Lyons' victim seeking shelter from creditors

Loewen Group, which played a central role in the Henry J. Lyons saga, is $2.3-billion in debt.

St. Petersburg Times, June 2, 1999
By Kris Hundley

The giant funeral home company that was bamboozled out of more than $3-million by the Rev. Henry J. Lyons has filed for bankruptcy protection.

Loewen Group, based in the Vancouver, British Columbia, suburb of Burnaby, filed Tuesday for protection from creditors in both Canadian and U.S. courts while it reorganizes. The company, North America's second-largest operator of funeral homes, said it has debt of $2.3-billion.

Loewen, which owns six funeral homes and two cemeteries in Pinellas County, played a key role in the downfall of Lyons, the St. Petersburg minister who was convicted in state court in February of racketeering and grand theft.

As president of the National Baptist Convention USA, Lyons convinced Loewen in 1995 that he could help the company tap into a lucrative market for its cemetery plots and funeral services: black Americans. Though Loewen sent Lyons checks totaling more than $3.2-million, few sales ever resulted. The money instead went to finance Lyons' lavish lifestyle -- buying golf clubs, tires for his wife's car and mortgage and taxes on a waterfront home in Tierra Verde that he bought with another woman.

During Lyons' trial, Loewen's former president said he felt "blackmailed" into making a $500,000 payment to Lyons after the minister threatened to hold a news conference on the steps of the nation's Capitol denouncing the company.

Lyons is serving 51/2 years in state prison. He also is awaiting sentencing on federal charges of tax evasion and bank fraud, to which he pleaded guilty in March.

Loewen's failed contract with Lyons was just one in a series of costly mistakes for the company. In 1997, Loewen spent $1.65-billion to fend off a hostile $3.7-billion takeover bid from Texas-based Service Corp. International, the largest funeral company in North America. It also had to pay millions to settle a breach-of-contract lawsuit in Mississippi.

Lyons had promised to "investigate" the Mississippi case, which had resulted in a jury verdict of $500-million. The minister told Loewen executives there were rumors of jury tampering in the trial and said that for $2-million, he would get proof the company had been railroaded.

Loewen initially agreed to Lyons' plan, then moved ahead and settled the court case for $175-million. According to Loewen officials, Lyons was furious at the settlement and called the company, demanding his $2-million. Loewen agreed to reimburse half, or $1-million. Robert Lundgren, Loewen's president and chief executive, said he expects the company to emerge from bankruptcy court protection within a year. The filing was under Chapter 11 of the U.S. code and similar Canadian provisions.

"This is not a liquidation, it's clearly a reorganization," said Lundgren, who has held the top jobs at Loewen since October. "From a location point of view, it's business as usual. We have productive assets across the country and protection from creditors as we lighten our load of debt."

Lundgren said the company has received a commitment of $200-million in debtor-in-possession financing from First Union National Bank, pending court approval. While the company wasn't having any trouble paying its day-to-day bills, it was scheduled to make a $16.7-million interest payment Tuesday. The company also was under pressure to refinance $300-million in notes by mid-September.

Loewen has about 1,100 funeral homes and more than 400 cemeteries in the United States, Canada and the United Kingdom. The company gets more than 90 percent of its revenues from the United States.

In the Tampa Bay area, Loewen owns Rhodes, Royal Palm and Prevatt funeral homes. The company also owns two cemeteries in St. Petersburg.

Lundgren blamed his company's financial troubles on an aggressive cemetery acquisition program.

"We took our focus off funeral services and paid too much for cemetery assets," he said.

Information from Bloomberg News and Times files was used in this report.