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Strategies & Market Trends : ARB/NLP/TCI/IOT - hidden value or just another magic ring?
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To: RockyBalboa who wrote (6)6/20/2000 7:44:00 AM
From: Rajiv  Read Replies (2) of 26
 
This is from today's WSJ -

Basic Capital Says Default
On Margin Calls Is Likely
By a WALL STREET JOURNAL Staff Reporter

DALLAS -- Basic Capital Management Inc. said it may default on $37 million in margin calls from numerous lenders, a week after two of its former advisers were accused of being involved in a massive securities fraud case.

American Realty Trust Inc., in which Basic has a 56% stake, separately said it may default on $35 million in margin calls.

The real-estate investment trust and Basic Capital, a closely held advisory company to four publicly traded companies including American Realty, both said they aren't in a position to pay the debt and are trying to renegotiate terms with lenders. The companies said there are no assurances that they will be successful in talks with lenders.

Last week, the Justice Department alleged that Gene E. Phillips and A. Cal Rossi and 120 people across the country, including figures from all five organized crime families in New York City, were involved in a scheme to defraud labor unions of millions of dollars in pension money. Federal authorities allege the enterprise laundered most of its bribe and kickback money through Basic Capital Management. Messrs. Phillips and Rossi resigned from their positions at Basic Capital last week.

American Realty's loans are secured by its equity investments in three affiliates: Income Opportunity Realty Investors Inc., Transcontinental Realty Investors Inc. and National Realty. Basic Capital's loans are secured by the same three entities and by American Realty.

American Realty's board appointed a special committee of independent directors to investigate possible involvement in securities fraud.
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