announced today that the Company and its senior creditors have agreed to
extend their forbearance agreement until June 3, 1998. The Company also
reported that it has filed its 1997 year-end financial results with the
Securities and Exchange Commission (SEC).
Under the terms of the agreement, Mercury will continue to keep interest
payments current and will make periodic payments to reduce the principal of
the outstanding debt as cash flow permits. The creditors, in return, have
agreed not to take action against Mercury while the agreement is in
effect. The forbearance agreement had technically expired on March 2, 1998.
The original agreement was reached in July 1997 and has been periodically
extended since then.
The agreement applies to Mercury's senior debt, which as of March 31,
1998, was approximately $730 million. The holders of the subordinated debt,
approximately $23 million, did not participate in the current extension of the
agreement.
In its form 10-K for 1997, which was filed with the SEC on March 27,
Mercury reported a net loss of $74.2 million for the year, compared to a net
loss of $29 million in 1996.
The loss from operations in 1997 was $38.2 million. Non-operating
expenses included charges related to the sale of the Lyndon insurance
subsidiary of $31.6 million and other costs of $20.7 million, primarily
relating to professional fees incurred addressing issues arising as a
result of the previously disclosed financial irregularities. The loss from
operations for 1996 was $49.4 million, including the effect of the adoption of
static pooling, which increased the provision for credit losses by
approximately $89 million.
Comparative operating performance in 1997 was negatively affected by lower
interest income as a result of a smaller portfolio, increased interest expense
as a result of default rates, and the sale of the profitable Lyndon operations
during the beginning of 1997. Further analysis and discussion can be found in
the Annual Report on Form 10-K, which can be viewed on the EDGAR Database
maintained by the SEC at sec.gov. |
