Plantation in 1992. Many other hotel companies were unable to avoid bankruptcy or foreclosure, they said.
by CNB