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/raid1/www/Hosts/bankrupt/TCR_Public/000703.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, July 3, 2000, Vol. 4, No. 129 Headlines AMERISERVE: Exploring Strategic Alternatives AMERISERVE: Files Motion to Sell Equipment Division APPLE ORTHODONTIX: Seeks Extension of Exclusivity BAAN: Says Risk Bankruptcy if Bid Fails CASMYN CORP: To Immediately Issue Common Stock CELLO RECORDINGS: Files for Chapter 11 CHOICE ONE: Moody's Assigns Ratings For The First Time CLARK MATERIAL: $45 Million Dip Financing Approved by Court DEVLIEG BULLARD: KPS Completes Acquisition DOW CORNING: Judge Rules Against Government DYNAMATIC CORP: Colmen Capital Advisors Named Financial Advisors FIRSTPLUS FINANCIAL: Taps Verner, Liipfert as Special Counsel FRANKEL'S HOME FURNISHINGS: Dismissal of Case FRUIT OF THE LOOM: Seeks To Pay CEO $1 Million Emergence Bonus FULCRUM DIRECT: Seeks To Extend Period To Remove Actions HARNISCHFEGER: Third Motion For Extension of Exclusivity INTEGRATED HEALTH: Motion To Reject Management Agreement KEVCO INC.: Moody's Lowers Debt Ratings LEVITZ: Seeks To Extend Exclusivity MAURICE: Going Out of Business Sales Commence MONET GROUP: Change in Date and Location of Auction Sale PURINA MILLS: Emerges From Chapter 11; To Trade on NASDAQ SANDS CASINO: Attorneys Deliver Closing Arguments SMITH CORONA: Sells 49% Of New Stock To Pubco TELEGEN CORP: Plan of Reorganization is Confirmed TELEGROUP: Representative Retains Counsel THREE D DEPARTMENTS: Hearing on Case Dismissal VENCOR INC: Court Approves Amendment To DIP Financing ********* AMERISERVE: Exploring Strategic Alternatives -------------------------------------------- As has been previously announced, AmeriServe Food Distribution, Inc. is exploring a number of strategic alternatives including the potential sale of substantially all the company's assets. Other options previously discussed by management are to continue as a stand-alone company or to take on a strategic partner. AmeriServe has entered into preliminary discussions with several parties, including McLane Company, Inc. concerning these strategies. No specific agreements have been reached with any party, and the U.S. Bankruptcy Court must approve any change in the company's status. AmeriServe will continue to work closely with its customers and employees during this period with the goal of continuing to improve operating efficiencies and customer service. AmeriServe, headquartered in Addison, Texas, a suburb of Dallas, is the one of the nation's largest distributors specializing in chain restaurants, serving leading quick service systems such as KFC, Long John Silver's, Pizza Hut and Taco Bell. AMERISERVE: Files Motion to Sell Equipment Division --------------------------------------------------- AmeriServe Food Distribution, Inc. filed a motion on June 27, 2000, with the U.S. Bankruptcy Court in Wilmington, Delaware, to sell its Equipment Division. The sale of the division will be contingent upon the satisfaction of a minimum sale price. All interested parties will be invited to submit bids against that minimum. It is expected that, upon the court's approval, an auction and sale hearing will be set for late July, with a closing to follow promptly thereafter. AmeriServe, headquartered in Addison, Texas, a suburb of Dallas, is one of the nation's largest distributors specializing in chain restaurants, serving leading quick service systems such as KFC, Long John Silver's, Pizza Hut and Taco Bell. APPLE ORTHODONTIX: Seeks Extension of Exclusivity ------------------------------------------------- The debtor, Apple Orthodontix, Inc. seeks a court order extending the exclusive periods during which the debtor may file reorganization plan(s) and solicit acceptances of such plan(s). The debtor believes that it will need at least an additional 60 days, through and including September 23, 2000 to propose a plan and through and including November 22, 2000 to solicit acceptances to such a plan. The debtor states that the size and complexity of this case alone justify such an extension. Over the next few weeks the debtor will continue to negotiate with its Affiliated Practices and will work with Orthodontic Centers of America, Inc. to close the contemplated transactions with as many Affiliated Practices as possible. After the close of the contemplated transaction with Orthodontic Centers of America Inc. the debtor will have a much better gauge of how many Affiliated practices will remain, and will at that time be in a better position to prepare a reorganization plan. BAAN: Says Risk Bankruptcy if Bid Fails --------------------------------------- Dutch software group Baan may file for bankruptcy if a takeover bid by Britain's Invensys fails, according to a Reuters report. Baan CEO Pierre Everaert said bankruptcy was the worst-case scenario if the offer did not succeed. Everaert confirmed that bankruptcy was the last of the four possible options for Baan, would the Invensys bid fail. If the bid fails, auditors PriceWaterhouseCoopers are "likely to issue a negative `going concern' opinion in 1999 audited accounts" to be filed by July 15. The Amsterdam company has a debt of $100 million. (ABI 30- Jun-00) CASMYN CORP: To Immediately Issue Common Stock ----------------------------------------------- Aries Ventures Inc., a Nevada corporation, the successor to Casmyn Corp., a Colorado corporation (OTC: ARVT), announced that on June 1, 2000, the United States Bankruptcy Court entered an Order Authorizing Non-Material Modification of Debtor's Second Amended Chapter 11 Plan of Reorganization. The Debtor's Second Amended Chapter 11 Plan of Reorganization was confirmed by the United States Bankruptcy Court on March 31, 2000, and became effective on April 11, 2000. The Order authorizes the Company to immediately issue and distribute to its shareholders all or a majority of the common stock of the Company's wholly-owned subsidiary that owns all of the Company's mining investments and properties, thus bypassing the issuance of the "New Goldco Warrants" originally provided for in the Plan. During May 2000, the name of the Company's subsidiary incorporated in the state of Nevada that owns all of the Company's mining investments and properties was changed from Goldco Ltd. to Resource Ventures, Inc. As a result of the foregoing, the Company's Board of Directors has authorized the spin-off of all of the shares of common stock of Resource Ventures, Inc. effective July 1, 2000, to the Company's shareholders of record on April 11, 2000 entitled to exchange their old securities for new securities pursuant to the Plan. Resource Ventures, Inc. has been assigned the OTC ticker symbol "RVTR". Shareholders entitled to exchange their old securities for new securities pursuant to the Plan now will receive one share of common stock and one common stock purchase warrant (hereinafter designated as the "Series A" warrants) in Aries Ventures Inc. (OTC: ARVT) and in Resource Ventures, Inc. (OTC: RVTR), respectively. Effective July 1, 2000, Aries Ventures Inc. and Resource Ventures, Inc. will operate as separate public companies and their securities will trade separately. In order to receive the cash or the new securities to be issued pursuant to the Plan, all shareholders are required to turn in certificates evidencing ownership of the Company's old common stock and old preferred stock to the Company's transfer agent for cancellation, as well as to comply with certain other conditions specified in the Plan. The Company's transfer agent will effect the share exchange pursuant to the terms of the Plan. Shareholders who hold their shares directly should send their share certificates to the Company's transfer agent, American Securities Transfer & Trust, Inc., 12039 West Alameda Parkway, Suite Z-2, Lakewood, Colorado 80228 (telephone 303-984-4127; fax 303-984-4110), to receive their new securities or the cash payment. Shareholders who hold their shares through brokerage accounts should contact their brokers to send their shares to the Company's transfer agent to be exchanged into the new securities or for the cash payment. Only shareholders of record on April 11, 2000 will be entitled to receive the new securities or the cash payment. Any certificates for old securities that are not presented to the transfer agent by the close of business on April 10, 2001, one year after the effective date, will be automatically cancelled without any further notice or action by the Company. On April 11, 2000, the Company effected a 1-for-500 reverse split of its 243,578,142 shares of common stock outstanding and a conversion of each of the Company's 523,784 shares of preferred stock outstanding and related claims thereunder into 5.27 shares of the Company's common stock. Shareholders of record owning less than 50,000 shares of common stock on April 11, 2000 will only receive a cash payment of $1.00 per share after adjusting for the 1-for-500 reverse stock split and are not entitled to the new securities being distributed pursuant to the Plan. All of the foregoing actions are being taken pursuant to the Plan. CELLO RECORDINGS: Files for Chapter 11 -------------------------------------- According to an article in the Washington Post on June 30, 2000, the year after he took UUNet public in one of the most profitable initial public offerings ever, Richard L. Adams Jr. splurged and had a state-of-the-art custom entertainment system designed and installed in his home. He apparently liked the system so much he decided to build a nationwide network of design centers aimed at helping affluent homeowners blend "entertainment excellence and aesthetic perfection." But now Adams is dismantling the network of design centers, and last week he filed for Chapter 11 bankruptcy protection for a related company, Cello Recordings LLC. Of the nine design stores previously assembled under the name Cello Technologies Corp., at least four had been sold back to previous owners, while several others had been closed or were in the process of going out of business, employees and store owners said yesterday. A third Cello unit that built audio equipment also has ceased operations, company employees said. Officials at Cello's Falls Church headquarters did not respond to calls seeking comment yesterday, and Adams did not return telephone messages. According to the bankruptcy filing, Cello Recordings claimed assets worth between $ 500,000 and $ 1 million and debts between $ 1 million and $ 10 million. Cello Technologies, which designed and installed ultra-high-end home electronics systems ranging in price from $ 15,000 to $ 500,000, promoted itself on its now-defunct Web site as "a leading provider of home entertainment and integration technology products and services" catering to the rich and famous. The Web site also told the story of how Adams became involved in the enterprise. Cello boasted on the Web site that its clientele included more than 30 members of the Forbes 400 list of wealthy individuals, at least five major studio executives, 20 major movie and recording celebrities and at least five of the nation's "major technology CEOs." In 1999 the company said it invested more than $ 1.5 million on technology research and development. The business model for Cello that called for creating glitzy, high-concept showrooms in affluent communities was doomed to failure, according to some employees. The type of labor-intensive technical design work Cello was doing is a high-overhead business that doesn't fit well with the national "chain store" approach, they said. It also was hard to find people with the skills to design and install the sophisticated equipment. "There were all sorts of problems with the Cello [organization] . . . but the flawed business model was the first step," said one Cello salesman who asked not to be identified. "It was an exercise in hubris all around--the whole concept." Adams, who founded UUNet in 1987 and turned the company into one of the first commercial Internet service providers, received stock worth about $ 300 million in 1995 after the company went public and was sold. John Sidgemore, former chief executive of UUNet and now vice chairman ofWorldCom Inc., sits on the Cello Technologies board of directors, according to the company Web site. Sidgemore was traveling and could not be reached for comment yesterday, a WorldCom spokesman said. CHOICE ONE: Moody's Assigns Ratings For The First Time ---------------------------------------------------- Moody's Investors Service has assigned a B3 rating to Choice One Communications Inc.'s $350 million senior secured credit facility. Moody's has also assigned a senior implied rating of B3 to Choice One Communications Inc., and a senior unsecured issuer rating of Caa2. The outlook is stable. This is the first time Moody's has assigned a rating to Choice One. The ratings reflect the risks common to an early-stage company, with positive cash flow generation still several years away, a small but rapidly growing customer base and significant market expansion; and the challenges associated with integrating the US Xchange properties. The ratings also recognize the significant amount of junior capital contributed (and committed) to date; a seasoned management team; and some early signs of operational success in the company's most mature markets. The credit facility is comprised of three tranches including a $100 million eight-year reducing revolver, a $100 million eight- year delayed draw term loan and a $150 million eight and one-half year term "B" loan. The borrowers under the credit facility include all direct and indirect subsidiaries of Choice One Communications Inc. (parent holding company) on a joint and several basis. The credit facility is supported by a pledge of essentially all of the assets as well as guarantees from those subsidiaries and pledge of stock from the parent holding company. The B3 rating on the credit facility is somewhat constrained by the early stage of the company's development. As the company's operations continue to mature, the value of its assets will become more assured, although Moody's believes the collateral coverage of the bank obligations to be adequate. Finally, the credit facility will be structurally senior to the company's $180 million senior unsecured bridge facility, which will be an obligation of the holding company above the borrowers under the bank facility. Choice One signed a definitive agreement on May 15, 2000 to acquire US Xchange, a privately-held CLEC, with operations in second and third tier markets in the Midwest. The purchase price for US Xchange will be financed with the proceeds from the term "B" loan and the proposed $200 million preferred stock investment as well as seven million shares of Choice One common stock. The acquisition will accelerate the company's expansion into new markets and provide it with a platform to launch its voice and data services. Although we believe the rationale for the acquisition is sound, we also recognize the risks inherent in integrating the two companies and the challenges associated with managing a much larger entity. Choice One Communications provides competitive voice and data services in second and third tier markets in the northeast and now the midwest with the acquisition of US Xchange. Choice One began commercial service in its first market in February 1999, while US Xchange began operations approximately a year earlier. Although the company is still at a relatively early stage of development, Moody's recognizes Choice One's early success in selling and provisioning access lines in its most mature markets. The combined entity currently operates in 21 markets and served approximately 93,000 access lines (73% on-switch) at the end of the first quarter of 2000, installing roughly 20,000 access lines during the period. From this base of 21 markets, the company plans to expand into another 8 markets within the next 12 months. A significant component of the company's strategy is to provide bundled voice and high-speed data services to small and medium- sized business customers. The company is utilizing DSL technology to provide the high-speed data access. DSL technology provides existing services at a much cheaper cost. Those that deploy DSL early, such as Choice One, should benefit by attracting customers with lower prices, however, we expect the advantage to dissipate over time as competitors, including the incumbent telephone companies, match the DSL cost basis. Choice One has employed a "smart-build" network strategy in its markets, which entails minimizing the up-front capital expenditures and tying network investment more directly to operational success. This strategy should enhance a company's return-on-asset measures, but not necessarily its cash flow. Choice One currently owns its switches but leases almost all of its transport. While Choice One has established itself with a smart-build strategy, Moody's expects the company will make further investments in network elements over time. For instance, as part of the US Xchange transaction, the company gains an IRU for 8 strands of inter- and intra-city fiber in the US Xchange markets. Further, Choice One has recently signed a 20-year master facilities agreement to acquire transport in its original Choice One markets. The company has recently demonstrated its access to the capital markets. Choice One raised $164 million in an initial public offering in February 2000. Most recently, the company received commitments from Morgan Stanley Dean Witter for a $200 million preferred stock investment and a $180 million senior unsecured bridge facility. Moody's notes the preferred stock investment is non-convertible and will begin to pay cash dividends beginning in year six. Pro forma for the US Xchange acquisition, Choice One will have approximately $50 million in cash and access to $200 million in undrawn bank facilities. Moody's expects the company will seek to replace its $180 million bridge commitment, however the company is under no obligation to utilize it, and Moody's believes the company can support its capital expenditures and operating losses over the next twelve months without accessing the bridge facility. Although we believe the company's current business plan is fully funded, we anticipate the company will find further growth opportunities and has already begun to evaluate other markets within its region. Going forward, Moody's will monitor management's ability to effectively integrate the US Xchange operations, as well as to successfully sell, provision, and support the expected growth in access lines. As the company matures and demonstrates success in selling its bundled voice and data services to end users, Moody's will reassess the appropriateness of these ratings. Choice One Communications Inc. is headquartered in Rochester, New York. CLARK MATERIAL: $45 Million Dip Financing Approved by Court ----------------------------------------------------------- CLARK Material Handling Company announced on June 29, 2000 that under a Final Order approved by the Court, CLARK will proceed with its plans to cease manufacturing operations in Lexington and transition these operations to Company facilities in Germany, Korea and Alabama. Furthermore, a portion of the $45 million permanent financing will carry a lower interest rate than the interim facility it replaces, and also includes separate financing accommodations to CLARK's Blue Giant subsidiary. Dr. Martin M. Dorio, Jr., Chairman and Chief Executive Officer stated, "We are pleased to take this important step in the reorganization process for CLARK Material Handling Company. We now will be implementing the manufacturing initiatives we have designed to most cost effectively produce value-added CLARK products for our dealers and customers, and have the permanent financing necessary for CLARK to fulfill the market's needs and move forward competitively. CLARK is positioned to meet its post Chapter 11 filing obligations to suppliers and provide dealers with the quality products and services they require." DEVLIEG BULLARD: KPS Completes Acquisition ------------------------------------------ KPS Special Situations Fund, L.P. announced on June 29, 2000 that it has completed the acquisition of DeVlieg-Bullard, Inc., a nationwide provider of machine parts and rebuilds for the machine tool industry. KPS purchased the assets and operations of DeVlieg out of bankruptcy for approximately $18.5 million in cash plus DeVlieg notes with a face value of $ 12.75 million. KPS provided a $10 million equity investment to fund a portion of the purchase price and arranged for LaSalle Business Credit, New York Region, to extend a $24 million credit facility to fund the remainder of the purchase price and provide the Company with approximately $9 million of new liquidity. DeVlieg, headquartered in Rockford, Illinois, operates three business segments: (1) a service parts unit that distributes OEM machine parts and tools and provides field services for name brands of manufacturing equipment including DeVlieg, Bullard, National Acme, and New Britain, (2) a rebuild division that rebuilds and retrofits machines, and (3) a manufacturing division that produces preset machines, boring tools and CNC tool holders under such brand names as Cushman, Universal Engineering and Microbore. The Company employs approximately 260 people in five facilities located across the nation and generated approximately $80 million in annual revenues before filing for bankruptcy in July 1999. KPS has retained Mr. Alan Konieczka and Mr. James Lally to serve as the CEO and CFO, respectively, of the Company. Messrs. Konieczka and Lally joined DeVlieg in November 1999 and have been instrumental in restructuring DeVlieg's operations and restoring the Company to profitability. Mr. Konieczka said, "We are extremely excited to complete the KPS investment transaction. DeVlieg has a strong core business and a tremendously loyal customer base in the machine tool industry. The financing provided by KPS and LaSalle provides us with the financial resources necessary to recapture our place as the premier provider of OEM parts, tools and rebuilds to our large customer base. KPS worked with our senior management team to develop a turn-around plan critical to the strategic direction of our Company and brings a truly unique relationship with organized labor. We cannot imagine reorganizing this business and returning the Company to sustained profitability without the value provided by the KPS team." The KPS transaction also includes a unique new collective bargaining agreement with Local 1131 of the United Automobile Workers of America (UAW) that will allow DeVlieg to grow its Tooling Systems Division substantially over the next two years. "KPS has taken a positive and professional approach to the contract negotiations that were required to complete this change of ownership," said George Andros, director of UAW Region 1D, which includes more than 80,000 active and retired union members in western Michigan. "They have shown a great deal of respect for the role that UAW members play in creating a quality product, and that's a very good sign for the future of the business." "This is a good day for workers at the Tooling Systems Division of DeVlieg-Bullard," said Ken Chaltraw, president of UAW Local 1131, representing active and retired workers at the Frankenmuth, Michigan plant. "We've established a good relationship with the new owners of our company, and we're going to work hard together to rebuild our business and create job security for our members." KPS Special Situations Fund L.P., founded in 1998 by Eugene Keilin, David Shapiro and Michael Psaros, is a New York City based private equity fund that invests in restructurings, turnarounds and other special situations, often in cooperation with employee groups. "We are proud and pleased to be associated with such great American machine tools and parts as DeVlieg, Bullard, National Acme, and New Britain and tooling products such as Cushman, Universal and Microbore," said Brian Riley of KPS. "Putting the OEM rebuilder and supplier of these machine parts and tools back on strong financial footing should be good news for the many owners of these machines." The principals of the KPS Fund have restructured dozens of companies in basic manufacturing and service industries. In addition to DeVlieg, KPS currently owns a controlling interest in Blue Ridge Paper Products, Inc., a leading manufacturer of envelope grade paper and coated board used in liquid packaging and Blue Heron Paper Company, a West Coast manufacturer of newsprint and related paper products. KPS has also entered into an agreement to purchase a controlling interest in United Road Services, Inc. (OTC: BB URSI), a national provider of automobile transportation and towing services. DOW CORNING: Judge Rules Against Government ------------------------------------------- U.S. Bankruptcy Judge Arthur Spector has ruled that Dow Corning Corp. doesn't have to pay $92 million to the U.S. government for federally paid medical expenses linked to silicone breast implants the company once made. Judge Spector said that the government "has utterly failed to produce evidence that would establish an essential element of its claim that one of (Dow Corning's) products was involved in the medical care for which it seeks recovery." Dow Corning filed chapter 11 in May 1995 after it was hit with about 19,000 lawsuits from women who alleged the company's silicone gel breast implants caused illnesses. DYNAMATIC CORP: Colmen Capital Advisors Named Financial Advisors ---------------------------------------------------------------- By order entered on June 20, 2000, the debtor, Dynamatic Corporation is authorized to retain Colmen Capital Advisors, Inc. as financial advisor. FIRSTPLUS FINANCIAL: Taps Verner, Liipfert as Special Counsel ------------------------------------------------------------- The debtor, Firstplus Financial, Inc., seeks authority to employ and retain the firm of Verner, Liipfert, Bernhard, McPherson and Hand, Chartered as special counsel to the FPFI Creditor Trust, effective as of May 11, 2000. The firm will provide the following services: Kahler litigation Objections to certain proofs of claim Finalizing and closing various settlement agreements; Finalizing and closing any transactions and agreements contemplated under the plan; Finalizing and closing the transactions and agreements contemplated under the Countrywide purchase agreement; Regulatory advice and assistance concerning sale of FirstPlus Bank; Tax advice and assistance regarding the debtor, Western Interstate Bancorp, and the Trust, including establishment of a voting trust for stock of FPFI; Litigation concerning certain secured creditor claims; And Other matters concerning the trust, debtor, its subsidiaries, WIB and FPB, as requested. The firm will charge its usual hourly rates that range from $150/hr. for associates to a high of $395 per hour for shareholders. FRANKEL'S HOME FURNISHINGS: Dismissal of Case --------------------------------------------- An order of dismissal was entered on June 26, 2000 by the Honorable Prudence Carter Beatty, US Bankruptcy Court Southern District of New York, in the Chapter 11 case of Frnakel's Home Furnishings, Inc. FRUIT OF THE LOOM: Seeks To Pay CEO $1 Million Emergence Bonus -------------------------------------------------------------- Fruit of the Loom Ltd. is seeking court authority to pay its Chief Executive Dennis S. Bookshester a $1 million bonus if the court confirms a joint plan of reorganization for the company before March 31, 2001, or $800,000 if a plan is confirmed after that date, according to a motion recently obtained by Federal Filings Business News. But in order for Bookshester to receive the bonus, he must be employed as CEO on the day immediately following the plan's effective date or have been replaced other than for cause or because of a voluntary withdrawal. The U.S. Bankruptcy Court in Wilmington, will consider the request at a hearing on July 10. "The purpose of the emergence bonus is to provide a real financial incentive to Mr. Bookshester to induce him to remain with Fruit of the Loom and continue to provide critical management services during Fruit of the Loom's Chapter 11 cases and to provide him with benefits substantially equivalent to other tier I key employees,' according to the motion. FULCRUM DIRECT: Seeks To Extend Period To Remove Actions -------------------------------------------------------- The debtors, Fulcrum Direct Inc., and its affiliates seek a court order enlarging the debtors' time within which to file notices of removal of related proceedings. The debtors seek an extension of approximately 90 additional days to and including September 29, 2000. The debtors have not had a full opportunity to investigate their involvement in Pre-petition actions. Additionally, the deadline for filing proofs of claim was only recently set in these cases. Accordingly the debtors believe that tit is prudent to seek an extension to protect their right to remove those pre- petition actions that are discovered through the debtors' investigation and the claims review process. HARNISCHFEGER: Third Motion For Extension of Exclusivity -------------------------------------------------------- The United States Trustee interposed an objection to the Debtors' request "because the expiration of exclusivity may have a salutary effect on the plan confirmation process." Joseph J. McMahon, Jr., Esq., made this bald assertion without any explanation of how competing plans of reorganization submitted by who-knows-how-many parties-in-interest would streamline the plan confirmation process. To soothe the U.S. Trustee and avoid protracted litigation over whether opening-up the plan process to multiple constituencies would foster or impede confirmation, the Debtors agreed to contract their request. Accordingly, the Debtors' request a further extension of their exclusive period during which to file a plan of reorganization through August 16, 2000, and request that their exclusive period within which to solicit acceptances of that plan be extended through October 16, 2000. James H.M. Sprayregan, Esq., representing the Debtors, advised Judge Walsh that 18,916 claims asserting more than $10 billion in liability have to be dealt with in these chapter 11 proceedings. Clearly, the overwhelming bulk of these claims are disputed. But, until appropriate objections can be filed and the bulk of these claims are disallowed, it is impossible for anyone to propose a feasible plan capable of achieving confirmation. Nobody, Mr. Sprayregan says, could draft a disclosure statement at this time that would pass muster under 11 U.S.C. Sec. 1125 meaningfully describing the anticipated distributions to legitimate creditors. In the absence of any unresolved objection, Judge Walsh ruled that the Debtors' exclusive period during which to file a plan of reorganization is extended through August 16, 2000, and the Debtors' exclusive period within which to solicit acceptances of that plan is extended through October 16, 2000. Although the Debtors will strive to propose a plan by August 16, 2000, Mr. Sprayregan cautioned, the Debtors do not believe it will be possible and the Court should anticipate a fourth request for a further extension. (Harnischfeger Bankruptcy News Issue 24; Bankruptcy Creditors' Services Inc.) INTEGRATED HEALTH: Motion To Reject Management Agreement --------------------------------------------------------- The Debtors seek to reject a management agreement between IHS Acquisition No. 175 and Advisors Healthcare Group, Inc. The agreement was originally between Connecticut Subacute Corporation II (CT-II) and Horizon Healthcare Corporation. Under the Agreement, Horizon was to be engaged as manager of certain facilities leased and operated by CT-II. Subsequently, debtor IHS 175 assumed Horizon's managerial obligations and Advisors Healthcare Group, Inc. became CT-II's successor in interest. The Agreement relates to three facilities in Connecticut: * Clifton House Rehabilitation at New Haven; * Greenery Rehabilitation Center at Waterbury; and * Greenery Extended Care Center at Cheshire. According to the Agreement, the manager is required to manage, supervise, and operate the Facilities, to provide high quality skilled nursing, intermediate and resident care services to patients of the Facilities and to carry out general management functions with respect to the Leased Properties. The fee to be received by the manager is based on a percentage of revenues. The agreement also provides that in the event a facility lacks funds to satisfy expenses, it is the manager's responsibility to loan funds to Advisors. In return, the manager is entitled to receive a promissory note from Advisors in the face amount of such loans. In 1998, 1999 and 2000, the Debtors advanced funds to Advisors to cover operational expense shortfalls, pursuant to IHS 175's role as manager of the Facilities, and several promissory notes that the Debtors received from Advisors are unpaid. The aggregate total of the unpaid amount is in excess of $4,800,000. Each of the Connecticut Facilities operated at a loss for calendar year 1999 and further loss for 2000 is projected: EBTDA-CapEx EBTDA-CapEx Actual 1999 Projected 2000 Clifton House Rehabilitation Center ($2,913,046) ($3,843,390) Greenery Rehabilitation Center ($1,936,450) ($466,498) Greenery Extended Care Center at Cheshire ($2,520,879) ($1,834,718) Although the Debtors are not obligated to bear the financial losses incurred by the Connecticut Facilities, they are required to advance funds which may not be recovered. In the circumstance, the Debtors assert there is ample justification, in their business judgment, to terminate the contractual obligations under the Agreement immediately. The Debtors therefore seek authorization, pursuant to section 365(a) of the Bankruptcy Code, to reject the Contract. The Debtors also propose that the Court establish a deadline of 30 days from the date the motion is granted, for the filing of all claims allegedly arising from such rejection, and any claim that is not timely filed before the deadline be forever barred. (Integrated Health Bankruptcy News Issue 5; Bankruptcy Creditors' Services Inc.) KEVCO INC.: Moody's Lowers Debt Ratings ----------------------------------------- Moody's Investors Service lowered the ratings of Kevco Inc.'s ("Kevco") $105 million 10.375% senior subordinated notes due 2007, to Ca from Caa2 and its issuer rating to Caa2 from Caa1. Moody's confirmed its $135 million secured credit facility at B3. The senior implied rating is downgraded to Caa1 from B3 and the outlook is negative. The rating action is prompted by the company's continued weak financial performance over the past two years which accompanies thin to no interest coverage after Kevco took on a large amount of debt during its December 1997 acquisition of Shelter Components Corp. Kevco continues to face challenges in integrating the Shelter Components acquisition, which includes integrating multiple computer systems into one. The majority of the systems integration should be completed by the end of next quarter however completing the multiple facility configuration in Indiana may take another twelve months. Also prompting the downgrade is the slowdown in the manufactured housing industry that Kevco serves which is not expected to bounce back in 2000. This slowdown has resulted mainly from an industry-wide build-up of retail inventory along with tighter lending availability. In addition, Moody's believes it will be difficult for Kevco to meet its debt obligations over the next year. Moody's expects 2000 operating income to fall short of projected interest and principal payments for 2000. Management expects the shortfall to be offset by planned reductions in working capital. Currently, the $120.5 million credit agreement is comprised of a $45 million revolver due December 2003, a $36.9 million Term loan A due December 2003, and a $38.6 million Term Loan B due December 2004. Availability on the revolver as of March 31, 2000 is $38.7 million. In May 2000, the company entered into its second amendment to the third amended and restated credit agreement, which modified certain conditions with respect to applicable covenants to make them less restrictive. Kevco's total debt as of March 31, 2000 is approximately $205 million on last twelve month sales of $785 million. Its book equity is $18 million and its goodwill is $112 million, on assets of $286 million. Leverage is high, with the ratio of debt to book capitalization at 91.9%. Interest coverage is nonexistent, with last twelve months ending March 31, 2000, EBITDA - CAPEX covering interest a negative 0.2 times. It should be noted that in 1999 CAPEX included a new factory for its DuoForm operation that burned down, as a result CAPEX should not be as high in 2000. Management expects it should be approximately $2.0 to $2.5 million. Kevco's sales dropped 25% for the 1st quarter ended 3/31/00 to $167 million from the comparable period in 1999, primarily caused by the general slowdown in the manufactured housing industry. For the year ended 12/31/99, roughly 86% of the company's net sales were to producers of manufactured homes. The company has undergone a number of initiatives since Wingate's investment in July 1999 such as bringing in more senior management, revamping its risk management area, reductions in headcount, consolidated operations, and reducing inventory to name a few. However all these initiatives come up against a tough environment within the manufactured housing industry that may make it difficult for Kevco to be profitable in 2000. Kevco Inc., headquartered in Fort Worth, Texas, is a leading wholesale distributor and manufacturer of building products to the manufactured housing and recreational vehicle industries. LEVITZ: Seeks To Extend Exclusivity ----------------------------------- Levitz Furniture Incorporated Inc., et al., debtors, filed a motion seeking to extend the exclusive periods during which the debtors may file reorganization plans and solicit acceptance of such plans. A hearing with respect to the motion will be held on July 6, 2000at 3:00 PM. The hearing to consider the adequacy of the disclosure statement is set for July 6, 2000. The debtors' proposed plan, however, is based, to a large extent on the Management Agreement and Shared Services Agreement with Seaman Furniture Co. If the Seaman shareholders are successful in their chancery court action, seeking an injunction against the Management Agreement and Shared Services Agreement, the debtors claim that an extension of the Exclusive Periods is necessary to ensure that the debtors can make any necessary revisions and/or amendments to the proposed plan. The debtors seek extension of the plan proposal and solicitation periods until September 29, 2000 and December 29, 2000 respectively. MAURICE: Going Out of Business Sales Commence --------------------------------------------- On June 30, 2000 Going Out of Business Sales will commence just in time for the 4th of July Weekend at all the Maurice the Pants Man & Poore Simon's stores located in Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Rhode Island and Vermont. Poore Simon's and Maurice the Pants Man is a leading retailer of branded and private brand sportswear and active wear. The stores have basic merchandise for young men and women including pants, shirts, blouses and casual wear. Hilco Trading Co., Inc., was appointed today by the United States Bankruptcy Court for the District of Massachusetts as the agent to dispose of $14 million of inventory. List of Maurice The Pants Man Stores That are Closing Quincy Granite Place 100 Granite Street Quincy MA Worcester 30 Millbury Street Worcester MA Milford Square Plaza 138 South Main Street Milford MA Yankee Spirits Plaza Route 20 Sturbridge MA List of Poore Simon's Stores That are Closing Putnam Shopping Parkade 62C Providence Turnpike Putnam CT Greenfield Plaza Shopping Center 255 Mowhawk Trail Greenfield MA Westford Valley Marketplace 174 Littleton Road Westford MA Searstown Mall Commercial Road Leominster MA Scarlet Brooke Market Place Route 12 (West Boyiston Street) West Boyiston MA Barrington Plaza Stockbridge Road Great Barrington MA River's Edge Plaza 247 Lincoln Avenue Haverhill MA Shaws Plaza Liberty Street, Rt 58 Hanson MA North Adams Center 66 Main Street North Adams MA Maine Coast Mall 225 High Street Ellsworth ME JFK Shopping Center JFK Shopping Center Waterville ME Cooks Corner Shopping Center Cooks Corner Shopping Center Brunswick ME Auburn Plaza Auburn Plaza Auburn ME Aroostook Centre Mall 839 Main Street Presque Isle ME Augusta Plaza Augusta Plaza Augusta ME Shop & Save Plaza 532 Main Street Saco ME Northgate Shopping Center 91 Auburn Street Portland ME Bangor Mall Hogan Rd/Stillwater Avenue Bangor ME Portsmouth/Superstore 72 Mirona Road Portsmouth NH Seacoast Shopping Center 270 Lafayette Road Seabrook NH Claremont 345 Washington Street Claremont NH Upper Valley Plaza Upper Valley Plaza W. Lebanon NH Upper Valley Plaza Upper Valley Plaza W. Lebanon NH Nashua Mall Nashua Mall Nashua NH West Street Shopping Center 423 West Street Keene NH Fort Eddy Plaza Fort Eddy Plaza Concord NH Plaistow 34 Plaistow Road Plaistow NH Belknap Mall Belknap Mall, Route 3 Belmont NH Granite State Market Place Route 3, 1328 Hookset Road Hooksett NH Rochester Marketplace 98 Milton Road Rochester NH Cheshire Market Place Rt. 202 Rindge NH Mountain Valley Plaza Route 16 (Berlin- Gorham Road) Gorham NH Shaws Dover Shopping Center Central Avenue Dover NH East Side Plaza East Side Plaza East Manchester NH Olean Center Mall 400 North Union Street Olean NY Tops Plaza 2348 US Route 19N Warsaw NY Hornell Plaza 1020 State Route 36 Hornell NY Tops Plaza 660 W. Main Street Arcade NY Warren Mall Space C2 Warren PA Wakefield Mall 160 Old Towerhill Road Wakefield RI University Mall University Mall So. Burlington VT Berlin Mall 282 Berlin Mall Road, Berlin/Montep elier VT St. Johnsbury 2002 Memorial Drive St. Johnsbury VT Hannaford Plaza Rte 67A - Northside Drive Bennington VT Highgate Commons Shopping Plaza 241 Swanton Road St. Albans VT Rutland Shopping Center Merchants Row Rutland VT MONET GROUP: Change in Date and Location of Auction Sale -------------------------------------------------------- A request to extend the bid deadline and subsequent auction., along with the requisite deposit, was received by the debtors in accordance with the terms of the Bidding Procedures Order. Therefore, the bid deadline is extended until July 5, 2000 at 4:00 PM. For all parties. The auction of the debtors' assets shall be held at 9:00 AM on July 7, 2000 at the Wyndham Garden Hotel, 700 King Street, Wilmington, Delaware 19801. PURINA MILLS: Emerges From Chapter 11; To Trade on NASDAQ --------------------------------------------------------- Purina Mills, Inc. (Nasdaq: PMIL), the nation's largest animal nutrition company, announced on June 29, 2000 that the company has emerged from Chapter 11 reorganization protection. The company's Plan of Reorganization, which was approved by more than 95 percent of the company's creditors that voted on the Plan and was confirmed on April 5, 2000 by the U.S. Bankruptcy Court for the District of Delaware, cleared the way for the company's emergence from its voluntary Chapter 11 proceeding today. To implement its restructuring, Purina Mills and 10 of its affiliates filed petitions for reorganization under Chapter 11 of the Bankruptcy Code on October 28, 1999. The company has met all requirements to emerge from bankruptcy and the implementation of the court approved Plan of Reorganization brings to a conclusion the company's financial restructuring process. Under the confirmed Plan of Reorganization, substantially all of the new common stock of the reorganized Purina Mills initially will be distributed to the company's pre-petition general unsecured creditors. The first distribution of common stock is anticipated to occur in August, 2000. Purina Mills' common stock will trade on NASDAQ under the symbol "PMIL." Old common stock in Purina Mills, which was held by Koch Agriculture Company, has been cancelled under the Plan of Reorganization. Purina Mills emerges with stockholders' equity equal to $185 million, with secured bank debt equal to $175 million and with access to $50 million under a new revolving credit facility. Brad J. Kerbs, Purina Mills' President and Chief Executive Officer, said: "Since commencing our voluntary reorganization eight months ago, we have successfully restructured our financial position. Through this restructuring we have effectively put many challenges of our past behind us, permitting the company to emerge from Chapter 11 with a significantly less leveraged balance sheet, cash to fund operations and an improved expense structure. All of this forms a stronger foundation for growth." As part of the newly reorganized Purina Mills, the company previously announced the appointment of a new five member Board of Directors pursuant to the Plan of Reorganization. The new Board members are Craig Scott Bartlett, Jr., Robert Cummings, Jr., James Gaffney, Robert Hamwee and Brad Kerbs. Mr. Bartlett is a self-employed corporate director, who currently serves on the Board of Directors of NVR, Inc., a homebuilder; Janus Hotels and Resorts, Inc., a hotel and hotel management company; Allstate Financial Corporation, a commercial finance company; and Abrayas Petroleum Corporation, an exploration and development company. Mr. Cummings joined Goldman Sachs & Co., an investment bank, in 1973 and thereafter served as a General Partner of the firm until his retirement in 1998. Since his retirement, he has served as an Advisory Director of Goldman Sachs & Co. Mr. Gaffney has served since 1997 as the Chairman of the Board of Vermont Investments, LTD., which provides consulting services to various investment funds. He was previously the Chairman of the Board and Chief Executive Officer of General Aquatics, Inc. Mr. Hamwee is a Managing Director of GSC Partners, which he joined in 1994. He previously was associated with The Blackstone Group, where he worked on a wide range of assignments in the Merchant Banking, Mergers & Acquisitions and Restructuring departments. Mr. Kerbs, President and CEO of Purina Mills, began his career with Purina in 1969 and has served in various management positions including credit, sales, operations and marketing. In his 31 year career, he also led the pet food business in Europe for BP Nutrition from 1988 to 1994 during the time Purina Mills was owned by British Petroleum. From 1998 to 1999, he served as Executive Vice President of Purina Mills Retail Business. Prior to being named President and CEO of Purina Mills in February, 2000, he was President and Chief Operating Officer of Purina Mills. "The successful culmination of this restructuring process would not have been possible without the commitment and support of our customers, dealers, suppliers and employees," said Kerbs. "We are extremely pleased that during the brief restructuring process Purina Mills was able to continue its daily operations, continue working with our vendors and dealers and fulfill its obligations to customers with minimal interruption." Mr. Kerbs notes, "Today, Purina Mills is a stronger, more competitive company. We remain committed to a market philosophy that is based on long term relationships in our businesses. Our brand, reputation, knowledge, and technology, combined with our independent Purina dealers and distribution channels to these markets, are our strength." "We have been the recognized leader in our industry for 106 years, and we intend for our leadership to continue," said Mr. Kerbs. "As long as there are animals, there will be an important animal nutrition business. We are looking forward to profitably growing our company as we continue to supply America's animal owners and production systems with the nutrition products, knowledge and services that profitably exceed our customers' expectations." Purina Mills is America's largest producer and marketer of animal nutrition products. Based in St. Louis, Missouri, the company has 49 plants and approximately 2,500 employees nationwide. Purina Mills is permitted to use the trademarks "Purina" and the nine-square Checkerboard logo under a perpetual, royalty-free license agreement from Ralston Purina Company. Purina Mills is not affiliated with Ralston Purina Company, which distributes Purina Dog Chow brand and Purina Cat Chow brand pet foods. SANDS CASINO: Attorneys Deliver Closing Arguments ------------------------------------------------- Attorneys for Park Place Entertainment Corp. and billionaire financier Carl Icahn delivered their closing arguments Thursday in the Sands Casino Hotel bankruptcy case, wrapping up several days of hearings over who should rescue the ailing casino. U.S. Bankruptcy Court Judge Judith Wizmur announced she will issue her decision on the competing plans to pull the Sands out of Chapter 11 bankruptcy after July 10. Park Place proposes spending $40 million on the property, receiving 57.5 percent of the new stock in exchange. It would provide bondholders with $128 million in new bonds. Icahn plans to invest $65 million in property, receiving 46.3 percent of the new Sands stock. He would issue $110 million in new bonds. Park Place attorney Michael Chertoff argued that Park Place essentially is offering a merger or joint venture with the other casinos it already operates, allowing the Sands to share costs and providing it with new, experienced management. Chertoff characterized Icahn's proposal as a cash infusion that keeps existing managers. But the Icahn plan provides more of a cash cushion, said his attorney, Ed Weisfelner. He denied the argument that casinos must be large to compete in Atlantic City, arguing that large Trump casinos have been in and out of bankruptcy. "To hear them tell it you have to be out of your mind to have a single property in Atlantic City," Weisfelner said. "The notion that bigger is always better ... is not true." Weisfelner also stressed that the Icahn plan has the support of Sands management, as well as the 1,500 vendors who are owed $6.7 million. Park Place has the support of Merrill Lynch Asset Management, which argued that the Sands is in a poor location and needs a good management team. Because Park Place owns 28 casinos, including the three in Atlantic City, it may face opposition from regulators on the Sands acquisition. New Jersey casino law allows authorities to decide on a case-by-case basis whether granting a license would result in economic concentration. SMITH CORONA: Sells 49% Of New Stock To Pubco --------------------------------------------- Smith Corona Corp. will sell 49% of its stock in the reorganized company to printer maker Pubco Corp. under a deal approved by a federal bankruptcy court. The Cleveland-based Pubco will assume Smith Corona's secured debt but it doesn't expect unsecured creditors will be paid cash for their claims. Smith Corona spokeswoman Rivian Bell relates that Pubco's plan is a "higher and better offer" than what Carolina Wholesale Office Machine Co. offered last month. As reported earlier, Carolina Wholesale would have bought nearly all of Smith Corona's assets for $6 million. Smith Corona President and Chief Executive Martin Wilson said the company retains its name and will be able to introduce Pubco's products through Smith Corona's distribution channel. TELEGEN CORP: Plan of Reorganization is Confirmed ------------------------------------------------- Telegen Corporation (OTCBB:TLGNQ.OB) announced on June 29, 2000 that its Plan of Reorganization has been confirmed by the U.S. Bankruptcy Court for the Northern District of California. The Plan was accepted by 100% of the voting secured and unsecured creditors holding allowed claims and 97.3% of the voting shareholders. The Effective Date for implementation of the Plan of Reorganization is scheduled to be 5 p.m. Pacific Time on Friday, June 30, 2000. The Plan provides for all allowed claims of secured and unsecured creditors of Telegen Corporation and its subsidiaries, Telegen Communications Corporation and Telegen Display Laboratories, Inc., to be paid in full in cash or common stock, on the effective date. The company expects to pay a total of approximately $1,383,000 in cash to creditors holding allowed claims with the balance paid in common stock. An additional estimated $680,000 is expect to be paid to holders of administrative priority claims. The Plan also provides for a 1:16 reverse split of the existing common stock of Telegen, to be effective at 5 p.m. Pacific Time on Friday, June 30, 2000. The Company will close its December 15, 1999 offering of common stock on the effective date for gross proceeds to Telegen of $7 million. An additional $11.6 million remains in escrow from later offerings and will be released to the company upon the effectiveness of a registration statement to be filed shortly. Additional offerings are currently under way. "We are very pleased that the Plan has been confirmed by the court and Telegen can now move forward toward commercialization of its flat panel and communications products," said Jessica L. Stevens, Telegen's President/CEO. She added, "I wish to personally thank our team of dedicated employees and professionals who worked so long and hard to make this such a great success." According to David S. Caplan of Brooks & Raub in Palo Alto, CA, the attorneys who handled Telegen's reorganization, "This is a true 'Phoenix Rising.' It is one of the most remarkable turnaround stories we have experienced in this district in a long time." A brief synopsis of the Plan of Reorganization is available on Telegen's web site at http://www.telegen.com/plan.html. Telegen Corporation is headquartered in San Mateo, California, with a diverse technology base in flat panel display technology, telecommunications and Internet products. The company's stock is traded under the symbol TLGNQ.OB. TELEGROUP: Representative Retains Counsel ----------------------------------------- The US Bankruptcy Court for the District of New Jersey entered an order authorizing the retention of local counsel by the representative of the post confirmation estate. David Walsh, representative of the post confirmation estate of Telegroup, Inc. was authorized to retain Wasserman, Jurista & Stolz. THREE D DEPARTMENTS: Hearing on Case Dismissal ---------------------------------------------- A hearing on the motion of the debtor, Three D Departments, Inc., is scheduled to take place in Courtroom 5D of the US Bankruptcy Court, Centr4al District of California, Santa Ana Division, 411 West Fourth Street, Santa Ana, Calif. on July 17, 2000 at 2:00 PM. The motion seeks an order dismissing the debtor's Chapter 11 case. The dismissal is sought only for the purpose of judicial economy and conserving the assets of the estate. The debtor is no longer operating its business, does not have any employees and after the interim distribution, the debtor will become essentially a dormant entity. VENCOR INC: Court Approves Amendment To DIP Financing ----------------------------------------------------- Vencor, Inc. announced that the United States Bankruptcy Court for the District of Delaware approved an amendment to the Company's debtor-in-possession financing to extend its maturity until September 30, 2000. The Amendment also revises certain covenants and permits the Company to file its plan of reorganization through July 18, 2000. As previously announced, the Company entered into a commitment letter with certain of the DIP lenders to finance an amended and restated debtor-in-possession credit agreement (the "Restated DIP"). The motion to approve the Restated DIP has been adjourned until July 27, 2000. The DIP Financing and existing cash flows will be used to fund the Company's operations during its restructuring. As of June 28, 2000, the Company had no outstanding borrowings under the DIP Financing. Vencor and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 with the Court on September 13, 1999. Vencor, Inc. is a national provider of long-term healthcare services primarily operating nursing centers and hospitals. ********* 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 * * *