Monday, October 29, 2001

Investor critical of Wilkinson


Thomas filing claims juggling at his expense

The Associated Press

        LEXINGTON — Wendy's founder Dave Thomas is alleging that former Gov. Wallace Wilkinson was secretly working with his largest creditor to set up a new textbook company shortly before he filed bankruptcy.

        The new company, dubbed Newco, would have competed with Mr. Wilkinson's flagship business — Wallace's Bookstores, Mr. Thomas alleges in documents filed in federal court in Lexington.

        Mr. Thomas said that The United Co. had “radically changed” its attitude toward Mr. Wilkinson and his debts, refusing to roll over loans and putting pressure on Mr. Wilkinson to pay. It was in an effort to placate United, Mr. Thomas alleges, that Mr. Wilkinson undercut the interests of other investors and creditors.

        Mr. Thomas claimed the new company would have benefited Mr. Wilkinson and United at the expense of Wallace's shareholders, including Mr. Thomas, who invested $10 million in Wallace's.

        In February, Mr. Wilkinson declared $418.4 million in debts, including about $111 million in loans from United.

        Wallace's, which was founded by Mr. Wilkinson in 1962, operated bookstores on 60 college campuses before its assets were sold at an auction last summer.

        Mr. Wilkinson's attorney, Mary Fullington, said she was skeptical about Mr. Thomas' claims.

        “I have read those allegations (about Newco), but I have not seen any proof” that they are true, she said.

        The Newco disclosure was made in a memo to the court in support of a request for documents from United and one of its Lexington attorneys, David Lester.

        Sam Hinkle, another attorney for United, said a proposed textbook company, tentatively called Newco, was discussed by Mr. Wilkinson and United. “Those discussions went nowhere,” Mr. Hinkle said.

        The goal was to provide textbooks to Wallace's and help the Lexington company with its financial problems, he said.

        However, Mr. Thomas — who personally loaned $25 million to Mr. Wilkinson — said he would not have guaranteed the money if he knew about Newco.

        Mr. Wilkinson told him, Mr. Thomas said, that the $25 million would be used by another Wilkinson company, ecampus.com, to buy textbooks that would be sold through Amazon.com.

        Instead, Mr. Thomas said, the money apparently was used to refinance debt.

       



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