Silvercrest Loses $1.5 Million, Breaks Loan Agreement

Silvercrest Corp. in Santa Ana says it lost $1.5 million in its fourth quarter and in doing so violated an agreement with its biggest lender.

A troubled developer and manufacturer of mobile homes, Silvercrest is embroiled in legal and financial difficulties on several fronts.

The loss for the quarter ended June 30 came on sales of $16.1 million. In the year-earlier quarter, the company had a loss of $56,000 on sales of $17.1 million.

For the fiscal year ending June 30, the company reported a loss of $2.1 million on sales of $55.3 million, contrasted with a profit of $1.4 million on sales of $52.1 million last year.

Deal Went Sour

The company blamed much of its losses on a deal that went sour to build a giant mobile home park in the San Fernando Valley. It ended when Silvercrest’s partner, giant Los Angeles home builder Kaufman & Broad, sued Silvercrest.

A Silvercrest subsidiary subsequently filed for protection under federal bankruptcy laws.

More red ink appeared on the ledgers this year when the company lost a legal dispute over a San Diego County mobile home park that cost the company $360,000 more than it expected, said Gary King, senior vice president.

Because of the losses, Silvercrest violated its loan agreements with California Federal Savings & Loan in Los Angeles. King says California Federal is processing a request to extend the loan agreement and has not called in the $7-million loan.

Negotiations Fail

Silvercrest also said negotiations to sell its mobile home manufacturing operation--which accounts for more than three-quarters of sales and profits--fell through. But several other potential buyers have since contacted the company.

The mobile home manufacturing operation is profitable, said King, who said the company’s financial problems began in earnest when it acquired a development company and jumped into the development business in a big way in 1986.