Wednesday, January 21, 1988/The Battalion/Page 3
State and Local
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HOUSTON (AP) — Financially
ubled First City Bancorporation
Texas Inc., saying it expects to
st an $852 million fourth-quarter
( loss, said Tuesday ii would submit to
, 'f'Bareholdei s a reorganization plan
[ 1 d° n| ®at includes sale of non-performing
lur tnoodjHsets at its subsidiary banks to a new
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â– itional bank.
â–  Bank of ficials, whose fourth-quar
ter prediction would Bring 1987
â– sses to $ 1.1 billion, also announced
the formation of a new holding com-
lany that will buy all remaining as-
Btsand assume all liabilities.
I First City, hard-hit by energy and
fal estate loan losses, last Septem-
r received a nearly $1 billion
Hedge from the Federal Deposit In-
iduatesn ranee Corp., making it the second-
lattaljon fBrg 651 government bailout of a fail-
â– igbank.
■ “The fbuith-c|uarter loss, while
k«ibstantial, should be considered ip
Tie context of the reorganization,”
ftid J.A. Elkins Jr., senior chairman
If the board.
â–  Included in that are loan losses of
â– 176 million and $23 million in reor-
lanization expenses.
I According to a 200-page, single-
sj :c cd proxy statement being sent to
shareholders, bank consultant A.
Robert Abboud will head an investor
Broup to raise some $500 million as
j|tlie primary source of capital in the
■new” First City and will become the
■ompany’s chairman of the board
||nd chief executive officer.
First City subsidiary banks, mean
while, will spin off $1.79 billion in
)ok value of non-performing and
itherwise substandard assets to Col-
ting Bank, the new national bank.
In exchange. First City will get
1970 million in FDIC notes and
Ibout $764 million in Collecting
IBank notes.
“Today is a significant and impor-
int benchmark in this whole pro-
[eeding,” Abboud said. “This has
ieen a very complicated and in
fn
many respects a frontier endeavor.
“It took a massive effort to put
this document together. It is an ex
citing document, but a long and
complex document.”
Elkins added, “We’re delighted
we’ve gotten this far with it. It gives
shareholders the opportunity to re
alize and reinstate this company,
which everyone has been anxious to
do for a long, long time.
“Our financial results have been
affected by troubles and the highly
publicized Texas economy. This is
going to enable us to deal with those
troubles and put us in a position —
an eviable one — once it’s in place.”
The reorganization includes the
exchange of each 100 shares of com
mon stock for one common share of
the new holding company, 100
shares of Collecting Bank common
stock and the right to buy more secu
rities of the new company.
The new holding company also
will offer to buy existing First City
preferred stock at about 1 7.28 per
cent of its liquidation value.
Abboud said besides the bank it
self, also involved in the negotiations-
were federal and state regulatory
agencies, including the Securities
and Exchange Commission, the
Comptroller of the Currency, the
Federal Reserve and FDIC.
“From the very beginning, we
wanted to make certain there was
full compliance all the time with
each and every requirement as we
went forward,” Abboud said.
W.L. Medford, chief financial of
ficer, said the plan, which requires a
two-thirds acceptance by sharehold
ers scheduled to vote March 4, es
sentially is the same one announced
in late September. -
“The legal form for accomplish
ing that transaction has been
changed slightly but the basic terms
are the same,” he said.
One change is that under the old
structure, each class of stock had its
On with the show
Photo by Mike C. Mulvey
Members of “Up With People” perform a lively and colorful dance to
a Spanish theme. The group of young people travels to different
states and countries, performing musical shows. They performed at
Texas A&M Tuesday night in Rudder Theatre.
Discontinuation
of drug for AIDS
results in protest
DALLAS (AP) — Gay leaders are
critizizing Parkland Memorial Hos
pital officials for discontinuing use
of a drug available to AIDS patients
at other institutions.
‘They are preventing patients
from getting care,” said William
Waybourne, Dallas Gay Alliance
president. “And people will be dying
because of it.”
Physicians at Parkland’s AIDS
clinic stopped prescribing aerosol
pentamidine isethionate last week
because demand for it was over
whelming, said Dr. James Luby, the
hospital’s chief of infectious disease
control.
“It was like someone put out a bul
letin telling all out AIDS patients to
ask for a prescription,” Luby said.
of I
“It is not a proven mode ot treat
ment, and it is too expensive for
Parkland to undertake without suffi
cient study to prove it is cost-effec
tive.”
Alliance leaders also asked Dallas
County commissioners to declare the
county a disaster area and apply for
emergency federal funds.
About 20 members of the alli
ance’s Gay Urban Truth Squad dem
onstrated outside the commission
ers’ chambers Monday.
Protest organizers said that 636
AIDS victims have died in Dallas
County, and officials are not spend
ing enough money for education
about acquired immune deficiency
syndrome.
The county has set aside $75,000
in AIDS education funds this year.
The protesters also said that Park
land, the county’s hospital, provides
inadequate care for people with
AIDS, and complained of long waits
for treatment.
Pentamidine, which has not been
approved by the federal Food and
Drug Administration for use as an
aerosol, is used to treat
pneumocystis pneumonia, the most
common malady among AIDS pa
tients.
Providing the drug through the
hospital’s pharmacy would cost
nearly $250,000 a year.
Famed heart surgeon
had stock in tobacco
own independent vote. Under the
new structure, voting will be com
bined.
“To us, this is a very democratic
thing,” Abboud said. “No class of
stock can preempt the right of any
other class. All shareholders will
have the right to vote and those
shareholders who may choose to dis
sent, there is a provision which will
allow for dissenters’ rights.”
Some of the largest holders of
preferred stock have been reported
unhappy with the reorganization
plan. Abboud said Tuesday he could
not comment on the possibility those
dissenters would go to court to halt
the planned shareholders vote.
HOUSTON (AP) — Bankruptcy
court documents filed on behalf of
Dr. Denton Cooley, who is seeking
protection from creditors, show that
among the famed heart surgeon’s in
vestments is stock in three major to
bacco companies.
In 1985, the American Medical
Association’s policy-making House
of Delegates called for a ban on all
cigarette advertising and promotion
and urged a tobacco-free society by
the turn of the century.
But the AMA held tobacco stock
as recently as 1981, when the House
of Delegates initially rejected a mo
tion to divest but changed its mind to
allow the sale of its $1.4 million in
stock.
Ross Bannister, spokesman for
the American Lung Association, said
his organization encourages its em
ployees and board members to di
vest of tobacco-related stocks, al
though he said they’re generally
considered a good investment.
Cooley’s portfolio, called well-bal
anced and typical, also shows invest
ment in medical, food, communica
tions and oil and gas companies.
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