Allegheny Beverage Corp. of Baltimore made a surprise offer yesterday to bail out, and perhaps take over, Wickes Corp., a troubled California conglomerate 10 times bigger than Allegheny.
Allegheny, which holds the local Pepsi-Cola franchise and owns Macke Corp. of Washington--including the D&F Furniture stores--disclosed that it already has purchased enough stock to become the biggest shareholder in Wickes.
Chairman Morton Lapides said Allegheny is prepared to help Wickes obtain $600 million in new financing in return for an active role in running the company. Wickes' board is to meet Sunday to weigh the offer.
The bailout offer was a stunning surprise because Allegheny is only a fraction the size of Wickes and the two companies have no previous connections and no known operations in common.
Wickes' widely diversified holdings produced sales last year of $4.1 billion, but the company reported an $80 million loss because earnings were wiped out by interest payments on money borrowed to finance rapid expansion.
Among the Wickes' businesses are MacGregor golf clubs, Yorktowne kitchen cabinets, the Aldens mail-order company, a $300 million manufacturing division, a $450 million agricultural division, and chains of supermarkets, drug, furniture, clothing and home improvement stores.
At one time, Wickes was the largest shareholder of Garfinckel, Brooks Brothers, Miller & Rhoads Inc. Wickes acquired about 20 percent of Garfinckel when it bought Gamble-Skogmo Inc. of Minneapolis, then sold the stock to Allied Stores Corp. when it took over the Washington retailer.
Allegheny's sales last year totaled $413 million, and the company earned about $7.7 million in profits. Before acquiring Macke Corp. in an unfriendly takeover last year, Allegheny was a $140-million-a-year business.
At Wickes' headquarters in San Diego, a spokesman said Allegheny initiated the plan to save Wickes, which is struggling under $580 million in debts and is trying to sell four divisions to raise cash and cut its losses.
Allegheny said it has negotiated with unidentified lenders to provide up to $600 million in new financing. Wickes' present $580 million credit line runs out in July, and its banks are threatening to sell as much of the company as necessary to pay the debt.
"The proposed financing would provide better terms than the present Wickes loans and make unnecessary the sale of profitable or potentially profitable operations," Lapides said.
In a series of open-market transactions disclosed for the first time yesterday, Allegheny has purchased 595,000 shares, or 4.2 percent, of Wickes' stock. At the current price of about $5.75 a share, Allegheny's Wickes shares are worth about $3 million.