To Rename Broker-Dealer Subsidiary To Prevent Sales Force Exodus
NEW YORK (AP) _ The struggling investment firm Integrated Resources Inc. says it will transfer its main broker-dealer subsidiary to two executives and change the division’s name in an attempt to stanch a sales force exodus.
Integrated, which has $1.75 billion in debt, said Monday that Integrated Resources Equity Corp. would be renamed Royal Alliance Associates Inc. and its stock transferred to Integrated executives Gerard M. Lavin and Gary W. Krat.
The change is directed at retaining credibility for Integrated’s 3,900 registered broker-dealers who sell products ranging from mutual funds to investment partnerships to stocks and bonds, Krat said in an interview.
″Right now now it’s fair to say if you’re affiliated with the name Integrated Resources you have a problem,″ he said.
Integrated in June defaulted on nearly $1 billion of its total debt of about $1.75 billion. Since then the New York-based company has sought to sell its key financial assets, including IREC, in an attempt to raise money to pay what it owes.
The sales force has shrunk from about 4,600 in June, when Integrated’s financial troubles became public, and the company wanted to prevent further defections.
″There has been a substantial decline over these many months in the amount of Integrated product sales they’ve been making as there has been growing resistance to the Integrated name,″ Krat said, but did not specify the decline.
While the sales force still would sell Integrated products, Krat said broker-dealers under a new name ″don’t have that first hurdle to overcome.″
Under the agreement, IREC sales personnel, who are independent contractors licensed with the subsidiary, would be offered the opportunity to be licensed with the new broker-dealer.
Lavin and Krat were the principal managers of the subsidiary, based in Englewood, Colo., and New York. Krat said the deal, which requires the approval of Integrated’s board, should be completed by year’s end.
IREC was the company’s key financial subsidiary, but it’s paper worth was minimal because the sales force was independent. The company said it would retain the right to repurchase the stock of Royal Alliance if it arranges a sale of the subsidiary.
In addition to IREC, Integrated wants to sell Resources Trust Co.; Integrated Resources Asset Management Corp., an investment adviser; and two of its life insurance companies, Integrated Resources Life Insurance Co. of Des Moines, Iowa, and Capitol Life Insurance Co. of Denver.
Integrated has not paid any principle or interest to bondholders since June. The company’s woes stem from difficulties diversifying out of real estate into financial services.