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Ex-Sunbeam Exec Focus of Probe

September 10, 2002|From Bloomberg News

Sunbeam Corp. said the Justice Department is investigating former Chief Executive Albert J. Dunlap's management of the company as the largest U.S. maker of small appliances revised its bankruptcy recovery plan.

The U.S. attorney's office in Manhattan is investigating events at Sunbeam from 1996 through 1998 while Dunlap was chief executive and Russell A. Kersh was chief financial officer, the company said Friday in a Bankruptcy Court filing.

Boca Raton, Fla.-based Sunbeam, maker of Mr. Coffee, Oster blenders and Coleman camping supplies, said the U.S. attorney hasn't told it the specific focus of the investigation. The firm said in the Bankruptcy Court filing that it "has no reason to believe that it is the target" of the investigation.

Dunlap last week agreed to pay $500,000 to settle Securities and Exchange Commission charges that he defrauded investors by inflating sales figures. Kersh agreed to pay $200,000. The SEC said Sunbeam used accounting reserves to widen its reported 1996 loss and inflate 1997 income, contributing "to the false picture of a rapid turnaround" in Sunbeam's financial performance.

"The U.S. attorney's investigation focuses on the actions of former management and we don't anticipate it will negatively impact our ability to reorganize by year's end," said George A. Davis, Sunbeam's bankruptcy lawyer.

Justice Department spokesman Bryan Sierra declined comment.

The recovery plan would give Sunbeam's secured lenders--Morgan Stanley, Wachovia Corp. and Bank of America Corp.--all of the shares of the reorganized company. Bondholders, owed $862.4 million, would get stock options that might have value depending on Sunbeam's financial performance. Existing Sunbeam shareholders would get nothing.

Sunbeam's suppliers would be fully paid under a separate reorganization plan filed for the company's operating units.

Sunbeam shares, which traded as high as $53 in 1998, fell 3 cents to 6 cents in over-the-counter trading.

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