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/raid1/www/Hosts/bankrupt/TCR_Public/000410.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, April 10, 2000, Vol. 4, No. 70 Headlines ALTA GOLD: Court Defers Ruling On Conversion To Chapter 7 AMERICAN GAMING: To File Annual Report Before April 14 AMERICAN GAMING: Net Income For Year $61M ANCHOR GLASS CONTAINER: Owens-Brockway Commences Action AUGMENT SYSTEMS: Suspends Current Operations AURORA FOODS: Management Resigns; Headquarters Relocates BOSTON CHICKEN: Hartford Fire Insurance Objects To Plan DIMAC: Files Voluntary Chapter 11 Petition GENCOR: Opposes Petition GIBBS CONSTRUCTION: Plans for Bankruptcy and Merger GLOBE MANUFACTURING: Requests 15-Day Extension To File Financials GOSS GRAPHIC: Sues Four Foreign Printing Press Manufacturers HVIDE MARINE: Notification of Late Filing; Lower Earnings IGI INC: To Delay Filing Financial Information With SEC INTEGRATED HEALTH: Informs SEC of Delayed Annual Reports LEVITZ FURNITURE: Levitz, Seaman Enter Shared Services Pact MARKETING SPECIALISTS: Under Review For Possible Downgrade MASON PLAN: Claims Not Met MATTHEWS STUDIO: Files Voluntary Petition in Chapter 11 MC SHIPPING: S&P Cuts Snr Unsecured Debt NORTH FACE: Announces Short Extension of Credit Facility NORTH FACE: Stock Falls After Possible Bankruptcy Announcement ORBIT INTERNATIONAL: Reports Financial Results For 1999 ORBITAL SCIENCES: To Delay Filing Financial Report PENNCORP FINANCIAL GROUP: Accepts Recapitalization Proposal SCOOP INC: Elects New Directors; Appoints New Accountants SCOOP INC: Delays Filing Financial Report SERVICE MERCHANDISE: Taps Grubb as Real Estate Consultant SUN HEALTHCARE GROUP: Needs More Time To File Financial Reports WASTE MANAGEMENT: Denies Sale Agreement With SITA WELLCARE MANAGEMENT GROUP: Change in Independent Auditors WESTERN DIGITAL: Offers 1,715,827 Shares Of Stock To Investor ********* ALTA GOLD: Court Defers Ruling On Conversion To Chapter 7 --------------------------------------------------------- At a hearing on March 30, 2000 the Bankruptcy Court agreed to defer ruling on the motion of the debtor, Alta Gold Co., to convert its case to a Chapter 7 liquidation case. This request was made to allow the company and certain of its secured creditors additional time to attempt to prepare a definitive agreement to complete the liquidation of the company's assets and to reclaim the company's mining properties, on an orderly wind-down basis. The Bankruptcy Court agreed to defer ruling on the motion until April 24, 2000, at which time it will also review the definitive agreement. If the definitive agreement is approved by the Bankruptcy Court, the company may at that time ask that the Bankruptcy Court continue to defer for several more months its ruling on the company's motion to convert. In conjunction with the company's request to defer ruling on the motion to convert, the company also filed a motion with the Bankruptcy Court to have John Bielun, the company's chief financial officer and most senior remaining employee, to be designated as the responsible individual for meeting the duties of the company as a debtor-in- possession. AMERICAN GAMING: To File Annual Report Before April 14 ------------------------------------------------------ American Gaming & Entertainment Ltd. is still determining the effects of a restructuring with its major stockholder and creditor, involving the transfer of substantially all of the company's assets and extinguishment of substantially all of the company's liabilities. Accordingly, it reports that it could complete its annual report for filing with the SEC by March 30, 2000 without unreasonable effort and expense. The Company intends to file its annual report on or before April 14, 2000. AMERICAN GAMING: Net Income For Year $61M ----------------------------------------- American Gaming & Entertainment, Ltd. reported net income for the year ended December 31, 1999 was approximately $61,417,000 as compared to a net loss for of ($6,720,000) for the year ended December 31, 1998. As a result of the confirmation of a plan of liquidation for the Company's two Mississippi subsidiaries and the dismissal of an adversary complaint filed by the creditors of such subsidiaries challenging the Company's title to a casino barge, the Company recognized "Deferred Charter Revenue" of approximately$11,743,000 as revenue for the year ended December 31, 1999. The Company has not received any financial statement information or payments relating to its interest in a gaming project in Rising Sun, Indiana for the year ended December 31, 1999 and therefore has not recorded any revenues attributable to the RSR Interest for such year. For the year ended December 31, 1998, the Company recorded revenues of approximately $445,000 attributable to the RSR Interest. From 1997 through October 4, 1999, the Company's Common Stock traded under the symbol "AGEL" on the OTC Bulletin Board. Effective October 4, 1999, the Common Stock has traded under the symbol "AGELE" on the OTC Bulletin Board. The Company has been informed by the OTC Bulletin Board that the symbol was changed because the report of the Company's independent public accountants on the Company's financial statements for the fiscal year ended December 31, 1998 contained a disclaimer of opinion. As a result of such disclaimer, the OTC Bulletin Board can decide to remove the Common Stock from the OTC Bulletin Board. In such event, there would be no public trading market for the Common Stock. The report of the Company's independent public accountants on the Company's financial statements for the fiscal year ended December 31, 1999 contains an unqualified opinion with a going-concern explanation, but not an adverse opinion or disclaimer of opinion, and therefore the Company intends to apply to the OTC Bulletin Board to ensure that the Common Stock is not removed from the OTC Bulletin Board and to have the symbol reversed to "AGEL". ANCHOR GLASS CONTAINER: Owens-Brockway Commences Action ------------------------------------------------------- On February 17, 2000, Owens-Brockway Glass Container, Inc. commenced an action against Anchor Glass Container Corporation alleging violations of a Technical Assistance and License Agreement between the company and Owens. Owens is seeking various forms of relief including (1) permanent injunction restraining Anchor Glass from infringing Owen's patents and using or disclosing Owen's trade secrets, and (2) damages for breaches of the Technical Assistance and License Agreement. A hearing is scheduled on Owen's motion for a preliminary injunction on April 12, 2000. Because the outcome of the hearing on April 12, 2000 could significantly impact the company's disclosure in its annual report to the SEC, it is requesting an extension of fifteen 15) days to file its annual report for the year ended December 31, 1999. AUGMENT SYSTEMS: Suspends Current Operations -------------------------------------------- On January 15, 1999, the Board of Directors of Augment Systems, Inc. decided to suspend its current operations, reduce its work force to one person and move to smaller office space. During 1999, the company attempted to find companies interested in purchasing technology or acquiring the company. In March 2000, the company entered into an agreement to sell a significant portion of the company to Right2web, an internet start-up company. Augment Systems auditors was to have completed their field work in March and will be completing the audit by the middle of April 2000. The company intends to file its financial statement within 15 days from the end of March. AURORA FOODS: Management Resigns; Headquarters Relocates -------------------------------------------------------- In February 2000, Aurora Foods Inc. announced that several members of its senior management team had resigned, including the company's chief executive officer and chief financial officer. The company developed an interim management team, and relocated its corporate headquarters from San Francisco, CA to St. Louis, MO. Also in February, Aurora formed a special committee to conduct an investigation into the company's accounting practices. The special committee retained legal counsel and an independent accounting firm to assist it in the investigation. The special committee's investigation is continuing. The company has not completed preparing its financial statements for the year ended December 31, 1999, and, as a consequence, the company's accountants have not yet delivered their audit opinion. The company reports that the foregoing matters have required significant attention and resources from the company's management, and have resulted in Aurora's inability to file its annual report with the SEC for the year ended December 31, 1999 within the prescribed period. BOSTON CHICKEN: Hartford Fire Insurance Objects To Plan ------------------------------------------------------- Hartford Fire Insurance Company relates that it issued various Utility Bonds on behalf of various Boston Chicken Affiliates that guarantee the Debtors' obligations to perform and make payment to various utility providers. Substantially contemporaneously various Boston Chicken Affiliates executed General Indemnity Agreements. In the circumstance, Hartford objects to the plan. Hartford says that under the plan it will be left in limbo beyond the confirmation date. Hartford explains that the Debtors fail to assume or reject the executory contracts, and McDonald's is given the post-confirmation right to "pick and choose" literally hundreds of unexpired agreements, including the Utility Bonds. However such confirmation date may not occur for years because of the conditions set in the plan. Hartford that the Debtors have not eliminated risk to Hartford by allowing Hartford to file a proof of claim before the Utility Bond have been rejected, given the Debtors' prediction that there will likely be no distribution to general unsecured creditors under the plan. The arrangement is also inequitable, Hartford says, because the plan provides that parties with executory contracts listed are required to provide performance from the Effective Date until the assumption or rejection of the executory contract. Hartford contends that the provisions under the Plan contravenes provisions in the Bankruptcy Code. As McDonald's is neither a debtor-in-possession or a trustee, the Debtors' attempt to contractually provide McDonald's with the right to assume or reject executory contracts after confirmation violated the Bankruptcy Code. Hartford asserts that the Utility Bonds and General Indemnity Agreements are executory contracts and cites cases which say that executory contracts are to be assumed. Hartford contends that "the Debtors' failure to assume or reject the utility bonds prior to plan confirmation must result in the Court denying approval of the Plan." (Boston Chicken Bankruptcy News Issue 11; Bankruptcy Creditors' Services Inc.) DIMAC: Files Voluntary Chapter 11 Petition ------------------------------------------ DIMAC Marketing Corporation announced that, in order to reorganize its capital structure and facilitate the continued implementation of its revitalization plan, the Company has voluntarily filed for reorganization under Chapter 11 of the U.S. bankruptcy code. The company filed on April 6, 2000 in Wilmington, Delaware. DIMAC also announced that it has obtained a $20 million debtor- in-possession financing commitment from its existing lenders, led by Credit Suisse First Boston. Pending court approval of the DIP financing, the Company has applied for and received court approval for $5 million of interim financing. Robert "Kam" Kamerschen, Chairman and Chief Executive Officer, said that the company filed for reorganization because its current capital structure simply is not consistent with the strategic direction being implemented for DIMAC. He said, "While our business is fundamentally sound, we have too much debt on our balance sheet." "The problem caused by the magnitude of our indebtedness was compounded by DIMAC's poor financial performance in fiscal 1999 - -- largely due to the loss of a few key accounts by two of the Company's nine business units. As a result, it was not possible to meet the principal and interest payments on that debt and continue to fund DIMAC's ongoing growth strategy." DIMAC Marketing Corporation provides direct response marketing solutions, which are supported by creative strategy/agency services, database strategy/management services and production services and products. Through its nationwide network of 21 production facilities, DIMAC offers its direct response marketing customers a wide variety of formats, printing, and converting capabilities. The company also offers its clients a complete range of pre- and post-production direct marketing services such as information services (information processing, fulfillment, and database services), creative/agency services and program development services (strategic marketing planning, creative development and program evaluation). In addition, DIMAC offers other printing and converting products such as custom pressure sensitive labels and custom mailers, to support its direct marketing products and services. GENCOR: Opposes Petition ------------------------ Gencor Industries Inc. (AMEX:GX) through it's Chairman E.J. Elliott announces "that a partial group of our lenders broke away from our bank group to file a petition to put the company into an involuntary Chapter 11. We are not in bankruptcy. This is only a petition, and the company has neither filed nor presently contemplates filing for bankruptcy. It is indeed an unusual, aggressive and unwarranted move in that Gencor is a viable and profitable company and certainly should not be in Chapter 11. We are on good terms with our vendors and customers and intend to vigorously oppose this petition through all available legal means. The company has its own claims and charges which it intends to bring at the appropriate time." Gencor Industries designs, manufactures and markets process machinery for the transportation, food and energy production industries. Products include machinery for the production of highway construction material, palletized animal feeds, edible oils, sugar, citrus juices, synthetic fuels and bio-mass energy as well as fuel refining and distilling equipment. GIBBS CONSTRUCTION: Plans for Bankruptcy and Merger --------------------------------------------------- Gibbs Construction, Inc. announced that its loss for fiscal year end December 31, 1999 amounted to $8,950,262 on gross revenue of $53,366,171. The Company incurred an operating loss of $7,389,716 which included a gross loss on construction of $2,121,707 and bad debt expense of $2,508,138. Since January 2000, the company has been receiving funding assistance pursuant to an operating agreement with one of its bonding sureties. Results of Gibbs' December 31, 1999 audit reflect the Company's insolvency and inability to continue to operate normally in its current financial condition. Consequently, Gibbs plans to file for protection pursuant to Chapter 11. Gibbs has entered into a letter of intent with a privately held Asset Management Company that contemplates the consolidation of the Company's resources and operations into Gibbs through either pooling of interests or by acquisition. Details of the transaction are too preliminary to disclose, but will later be available as a part of the company's Plan of Reorganization. It is anticipated that this transaction and the cooperation of Gibbs' largest creditor will be the cornerstone of the Company's plan. Discussing these events, president Danny Gibbs stated, "During the last half of 1999 the Company's largest and most profitable customer, Just for Feet, declared bankruptcy. In addition, losses and collection problems in connection with the completion of hotel and other projects continued to escalate. We realized the Company could either require additional financial resources or consolidation with another company. In December 1999, we began discussions with a privately held Asset Management Company located in Atlanta, Georgia relative to a consolidation by 'reverse merger' with Gibbs. Given the compatibility of the two organizations, the Atlanta Company's desire to operate as a Public Company, and Gibbs' need for assistance, frequent discussions have continued through the first quarter of 2000. During this period Gibbs' financial condition has continued to deteriorate, and escalation of funding assistance by its bonding surety became necessary. Considering the current financial condition of Gibbs, we have concluded that any transaction is not feasible without the assistance of a Chapter 11 Bankruptcy." Gibbs is a general contractor providing construction services for retail, office, warehouse, and specialty real estate. Gibbs is headquartered in the Dallas-Fort Worth Metroplex and its stock was formerly traded on the Nasdaq Exchange (GBSE). GLOBE MANUFACTURING: Requests 15-Day Extension To File Financials ----------------------------------------------------------------- Globe Manufacturing Corporation has requested a 15-day extension of time to file its financial information with the SEC for the year ended December 31, 1999. The company has presented its plan to amend its senior credit facility with its Senior lenders and indicates that disclosure of such plans is material to the financial statements. Consequently the company reports that it could not have filed by March 30, 2000 without unreasonable effort or expense. The company anticipates that the plan will be finalized in a manner that allows it to file by April 14, 2000. GOSS GRAPHIC: Sues Four Foreign Printing Press Manufacturers ------------------------------------------------------------ According to an article in Crain's Chicago Business on April 3, 2000, Goss Graphic Systems Inc. is suing four foreign printing press manufacturers for damages the Westmont-based company says it suffered as a result of illegal dumping of newspaper printing presses in the U.S. market. "Goss alleges that the dumping was an attempt to destroy the large newspaper printing press industry in the United States," the company said in a prepared statement. A Goss spokeswoman declined further comment. According to the article, Goss filed suit against two German companies, MAN Roland Druckmaschinen AG and Koenig & Bauer AG, and two Japanese companies, Mitsubishi Heavy Industries Ltd. and Tokyo Kikai Seisakusho Ltd. Following an investigation by the U.S. Department of Commerce and related federal agencies four years ago, the federal government concluded that the four foreign companies were selling printing presses at below-market rates, and imposed a tariff on certain press imports. HVIDE MARINE: Notification of Late Filing; Lower Earnings --------------------------------------------------------- Hvide Marine, Inc. operated under the protection of chapter 11 of the U.S. Bankruptcy Code from September 8 through December 15, 1999. As a result of the extensive and complex financial disclosures associated with its emergence from bankruptcy, the company is unable to complete its financial report to be filed with the Securities & Exchange Commission by the prescribed due date. In addition, due to adverse market conditions in its three principal businesses, the company anticipates lower than projected earnings for the first quarter of 2000. As a result, the company does not expect to be in compliance with certain covenants of its bank credit agreement as of March 31, 2000. Hvide is in discussions with its lending banks concerning an amendment to the credit agreement, the results of which will also resolve the classification of the bank debt on its balance sheet. IGI INC: To Delay Filing Financial Information With SEC ------------------------------------------------------- IGI, Inc. will delay the filing of its financial information with the SEC as it has received verbal confirmation that it will receive waivers of noncompliance under certain covenants under some of its credit facility agreements from both of its lenders. The company was assured, and therefore anticipated receiving, these waivers/amendments before March 30, 2000 and prepared the presentation of its financial statements under that assumption. However, IGI has not received the waivers and/or amendments and could not change the presentation of its financial statements before the March 30 filing deadline. The company anticipates receiving such waivers/amendments within the next week. INTEGRATED HEALTH: Informs SEC of Delayed Annual Reports --------------------------------------------------------- The Albuquerque Journal reports that Integrated Health Services Inc. of Sparks, Md., says it needs more time to get its annual reports ready. Integrated Health, which runs 26 nursing homes in the state, requires more time because it is operating under liquidation proceedings since Feb. 2, according to a preliminary report to the SEC. The final report must be filed within 90 days of the end of a company's fiscal year, according to the SEC's Web site, the Albuquerque Journal reports LEVITZ FURNITURE: Levitz, Seaman Enter Shared Services Pact ----------------------------------------------------------- Levitz Furniture Incorporated and Seaman Furniture Company, Inc. announced that they are entering into a management agreement and a shared services agreement that are expected to create efficiencies in advertising, merchandising, warehousing, distribution and administration. The announcement was made jointly by Ed Grund and Alan Rosenberg, the Chief Executive Officers of Levitz and Seaman, respectively, at a presentation to vendors during the furniture industry's market week here at America's furniture capital. These agreements are being entered into in contemplation of a plan of reorganization to be filed by Levitz in its bankruptcy proceedings. The agreements are subject to bankruptcy court approval, which Levitz anticipates receiving by late summer, and other conditions. As part of the plan of reorganization, it is anticipated that a new holding company will be formed, Levitz Home Furnishing, Inc., which would own all of Levitz and a majority of Seaman. Except as provided in these agreements, Levitz and Seaman would continue to be operated separately. Under the management agreement, upon approval of the plan of reorganization, Seaman's management will add to their responsibilities the management of the Levitz stores on the east coast. Marketing, merchandise selection and replenishment for Seaman's 51 stores and for 20 of Levitz' stores will be integrated in an effort to enhance synergies and increase cash flow for both companies. Seaman will also provide certain administrative services for the combined companies' 115 stores, including MIS, accounting and human resources. Levitz will continue to direct all aspects of operations for its 44 stores on the west coast and Minneapolis/St. Paul from a new regional headquarters to be located in Pleasanton, CA. Levitz's administrative offices in Boca Raton, FL and Pottstown, PA will be phased out over an 18-month period after approval of the Levitz' plan of reorganization, with some personnel from those offices transferring to Seaman's headquarters in Woodbury, NY or to the new California office. Rosenberg and Grund emphasized that there are no planned reductions in store or field personnel. If the plan of reorganization is approved, Resurgence Asset Management, L.L.C. and its affiliated entities are expected to become the largest shareholder of the new company by contributing their claims in the Levitz bankruptcy to the new company and exchanging their majority ownership of Seaman for equity in the new company. James B. Rubin, Co-Chairman and Chief Investment Officer of Resurgence said, "We are extremely excited about the opportunities in the U.S. furniture retailing industry. Through its ownership interests in Levitz and Seaman, the new company hopes to benefit from the increased store density in existing regions, reductions in fixed expenses and strengthened vendor relationships. Importantly, we hope that the customers of both Levitz and Seaman will be better served". Mr. Rubin is expected to become the Chairman of the new holding company, while Messrs. Grund and Rosenberg will each remain Chairman and Chief Executive Officer of Levitz and Seaman, respectively. Levitz and Seaman will continue to operate as separate and distinct companies with separate and distinct brands. MARKETING SPECIALISTS: Under Review For Possible Downgrade ---------------------------------------------------------- Moody's Investors Service placed the Caa2 rating on $100 million of senior subordinated notes due 2007 issued by Marketing Specialists Corporation under review for possible downgrade. The senior implied rating of B3 and issuer rating of Caa1 were also placed under review for possible downgrade. Review of the ratings was prompted by tight credit protection measures and Moody's belief that cost efficiencies from the merger of Richmont Marketing Specialists and Merkert American have lagged previous expectations. Meanwhile, the company has acquired two smaller food brokers in the past six months as part of its effort to complete a national network. Debt to annualized fourth quarter EBITDA was 7.3 times at December 31, 1999 and interest coverage was slightly less than 1.7 times. The company continues to experience difficulties such as recovering lost commission revenue following the merger of the former businesses. The liquidity position of company remains uncertain despite recent equity commitments of $15 million from the controlling shareholder as well as refinancing of the bank facility. The new $85 million bank facility was preceded by a senior subordinated noteholder consent that approved certain amendments including new restrictions on future acquisitions and increased the amount of bank debt that could be incurred by the company (to accommodate the new credit facilities). Marketing Specialists Corporation, the result of a merger of Merkert American Corp. and Richmont Marketing Specialists Inc., is based in Dallas, Texas and provides brokerage services to food and consumer products manufacturers across the United States. MASON PLAN: Claims Not Met -------------------------- According to The Associated Press, Mason Plan filed for protection under Chapter 11 in March 1997 and listed more than 300 creditors who deposited money into it. Depositors claimed $ 7 million in losses and are likely to get back just a fraction of what they claimed and several banks also filed for about $ 1 million in losses. Sam Vrachalus, the 72-year-old former Mason Plan owner, is serving a federal prison sentence for income tax fraud and Social Security fraud while his wife, Mason Plan accountant Elizabeth Vrachalus, served four months in a halfway house for Social Security fraud, and was released in April 1999. Both pleaded guilty last year to state charges of securities fraud, but were not required to serve prison time in addition to their federal sentences. And, it's been three years now, but none of the $ 7 million in claims have been met. According to an interview with Theodore Hall, it will be at least another year before the U.S. Bankruptcy Court in Mobile will be able to disburse money from the Mason Plan bankruptcy estate MATTHEWS STUDIO: Files Voluntary Petition in Chapter 11 ------------------------------------------------------- Matthews Studio Equipment Group. (Nasdaq:MATT), an international single-source provider of professional equipment to the entertainment industry today announced that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Matthews and its subsidiaries were included in the filings. The filings were made in the U.S. Bankruptcy Court in the San Fernando Valley division of the Central District of California. Matthews has retained the services of Klee, Tuchin, Bogdanoff & Stern, LLP to represent the Company as reorganization counsel. The Company's outside corporate counsel, Whitman Breed Abbot & Morgan, LLP will continue to represent the company. In addition, Matthews has hired Crossroads, LLC as an advisor to validate the new business plan, operational improvements and any restructuring of the company's debt and other liabilities. Crossroads, based in Newport Beach, Calif., is a national turnaround management firm that assists middle market and Fortune 100 companies to improve corporate value with interim management, financial advisory, operational improvement, and information technology services. Carlos D. DeMattos, Chairman and Chief Executive Officer, stated, "Matthews Studio Group has strong cash flow performance. We have spent the past several months attempting to come up with a proposal that would address the Company's challenges outside of a court proceeding. Ultimately, the time required to complete a restructuring transaction and the uncertain cost of closing unprofitable locations were too great to overcome." "While unfortunate, this proceeding will bring order to a disorderly process. It should have little or no impact on our customers, our vendors, or our employees. We intend to continue to compete vigorously in all of our markets and to work diligently to meet the needs of our customers." DeMattos continued, "Our personal goal is to emerge from reorganization as quickly as possible with a stronger, more efficient and profitable company." Certain of Matthews' subsidiaries were included in the filings as a result of last minute demands by the Company's lenders to which the Company was forced to accede. Matthews Studio Group supplies traditional lighting, grip, transportation, generators, camera equipment, professional video and audio equipment, automated lighting and complete theatrical equipment and supplies to entertainment producers through its worldwide distribution network. MC SHIPPING: S&P Cuts Snr Unsecured Debt ----------------------------------------- Reflecting the Monaco-based MC Shipping Inc.'s deteriorating financial profile, Standard & Poor's today lowered the company's long-term corporate credit rating to single-'B'-minus from single-'B'. At the same time, MC Shipping's long-term senior unsecured debt rating was lowered to triple-'C'-plus from single-'B'-minus. The outlook is negative. MC Shipping has a fleet of 23 vessels (container vessels, multipurpose carriers, multipurpose sea-river vessels, and gas carriers), with an average age of 16.5 years. The rating on MC Shipping reflects the shipping industry's below- average characteristics, and the company's very weak financial profile. MC Shipping is part of the Vlasov Group--a major ship-owning and ship-management group. Weak fundamentals and high industry risk characterise the shipping market in general. To a large extent, MC Shipping is exposed to charter-rate volatility, as a large portion of its vessels is on short-term charter. Depressed container and small gas carrier markets have had a particularly strong negative effect on MC Shipping over the past few years. Charter rates have improved this year, but from a very low level. MC Shipping is highly leveraged, and net debt to capitalisation was 71% at the end of 1999, up from about 40% at the end of 1997. Furthermore, market value for the company's fleet is expected to be significantly lower than book value. At the end of 1999, about US$8 million of the company's total cash balance of US$13 million was restricted, in accordance with covenants related to the company's bank debt. Profitability measures have been poor over the past few years, mainly because of weak market conditions. Earnings before interest, taxes, depreciation, and amortization net interest coverage was weak at about 2 times in the year ended Dec. 31, 1999. Profitability measures are expected to remain weak in 2000. NORTH FACE: Announces Short Extension of Credit Facility -------------------------------------------------------- The North Face, Inc. (Nasdaq: TNFI) today announced that the Company's bank line facility, which expired on March 31, 2000 was extended to April 15, 2000. However, the Company's difficulties in meeting its loan agreement covenants and financing needs, its losses from operations and its negative working capital position raise substantial doubt about its ability to continue as a going concern. The Company has filed a notification with the SEC that it intends to file its 1999 Form 10K by April 14, 2000. In addition, the Company indicated that, while it had been exploring, and was continuing to explore, various strategic alternatives for the Company, there could be no assurance that any of the alternatives being considered would be consummated. The Company indicated that any alternative currently under consideration would result in payment to shareholders materially less than the current market price of the Company's common stock. The Company also indicated, that if it is unable to extend the maturity of its bank credit agreement and if the Company fails to consummate any of the strategic alternatives under consideration, the Company would be required to consider seeking protection under Chapter 11 of the Bankruptcy Code. The North Face, Inc. designs and distributes technically sophisticated outerwear, snowsports apparel, functional sportswear, tents, sleeping bags, backpacks, daypacks, accessories and rugged footwear under The North Face(R) name. Through its subsidiary, La Sportiva USA, the Company distributes rock climbing shoes, mountaineering boots and other rugged footwear under the La Sportiva name. The Company sells its products to select specialty retailers throughout the United States, Europe and Canada. NORTH FACE: Stock Falls After Possible Bankruptcy Announcement -------------------------------------------------------------- The North Face Inc.'s stock fell $2.47, or 67 percent, ending at $1.22 on the NASDAQ Stock Market on Thursday after the company announced that it may be forced to seek bankruptcy protection, and that its financial condition raises "substantial doubt about its ability to continue as a going concern." (ABI 07-Apr-00) ORBIT INTERNATIONAL: Reports Financial Results For 1999 ------------------------------------------------------- Orbit International Corp. conducts its operations through its Orbit Instrument Division and its subsidiary, Behlman Electronics, Inc. Through its Orbit Instrument Division, which includes its wholly-owned subsidiary, Orbit Instrument of California, Inc., the company is engaged in the design, manufacture and sale of customized electronic components and subsystems. Behlman Electronics, Inc. is engaged in the design and manufacture of distortion free commercial power units, power conversion devices and electronic devices for measurement and display. Consolidated net sales for the year ended December 31, 1999 decreased to $12,220,000 from $16,351,000 for the prior year due to decreased sales from both the Electronics Segment and the Power Units Segment. For the year ended December 31, 1999, the company recorded a net loss of $1,375,000 compared to net income of $1,881,000 for the year ended December 31, 1998. ORBITAL SCIENCES: To Delay Filing Financial Report -------------------------------------------------- Orbital Sciences Corporation will delay the filing of its financial report with the Securities & Exchange Commission because the company's current and previous auditors have not yet agreed whether certain costs related to the company's two principal space launch vehicles, Pegasus and Taurus, that were capitalized in 1995, 1996 and 1997, instead should have been expensed as incurred. The company is working with both audit firms to resolve the matter promptly. The company expects to file the 1999 annual report on or before April 14, 2000. PENNCORP FINANCIAL GROUP: Accepts Recapitalization Proposal ----------------------------------------------------------- On February 7, 2000, PennCorp Financial Group Inc. filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code with the United States Bankruptcy Court for the District of Delaware in order to complete the sale of its remaining principal insurance subsidiaries, Southwestern Life Insurance Company and Security Life & Trust Insurance Company to Reassure America Life Insurance Company. On March 23, 2000, the company accepted a recapitalization proposal made by a group of its preferred stockholders as a "higher and better offer." On March 24, 2000, the Bankruptcy Court approved the recapitalization as a "higher and better offer." The company is attempting to consummate the recapitalization as promptly as possible. According to the company the pending bankruptcy has posed an undue hardship on its limited resources. PennCorp shares resources with its subsidiary service company and utilizes a small group of accounting and financial employees. These employees must focus their attention on addressing the daily requirements of the company's Chapter 11 debtor-in-possession proceeding, the preparation of financial statements as required by applicable insurance regulators, responding to requests from insurance regulators that are currently conducting a target examination, preparing materials related to the recapitalization, responding to requests from its major creditor groups, and working on the monthly reports to be filed with the Bankruptcy Court. These activities have strained the already limited resources of the company. Additionally, the recent approval by the bankruptcy court of the recapitalization as the higher and better offer will require the company to re-examine the proper disclosures to be included in its annual report in order to reflect the recapitalization proposal. As a result, it is unable to prepare such report on a timely basis without unreasonable effort and expense. SCOOP INC: Elects New Directors; Appoints New Accountants --------------------------------------------------------- Scoop, Inc. (OTC Bulletin Board: SCPI), announced the election of its new Board of Directors in line with the acquisition of a majority interest in Scoop by InfiniCom AB (publ), Sweden, pursuant to Scoop's Chapter 11 plan of reorganization. Biographies of the new directors of Scoop follow below. Larsake Sandin, Director, Chairman - With approximately twenty- five (25) years of experience in the information technology field as founder, director and manager of several companies in Sweden, the United Kingdom and the United States, Mr. Sandin is currently the founding director and a business consultant with Acom CMC Ltd. in London. Additionally he is the founder of The Server Group in Scandinavia, Stockholm, the Chairman of the Board of 24IT AS, Norway, and InfiniCom AB, Sweden, the majority shareholder of Scoop, Inc. Lennart Orkan, Director - Approximately twenty-six (26) years experience in business and banking. Currently, Mr. Orkan is the President and CEO of Strator B.D.N. International AB, a company based in Sweden which provides consulting services to public and private companies on mergers and acquisitions, recapitalization, and other forms of corporate reorganization. The Strator Group has subsidiary companies and affiliates in North America and in a number of European countries. Mr. Orkan is also the founder and the majority owner of the company. Akbar Seddigh, Director - Approximately twenty-five (25) years experience in the business field. Currently, Mr. Seddigh is the Chairman of the Board and President of Ortivus US, Inc.; the Chairman of the Board of ELEKTA AB, Cascade Computing AB, Neoventa AB and Samba Sensor AB; and Board Member of Nordbanken, Taby, Affarsstrategerna AB, Artimplant AB, and Minidoc AB in addition to other responsibilities. As at Friday, March 31, 2000, Scoop Inc. appointed Stonefield Josephson, Inc. as its independent accountants. The appointment of SJI fills the vacancy created by the resignation of Deloitte & Touche LLP in April 1999 due to the pending Chapter 11 proceedings. Following confirmation and execution of its Chapter 11 plan of reorganization, such reorganization being fully consummated in December 1999, Scoop was not able to complete and file its annual report on Form 10-K in a timely fashion. Scoop is, however, making every effort, and believes that it will be in position, to file its annual report on or before April 14, 2000. Scoop Inc., via its wholly owned subsidiary 24STORE.com Limited is one of Europe's earliest established dot-coms. Headquartered in the United Kingdom and with existing on and off-line operations in the UK and Scandinavia 24STORE.com provides an array of leading technology and associated products to both businesses and consumers throughout Europe. SCOOP INC: Delays Filing Financial Report ----------------------------------------- On July 31, 1998, Scoop Inc. filed a voluntary petition commencing a case under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Central District of California. In accordance with the company's Second Amended Plan of Reorganization dated July 23,1999, confirmed by the Bankruptcy Court on September 30, 1999, InfiniCom AB, a company organized and existing under the laws of the Kingdom of Sweden, acquired from Scoop Inc. such number of newly issued shares of common stock of the company which, in the aggregate, represented approximately 91% of the issued and outstanding common stock on a fully diluted basis, in exchange for which InfiniCom conveyed to Scoop 100% of the issued and outstanding ordinary shares of 10 pence each of 24STORE.com Limited, a company incorporated under the laws of England and Wales. The transactions were fully consummated as of December 7, 1999 and resulted in a complete recapitalization and reorganization of Scoop Inc., the assets of the company prior to the confirmation of the Plan having been liquidated and distributed to creditors of the company in accordance with the terms of the Plan. The consequences resulting from the transaction, in the opinion of the company's management, significantly impact information to be disclosed in various sections of the company's annual report. The company has not been able to complete the preparation and assimilation of information that it believes would be required to be disclosed in its annual report without the expenditure of unreasonable effort and expense, due principally to the organizational consequences of the transaction and the subsequent resignation of the sole remaining director of the company and election of a new board of directors of the company. Accordingly, Scoop Inc. will delay the filing of its report. SERVICE MERCHANDISE: Taps Grubb as Real Estate Consultant --------------------------------------------------------- In connection with the anticipated capitalization on their well- located real estate assets as part of their 2000 Business Plan, and pursuant to 11 U.S.C. Sec. 327(a) and Fed. R. Bankr. P. 2014(a) and 5002, the Debtors sought and obtained authority to employ and retain Service Real Estate Venture as Consultant, and Grubb & Ellis Company to provide service through its affiliate Grubb & Ellis/Centennial (GEC) for the Conultant's utilization. The Debtors tell the Court that they need the Consultant to assist in the implementation of certain strategic real estate initiatives, including the subleasing, or other form of real estate transaction of the unutilized portion of the Debtors' stores after refurbishment. Such implementation will necessitate the use of a local broker process, they say, and hence the assistance of Grubb & Ellis Company through its affiliate GEC, and the management service of the Consultant for such process. The Debtors explain that each of their 221 locations are scheduled to receive some form of capital improvements, including the installation of Internet kiosks and the reduction of store selling space in the near term. Seventy to eighty stores are scheduled for total refurbishment, including an expansion of the jewelry selling area, during the next six months while the other stores will undergo a more limited capital improvement remodel during 2000. The Debtors indicate they will evaluate the long- term use, and possible replacement, of the remaining 50 to 60 stores as part of their five-year strategic business plan under development in connection with the Company's emergence from the chapter 11 proceedings. The Debtors anticipate that one half of each refurbished store will become available for subleasing or other form of real estate Transaction, and they require the advice and assistance of qualified real estate advisors and brokers to identify and negotiate real estate deals with retailers having similar demographic profiles and the ability to drive additional traffic into the Service Merchandise stores. The Debtors believe that the proposed Consultant, a joint venture consisting of Keen Realty Consultants Inc. and Dean & Associates, can effectively provide the real estate advisory and brokerage services required. Keen, the Debtors say, is a real estate consulting firm with a specialized expertise in assisting retailers to restructure their real estate and lease portfolios. In addition to significant qualifications, the consulting firm has experience in providing advisory services to retailers such as Kmart and Meyers Bros. Department Store, and specifically, in providing retailers and other companies in bankruptcy. The Debtors note that Keen has experience in representing retailers and/or their creditors in appraising, selling and/or renegotiating over 140,000,000 square feet of retail space. D&A's partners, including Floyd Dean, the founder of D&A, and James Elrod, were previously employed by the Debtors and have significant experience with the Debtors' real estate holdings, the Debtors affirm. Keen and D&A are also two of the principals of The Keen Venture which was retained by the Debtors as special real estate consultant pursuant to the 1999 Retention Order. Grubb& Ellis Company, the Debtors say, is one of the nation's leading real estate brokerages, property management and corporate services firm. It serves over 90 markets throughout the country with over 4,400 professional and staff members nationwide, providing retailers with national tenant representation services, property disposition services, and strategic financial services, including net leasing, sale-leasebacks, and mortgage financings, the Debtors put forward to Judge Paine. Grubb & Ellis, that is GEC and Grubb & Ellis Company collectively, also has significant qualifications and experience in providing real estate brokerage services to retailers and other companies in bankruptcy, the Debtors remark, adding that they have provided service to dozens of national retailers, including Target, OfficeMax and Barnes & Noble. The Debtors desire to have the Consultant provide services as below: (A) With regard to Real Estate Consulting, to: (1) act as the Debtors' exclusive agent for the purpose of subleasing the unutilized portion of the assigned properties; (2) review all pertinent documents for each of the assigned Property; (3) organize the lease information for each Property in a manner that clearly displays the store and lease economics, establish negotiating goals and parameters to present to the Debtors for approval; (4) implement a subleasing marketing program for the Properties, within four days of approval by the Debtors, and as directed by the Debtors; (5) communicate with potential tenants, brokers, landlords, etc. and using diligent efforts to locate additional parties who may have an interest in a sublease or lease of the Properties; (6) respond and provide information to negotiate with, and solicit offers from, prospective subleasees or leassees and make recommendations to the Debtors accordingly; (7) work with the Debtors' management and their counsel in connection with the preparation of documents and the implementation of the proposed transactions; (8) work with the landlords, in conjunction with the Debtors and their counsel, to obtain consents and approvals in connection with any lease or sublease of a Property; (9) prepare abstracts and/or summaries of the leases and subleases for the Properties and any other documents reasonably requested by the Debtors; and (10) attend and participate in all hearings of the Bankruptcy Court and Creditors' Committee meetings when requested by the Debtors. (B) With regard to the use of local brokers, to: (1) advise the Debtors of its recommendation that local brokers are needed for particular properties; (2) provide the Debtors with a list of recommended local brokers; (3) estimate market rate broker fees in each area; and (4) retain local brokers for particular properties as directed by the Debtors but in no event to retain a local broker without the Debtors' consent. To manage the local broker process, the Debtors desire to utilize the services of Grubb & Ellis specifically to: (1) work with the Consultant as the primary contact for Grubb & Ellis with respect to the sublease of properties; (2) provide the best qualified local brokerage services in any geographic area which the Consultant or the Debtors direct; (3) supervise local broker activity, including showing or marketing properties; (4) provide local brokers within 15 days after properties have been assigned to the local brokers; (5) provide a complete marketing package for property assigned to a local broker; (6) provide an analysis of rental rates for comparable properties, and (7) provide an action plan for media marketing. Under the proposal, and as is customary between the two companies, GEC will act as the primary contact on behalf of Grubb & Ellis Company in connection with the matters concerned, but the full resources of Grubb & Ellis Company will be available to GEC, the Consultant and the Debtors. The Debtors tell the Court that the Advisors, that is, the Consultant and Grubb & Ellis, have been selected from among several real estate advisors, from whom the Debtors have sought proposals. The Debtors clarify that the engagement of Keen and D&A as participants in the Keen Venture under the 1999 Retention Order is completely separate and distinct from the proposed engagement under the 2000 Retention Program. The Debtors further assure the Court that any particular interest in the Debtors' real estate will only be subject to one of these engagements. The Debtors affirm that Keen, D&A and GEC do not have any connection with the Debtors, their creditors, their attorneys or accountants, or an investment banker for a security of the Debtors, or any other party in interest, and do not hold or represent an interest adverse to the estate. Subject to the Court's approval, the Debtors agree to pay the Consultant: (a) a Consulting Fee of $450,000.00 payable in equal monthly instalments of $150,000.00 on March 1, 2000, April 1, 2000 and May 1, 2000; (b) a Broker Fee ranging from 2.375% to 3.25% of five times the average annual negotiated rent with respect to a sublease, with the actual amount in accordance to the promptness in entering a sublease and how close the rental rate is to the valuation by the Debtors real estate advisors D.G. Hart & Associates, payable upon the approval by the Bankruptcy Court of the applicable lease or sublease and against which the Consultant Fee will be credited dollar for dollar. (Under the Agreement presented for the Court's approval, the Consultant will also be entitled to a Broker Fee in connection with any bulk sale to an entity introduced to the Debtors by the Consultant.) (c) a Termination Fee in the event the Debtors terminate the Agreement before the end of May, 2000, equal to the amount of all Consultant Expenses to the date of the termination, plus $150,000.00 (d) reimbursement of reasonable expenses. The Debtors also agree to pay the customary commissions, fees and expenses associated with local brokers with respect to particular properties, for services that the Debtors consider as necessary. Under the Agreement, GEC will be compensated for its services through its share of the commissions earned by and through local brokerage offices and will be reimbursed of costs and expenses. In addition, the Agreement provides for GEC's receipt from the Consultant 5% of the total compensation paid to the Consultant by the Debtors pursuant to the Consulting Agreement. While the Debtors see the compensation package as fair and reasonable, they say the ultimate amount of brokerage fees payable is difficult to predict, but reasonable estimates are $4 million for the total compensation payable to the Consultant and another $4 million to pay to local brokers, inclusive of the portion of the local brokerage fees payable to GEC. (Service Merchandise Bankruptcy News Issue 22; Bankruptcy Creditors' Service Inc.) SUN HEALTHCARE GROUP: Needs More Time To File Financial Reports --------------------------------------------------------------- Sun Healthcare Group, Inc. has advised that it requires additional time to file its financial reports with the Securities & Exchange Commission as a result of additional work required to be done due to the Chapter 11 bankruptcy proceedings pending against Sun and its U.S. operating subsidiaries in the U. S. Bankruptcy Court for the District of Delaware. The company will report a net loss for the year. WASTE MANAGEMENT: Denies Sale Agreement With SITA ------------------------------------------------- Waste Management Inc. (NYSE:WMI) stated that contrary to a statement released yesterday by SembCorp Industries Ltd., neither Waste Management nor its subsidiaries have entered into an agreement for the sale of Pacific Waste Management to SITA. Negotiations for the sale are ongoing at this time. WELLCARE MANAGEMENT GROUP: Change in Independent Auditors --------------------------------------------------------- As previously disclosed The WellCare Management Group, Inc. had a change in its independent auditors. Due to this change, the necessary audited financial report has not been completed, which has prevented the company from filing its financial statements with the SEC within the prescribed time period. WESTERN DIGITAL: Offers 1,715,827 Shares Of Stock To Investor ------------------------------------------------------------- Western Digital Corporation is offering 1,715,827 shares of its common stock to an institutional investor. The common stock will be purchased at a negotiated purchase price of $5.828093 per share. This price reflects the average of recent trading prices of the company's common stock on the New York Stock Exchange, net of a 4.25% discount. Western Digital will not pay any commissions or other compensation in connection with the sale. The net proceeds to the company from this offering will be $10,000,000. Western Digital says it plans to use the net proceeds for general corporate purposes, including working capital. Pending use of the net proceeds for any of these purposes, the company may invest in short-term investment grade instruments, interest- bearing bank accounts, certificates of deposit, money market securities, U.S. government securities or mortgage-backed securities guaranteed by federal agencies. For more information and details of the offering access http://www.sec.gov/cgi-bin/srch-edgar?0001095811-00-000803on the Internet, free of charge. ********* 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 * * *