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Steve Myers
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While Sports Resorts International Inc. posted another loss in the second quarter, it received a partial payment from majority shareholder Don Williamson on a loan he defaulted on in February.
SRI, where Williamson also is president, chief executive officer and board chairman, said in a filing this week with the U.S. Securities and Exchange Commission that it received $1.6 million from Williamson in June. Williamson also is Flint's mayor.
The default stems from a $5.2-million loan that the company made in February 1999 to South Saginaw LLC, a company Williamson also owns. He used the loan to buy the 320-acre Potter Lake recreation complex and Sugarbush Golf Course in Davison Township.
The balance was due in February and went unpaid, though Williamson made principal and interest payments through May, the filing said.
SRI is pursuing collection and options it has on the loan's collateral, the report said.
An independent appraisal done during the quarter found the collateral to be worth about $4.86 million, the report said.
The loan's balance at the end of June was about $2.76 million, down from about $4.43 million at the end of December, the filing said.
SRI Chief Financial Officer Greg Strzynski could not be reached for comment Tuesday, but he told The Flint Journal in late June that the company was "continuing to make progress" on the loan.
Williamson on Tuesday declined to comment on the loan issue but asked a reporter to call him today.
For the quarter, SRI lost $124,602, more than its $48,816 loss in the same three months last year. For the first six months of 2005, the company lost $766,732 compared to a $446,624 loss in the same time in 2004.
The company blamed the quarter's loss on a drop of sales at its Rugged Liner subsidiary, which makes pickup truck bed liners, and because of decisions to improve profitability at its race track subsidiary near Brainerd, Minn.
It eliminated two events at the track this quarter and did not open a combined gas station/convenience store, the filing said. The track is for sale.
Rugged Liner also extended its lease on its Shiawassee County facility through May 2020, the filing said. SRI pays $50,000 in monthly rent to 620 Platt Road LLC, which is owned by Williamson and his wife, Patsy Lou.
Related party transactions remain legal after the Sarbanes-Oxley Act of 2002, but rates or rent must be fair, said Randy Paschke, chair of the accounting department at Wayne State University.
"You're still allowed, but there's just a lot more scrutiny put on it," he said of related party transactions.
Since Sarbanes-Oxley, SRI has stopped advancing loans and changing credit agreements with affiliated entities.
Full Story:
http://www.mlive.com/business/fljournal/index.ssf?/base/business-2/1123687207150100.xml&coll=5 |
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Sat Aug 13, 2005 2:22 am |
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