/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000310.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 10, 2000, Vol. 4, No. 49 Headlines ABLE TELCOM HOLDING: Reports Operating Results AMERICAN ECO, CORP.: S&P Cuts Ratings AMERISERVE: Pilgrim's Pride Notes Effect of Bankruptcy BEVERAGE CANNERS INTERNATIONAL: Files For Chapter 11 CELLNET DATA: Court Approves Asset Sale Procedures CHAI-NA-TA: Obtains CCAA Extension CROWN CENTRAL: Moody's Places Ratings On Review DIAMOND ENTERTAINMENT: Reports Net Loss of $1.6 Million For 1999 EAGLE FOOD: Obtains $50 Million In Financing EMPRESA ELECTRICA: S&P Downgrades Ratings to 'B' From 'BB-' HEATWAY SYSTEMS: Files For Chapter 11 Protection GENEVA STEEL: Reports Quarter Results INTEGRATED HEALTH: US Trustee Appoints Committee LAMONTS APPAREL: Reports Operating Results LOEWEN: Rose Hills' Motion For Assumption or Rejection of ASA MARINER POST ACUTE: Reports Operating Results NIPPON CREDIT BANK: No Deal Yet for Lehman, Gets Closer NISSAN MOTOR CO.: Seen to rebuff workers on wage hike PHELPS TECHNOLOGIES: Adversary Proceeding PIC'N PAY: Case Summary and 20 Largest Unsecured Creditors POWER DESIGNS: Reports Operating Results SALANT CORP: Announces Fourth Quarter and 1999 Year End Results SAMSUNG MOTOR: Creditors to reject Renault offer SAMSUNG MOTOR: Renault, Creditors Vie in Pricing Dispute SIZZLER: Announces Third Quarter Results SUMITOMO METAL INDUSTRIES: Raises expected net loss SUPERIOR NATIONAL INSURANCE: S&P Lowers Ratings to 'D' SYSTEMSOFT CORP: Announces Resolution of Chapter 11 Status BOND PRICING For Week of March 6, 2000 ********* ABLE TELCOM HOLDING: Reports Operating Results ---------------------------------------------- Able Telcom Holding Corp. and its subsidiaries develops, builds and maintains communications systems for companies and governmental authorities. The company has five main organizational groups. Each group is compromised of subsidiaries of the company with each having local executive management functioning under a decentralized operating environment. The company completed operational restructuring of its subsidiaries during fiscal year 1999. As a result, it now has 14 active subsidiaries, 11 of which are wholly-owned. Able Telcom has borrowed the maximum available under its existing Credit Facility and is in default of the related covenants. While the company is current with respect to amounts due under the Credit Facility, the lender has the right to demand payment and the company has insufficient liquidity to pay such amounts, if called. Able has not yet been successful in obtaining alternative financing and may have insufficient liquidity to fund its continuing operations. Consequently, there is substantial doubt about the company's ability to continue as a going concern. For the fiscal year ended October 31, 1999, revenues totaled $418.6 million compared to $217.5 million during the fiscal year ended October 31, 1998, an increase of $201.1 million or 92 percent. This increase in revenues is due primarily to growth in the company's operations through the acquisition of MFSNT on July 2, 1998. Revenues generated by MFSNT for the fiscal year ended October 31, 1999, totaled approximately $264.0 million and included sales of conduit capacity of approximately $35.7 million. For the fiscal year ended October 31, 1999, net loss was $18.1 million compared to net income of $2.5 million for the fiscal year ended October 31, 1998 a decrease of $20.6 million. Net loss applicable to common stock was $36.8 million after $18.7 million in charges related to the Series B Preferred Stock and Warrants. AMERICAN ECO, CORP.: S&P Cuts Ratings ------------------------------------- Standard & Poor's lowered its corporate credit rating and its senior unsecured debt rating on American Eco Corp. to triple-'C'- plus from single-'B', affecting $117 million in debt securities. The outlook is negative. The rating actions reflect the company's significantly weaker-than-expected financial performance, resulting in a deterioration of credit protection measures and increasing liquidity pressures. At Nov. 30, 1999, the company had about $5.4 million in cash and currently has about $2 million available under its $30 million revolving credit facility. Houston, Texas-based American Eco is a leading provider of industrial support and specialty fabrication services to the energy, pulp and paper, and power generation industries. The company's operating performance continues to deteriorate, resulting in reduced cash generation and erosion of the balance sheet due to increased debt levels and asset write-downs. The firm had a net loss of $46 million for the year ended Nov. 30, 1999, compared with a net loss of $30 million for 1998. American Eco's operating performance continues to be well below expectations, primarily resulting from an inability to control costs and continued weakness in several key markets served. The company has discontinued several unprofitable operations, made changes to the management team, and it continues to cut costs. For fiscal 1999, total debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) was about 11.2 times (x), and EBITDA interest coverage was 1.1x. In the future, some improvement in American Eco's operating performance is expected, reflecting some recovery in key markets, including the oil and gas and pulp and paper industries. Credit measures, however, are expected to remain very weak. Financial flexibility is very limited, as the company has a $5.6 million interest payment due May 15, 2000. OUTLOOK: NEGATIVE Liquidity will remain tight, heightening concerns about the company's ability to meet its debt service obligations during the near term. Failure to improve cash generation could result in the company's inability to make its May 2000 interest payment, resulting in a default, Standard & Poor's said. At Nov. 30, 1999, the company had about $5.4 million in cash and currently has about $2 million available under its $30 million revolving credit facility. Houston, Texas-based American Eco is a leading provider of industrial support and specialty fabrication services to the energy, pulp and paper, and power generation industries. The company's operating performance continues to deteriorate, resulting in reduced cash generation and erosion of the balance sheet due to increased debt levels and asset write-downs. The firm had a net loss of $46 million for the year ended Nov. 30, 1999, compared with a net loss of $30 million for 1998. American Eco's operating performance continues to be well below expectations, primarily resulting from an inability to control costs and continued weakness in several key markets served. The company has discontinued several unprofitable operations, made changes to the management team, and it continues to cut costs. For fiscal 1999, total debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) was about 11.2 times (x), and EBITDA interest coverage was 1.1x. In the future, some improvement in American Eco's operating performance is expected, reflecting some recovery in key markets, including the oil and gas and pulp and paper industries. Credit measures, however, are expected to remain very weak. Financial flexibility is very limited, as the company has a $5.6 million interest payment due May 15, 2000. OUTLOOK: NEGATIVE Liquidity will remain tight, heightening concerns about the company's ability to meet its debt service obligations during the near term. Failure to improve cash generation could result in the company's inability to make its May 2000 interest payment, resulting in a default, Standard & Poor's said. AMERISERVE: Pilgrim's Pride Notes Effect of Bankruptcy ------------------------------------------------------- Pilgrim's Pride Corporation (NYSE: CHX, CHX.A) stated that in- light of the Chapter 11 bankruptcy filing on January 31, 2000 by AmeriServe in Wilmington, Delaware, the ice storm losses incurred on January 27-28, 2000 and the generally weaker chicken markets being experienced currently in the U.S., they would not meet the consensus estimates of $.32 per share for their second quarter ending on April 1, 2000. At this time, the Company anticipates their second quarter's earnings will be in the range of $6.2-$8.3 million or $.15-$.20 per share. As has been reported, AmeriServe is a significant distributor of products to several fast food and casual dining restaurant chains, several of which are customers of Pilgrim's Pride Corporation. At the time of the Chapter 11 filing, Pilgrim's Pride Corporation had extended approximately $6 million in trade credit to AmeriServe all of which will be reserved in the second quarter and decreasing reportable earnings by approximately $.09 per share on an after-tax basis. The Company has reached the necessary post-reorganization agreements with its customers supplied by AmeriServe to continue distribution of its products and does not believe that the reorganization filing by AmeriServe will materially adverse effect the distribution of its products on a going-forward basis. The Company estimates that losses realized from the late January ice storm will negatively affect second quarter pre-tax earnings by approximately $2 million or $.03 per share on an after-tax basis. BEVERAGE CANNERS INTERNATIONAL: Files For Chapter 11 ---------------------------------------------------- According to a report in the BROWARD DAILY BUSINESS REVIEW On March 8, 2000, a Miami-based bottled water distributor filed for Chapter 11 bankruptcy last month to stave off creditors while it reorganizes. Beverage Canners International said the bankruptcy filing does not impact production at the company's four factories, which continue making carbonated drinking and distributing several brands of bottled water. BCI has four beverage plants located in Texas, Tennessee, Miami and Orange, and employs more than 400 people. Company president and CEO Allen Fleischer could not be reached, but in a written statement he said BCIs inability to extend credit past March left it temporarily unable to pay debts. We are highly confident that BCI will emerge from bankruptcy by the summer or early fall, and our plan is that our banks and suppliers will receive 100 cents on the dollar under the BCI reorganization plan, Fleischer said. Chapter 11 is a voluntary filing that protects a company from creditors and allows it to continue operating while it restructures debt. According to federal bankruptcy court records filed in Miami, BCI has $ 10 million in assets, while owing about $ 28 million. Negotiations with several investors to pay back debt are ongoing, the company said. But that does not ease the minds of all its creditors. Bob Zingler, director of credit operations for Wisconsin-based Green Bay Packaging, doubts he will see much of the roughly $ 300,000 owed his company. From what I understand there is a substantial amount of unsecured debt from suppliers, who probably will see only a portion paid back, people like us, Zingler said. Zingler, whose company continues to sell packaging cardboard to BCI on a cash-advance basis, said he believes BCI has been in financial straits for years. We have been in business with them since November, he said. We dont think they gave us a fair idea of their condition then. BCI, which reported revenues of $ 128 million for 1999, produces Crystal Bay Naturally Flavored Sparkling Water and Samantha Springs water, which appears under various labels in stores such as Albertsons, Walgreens and Wal-Mart. BCI officials refused to discuss what has gone wrong with the company, or how long it has been in trouble. Over the past year, it has introduced a number of new drinks, and managed to get placement on several major television series such as Ally McBeal and Friends. Gilbert Bigio, chairman of the board, said BCI is exploring several alternatives to strengthen its balance sheet. That does not necessarily include shutting down plants or laying off workers, said Patricia Clements, BCIs director of public relations. CELLNET DATA: Court Approves Asset Sale Procedures -------------------------------------------------- Bankruptcy Judge Peter J. Walsh (D. Del.) this week approved bidding procedures for the sale of substantially all of CellNet Data Systems Inc.'s assets to stalking horse bidder Schlumberger RMS, a unit of Schlumberger Ltd. (SLB), a French energy services firm, according to a newswire report. Judge Walsh authorized a $5 million break-up fee payable to Schlumberger if the deal with CellNet falls through, and he set a $2.5 million bid increment for offers seeking to top Schlumberger's proposal to acquire CellNet. The deal is valued at more than $225 million, and the opening bid at auction must be at least $7.5 million greater than that. Judge Walsh set an April 12 bid deadline, and if higher or better offers are received, an auction will be held on April 14 in the New York office of Simpson, Thacher & Bartlett, CellNet's lead bankruptcy counsel. A hearing to approve the sale to Schlumberger or the highest bidder will be held shortly after the April 17 deadline for objections to the sale. CellNet recently received final court approval of $30 million in debtor-in- possession financing from Schlumberger. CellNet filed chapter 11 in February, listing assets of $343.4 million and liabilities of $503.7 million as of Dec. 31. (ABI 09-Mar-00) CHAI-NA-TA: Obtains CCAA Extension ---------------------------------- Chai-Na-Ta Corp. announced that it has been granted an extension to creditors' protection under the Companies' Creditors Arrangement Act (CCAA) of January 28, 2000. Chai-Na-Ta, a leading producer of North American ginseng, has been battling the impact of depressed market prices for its product, and has been engaged in efforts to restructure its financial position for more than eighteen months. On January 28, 2000, the Company filed for CCAA protection to enable it to pursue refinancing and restructuring opportunities while continuing its operations. The Company continues to work on its restructuring plan and discussions aimed at refinancing the Company's debt with its principal lenders are ongoing. Under the CCAA extension, which was granted on February 25, 2000, the Company is under order to file a formal restructuring plan with the Supreme Court of British Columbia on or before April 28, 2000. Chai-Na-Ta Corp., based in Langley, British Columbia, is the world's largest supplier of North American ginseng. The Company farms, processes and distributes North American ginseng as bulk root, and supplies processed extract powder for the manufacture of value-added ginseng-based products. CROWN CENTRAL: Moody's Places Ratings On Review ----------------------------------------------- Moody's Investors Service placed the ratings of Crown Central Petroleum Corporation on credit review, direction uncertain. Moody's action follows the company's announcement that Rosemore, Inc. has offered $8.35 per share for the company's publicly held stock. Ratings affected include: the company's $125 million 10.875% senior unsecured notes, due 2005, rated B2; the company's senior implied rating of B1; and the company's senior unsecured issuer rating of B2. Acquisition of the company by Rosemore could have positive rating implications. Absent a transaction with Rosemore, the ratings would be under pressure as a result of sustained pressures on financial flexibility over the past year. Rosemore is a privately held company owned by the family of Henry Rosenberg, Chairman of Crown. Rosemore owns 49% of Crown's A shares, 11% of Crown's B shares, and has been supporting the company's liquidity with working capital lines of credit. It is not clear whether a purchase by Rosemore would trigger the change of control provision of the note indenture, and Rosemore's intentions regarding the notes have not been made public. Rosemore's offer, which is being considered by Crown's board, expires Friday, March 10, unless extended, and would require two- thirds shareholder approval. In February 1999, Crown hired an advisor to review its strategic alternatives, including potential asset sales and sale of the company. Late in 1999, a group including Paul Novelly proposed a merger involving Apex (a private company of which Paul Novelly is chief executive) and Crown, which has not proceeded. To date, Crown has not concluded a strategic restructuring or completed sales of any major assets. Crown's financial position has long been eroding. Its two small and relatively uncompetitive Gulf refineries, combined with difficult sector conditions, resulted in significant losses during 1999. Market conditions improved in 4Q99 and to date in 2000, however, with consequent improvement in Crown's performance. The company reported a loss of $30 million for full year 1999 and a loss of $1 million for 4Q99, while reported EBITDA was $10 million for the full year and $7 million for the fourth quarter. Coupled with a 4Q99 sale of non-strategic assets, Crown internally funded its financing requirements for full year 1999, but financial flexibility remains sensitive to changes in sector conditions. Moody's review will assess the likely business and financial strategies of Rosemore for Crown, should the offer be accepted by Crown, as well as Crown's prospects and plans should the sale to Rosemore not be concluded. Crown Central Petroleum, headquartered in Baltimore, Maryland, owns and operates two refineries in Texas, and markets and distributes products through company-owned gas stations, convenience stores, and terminals. DIAMOND ENTERTAINMENT: Reports Net Loss of $1.6 Million For 1999 ---------------------------------------------------------------- Diamond Entertainment Corporation is in the business of distributing and selling videocassettes, general merchandise, patented toys, furniture, and Cine-Chrome gift cards, with a web site presence throughout the United States. Sales are recorded by the company when products are shipped to customers and are shown net of returns and allowances. The company incurred net losses of $1,602,652 and $1,505,442 for the years ended March 31, 1999 and 1998, respectively, and had a working capital deficit at March 31, 1999 of $2,154,599. The company had also been experiencing difficulties in paying its vendors on a timely basis. These factors create uncertainty whether the company can continue as a going concern. For the nine months ended December 31, 1999 and 1998, the company had net sales to six customers of approximately $1,872,426 or 59% and to seven customers of approximately $2,089,895 or 57%, respectively. The company's net loss for the nine months ended December 31, 1999 was approximately $1,857,000 as compared to a net loss of approximately $583,396 for the same period last year. According to the company the primary reason for the net loss was the company's operating loss of approximately $1,479,000. The company's operating loss for the nine months ended December 31, 1999 was approximately $1,479,000 as compared to an operating loss of approximately $471,000 for the same period last year. The company's operating loss arose primarily from an increased operating expenses of approximately $186,000 and decreased gross profit of approximately $822,000. The company's sales for the nine months ended December 31, 1999 and 1998, were $3,195,037 and $3,671,185, respectively. Its sales decreased by approximately $476,148 from the same period a year earlier with decreased video product sales and toy sales of approximately $336,000 and $140,000. The lower video product sales when compared to the same period a year earlier were primarily the result of the company experiencing selling and marketing difficulties, including a temporary reduction in sales orders from principal customers. The company intends on marketing furniture in the fourth quarter of fiscal 2000, although there is no assurance the company will be successful in such efforts. Sales of the company's products are generally seasonal which normally results in increased sales starting in the third quarter of the fiscal year, however the company experienced lower than expected sales during the recent Christmas season. The company's net loss for the three months ended December 31, 1999 was approximately $508,000 as compared to a net income of approximately $9,000 for the same period last year. The company's sales for the three months ended December 31, 1999 and 1998, were $1,521,926 and $1,593,878, respectively. The company's sales decreased by approximately $72,000 from the same period a year earlier with increased video product sales of approximately $98,000 and decrease toy sales of approximately $170,000. EAGLE FOOD: Obtains $50 Million In Financing -------------------------------------------- The supermarket chain operator filed for Chapter 11 protection on February 29, 2000 in the U.S. Bankruptcy Court in Wilmington, Delaware. Concurrent with the filing, Eagle Food reported it had secured$50 million in financing and negotiated the terms of a plan of reorganization with its biggest secured lenders and substantially all identifiable institutional holders of 8-5/8% senior unsecured notes due April 15, 2000. The company's largest secured lender, Congress Financial, has agreed to provide the company with interim debtor-in-possession financing to fund operations and sustain financial obligations. The proposed debtor-in- possession financing agreement and reorganization plan are both subject to U.S. Bankruptcy Court approval. Although primarily a regional company in focused in the Midwest, Eagle Foods is the largest supermarket chain to file bankruptcy in 2000, claiming $283.2 million in pre-petition assets. The largest creditor on the list of 40 largest unsecured claim is Alliance Capital Management, LLC. with a claim of $12.55 million. The listed claims total $38.22 million, which is only a small portion of the $237.82 million in liabilities shown on Eagle Foods' bankruptcy petition. EMPRESA ELECTRICA: S&P Downgrades Ratings to 'B' From 'BB-' ---------------------------------------------------------- Standard & Poor's today lowered its senior unsecured debt and corporate credit ratings on Empresa Electrica Del Norte Grande S.A. (Edelnor) to single-`B' from double-`B'-minus. The outlook is negative. Southern Energy, a subsidiary of Southern Co. (single- `A'/Stable/`A-1'), owns 82% of Edelnor. Edelnor generates and transmits electricity in the Northern Interconnected System (SING), Chile's second largest electrical grid. The downgrade reflects: -- The recent regulatory decision rejecting Edelnor's petition to use a blend of pet coke fuel and coal in its existing coal plants; -- The anticipated loss of significant contract cover at the end of 2001; -- Uncertainty about Edelnor's ability to keep and attain new sales contracts or sell into the spot market considering the competitive disadvantage generated by the regulatory decision; -- The entry of gas and gas-fired plants, which have created overcapacity in the SING grid; -- The likely ranking of the company's coal plants at the end of the dispatch curve after 2001, given their higher marginal cost; -- Uncertainty over the level of capacity payments Edelnor would be entitled to receive. In March 2000, Edelnor received a formal communication from the COREMA, the local government environmental agency, rejecting Edelnor's petition to use petroleum coke in its coal plants. The use of pet coke lowers the marginal cost of Edelnor's coal plants by about 45%. This decision prevents Edelnor from attaining marginal costs that approach those of their competitors' newly installed combined-cycle gas turbines. A positive outcome might have placed the company in a better position to attract new customers, a key issue given that Edelnor will loose two significant contracts later in 2000 and at the end of 2001, which together account for 225MW (55% out of a total capacity of 424MW), and represent a loss of roughly 50% of contracted revenues. At present, Edelnor has contracts for approximately 90% of its installed capacity, which is mostly coal-fired. The loss of these contracts coincides with the entry of lower marginal cost gas-fired facilities, which will double installed capacity in the SING. Because most large customers have already procured firm supply, there is little opportunity for Edelnor to replace these customers, especially in light of the recent ruling. Edelnor is currently reviewing its options for an appeal to the COREMA's decision. If Edelnor is unable to or is unsuccessful in its appeal, Standard & Poor's is likely to further lower Edelnor's ratings. Mejillones I and II power plants (combined 341MW) burn coal. The addition of Mejillones III combined-cycle gas unit in March 2000 should help strengthen Edelnor's position in the system's current dispatch order. Still, a significant amount of Edelnor's capacity might not be dispatched into the SING. In that event, Edelnor would still be entitled to capacity payments, which are made to all generators in the system as a means to encourage standby reserves. However, a finite payment- the amount of which is dependent upon the future supply, demand, and the marginal cost of incremental capacity-is allocated over the system's total firm capacity. Standard & Poor's expects difficulties to arise among members of the Economic Load Dispatch Center (other system generators) when allocating capacity payments. Thus, it is difficult to specify with any certainty what Edelnor's capacity payments will be in 2002. If capacity payments prove to be much smaller than Edelnor's current estimates, they may be insufficient to cover expenses. With expected narrowing margins on sales of coal-powered energy, Edelnor's cash interest coverage could decline to slightly more than 1 times (x) by 2002. This ratio assumes the failure to assume new contracts in the SING, a sensitivity incorporating only 40% of the capacity payments Edelnor expects to receive going forward, and that a planned interconnection between the SIC (Chile's largest electrical grid) and the SING will be constructed. OUTLOOK: NEGATIVE The negative outlook reflects uncertainty about the supply/demand balance in the SING after 2001, Edelnor's competitive position, its level of plant dispatch at that time, and whether the level of capacity payments will be sufficient to cover costs if Edelnor's plants are not fully dispatched, Standard & Poor's said. HEATWAY SYSTEMS: Files For Chapter 11 Protection ------------------------------------------------ According to a report in Rubber & Plastics News on March 6, 2000, Heatway Systems filed for Chpater 11 after losing a federal lawsuit against Goodyear about Entran II radiant heating hose. The Springfield-based supplier of components for hydronic heating systems filed a petition for Chapter 11 protection from its creditors Feb. 25 at the U.S. Bankruptcy Court in Kansas City, Mo., said Dan Chiles, executive vice president of the company. Heatway is reportedly negotiating with Watts Industries Inc. to be acquired by the plumbing and heating component manufacturer. According to the report, the bankruptcy could affect Goodyear's ability to collect on a $2.7 million trade debt existing between the two companies. Watts is a publicly held company with more than 4,600 employees and about $520 million in annual sales. It has operations in the U.S., Canada, Europe and China. GENEVA STEEL: Reports Quarter Results ------------------------------------- Geneva Steel Company filed for Chapter 11 bankruptcy protection on February 1, 1999 and management currently anticipates that the Plan of Reorganization will be completed and ready to file with the Bankruptcy Court during mid 2000. The Plan of Reorganization will be premised on the company being approved for a guarantee under the Loan Guarantee Program, and the company may not file its Plan of Reorganization until a decision on the loan guarantee application has been announced. There is no assurance as to the actual timing for the filing of the Plan of Reorganization or the approval by the Bankruptcy Court, if at all. Since its bankruptcy filing, the company has supplemented its liquidity by the sale of certain non-core assets. During the first quarter of fiscal year 2000, the company completed the sale of its quarry for $10.0 million ($1.5 million of which is contingent upon the future issuance, by the relevant governmental entity, of a conditional use permit) and received $8.5 million in October 1999. There is no assurance that the conditional use permit will be issued or that the company will receive the additional $1.5 million of the sale price. Geneva's revenues for the three months ended December 31, 1999 were $126,169 as compared to the same quarter of 1998 with revenues of $78,699. Net gain for the first quarter of fiscal 2000 was $1,761 as compared to a net loss in the first quarter of fiscal 1999 of $49,818. INTEGRATED HEALTH: US Trustee Appoints Committee ------------------------------------------------- The United States Trustee for Region III convened an organizational meeting for the purpose of forming one or more official committees of the Debtors' creditors. At that meeting, John "Jack" McLaughlin, Esq., the attorney for the U.S. Trustee in charge of Integrated's chapter 11 cases, announced that one official committee is appointed to represent the interests of the Debtors' unsecured creditors, and the members are: Citibank, N.A. 599 Lexington Avenue, 21st Floor/Zone 10 New York, New York 10043 Mr. Anthony Murphy Oaktree Capital 333 South Grand Avenue, 28" Floor Los Angeles, CA 90071 Mr. Matt Barrett U.S. Bank, N.A. Corporate Trust Services 190 East Fifth Street St. Paul, Minnesota 55101 Mr. Timothy Jon Sandell SunTrust Bank Mail Code NA 1982 P.O. Box 305110 Nashville, TN 37230-5110 Ms. Janet R. Naifeh, Vice President - Special Assets Group Capital Research 11100 Santa Monica Blvd. Los Angeles, CA 90025-3384 Mr. David Daigle Van Kampen Investment Advisory Corp. 1 Parkview Plaza, 5th Floor Oakbrook Terrace, IL 60181-5555 Mr. Douglas J. Smith, Vice President Credit Suisse First Boston Corporation 111 Madison Avenue New York, NY 10022 Mr. Alex Lagetko, Director PharMerica 175 Kelsey Lane Tampa, FL 33619 Mr. Gerald R. Gerlach Gulf South Medical P.O. Box 841968 Dallas, TX 75284-1968 Mr. Matt Adkins Following its appointment, the Committee selected Van Kampen Investment Advisory Corp., represented by Douglas J, Smith, Vice President, and PharMerica, represented by Gerald R. Gerlach, Vice President of Finance and Accounting, as its Co-Chairpersons. LAMONTS APPAREL: Reports Operating Results ------------------------------------------ On January 4, 2000, Lamonts filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code and on January 6, 2000, the Bankruptcy Court issued its Interim Borrowing Order that authorized debtor-in-possession financing with terms and conditions intended to resolve Lamonts' liquidity issues. Prior to this year's bankruptcy filing Lamonts had filed for Chapter 11 protection. On January 6, 1995, Lamonts filed a voluntary petition for relief under Chapter 11 in the United States Bankruptcy Court for the Western District of Washington at Seattle. The Lamonts' Modified and Restated Plan of Reorganization was confirmed by the Bankruptcy Court on December 18, 1997 and Lamonts emerged from bankruptcy on January 31, 1998. In reporting on its quarterly results for the quarter ended October 30, 1999 Lamonts reports comparable store revenues of $51.2 million an increase of $0.3 million or 0.6% from $50.9 million for third quarter 1998. Comparable store revenues of $143.3 million for Year-to-Date 1999 increased $2.4 million or 1.7% as compared to $140.9 million for Year-to-Date 1998. Revenues increased due primarily to higher average inventory levels and strong Year-to-Date 1999 sales in the Alaska, Idaho, Oregon, and Utah markets, partially offset by a decrease in sales in the Seattle/Tacoma market. Lamonts recorded a net loss of $2.5 million for third quarter 1999, compared to a net loss of $0.7 million for third quarter 1998, and a net loss of $8.3 million for Year-to-Date 1999, compared to a net loss of $6.5 million for Year-to-Date 1998. LOEWEN: Rose Hills' Motion For Assumption or Rejection of ASA ------------------------------------------------------------- The Debtors draw the Court's attention to the fact that remind the Court that Rose Hills' Motion for a Deadline for the Debtors to Assume or Reject the Administrative Services Agreement comes after Rose Hills' failure in seeking relief from stay for the termination of the Administrative Services Agreement. The Debtors assert that Rose Hills' Motion for the Deadline is, in effect, an action to seek the same result. The Debtors point out Rose Hills' bare mention that (a) the ASA is one of four complex, integrated agreements that stemmed from Loewen's 1996 acquisition of a minority stake in Rose Hills, (b) Loewen's stake in Rose Hills represents an approximate $100 million investment, (c) Blackstone Capital Partners, the majority owner of Rose Hills, has asserted claims in excess of $1 billion in the cases, the vast majority of which relates to Rose Hills and (d) termination of the ASA will likely adversely impact the Debtors by potentially increasing Blackstone's claim under the related agreements by tens of millions of dollars. The Debtors recapture that in November 1996 Loewen partnered with Blackstone to collectively acquire what became Rose Hills Company. This acquisition, the Debtors relate, came at a heavy price to Loewen, as it transferred 17 of its California cemetery properties to Rose Hills and contributed nearly $35 million in cash in exchange for 20.5 percent of the common stock and 10 percent of the preferred stock of Rose Hills. For its financial stake, Blackstone became the majority owner of Rose Hills, acquiring 78.5% of its common stock. Related to this acquisition, Loewen entered into a series of complex agreements, all dated November 19, 1996: (1) the Subscription Agreement between Loewen and Blackstone, which outlines each party's contributions and resulting equity stake in Rose Hills; (2) the Stockholders' Agreement, which concerns the corporate governance of Rose Hills.; (3) the Put/Call Agreement, which sets forth a variety of situations where Loewen can "call" Blackstone's equity stake in Rose Hills or where Blackstone can "put" its equity interests to Loewen; and (4) the ASA. The Debtors point out that the Stockholders' Agreement importantly contains an integration clause that reads: "(t)his Agreement, together with [the Subscription Agreement, the Put/Call Agreement and the ASA], is the entire Agreement among the parties." In addition, the Debtors point out that this agreement provides that it terminates upon the earlier of the exercise of an option under the Put/Call Agreement or the parties' mutual agreement. The Debtors emphasize that perhaps most critically for purposes of the Motion is the provision of the Put/Call Agreement that says: "If the ASA becomes terminable by Rose Hills, the Put Option Price becomes the greater of (i)the normal calculated amount, or (ii)the sum of the Blackstone Put Hurdle Profit and the Blackstone Contribution, as defined in the Agreement. The Debtors tell the Court that termination of the ASA will likely substantially increase by a magnitude of perhaps tens of millions of dollars the put price to the detriment of the Debtors. As a result of the Put/Call Agreement, the Debtors report, Blackstone has asserted at least ten proofs of claim in these cases that aggregate more than $1 billion. Specifically, the claims, among other things, contend that: Loewen is contingently liable for $158.8 million because "pursuant to the Rose Hills Put/Call Agreement, the Blackstone Rose Hills Entities hold an irrevocable option to put the Blackstone Rose Hills Common Stock to [Loewen], a minority shareholder of Rose Hills, for purchase at a price calculated pursuant to a formula contained in the Rose Hills Put/Call Agreement. The Debtors relate that on November 19, 1996, they entered into the ASA Agreement under which they agreed for a term of 8 years to provide Rose Hills with certain administrative servces such as accounting, legal, computer and telecommunications support, as Rose Hills "may request from time to time." In return, Rose Hills pays "a substantial fee for these services": $334,000 for the first year and $250,000 per year for the following years, subject to a 2.5% annual increase. The Agreement provides that the parties may negotiate to reduce the administrative fee "if the scope of the Services provided is reduced. The ASA further provides that the Agreement can be terminated by Loewen or Rose Hills upon material breach that is not remedied within 30 days after receipt of written notice of such breach. Importantly, the Debtors point out, rejection of the ASA in a bankruptcy proceeding effects a termination of the ASA. Therefore, the Debtors' rejection of the ASA could trigger a substantially higher put price for Blackstone's equity stake in Rose Hills. With the above information about the ASA presented, the Debtors put forward to the Court grounds for rejecting Rose Hills' Motion as follows: (1) A termination of the ASA will likely adversely impact the Debtors by potentially increasing Blackstone's claim under the related agreements by tens of millions of dollars, but denial of the Motion will not harm Rose Hills. The Debtors claim that the intended effect of the ASA potentially encompasses Loewen's entire investment in Rose Hills. They assert that Rose Hills has suffered no post-petition economic harm under the ASA. They inform the Court that Rose Hills candidly admits that it has not paid Loewen any administrative fees. In addition, Rose Hills never sought to mitigate any financial burden that it alleged by seeking to reduce the required administrative fees under the provision of the ASA, the Debtors point out. (2) On the matter about breach of agreement, the Debtors argue that the ASA provides that Loewen is to furnish administrative services only upon Rose Hill's request, but it is Rose Hills that ceased making requests. (3) The Debtors assert that ASA's complaints that Loewen has been in breach of the Agreement is both irrelevant to the Motion and contrary to fact. Despite the irrelevance to the Motion, the Debtors maintain that Loewen has fulfilled its obligations under the ASA by providing services on Rose Hills' request. The Debtors claim that post-petition, Loewen continues to provide services to Rose Hills especially telecommunications and environmental support, while evidence of pre-petition breaches is irrelevant. (4) The Debtors point out that, despite the stipulation in the Agreement, Rose Hills never lodged a written complaint with Loewen about services under the ASA, a contract that was in effect for nearly three years prior to the filing of Rose Hills' initial Motion. (5) The Debtors further allege that, contrary to the accusations by Rose Hills, it is Rose Hills that falls short on making payments for administrative fees since November 1998 and has failed to reimburse Loewen approximately $400,000 for payments made. (6) The Debtors draws the Court's attention to section 365(d)(2) of the Bankruptcy Code, which provides a debtor in possession with the exclusive right to assume or reject an executory contract at any time prior to the confirmation of its plan of reorganization. The Debtors maintain that as strongly suggested by the factual record, there are no compelling circumstances, in fact no cause at all, to force the Debtors to make an early decision. The Debtors also suggest to the Court that Rose Hills' delay in complaining about Loewen's performance raises questions about its real motivation for pursuing this Motion. The Debtors mention that it's not Rose Hills, but a representative from Blackstone, that instigated the issue. The Debtors further argue that while the Motion addresses when the Debtors must elect to assume or reject the ASA, it is a fallacy for Rose Hills to assert in its Motion that the Debtors cannot ultimately assume the ASA. The Debtors remind the Court that while 11 U.S.C. S. 365(d)(2) authorizes the Court to assume or reject a contract, it does not authorize the Court to order either acceptance or rejection of a contract. The Debtors infer that any allegation or evidence that the Debtors cannot assume the ASA is irrelevant and should be disregarded by the Court for purposes of the Motion. The Debtors conclude that they require the full statutory period to appropriately address the four complex agreements relating to the Rose Hills acquisition, and they request that the Court deny Rose Hills' Motion accordingly. Committee's Objection The Committee also objects to Rose Hills' Motion, largely echoing the arguments put forward by the Debtors. In addition, the Committee informs the Court that the Debtors have been working with the Committee since the Petition Date, to evaluate the funeral homes and cemetery operations in the Loewen group, including Rose Hills, as part of developing an overall business plan for Reorganization for Loewen. The Committee asserts that with regard to Rose Hills and the ASA, the Debtors and the Committee must consider all the related agreements in aggregate. The Committee affirms that this and numerous other components are being actively pursued by the Debtors and their professionals, in consultation with the Committee. In addition, the Committee reports to the Court that the Committee's own financial advisors, Houlihan Lokey Howard & Zukin are evaluating the value of the Debtors' interests in Rose Hills in the light of the Debtors' business plan. The Committee, like the Debtors, draws the Court's attention to Bankruptcy Code S. 365(d)(2) which gives the Debtors until the confirmation of a plan to decide whether to assume or reject the ASA. The Committee asserts that, allowing Rose Hills to force rejection or assumption of the ASA at this stage may negatively and irreparably affect the value of Rose Hills and, consequently, the value of the Debtors' interests in this entity. Furthermore, it will destroy the balance among the integrated agreements, of which the ASA only forms one part, the Committee remarks. The Committee reiterates that only after the Debtors have completed their business plan and properly assessed the role of Rose Hills as part of their future business can the Debtors properly make a decision whether to move for assumption or rejection of the ASA. (Loewen Bankruptcy News Issue 20; Bankruptcy Creditor's Service Inc.) MARINER POST ACUTE: Reports Operating Results --------------------------------------------- Mariner Post-Acute Network, Inc. changed its name effective August 1, 1998 from its former name, Paragon Health Network, Inc., following the consummation of the merger with Mariner Health Group, Inc. on July 31, 1998. The company had previously changed its name from Living Centers of America, Inc. to Paragon on November 4, 1997. In reporting on its financial condition the company has assumed that it will continue as a going concern, however, the company has experienced significant losses, has a working capital deficiency of approximately $2.0 billion, and has a capital deficit of approximately $1.4 billion at December 31, 1999. In addition, the company has violated certain covenants of various loan agreements. On January 18, 2000, the company, Mariner Health and certain of their respective subsidiaries filed separate voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the District of Delaware. These matters, among others, raise substantial doubt about the company's ability to continue as a going concern. Management is in the process of developing a plan of reorganization that will be submitted to the U.S. Bankruptcy Court, the company's and Mariner Health's creditors for their approval. In the event the plan of reorganization is accepted, continuation of the business thereafter is dependent on the company's ability to achieve successful future operations. In the quarter ended December 31, 1999 Mariner Post's consolidated revenues were $537,206 with net losses of $58,041. In the same period of 1998 revenues were $672,680 and net losses $39,023. NIPPON CREDIT BANK: No Deal Yet for Lehman, Gets Closer ------------------------------------------------------- Lehman Brothers, the fourth-largest US investment bank, denied reports that it is close to buying a stake in Japan's Nippon Credit Bank from Softbank. "It's news to me," said Michael O'Hanlon, co-head of Lehman's investment bank unit in Japan. "There is no agreement with Softbank or anybody else." Lehman originally submitted its own bid for Nippon Credit in October and has considered buying a stake in the bank since it withdrew that bid in November. The Yomiuri newspaper reported yesterday that Lehman plans to take a 5- 10 per cent stake, without citing sources. Softbank declined to comment. Lehman, which is setting up an online bond trading system with Softbank called E-Bond Securities Co, wouldn't rule out an eventual agreement with the Internet investor, which wants to lower its own stake in the bank. "I'm not saying it's never not going to happen," Mr O'Hanlon said. "The ball is in their court." The government agreed on Feb 24 to sell Nippon Credit to Softbank, leasing firm Orix Corp and Tokio Marine and Fire Insurance Co, the top non-life insurer. Softbank needs to cut its stake in the bank to less than 50 per cent, from 65 per cent now, in order to keep the bank from being considered a subsidiary. (Singapore Business Times 08- March-2000) NISSAN MOTOR CO.: Seen to rebuff workers on wage hike ----------------------------------------------------- Nissan Motor Co. (7201) Chief Operating Officer Carlos Ghosn on Tuesday dampened the union's hopes of receiving the full amount of a proposed wage hike, The Nihon Keizai Shimbun has learned. In his first appearance at a session of the automaker's "shunto" spring wage negotiations, Ghosn said that the company had promised to return to the black for fiscal 2000, but it now faces a tough environment. Despite high expectations on the part of labor, a rebound in Nissan's earnings must take precedence, he added. Nissan expects to sustain a net loss of 730 billion yen for the fiscal year ending March 31. Ghosn has staked his job on the automaker's turnaround, having publicly pledged to resign if it fails to post a profit for fiscal 2000, in line with the firm's Revival Plan announced last fall. (Nikkei 08-March-2000) PHELPS TECHNOLOGIES: Adversary Proceeding ----------------------------------------- The Official Committee of Unsecured Creditors of Phelps Technologies Inc. and its debtor affiliate, filed an action against Sharp Electronics seeking to avoid and recover $700,000 in alleged preferential payments. Both the Committee and Sharp are seeking summary judgments. Sharp says that the payments were made by Monorail as an independent obligation as a guarantor of the debtor's debt to Sharp. Sharp argues that no property of the debtor was transferred. The Committee states that the debtor had a contractual right to receive payments under the Phelps/Monorail Agreement and that the language of that agreement created an account receivable that is property of the bankruptcy estates. The court agrees with the Committee and states that the debtor's right to receive payments under the Phelps/Monorail Agreement was a contractual right that vested at the time the parties signed the agreement. All future payments which the debtor was entitled to receive under the agreement were, and are, property of the bankruptcy estate. PIC'N PAY: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------ Debtor: Pic 'N Pay 10301 Old Monroe Rd. Mathews, N.C. 28105 Petition Date: March 8, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01358 Debtor's Counsel: S. David Peress Robert S. Brady Young Conaway Stargatt & Taylor, LLP 11th Floor, 1100 North Market Street Wilmington, DE 19899-0391 PO Box 391 (302) 571-6600 Total Assets: $ 50 to 100 million Total Debts: $ 50 to 100 million 20 Largest Unsecured Creditors The Topline Corporation 13150 SE 32nd Street Bellevue, WA 98805-4436 Trade $ 3,527,345 Renaissance Imports, Inc. 150 Woodbury Road Woodbury, NY 11797 Trade $ 2,896,866 Marlboro Footworks 60 Austin Street Newton, MA 02160 Trade $ 2,200,472 Fritz Companies, Inc. PO Box 360302 Pittsburgh, PA 15250-6302 Trade $ 1,325,577 Direct Buying Service 426 N. Park Place Yellow Springs, OH 45387 ATTN: Jean Kessel Trade $ 842,831 Polo Imports 1699 South Hanley Road St. Louis, MO 63144 Trade $ 694,507 Pacific Connections, Inc. 135 South LaSalle Dept. 3365 Chicago, IL 60674 Trade $ 662,234 BBC International, Ltd. 1515 North Federal Highway Boca Raton, FL 33432 Trade $ 539,096 Trade Winds Importing 10200 Timberlake Road Lynchburg, VA 24502 Trade $ 507,025 Elan Imports 630 Melrose Avenue Nashville, TN 37211 Trade $ 313,956 Lyle Richards 7 Cabot Place Unit 9 Stoughton, MA 02072 Trade $ 272,226 Carat ICG Trade $ 186,622 ADVO, Inc. Trade $ 171,988 Gary Gaines Trade $ 151,210 ES Originals, Inc. Trade $ 119,161 Answer Think Consulting Trade $ 91,192 Roth Bros., Inc. Trade $ 87,365 State of Georgia Tax $ 76,677 Mail South, Inc. Trade $ 62,024 Triumph Hosiery Corp Trade $ 60,705 POWER DESIGNS: Reports Operating Results ---------------------------------------- Since its inception in 1952 Power Design Inc. has been engaged exclusively in the design and manufacture of electronically controlled power sources used in the operation of electronic equipment and mechanical instruments. The power sources produced by the company function by taking electric current from batteries or commercial power lines and converting it into controlled voltages or currents for the operation of the end equipment. The equipment is used by military, industry, scientific research, and electro-medical organizations for such applications as computers, data processors, video and sound communications media, nuclear biological and medical research, nuclear power generation, and other facilities where disturbances in the primary power source for these systems may affect their accuracy and performance. These power sources or conditioners are connected between the primary source, which may be a commercial power line, battery, diesel, gasoline or steam-driven generator, and the system being powered, to stabilize, eliminate surges or transient changes, or convert the input voltages and currents to other voltage or current levels required by the system. An unacceptable level of product failures in the early shipments of the UPS/PLC product line, required Power Designs to suspend product distribution and initiate efforts to resolve serious technical and production problems. As a result of the significant operating losses sustained during its attempts to resolve these issues, the company ceased operations and filed for relief under Chapter 11 of the United States Bankruptcy Code on January 22, 1998. On January 26, 1998 Power Designs reopened for business on a reduced scale and under new management. At this writing, the company continues to manufacture its original product line, as well as the autotransformer and military power supply line. The company's revenues for the fiscal year ended June 30, 1999 were $2,875,686 compared to $2,602,387 in fiscal 1998. Net losses were $1,560,176, fiscal 1999, and $8,649,067, fiscal 1998. In the first quarter of fiscal 2000 the company had revenues of $823,912 and net losses of $329,474. In the same quarter of 1998 revenues were $745,706 and net losses were $413,119. During the first quarter of fiscal 2000, the company and its wholly-owned subsidiary, continued manufacturing operations as debtors-in-possession under Chapter 11 protection. The Vantage Partners LLC, a management consulting firm retained pursuant to court order, together with Melvin A. Becker, Vice President of Operations, continued in their roles as senior management. Product offerings were confined to three historical families of products: military grade power supplies, variable autotransformers, and linear switching power supply products. Employees and contracted consultants of the company at September 30, 1999 totaled 26. The company's net profit before other income in the first quarter, 2000, showing improvement over the first quarter fiscal 1999 net profit is largely due to the increased sales levels which have resulted from the company's increased efforts in the areas of sales and marketing. In addition, improved manufacturing efficiencies have resulted in the company's ability to shorten the span of time between the receipt and the fulfillment of customer orders. A confirmation hearing on the amended plan of reorganization has been continued to March 21, 2000, although it may be continued from time to time by the court. Should the amended plan not be confirmed, there is significant probability that the case may be converted to a Chapter 7 case. In the instance of a conversion to a Chapter 7 liquidation, there is little likelihood of any value remaining to satisfy the existing equity interests of the debtors. SALANT CORP: Announces Fourth Quarter and 1999 Year End Results --------------------------------------------------------------- Salant Corporation (OTC Bulletin Board: SLNT) has announced its financial results for the fourth quarter and year ended January 1, 2000. The results for the quarter are a continuation of the improvement reported by the Company in the third quarter. Perry Ellis products experienced an increase of $5.6 million in net sales for the fourth quarter of 1999 as compared to the same quarter for 1998. The Company's total net sales for the fourth quarter were $50.7 million, compared to $73.9 million for the comparable quarter in 1998. This decrease resulted primarily from a reduction of $28.8 million in net sales for the discontinued non-Perry Ellis businesses which were closed and/or sold during 1999. Income from continuing operations before interest, income taxes and extraordinary gain for the fourth quarter was $1.9 million, compared to a loss of $51.5 million for the fourth quarter of 1998. The fourth quarter 1998 loss was primarily caused by the planned closure and/or sale of non-Perry Ellis businesses and Chapter 11 and debt restructuring costs. Net income for the fourth quarter of 1999 was $1.9 million, or $0.19 per diluted share on a pro forma basis, compared to a net loss of $67.9 million or $6.79 per diluted share on a pro forma basis for the same period in 1998, which included $1.28 loss per diluted share from discontinued operations. The net sales of Perry Ellis products for the year increased $16.8 million over the prior year. The Company's total net sales for the year 1999 were $ 248.4 million, compared to $300.6 million for the year 1998. This decrease was primarily due to the discontinuation of non-Perry Ellis businesses which were closed and/or sold during 1999. Income from continuing operations before interest, income taxes, extraordinary gain, debt restructuring costs and a restructuring provision for 1999 was $2.6 million compared to a loss for the same period in 1998 of $9.2 million. Income from continuing operations before interest, income taxes, extraordinary gain, debt restructuring costs and a restructuring provision for the year includes a loss of $11.0 million from non-Perry Ellis products which were phased out during the year. For the year, the Company earned net income of $20.6 million, which amount included an extraordinary gain of $24.7 million related to the conversion of certain senior notes and related unpaid interest into equity pursuant to the Company's reorganization, or $2.06 per diluted share on a pro forma basis, as compared to a loss of $72.7 million or $7.27 per diluted share for the year 1998. Commenting on the results, Michael J. Setola, Chairman and Chief Executive Officer stated: "The extraordinary efforts of the new Salant team have produced these strong fourth quarter results. The reorganization of the Company was successfully completed in 1999, and the year-end figures reflect that success. Salant's focus will be to actively pursue a strategic plan of growth by way of new license and acquisition opportunities". Salant Corporation markets and distributes Perry Ellis menswear in the sportswear, accessories, pants and dress shirt categories. Its products are sold in major department and specialty stores. The Company employs more than 500 people in the United States and overseas. SAMSUNG MOTOR: Creditors to reject Renault offer ------------------------------------------------ Creditors of Samsung Motors say they will reject Renault's offer of US$ 450 million for the Korean auto maker, insisting the price will go no lower than $1 billion. "The Seoul District Court has put Samsung's value at 1.2 trillion won (US$1.07 billion), so Renault's offer is outrageous," said a creditor source. The creditors will convene an emergency meeting today. "It cost 5 trillion won to build Samsung Motors so the Korean public will not understand if it is sold to a foreign company at one tenth the price," the source said. Thus negotiations on the sale of the car maker is apparently back to square one. Renault said it offered to create a joint venture with Samsung in the hope of allowing the insolvent car maker to produce 200,000 vehicles a year within a few years. Representatives of the French car maker had stayed in Seoul and Pusan for the past two months visiting the plant and examining related papers. Renault also proposed a joint venture in which it would own 70 percent and Samsung 30 percent to acquire the operating assets of Samsung Motors. Samsung says it wants to own no more than 20 percent. (Asia Pulse 07-March-2000) SAMSUNG MOTOR: Renault, Creditors Vie in Pricing Dispute -------------------------------------------------------- Renault and Samsung Motors' creditors have intensified their dispute over the Korean carmaker's takeover price. Rejecting Renault's offer of about $450 million (500 billion won), Korean creditors yesterday set the minimum sale price at $1 billion (1.12 trillion won). "It is absurd that Renault is attempting to purchase Samsung Motors for just half of the court-calculated company value of 1.2 trillion won," said a top creditor bank official. "Few Koreans will understand if Samsung Motors, built at a cost of over 5 trillion won, is sold to foreigners for just one-tenth of the cost," he stressed. He also noted that even neutral parties, such as lead manager Banque Paribas and U.S. consulting firm KPMG, also set the value of Samsung Motors at over 1 trillion won. Amid the escalating argument the creditors' original plan to finalize the sale contract by the end of March may be considerably delayed, industry watchers forecast. "Renault is likely to stick to its stance of knocking down the takeover price, out of the conviction that it is the only automaker in the position to buy Samsung," said an industry executive, forecasting turbulence in the upcoming negotiations, set to begin next week. Indeed, some officials belonging to the creditor group have indicated that Samsung could be put up for international bidding, in case of a failure to compromise on the pricing terms. In its takeover proposal, meanwhile, Renault said it wishes to create a joint venture with the Samsung Group in hopes of allowing the insolvent carmaker to produce 200,000 vehicles annually within a few years. Renault also proposed owning 70 percent of the joint venture while giving a 30-percent stake to Samsung. However, the Korean firm is reportedly determined to restrict its equity ownership to less than 20 percent, sources said. (The Korea Herald 08-March-2000) SIZZLER: Announces Third Quarter Results ---------------------------------------- Sizzler International, Inc. (NYSE:SZ) reported financial and operational improvements for the third quarter of Fiscal 2000 ended February 6, 2000. For the third quarter, the company reported revenues of $71.9 million, an increase of 6 percent over the $68.1 million in the comparable period in Fiscal 1999. Sizzler reported net income for the third quarter excluding one-time items of $1.3 million, or $0.05 per diluted share, compared with net income of $1.2 million, or $0.04 per diluted share in the same period a year ago. Including the non-recurring items, the company reported a net loss of $4.9 million, or $0.17 per diluted share. "The continued financial and operational improvement that Sizzler is experiencing is due to a number of factors, primarily continued same-store-sales growth from the company's U.S. Sizzler and Australian KFC operations, but also increased guest counts. Sizzler USA reported its first quarterly increase in guest counts in over two years," said Charles Boppell, President and CEO of Sizzler Intl. "As our results indicate, we believe our management team has built the platform needed to not only lead the company to increasing profitability, but also to sustain a level of accelerated growth and expansion." The company's continued turnaround reflects Sizzler's success in the improvement of its restaurant operations, including cost controls, positive customer response to the enhanced food quality and cooking methods, and the early success Sizzler has achieved with its store remodeling program. The company plans to continue with the implementation of its strategic growth plan. Among the primary goals of this plan are the remodeling and repositioning of domestic restaurants, which has yielded positive results since its initiation in the fall of 1999. The company has also completed the repurchase of approximately half of the 1.5 million shares of common stock it has been authorized to repurchase by its Board of Directors. As of quarter end February 6, 2000, the company had bought 706,700 shares of its common stock, all in open market transactions. Subject to applicable law and other factors, the company expects to continue its stock repurchase program. The company reported the final financial adjustments related to its 1996 Chapter 11 reorganization, including a$6.6 million non-recurring, one-time charge to its third quarter earnings. The charge resulted from the completion of an extensive review of the complex financial issues that resulted from the reorganization. After an assessment of all of the costs associated with the reorganization, Sizzler's management has determined that the original$108.9 million estimate is lower than the final expected cost by $6.6 million. As such, Sizzler has taken a $6.6 million charge against earnings on its third quarter 2000 income statement, attached hereto. Importantly, because the final payment was made to the creditor trust in January 2000, the company does not anticipate any further cash outlay in settlement of Chapter 11 related matters. The company has now settled substantially all of the original claims and does not anticipate any further charges relating to the reorganization. Sizzler International, Inc. operates, franchises or joint ventures 347 Sizzler restaurants worldwide, in addition to the 101 KFC restaurants in Queensland, Australia. SUMITOMO METAL INDUSTRIES: Raises expected net loss --------------------------------------------------- Sumitomo Metal Industries Ltd. (5405) said Tuesday it has raised its expected group net loss to 146 billion yen for the year through March from the earlier projection of 84 billion yen. The loss would be the largest ever recorded by a major steelmaker. The company posted a loss of 69.5 billion yen a year earlier. Sumitomo Metal blamed the blowout on a parent-only extraordinary loss of 207 billion yen incurred on the consolidation of money-losing semiconductor and other non-core businesses. The red ink will wipe out group capital surplus (accumulated past profits), which stood at 125 billion yen at the end of March last year, and leave a capital loss. The company expects to fall short of the unconsolidated pretax profit target of 8 billion yen for the six-month period ending March 31, due largely to the yen's appreciation. Consequently, the group pretax balance for the whole of fiscal 1999 is likely to see a 65 billion yen loss. The bottom line should improve substantially by next fiscal year at the earliest as unprofitable operations are terminated, company officials said. (Nikkei 07-March-2000) SUPERIOR NATIONAL INSURANCE: S&P Lowers Ratings to 'D' ----------------------------------------------------- Standard & Poor's revised its financial strength ratings on Superior Pacific Casualty Co., California Compensation Insurance Co., and Combined Benefits Insurance Co., three of the five members of the Superior National Insurance Group Inc., to 'R' from single-'B'-plus. An insurer rated 'R' is under regulatory supervision owing to its financial condition. On March 3, 2000, Standard & Poor's lowered its counterparty credit rating on the Superior National Insurance Group Inc., one of California's largest workers' compensation insurers, to 'D' from triple-'C'-plus and removed it from CreditWatch, where it had been placed on Dec. 22, 1999, with developing implications. At the same time, on March 3, 2000, Standard & Poor's revised its financial strength rating on the group's lead company, Superior National Insurance Co., to 'R' from single-'B'-plus. These ratings actions followed California Insurance Commissioner Chuck Quackenbush's issuance of a seizure order to take control of Superior National Insurance Group. The California Department of Insurance (DOI) appeared before the Los Angeles and Sacramento superior courts on March 6, 2000, to seek a conservation order for Superior National Insurance Group to allow the commissioner to use department staff to conduct the business of the conserved company as he sees appropriate. The order was approved by the courts and received by the department on March 7. In a report entitled, "Insurer Financial Troubles on the Rise" (http://www.standardandpoors.com/ratings/insurance/index.htm), Standard and Poor's cites the main reason for failures in the property/casualty industry as competitive pressures that have led to inadequate pricing and, subsequently, weakened reserve positions. The California DOI's report stated that its financial examinations of Superior National Insurance Group revealed that the company was in hazardous financial condition and was severely under-reserved. The Superior National Insurance Group Inc., consists of five companies. Four of the companies -- California Compensation Insurance Co., Combined Benefits Insurance Co., Superior National Insurance Co. and Superior Pacific Casualty Co. -- have been seized by California regulators. Appropriate actions relating to the fifth company, Commercial Compensation Insurance Co., are being pursued in coordination with regulators in the company's domiciliary state of New York. At the time of this release, Standard and Poor's has been unable to confirm what action, if any, has been taken by the New York State Insurance Department. SYSTEMSOFT CORP: Announces Resolution of Chapter 11 Status ---------------------------------------------------------- The company's Plan of Reorganization, approved on February 22, 2000, by the United States Bankruptcy Court for the District of Massachusetts, states that the Assets and Intellectual Property Rights of SystemSoft Corporation were acquired by Rocket Software, a privately held company also of Natick. The Plan of Reorganization became effective March 2, 2000. SystemSoft Corporation is now privately held by Rocket Software. All issued and outstanding publicly traded shares of SystemSoft stock were canceled effective March 1, 2000. BOND PRICING For Week of March 6, 2000 ====================================== DLS Capital Partners, Inc., bond pricing for week of March 6, 2000. Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 14 - 16 (f) Ameriserve 8 7/8 '06 10 - 14 (f) Asia Pulp & Paper 11 3/4 '05 90 - 91 E & S Holdings 10 3/8 '06 37 - 40 Fruit of the Loom 8 7/8 '06 4 - 6 (f) Genesis Health 9 3/4 '05 13 - 14 Geneva Steel 11 1/8 '01 21 - 23 (f) Globalstar 11 1/4 '04 46 - 48 Hechinger 9.45 '12 6 - 9 (f) Integrated Health 9 1/4 '08 4 - 6 (f) Iridium 14 '05 3 - 4 (f) Loewen 7.20 '03 44 - 46 (f) Paging Network 10 1/8 '07 82 - 84 (f) Pathmark 11 5/8 '02 37 - 39 Pillowtex 10 '06 38 - 40 Revlon 8 5/8 '08 44 - 46 Rite Aid 6.70 '01 72 - 74 Service Merchandise 9 '04 12 - 13 (f) Sunbeam 0 '18 14 - 15 TWA 11 3/8 '06 33 - 35 United Artists 9 3/4 '08 2 - 5 Vencor 9 7/8 '08 18 - 20 (f) ********* 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 * * *