Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 17, 1993 TAG: 9312170354
SECTION: BUSINESS PAGE: A18 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
SSMC Inc. N.V.'s lawsuit filed this month in U.S. District Court in Roanoke is seeking $15 million plus a 100 percent security interest in Singer's common stock.
The suit charges the defendants with fraud, unjust enrichment, breach of contract, breach of stock pledge and conspiracy.
Singer Furniture, which has its headquarters in Roanoke, projects sales of $130 million this fiscal year. It has 2,400 employees, including 600 at the Roanoke plant. The other plants are in North Carolina.
Issues raised in the suit date to 1989, when an investment company headed by Florida corporate raider Paul Bilzerian bought Singer Furniture from SSMC, which had been part of Singer Co.
In 1989, Bilzerian, who had been chairman of the parent Singer Co., formed Singer Furniture Acquisition Corp. to buy the furniture portion of SSMC. Semi-Tech Microelectronics Ltd. acquired SSMC and its remaining sewing-machine company holdings.
Bilzerian's company, Singer Furniture Acquisition Corp., based in Tampa, Fla., also is named as a defendant in the suit.
SSMC says Bilzerian's company pledged the common stock of Singer Furniture to SSMC as collateral for a $44.6 million promissory note payable in March 1990.
The suit says the note was refinanced in 1990 after Bilzerian's company paid SSMC $25 million in cash and agreed to another note for $4.6 million payable if the furniture company achieved certain operating income targets for three years ended Dec. 31, 1992.
SSMC further claims that in 1991, after Singer President Dennis Ammons failed to negotiate a lower principal payment with SSMC, a management group bought Singer Furniture in a "secret merger" of the "old Singer" and "new Singer."
It said the new company then issued new stock and used it to "retire" all but 10 percent of the old common stock that had been pledged to SSMC.
This action, the plaintiff says, diluted SSMC`s interest in the company and had the same effect as reducing the principal payment.
Also, the suit said, Bilzerian - who had filed for bankruptcy three months before the sale - orchestrated dilution of the stock value through his wife, Terri Steffen. Steffen is chairman of the Singer Furniture board and owns controlling interest in the company.
The suit also said SSMC suffered financial loss when Bilzerian's company defaulted in August on the refinanced note to SSMC.
Ammons, in a written statement issued Thursday, said the suit is part of "complicated litigation between other parties in Florida" and Singer Furniture is "only indirectly involved and the financial and business interests of the company are not at risk."
Bilzerian recently was released from jail after serving time for a 1989 securities fraud and tax violations not related to Singer Furniture.
His bankruptcy has sparked several lawsuits from former creditors who question his wife's holdings, which include the majority of Singer and several million dollars in personal real estate.
\ who's who in the lawsuit
PLAINTIFF: SSMC Inc. N.V., a Netherlands Antilles corporation with headquarters in Hong Kong and successor to SSMC Inc., a Delaware corporation that formerly owned all of the common stock of Singer Furniture Co. Semi-Tech Microelectronics (Far East) Limited was in 1989 the majority owner of SSMC Inc.
DEFENDANTS:
Singer Furniture Acquisition Corp., Tampa, Fla., is Paul Bilzerian's company that bought Singer Furniture Co. for $44.6 million in 1989 from SSMC Inc.
Singer Furniture Co., a Virginia corporation formed in November 1991 as a successor to Singer Furniture Co., a Delaware corporation formed when Singer Furniture Acquisition Corp. bought the company.
Terri Steffen, wife of Paul Bilzerian and principal stockholder in Singer Furniture Co. She is chairman of Singer's board.
Dennis Ammons, president and chief executive officer of new Singer and former president of old Singer
Other Singer executives listed as defendants: Charles Shaughnessy, vice president; William Johnson, vice president; Eugene Mathews, vice president, secretary and treasurer; William Foster, vice president.i
WHO STARTED IT ALL
Paul Bilzerian, a corporate raider who in 1987 maneuvered a $1.06 billion takeover of The Singer Co., which included the furniture manufacturer. He gave the Singer Co.'s name to Bicoastal Corp. and sold eight of its 12 divisions. In June 1989, Bilzerian led an investment group that bought Singer Furniture plants in Roanoke and North Carolina. He was recently released from a Florida jail, where he had been serving a sentence for breaking securities laws and tax fraud related to four failed takeover attempts. At the time of his trial in the 1980s, he had a net worth of $81 million, according to government documents.
by CNB