Call It Harried Eddie Chain Struggling To Balance Finances

Posted: May 26, 1989

NEW YORK — Crazy Eddie Inc.'s financial and operating problems have gone from crazy to extremely serious, company insiders and suppliers say.

Despite the closing of 17 stores - and a recent management shakeup - Crazy Eddie's still is struggling to raise enough cash for a June 15 multimillion- dollar loan payment. Other near-term operating problems also threaten the existence of one of New York's best-known electronics chains. Among those problems:

* Zenith and JVC, two big electronics suppliers, said they no longer will ship goods to Crazy Eddie. Other main suppliers - Sony, Sharp, Panasonic and RCA - will ship goods only if paid cash on delivery.

* A source close to a consortium of Crazy Eddie's vendors and creditors said that the 26-store chain has been given a 30-day moratorium on past-due bills that ends June 24.

"We'd still like to give the company a chance to get on track rather than line up in bankruptcy court," a member of the consortium, who requested anonymity, said this week.

* The cash-poor company faces a multimillion-dollar interest payment due June 15 on an $80 million bond issued in November. "If sales continue to plummet and liquidity is not bolstered, the bond payment may be in serious jeopardy," said Vivianne Filmer, an analyst with Standard & Poor's CreditWeek.

* Eddie Antar, who was rumored to be considering "saving" the floundering retail chain that he founded, may be facing his own troubles in the form of

criminal and civil suits.

The suits are associated with alleged fraudulent manipulation of financial information before and during the takeover of the company in November 1987, according to papers filed by the Committee to Restore Stockholder Profitability, a dissident shareholders' group.

In March, the company's store at 3400 Aramingo Ave. and the one at Front Street and Olney Avenue, both in Northeast Philadelphia, were closed. The only remaining Crazy Eddie's in Philadelphia - at 11000 Roosevelt Blvd. in the Northeast - will stay open, as will suburban locations in Willow Grove and Cherry Hill, N.J.

Some of the firm's current management's vendors and creditors confirmed Crazy Eddie's problems.

"We'd like to see them survive, but we are doing business only on a cash basis now," said Frank McCann, a spokesman for Thomson Consumer Electronics. Thomson manufactures electronics equipment under the RCA and GE brand names.

"We haven't dealt with Crazy Eddie in a while now, and don't plan to in the foreseeable future," said Nancy Fleming, a JVC spokeswoman.

A spokeswoman for Crazy Eddie Inc. said Peter Martosella, Crazy Eddie president and chief executive, would not be available to comment.

According to analysts, even if new management can weather the latest crisis, Crazy Eddie still would face an uncertain future.

"Near-term viability appears to be increasingly dependent on the continued leniency of creditors and vendors," said Filmer.

Crazy Eddie stock, which traded as high as $29 three years ago, is now selling at between 35 and 40 cents.

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