/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000111.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, January 11, 2000, Vol. 4, No. 7 Headlines AFP IMAGING: Cohen Sells Shares of Stock APPLIED MAGNETICS: Files Voluntary Chapter 11 Petition BAPTIST FOUNDATION: Committee Taps Fennemore Craig as Counsel CADET MANUFACTURING: To Recall Electric Heaters CHECKERS OF CHICAGO: Discontinues Operations CONTINENTAL INVESTMENT: Court Agrees To Rescind Agreement CONTINUCARE: Annual Meeting To Be Held February 15 FAMILY GOLF CENTERS: Stock Holdings Reported To SEC FLORIDA COAST PAPER: Court Confirms Plan FRUIT OF THE LOOM: Motion To Reject Sears Tower Leases FRUIT OF THE LOOM: To Repay $65 Million Loan to Chairman GANTOS: Announces Net Sales For 5 Week Period Ended January 1 HARNISCHFEGER: Selects Stalking Horse Bids For Beloit IMPERIAL HOME: Case Summary & 20 Largest Unsecured Creditors IMPERIAL HOME: Moody's Downgrades Ratings To Caa3 KAISER GROUP INTERNATIONAL: Making Interest Payment Due Dec. 31 LITTLE SWITZERLAND: Nasdaq Delists Stock LOEWEN: Motion To Sell Certificates of Indebtedness METROCALL: Page America No Longer Owns Securities PAGE AMERICA GROUP: Court Confirms Prepackaged Plan PAM CAPITAL: 2 Tranches Of Notes On Review For Downgrade SPECIALTY RETAILERS: Moody's Downgrades Sr and Bank Debt SYMONS INTERNATIONAL GROUP: Moody's Lowers Ratings To Caa From B3 UNITED COMPANIES: Duff & Phelps Withdraws Ratings UNITED COMPANIES FINANCIAL: Signs Agreement For Sale V COMPANIES: V Companies, VS Architects File Chapter 11 WASTEMASTERS: Court Agrees To Rescind Purchase Agreement WHITE MOUNTAINS GROUP: Moody's Revises Its Outlook To Negative Meetings, Conferences and Seminars ******** AFP IMAGING: Cohen Sells Shares of Stock ---------------------------------------- Joseph A. Cohen, by virtue of having sold 112,000 shares of common stock of AFP Imaging Corporation on December 29, 1999, has ceased to be the beneficial owner of more than 5% of the company's common stock. Mr. Cohen holds 435,142 shares of common stock of AFP in the aggregate, which amount represents 4.69% of the outstanding common stock of AFP Imaging Corporation. APPLIED MAGNETICS: Files Voluntary Chapter 11 Petition ------------------------------------------------------ Applied Magnetics Corporation (NYSE:APM) today announced that it has filed a voluntary petition for protection under Chapter 11 of the Federal Bankruptcy Code with the United States Bankruptcy Court in Santa Barbara. Operations at the Company's Goleta facility have been discontinued and most of the employees there have been laid off. The Company expects to continue limited operations in Malaysia and Korea for the purpose of fulfilling existing customer commitments. The Company will continue to seek new financing in an effort to resume full operations, but there is no assurance its efforts will be successful. "In the past two years, magnetic recording head manufacturers have suffered from excess capacity and slowing demand from the hard disk drive industry. These market conditions have severely hampered the Company's efforts in qualifying its GMR technology on new products and have prevented the Company from achieving its planned sales volume," said Craig Crisman, Chairman and CEO of the Company. Applied Magnetics Corporation is an independent manufacturer of magnetic recording heads, head-gimbal assemblies ("HGAs") and headstack assemblies ("HSAs") for computer hard disk drives. Founded in 1957, Applied Magnetics is the oldest independent U.S.-based supplier of disk heads to the merchant market. The Company has offshore facilities in Malaysia, Korea and China. BAPTIST FOUNDATION: Committee Taps Fennemore Craig as Counsel -------------------------------------------------------------- The Official Joint Committee of Unsecured Creditors (the "Committee") for the debtors applies for retention of the law firm of Fennemore Craig as counsel for the Committee pursuant to 11 U.S.C. 1103(a) and Rule 2014(a), Federal Rules of Bankruptcy Procedure and requests the Court to enter an Order approving this Application. It is contemplated that Fennemore Craig will render the following legal services as counsel for the Committee: (a) Advise the Committee with respect to the powers and duties of the Committee in these Chapter 11 cases; (b) Consult with the trustee or Debtors concerning the administration of these cases; (c) Advise the Committee with respect to the powers and duties of the Debtors in the continued operation of their businesses and the management of their assets in these Chapter 11 cases; (d) Investigate the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses and the desirability of the continuance of such business, and any other matter relevant to the cases or to the formulation of a plan; (e) Participate in the negotiation, formulation, and drafting of a plan of reorganization, including modifications and amendments, and advise the Committee regarding the acceptance and confirmation process; (f) Advise the Committee with respect to requesting the appointment of a trustee or examiner under 11 U.S.C. 1104; (g) Prepare all necessary pleadings and papers pertaining to matters of bankruptcy law or the cases, including, without limitation, appeals and other litigation as is necessary to represent the Committee; (h) Participate in any proceeding or hearing in the Bankruptcy Court, the District Court, the Bankruptcy Appellate Panel, the Circuit Court of Appeals, the United States Supreme Court, or any other judicial or administrative forum in which any action or proceeding may be pending which may affect the Debtors, their assets, or the claims of their creditors; (i) Advise the Committee with respect to the use, sale or lease of property, financing and the rejection and assumption of executory contracts and unexpired leases, among other things; and (j) All other legal services that may be necessary during the pendency of these Chapter 11 cases on behalf of the Committee. The standard compensation rates for the year 2000 for the Fennemore Craig attorneys who are expected to render services to the Committee on this case are: Cathy L. Reece, Director, $265.00; Don J. Miner, Director, $250.00; Robert P. Robinson, Director, $295.00; Bryan A. Albue, Director, $220.00; James J. Trimble, Director, $205.00; Dewain D. Fox, Director, $185.00; Julio Zapata, Associate, $125.00; Carol Levine, Legal Assistant, $80.00. Other Fennemore Craig attorneys and legal assistants may render services on behalf of the Committee from time to time and their standard compensation rates will be used. Directors' rates range from $185.00 to $325.00 per hour; associates' rates range from $110.00 to $215.00 per hour. In addition, the Official Joint Committee of Unsecured Creditors applied to employ PricewaterhouseCoopers LLP as financial advisors and accountants for the Committee. CADET MANUFACTURING: To Recall Electric Heaters ----------------------------------------------- Cadet Manufacturing, a Vancouver, Wash., company, announced that it will began a recall of 1.9 million electric heaters blamed for house fires and three deaths as soon as the bankruptcy court and the Consumer Product Safety Commission approve the recall, according to the Associated Press. Cadet filed chapter 11 in January 1999, citing pressure from a 1997 class action lawsuit. It is expected the recall will take place the first week of February. Cadet plans to recall the heaters and sell customers replacement units at a reduced cost. Founded 40 years ago, Cadet had $23 million in sales in 1998, but sales dropped to $16 million last year with the bankruptcy filing. (ABI 10-Jan-00) CHECKERS OF CHICAGO: Discontinues Operations --------------------------------------------- CHECKERS DRIVE-IN RESTAURANTS, INC. (Nasdaq: CHKR) announced that its subsidiary, Checkers of Chicago, Inc., a Delaware corporation, has discontinued operations in the Chicago metropolitan area and filed for relief under Chapter 7 of the United States Bankruptcy Code. Checkers of Chicago, Inc. had operated 8 restaurants as a general partner of certain limited partnerships and three restaurants which it owned, all of which are now closed. The Company expects that a trustee will be appointed today to distribute the subsidiary's assets to creditors. "This action was necessary in light of the significant on-going losses being sustained at the locations operated by our Checkers of Chicago subsidiary. The nearly 1,000 other Checkers and Rally's restaurants operated by Checkers Drive-In Restaurants and its franchisees are not affected by this action and will remain open," stated CEO Daniel Dorsch. CONTINENTAL INVESTMENT: Court Agrees To Rescind Agreement --------------------------------------------------------- WasteMasters, Inc. (OTC Bulletin Board: WAST) announced that the bankruptcy court overseeing Continental Investment Corporation's (OTC Bulletin Board: CICG) bankruptcy approved the agreement to rescind a prior purchase agreement in which Continental acquired 5,000,000 shares of the Company's Preferred Stock and 4,500,000 shares of its Common Stock. The 5,000,000 shares of Preferred Stock were convertible into 25,500,000 shares of the Company's Common Stock. The agreement had been previously announced pending approval from the bankruptcy court. Parties have ten days to appeal the decision of the court. No appeal is expected. Closing on the rescission agreement will occur ten days following the appeal period. According to the terms of the rescission, WasteMasters, Inc. will return shares it holds in Continental and one of its subsidiaries, Continental Technologies Corporation as well as pay $590,000 to Continental. WasteMasters, Inc. will receive an operating landfill in Rye Creek, Missouri that was included in the original transaction. This landfill is currently producing approximately $600,000 in revenue and netting 7% in after tax net income. In addition, a warrant that would have given Continental 100,000,000 shares of WasteMasters Common Stock in exchange for 1,000,000 of Continental Common Stock will be cancelled. WasteMasters previously notified Continental that it would not honor the warrant. This move completely eliminates the possibility of future litigation. Douglas Holsted, President of the Company, stated: "The long time spent to completely separate Continental and WasteMasters is finally coming to an end. This outcome is tremendous; we will reduce our outstanding stock, bring in an operating asset, and eliminate the outstanding warrant. Continental wins also. They separate from us, get their stock back and get enough cash to allow them to concentrate on their difficulties. It is a pleasure to get the landfill back. Since its acquisition by Continental no one has made any effort to improve the landfill's operations. We will be able to quickly build on the performance of this landfill." J.B. Morris, Chairman and President of Continental Investment Corporation is satisfied with the outcome. He claimed, "This decision was an integral part in our ability to come out of bankruptcy. I could not be more pleased." "Rye Creek is a vital landfill for WasteMasters in that the operation generates revenues and net income. This is not a development or contingent on permitting -- it is a currently operating landfill," said Leon Blaser, the Chairman of WasteMasters. "This is a small but significant step for re- building WasteMasters' operations." David Fuselier of The Ridgefield Group, WasteMasters' turn-around consultant continued: "Both companies and their management were vigilant in resolving the largest singular dilemma of each company. This took an incredible amount of time and effort over the past six months. This one transaction substantially stabilizes WasteMasters and certainly clears the balance sheet of the convertible preferred and the 4,500,000 of common. The transaction will be financed via a loan from a third party lender." CONTINUCARE: Annual Meeting To Be Held February 15 -------------------------------------------------- The 1999 annual meeting of shareholders of Continucare Corporation, a Florida corporation, will be held at 10:00 a.m., local time, on Tuesday, February 15, 2000, at a location yet to be determined, in the city of Miami, Florida. The meeting will convene for the following purposes: (1) The election of three members to the company's Board of Directors to hold office until Continucare's 2000 annual meeting of shareholders or until their successors are duly elected and qualified; (2) To approve the restructuring of the company's convertible subordinated notes; and (3) The transaction of any other business that properly arises. The Board of Directors has fixed the close of business on January 12, 2000 as the record date for determining those shareholders entitled to notice of, and to vote at, the annual meeting. FAMILY GOLF CENTERS: Stock Holdings Reported To SEC --------------------------------------------------- The following entities hold common stock of Family Golf Centers Inc. with shared voting and dispositive powers. West Highland Capital, Inc. holds 3,837,000 such shares, as does Lang H. Gerhard. This amount represents 14.7% of the outstanding common stock of Family Golf Centers. Estero Partners, LLC holds 3,606,419 shares, representing 13.9% of the outstanding common stock of the company and West Highland Partners, L.P. holds 2,915,775 shares, 11.2% of the outstanding shares of common stock of the company. Buttonwood Partners, L.P. holds 690,644 shares, representing 2.7% of the outstanding shares of common stock of Family Golf Centers. West Highland Capital is a California corporation, LLC is a California limited liability company, West Highland Partners and Buttonwood Partners are California limited partnerships and Gerhard is a United States citizen. West Highland Capital is a registered investment adviser whose clients have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the stock. Gerhard is the sole shareholder of West Highland Capital and the Manager of LLC. West Highland Capital, LLC and Gerhard are the general partners of West Highland Partners and Buttonwood Partners, which are investment limited partnerships. No single client of West Highland Capital, other than West Highland Partners, holds more than five percent of the stock. FLORIDA COAST PAPER: Court Confirms Plan ----------------------------------------- On Jan. 5, the U.S. Bankruptcy Court in Wilmington, Del., confirmed Florida Coast Paper Holding Co.'s joint chapter 11 plan of reorganization submitted by the linerboard mill operator, its affiliates and an ad hoc committee of holders of 12.75 percent first mortgage notes due 2003. According to counsel to an ad hoc committee of noteholders, the joint plan had the requisite dollar amount of favorable votes, but a majority number of the noteholders voted against the plan. Therefore, the plan had to be crammed down on the noteholder class. Unusually, the noteholders thus were proponents of both the plan and the cramdown. (The Daily Bankruptcy Review and ABI Copyright c January 10, 2000) FRUIT OF THE LOOM: Motion To Reject Sears Tower Leases ------------------------------------------------------ Under a 1990 Lease Agreement with Tower Leasing, Inc., Fruit of the Loom, Inc., rented office space in the Sears Tower. Between 1991 and 1994, the Lease Agreement was amended four times to alter the amount of leased space. The Debtors entered into Sublease Agreements with Goldman Sachs Group, L.P., and William F. Farley for portions of the leased space. As of the Petition Date, the Debtors no not occupy any space in the Sears Tower. Further, they have no use for the space now or in the foreseeable future. Moreover, rent payments required under the Lease Agreement are set at above-market rates. Accordingly, by this Motion, the Debtors seek the Court's authority, pursuant to 11 U.S.C. Sec. 365, to reject all Sears Tower Lease and Sublease Agreements as of the Petition Date. The burdens of the agreements outweigh their benefits, the Debtors explain; rejection will relieve the Debtors of a significant financial burden, they say. Hence, rejection of these agreements is a reasonable exercise of their business judgment, consistent with the teachings in NLRD v. Bildisco and Bildisco, 465 U.S. 513 (1984) and Sharon Steel Corp. v. National Fuel, 872 F.2d 36 (3d Cir. 1989). The business judgment standard, the Debtors argue, requires that the Bankruptcy Court approve their decision to reject unless that judgment is the product of bad faith, whim or caprice, directing Judge Walsh's attention to Lubrizol Enterprises v. Richmond Metal Finishes, 756 F.2d 1043 (4th Cir. 1985), cert. denied, 475 U.S. 1057 (1986). Once the Lease Agreement is rejected, the Debtors observe that the Sublease Agreements will be deemed rejected as a matter of law, pointing to In re Chatlos Systems, Inc. v. Kaplan, 147 B.R. 96 (D. Del. 1992). As a result, the Debtors suggest, the Subtenants will have no remaining rights under the Lease Agreement and may not elect to exercise any rights to remain in possession pursuant to 11 U.S.C. Sec. 365(h)(1)(A). To avoid further litigation, the Debtors ask Judge Walsh to specifically authorize their rejection of the Sublease Agreements. (Fruit of the Loom Bankruptcy News Issue 2; Bankruptcy Creditor's Service, Inc.) FRUIT OF THE LOOM: To Repay $65 Million Loan to Chairman -------------------------------------------------------- Fruit of the Loom Inc.'s pre-bankruptcy debt of about $1.6 billion includes a guaranty to repay a $65 million secured personal bank loan made in March to Chairman William Farley, according to a newswire report. District of Delaware Chief Bankruptcy Judge Peter Walsh signed orders Dec. 30 that detail the loan and the rest of the debt. Farley had agreed to repay the company for the secured loan from Bank of America and Credit Suisse First Boston in March. In August, Farley resigned as president and CEO. Fruit of the Loom and its 33 affiliates filed chapter 11 on Dec. 29. Fruit of the Loom bankruptcy attorney Mark Thomas of Katten Muchin Zavis, Chicago, said the loan to Farley had been fully disclosed. GANTOS: Announces Net Sales For 5 Week Period Ended January 1 ------------------------------------------------------------- Gantos, Inc. (Nasdaq: GTOS) today announced net sales for the five week period ended January 1, 2000 of $18.5 million, a decrease of 19 percent from the same period a year ago. Net sales for stores open throughout both periods decreased 20 percent from the same period a year ago. Net sales for the forty-eight week period ended January 1, 2000, were $136.7 million, a decrease of 4 percent from the same period a year ago. Net sales for stores open throughout both periods also decreased 4 percent from the same period a year ago. Commenting on the sales announcement, President and Chief Executive Officer Arlene Stern said, "December sales were affected by reduced receipts in nearly all apparel categories. As announced on December 30, 1999, a $40 million debtor-in- possession agreement was negotiated with Foothill Capital Corporation and Paragon Capital, LLC to fund operations during our voluntary reorganization under Chapter 11 of the United States Bankruptcy Court." Gantos, Inc. is a specialty retailer of quality women's wear and accessories. The Company currently operates 118 stores in 24 states. HARNISCHFEGER: Selects Stalking Horse Bids For Beloit ----------------------------------------------------- MILWAUKEE, Wisconsin -- January 6, 2000 -- 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 Bankruptcy News Issue 19; Bankruptcy Creditor's Service Inc.) IMPERIAL HOME: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor Affiliates: The Imperial Home Decor Group, Inc. The Imperial Home Decor Group(US) LLC WDP Investment Inc. Marketing Services, Inc. 23645 Mercantile Road Cleveland, OH 44122 Imperial Home Decor Group Holdings, LLC 345 Park Avenue New York, NY 10154 Vernon Plastics, Inc. 20 Shelley Road Ward Hill Haverhill, MA 01835 Type of Business: Design, manufacture and market wallcovering, products, flexible vinyl films and sheetings in the United States, Canada and the United Kingdom. Petition Date: January 5, 2000 Chapter 11 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Thomas L. Ambro, Esq. Daniel J. DeFranceschi, Esq. Richards, Laylon & Finger, P. A. One Rodney Square North P.O. Box 551 Wilmington, Delaware 19896 David G. Helman, Esq. Paul E. Harner, Esq. Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Total Assets: $ 406,393,000.00 Total Debts: $ 549,441,000.00 20 Largest Unsecured Creditors State Street Bank & Trust Co. Unsecured Notes $ 49,000,000 Chase Bank of Texas Unsecured Notes 19,350,000 Bankers Trust Co. Unsecured Notes 14,500,000 Brown Bros. Harriman& Co. Unsecured Notes 13,000,000 Citibank Unsecured Notes 8,550,000 Chase Manhattan Bank Unsecured Notes 6,300,000 Investors Bank & Trust Co Unsecured Notes 5,000,000 Bank of NY/First Union Safekeeping Unsecured Notes 4,000,000 PNC Nat'l Center Unsecured Notes 2,000,000 Chase Securities Inc. Unsecured Notes 1,368,000 Deloitte & Touche Trade Debt 1,452,933 United Parcel Service U.S. Trade Debt 1,347,761 Formosa Plastics Trade Debt 1,213,599 Hachette Home Group Trade Debt 1,035,000 Bank of NY Holder of Unsecured Notes 1,000,000 Folia Trade Debt 832,179 Exxon Chemical Americas Trade Debt 824,781 AG Industries Trade Debt 817,161 Gencorp Polymer Products Trade Debt 720,587 Laura Ashley Inc Trade Debt 702,181 Modern Int'l Graphics Trade Debt 614,002 Diners Club Trade Debt 535,452 IMPERIAL HOME: Moody's Downgrades Ratings To Caa3 ------------------------------------------------- Approximately $425.0 Million of Debt Affected. New York, January 07, 2000 -- Moody's Investors Service downgraded the long-term debt ratings of the Imperial Home Decor Group, Inc. The affected debt includes: $75.0 million guaranteed senior secured revolving facility maturing in 2004, to Caa3 from B1; $65.0 million guaranteed senior secured tranche A term loan, maturing in 2004, to Caa3 from B1; $115.0 million guaranteed senior secured tranche B term loan, maturing in 2005, to Caa3 from B1; $45.0 million guaranteed senior secured tranche C term loan, maturing in 2006, to Caa3 from B1; $125.0 million of 11% senior subordinated notes, maturing in 2008, to C from B3. The senior implied rating was downgraded to Ca and the senior unsecured issuer rating was downgraded to C. Imperial Home Decor Group, Inc., and its US affiliates, filed for protection under Chapter 11 on January 5, 2000. Excluded from the filing were its non-guarantor subsidiaries, The Imperial Home Decor Group (Canada) ULC, and The Imperial Home Decor Group (UK) Ltd. The petition lists $547 million in liabilities and $406.4 million in assets. The new ratings reflect the poor recovery prospects for the debt holders, particularly with almost 50% of tangible assets located at foreign subsidiaries which also have significant liabilities, operating losses, and serious business challenges. The rating also reflects the Moody's expectation of continued asset write- downs as aged inventory and excess UK capacity are addressed, as well as continued tight liquidity. The company has received bankruptcy court approval to borrow up to $25 million domestically, and an additional $7million for its UK operations, under a 2-year, $75 million DIP facility. The borrower under the existing bank facility is the holding company, except in the case of the revolving credit under which one or more non-US subsidiaries may borrow up to $20 million. The credit facility is guaranteed by the company's domestic subsidiaries and by IHDG UK. The guarantees are secured by a first priority security interest in substantially all pledgeable tangible and intangible assets of the company, its US subsidiaries and of IHDG UK, to the extent permissible by law. At September 25, 1999, there were $87 million in liabilities at non- guarantor subsidiaries and $43 million at domestic operating subsidiaries, as well as inter-company loans. The Imperial Home Decor Group Inc., a holding company based in Cleveland, Ohio, is a global designer, producer and marketer of wallcovering products (e.g. sidewalls and borders), flexible vinyl films and sheetings. The company's residential wallcovering products are marketed under such brands as Plexus, Shand Kydd, Sunworthy, Imperial, Crown, Imperial Fine Interiors, Albert Van Luit and others. The Imperial Home Decor Group Inc. markets its products primarily in North America and Europe. Blackstone Capital Partners owns 89% of the company's stock. KAISER GROUP INTERNATIONAL: Making Interest Payment Due Dec. 31 --------------------------------------------------------------- On December 31, 1999, Kaiser Group International, Inc. announced that, based on continuing discussions with representatives of its noteholders concerning the means by which an acceptable credit facility might be obtained and a modified restructuring of its debt completed, it is making the interest payment due December 31, 1999 on the company's senior and senior subordinated notes. LITTLE SWITZERLAND: Nasdaq Delists Stock ---------------------------------------- Nasdaq has delisted the common stock of Little Switzerland Inc. from the SmallCap Market based upon the company's failure to meet certain continued listing requirements, including obtaining alternative asset-based financing to pay down existing debt and for working capital purposes. The action was taken as of the close of business December 22, 1999. The company's stock was to be eligible to trade on Nasdaq's OTC Bulletin Board beginning with the open of business December 23, 1999. Little Switzerland's president and chief executive officer, Robert Baumgardner, stated "We are disappointed with Nasdaq's decision to delist the company's stock. The company has made significant progress in its restructuring. However, because of the adverse impact of Hurricane Lenny on the company's business, we were unable to meet Nasdaq's continued listing requirements in the time required." The company is still engaged in active negotiations with an asset-based lender to obtain alternative financing and, at this time, indicates it anticipates closing on a new working capital facility by the end of January 2000. The company is also in active negotiations with its existing lenders to extend the terms of the forbearance agreement through January 31, 2000. In connection with the foregoing, the company has reduced the amount of debt owed to its existing lenders. As a result of Nasdaq's decision, Little Switzerland will not effectuate the reverse stock split which was approved by the company's stockholders at its annual meeting held on December 21, 1999. At the annual meeting the company's stockholders also elected Peter R. McMullin and Kenneth W. Watson as Class II directors, each with a term expiring at the 2002 annual meeting. Little Switzerland, Inc. is a specialty retailer of brand name watches, jewelry, crystal, china, fragrances and accessories, operating 20 stores on six Caribbean islands, and two stores in Alaska cruise ship destinations. The company's primary market consists of vacationing tourists attracted by free-port pricing, duty-free allowances and a wide variety of high quality merchandise. LOEWEN: Motion To Sell Certificates of Indebtedness --------------------------------------------------- The prospective buyers of these certificates of indebtedness, the "Shipper Family," backed out of the original deal for these certificates. The Debtors now ask the Court to approve a revised deal where: (i) the Shipper family will pay $4,000,000 in cash minus any amounts previously paid by them into and remaining in escrow; (ii) the Debtors will not verify the amount or indemnify the Shipper family for any merchandise liabilities in connection with the certificate sale; and (iii) the properties covered by the certificates will be free of long-term debt other than the certificates at closing. (Loewen Bankruptcy News Issue 17; Bankruptcy Creditor's Service Inc.) METROCALL: Page America No Longer Owns Securitites -------------------------------------------------- Effective January 3, 2000, Page America Group Inc., pursuant to confirmation of its prepackaged liquidating Chapter 11 Plan, distributed all shares of common stock of Metrocall Inc. owned by it to its holders of 15% Subordinated Notes due 2003 and holders of Series One Preferred Stock. As a result, effective January 3, 2000, Page America ceased to be the beneficial owner of any securities of Metrocall Inc. PAGE AMERICA GROUP: Court Confirms Prepackaged Plan --------------------------------------------------- On December 21, 1999, the United States Bankruptcy Court for the Southern District of New York confirmed a prepackaged liquidating Chapter 11 Plan for Page America Group, Inc. and its subsidiaries. The Plan became effective January 3, 2000. Under the Plan, the company will be dissolved on the final distribution date. All creditors of the company, except for the holders of the company's 15% Subordinated Notes due 2003, will be paid all amounts due to them. The remaining assets of the company will then be distributed 70% to the holders of the Subordinated Notes, 21% to the holders of Series One Preferred Stock and 9% to the holders of common stock. Page America has outstanding 16,024,585 shares of common stock, 286,381 shares of Series One Preferred Stock and $13,000,000 original principal amount of Subordinated Notes. Immediately prior to confirmation of the Plan, the company had assets totaling approximately $10,400,000 and liabilities totaling approximately $24,600,000. PAM CAPITAL: 2 Tranches Of Notes On Review For Downgrade ------------------------------------------------------- New York, January 07, 2000 -- Moody's Investors Service has placed the following Notes on watch for possible downgrade: the U.S. $141,250,000 Class B-1 Fixed Rate Second Senior Secured Notes due 2010 and the U.S $121,250,000 Class B-2 Floating Rate Second Senior Secured Notes due 2010 issued by PAM Capital Funding LP. According to Moody's, this action results primarily from deterioration in the credit quality of the collateral pool. Moody's noted that almost 25% of the collateral pool is currently rated Caa1or lower (including Defaulted Securities). Finally, Moody's noted that while the overcollateralization ratio tests are not in violation, it remains concerned about continued trends in the quality of the collateral. RATING ACTION: WATCH FOR DOWNGRADE Issuer:PAM Capital Funding LP Description:U.S. $141,250,000 Class B-1 Fixed Rate Second Senior Secured Notes due 2010 Rating:Baa3 RATING ACTION: WATCH FOR DOWNGRADE Issuer:PAM Capital Funding LP Description:U.S $121,250,000 Class B-2 Floating Rate Second Senior Secured Notes due 2010 SPECIALTY RETAILERS: Moody's Downgrades Sr and Bank Debt -------------------------------------------------------- Approximately $500 Million of Debt Affected. New York, January 07, 2000 -- Moody's Investors Service downgraded the debt of Specialty Retailers, Inc. ("Stage"), the operating subsidiary of Stage Stores Inc. The ratings were also placed on review for possible further downgrade. The affected ratings are as follows: $200 million total revolving credit facilities maturing 2002 to B2 from B1 $200 million 8.5% guar. senior debenture due 2005 to B2 from B1 Issuer rating to B2 from B1 $100 million 9.0% sr. sub. notes due 2007 to Caa2 from B3 The company's senior implied rating was also lowered to B2 from B1. The rating actions reflect Moody's concerns about the company's near term financial condition and longer term market position following disappointing holiday sales. Stage reported that same store sales for the nine-week 1999 holiday period fell 6.7% versus 1998, and that promotional activity was higher than expected during this period. Moody's anticipates that lower sales will be followed by clearance activity, which could cause operating profits, cash flow, and debt levels for the year ending February 2000 to be significantly below expectations. The review will focus on prospects for liquidity given the likelihood that the company will be unable to meet covenants under its current bank facility. The company's liquidity was recently bolstered by increasing its receivables-backed facility. However, usage of this facility is tied to customer usage of Stage's proprietary credit card, which in turn is linked to the level of sales activity. Moody's will also consider Stage's prospects for improving its market position, on its support from vendors, and on the company's near term financial condition and flexibility to respond to weather and other conditions which influence apparel sales. Other rating factors include the value of Stage's relatively low-rent locations; its historic presence in its markets, as well as competition from other retailers; and the company's potential to continue expanding its label offerings. Stage Stores Inc., and its main operating subsidiary, Specialty Retailers, Inc., headquartered in Houston, Texas, operate about 680 department stores under the Stage, Bealls, and Palais Royal names, largely in rural areas. Revenues were about $1.1 billion for the year ended January 1999. SYMONS INTERNATIONAL GROUP: Moody's Lowers Ratings To Caa From B3 ----------------------------------------------------------------- Approximately $135 Million of Preferred Securities Affected. New York, January 07, 2000 -- Moody's Investors Service has lowered the preferred securities rating (to "caa" from "b3") of Symons International Group, Inc. In addition, the financial strength ratings of the Superior Group, and Pafco General Insurance Company have been lowered (to B1 from Ba3). The rating actions reflect the low capitalization and increased regulatory attention at the non-standard auto operating subsidiaries and the increased possibility of trust preferred dividends being deferred, over the medium term. This rating action concludes a review for possible downgrade initiated on October 29, 1999, following the announcement by Symons that it was no longer seeking a buyer for its crop and non-standard auto operations. In view of the company's severely restricted financial flexibility, the outlook for the ratings is negative. Elaborating on its rationale, Moody's noted that increased regulatory attention could have an adverse impact on the operating flexibility of subsidiary insurers and on stability of management fee income. The rating agency also expressed uncertainty about the adequacy of Symons' internal controls, given the scope of weaknesses reported in recent public filings. Moody's also noted the reduced ability of the parent company, Symons International Group, Inc. to provide support to its insurance subsidiaries, due to its limited financial flexibility and high debt obligations. However, Moody's feels the issues pressuring the non-standard auto operations are not as significant for Symons' crop insurance subsidiary, IGF, whose financial strength rating remains at Ba2. The following ratings were downgraded: SIG Capital Trust I - trust preferred securities to "caa" from "b3"; Symons International Group, Inc. - senior subordinated notes to Caa2 from B3; Pafco General Insurance Company - insurance financial strength to B1 from Ba3; Superior Insurance Company - insurance financial strength to B1 from Ba3; Superior American Insurance Company - insurance financial strength to B1 from Ba3; Superior Guaranty Insurance Company - insurance financial strength to B1 from Ba3. The following rating remains unchanged: IGF Insurance Company - insurance financial strength at Ba2; Symons International Group, Inc. is an Indianapolis, Indiana- based holding company whose subsidiaries underwrite crop insurance and nonstandard automobile insurance through independent agents. For nine months ending September 30, 1999, Symons International reported a net loss of $29.9 million and stockholders' equity of $27.9 million. UNITED COMPANIES: Duff & Phelps Withdraws Ratings ------------------------------------------------- Duff & Phelps Credit Rating Co. (DCR) is withdrawing its ratings for United Companies Financial Corporation (UC). UC, which has been operating in Chapter 11 reorganization since March 1, 1999, recently announced intentions to sell its servicing operation to EMC Mortgage, a wholly owned subsidiary of the Bear Stearns Companies, Inc., for approximately $895 million. Previously, UC sold its origination platform to Aegis Mortgage Corporation. DCR is a leading global rating agency with 34 local market offices providing ratings and research on debt issues and insurance claims paying ability in more than 50 countries. For additional research, visit DCR's Web site at http://www.dcrco.com. DCR's research is also available on Bloomberg at DCR and FirstCall's BondCall Direct/Research Direct at http://www.firstcall.com,as well as through other third-party providers. UNITED COMPANIES FINANCIAL: Signs Agreement For Sale ---------------------------------------------------- United Companies Financial Corporation, which has been operating in chapter 11 reorganization since March 1, 1999, has signed a letter agreement for the sale of substantially all of the assets related to its mortgage servicing, whole loan portfolio and residual interests to EMC Mortgage Corporation, a wholly-owned subsidiary of The Bear Stearns Companies, Inc. The agreement calls for an aggregate purchase price of approximately $895 million subject to adjustments. Cash on hand and certain other assets are not included in the sale. The transaction is subject to the negotiation and execution of definitive documentation, which is expected to be completed in January 2000. The sale is further subject to the approval of the United States Bankruptcy Court and the submission of higher or better offers pursuant to bidding procedures to be established by the Bankruptcy Court, as well as the satisfaction of certain other conditions. The letter agreement also provides that United Companies may bifurcate the proposed transaction and sell its whole loan portfolio to another bidder or accelerate the sale of the whole loan portfolio to EMC. On June 1, 1999, United Companies sold its loan origination platform to Aegis Mortgage Corporation. Since that time, United Companies has continued to service a multi-billion dollar portfolio of home equity and manufactured housing loans while developing strategies to address its financial difficulties. "The EMC transaction will allow the company to move closer to completing its reorganization efforts. We believe that this transaction, and the Bankruptcy Court approval process, will maximize the value of United Companies," said Lawrence J. Ramaekers, Chief Executive Officer of United Companies. United Companies is a specialty finance company that services non-traditional consumer loan products. V COMPANIES: V Companies, VS Architects File Chapter 11 ------------------------------------------------------- The V Companies and VS Architects Inc., commonly known as the V Group, filed chapter 11 late Friday in order to allow the firms to recover from the cost of litigation involving their role in the design and construction observation of the Jefferson County Jail in Steubenville, Ohio, according to a newswire report. Paul V. Voinovich, owner of both companies, said, "A long list of companies, including several in Northern Ohio, resurrected under chapter 11 reorganization and are now flourishing. We plan to do the same. "He also said the filing would have no effect on the company's capability to meet commitments to customers and employees. In December a jury returned a $13.3 million judgment against the two companies involving their contracts for design and as architect's project representative for the jail's construction. Voinovich said the companies disagree with the verdict and will continue pursuing their legal rights. (ABI 10- Jan-00) WASTEMASTERS: Court Agrees To Rescind Purchase Agreement -------------------------------------------------------- WasteMasters, Inc. (OTC Bulletin Board: WAST) announced today that the bankruptcy court overseeing Continental Investment Corporation's (OTC Bulletin Board: CICG) bankruptcy approved the agreement to rescind a prior purchase agreement in which Continental acquired 5,000,000 shares of the Company's Preferred Stock and 4,500,000 shares of its Common Stock. The 5,000,000 shares of Preferred Stock were convertible into 25,500,000 shares of the Company's Common Stock. The agreement had been previously announced pending approval from the bankruptcy court. Parties have ten days to appeal the decision of the court. No appeal is expected. Closing on the rescission agreement will occur ten days following the appeal period. According to the terms of the rescission, WasteMasters, Inc. will return shares it holds in Continental and one of its subsidiaries, Continental Technologies Corporation as well as pay $590,000 to Continental. WasteMasters, Inc. will receive an operating landfill in Rye Creek, Missouri that was included in the original transaction. This landfill is currently producing approximately $600,000 in revenue and netting 7% in after tax net income. In addition, a warrant that would have given Continental 100,000,000 shares of WasteMasters Common Stock in exchange for 1,000,000 of Continental Common Stock will be cancelled. WasteMasters previously notified Continental that it would not honor the warrant. This move completely eliminates the possibility of future litigation. Douglas Holsted, President of the Company, stated: "The long time spent to completely separate Continental and WasteMasters is finally coming to an end. This outcome is tremendous; we will reduce our outstanding stock, bring in an operating asset, and eliminate the outstanding warrant. Continental wins also. They separate from us, get their stock back and get enough cash to allow them to concentrate on their difficulties. It is a pleasure to get the landfill back. Since its acquisition by Continental no one has made any effort to improve the landfill's operations. We will be able to quickly build on the performance of this landfill." J.B. Morris, Chairman and President of Continental Investment Corporation is satisfied with the outcome. He claimed, "This decision was an integral part in our ability to come out of bankruptcy. I could not be more pleased." "Rye Creek is a vital landfill for WasteMasters in that the operation generates revenues and net income. This is not a development or contingent on permitting -- it is a currently operating landfill," said Leon Blaser, the Chairman of WasteMasters. "This is a small but significant step for re- building WasteMasters' operations." David Fuselier of The Ridgefield Group, WasteMasters' turn-around consultant continued: "Both companies and their management were vigilant in resolving the largest singular dilemma of each company. This took an incredible amount of time and effort over the past six months. This one transaction substantially stabilizes WasteMasters and certainly clears the balance sheet of the convertible preferred and the 4,500,000 of common. The transaction will be financed via a loan from a third party lender." WHITE MOUNTAINS GROUP: Moody's Revises Its Outlook To Negative -------------------------------------------------------------- Cites Increased Risk Profile Suggested by Acquisition of PCA New York, January 07, 2000 -- Moody's Investors Service has revised its outlook on the ratings of White Mountains Insurance Group, Ltd. (senior debt at Baa2) and its main operating subsidiary Folksamerica Reinsurance (insurance financial strength at A3), from stable to negative. This action follows the recent announcement by Folksamerica Re that it has signed a definitive agreement to acquire PCA Property & Casualty Insurance Company (PCA), a subsidiary of Humana, Inc. for $125 million. PCA is a Florida-based insurance company that until late 1996, assumed workers' compensation business written mainly through self- insurance funds. Until recently, PCA was under state supervision; it is currently in run-off. The rating agency expressed concern over the higher reserve leverage as a result of the transaction, and substantial increase to Folksamerica Re's reserve risk, given the long-tail nature of the liabilities assumed. Elaborating on the outlook, Moody's cited the somewhat diminished capital strength at Folksamerica resulting from higher reserve leverage, and the potential for adverse reserve development, related to the assumed loss portfolio. Although reserving risk is substantial, it is somewhat offset by the discount purchase price. The rating agency noted that while the White Mountains Insurance Group has a good track record for assuming books of business (most recently USF Re and the Consolidated Insurance Group) the magnitude of this particular transaction, and its potential impact on Folksamerica Re's financial strength warrants the change in outlook. Folksamerica Re is a wholly owned subsidiary of the White Mountains Insurance Group, and one of the main operating units within the group. Folksamerica ranks among the top 20 largest broker market reinsurers in the USA, and its business profile consists of a balanced mix of property and casualty business, predominantly in the U.S. It is the largest insurance operating subsidiary of White Mountain Insurance Group, Inc. (formerly Fund American Enterprises Holdings, Inc.), a Bermuda-based holding company with consolidated shareholders' equity of $623.7 million as September 30, 1999. For the first nine months of 1999, White Mountains reported consolidated net income of $104.6 million, which includes a $52.8 million gain from the sale of the Valley Group insurance operations. Meetings, Conferences and Seminars ---------------------------------- January 13-15, 2000 AMERICAN LAW INSTITUTE Real Estate Financing Documentation: Coping with the New Realities Doubletree La Posada Resort, Scottsdale, Arizona Contact: 1-800-CLE-NEWS February 24-26, 2000 AMERICAN LAW INSTITUTE Chapter 11 Business Reorganizations Walt Disney World, Orland, Florida Contact: 1-800-CLE-NEWS February 27-March 1, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute I Olympic Park Hotel, Park City, Utah Contact: 1-770-535-7722 March 2-5, 2000 COMMERICAL LAW LEAGUE OF AMERICA 1st Annual Winder Conference Radisson Resort Hotel, Scottsdale, Arizona Contact: 1-561-241-7301 or 1-213-487-7550 March 9, 2000 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Spring Seminar Somewhere in New Orleans, Louisiana Contact: 1-803-252-5646 or info@nabt.com March 9-10, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Healthcare Restructurings: Successful Strategies for Managing Distressed FinancesConference on The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com March 23-25, 2000 SOUTHEASTERN BANKRUPTCY LAW INSTITUTE, INC. 26th Annual Southeastern Bankruptcy Law Institute Marriott Marquis Hotel, Atlanta, Georgia Contact: 1-770-451-4448 March 30-April 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute II Flamingo Hilton Hotel, Las Vegas, Nevada Contact: 1-770-535-7722 April 3-4, 2000 PRACTISING LAW INSTITUTE 22nd Annual Current Developments in Bankruptcy and Reorganization Conference PLI Conference Center, New York, New York Contact: 1-800-260-4PLI April 5-8, 2000 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference The Pointe Hilton Squaw Peak Resort Phoenix, Arizona Contact: 1-312-822-9700 or info@turnaround.org April 6-7, 2000 AMERICAN LAW INSTITUTE Commercial Securitization for Real Estate Lawyers Walt Disney World, Orlando, Florida Contact: 1-800-CLE-NEWS April 10-11, 2000 PRACTISING LAW INSTITUTE 22nd Annual Current Developments in Bankruptcy and Reoorganization Conference Grand Hyatt Hotel, San Francisco, California Contact: 1-800-260-4PLI May 4-5, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com June 29-July 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 August 14-15, 2000 TURNAROUND MANAGEMENT ASSOCIATION Advanced Education Workshop Loewes Vanderbilt Plaza, Nashville, Tennessee Contact: 1-312-822-9700 or info@turnaround.org September 12-17, 2000 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Convention Doubletree Resort, Montery, California Contact: 1-803-252-5646 or info@nabt.com September 21-22, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. 3rd Annual Conference on Corporate Reorganizations The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com November 2-6, 2000 TURNAROUND MANAGEMENT ASSOCIATION Annual Conference Hyatt Regency, Baltimore, Maryland Contact: 312-822-9700 or info@turnaround.com The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *