Auto-Train Corp. said yesterday it has hired Bear, Stearns & Co., a New York investment banking firm, as financial advisor, whose job will be to try to restructure the trouble railroad's debt.
Auto-Train, which did about $29 million of business in 1977 had debts of $10.8 million at the end of the year and has had operating losses for the past two years.
Chairman Eugene K. Garfield said Auto-Train is not under pressure to refinance its obligations, but hired Bear, Stearns to work out a long-range financial plan for the company.
Garfield denied trade reports that Auto-Train is seeking a partner for a merger and hired Bear, Stearns to improve its merger prospects.
As part of its fee, Bear, Stearns will receive five-year warrants to purchase 90,000 shares of Auto-Train stock at $3 per share. Garfield said the financial advisors would also be paid in cash for their expenses.
Auto-Train lost its top financial executive last January, when Allan Menell resigned as vice president and treasurer. Menell received $37,250 in severance pay, the proxy statement for the company's annual meeting reveals. In addition Auto-Train guaranteed Menell an income of at least $5,000 a month from August 1978 to January 1979, saying it would pay him the difference between his other income and that amount.
The company also announced yesterday that Dr. Saul Feldman, director of the staff college of the National Institute of Mental Health, has been appointed to its board of directors.
Feldman's wife, Gloria, manages gift boutiques housed in a caboose at each Auto-Train terminal. He replaces director Seymour Klienman, who resigned from the board and as an attorney for Auto-Train at the same time that Menell quit.