The URL can be used to link to this page

Home My WebLink About21- Economic Development ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO REQUEST FOR COMMISSION/COUNCIL ACTION From: TIMOTHY C. STEINHAUS Subject: ROGER'S BINDERY - Administrator-EDA DELINQUENT LOAN Date: December 2, 1993 ---------------------------------------------------------------------------------------------------------------------- Synollsis of Previous Commission/Council/Committee Action(s): On November 15, 1993, the Community Development Commission directed staff to present a specific agreement, referencing any available new collateral, to resolve the pending Roger's Bindery loan delinquency at the next regular meeting of the Community Development Commission on December 6, 1993. ---------------------------------------------------------------------------------------------------------------------- Recommended Motion(s): (Community Development Commission) MOTION: That the Community Development Commission review, evaluate, discuss and select the most appropriate option to resolve the Roger's Bindery 0 pending loan delinquency either via consideration of staff conceived strategies or others deemed more appropriate. TIMOTHY C. STEINHAUS Administrator ------------------------------------------------------------------------------------------------------------- Contact Person(s): Timothy C. Steinhaus Phone: 5081 Project Area(s): Southeast Industrial Park (SEIP) Ward(s): Three (3) Supporting Data Attached: _Staff Report FUNDING REQUIREMENTS: Amount: $ N/A Source: Budget Authority: -------------------------------------------------------------------------------------- Commission/Council Notes: ------------------- - ----------------------- TCS-SW P:dle:bindery.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/06/1993 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO STAFF REPORT ---------------------------------------------------------------------------------------------------------------------- ROGER'S BINDERY - DELINQUENT LOAN The Commission has had extensive discussions regarding pending action concerning disposition of Roger's Bindery (the Bindery) delinquent loan that has an outstanding balance of $457,905 (principal and interest) as of November 3, 1993. The original loan was $500,000. In addition to three prior meetings of Commission deliberation, staff, pursuant to Commission direction on November 15, 1993, met with representatives of Roger's Bindery on November 22, 1993. Present in the meeting were Roger Imbriani, Bindery CEO; Bob Forrest, Bindery Chief Financial Officer; Gene Wood, E.H. Wood and Associates; Timothy C. Steinhaus, Agency Administrator and Kenneth J. Henderson, Executive Director. Based on this meeting and prior dialogue during Commission meetings the following options, with obvious different degrees of desirability, have been developed:. I. The loan could be "forgiven" and converted to a grant. This option would preclude the Agency from recouping its principal loan amount and interest plus diminish its anticipated accounts receivable cash flow. 2. Accept the Bindery's proposal. Essentially the Bindery has proposed that the $269,250 it has paid over the years be deducted from the outstanding principal. It further urges the ultimate balance be amortized in ten years. During this payment period the company would "...continue to increase its operation and increase its payroll to support the San Bernardino area." 3. The loan could be renegotiated so it is mutually acceptable to all parties. This strategy was attempted during the above referenced meeting on November 22, 1993 and agreed to by Roger Imbriani. Approval of this strategy would result in the business receiving temporary relief from making the Agency monthly payments, enable the company to have a fighting chance to survive, thus saving jobs and preserving a strong tax base. The negotiations reflected current loan balances ($456,580) at that time and the major deal points in the agreement were as follows: a. Reduce the outstanding loan balance by the aggregate of all loan payments to date resulting in a new loan balance of $183,580. ----------------------------------------------------------------------------------------- TCS:SWP:d1e:bIndery.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/06/1993 Agenda Item Number: ECONOMIC DEVELOPMENT AGENCY STAFF REPORT Roger's Bindery Delinquent Loan December 2, 1993 Page 3 ----------------------------------------------------------------------------------------------------------------------- b. Amortize the new loan balance of $ 183,580 over ten years with the delinquent amount of $60,500 to be paid by increasing the loan from 7% to 10.5%. c. The new loan term would be eleven (11) years from the date of execution which includes a one (1) year deferral of monthly payments. d. Require Roger Imbriani to assign one-hundred percent (100%) of his forty-five percent (45%) company stock to the Agency as additional collateral and security. Based on the weakness of the organization the value of this may be insignificant, unless substantial company financial stability occurs over the years. e. The Bindery would transfer its Colton operation to San Bernardino within seven (7) years from execution of the agreement or as soon as economically feasible. Downsizing staffing, as or if necessary, for economic survival could affect this. L The Bindery will remain in San Bernardino a minimum of ten (10) years. g. The Bindery will submit a Business Reorganization Plan to the Agency within thirty days from the date of the signed agreement. h. The Bindery agrees to allow the Agency to review the company's financial records, at least monthly or periodically as discretionally determined by the Agency. 4. The Agency can file a suit to collect its past due note. This option is in harmony with Agency policies in the event no "workout" solution can be agreed to. Such action enables the Agency to secure what assets it can immediately. However, it could result in the Agency receiving less than its outstanding principal and interest . In the event bankruptcy is declared it will delay collection proceedings and could probably cause collection of a small percentage of each dollar owed, if anything is collected. ----------------------------------------- --------------------------------- TCS:SWP:die:bIndery.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/06/1993 r Agenda Item Number: ' "`' i ECONOMIC DEVELOPMEN'. AGENCY STAFF REPORT Roger's Bindery Delinquent Loan December 2, 1993 Page 4 ------------------------------------------------------------------------------------------------------------------------ While there may be various alternatives to the above options, these appear to be the principal ones for the Commission to focus its review and discussion in order to resolve the loan delinquency. Staff recommends adoption of the form motion. TIMOTHY C. STEINHAUS, Administrator Economic Development Agency ----------------------------------------- --------------------------------- TCS:SWP:dle:bindery.cdc COMMISSION MEETING AGENDA MEETING DATE: 12/06/1993 A, _ Agenda Item Number: