/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000228.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, February 28, 2000, Vol. 4, No. 40 Headlines ACE BAKING CO: Assets To Be Auctioned Next Week AGRI BIOTECH: Schweitzer Proposes Federal Loans for Purchase BAPTIST FOUNDATION: Seeks Date For Disclosure Statement Hearing CHARTER BEHAVIORAL: Crescent Enters Into Certain Arrangements COLORADO GREENHOUSE: Plans To Sell New Mexico Greenhouses COMPLETE MANAGEMENT INC: Plan of Reorganization CRIIMI MAE: Exchanges Series C Preferred Stock For New Series HC HOLDINGS: Seeks Authority to Assume Leases LEWIS & PEAT: Seeks Dismissal of Chapter 11 Filing LOEWEN: Appoints Two New Directors MEDIQ INC: Moody's Downgrades Ratings; Outlook Is Negative MERIT ENERGY: New Management Team To Turn Around Merit MIDCON OFFSHORE: Chapter 11 Trustee's Final Report MORRIS MATERIAL: Hires Donaldson Lufkin & Jenrette NEXTWAVE: Nextel Partners Provide Needed Money PRIMUS TELECOMMUNICATIONS: Moody's Assigns Caa2 To Debentures RIGCO: Seeks Order Establishing Bidding Procedures SINGER: Seeks Authority To Pay Due Diligence Fee to Foothill SMURFIT STONE: Moody's Places Ratings On Possible Downgrade SYSTEMSOFT CORP: Announces Resolution of Former Chapter 11 Status TANDY BRANDS: Comments on Expected Third Quarter Results TULTEX CORP: Debtors Tap Real Estate Brokers XCEL: Completes Asset Purchase Agreement With Insynq, Inc. ********* ACE BAKING CO: Assets To Be Auctioned Next Week ----------------------------------------------- The assets of ice cream cone manufacturer Ace Baking Co. are scheduled to go on the auction block next week, the bankruptcy lawyer for the firm says. Real estate in Atlanta, Chicago, Dallas and Green Bay, will be auctioned off Tuesday in Milwaukee, attorney Peter Blain said. Machinery, equipment, molds, vehicles, furniture, fixtures, customer lists and inventory are also up for sale, U.S. Bankruptcy Court files say. The assets will come from Ace's cone suppliers Atlanta-based Food Service Division and the Green Bay- based Novelty Division. The company's "jacketing operation," which manufactures the paper wraps on the outside of ice cream cones, in Owings Mills, Md. will also be sold. Badger Paper Mills Inc. of Peshtigo said Thursday it planned to bid on the cone jacket equipment. Ace, the nation's largest cone-maker, filed for protection under Chapter 11 of the U.S. Bankruptcy Code in December. The company has $35 million in assets and $41 million in liabilities, according to an amended bankruptcy schedule filed this month. Ace's financial problems sparked cone customers' concerns that there could be a serious product shortage this summer. The company said the it's important that a potential buyer begin manufacturing immediately to stave off a shortage. Most of the money from the auction will go to the firm's secured creditors, who hold more than $31 million in Ace debt. Other money from the sale will be set aside for the firm's unsecured creditors owed about $7 million. AGRI BIOTECH: Schweitzer Proposes Federal Loans for Purchase ------------------------------------------------------------ Companies should be offered federal loans to buy AgriBio Tech Inc., a seed company that filed a Chapter 11 bankruptcy without paying farmers for seed harvested and delivered, U.S. Senate candidate Brian Schweitzer said. The Whitefish Democrat said government incentives to break AgriBio Tech into six to 10 companies would help seed growers, by giving them some choice when shopping for buyers. "Because of mergers, ABT is the only game in town," Schweitzer said Tuesday in a news release critical of Republican Sen. Conrad Burns' vote on merger legislation. "They are a monopoly squeezing farmers off the farm." In four years, AgriBio Tech grew with the acquisition of more than 30 seed companies. But in January, AgriBio Tech, one of the largest U.S. buyers of alfalfa, turfgrass and clover seed, filed for Chapter 11 bankruptcy protection. The bankruptcy will cost 27 Montana seed growers $1.1 million in contracts this season alone, Schweitzer said. Citing the AgriBio Tech trouble, he criticized Burns' November vote against a Senate amendment that would have placed a moratorium on corporate mergers. "The bottom line is this: More and more Montana farmers are left with a single giant corporation to whom they can market their crops," said Schweitzer, who is challenging Burns' re-election bid. "If that corporation goes under, like ABT did, our farmers will go down with them." Burns spokesman Matt Raymond defended the Montana senator's vote. The amendment was too broad, and many farmers in the state asked Burns to vote no, Raymond said. The amendment failed, 71-27. Raymond also said Burns has asked that Agriculture Secretary Dan Glickman do everything possible to blunt the AgriBio Tech bankruptcy's effect on farmers. The case is pending in U.S. Bankruptcy Court in Las Vegas. BAPTIST FOUNDATION: Seeks Date For Disclosure Statement Hearing --------------------------------------------------------------- The debtors seek court approval of the following schedule for the disclosure and confirmation process: Bar Date - March 31, 2000 Disclosure Statement Hearing - April 10-14, 2000 Commencement of Solicitation Period - April 24, 2000 Voting Deadline - May 24, 2000 Deadline for Objection to Ballots and Claims for Voting Purposes - May 31, 2000 Commencement of Confirmation Hearing - June 5-9, 2000 CHARTER BEHAVIORAL: Crescent Enters Into Certain Arrangements ------------------------------------------------------------- On February 16, 2000, Crescent announced that it had entered into certain arrangements with its tenant, Charter Behavioral Healthcare Systems, LLC ("Charter"), to facilitate an orderly restructuring of Charter's business in Charter's voluntary Chapter 11 bankruptcy proceeding. Charter's core business will consist of 37 core facilities, 30 of which are operated in facilities leased by Charter from Crescent. By the end of February 2000, Crescent expects to have received the remaining 48 Crescent-owned non-core facilities back from Charter, which Crescent has been or will be actively marketing for sale. To date, six of these facilities, two of which closed within the past week, have been sold at or above gross appraised value, generating approximately $16 million in net proceeds. John C. Goff, President and Chief Executive Officer commented, "We left 1999 feeling very confident about the progress we made in the past year. We met or exceeded each of our investment segment earnings projections made in 1999, with the exception of our behavioral healthcare segment. During 2000, the year we've identified as our transition year, we will continue to execute on and measure our performance against the strategic plan we presented to our constituents in the 4th quarter of 1999. Recently, we completed, ahead of schedule, the refinancing of almost all of our 2000 and 2001 debt maturities and reduced our variable-rate exposure to less than 30% of total debt. We also reduced our exposure to Charter by 1) taking back and marketing 48 facilities and 2) supporting Charter's decision to seek a comprehensive restructuring plan as an effective way to restore Charter's core business to operational and financial health. Additionally, we are continuing our office property disposition and joint venture efforts. I see 2000 as a year for Crescent to reinforce its direction and to strategically reposition itself to take advantage of the opportunities ahead. We are committed to providing our shareholders with attractive and predictable growth in cash flow and underlying asset value." As announced on February 16, 2000, Crescent's tenant, Charter, filed for Chapter 11 bankruptcy as part of a restructuring plan initiated by Charter in September 1999. Charter is seeking through bankruptcy to convey its core operating assets to a purchaser free and clear of all prior liabilities. Charter's core business, which consists of 37 facilities, is accountable for over 90% of its present earnings from operations before rent. Crescent is Charter's landlord in 30 of the 37 facilities. In conjunction with the bankruptcy filing, Charter has entered into an agreement for the sale of the core operating assets to a new subsidiary of Crescent Operating, Inc. (Nasdaq: COPI). As such, Crescent has agreed to lease the core facilities to the new subsidiary of Crescent Operating, Inc. if the subsidiary is successful in acquiring the core operating assets and if agreement is reached on various terms of the lease. The proposed lease requires an annual rental payment to Crescent of approximately $20.3 million in the first year, escalating annually at 5% over the 10-year term. By the end of February 2000, Crescent expects to have received a total of 48 facilities back from Charter, which Crescent has been or will be actively marketing for sale. To date, six of these facilities have been sold at or above gross appraised value, generating approximately $16 million in net proceeds. Eight additional facilities are currently under contract or letter of intent. COLORADO GREENHOUSE: Plans To Sell New Mexico Greenhouses --------------------------------------------------------- The Albuquerque Journal reports on February 24, 2000, that Colorado Greenhouse Inc. plans to sell its two New Mexico greenhouses, the company's CEO said Monday. The Colorado-based company owns the tomato greenhouse south of Estancia, as well as one in Grants and three in Colorado. The Estancia greenhouse, which was Torrance County's third- largest employer, shut down on Feb. 11 after the parent company filed for Chapter 11 bankruptcy reorganization on Feb. 7. The Grants location was closed in January. An estimated 110 employees lost their jobs when the Estancia plant closed. A tomato virus that destroyed the tomato crop, low pricing, the cost of sanitizing the plants and many other factors went into the decision to close the greenhouses, according to the company's CEO Martin Wehr. COMPLETE MANAGEMENT INC: Plan of Reorganization ----------------------------------------------- Treatment of claims under the proposed plan of reorganization of Complete Management Inc., debtor: Class 1 - Secured Claims - Unimpaired Class 2 - Unsecured Claims entitled to priority - Unimpaired Class 3 - General Unsecured Claims against the debtor including August Debenture Claims and December Debenture Claims. Each holder of an allowed Class 3 claim shall receive a pro rata distribution of shares of New Common Stock, aggregating 95% of the New Common Stock plus (Class 3 and 3a) - a pro rata distribution of certificates representing the entitlement of the net proceeds of the Litigation Trust, Up to the Class 3 (and Class 3a) Class Amount, respectively. Class 4 - Indemnification Claims - to be waived and discharged. Class 5 - Security Litigation Claims - If settlements accepted, they may be funded only from the proceeds available under the debtor's insurance policies; otherwise, reclassified as claims in Class 3 or subordinated and treated pari passu with claims in Class 3(a) Class 6 - Convenience Claims - Holders shall receive cash equal to 50% of the allowed amount of such convenience claims. Class 7 - Old Common Stock of Debtor - Each existing Old Common Stock share shall be exchanged for a pro rata distribution of shares of New Commo9n Stock in the reorganized debtor, aggregating, in total 5% of the new common stock. Classes 3, 4, 5, 6, 7 are impaired under the plan. CRIIMI MAE: Exchanges Series C Preferred Stock For New Series ------------------------------------------------------------- On February 22, 2000, CRIIMI MAE Inc. and the holder of its Series C Cumulative Convertible Preferred Stock, par value $0.01 per share entered into a Preferred Stock Exchange Agreement to exchange 103,000 outstanding shares of Series C Preferred Stock for 103,000 shares of a new series of preferred stock designated as "Series E Cumulative Convertible Preferred Stock," par value $0.01 per share. The principal purpose of the Share Exchange was to extend the February 23, 2000 mandatory conversion date for the Series C Preferred Stock to a later date that will be specified in the Company's amended plan of reorganization, which has not yet been confirmed by the Bankruptcy Court. If the mandatory conversion date had not been extended, the 103,000 outstanding shares of Series C Preferred Stock would have converted into approximately 9 million additional shares of CMI common stock, resulting in substantial dilution to existing common shareholders. Pursuant to the Preferred Stock Exchange Agreement, the Company intends to amend its plan of reorganization to provide for certain additional terms and conditions with respect to the Series E Preferred Stock, substantially in accordance with the term sheet attached as an exhibit to such Agreement. The additional terms principally address conversion and dividend matters. The Preferred Stock Exchange Agreement will be filed as an exhibit to a Current Report on Form 8-K with the SEC. The Company has taken the position that approval of the Share Exchange is not required under applicable bankruptcy law. However, at the request of the holder of the Series C Preferred Stock, the Company filed an Emergency Motion for approval of the Share Exchange in the United States Bankruptcy Court in Greenbelt, MD. The Official Committee of Unsecured Creditors of CMI opposed the Emergency Motion while the Official Committee of Equity Security Holders of CMI supported the Emergency Motion. At the conclusion of the hearing on the Emergency Motion, the Bankruptcy Court neither approved nor disapproved the Share Exchange. The Company believes the Share Exchange is in the best interest of the Company, its creditors, and shareholders. There can be no assurance that the Creditors' Committee will not challenge the Share Exchange. On October 5, 1998, CRIIMI MAE Inc. and two affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Before filing for reorganization, the Company had been actively involved in acquiring, originating, securitizing and servicing multi- family and commercial mortgages and mortgage related assets throughout the United States. Since filing for Chapter 11 protection, CMI has suspended its loan origination, loan securitization and CMBS acquisition businesses. The Company continues to hold a substantial portfolio of subordinated CMBS and, through its servicing affiliate, acts as a servicer for its own as well as third party securitizations. HC HOLDINGS: Seeks Authority to Assume Leases ----------------------------------------------------------------- The debtors, HC Holdings, Inc. and its affiliates seek court authority to assume and assign four real estate leases to TCS.com Acquisition Corp, a n affiliate of Express Custom tailors LLC. The leases cover stores located at Gallery at Harbor Place 200 E. Pratt Street #104 Baltimore, Md. 599 Lexington Avenue, New York, NY Pacific Place 600 Pine Street Seattle, WA Valley Fair Shopping Ctr. 2855 Stevens Creek Blvd. #1034 Santa Clara, CA. These four leases are in addition to those leases that the Purchaser selected after an initial analysis of the debtor's contracts and unexpired leases. LEWIS & PEAT: Seeks Dismissal of Chapter 11 Filing -------------------------------------------------- Rubber & Plastics News reports on February 21, 2000 that Lewis & Peat Rubber L.P. is "operating again as we did before we filed" for Chapter 11 protection in federal bankruptcy court, according to a company spokeswoman. The Middlebury-based rubber trader moved for dismissal of its Chapter 11 filing in the New Haven, Conn., bankruptcy court Feb. 10, one month to the day after it made the filing. "We have been able to resolve the circumstances that necessitated the Chapter 11 bankruptcy petition with our banking syndicate," Lewis & Peat President Jim Belcher said in a prepared statement which didn't explain the details of the resolution. The syndicate is headed by Rabo Bank Singapore, sources close to the company said earlier. When Belcher has signed an agreement with the court to withdraw the Chapter 11 filing, Lewis & Peat will issue another news release, according to the spokeswoman. Belcher expects to have a signed document no later than Feb. 23, she said. Complications in Lewis & Peat's relationship with its Indonesian owners, Bakrie Brothers, led to the Chapter 11 filing, the sources said. Meanwhile, the company was able to fulfill its U.S. contracts through inventories on hand without disruption of service. LOEWEN: Appoints Two New Directors ---------------------------------- The Loewen Group Inc. (NYSE, TSE: LWN), announced it has appointed two new directors whose expertise reflects the Company's commitment to becoming a superior operating company and the most service-oriented care provider in its industry. Donna R. Moore has successfully held senior level executive positions in quality companies recognized for delivering customer focused service. Ms. Moore's senior management experience includes Marriott Hotels, Senior Vice President at The Walt Disney Company, Senior Vice President at Williams Sonoma, and President of Laura Ashley PLC. Ms. Moore also brings to The Loewen Group board a background in reorganizing and training large numbers of service-oriented retail employees. John J. (Jack) Wiesner, a retail consultant with a strong financial background in company restructuring, is a director of Stage Stores Inc., Lamonts Apparel, Inc., and Elder Beerman, Inc. Mr. Wiesner has held senior level executive positions in large retail organizations with operations throughout the United States. Commenting on the appointments, Loewen Group Chairman John Lacey said, "Our two new directors reflect Loewen's commitment to becoming a superior operating company and the most service-oriented care provider in our industry. The careers of both Ms. Moore and Mr. Wiesner reflect a remarkable combination of financial and consumer service experience derived from a variety of different geographic markets in North America." "Our board now numbers eight directors which is small enough to permit the board to work actively with senior management and our advisors over the next important phase of Loewen's restructuring," Mr. Lacey said.(Loewen Bankruptcy News Issue 19; Bankruptcy Creditor's Service Inc.) MEDIQ INC: Moody's Downgrades Ratings; Outlook Is Negative ---------------------------------------------------------- Moody's Investors Service downgraded the ratings of MEDIQ Inc. ("MEDIQ") and its operating subsidiary MEDIQ/PRN Life Support Services, Inc. ("MEDIQ/PRN"). The ratings affected are as follows: MEDIQ: � $141 million senior step up discount debentures due 2009 from Caa1 to Ca � Senior implied rating from B1 to Caa1 � Senior unsecured issuer rating from Caa1 to Ca MEDIQ/PRN: � $325 million senior secured credit facilities from B1 to Caa1 � $190 million 11% senior subordinated notes due 2008 from B3 to Caa3 The ratings outlook is negative. MEDIQ rents critical care medical equipment and specialty surface overlays to hospitals and other healthcare providers. The rating action reflects uncertainty regarding the potential impact of recently disclosed accounting issues as well as the company's current liquidity crisis that has resulted from its default under its senior credit facilities. The company recently disclosed that it was unable to file its annual report on a timely basis due to concerns of its outside auditors regarding several accounting issues. Areas of concern include the potential understatement of reserves for accounts receivable and the related improper recognition of revenue and earnings, the reduction of obsolete and excess inventories to net realizable value, and the deferral and capitalization of certain costs and expenses. It is anticipated that these issues could result in prior quarter adjustments. Currently, the company, its auditors, and outside counsel are gathering information and conducting a review of the situation. As a result of its failure to deliver audited financials, the company is in default of its bank credit agreement. In addition, the pending restatements will likely give rise to additional events of default including covenant violations. Further, the failure to file the financial statements could also lead to events of default under the bond indentures. The company's liquidity has been severely limited as it currently cannot access its credit facilities. The company anticipates requiring additional funds to meet its near term working capital and debt service requirements, and is in discussions with its major stockholders concerning such additional funding. The company is also pursuing an agreement with its bank group regarding the current and potential additional defaults. Moody's further notes that the company's Chief Financial Officer has recently been replaced by an interim CFO. MEDIQ, headquartered in Pennsauken, NJ, through its subsidiary MEDIQ/PRN, operates the largest critical care, life support and other movable medical equipment rental business in the U.S. The company also sells a variety of disposable products, accessories and repair parts primarily for use with its rental equipment. MERIT ENERGY: New Management Team To Turn Around Merit ------------------------------------------------------ The Calgary Herald reports on February 25, 2000, that a new management team is bidding to turn around Merit Energy Ltd., the fallen junior Calgary oilpatch star that placed itself under court protection last week to stay a flurry of creditor claims and shareholder lawsuits claiming its former management misrepresented financial statements. The plan of arrangement was presented by Atlas Energy Management Ltd. Merit has been under CCAA protection since last weekend. According to the report, the Atlas team, headed by president Lloyd Arnason, is proposing to take over management of the junior natural gas firm's assets and pay off the National Bank and Bank One, a U.S. lender, which are owed $72 million. The team is also proposing to sell some assets, raise money through a rights offering, create a $15-million pool for unsecured creditors and inject $5 million in exchange for equity in the restructured company. Atlas will present its plan at a March 8 court hearing. A creditors' meeting for a vote on the plan is expected around the end of March. Merit's shares collapsed last fall when the company said it had issued incorrect financial and production estimates. MIDCON OFFSHORE: Chapter 11 Trustee's Final Report -------------------------------------------------- The Trustee disbursed funds to certain parties in accordance with the terms and provisions of the plan and confirmation order. Thereafter the Trustee transferred the debtor's remaining assets to Jeffrey A. Compton, Creditors Trustee of the Creditors' Trust created under the plan. The Trustee requests that the court enter an order approving the final report and final accounting and discharging the Trustee. MORRIS MATERIAL: Hires Donaldson Lufkin & Jenrette -------------------------------------------------- According to an article in The Business Journal, February 4, 2000, Morris Material Handling Inc. has hired Donaldson Lufkin & Jenrette to explore its strategic options, including the sale of the company. Just seven months after renegotiating a lending agreement with its banks, the manufacturer has failed to comply with its lending requirements and has asked its banks to raise its credit line by $12 million. According to the article, if Morris doesn't restructure its balance sheet, the firm is in jeopardy of missing a $9.5 million interest payment to its bondholders on April 1, said David Smith, chief financial officer of the factory crane manufacturer. Sales totaled $81.7 million in its fiscal fourth quarter, which ended Oct. 31. That's down 5 percent from $86.2 million a year earlier. The company's earnings before interest, depreciation and amortization - totaled $4.7 million before one-time items, down 57 percent from $11.1 million in the year-ago quarter. In addition, the firm booked just $64.8 million in orders, a 35 percent decline from $100.2 million a year ago. This is the second financial crisis in a year for Morris, which employs about 350 people in Oak Creek and 2,000 worldwide. Last June, Standard & Poor's and Moody's Investor's Service both lowered their ratings on Morris debt after the company violated certain bank loan covenants and tried to renegotiate its bank debt. Moody's lowered its rating on the manufacturer's $200 million in senior unsecured notes to "Ca" from "B3." Morris has failed to meet certain financial targets outlined in the agreement, yet its lenders have suspended the requirements until March 29 - two days before its interest payment to unsecured noteholders is due. The lenders also have raised the limit on Morris's credit line by $12 million. Morris took on a lot of debt in the spring of 1998, after St. Francis-based Harnischfeger Industries Inc. sold an 80 percent stake in the company to Chartwell Investments Inc., a New York leveraged buyout firm. NEXTWAVE: Nextel Partners Provide Needed Money ---------------------------------------------- COMMUNICATIONS TODAY reports on February 24, 2000 that Nextel Communications [NXTL] reported an operating loss of $469 million during 1999, despite adding 1.8 million U.S. subscribers. So the carrier wants revenue from the initial public offering of a spin-off, Nextel Partners [NXTP]. Kirkland, Wash.-based Nextel Partners, which is 35 percent owned by Nextel, sold 23.5 million shares in an IPO on February 23, 2000. The trading opened at $20 a share and by closing hit $31.12. Nextel Partners was launched to fill gaps in the footprint of Nextel's integrated digital enhanced network, and to handle roaming traffic. In addition, Reston, Va.-based Nextel is declaring a two-for-one stock split. The split, if approved by shareholders, will be payable June 6 to stockholders of record as of May 26. In addition to needing capital to pay for network build-out, the company needs money to buy NextWave Telecom's wireless licenses - if it gets the chance. NextWave has filed for Chapter 11 protection and the ownership of its wireless licenses is the subject of an ongoing court battle with the FCC. Nextel completed an equity offering of 33.8 million shares during the 1999 fourth quarter, raising more than $2.8 billion. The company also completed a convertible bond issue during the first quarter, raising $1.15 billion. PRIMUS TELECOMMUNICATIONS: Moody's Assigns Caa2 To Debentures ------------------------------------------------------------- Moody's Investors Service has assigned a Caa2 rating to Primus Telecommunications Group, Inc.'s $250 million 5.75% convertible subordinated debentures due 2007. Moody's has also confirmed the B3 ratings on the company's outstanding senior unsecured notes and the senior unsecured issuer rating. Primus Telecommunications Group, Inc.'s senior implied rating is B2. The outlook has been changed from positive to stable. The ratings reflect the risks associated with effectively integrating recent and future acquisitions; assembling a stable customer base in an extremely competitive environment of rapidly declining prices; and the increased capital investment required to further develop the company's network, product set, support systems and sales infrastructure. However, the ratings recognize the company's enhanced business strategy emphasizing a broader set of voice and data services; and the expectation that Primus will maintain a balanced capital structure to fund its future expansion plans. The ratings also reflect the structural characteristics of the debt instruments. The issuer of the senior notes and the convertible subordinated debentures, Primus Telecommunications Group, Inc. is a holding company, making both classes of debt structurally subordinated to debt at the operating companies. Most notable at this time are two vendor facility commitments totaling $68 million. The B3 rating on the senior notes also reflects the possibility of additional amounts of secured debt in the future, as permitted by the indentures. The rating on the convertible subordinated debentures reflects its contractual subordination to a significant amount of senior debt. Although the existing note indentures provide limited protection, Moody's expects the company will use a mix of equity and debt to meet its future growth initiatives. The change in outlook from positive to stable is due to changes in the company's business model. Moody's expects capital expenditures of approximately $210 million in 2000, a significantly higher level relative to prior years. Under the current business plan, we believe the company is funded through 2001, however, the timing and size of future acquisitions and other potential investments may affect the company's capital requirements sooner than expected. Recent acquisitions continue to benefit the company's reported mix of retail and wholesale revenues. Moody's believes gross margins will continue to benefit from additional network investment and lower access costs in certain markets offset to some degree by continued pricing pressures in its markets. Primus reported positive EBITDA of $6.0 million in the fourth quarter of 1999. Given the successful execution of the current business plan, leverage (debt to EBITDA) could be reduced to 5 times in 2003. Details of the rated issues are as follows: Senior Notes rated B3 include: $225 million 11.75% due 2004 $150 million 9.875% due 2008 $246 million 11.25% due 2009 $250 million 12.75% due 2009 Convertible Subordinated Debentures rated Caa2: $250 million 5.75% Convertible Subordinated Debentures due 2007 Primus Telecommunications Group, Inc. has its headquarters in Vienna, Virginia. RIGCO: Seeks Order Establishing Bidding Procedures ----------------------------------------------------------------- The debtors, RIGCO North America LLC and its debtor affiliates seek approval of bidding procedures with respect to the sale of FPS Laffit Pincay to Seatankers management Company, Ltd. For a purchase price of $28 million. The terms of the sale provides that the Pincay may be sold subject to a higher and better offer. The debtor requests that a competing offer be on the same terms and at least $28,940,020. All competing offers must be received by close of business on March 17, 2000. A break-up fee of $840,000 is provided to compensate the Buyer for all of its direct and indirect costs. SINGER: Seeks Authority To Pay Due Diligence Fee to Foothill ----------------------------------------------------------------- The debtors, The Singer Company N.V., et al., seek court authority to accept the Proposal Letter, and in connection therewith pay the $100,000 due Diligence Fee required by Foothill. The Proposal Letter contains proposed terms and conditions for DIP financing, subject to the satisfaction of certain conditions precedent including completion of due diligence by Foothill. The terms of Foothill's proposed DIP Facility provide for a revolving loan with a maximum credit line of $25 million. $10 million of the DIP would be used to repay in full the current DIP facility with the Bank of Nova Scotia which expires by its terms on March 31, 2000; the remainder would be used for the debtors' working capital needs and to pay for professional fees incident to the Chapter 11 cases. A Facility Fee of $1.5 million is payable to Foothill at closing. The debtors have been in continuing negotiations with Scotia; however, Scotia's demands include a roll-up of approximately $65 million of its pre-petition debt into post-petition DIP loans, which is unacceptable to the debtors and the Committee as threshold matter, because such a roll-up would make obtaining existing financing extremely difficult, particularly given the debtors' intent to seek emergence from Chapter 11 in the summer of 2000. To complete its due diligence, as is typical in DIP Financing proposals, Foothill requires payment of the Due Diligence Fee. SMURFIT STONE: Moody's Places Ratings On Possible Downgrade ----------------------------------------------------------- Moody's Investors Service placed the long-term ratings of Jefferson Smurfit Corp. (JSCUS) and Stone Container Corporation (Stone), the rated subsidiaries of Smurfit-Stone Container Corporation (SSCC) on review for possible downgrade. The review stems from the planned acquisition by SSCC of St Laurent Paperboard, for approximately $1.4 Billion. Under the terms of the acquisition agreement, Stone will pay approximately $625 million in cash and assume $400 million in Saint Laurent debt. The balance of the purchase price of around $350 million will be paid with new shares of SSCC. Although SSCC has made significant progress towards debt reduction over the past year, Moody's expressed concern over the roughly $1.0 billion increase in debt which will result from the transaction. With containerboard pricing expected to remain relatively strong over the next eighteen to twenty four months, Moody's had anticipated a further permanent reduction in debt, and a strengthening in debt protection measurements through the cycle. The ratings review will assess management's plans for debt levels over the long term, as well as its strategic plans for future growth. In addition, the review will assess he company's plans for integrating the assets of St. Laurent, and the expected cost savings from synergies and operational improvements. Smurfit-Stone Container Corporation, headquartered in Chicago, Illinois, is the industry's leading manufacturer of paper and paperboard-based packaging, including containerboard, corrugated containergs, industrial bags, and claycoated recycled boxboard. SYSTEMSOFT CORP: Announces Resolution of Former Chapter 11 Status ----------------------------------------------------------------- SystemSoft(R) Corporation, a leading Windows Utilities provider, announced the resolution of its former Chapter 11-bankruptcy status. On February 22, 2000, the United States Bankruptcy Court for the District of Massachusetts confirmed a Chapter 11 plan of reorganization proposed by SystemSoft Corporation. Under the Court approved plan, SystemSoft, which designs and sells proprietary PC Card and diagnostic software related products, will be acquired by Rocket Software of Natick, Massachusetts. Rocket Software agreed to retire SystemSoft's outstanding bank debt and to provide funding for a trust to be established for the benefit of SystemSoft's unsecured creditors. Approximately 27,000,000 outstanding shares of SystemSoft's publicly traded stock will be cancelled when the Company's Plan becomes effective. The Plan is expected to become effective on or before March 4, 2000. SystemSoft Corporation is a leading provider of Windows Utilities. Current solutions include CardWizard for Windows NT, PowerProfiler/SE for Windows NT, PowerLast for Windows 98, SystemWizard for Windows 95/98 desktops and notebooks, and SmartMonitor for Windows 95/98/NT. SystemSoft customers and partners include Chevron, Hewlett-Packard, IBM, Intel, Gateway, Micron Electronics, Packard Bell, NEC, PeopleSoft, Siemens, SmithKline Beecham, and Toshiba. Product names used in this publication are for identification purposes only and may be trademarks of their respective companies. Additional information on SystemSoft products and services is available on the World Wide Web at http://www.systemsoft.com. TANDY BRANDS: Comments on Expected Third Quarter Results -------------------------------------------------------- Tandy Brands Accessories, Inc. (Nasdaq: TBAC) announced that, based on currently available information, it expects that sales and earnings for the third quarter of fiscal 2000 ended March 31, 2000, will be below last year's levels. The Company expects third quarter sales will be in the range of $32 million to $37 million compared to $38.2 million in sales reported in the third fiscal quarter of last year. Diluted earnings per share for the third quarter of fiscal 2000 are expected to be in the range of $0.05 to $0.12, versus $0.29 reported for the third fiscal quarter in the prior year. The company attributes this anticipated shortfall from expectations to certain sales factors specific to the third quarter. January sales were below internal estimates in part due to weak reorders as a result of soft holiday retail sales which led to higher than expected retail customer inventories. Additionally, the Company's women's accessories trend item sales are below the very strong hair accessories sales experienced in the third quarter of the prior year. Lastly, sales have been impacted by the discontinuation of business of several retail customers as a result of industry consolidation, chain closures and bankruptcies. As the third quarter is the Company's lowest sales volume quarter of the year, it is anticipated that these top-line trends will have a disproportionate effect on selling, general and administrative expenses as a percent of sales. Several factors, however, suggest that this quarterly sales disruption is likely to be confined to the third quarter. Normal inventory replenishment sales levels are expected to be reestablished in the fourth quarter as customer retail inventories are drawn down through the balance of the third quarter. Third quarter 2000 results will be officially released in late April. Tandy Brands Accessories, Inc. designs, manufactures and markets fashion accessories for men and women and children. Key product categories include belts, wallets, handbags, suspenders, socks, scarves and hair accessories. TULTEX CORP: Debtors Tap Real Estate Brokers -------------------------------------------- The debtors, Tultex Corporation, et al. seek court authority to retain and employ Walker Commercial Services, Inc. as real estate broker and agent. The firm will assist the debtors in the marketing and sale of real estate located in Virginia, consisting of, but not limited to, Tultex manufacturing plants located in Roanoke, Bastian and South Boston, Virginia. Walker will seek a commission of 5% of gross sales price and $750- for out of pocket advertising expenses for each property that is listed and sold by Walker The debtors also seek court authority to retain the services of The Stump corporation as a real estate agent and broker in connection with its Chapter 11 case, to assist the debtors in the marketing and sale of real estate located in North Carolina, consisting of, but not limite4d to, Tultex manufacturing plants located in Roxboro, Mayodan and Asheville North Carolna. The debtors proposed to compensate Stump five percent of the gross sales price for listing and marketing the real property as well as $750 for out-of-pocket advertising expenses. XCEL: Completes Asset Purchase Agreement With Insynq, Inc. --------------------------------------------------------- Xcel Management, Inc., formerly "Palace Casinos, Inc.," announced today that it has completed an asset purchase agreement with Insynq, Inc. ("Insynq"), a Washington corporation, providing for the acquisition by Xcel of all of the business assets, and the assumption of the indebtedness, of Insynq. In connection with the transaction, John Gorst, Chairman and Chief Executive Officer of Insynq, Inc., and M. Carroll Benton, Secretary/Treasurer, have been appointed to the Board of Directors of the Company. Mr. Gorst will serve as Chief Executive Officer and Ms. Benton will serve as the Secretary/Treasurer, respectively, of the Company. Dallin Bagley and Steve Rippon have resigned as officers and directors of the Company. As a result of this transaction, the Company, through its new management, intends to pursue the business of Insynq. Insynq, organized in August, 1998, is a development stage Washington corporation engaged in the development and commercialization of unique comprehensive packages of office productivity software, mission critical applications, web-site development and hosting, data storage and networking capabilities through a proprietary IQ computing system utilized over the internet via its own internet appliance. Insynq concentrates on the outsourcing of a business's entire computer and telephony requirements, including providing services as an internet utility company, attempting to provide such services cost effectively to the business user. From inception through October 31, 1999, Insynq has incurred losses of $348,325. Insynq has its headquarters at 1101 Broadway Plaza, Tacoma, Washington. Insynq also markets its services and products through its national sales office in Roseville, California. In connection with the acquisition transaction, the Company issued a total of 7,604,050 shares of restricted common stock to the Insynq shareholders. As a result of this transaction, the Company now has a total of 9,404,050 shares issued and outstanding, of which approximately 81% will be held by Insynq shareholders. The Company completed a Chapter 11 reorganization in the latter part of 1999. Since the completion of the Chapter 11, and until the transaction with Insynq, the Company has been inactive, and has been seeking a business opportunity in which it could become engaged. The Company's common stock is traded in the over the counter market under the symbol "XCLL". ********* 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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