/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000110.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, January 10, 2000, Vol. 4, No. 6 Headlines BAPTIST FOUNDATION: Seeks To Extend Time To Assume/Reject Leases BOSTON CHICKEN: Files Plan of Reorganization COLORADO CASINO: Applies To Employ Unirock Management CUSTOM SHOP: Case Summary and 21 Largest Unsecured Creditors DAILEY INTERNATIONAL: Motion For Final Decree DOW CORNING: Asks That Portion Of Opinion Be Set Aside DREXEL SHIRT: Case Summary and 19 Largest Unsecured Creditors FAVORITE BRANDS: Seek Authority To Settle De Minimis Claims FRUIT OF THE LOOM: Seeks To Honor Prepetition Employee Payments FWT INC: Says It Is Poised For Growth GENESIS DIRECT: Order Authorizes CW Gifts To Reject Leases GENESIS DIRECT: Order Extends Exclusivity GIBSON GREETINGS: Enters Credit Agreement With GE Capital HARNISCHFEGER: Announces Selection of Initial Bids for Beloit HARNISCHFEGER: US Trustee's Appoints 2nd Creditors' Committee HC, HOLDINGS: Case Summary and 10 Largest Unsecured Creditors INDUSTRIAL IMAGING: Leighton Reports Stock Ownership INDUSTRIAL IMAGING: Special Meeting Of Stockholders IRIDIUM: Seeks 90-Day Extension of Its Exclusive Periods KCS: Reiterates Restructuring Agreement LAMONTS: Receives Interim Financing Approval LIBERTY HOUSE: Committee Supports Extension For Leases LOEWEN: Motion For Compromise With Wachovia On Letters of Credit NEUROMEDICAL SYSTEMS: Reports Financial Information To SEC PHONETEL TECHNOLOGIES: Leucadia Reports Holdings PHONETEL TECHNOLOGIES: Prepackaged Plan Consummated PREMIER SALONS: Bar Date For Filing Proofs of Claim RAND ENERGY: Consummation of Joint Plan of Reorganization SERVICE MERCHANDISE: Reports Favorable Holiday Season TIE/COMMUNICATIONS: Taps Special Litigation Counsel ******** BAPTIST FOUNDATION: Seeks To Extend Time To Assume/Reject Leases ---------------------------------------------------------------- Baptist Foundation of Arizona, Inc. together with certain of its subsidiaries and affiliates, submit their motion for an order extending the companies' time to assume or reject executory contracts and unexpired leases. The companies request a ninety day extension, up to and including April 9, 2000, or the date a plan or plans of reorganization are confirmed, whichever is earlier. BOSTON CHICKEN: Files Plan of Reorganization -------------------------------------------- Boston Chicken, Inc. announced that it and its Boston Market related subsidiaries ("Boston Chicken") filed a joint Plan of Reorganization with the United States Bankruptcy Court for the District of Arizona in Phoenix. The Plan is based on the previously announced Asset Purchase Agreement that provides for the sale to Golden Restaurant Operations, Inc., a McDonald's Corporation subsidiary, of substantially all of the assets of Boston Chicken and the assumption of certain related liabilities for an estimated purchase price of $ 173.5 million. Certain assets not subject to the Asset Purchase Agreement, including Boston Chicken's ownership interest in Einstein/Noah Bagel Corp., will be transferred to a Plan Trust for the benefit of creditors. Under the terms of the Plan of Reorganization, filed today, after payment of bankruptcy administrative expenses and payment of claims entitled to priority under the Bankruptcy Code, the Debtors' senior secured creditors will receive substantially less than the aggregate face value of their loans to the Company. Holders of the Debtors' equity securities and holders of any claims arising out of the purchase of the Debtors' convertible subordinated debt and equity securities will receive no distributions under the proposed Plan of Reorganization. In addition, it is unlikely that holders of the Company's convertible subordinated debt securities will receive any distributions under the Plan of Reorganization. Boston Chicken filed its voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court, District of Arizona on October 5, 1998. Boston Chicken expects the Chapter 11 process, including the Disclosure Statement hearing and the subsequent Plan Confirmation hearing, to be completed by mid-year 2000. All filings in this case are available on the internet at http://ecf.azb.uscourts.gov. Boston Chicken, Inc. operates and franchises restaurants under the Boston Market brand name that specialize in fresh, convenient meals, featuring homestyle entrees, fresh vegetables, sandwiches, salads and side dishes. There are 858 Boston Market restaurants in 33 states and the District of Columbia. Information on Boston Chicken and Boston Market is available at www.boston-market.com. COLORADO CASINO: Applies To Employ Unirock Management ----------------------------------------------------- The debtor, Colorado Casino Resorts, Inc. applies for an order authorizing the employment of UniRock Management Corp as its financial advisor. UniRock prepared a valuation analysis for the debtor UniRock's post-petition services are limited in scope and will be rendered only as needed by the debtor in connection with plan confirmation. The services will be limited to: Providing the debtor with any necessary or required, updated valuation reports and related information or analyses; and Preparing for and providing expert testimony with respect to any of UniRock's services as may be necessary in connection with plan confirmation or as otherwise may be required. UniRock has agreed to accept a fee of $5,000 payable upon completion of the services. CUSTOM SHOP: Case Summary and 21 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Custom Shop Corp. 402-413 Route 23 Franklin, NJ 07416 Petition Date: January 3, 2000 Chapter 11 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Robert J. Dehney Derek C. Abbott Morris, Nichols, Arsht & Tunnell 1201 N. Market St. P.O. Box 1347 Wilmington, DE 19899 - 1347 Tel (302) 658-9200 Fax (302) 658-3989 Fruman Jacobson Robert F. Richards Sonnenschein Nath & Rosenthal 8000 Sears Tower Chicago, IL 60606 Tel (312) 876-8000 Fax (312) 876-7934 Joseph H. Smolinsky Sonnenschein Nath & Rosenthal 1221 Avenue of the Americas, 24th floor New York, NY 10020-1089 Tel (212) 768-6700 Fax (212) 768-6800 21 Largest Unsecured Creditors Mortimer Levitt Subdebt $ 2,384,100 Nat'l Retail Const. Trade Debt $ 195,000 Lalire March Architects Trade Debt $ 96,235 Lectra Systems Trade Debt $ 80,000 Provincial Store Fixtures Trade Debt $ 58,647 Bloomburg Trade Debt $ 57,440 Katz Digital Technologies Trade Debt $ 54,111 Bieri & Associates Trade Debt $ 46,445 Dow Jones & Co. Trade Debt $ 35,675 New York Times Trade Debt $ 31,896 Positive Image Trade Debt $ 27,006 Hammer Graphics Trade Debt $ 25,819 R. J. Pitcher Trade Debt $ 22,274 Frank Galipo Photography Trade Debt $ 21,495 MBS Business Products Trade Debt $ 20,689 New York Sample Card Trade Debt $ 16,508 Fisher Development Inc. Trade Debt $ 12,767 Maury Rogoff Public Relations Trade Debt $ 12,398 Nationwide Yellow Pages Trade Debt $ 10,081 North American Graphics Trade Debt $ 8,853 Chicago Tribune Co. Trade Debt $ 7,223 DAILEY INTERNATIONAL: Motion For Final Decree --------------------------------------------- The debtors, Dailey International Inc. and its affiliates seek entry of an order for a final decree closing the Chapter 11 cases. The plan has been substantially consummated and the initial distributions to holders of allowed general unsecured claims have been made in accordance with the terms of the plan and the confirmation order. The claims review and resolution process is complete, although certain claims remain to be litigated, if necessary. DOW CORNING: Asks That Portion Of Opinion Be Set Aside ------------------------------------------------------ Dow Corning Corp. and the Tort Claimants Committee (TCC), representing women with silicone breast implant and other product liability claims, today announced that they have jointly asked U.S. District Judge Denise Page Hood to set aside one portion of the U.S. Bankruptcy Court's recent opinion that has created confusion about Dow Corning's Joint Plan of Reorganization, a plan that was approved by 94 percent of the claimants. Although the Bankruptcy Court in Bay City, Mich., confirmed the Joint Plan on Nov. 30, 1999, in an opinion signed on Dec. 21, the Court attempted to modify the Plan to allow anyone who did not vote in favor of it to sue Dow Corning's shareholders and other third parties. In pleadings filed today, Dow Corning and the TCC asked Judge Hood to set aside this portion of the Bankruptcy Court's Dec. 21 opinion and restore the release of third parties, consistent with the plan that claimants overwhelmingly approved. The pleadings stated that the Bankruptcy Court had no jurisdiction over the Joint Plan once Plan objectors filed appeals from the Confirmation Order. "The third-party release is an integral part of the Joint Plan of Reorganization that was heavily negotiated between Dow Corning and the Tort Claimants Committee to resolve the silicone breast implant controversy," said Gary E. Anderson, president and chief executive officer of Dow Corning. "Without the third-party release, there is no closure of breast implant litigation against our shareholders or Dow Corning. The Joint Plan, as filed, already provides a fair and equitable way for women with breast implants to have their day in court. The Joint Plan allows any claimant to file a lawsuit against the Litigation Facility, which will be funded by Dow Corning following implementation of the Joint Plan." Anderson stressed that the Joint Plan, including the third-party release, had been overwhelmingly approved by the claimants, and that both Dow Corning and the Tort Claimants Committee remain committed to obtaining final approval for the Joint Plan as originally agreed to. "We are asking Judge Hood to eliminate the confusion created by the Bankruptcy Court's Dec. 21 opinion so that we can proceed with the appeals process and implement the Plan." Tort Claimants Committee representative Ralph I. Knowles said, "Both the TCC and Dow Corning are committed to resolving this last remaining issue so that we can rapidly implement the Joint Plan and begin the processing and payment of claims as soon as possible." DREXEL SHIRT: Case Summary and 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Drexel Shirt Co., Inc. 402-413 Route 23 Franklin, NJ 07416 Petition Date: January 3, 2000 Chapter 11 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Robert J. Dehney Derek C. Abbott Morris, Nichols, Arsht & Tunnell 1201 N. Market St. P.O. Box 1347 Wilmington, DE 19899 - 1347 Tel (302) 658-9200 Fruman Jacobson Robert F. Richards Sonnenschein Nath & Rosenthal 8000 Sears Tower Chicago, IL 60606 Tel (312) 876-8000 Fax (312) 876-7934 Joseph H. Smolinsky Sonnenschein Nath & Rosenthal 1221 Avenue of the Americas, 24th floor New York, NY 10020-1089 Tel (212) 768-6700 Fax (212) 768-6800 19 Largest Unsecured Creditors Threadtex Trade debt $ 264,287 Custom Vetement Assoc Trade debt $ 237,383 Hagale Industries Trade debt $ 170,861 E. Tennenhouse Trade debt $ 166,951 Superbra, Inc Trade debt $ 130,172 Martin Grienfield Clothiers Trade debt $ 130,142 Santai American Corp. Trade debt $ 54,816 IBM Corp Trade debt $ 33,905 Bentley Cravats Corp. Trade debt $ 32,575 Finova Capital Corp. Trade debt $ 30,166 Ezrason's Inc. Trade debt $ 29,486 Computer Inventory Assoc Trade debt $ 26,000 Warren Corp Trade debt $ 25,837 NationsBanc Commercial Trade debt $ 24,479 Dickard Widder Industries Trade debt $ 23,406 MBS Business Products Trade debt $ 20,689 Domeuil Trade debt $ 17,594 W. Stafford Collections Trade debt $ 12,909 BNY Financial Corp. Trade debt $ 11,896 FAVORITE BRANDS: Seek Authority To Settle De Minimis Claims ----------------------------------------------------------- Favorite Brands International Holding Crop., et al., debtors, seek authority to settle certain claims in the Chapter 11 cases. The debtors seek court authority to settle all claims less than $750,000 without seeking court approval. For those claims between $50,000 and $750,000, the debtors shall notify the creditors' committee. FRUIT OF THE LOOM: Seeks To Honor Prepetition Employee Payments --------------------------------------------------------------- Excluding Fruit of the Loom, Ltd., the Debtors' aggregate workforce consists of approximately 11,022 employees. Paychecks were issued prior to the Petition Date and many have not been cashed. Additionally, Employees are entitled to vacation, sick pay and paid time off benefits. At the Petition Date, the Debtors estimate that accrued and unpaid Employee-Related Liabilities approximate: $19,000,000 for wages, salaries, bonuses, commissions, and taxes; 500,000 for vacation, holiday and sick pay; 9,300,000 for 401(k), flexible spending, pension and other plans; The Debtors' Employees are vital to daily operations, maintaining positive employee morale is important, and the reorganization effort will fail if the Debtors lose their valuable employees. Accordingly, by this Motion, the Debtors sought and obtained the Court's authority to honor all prepetition obligations to their Employees in the ordinary course of business. The Debtors have not spent the time to determine how many employees are owed more than the $4,300 cap under 11 U.S.C. Sec. 507(a), but the Debtors are confident that the vast majority of pre-petition Employee claims are below that amount. FWT INC: Says It Is Poised For Growth ------------------------------------- FWT, Inc. reports strong sales and increased hiring as it emerges from a bankruptcy reorganization. The fast-paced nine-month process was officially completed December 31, 1999. With members of FWT's founding family back in charge the firm is poised for continued growth in the booming wireless communications field. FWT designs and markets wireless communications infrastructure products, including towers, monopolies, shelters and PowerMounts(TM). "We are increasing employment to help fill customer orders," said Roy Moore, FWT's chief executive officer. "We have added more than 20 new employees and are continuing to recruit others." "We would like to express our sincere appreciation to our customers, employees and strategic partners who worked with us throughout this process," said Fred Moore, chairman of the executive committee. The firm is beefing up its sales staff with the addition of industry veterans such as Mike Rigley, who recently returned as vice president of sales. Rigley has served in various positions over the past 12 years with FWT. "We are continuing to focus on high quality, on-time delivery and a high level of customer service," said Carl Moore, FWT's president. "We remain committed to providing our customers with flexible, timely support, innovative solutions and manufacturing expertise to ensure their success. Our customers are our most valued asset. I truly appreciate their support during the reorganization. "We are definitely positioned to continue to grow the business and take advantage of the continued strong demand for our company's products in the explosive growth in the wireless communications field," he added. GENESIS DIRECT: Order Authorizes CW Gifts To Reject Leases ---------------------------------------------------------- The US Bankruptcy Court for the District of New Jersey entered an order on December 23, 1999 authorizing CW Gifts, LLC to reject executory contracts and unexpired leases. CW has contracted, pursuant to a certain asset purchase agreement to sell substantially all of its assets to Dr. Leonard's Healthcare Corp. or such other successful bidder to be determined at a hearing. GENESIS DIRECT: Order Extends Exclusivity ----------------------------------------- By order of the court entered on December 21, 1999, the debtors' exclusive time period within which to file a plan of reorganization and solicit acceptances of such plan is extended for 90 days up to and including March 17, 2000 and May 15, 2000. GIBSON GREETINGS: Enters Credit Agreement With GE Capital --------------------------------------------------------- On November 30, 1999, Gibson Greetings, Inc. and its wholly owned subsidiaries, Gibson Greetings International Limited and GGIP, Inc., entered into a Credit Agreement with General Electric Capital Corporation, as Agent and Lender. The Credit Agreement provides for a revolving credit facility of up to $50 million through November 30, 2002, subject to earlier termination in certain events. The maximum amount which the company may borrow from time to time will be based upon the amount of its eligible accounts receivable and inventory, subject to certain reserves. At November 30, 1999, maximum availability under the Credit Agreement was approximately $39.4 million, with actual borrowings of approximately $20.8 million. Loans will bear interest at a rate equal to high grade 30-day commercial paper plus a margin of 1.75% to 2.75% depending upon the company's financial performance. The company's obligations under the Credit Agreement are secured by a lien in favor of GECC on substantially all of the company's assets. The Credit Agreement contains customary covenants restricting, among other things, the company's ability to incur additional debt, make investments, incur liens, merge or sell its assets or pay dividends. The company is also required to comply with certain covenants including maximum capital expenditures, minimum fixed charge coverage ratio, minimum EBITDA, minimum tangible net worth and minimum interest coverage ratio. Simultaneously with entering into the Credit Agreement, Gibson repaid all amounts outstanding under its prior loan agreement with a group of banks led by Bank One, N.A. HARNISCHFEGER: Announces Selection of Initial Bids for Beloit ------------------------------------------------------------- Harnischfeger Industries, Inc. (OTC Bulletin Board: HRZI) announced the selection of initial bids for the sale of assets of Beloit Corporation, the company's pulp and papermaking equipment manufacturing and servicing subsidiary. The company and its U.S. subsidiaries, including Beloit, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on June 7, 1999. The Beloit businesses are being sold through an auction to be conducted on January 10, 2000 at the offices of Kirkland & Ellis in Chicago. A hearing before the Bankruptcy Court to approve bids that are accepted by Beloit at the auction is set for January 19, 2000. Government agency approvals may also be required. The selected initial bids receive "stalking horse" protection in the auction under "Bid Protection Procedures" previously approved by the Bankruptcy Court. The Bid Protection Procedures provide selected bidders with a topping fee of up to 3 1/2% of their initial bids in the event the assets are sold to other parties and require competing bids to be at least 1/2% greater than the sum of the selected bid plus the topping fee. The selected initial bids are: -- Pulp and Finishing Divisions: Groupe Laperriere & Verreault Inc. -- Woodyard Division: Andritz AG -- OASIS: Alignment Services of North America, Inc. -- Paper Aftermarket and Roll Covers Division: Valmet Corporation -- Paper Technology: Mitsubishi Heavy Industries, Inc. Robert N. Dangremond, Chief Restructuring Officer for the company and Beloit, is directing the Beloit sale process and PricewaterhouseCoopers Securities LLC is acting as Harnischfeger's investment banker to assist in the sale of Beloit. While the company continues to pursue the sale of the Beloit businesses through the Bankruptcy Court approved auction process, there can be no assurance as to whether or when any transaction will take place. Harnischfeger Industries, Inc. is a global company with business segments involved in the life-cycle management of equipment for underground mining (Joy Mining Machinery), surface mining (P&H Mining Equipment), and pulp and papermaking (Beloit Corporation). HARNISCHFEGER: US Trustee's Appoints 2nd Creditors' Committee ------------------------------------------------------------- The United States Trustee advises that that Georgia-Pacific resigned from the Creditors Committee as of December 9, 1999. Accordingly, pursuant to 11 U.S.C. Sec. 1102, the U.S. Trustee appoints the following entities to serve on the Official Creditors' Committee: 1. HSBC Bank USA , as Indenture trustee; 2. Conseco Capital Mangement, Inc.; 3. Intelligroup, Inc.; 4. Rockwell International Corporation; 5. United Steelworkers of America, AFL-CIO; 6. The First National Bank of Chicago; 7. National Westminster Bank PLC; 8. PNC Bank, N.A.; 9. Suntrust Bank ; and 10. J. Weldon Cole. HC, HOLDINGS: Case Summary and 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: HC, Holdings, Inc. 402-413 Route 23 Franklin, NJ 07416 Petition Date: January 3, 2000 Chapter 11 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: Robert J. Dehney Derek C. Abbott Morris, Nichols, Arsht & Tunnell 1201 N. Market St. P.O. Box 1347 Wilmington, DE 19899 - 1347 Tel (302) 658-9200 Fax (302) 658-3989 Fruman Jacobson Robert F. Richards Sonnenschein Nath & Rosenthal 8000 Sears Tower Chicago, IL 60606 Tel (312) 876-8000 Fax (312) 876-7934 Joseph H. Smolinsky Sonnenschein Nath & Rosenthal 1221 Avenue of the Americas, 24th floor New York, NY 10020-1089 Tel (212) 768-6700 Fax (212) 768-6800 10 Largest Unsecured Creditors Brand Equity Ventures Subordinated Secured Undercollateralized Debt 2,089,819 Ronald H. Cordover Subordinated Secured Undercollateralized Debt 1,025,000 Greystone Ventures Subordinated Secured Undercollateralized Debt 1,025,000 Kronish Lieb Weiner & Hellman Legal Services 87,841 PricewaterhouseCoopers Accounting Services 46,434 Levy Kerson Executive Search Services 41,795 Baker & Hostetler Legal Services 18,157 Universal Capital Group Consulting Services 7,500 Testa Hurwitz & Chibeault Legal Services 4,579 Krisiewicz McCoy & Co. Accounting Tax Services 750 INDUSTRIAL IMAGING: Leighton Reports Stock Ownership ---------------------------------------------------- Charles M. Leighton beneficially owns 3,000,000 shares of common stock and warrants to purchase an additional 2,000,000 shares of Industrial Imaging Corporation. Mr. Leighton owns 27.55% of the company's issued and outstanding common stock. He has the sole power to vote or direct the vote, and the sole power to dispose or to direct the disposition of all of these securities. Under the terms of a Stock and Warrant Purchase Agreement between Industrial Imaging, Imprimis SB, L.P., Imprimis Investors LLC, Wexford Spectrum Investors LLC and Mr. Leighton, dated October 26, 1999, the Wexford Affiliates sold to Mr. Leighton the 3,000,000 shares of Industrial Imaging common stock and warrants to purchase 2,000,000 additional shares of common stock owned of record on that date by the Wexford Affiliates. Using his own personal funds to pay the aggregate purchase price of $95,000, Mr. Leighton is under no obligation to any third party as a result of the purchase since he did not borrow the funds used in the purchase. Mr. Leighton purchased securities of Industrial Imaging for personal investment purposes. His purchase of securities of the company is related to the sale by the company of substantially all of its assets to an unaffiliated third party, Focus AOI, Inc. Under the terms of a certain Asset Purchase Agreement dated November 1, 1999, Focus has agreed to pay the company, not later than four years after the closing of the transaction described in the Asset Purchase Agreement, a certain multiple of the net earnings of the company's former business. A substantial percentage of the Earnout, after satisfaction of certain noteholders' claims, should be available for distribution to the company's shareholders in the form of a cash dividend. Mr. Leighton's purchase of the securities of the company was conditioned upon the signing of the Asset Purchase Agreement and the inclusion of satisfactory Earnout provisions in that agreement. Mr. Leighton acted as a broker on behalf of Industrial Imaging with respect to the transaction described in the Asset Purchase Agreement. Under that agreement, Mr. Leighton is entitled to receive a certain percentage of the Earnout as a broker's fee. He has also signed a Stockholder's Voting Agreement and Irrevocable Proxy, in which Mr. Leighton has assigned to officers of Focus AOI the right and obligation to vote his shares in favor of the transaction described in the Asset Purchase Agreement. INDUSTRIAL IMAGING: Special Meeting Of Stockholders --------------------------------------------------- A special meeting of stockholders of Industrial Imaging Corporation has been called to be held on January 18, 2000 at 10:00 a.m., Eastern Standard Time, at the Lowell Courtyard, 30 Industrial Avenue, Lowell, Massachusetts, called in connection with the proposed sale of substantially all of the company's operating assets to Focus AOI, Inc., a Delaware corporation. The special meeting of stockholders has been called for the purpose of considering and voting upon the following proposals: 1. To consider and vote upon the sale of substantially all of the company's assets to Focus as set forth in the Asset Purchase Agreement; and 2. To consider and act upon any matters incidental to the foregoing and any other matters that come before the meeting. The Board of Directors of Industrial Imaging has unanimously voted for the transaction. The Board is said to believe that the proposed asset sale is in the best interests of the company and the stockholders of the company. Holders of 7,700,758 shares (approximately 70.71%) (10 persons) of the outstanding common stock of the company have executed proxies to vote in favor of the transaction and all the other items proposed. As of December 20, 1999 there were 10,890,201 shares of Industrial Imaging common stock outstanding. For the full content of the Asset Purchase Agreement access http://www.sec.gov/cgi-bin/srch-edgar?0001058217-99-000410on the Internet, free of charge. IRIDIUM: Seeks 90-Day Extension of Its Exclusive Periods -------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan on Thursday was to consider Iridium LLC's (IRIQE) request for a 90-day extension in its exclusive periods for filing and soliciting acceptances to a chapter 11 plan. The request follows Iridium's conclusion that it needs funding from an outside investor to successfully reorganize. While the company has received interest and is continuing to search for potential investors, it has not obtained funding commitments. In addition to seeking investors, Iridium recently began seeking potential purchasers of the company's assets. Iridium believes the process of seeking an investor and/or asset purchaser will take until at least Feb. 15., several weeks after the Jan. 11 expiration of the company's exclusive period for filing a plan. KCS: Reiterates Restructuring Agreement --------------------------------------- KCS Energy, Inc. (NYSE: KCS) announced today that an involuntary bankruptcy petition was filed by three purported Senior Noteholders on January 5, 2000. Despite such filing, the Company reiterated its intention to move forward with a Restructuring Agreement that has been approved by more than two-thirds of the holders of the Company's 8.875% Senior Subordinated Notes due January 15, 2008 and by more than a majority of its 11% Senior Notes due January 15, 2003 and to continue to pay trade creditors in the ordinary course. As part of that agreement, the Company intends to move forward with its previously announced plan to implement the Restructuring pursuant to a case under Chapter 11 of the Bankruptcy Code. KCS President and Chief Executive Officer James W. Christmas stated, "We are confident the Restructuring Agreement, as announced on December 28, is the best possible plan for all of KCS' stakeholders -- lenders, Noteholders, equity investors, trade creditors and employees." The Agreement provides for all Senior Noteholders to receive a cash payment for interest due as of January 15, 2000, totaling $16.5 million. Consenting Senior Noteholders will exchange their existing notes for new 11% Senior Notes due January 15, 2005 secured by a junior lien against certain assets. Non-consenting Senior Noteholders will have their existing Senior Notes reinstated, as amended in accordance with the existing indenture. Senior Subordinated Noteholders will receive a combination of cash and redeemable convertible preferred stock in exchange for their Subordinated Notes. In addition, the Restructuring Agreement would enable the Company to continue to pay trade creditors in the normal course of business. The Company intends to file the proposed plan with the bankruptcy court on or before January 18, 2000. The plan will be subject to confirmation by the bankruptcy court. KCS is an independent energy company engaged in the acquisition, exploration, development and production of natural gas and crude oil with operations in the Mid-Continent and Gulf Coast regions. The Company also purchases reserves (priority rights to future delivery of oil and gas) through its Volumetric Production Payments (VPP) program. For more information on KCS Energy, Inc., please visit the Company's web site at http://www.kcsenergy.com To receive KCS' latest news and other corporate developments via fax at no cost, please call 1-800-PRO-INFO. Use company code KCS. See also http://www.frbinc.com. LAMONTS: Receives Interim Financing Approval ------------------------------------------- Lamonts Apparel Inc. (OTCBB:LMNTE), which operates 38 casual lifestyle and apparel stores in five Northwestern states, received Court approval today for interim use of the company's new debtor-in-possession (DIP) financing which makes $45 million available to Lamonts immediately. The company noted that the unsecured creditors represented at today's hearing had given their "enthusiastic support" to the new financing package. A final hearing on the financing will be held Jan. 31. Alan Schlesinger, Lamonts' chairman and chief executive officer, stated that he was pleased with the overall response from the vendor community. "We had a number of important vendors calling us immediately to find out when they could resume shipping merchandise. While we are still in the process of calling and responding to every vendor, we feel that the vendor community is overall very supportive of Lamonts' efforts." Founded in 1967, Lamonts Apparel operates 38 stores in Alaska, Idaho, Oregon, Utah, and Washington. The company is well-known in the Northwest as a retailer of brand-name apparel, accessories and home decor from such manufacturers asAlfred Dunner, Byer of California, Jockey, Lee, Levi, Liz Claiborne, Mikasa, OshKosh, Pacific Trail, Rafaella and Woolrich. Lamonts has headquarters in Kirkland in the greater Seattle area and employs approximately 1,500 people. The company voluntarily filed to reorganize under Chapter 11 on Jan. 4. Additional corporate information is available at the company's Web site at www.lamonts.com. LIBERTY HOUSE: Committee Supports Extension For Leases ------------------------------------------------------ The Official Committee of Unsecured Creditors of Liberty House, Inc. support the debtor's motion for an order extending the time to assume, assume and assign or reject approximately 17 unexpired non-residential real property leases until May 31, 2000. The Committee believes that the additional time is necessary to ensure that the debtor and its creditors have flexibility to deal with the remaining leases, particularly in the context of the joint creditor plan filed by the Committee and the debtor's secured lenders, which has been delayed as the parties attempt to resolve a large tax claim. The only objection to the debtor's motion for extension was by the new owner of the Ala Moana Center, the location of Liberty House's flagship department store in Honolulu. Liberty House states that the large disputed IRS claim and the longstanding controversy concerning corporate control render Liberty House's reorganization process unstable. Liberty House's chapter 11 case has been prolonged by factors generally beyond its control, but it assert that its business and the Chapter 11 case are stable. At the value of $90 million as noted in the objection, this lease may be Liberty House's must valuable unencumbered asset, and the debtor does not wish to assume or reject the lease without careful evaluation. LOEWEN: Motion For Compromise With Wachovia On Letters of Credit ---------------------------------------------------------------- Before the Petition Date, Wachovia Bank, N.A. issued six letters of credit on behalf of Debtor Loewen Group Acquisition Corp. in a total maximum face amount of $4,750,000. As of the Petition Date, the maximum face amounts of these notes totaled $4,382,083.39. The amounts that can be drawn under some of the letters of credit have decreased and will continue to do so over time. In addition, Wachovia has already honored draws under some of the letters. LGAC's obligations under these letters of credit are secured by a collateral account of $4,400,416.71. The Debtors and Wachovia have agreed to modify the automatic stay in bankruptcy to allow Wachovia to use the collateral account to satisfy LGAC's obligations under the letters of credit. This agreement allows Wachovia to immediately apply the collateral account to LGAC's obligations that are outstanding if and when the Court enters an order approving the agreement. The agreement also allows Wachovia to use the collateral account to satisfy any obligations resulting from LGAC's drawing on the letters of credit after entry of a Court order approving the agreement. Finally, the agreement sets out a procedure by which Wachovia can remit to LGAC the collateral account amounts equivalent to portions of a letter of credit that cannot be used by LGAC under the terms of the letters. (Loewen Bankruptcy News Issue 17; Bankruptcy Creditors' Service Inc.) NEUROMEDICAL SYSTEMS: Reports Financial Information To SEC ---------------------------------------------------------- When filing its financial information for the month of October 1999 with the U. S. Bankruptcy Court for the District of Delaware, Neuromedical Systems Inc. reported net revenue of $8,904 and net losses of $85,344. PHONETEL TECHNOLOGIES: Leucadia Reports Holdings ------------------------------------------------ Leucadia National Corporation is a New York corporation with its principal office in New York City. It is a financial services holding company principally engaged in personal and commercial lines of property and casualty insurance, banking and lending, manufacturing and mining. In October and November 1999, Leucadia purchased an aggregate of $9,500,000 principal amount of PhoneTel Technologies Inc. 12% Senior Notes due 2006 for an aggregate purchase price of $1,560,000. Leucadia obtained the funds for these purchases from its working capital. On October 20, 1999, the United States Bankruptcy Court for the Southern District of New York confirmed PhoneTel's Chapter 11 reorganization plan. Under the Plan, 10,205,000 shares of common stock will be outstanding following the Plan's consummation. Of these shares, 9,500,000 will be issued to holders of the Senior Notes, which originally were issued in the aggregate principal amount of $125,000,000. Leucadia expects to receive approximately 722,000 shares upon consummation of the Plan, representing approximately 7.07% of the common stock to be outstanding following consummation of the Plan. Leucadia acquired the Senior Notes and will hold the common stock for investment purposes. Notwithstanding the foregoing, Leucadia says it will monitor its interest in the company with a view toward maximizing the value of its investment. PHONETEL TECHNOLOGIES: Prepackaged Plan Consummated --------------------------------------------------- On November 17, 1999, the prepackaged plan of reorganization of PhoneTel Technologies, Inc. was consummated, thus completing the company's financial restructuring. In accordance with the terms of the Plan, PhoneTel's 12% Senior Notes due in 2006 have been converted into approximately 95% of the reorganized company's common stock, with former equity holders sharing in the remaining 5%. In addition, the former equity holders will receive warrants to purchase approximately 1.1 million shares of the reorganized company's common stock, at an exercise price of $10.50 per share, with a term of three years. These equity interests are subject to dilution by certain other equity issuances, including issuances upon the exercise of certain options and awards to purchase up to an aggregate of 5% of the reorganized company's common stock, to be granted pursuant to the terms of a new management incentive plan approved as part of the Plan. Claims of employees, trade and other creditors of the company, other than holders of the Senior Notes, will be paid in full by the company in the ordinary course unless otherwise agreed, with the company retaining its rights and defenses with respect to such claims. In connection with the consummation of the Plan, the company has also entered into a new credit agreement with Foothill Capital Corporation which provides for a $46 million revolving credit line. The proceeds of the facility have been primarily utilized to repay the principal balance of the prior line of credit with Foothill. The terms of the Agreement provide for interest on the principal balance at three percent above the base rate and obligate the company to pay certain fees which become due and payable at various intervals throughout the term of the Agreement. Certain fees, together with interest thereon, may be deferred and added to the then outstanding principal balance at the option of the company. Certain fees are also subject to reductions for early prepayment of the principal balance outstanding. The Agreement also includes covenants which require the company to maintain certain financial ratios and limit the incurrence of additional debt, capital expenditures and the payment of dividends. Pursuant to the terms of the Plan, a new Board of Directors has been appointed. The five member board includes Thomas M. Barnhart, II, John D. Chichester, the company's President and Chief Executive Officer, Eugene I. Davis, Peter G. Graf and Kevin L. P. Schottlaender. Thomas M. Barnhart, II has been elected to serve as the company's Chairman of the Board. PREMIER SALONS: Bar Date For Filing Proofs of Claim --------------------------------------------------- On December 16, 1999, the US Bankruptcy Court for the District of Delaware entered an order establishing January 31, 2000 as the general claims bar date in the Chapter 11 cases of Premier Salons International, Inc. and GEMM Holdings, Inc. RAND ENERGY: Consummation of Joint Plan of Reorganization --------------------------------------------------------- The US Bankruptcy Court for the Northern District of Texas, Dallas Division entered a confirmation order on November 3, 1999, confirming the joint plan of reorganization for Rand Energy Company dated September 22, 1999. All of the conditions precedent to the consummation of the plan have been satisfied, and the "consummation date," as defined in the plan is November 30, 1999. SERVICE MERCHANDISE: Reports Favorable Holiday Season ----------------------------------------------------- Service Merchandise Company, Inc. (OTCBB:SVCDQ) announced that it has successfully completed its 1999 holiday season and, subject to physical inventory results and other normal year-end adjustments, should substantially exceed the benchmark targets established in its 1999 Business Plan. Having surpassed the commitments forecasted to its creditors during 1999 and consistent with its strategic reorganization timeline developed and announced in the first quarter of 1999, Service Merchandise said it is seeking a further extension of the period in which the Company has the exclusive right to file or advance a plan of reorganization in its Chapter 11 case through the 2000 holiday season. In a motion filed with the United States Bankruptcy Court in Nashville on Wednesday and presently set for hearing on January 25, 2000, the Company seeks an extension of the plan proposal period through and including April 30, 2001 and an extension of the Company's exclusive right to solicit acceptances of its plan through and including June 30, 2001. The Company has proposed that its Official Committee of Unsecured Creditors have an opportunity to request that the Court reevaluate the proposed extension in May 2000 following the formal presentation of Service Merchandise's Year 2000 Business Plan in March 2000. "The extension will provide Service Merchandise the opportunity to complete, present and implement its 2000 Business Plan, assess the results of the Plan and formulate, propose, solicit acceptances of and confirm a reorganization plan prior to the original termination date of its $750 million debtor-in-possession (DIP) financing agreement in June 2001," said Chief Executive Officer Sam Cusano. "From the outset of our reorganization cases, the Company's goal has been to first stabilize Service Merchandise's business operations -- including marketing, merchandising, store operations, E-commerce and other distribution channels -- in 1999 and then formulate a 2000 Business Plan which, if successful, should be the basis for the Company's successful emergence from Chapter 11 in 2001. Stabilization of the business is only the first step of a reorganization, however, we recognize that many challenges lie ahead before Service Merchandise can return to long-term growth and profitability," Mr. Cusano said. "While final year-end results will not be reported until the year-end closing process is completed at the end of this month, we are pleased to report that the Company has met each of its primary 1999 goals and substantially exceeded target EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring charges) for continuing store operations during the nine months ended December 31, 1999 of approximately $35 million." He noted that the targeted EBITDAR represents an approximate $7 million improvement in performance over the same 1998 nine-month period on a comparable store basis. Based on preliminary financial information, the Company's December 1999 sales exceeded $500 million while gross margin exceeded the Plan by more than $5 million. More than $7 million customer transactions took place at Service Merchandise during the December holiday period. Cusano noted that liquidity remained strong in 1999, with more than $150 million of excess availability maintained under the Company's DIP financing agreement throughout the course of the reorganization cases to date, and that the Company expected to have more than $250 million of excess availability in January 2000. Actual vendor support (e.g. accounts payable) exceeded the Plan by $34 million or 43 percent during peak inventory requirements in late October and early November. Out-of-stock inventory occurrences (including in-transit shipments) were reduced from 14 percent at the commencement of the Chapter 11 cases to 2 percent entering into the Christmas selling season. "The holiday selling season was the critical test for Service Merchandise, and the Company's efforts at the store and corporate levels combined with the support of our lender, vendors and customers have resulted in strong December sales performance," said President and Chief Operating Officer Charles Septer. "During the past year, the Company has improved vendor and customer relations, refocused its merchandising mix, re- established its private label credit card program, and completed successful store rationalization, asset disposition and cost reduction programs. Combined with other significant achievements during 1999, we believe Service Merchandise is well-positioned to formulate the 2000 Business Plan and implement a successful reorganization strategy consistent with our original timetable," Mr. Cusano said. Service Merchandise and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville on March 27, 1999. The Company presented its 1999 Plan to its principal lenders, vendors and other creditors in Nashville on July 14, 1999. The 2000 Plan is presently scheduled for similar presentation on March 21, 2000 in Nashville. Service Merchandise is a specialty retailer focusing on fine jewelry, home and gift products. TIE/COMMUNICATIONS: Taps Special Litigation Counsel --------------------------------------------------- TIE/Communications Inc. submitted an application to the US Trustee for approval of employment of Frandzel Share Robins & Bloom LC as special litigation counsel for the debtor for the purpose of investigating , filing and litigating objections to requests for payment of fees and expenses of Paul, Hastings, Janofsky & Walker LLP, special litigation counsel to the Creditors Committee. ********* A listing of Meetings, Conferences and Seminars appears each Tuesday in the TCR. Bond pricing, appearing each Friday, is supplied by DLS Capital Partners, Dallas, Texas. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. All rights reserved. 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