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    Tokheim Weighs Future Options

    Sale of company could be forthcoming.

    FT. WAYNE, Ind. -- Despite emerging from bankruptcy protection two years ago, Tokheim Corp. is again in financial hot water, eyeing the protective embrace of Chapter 11 bankruptcy once more.

    The possibility of a sale could have Tokheim management considering a return to the clutches of bankruptcy protection, according to The Ft. Wayne (Ind.) Journal Gazette.

    Tokheim suffered a net loss of more than $56.7 million in fiscal 2001, which ended Nov. 30. Net sales dropped 5.5 percent compared with the previous year. The company blamed a weak market, especially in North America, for its financial performance. Sales for North America, excluding domestic export sales, were about $132 million in 2001, compared with nearly $165 million in 2000.

    The company faults the drop in its North American sales on the reorganization of major oil companies and related cuts in capital spending. Fluctuating wholesale gasoline prices also created uncertainty in the retail petroleum industry. The company is now considering various debt restructuring options, the most likely of which is a sale of the company, Tokheim president and chief executive officer John Hamilton has said.

    The proceeds from the sale would be used to help pay off debt, Hamilton said. But if the sale doesn't generate enough money to match Tokheim's debt, a Chapter 11 filing will wipe out the remaining debt. Tokheim can be expected to sell for between $225 million and $250 million based on fiscal 2001 sales of about $494 million. As of May 31, the company had about $300 million in debt, the report said.

    But Tokheim's chief said a bankruptcy filing is not the only option and that the company could restructure its debt without having to pursue bankruptcy protection. "We are going through a process to find the external partner that's right for the company," Hamilton said.

    The right partner would be one that values the company the highest, not just in price, but also in terms of Tokheim's human and technology assets, he said.

    About a third of all companies which file Chapter 11 bankruptcy end up back in financial distress within the next couple of years, said David Denis, professor of finance at Purdue University in West Lafayette. While about two-thirds of businesses reorganize after the first Chapter 11 filing, only about a third successfully reorganize the second time, he said.

    The rest are either liquidated -- where assets are auctioned off in parts -- or the entire company is sold, Denis said.

    In the past 18 months, Tokheim's two main rivals -- Marconi Commerce Systems and Dresser Wayne -- have been sold. Earlier this year, Danaher Corp., the owner of Veeder-Root fuel inventory systems, purchased Marconi and its famed Gilbarco gasoline dispenser line for $325 million. In January 2001, Halliburton Co. sold the Dresser Wayne dispenser division to an investment group.

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