Republic Van Lines of Baltimore, the nation's 11th largest moving company, yesterday said it is unable to repay a $3.4 million loan and must cease operations.
The 33-year-old company, plagued for months by financial ills, has "insufficient funds to meet these obligations and has been unable to reach any reasonable solution of its financial and operating problems," according to a statement released by the firm.
The company will now "engage in an orderly liquidation of assets, substantially all of which are pledged as collateral for its obligations to" the lending bank. "It is not expected that there will be any liquidation proceeds available for distribution to general creditors or to stockholders," the company statement said.
Company President Robert W. Mockard and other officials were unavailable for comment all day and spent some time telling employes about the firm's fate, according to a Republic employe.
Last month the company reported a loss of $1.17 million for 1978 and said its auditors warned that the company might not be able to continue in business. Republic's loss was less than a $1.65 million loss the previous year, but revenues declined to $22.4 million from $23.8 million.
The company said last month that auditors had qualified its financial report because of substantial losses in the two years, defaults on the company's revolving credit loans and "a severe liquidity problem."
According to the American Movers Conference, Republic made a profit of only $1.40 from every $100 in revenues, last year. "That's bad, real bad," a conference spokesman said.
But that was better than the mover's performance in 1977 in which it lost $2.70 for every $100 in revenues, the spokesman said. Republic was ranked 11th in the volume of shipments handled and revenues last year, the spokesman said. In 1975 it was ranked ninth.
Industry sources said that part of Republic's problems stemmed from poor management and the poorer national economic situation.
Movers, which are regulated by the Interstate Commerce Commission, have been unable to get the rate increases they have asked for, according to Francis Wyche, executive secretary of the Household Goods Carriers Bureau. In May 1978 the movers asked for a 9.2 percent increase and were eventually granted a 6 percent increase, Wyche said. The movers recently were granted a 4.2 percent increase, however, Wyche said, which is what they had asked for.
"The larger van lines are operating at a 1 percent profit margin," Wyche said. "That affects their ability to get financing."
Wyche said he knew of one other mover in the top 15 "that's in bad financial straits." Wyche, however, would not disclose the name of that carrier.
Movers are also being hurt by the ongoing independent truckers strike which is forcing the movers to operate at 30 percent of their capacity during a time in which they handle 60 percent of their shipments, Wyche said.