Heileman Bankruptcy Plan Looks Favorable for Banks

Bankers probably are not crying in their beer over the bankruptcy filing Wednesday by G. Heileman Brewery.

The banks may come out reasonably well, all things considered, by swapping $623 million in defaulted debt for $323 million of notes and 67% of the reorganized company.

The unsecured creditors may shed tears, though. The bankruptcy filing calls for them to accept about 25 cents on the dollar for their claims, which total about $830 million - provided they agree to the terms.

Bought by Bond Corporation

G. Heileman, in LaCrosse, Wis., took on the debt following a 1988 takeover by Bond Corporation Holdings Ltd., an Australian company that is in trouble itself. Bank of Boston led the bank syndicate that provided the bridge loan.

Other participating banks included Wells Fargo Corp., Continental Bank, and Bank of Nova Scotia.

The situation now offers a stark contrast with the situation three years ago, when bankers lined up to get in on the Heileman deal.

Heileman, which had been profitable prior to the sale, got into trouble almost immediately afterward. The court documents noted a $5 million annual loss at the end of 1988.

Bankruptcy Filing

Beset by competitive pressures and dwindling revenues, the company finally filed for reorganization under the bankruptcy law in January.

The bankruptcy plan notes the bank led another $600 million line of credit, about $50 million of which was used. Participants in that revolving credit facility were BNS, Pittsburgh National Bank, State Bank of Victoria, Bank of Montreal, First Bank, Irving Bank Corp., Osterreichische Landesbank AG, and Security Pacific Corp.

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