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CHIPWICH: PELTZ FOOD INVENTORIES MATERIALLY OVERSTATED

 CHIPWICH: PELTZ FOOD INVENTORIES MATERIALLY OVERSTATED
 NEW YORK, June 8 /PRNewswire/ -- Chipwich, Inc. (NASDAQ: CHIPA)


today announced that it had received information that the inventories of its Peltz Food Division had been materially overstated at Dec. 31, 1991, and March 31, 1992.
 If the information is accurate, the effect of this overstatement would be to overstate assets at both dates and to understate losses by an equivalent amount for the year ended Dec. 31, 1991. Further, any such material overstatement, would cause an event of default under its loan and revolving credit agreement, pursuant to which its lending bank has a lien interest in such inventory and determines amounts available to Chipwich under its revolving line of credit based, in part, on such inventory levels. Following disclosure of this overstatement Robert Peltz, chairman of the board of Chipwich and the chief executive officer of Chipwich and its Peltz Food Division submitted his resignation.
 At a special board meeting last week, the board of directors of Chipwich authorized an immediate independent legal investigation as to the company's legal responsibility and position with respect to the overstatement of inventory and other possible misstatements in the financial reporting of its Peltz Division. To this end, a special investigative accountant reporting to legal counsel has begun auditing the Peltz Division's inventory and investigating the reasons for any overstatement and any other accounting deficiencies. Chipwich will appoint an independent special executive to coordinate the investigation. Chipwich has also notified the appropriate federal authorities.
 Chipwich had heretofore entered into an agreement, subject to shareholder approval, to sell the Peltz Food Division to a company to be formed by Peltz. In light of the recent revelations the proposed sale has been terminated and preparations for a shareholders meeting to approve the sale have been discontinued. Further, certain shareholders of Best of the Best, Inc. and Diner Express, Inc., who had previously conveyed controlling equity interests in such companies to Chipwich in exchange for its securities rescinded such transactions pursuant to a contract right based upon the failure of Chipwich to consummate the sale of its Peltz Food Division.
 Chipwich's revolving credit facility expired on May 31, 1992, but its bank had unilaterally extended the credit facility for a two month period. Following notification of the inventory overstatement and notice as to the termination of Peltz's employment as chairman of the board (also an event of default) the bank advised that the extension of the credit facility was no longer applicable, but that it would consider further extensions of credit to Chipwich based on, as yet, unspecified information. The bank also reserved its rights to take further action. In the present situation, Chipwich has not sought additional credit from the bank. Approximately $6 million is currently owed under the loan and credit agreement.
 -0- 6/8/92
 /CONTACT: Sam Metzger, president of Chipwich, 212-688-8890/
 (CHIPA) CO: Chipwich, Inc.; Peltz Food Division ST: New York IN: FOD SU:


KD-PS -- NY078 -- 8130 06/08/92 17:55 EDT
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Publication:PR Newswire
Date:Jun 8, 1992
Words:498
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