Anchor Glass Must Revise at Least 3 Years of Reports

Anchor Glass Container Corp.'s future grew bleaker Friday when it said it would revise at least three years' worth of financial reports and that it hired a law firm to help deal with the problem.

The troubled Tampa company, which makes bottles for beverages like Budweiser and Yoo-Hoo and calls itself the third-largest U.S. manufacturer of its type, said it will revise quarterly and annual reports as far back as 2001 because of what it described as "improper accounting."

Three separate payments from an unidentified customer were recorded improperly, leading Anchor to overstate or understate its earnings at various times.

"The financial statements of Anchor for the years 2001, 2002, 2003 and 2004 and for each of the quarters therein should not be relied upon," the company said in a news release Friday .

Chief financial officer Mark Burgess did not return a call seeking comment. Anchor's stock closed Friday at 42 cents per share, down 3 cents, for a new low.

The company expressed concern about its accounting in a July 18 news release. Compared to some of the other financial woes described in the statement, however, the issue loomed small.

Anchor said then that it expected to fall out of compliance with the terms of two lines of credit worth up to a total of $135 million, might not be able to muster funds to meet an Aug. 15 payment on its senior debt and was at some risk of filing for bankruptcy for what would be the third time in 10 years. The next day, Anchor's stock plunged 54 percent.

But Friday's update on the accounting issue may have strengthened the hand of shareholders who last year sued Anchor, its directors and officers, auditor Pricewaterhouse Coopers LLC; underwriters Credit Suisse First Boston, Lehman Brothers and Merrill Lynch & Co.; and Cerberus Capital Management LP, the New York hedge fund that bought the company out of bankruptcy in 2002 and took it public in September 2003 at $16 per share.

Among other things, the lawsuit alleged that Anchor's August 2003 prospectus, a disclosure statement meant to attract potential investors, omitted key facts and included others that were "untrue."

"To say that the company has had bad financials for two full years before even the (initial public offering of stock) is a problem," said Ken Vianale, a Boca Raton lawyer who is lead attorney for the plaintiffs. Anchor is liable for significant errors in the prospectus whether or not the errors were intentional, he added.

If Anchor does file for bankruptcy protection, however, it's unlikely shareholders will get any money from the company. Owners of common stock are assigned a very low repayment priority in bankruptcy court.

600450 Anchor Glass Must Revise at Least 3 Years of Reports
Date: 8 August 2005

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