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More woes for Sunbeam
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June 25, 1998: 7:22 p.m. ET
Appliance maker delays filing, pending review by auditors
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NEW YORK (CNNfn) - In another blow to Sunbeam Corp., the household products maker delayed filing statements on its debt Thursday until its auditors completed a review of the company's 1997 results.
Sunbeam, which fired controversial Chairman "Chainsaw" Al Dunlap on June 15, also confirmed it is the subject of an investigation by the Securities and Exchange Commission into Sunbeam's accounting policies and practices and has requested various documents.
In a statement, Sunbeam said it plans to cooperate with the probe.
SEC officials have declined to confirm or deny that an investigation is under way. But people close to the agency have said in recent days that the SEC is seeking to determine whether bookkeepers at Sunbeam resorted to accounting gimmicks to make the company's 1997 earnings appear stronger than they actually were.
Sunbeam said it decided to delay filing the registration statement for its previously issued Zero Coupon Convertible Senior Subordinated notes so the company could review Sunbeam's 1997 financial statements.
"Arthur Andersen LLP, the company's auditor, notified the company yesterday that it will not provide its consent to the inclusion in the registration statement of its opinion on the 1997 financial statements, pending completion of the review," the company said.
The issue has taken on a sense of added urgency in light of recent troubles at Sunbeam. On June 15, directors ousted Dunlap, citing lack of confidence in his leadership ability and dismay at the company's deteriorating financial condition.
On the day Dunlap was fired, the company said it expected to incur a second-quarter operating loss, reversing a previous forecast.
Separately, Sunbeam said it is in talks with a group of bankers to waive certain covenants on $1.7 billion in loans.
The banks -- Morgan Stanley Dean Witter & Co., First Union Corp. and BankAmerica Corp. -- underwrote the loans in March as part of a debt restructuring by Sunbeam following its acquisition of Coleman Co., First Alert Inc., and Signature Brands USA.
The banks canceled plans to syndicate that debt, however, on June 15 amid growing concerns over Sunbeam's financial predicament.
Sunbeam would violate the terms of its loan covenants at the end of the second quarter, if it reported an operating loss. By waiving the covenants, however, the company would be granted leeway while its new management team tries to set its financial house in order.
Morgan Stanley holds 40 percent of the loans while First Union and BankAmerica each control 30 percent.
Shares of Sunbeam (SOC) closed Thursday at 10-7/16, down 1-9/16 on the New York Stock Exchange. Since March, the company's stock has swooned from a March peak of 53, when it began a financial slide.
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