Retiree Benefits Put Sayer In A Hole p.7

By: John Consoli WHEN E&P REPORTED the sale of Sawyer Ferguson Walker to Berkley Acquisition Corp. in June 1995, it cited sources who stated that the newspaper representative firm was heavily burdened with financial obligations to high-level retirees.
E&P reported that those obligations forced the company into a cash-poor situation, which was a major contributing factor in its sale to Berkely.
Following publication of the article, Sawyer executives scoffed at its accuracy, but refused an offer by E&P to discuss the company's financial picture in more detail for a follow-u story.
Document and internal letters filed as part of a law-suit against Sawyer, dated March 17, 1993, tells how the newspaper rep firm retained a management consulting firm to make recommendations aimed at enabling Sawyer ""to regain its financial strength and surive as a viable and competitive business entity.""
Among the reasons cited by Krauss as contributing to Sawyer's financial difficulties was ""sizable stock redemption funding requirements, including interest costs.""
Blackfield, who retired in 1992, was being paid installments by Sawyer of more than $250,000 annually under a Stock Sale Agreement through which the company agreed to buy Blackfield's 63,000 shares of Sawyer stock at $38 per share. The total amount owed to Blackfield for his stock was $2.3 million.
In addition, Sawyer had signed a Supplemental Pension Agreement to pay Blackfield an additional $8,000 per month) see related story on page 6)
In his March 1993 letter to Blackfield, Krauss detailed some of the financial problems of Sawyer and indicated a desire to restructure the payment plan for his stock-which would reduce annual payments but extend the payment period by more than three years and to reduce the amount of annual interest paid from 7% to 6%. It was hoped that this would help improve Sawyer's cash flow.
According to the Krauss letter, there were six retired Sawyer shareholders including Blackfield, who were being paid in installments for their Sawyer stock.
Krauss detailed some of the financial steps Sawyer was implementing with existing employees and stated that ""unless all of the existing note holders agree to reform the paymet terms of their outstanding installment notes along the lines discussed, the effort to bring SFW out of its present financial difficulties will ikely fail.""
It could not be ascertained whether the new payment terms were agreed to, but in January 1996, Blackfield was notified by John Power, president of Sawyer parent company Berkeley, that Sawyer's ""financial condition had deteriorated significantly which necessateted suspending payments to you.""