Bondholders get cash from Pacific Security

Bondholders of troubled Pacific Security Companies Inc. are recovering some of their money.

The Spokane company managed by David Guthrie is selling assets and returning the proceeds to investors as part of its ongoing receivership case in Spokane County Superior Court.

Attorney Barry Davidson said $2.2 million was disbursed to the approximately 180 people holding unsecured bonds called debentures. The repayment is a third of the $6.4 million in debentures that the company issued during its 47-year history.

“This has been good for the creditors,” said Davidson, who said a second disbursement of funds could be mailed in about 30 days.

He said the goal is to fully refund debenture holders. After that, Pacific Securities may seek an infusion of cash to restart its business of investing in development properties.

The company was a victim of tighter bank credit in the wake of the Sept. 11, 2001 terrorist attacks. Within months of the attack, two banks pulled Pacific’s credit lines totaling about $25 million and demanded repayment.

With its liquidity dried up, Pacific was unable to make the commercial loans that were the core of its business. When the company was unable to issue new debt, it had few choices.

Most of Pacific’s investors also held bonds issued by bankrupt Metropolitan Mortgage & Securities Co.

Though there are some business parallels between the two firms, Davidson, who represents both companies, said the Pacific bondholders have a chance at full recovery. “If we don’t meet it, we’ll be very close,” he said.

The company is attempting to sell development property in Spokane and Boise, along with parcels in Park City, Utah, and San Diego, Calif.