ST. LOUIS, JULY 31 -- Interco Inc., the manufacturing firm that nearly destroyed itself by using junk bonds to fend off a hostile takeover attempt, apparently has solved its nagging debt woes.
The company, which owns Converse and Florsheim footwear companies along with furniture manufacturers Lane Co. and Broyhill Industries, today announced a basic restructuring agreement with its creditors.
The agreement between the St. Louis-based company and its banks, medium-term noteholders and subordinated debenture holders apparently will keep the company from entering bankruptcy proceedings.
It was reached after four days of marathon meetings in New York involving 50 to 60 people representing the various creditors.
''We all felt that Interco was basically a very sound operation that had the terrible misfortune of getting trapped with a terrible balance sheet,'' said Wilbur Ross, senior managing director of Rothschild Inc., which served as chief negotiator for subordinated debenture holders. ''This was a situation that deserved a peaceful ending rather than a contentious one.''
The agreement involves restructuring about $1.9 billion in bank loans, bonds and other notes.
Interco took on $1.65 billion in debt in 1988 in an effort to protect itself from a takeover attempt by corporate raiders Steven and Michael Rales of Washington.
At the time, the company made men's and women's apparel, operated 201 retail stores such as do-it-yourself hardware stores and discount clothing stores, and owned footwear and furniture companies.
To pay off its debt, the company announced plans to sell off all of its companies except the four it currently operates. However, the plan faltered when Interco subsidiaries brought far less than the company had anticipated. That, coupled with the junk bond market collapse, left the company with more debt than it started with. Company officials were forced to look for another solution.
Although no details of the agreement were released, the company did say it will not be required to make any principal or interest payments on its bonds until October.
The waiver of payments includes a $3.8 million interest payment that was due Monday and also allows Interco to make an $8.6 million interest payment that was due July 16 sometime before Aug. 15.
"We believe that the financial restructuring under discussion will alleviate the problems caused by Interco's excessive debt levels,'' said Chairman Richard Loynd.
Ross said the agreement will include provisions of a proposal made by the company in June that asked bondholders to accept common stock in exchange for their bonds.