- 42 -
be as high as $98.7 million due to unanticipated write-
downs and other factors. At that level of loss, the
funded debt ratio would have increased to 66.4 percent.
Mr. Knauss also advised officials of the Wichita Bank that
petitioner's management had recommended selling a major
asset to reduce debt.
At its meeting of February 1-2, 1983, petitioner's
board of directors accepted Mr. Knauss's recommendation to
sell a major asset. In view of this decision, the Wichita
Bank agreed to allow petitioner's funded debt ratio to
remain at 65 percent through August 31, 1983, but insisted
that it be reduced to 62 percent by September 1, 1983. The
current ratio requirement was also relaxed for the period
ending August 31, 1983, to an absolute working capital
level of $75 million. Petitioner's current ratio as of
February 28, 1983, was 1.17:1.
Petitioner’s projected losses continued to increase
throughout February and March 1983. An internal memorandum
of the Wichita Bank dated March 4, 1983, states that
petitioner “is firmly committed to selling assets to
strengthen [its] operations.” Another memorandum of the
Wichita Bank prepared on the same day states that
petitioner’s financial problems “exceed the worst case
projections.” A memorandum of the Wichita Bank dated
Page: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 NextLast modified: May 25, 2011