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estimated financial results for fiscal year 1983 had been
revised from savings of $46.4 million to a loss of $18.4
million. During the same meeting, Mr. David Andra, senior
vice president of the Wichita Bank, informed petitioner's
board of directors that the Wichita Bank had classified the
company’s loan as a problem loan. Terra's president,
Mr. Francis Merelli, also reported that Terra was exploring
the possibility of selling leasehold interests pursuant to
authorization by petitioner's board of directors to sell up
to $50 million of Terra's reserves to raise cash.
In December 1982, the Wichita Bank proposed to change
petitioner's loan covenant ratios effective February 1983,
to require that the funded debt ratio would be no more than
62 percent by August 31, 1983, and no more than 64 percent
during the period from February 15 through August 31.
Petitioner resisted this proposal.
Petitioner's financial difficulties continued into
1983. Early in the year, petitioner's board of directors
decided to sell the company's stock in Terra to avoid
default on the Wichita Bank loans and potential bankruptcy.
At a January 28, 1983, meeting of representatives of the
Wichita Bank and petitioner, petitioner revealed that its
projected loss for 1983 had increased to $64.7 million.
Furthermore, Mr. Knauss reported that the net loss could
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