/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000607.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, June 7, 2000, Vol. 4, No. 111 Headlines ALTERNATE ENERGY: To Halt Operations; File Bankruptcy AMERICAN ARCHITECTURAL: Moody's Downgrades Sr. Notes To Caa1 AURORA INDUSTRIAL: Case Summary and 6 Largest Unsecured Creditors AUTOINFO: Announces Rescheduled Disclosure Statement Hearing Date CHICAGO ORNAMENTAL: Case Summary and 20 Largest Creditors EINSTEIN/NOAH: Reports Quarterly Loss GOTHIC ENERGY: Announces Deal with Discount Bond Holders HARVARD INDUSTRIES: Considering Breed Technologies Acquisition HOMECHEF: Files for Chapter 11 KITTY HAWK: Alleged Violations of WARN Act LEVITZ: T. Rowe Price & Carl Marks File Suit MARINER: Motion To Sell Land Owned By GCI-Bella MBA POULTRY: Omaha firm buys assets of MBA Poultry PARACELSUS: Commencement of Trading on OTC Bulletin Board PATHMARK: To Seek Bankruptcy Protection PENNCORP FINANCIAL: Plan of Reorganization Confirmed PENN TRAFFIC: Reports First Quarter Loss PHILIP SERVICES: Reports Fresh Start Balance Sheet POWERWORX ONLINE: Case Summary and 20 Largest Unsecured Creditors SAFETY KLEEN: Bond Values Down SERVICE MERCHANDISE: Seeks New Bar Date For Exec. Security Plan SINGER: Third Extension to Remove Actions SPECIALTY RETAILERS: Moody's Lowers Senior Implied Rating To Ca STONE & WEBSTER: Case Summary and 20 Largest Unsecured Creditors TOWER AIR: Wings Set To Fly Again ZERMATT CBO LIMITED: Moody's Downgrades Three Tranches ********* ALTERNATE ENERGY: To Halt Operations; File Bankruptcy ----------------------------------------------------- According to an article in The Augusta (Ga.) Chronicle On June 3, 2000, the new managers of Augusta-based Alternate Energy Resources announced they temporarily will halt operations and seek bankruptcy protection in an attempt to restore profitability. The company laid off 60 employees Friday, about 95 percent of its work force, said John Clain, chief executive officer of St. James Asset Management Inc., the Atlanta-based investment group that purchased a majority of the company's stock from co-owner John Metts in late March. The layoffs and the plan to file Chapter 11 next week will establish a 60-day ''cooling off'' period allowing the financially troubled company to pay off more than $ 500,000 in debt to private vendors and about $ 23,000 to the city's utility department. Clain said they plan to pay 100 percent of the dollars they owe. Employees laid off Friday were given two weeks' severance pay. Mr. Clain said the workers would be offered re-employment after 60 days. St. James Asset Management paid $ 2.8 million for its equity stake in the company. Co-owner Jim Evans, who bought into the company six years ago, still has ownership of the business. Mr. Clain said an estimated $ 1 million in capital improvements will be made at the Walden Drive facility during the downtime. The new equipment will allow the company to take on a wider variety of toxic substances. Alternate Energy, one of four permitted solvent recyclers in Georgia, was formed in 1975 to handle waste oil. It became a hazardous waste facility in 1983. The company has been financially crippled for most of the past decade because of more than $ 1 million in state environmental fines and cleanups stemming from groundwater contamination cases in the 1980s when the company was under different ownership. Alternate Energy discharges its waste into the city sewage system after filtering out the hazardous materials. The company's overdue utilities account went as high as $ 161,000 last summer. Alternate Energy's solid wastes are shipped to other plants or buried in landfills. Some of the material is blended into combustible fuel mixtures used by cement factories. Mr. Clain, whose firm invests in undervalued companies, said he intends to place Alternate Energy and several other regional recyclers into a publicly traded holding company within 36 months. He said his firm is negotiating the purchase of a waste facility in Alabama. AMERICAN ARCHITECTURAL: Moody's Downgrades Sr. Notes To Caa1 ------------------------------------------------------------ Moody's Investors Service downgraded the ratings of American Architectural Products's ("AAPC") $125 million senior unsecured notes due 2007 to Ca from Caa1. Moody's has also downgraded AAPC's issuer rating to Ca from Caa2 and lowered its senior implied rating to Caa3 from B3. Moody's rating outlook for the company is changed to negative from stable. The ratings reflect the announcement that AAPC elected to enter into the 30-day grace period as provided for in the Indenture for its $125 million of 11.75% Senior Notes due 2007 ("Senior Notes") and to defer the payment of $7.3 million of interest on the Senior Notes otherwise payable on June 1, 2000. AAPC has also entered into a waiver agreement with the lender for the Company's $25 million Credit Facility, which provides for a limited waiver of compliance with certain financial covenants and the effect of the decision to defer the interest payment on the Senior Notes. AAPC hired Banc of America Securities LLC as its financial advisor to consider options relating to refinancing, raising new capital, restructuring existing funded debt obligations and potential sales of non-core assets. During the month of June, the Company anticipates it will have borrowing availability of $5-7 million, which it indicates is in the general range of its projected working capital financing requirements for the remainder of fiscal year 2000 and, in the opinion of management, is sufficient to properly operate the business. The company has not filed a financial statement since 3rd Quarter ending September 30, 1999, and with limited disclosure, precludes Moody's from accessing the financial performance of the company along with the quality of its assets. AAPC is a manufacturer and distributor of a broadly diversified line of windows, doors and related products designed to meet a variety of consumer demands in both the new construction and repair/remodel markets, primarily for residential uses. AURORA INDUSTRIAL: Case Summary and 6 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Aurora Industrial Park, LLC 875 Aurora Avenue, Suite 200 Aurora, IL 60505 Petition Date: June 2, 2000 Chapter 11 Court: N. District of Illinois Bankruptcy Case No.: 00-16520 Judge: John H. Squires Debtor's Counsel: Charles J. Myler Myler Ruddy & McTavish 111 W Downer Pl, Suite 400 Aurora, IL 60506 Tel:(630) 897-8475 Total Assets: $ 4,293,537 Total Debts: $ 3,548,697 6 Largest Unsecured Creditors Larsen Management Group 220 Alyworth Ave., #200 South Haven, MI 49090 Mr. Steven Goforth Tel:(616) 637-6307 $ 346,000 R. Betker & Associates $ 137,000 Rocks, Pitts & Poust $ 23,000 Direct Design $ 13,000 CB Richard Ellis $ 11,518 William E. Hanna Surveyors $ 2,575 AUTOINFO: Announces Rescheduled Disclosure Statement Hearing Date ----------------------------------------------------------------- AutoInfo Inc. (OTCBB:AUTO) announced that the hearing schedule to be held before the Honorable Adlai S. Hardin Jr., United States Bankruptcy Judge, in Room 520 of the United States Bankruptcy Court, 300 Quarropas Street, White Plains, N.Y. 10601, on June 7, 2000 has been rescheduled for 10:30 a.m. on June 27, 2000. William Wunderlich, president and chief financial officer of AutoInfo, stated, "the hearing date has been rescheduled to allow us additional time to file our amended disclosure statement and plan of reorganization. We believe that this additional time will ultimately expedite the acceptance of the disclosure statement which will lead to the timely confirmation of our reorganization plan. We continue with our efforts to proceed toward the consummation of a transaction in our continuing efforts to restore shareholder value." CHICAGO ORNAMENTAL: Case Summary and 20 Largest Creditors --------------------------------------------------------- Debtor: Chicago Ornamental Iron Co. An Illinois Corporation 3131 Soffel Melrose Park, IL 60160 Petition Date: June 2, 2000 Chapter 11 Court: N. District of Illinois Bankruptcy Case No.: 00-16404 Judge: John H. Squires Debtor's Counsel: David K. Welch Dannen, Crane, Heyman & Simon Suite 1540 135 S. LaSalle St Chicago, IL 60603 Tel:(302) 641-6777 Total Assets: $ 1 million above Total Debts: $ 1 million above 20 Largest Unsecured Creditors Area Erectors, Inc. $ 192,980 Walko & Associates $ 186,975 Ironworkers Local No. 63 $ 138,987 Western Architectural Iron Co. $ 101,016 White Brothers Trucking Co. $ 79,284 Aarow, S.P. Associates, LLC $ 65,109 Assurance Agency, Ltd. $ 62,352 Danny's Construction Co. Inc. $ 54,000 Liberty Mutual Ins. (Install) $ 44,673 Bend Tec, Inc. $ 39,500 Urban Real Estate Research $ 25,394 Alert Construction Company $ 25,234 Roy S. Transfer $ 23,503 Liberty Mutual W/C $ 22,661 Raven Electric $ 21,611 Westmont Engineering Company $ 19,000 Sam Smith Trust $ 16,793 Chicago Tube & Iron Co. $ 15,940 Construction Specialties, Inc. $ 15,845 M&R Machine Tool Co. $ 15,710 EINSTEIN/NOAH: Reports Quarterly Loss ------------------------------------- According to the Denver Post on May 31, Einstein/Noah Bagel Corp. reports a net loss of $ 9.3 million, or 28 cents a share for the quarter that on ended April 16. The company compared to this quarter had a net loss of $ 5.7 million, or 17 cents per share, for the same period a year ago. Einstein/Noah's reported revenues for this quarter has climbed 4.8% from $ 112.4 million last year to a $ 118.3 million for the same quarter. GOTHIC ENERGY: Announces Deal with Discount Bond Holders -------------------------------------------------------- Gothic Energy Corporation (OTC Bulletin Board: GOTH) announced that it had reached agreement with the holders of approximately 90% principal amount of its outstanding 14-1/8% Senior Secured Discount Notes to convert those notes into shares of common stock of the Company. The agreement is part of a plan to restructure the Company's balance sheet which includes, among other things, the surrender by Chesapeake Energy Corporation of its holdings of the Company's outstanding Series B Preferred Stock and approximately 2.4 million shares of Common Stock in exchange for assignments of various undeveloped leaseholds and for substantial revisions to a participation agreement between the Company and Chesapeake as previously announced. The conversion of the notes and the other restructurings of the Company's balance sheet are intended, pursuant to the agreement, to be effected through a pre-negotiated Plan of Reorganization under Chapter 11 of the Federal Bankruptcy Code. As contemplated by the agreement, the Plan of Reorganization will provide that the holders of all outstanding Discount Notes will be converted into Common Stock and will receive approximately 94% of the Company's equity. Under the Plan, the Company's current common stockholders will receive approximately 6% of the Company's equity. It is contemplated that the Plan of Reorganization will only apply to the parent company and not to its operating subsidiary, Gothic Production Corporation. It is expected that the Company's operating subsidiary will meet all its secured debt obligations, trade credit and other obligations in the ordinary course of its business and that there will be no disruption of its operations. It is anticipated that the proceedings under the Bankruptcy Code will be filed within 30 to 60 days and, subject to court approval, consummated by the end of the third calendar quarter of 2000. Prior to commencing the proceeding, Gothic Production intends to seek certain waivers and consents from its senior secured lenders. The Plan of Reorganization will also provide for offerings of additional shares of Common Stock to the holders of the Discount Notes and the current holders of the Company's Common Stock to participate in the sale of up to $15.0 million of additional shares of Common Stock. The offerings of Common Stock will be made pro-rata to the holders of the Discount Notes and current holders of Common Stock, with $12.75 million offered to the holders of Discount Notes and $2.25 million offered to the holders of Common Stock. If fully subscribed by the holders of the Discount Notes and Common Stock, the post-confirmation ownership of Gothic by the current holders of the Common Stock will represent approximately 9% of the Company's outstanding equity. The foregoing does not constitute an offer of any securities for sale. Such securities have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. The agreement also contemplates that after confirmation the Company's Board of Directors will consist of seven members, five of whom will be designated by the former holders of the Discount Notes, one will be designated by the existing Board members and one will be designated by management. The executive officers of the Company will remain unchanged. Mike Paulk, President and Chief Executive Officer of the Company commented, "Over the past year we, together with our financial advisors, CIBC World Markets, have examined many alternatives for restructuring and re- capitalizing Gothic. We have also been approached by a number of companies interested in discussing a possible purchase of Gothic during that time. In each of these instances, the impediments to raising new capital and to discussing a sale of the company where we could maximize the value of our asset base, centered on the uncertainties relating to our existing capital structure, including specifically the Discount Notes and the Series B Preferred Stock. This restructuring, including the $15.0 million of additional capital intended to be raised, and puts the Company in a position to actively develop its asset base. Eliminating the 14-1/8% interest obligation on the Discount Notes and the 12% pay-in-kind dividend on the Series B Preferred Stock will improve substantially our balance sheet position and operating results." Gothic Energy Corporation is an oil and gas acquisition, exploitation, development and production company headquartered in Tulsa, Oklahoma. Additional information may be obtained by contacting Michael Paulk or Steven Ensz at the corporate headquarters, Two Warren Place, 6120 South Yale Avenue, Suite 1200, Tulsa, Oklahoma, 74136, telephone number 918/749-5666. HARVARD INDUSTRIES: Considering Breed Technologies Acquisition -------------------------------------------------------------- The Wall Street Journal reports on June 6, 2000 that Harvard Industries Inc. is considering an acquisition of Breed Technologies Inc., which is currently under Chapter 11 bankruptcy-court protection, a court filing indicates. Officials at Harvard, a Lebanon, N.J., auto-equipment maker which itself emerged from Chapter 11 protection in 1998, couldn't be reached to comment. Breed's filing in U.S. Bankruptcy Court in Wilmington, Del., indicated that there are two offers on the table for Breed, a Lakeland, Fla., provider of automotive-safety restraints, but also said the company is considering a "stand alone" plan of reorganization. Breed filed for Chapter 11 protection in September. HOMECHEF: Files for Chapter 11 ------------------------------ The Sacramento Bee reports on May 31, 2000 that HomeChef, a Bay Area chain of kitchenware and cooking lesson centers has filed for bankruptcy protection under Chapter 11 on May 22 in the Santa Rosa Division of U.S. Bankruptcy Court for the Northern District. Apparently a key investor decided to stop funding HomeChef, forcing the bankruptcy. The Corte Madera-based retailer is not traded publicly and relies deeply on private investors for its financing. KITTY HAWK: Alleged Violations of WARN Act ------------------------------------------ According to the News-Sentinel on May 31, lawyers for Local 747 of the International Brotherhood of Teamsters filed a brief in bankruptcy court on May 10 alleging Kitty Hawk Inc. violated the WARN Act. The act serves as a safety net in case a certain company went out of business or was forced into mass layoffs. Kitty Hawk violated the WARN Act after it ceased operations on April 30, two days after the company announced the shutdown without prior warning or notice to its 600 employees. LEVITZ: T. Rowe Price & Carl Marks File Suit -------------------------------------------- On April 27, 2000, two of Seaman's shareholders -- T. Rowe Price Recovery Fund, L,P. and Carl Marks Management Co., L.P. -- commenced an action in the Chancery Court for the State of Delaware to enjoin the Seaman's transactions. Rowe and Marks allege they own 42% of the common stock of Seaman. Rowe and Marks further allege that the Seaman-Levitz transactions are intended solely to benefit Resurgence as the majority shareholder of Seaman and entities affiliated with Resurgence. In addition, Rowe and Marks have sued certain Seaman officers, alleging that their selling their Seaman shares to Resurgence violated their fiduciary duties to all shareholders. The Chancery Court has scheduled hearings on these allegations, Levitz has moved the Bankruptcy Court for an order enjoining the Chancery Court action on the ground that the action violates the automatic stay because it is an attempt to interfere with the property of the estate. In addition, Levitz has sought attorneys' fees, damages, and punitive damages. (Levitz Bankruptcy News Issue 45; Bankruptcy Creditors' Services Inc.) MARINER: Motion To Sell Land Owned By GCI-Bella ----------------------------------------------- Mariner Post-Acute Network, Inc. and its debtor affiliates and its indirect wholly owned subsidiary GCI-Bella Vita, Inc. seek the Court's authorization to effect the sale of 5.3 acres of vacant land owned by GCI in Parker, Colorado, free and clear of liens, claims, encumbrances and interests, and exempt from Transfer Taxes. GCI acquired the land for $699,000 in 1996 for the purpose of constructing an assisted living facility. However, for various reasons, the Land was never developed, and currently produces no income or other benefits for the Debtors. In July 1999, GCI engaged real estate broker Frederick Ross Company to market the land and the marketing effort produced an offer by Signature Inc. Pursuant to that, GCI and Signature Inc. entered into a Sale Agreement which provides for Signature to buy the land at $1 million in cash, subject to: (1) A price reduction of $150,000 to Signature for closing the transaction before obtaining certain approvals for the development of the Land. (2) A credit of up to $20,000 to Signature for closing the sale before obtaining clear title to a small strip of property within the Land known as "Ballpark Lane." It follows that if Signature elects to close notwithstanding the Ballpark Lane title issue, and prior to obtaining the development approvals, the Debtors will have net proceeds of: $ 1,000,000 less $ 150,000 less $ 20,000 less $ 50,000 approximately, as the 6% sales commission to Ross ------------ $ 78,000 In accordance with the DIP financing arrangements, 25% of the net proceeds will be for working capital needs, and 75% will be paid to the Debtors' prepetition senior secured lenders as adequate protection. With respect to the Site Development Approval, the Sale Agreement provides that if Signature does not obtain such approvals by July 24, 2000, it may terminate the Sale Agreement or close earlier, by June 15, 2000, in exchange for a $150,000 purchase price reduction. The Debtors believe that Signature will elect to waive the Site Development Approval condition and thus close by June 15, 2000. With respect to the Ballpark Lane title issue, the Sale Agreement provides that Signature will have 60 days from the date it receives a copy of the Court's Sale Order to perfect title to Ballpark Lane. If Signature is not able to obtain clear title within that period, it has the option of terminating the Sale Agreement or closing the sale. If Signature elects to close the sale notwithstanding the title problem, or if it is able to cure the title problem, it is entitled to a credit against the purchase price of up to $20,000 for its costs incurred in obtaining clear title. In their business judgment, the Debtors believe that even at the reduced purchase price, the sale to Signature is in the best interest of the Debtors' estates. The Debtors further represent that Signature is a "good faith" purchaser of the Land within the meaning of Bankruptcy Code section 363(m), that the negotiations have been conducted at arms length, and that adequate notice of the sale is being provided pursuant to the Notice Procedures Order. The Debtors also assert that the proposed sale satisfies the requirements for a sale free and clear of liens, claims, encumbrances and interests under Bankruptcy Code section 363(f) and for exemption from Transfer Taxes pursuant to Bankruptcy Code section 1146(c).(Mariner Bankruptcy News Issue 6; Bankruptcy Creditors' Services Inc.) MBA POULTRY: Omaha firm buys assets of MBA Poultry -------------------------------------------------- An Omaha firm managed by a former Inacom Corp. executive bought the assets of a financially strapped poultry producer in U.S. Bankruptcy Court. Bird Watchers, managed by former Inacom Corp. chairman Bill Fairfield, purchased the assets of MBA Poultry of Tecumseh on Monday for $4.8 million. MBA attorney Bill Biggs said the sale has given the company "life and vitality." It also should mean consumers could see the company's Smart Chicken label in the stores "in very short order," he said. The plant, which employs nearly 300 people, abruptly closed in January after equipment problems forced MBA to file for Chapter 11 bankruptcy protection from creditors. MBA promised to reopen, but has been restructuring its financing plan since filing for Chapter 11. MBA suffered months of dismal financial reports after it started producing its air-cooled "Smart Chicken" products in a refurbished factory in 1998. The company blamed faulty conveyor belts for curtailing production and setting back sales. The "Smart Chicken" production uses an air-chilling process rather than the traditional method of dumping birds into a large tank of ice and water. Researchers felt everything within that bath potentially could get on all the birds and increase the risk of contamination. Both MBA President Mark Haskins and Fairfield declined comment Monday. Bird Watchers offered the only bid of $2.3 million on MBA's equipment and the only combined bid on both the equipment and the plant's real estate. The Small Business Administration was the only other bidder on the real estate, offering $ 1.5 million. That was the amount it had lent to MBA, Biggs said. The SBA is on a list of four secured creditors who can expect to be repaid, in part or in full, with proceeds from the auction, Biggs said. Heading the debt list, as required by law, are MBA's real-estate property taxes. Also on it are delinquent utility bills owed to the city of Tecumseh and loans from the American National Bank and the Money Store, both of Omaha. A co-founder of Inacom Corp, Fairfield stepped down as president and CEO last October. Inacom Corp., a former Fortune 500 company, moved its headquarters from Omaha to an Atlanta suburb earlier this year. PARACELSUS: Commencement of Trading on OTC Bulletin Board --------------------------------------------------------- Paracelsus Healthcare Corporation (OTC Bulletin Board: PLHC) was informed on June 5, 2000 that the Company's common stock will be traded on the NASD OTC Bulletin Board Service. The ticker symbol for the stock is "PLHC." Paracelsus Healthcare Corporation was founded in 1981 and is headquartered in Houston, Texas. Including a hospital partnership, Paracelsus presently owns the stock of hospital corporations that own or operate 10 hospitals in seven states with a total of 1,287 beds. Additional Company information may be accessed through http://www.prnewswire.com under the Company's name. PATHMARK: To Seek Bankruptcy Protection --------------------------------------- Pathmark Stores Inc. said last Friday that it is preparing to seek bankruptcy protection. The company is struggling with $ 960 million in bond debt hopes to revitalize New Jersey's No. 2 grocery chain. The Carteret-based subsidiary of Supermarkets General Holding Corp. said it has reached agreement with a committee of its bondholders to swap their claims for shares in a reorganized Pathmark. Pathmark 's debts are a result of a 1987 leveraged buyout by a group led by Merrill Lynch & Co. Last month, the company missed making a $33.3 million interest payment to holders of $665 million in company bonds. "Given the strong support we've gotten from the bondholders group, we believe a majority of bondholders will support this plan," said Harvey Gutman, Pathmark's senior vice president. (Compiled from Associated Press and Bloomberg News reports.) PENNCORP FINANCIAL: Plan of Reorganization Confirmed ---------------------------------------------------- PennCorp Financial Group, Inc. announced on June 5, 2000 that the Delaware Bankruptcy Court has confirmed its Plan of Reorganization, clearing the way for consummation of the Plan and completion of a recapitalization transaction chosen by the Company's Board of Directors in March 2000. The Company expects consummation of the Plan and closing of the recapitalization transaction to occur on or before June 19, 2000. Confirmation of the Plan came at the conclusion of a hearing which assured that all reorganization requirements had been met under the Bankruptcy Code, which included acceptance by the requisite majority of preferred shareholders. The Company received votes in favor of the Plan from holders of approximately 90 percent of its two outstanding series of preferred stock, which satisfied voting requirements for confirmation. Under the terms of the Plan and the recapitalization agreement: -- Preferred stockholders will receive one share of common stock of the reorganized company for each share of outstanding preferred stock. The rights offering was fully underwritten by Inverness/Phoenix Capital, LLC and Vicuna Advisors, LLC. -- All existing shares of the Company's common stock will be cancelled for no value. -- The Company's existing senior and subordinated debt, with principal estimated to aggregate approximately $175 million at confirmation, will be paid in full in cash. -- Any and all other claims and liabilities of the Company will be paid in accordance with their terms. Consummation of the recapitalization transaction remains subject to the consummation of a $95 million credit facility with ING Barings in New York. PennCorp Financial Group, Inc. is an insurance holding company. Through its subsidiaries, the Company underwrites and markets life insurance and accident and sickness insurance throughout the United States. The Company filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on February 7, 2000. PENN TRAFFIC: Reports First Quarter Loss ---------------------------------------- Penn Traffic Co. officials told The Associated Press that they overlooked their first quarterly loss of $ 26.7 million, or $ 1.33 per share that ended April 29. And since the emergence of Penn Traffic from bankruptcy reorganization last June, it has now lost nearly an amount of $ 87 million. But, aside from the reported net loss there are still other signs that the regional grocery chain is recovering its financial status. PHILIP SERVICES: Reports Fresh Start Balance Sheet -------------------------------------------------- Philip Services Corporation (TSE: PSC, NASDAQ:PSCD) announced its audited fresh start balance sheet as at March 31, 2000. The unaudited financial results of Philip Services Corp., the predecessor company, for the 1999 year-end and the first quarter ended March 31, 2000 are also included. All currency figures are stated in U.S. dollars. Results have been presented according to U.S. generally accepted accounting principles. "With our financial reorganization behind us, we have removed the uncertainty that hampered our performance and business growth over the past year," said Anthony Fernandes, President and CEO. "Our employees have demonstrated outstanding dedication and commitment during this difficult time, and the response of our clients has been very encouraging. We are very pleased with the improvement indicated by our first quarter performance. "With renewed financial stability, it is our objective to realize the potential of our company and build a foundation for profitable growth. We are integrating our services to our clients and moving forward as one company. We have also embarked on a significant undertaking to establish common business processes that will allow for the widespread sharing of best practices and information across our company. With the underlying strength of our people and the breadth of our service capabilities and client base, I am both confident and enthusiastic about our future." POWERWORX ONLINE: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Powerworx Online, Inc. A Nevada Corporation 5775 Flatiron Pky #205 Boulder, CO 80301 Type of Business: Internet services. Petition Date: May 30, 2000 Chapter 11 Court: District of Nevada Bankruptcy Case No.: 00-13979 Judge: Linda B. Riegle Debtor's Counsel: Susan G. Boswell 1 S Church St #1700 Tucson, AZ 85701 Total Assets: $ 1,000,000 Total Debts: $ 8,356,272 20 Largest Unsecured Creditors Deep Marble, Inc. PO Box 365 Promissory Louisville, CO 80027 Note $ 1,000,000 Don Bunch 305 Terminal Drive Promissory Morristown, TN 37814 Note $ 750,000 David Wild 1010 St Ives Ct. Promissory Morristown, TN 37814 Note $ 750,000 Tim Wild 1985 Crocket Ridge Road Promissory Morristown, TN 37814 Note $ 750,000 Uunet Technologies, Inc. Accounts Receivable Dept. 1945 Old Gallows Rd Vienna, VA 22182 Trade (703) 203-5600 Payable $ 737,573 Ernst and Young, LLP Bank of America-LA 98594 Los Angeles, CA 90074-8594 Trade (720) 931-4000 Payable $ 351,032 Alston & Bird, LLP PO Drawer 34009 Charlotte, NC 28234 Trade (704) 555-1212 Payable $ 336,578 Martin Clark 3040 Sugarwood Dr. Promissory Kodak, TN 37764 Note $ 250,000 George McGuffin 2103 N. Economy Rd. Promissory Morristown, TN 37814 Note $ 250,000 MCI World Com Trade Payable $ 162,000 Sprint Paranet Trade Payable $ 108,535 David J. Reuben Promissory Note $ 78,000 Jack E. Campell Promissory Note $ 75,000 Ronnie Ailey Promissory Note $ 75,000 R.R. Donnelley, Inc. Trade Payable $ 73,226 Center Partners, LLC Trade Payable $ 67,362 Agilent Technologies Trade Payable $ 54,204 Jeffrey P. Wood Promissory Note $ 52,000 Craig & Teresa Wild Promissory Note $ 50,000 Jerry Issacs Promissory Note $ 50,000 SAFETY KLEEN: Bond Values Down ------------------------------ The Mergers and Acquisitions Report published an article on June 05, 2000 stating that ever since Safety-Kleen Corp.'s auditors withdrew its financial statements for the last three years, its bond values have "entered death territory." On May 15, the industrial waste management company announced it would not make its $10.4 million in interest payments on its 9.25% senior unsecured notes due 2009. According to the article, sources say the bonds have been recently quoted from 4 to 12 cents on the dollar, and at least one analyst thinks when the dust settles, that price might be 4 to 12 cents too high. The company has two bond issues of $325 million each, which were trading just below par in early January. The 30-day grace period expires on June 15. The company on June 1 deferred an interest payment on an additional issue. Columbia, S.C.-based Safety-Kleen provides industrial waste services in the U.S. and Canada. Its stock was trading at $0.69 at press time and has been under $1 the entire month of May. Following the March 6 announcement that PricewaterhouseCoopers would withdraw its auditing approval of the financial statements, Safety-Kleen saw its CEO, CFO and COO resign. A board committee led by four independent directors is investigating the accounting irregularities with the aid of PricewaterhouseCoopers. It has indefinitely delayed the reports on those results. During March, several shareholders filed class action securities fraud suits, and the company said in an SEC filing it is anticipating more. The banking syndicate is led by Toronto Dominion Inc., from whom Safety-Kleen obtained an extra $20 million in March. Jay Alix & Associates has also been retained by the company for restructuring consultation. There is much speculation as to whether the company will file for Chapter 11 bankruptcy protection. SERVICE MERCHANDISE: Seeks New Bar Date For Exec. Security Plan --------------------------------------------------------------- The Debtors sought and obtained Court approval for the extension of the deadline for filing proofs of claim in connection with the Debtors' Executive Security Plan until 30 days following the earlier of: (a) the completion of the negotiations between the Debtors and the ESP Committee, and (b) the termination of the ESP Committee's function and duties under prior orders of the Court. As the negotiations and discussions between the Debtors and the ESP Committee are still going on, the Debtors believe it is prudent to seek a temporary extension of the deadline for the filing of claims in connection with the ESP in order to avoid premature filing in this regard when there is still uncertainty over the ultimate treatment of the ESP. The Debtors say they hope that with more time for negotiations, the ESP Committee and the Debtors will resolve or narrow the issues that would be presented in such proofs of claim. (Service Merchandise Bankruptcy News Issue 12; Bankruptcy Creditors' Services Inc.) SINGER: Third Extension to Remove Actions ----------------------------------------- The Singer Company NV and certain of its affiliates seek a court order permitting an extension of the time period within which the debtors may remove pending proceedings until the later of September 30, 2000 or 30 days after the entry of an order terminating the automatic stay with respect to any particular action sought to be removed. The debtors are parties to judicial and administrative proceedings involving a wide variety of claims. The debtors are beginning the process of reviewing and reconciling proofs of claim. They have received over 1,00 claims that total in excess of $6.8 billion. In connection with the debtors' process of reviewing and reconciling claims, the debtors intend to make a final decision as to which Actions they desire to remove. Thus the debtors require additional time to determine which, if any, of th actions should be removed and, if appropriate, transferred to this district6. The debtors believe that an extension to September 30, 2000 will provide sufficient time for them to complete this analysis, consistent with the timetable for emergence from Chapter 11 and the claims reconciliation process. The debtors submit that the relief requested is in the best interests of their estates and creditors. SPECIALTY RETAILERS: Moody's Lowers Senior Implied Rating To Ca --------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Specialty Retailers Inc., ("Stage") the primary operating subsidiary of Stage Stores, Inc. Both companies filed for protection under Chapter 11 of the U.S. bankruptcy code. The following ratings were affected by this action: Senior implied rating to Ca from Caa1; $35 million senior secured revolving credit facility to B3 from B2; $200 million senior secured revolving credit facilities to Ca from Caa2; Senior unsecured issuer rating to Ca; $200 million senior guaranteed notes to Ca from Caa3; $100 million senior subordinated notes to C from Ca. The revised ratings reflect the weakness of Stage's financial condition and business prospects at the time of the bankruptcy filing. The downgrade of the $35 million secured credit facility, which closed on March 6th, reflects Moody's expectation that lenders are likely to be fully repaid. The company has announced that it is arranging for a $450 million DIP facility. Moody's believes that a substantial portion of that facility, if approved, will be used to finance credit card receivables currently financed under an off-balance sheet vehicle. Stage Stores and its subsidiary, Specialty Retailers Inc., operates more than 600 stores in 33 states under the names Stage, Bealls, and Palais Royale. STONE & WEBSTER: Case Summary and 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Stone & Webster, Inc. 245 Summer Street Boston, MA 02210 Type of Business: Principally engaged in providing professional engineering, construction, and consulting services. Certain of the Debtors also own and operate fourteen cold storage warehousing facilities primarily in the Southeastern United States. Petition Date: June 2, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-02142 Debtor's Counsel: Gregg M. Galardi Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square, PO Box 636 Wilmington, DE 19899-0636 Tel:(302) 651-3000 Total Assets: $ 917,251,000 Total Debts: $ 604,461,000 20 Largest Unsecured Creditors Power Piping Co. Inc. 4 Allegheny Center Suite 401 Pittsburgh, PA 15212 Steven Janaszck Trade debt $ 8,832,751 Sturgeion Electric 12150 East 112th Ave Henderson, CO 80640 Trade debt $ 6,400,000 Daelim Yoido PO Box 1117 Seoul, Korea Mr. Hak II Lee Trade debt $ 4,813,639 Forster Wheeler Limited PO Box 71448 Chicago, IL 60694-1448 Trade debt $ 2,668,531 Merrell & Garaguaso, Inc. 157 Locke Avenue Swedesboro, NJ 08085 $ 1,806,093 Freitag-Weinhardt, Inc. PO Box 5177 5900 No. 13th Street Terre Haute, IN 47805-5177 Trade debt $ 1,753,805 O'Connor Constructors, Inc. 45 Industrial Drive Canton, MA 2021 Paul Stuart Trade debt $ 1,483,510 Hyundai Heavy Industries, Inc. 1 Chonha - Dong 682-792 Ulsan, Korea Mr. H.C. Moon Trade debt $ 1,468,168 Alstom Elektrik Endustrial Baris Mah. E-5 Alti, 1801 Sk. Gebze/Kocaeli no: 104,41410 Trade debt $ 1,365,000 Miller Eads 4125 N. Keystone Ave. Indianapolis, IN 46205 Trade debt $ 1,347,205 Panalpina, Inc. PO Box 60614 - AMF Houston, TX 77205 Trade debt $ 1,064,176 ABB PO Box 500 2000 Day Hill Road Windsor, CT 06095-0500 Edward Henry Trade debt $ 1,048,905 Schelling America, Inc. PO Box 80367 Raleigh, NC 27673 Trade debt $ 1,033,480 State Board of Equalization PO Box 942879 Sacramento, CA 94279-8015 Trade debt $ 1,029,917 Brush Transformers PO Box 20 Lounghborough - Leicester Trade debt $ 917,993 Powell Electrical Manufacturing Co. PO Box 843823 Dallas, TX 75284-3823 Trade debt $ 895,261 Babcock-Borsig Aktiengesellsschaft Egellsstrabe 21 Trade debt $ 889,082 Hohl Industrial Services, Inc. 95 Stark Street Tonawanda, NY 14150-1290 Trade debt $ 883,529 G.E. International 7250 McGinnis Ferry Road Suwanse, GA 30024 Dennis McNulty Trade debt $ 817,920 Institut Francals Du Petrole 1 ET 4 Avenue De Bois - Preu Rueil-Malmaison France 92852 Trade debt $ 801,525 TOWER AIR: Wings Set To Fly Again ---------------------------------- According to an article in The Daily News(NY) on May 31, troubled Tower Air which filed for bankruptcy in February, is planning to have back its New York service to Trinidad and Tobago with charter flights beginning this June 17. Tower Air also is in discussion to add New York-to-Tel Aviv charter service. The company's immediate goal is to come out of bankruptcy and with all this charter build-up it is giving Tower Air the necessary nudge onwards to its recovery. ZERMATT CBO LIMITED: Moody's Downgrades Three Tranches ---------------------------------------------=-------- Moody's Investors Service announced that it has downgraded all three rated tranches issued by Zermatt CBO Limited. The downgrades -- from Aa3 to A1 for the Class A Notes, from Baa3 to Ba1 for the Class B Notes and from B1 to Caa3 for the Class C Notes -- reflect the deterioration in the credit quality and par value of the collateral pool. As a result of the decline in credit quality and loss of par, the initial ratings assigned to the tranches are no longer consistent with the credit risk posed to investors. Rating Action: Downgrade The ratings of the following tranches has been downgraded: Issuer: Zermatt CBO Limited Tranche Descriptions: $215.25 M Class A Senior Secured Floating Rate Notes Due 2010; From Aa3 to A1 $51 M Class B Senior Secured Fixed Rate Notes Due 2013; From Baa3 to Ba1 $9.75 Class C Senior Subordinated Fixed Rate Notes Due 2013; From B1 to Caa3 ********* 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 * * *