NEWSPAPER
© Entire contents copyright 1985 by Crain Commun ications Inc. All rights reserved .
Crain's
Price: 50 cents a copy; $20 a year.
U-D basketball seeks sponsors
•
PAGE 4
..... Fuddruckers joins gourmet burger war PAGE 18
•
Facelift set for Royal Oak Theatre PAGE 16
WEEK OF SEPT. 2 - 8,1985 VOLUME 1 0 NO. 31
Analysts call News-Freep merger likely
LATE NEWS Northwest Airlines plans Detroit Metro project Northwest Airlines will begin construction this fall on two projects totaling more than $6 million in improvements to its facilities at Detroit Metropolitan Wayne County Airport, according to William Wren, Northwest vice president for public relations. The airline will build four new gates in Concourse A in the south terminal, bringing Northwest's gate total at Metro to 10. Part of the $4.5 million concourse project will be the Top Flight Club Executive Lounge for club members and first-class passengers. The airline also plans to spend $1.6 million on a new underground hydrant fuel system which will make it unnecessary to bring fuel trucks up to the airplanes. Northwest has increased its Detroit operations from 34 . departures daily in July 1984 to 41 , according to Wren. Northwest is the second busiest carrier at Metro after Republic, which now operates 189 flights daily.
PPG Industries Inc. may buy Parker Chemical PPG Industries Inc . of Pittsburgh may buy Parker Chem ical Co. of Madison Heights, a $100-million-a-year subsidiary of Ford Motor Co ., industry sources say. PPG Vice President Fred Rhue "was talking to people at Ford about buying Ford's paint, plastics and vinyl division - which includes Parker - two or three months ago," said Harry Charles, technical director at Chemfil Corp., a direct competitor of Parker. See LATE NEWS, PAGE 2
~
BY KATIE LANE-WILKE CRAIN'S DETROIT BUSINESS
GLENN TRIEST
Former Meyer Jewelry Inc. executive Louis Tomarken (right) abandoned retirement to try to turn around Shifrin-Willens Inc.
Ohio firm rescues Shifrin-Willens BY KATHY JACKSON CRAIN 'S DETROIT B USINESS
Oak Park-based Shifrin-Willens Inc. is back doing business as The New Shifrin-Willens. The company, which filed for Chapter II reorganization in June 1984, is now run by the Schottenstein Stores Corp. of Columbus, Ohio. Schottenstein, a $600 million corporation that owns and operates retail stores and other businesses , and investor Robert Wellington of New York purchased Shifrin's stock for $500,000 and loaned the company $5 million to payoff its remaining debts, according
~
BY CHARLES CHILD
20
CRAIN'S DETROIT BUSINESS
19 18 ~
See JEWELRY, PAGE 21
See NEWS, PAGE 22
~
Great Lakes Federal stock jumps
Stock prices, _ Great Lakes Federal Savi & Loan Ass'n.
.;:
to Edgar Houbert, the Detroit attorney who represented Shifrin in the proceedings. The final plan was approved by the U.S. Bankruptcy Court in Detroit in June. When the company filed for reorganization, it owed its creditors nearly $10 million. The debt has now been almost totally satisfied, said Houbert. The plan called for secured creditors to be paid in full and for unsecured creditors to receive 52.5 cents on the dollar, a plan that was approved by the ma-
With Gannett Co. at the helm, The Detroit News probably will eventually link arms with its adversary and enter a joint operating arrangement (JOA) with the Detroit Free Press, media analysts say. It is "highly likely" that the two papers would enter into a JOA if the Evening News Association, which owns The News, changes hands, said John Morton, a media analyst with Lynch, Jones & Ryan, in Washington, D.C. The News would not be attractive unless the new owner had the option of a JOA, he said. Gannett, the nation's largest newspaper chain, announced Thursday that it would buy the ENA for $1,583 per share for ENA's 453,000 outstanding shares, or $717 million. The agreement with ENA ended months of bidding rivalry and a hostile takeover attempt. Neither Gannett nor Knight-Ridder Newspapers Inc., which owns the Detroit Free Press, is a stranger to joint operating agreements. Gannett has seven and Knight-Ridder three. Joint operating agreements often mean steeper advertising rates and higher newspaper prices, and always lead to lost jobs. Analysts say at 15 cents and 20 cents a copy , newspapers in Detroit are underpriced, and the advertising rates are too low . "I think (a JOA) is a definite possibility - down the road," said Lee Dirks, a former Free Press vice president and general manager who is now president of Lee Dirks & Associates Inc., a newspaper merger and acquisition firm in Detroit. "A new buyer at The N ews might take steps to reduce losses before giving in to a JOA ." Paul Kagan, a Carmel, Calif.-based media analyst who owns ENA shares, said in a June report that it is "conceivable an opponent would be willing to pay (at least half the value of the leading paper) in order to get a monopoly . .. there is clearly a value in establishing a joint agency out of one plant." JOAs combine the business operations of two or more competing papers while keeping news operations separate. To be exempted by the U.S. attorney general from federal antitrust laws, one of the papers must be solvent and the other "in probable danger of financial failure."
17
c. 16
~
CJ
o Ci5 15 14
13 12 Date 6/5 6/1 26/196/26 7/3 7/10 7 /17 7/24 7 /31 817 8/148/21 8/28 Source: Wall Street Journal SANDRA SCHULTZ
Record profits, sound operations and new friends in the investment community have made the stock of Great Lakes Federal Savings and Loan Association a hot property this summer. Since Aug. 1, the price has increased 28 percent, from 14% to 18% last Thursday. It peaked Wednesday at 19Vs. During the week of Aug. 19, 757,000 shares were traded, 15 times more than an average week's volume early in the year. Based in Ann Arbor, Great Lakes is Michigan's third largest S&L, with assets of $2.3 billion. One aggressive institutional buyer has purchased more than 5 percent of the S&L's stock in recent weeks, said Charles Henry Jr., senior vice president and director of marketing. He declined to name the
buyer, which he described as a large institutional investor, such as a pension fund. Henry expects the investor to notify the U.S. Securities and Exchange Commission shortly that it has purchased 5 percent or more of the shares. Since Great Lakes' book value is $26.53 per share, management had considered its stock price undervalued early this year, Henry said. Book value is a company's net worth on paper. In April and May, management arranged to meet with investment analysts in Grand Rapids, Detroit and New York City. The S&L had good numbers to report. Great Lakes had become less dependent on traditional residential mortgage loans compared to other thrifts in the United States, says a research report written by Roney & Co., a Detroit-based brokerage company. See STOCK, PAGE 22
~