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/raid1/www/Hosts/bankrupt/TCR_Public/000707.MBXT R O U B L E D C O M P A N Y R E P O R T E R Friday, July 7, 2000, Vol. 4, No. 132 Headlines APB ONLINE: Case Summary and 20 Largest Unsecured Creditors CLARIDGE HOTEL: Committee Taps PricewaterhouseCoopers CONNECTICUT SURETY: S&P Lowers Ratings to 'CCCpi' CONSECO: Sells Its Bankcard Portfolio CREDITRUST CORP: Postpones Shareholder Meeting DAEWOO INTERNATIONAL: Settlement of Claims Against Premier Motors DAEWOO MOTOR: Hyundai,GM not ready to call it quits yet DOE RUN RESOURCES: Moody's Downgrades Ratings; Negative Outlook GENESIS/MULTICARE: GHV to Employ Weil, Gotshal as Lead Counsel GEOTELE.COM: Hearing on Confirmation of Plan GLOBAL OCEAN: Taps Arthur Anderson, LLP as Auditors GREAT TRAIN: Rejection of Leases HARNISCHFEGER: Beloit Committee Taps Stroock as Lead Counsel HEDSTROM HOLDINGS: Seeks Authority to Hire Temporary Management IMPERIAL SUGAR: Moody's Downgrades Ratings ITHACA INDUSTRIES: Court Approves Bidding Procedures KITTY HAWK: Seeks To Maintain Fort Wayne Authority ORBCOMM GLOBAL: Moody's Downgrades Ratings Of Sr Notes To Caa2 PETSEC ENERGY: Hearing on Disclosure Statement PRISON REALTY: Restructuring Deal With Pacific Ended SAFETY KLEEN: South Carolina Seeks Transfer of Venue SOUTHERN MINERAL: Agreement To Support Plan STONE & WEBSTER: The Shaw Group Inc. Submits Bid SYSTEM SOFTWARE: Seeks Extension of Time to Assume/Reject Leases TITAN ENERGY: Second Bankruptcy Filing Since Deregulation TRANS-RESOURCES: Moody's Lowers Ratings Of Sr Unsecured Notes TRI VALLEY: May File For Bankruptcy BOND PRICING FOR WEEK OF July 3, 2000 ********* APB ONLINE: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: APB Online, Inc. 65 Broadway New York, NY 10006 Petition Date: July 5, 2000 Chapter 11 Court: S. District of New York Bankruptcy Case No.: 00-41675 Judge: Stuart M. Rubinstein Debtor's Counsel: Herbert P. Minkel, Jr. 1270 Avenue of Americas Suite 2217 New York, NY 10020 Tel:(212) 218-6437 Total Assets: $ 3,274,231 Total Debts: $ 8,230,378 20 Largest Unsecured Creditors 24/7 Media 1250 Broadway, 27th Floor New York, NY 10001 Tel:(212) 231-7000 Trade $ 1,319,892 Netscape Communications Corp. PO Box 5696 New York, NY 10087-5696 Tel:(703) 265-2435 Trade $ 800,000 Advertising.com 1010 Hull Street Suite 200 Baltimore, MD 21230 Tel:(410) 244-1057 Trade $ 750,000 AdSmart Corporation 100 Brickstone Square Andover, MA 01810 Tel:(978) 684-3625 Trade $ 698,749 Intraware, Inc. 25 Orinda Way Suite 101 Orinda, CA 94563 Tel:(925) 253-4561 Trade $ 591,571 Flycast Communications Corp 181 Fremont Street Suite #120 San Francisco, CA 94105 Tel:(415) 977-1000 Trade $ 316,142 William L. Rumsey Corp. 500 Route 32 PO Box 445 Highland Mills, NY 10930 Tel:(914) 928-2304 Trade $ 264,464 (disputed) Digex Trade $ 169,923 Bozell Kamstra Trade $ 166,223 America Online, Inc. Trade $ 100,000 Sonar Network Trade $ 96,460 L90, Inc. Trade $ 96,248 DoubleClick, Inc. Trade $ 83,339 Grant Thornton Trade $ 48,275 BSMG Worldwide Trade $ 45,367 Dell Marketing, LP Trade $ 30,372 Message Media, Inc. Trade $ 30,000 Frank N. Magid Assoc., Inc. Trade $ 29,722 Trylon Communications Trade$ $ 25,968 Empire Technologies Trade $ 24,156 CLARIDGE HOTEL: Committee Taps PricewaterhouseCoopers ----------------------------------------------------- The Official Committee of Secured Noteholders in these cases applies for authority to employ and retain PricewaterhouseCoopers LLP as appraiser and valuation consultant to the Committee in connection with its analysis of the Joint Plan and continuing efforts by the debtors to reorganize and specifically to value the assets of the debtors, analyze the appraisal and other valuation determinations offered by the debtors and challenge such valuations, as necessary and appropriate. The hourly rates for the firm range from $595 per hour for partners to $550 per hour for directors to $440 per hour for managers and $275 per hour for staff members. The firm seeks an initial retainer in the amount of $40,000. CONNECTICUT SURETY: S&P Lowers Ratings to 'CCCpi' ------------------------------------------------ On July 5, 2000, Standard & Poor's lowered its financial strength rating on Connecticut Surety Co. to triple-'Cpi' from single- 'Bpi'. This rating action reflects the company's weak capitalization, high leverage, and continuing poor operating performance. The company mainly writes contract and miscellaneous surety bonds and distributes its products primarily through independent general agents. Its major states of operations-- California, Texas, Arizona, and New York-- account for more than 84% of its business. The company, which is based in Hartford, Connecticut and licensed in 30 states and the District of Columbia, began business in 1989. Major Rating Factors: -- Capitalization remained somewhat weak at year-end 1999, as indicated by a Standard & Poor's capital adequacy ratio of 92.6%. -- The company experienced a 47.2% drop in surplus and an operating ratio of 133% in 1999. -- Operating performance has been weak and volatile. The five-year average return on revenue was negative 18.1%, and one-year loss development to surplus was 36.1%. -- The company has no retained earnings. The cumulative deficit was $12.7 million at year-end 1999, which amounts to 60.7% of total assets. The liquidity ratio was 71.3% -- Leverage is high, as measured by the ratio of premiums and liabilities to surplus (6.6 times). The company is rated on a stand-alone basis. CONSECO: Sells Its Bankcard Portfolio ------------------------------------- Conseco, Inc. (NYSE:CNC) announced that its Conseco Finance Corp. subsidiary sold substantially all of its Bankcard (Visa/Mastercard) portfolio to Wells Fargo Financial Bank, the credit card subsidiary of Norwest Financial, part of Wells Fargo & Company. The size of the portfolio sold was approximately $400 million. The sale of this noncore business provides additional liquidity to Conseco Finance and is not expected to result in a material gain or loss. Conseco Finance, with nationwide operations and managed finance receivables of nearly $46 billion at December 31, 1999, is one of America's largest of nearly $46 billion at December 31, 1999, is one of America's largest consumer finance companies, with leading market positions in retail home equity mortgages, home improvement mortgages and consumer and floorplan loans for manufactured housing. Based in St. Paul, Minn., Conseco Finance had 9,600 employees at year-end 1999. World Wide Web http://www.conseco.comInvestorHotline 800.4.CONSECO Fax-on-Demand 800.344.6452 CREDITRUST CORP: Postpones Shareholder Meeting ---------------------------------------------- Creditrust Corp. said yesterday it postponed its shareholder meeting set for today after filing for chapter 11 bankruptcy protection, prompted by a year of poor stock performance and credit problems, according to a Reuters report. "Due to the chapter 11 filing, the company and its board of directors believe that the annual meeting should be delayed for a brief period of time until the chapter 11 reorganization process has progressed beyond the initial weeks of hearings," the company said in a statement. The Baltimore-based company said the new time and place for the meeting will be announced. Meanwhile the company, which buys delinquent consumer debt from lenders, warned that its stock on Nasdaq may not resume trading immediately. On June 22, Nasdaq halted trading of the stock, and asked for additional information from the company, including circumstances leading up to the chapter 11 filing, the expected timetable for the filing and the specific aspects of its reorganization plan. DAEWOO INTERNATIONAL: Settlement of Claims Against Premier Motors ----------------------------------------------------------------- In accordance with the terms of a certain letter agreement entered into among the debtor, Daewoo International (America) Corp., Premier and Kennedy Funding, Inc., the debtor proposes settling and compromising the claim it holds against Premier for payments aggregating $3,176,847 if paid by Premier over a 10 year period, $2,676,847 if paid by Premier over a five year period. The debtor received $250,000 as a good faith deposit against the settlement. The principal feature of the settlement outlined by the Letter Agreement is a $1.6 million cash payment to be made by Premier to the debtor, payable upon Premier's receipt of the new financing from Kennedy. DAEWOO MOTOR: Hyundai,GM not ready to call it quits yet ------------------------------------------------------- Following the June 29 selection of Ford Motor Company as the sole priority negotiator in a three-way international tender for ailing Daewoo Motor, the also-rans -- General Motors-Fiat SpA and DaimlerChrysler AG-Hyundai Motor -- don't appear ready to call it quits. "In the announcement of priority negotiator, Daewoo restructuring committee chairman Oh Ho-keun said this is just the beginning," one source said. "Therefore, we feel obligated to wait and see what will happen." A communications director at GM Asia-Pacific operations, who had planned to stay in Korea for a month, left for his home port of Singapore immediately after the June 29 announcement. As a partner with Daewoo for more than 10 years prior to the 1992 breakup, it had been widely speculated that GM was a clear front runner, with intimate knowledge of its former partner. GM was also given two years to assess Daewoo and negotiate with Daewoo officials. (The Korea Times 03-July-2000) DOE RUN RESOURCES: Moody's Downgrades Ratings; Negative Outlook --------------------------------------------------------------- Moody's Investors Service lowered its ratings for The Doe Run Resources Corporation (Doe Run). The downgrades reflect the much lower price of lead, which has diminished Doe Run's cash flow, interest coverage, and shareholder's equity, and exacerbated the financial burden associated with its high debt levels and substantial environmental commitments. The rating outlook was changed to negative. The following ratings were affected by this action: Doe Run's senior implied rating was lowered to B3 from B2, $100 million secured revolving credit facility, downgraded to B2 from B1, $50 million of 11.25% guaranteed senior secured notes due 2005, downgraded to B3 from B2, $200 million of 11.25% guaranteed senior notes due 2005, downgraded to Caa1 from B3, $55 million of guaranteed floating interest rate senior notes (FIRSTSsm*) due 2003, downgraded to Caa1 from B3, and Doe Run's senior unsecured issuer rating was downgraded to Caa1 from B3. Lower lead prices have pushed Doe Run's EBITDA to net interest ratio below 1.0, erased most of its equity, and forced it to idle lead mines and mills in Missouri, lay off 12% of its US mining workforce, and begin mining higher than average ore reserve grades at its remaining mines. Due to its substantial capital and environmental commitments and debt maturities, Doe Run's financial flexibility could be seriously impaired should lead prices remain near current levels. Under the terms of its 1997 agreement to purchase Metaloroya, the company committed to spend $120 million for certain qualifying expenditures. At April 30, 2000, Doe Run estimated that it had spent $70 million, leaving $50 million to be expended by October 2002. In addition, Doe Run Peru's PAMA requires it to implement environmental projects estimated to cost $190 million by the end of 2006, and Doe Run has $388 million of net debt maturing by the end of 2005. In Doe Run's second quarter ended April 30, 2000, its US operations broke even on a cash basis before paying interest and capex. This occurred despite a 33% increase in secondary smelter production compared to the prior year and preservation of near historical premiums over the LME lead price for the company's products. In Peru, where Doe Run's custom smelting and refining operations are less exposed to lead prices, operating cash flow was positive in the second quarter but, at current metal prices, will just cover projected Peruvian interest and capex for fiscal 2000. On a consolidated basis, for the 6-months ended April 30, 2000, Doe Run reported EBITDA of $28 million, net interest expense of $23 million, and capex of $16 million. Results from Doe Run's second fiscal quarter, which ended April 30, were weaker than in its first quarter, as lead prices were 2 cents a pound lower and copper, zinc, and silver prices were marginally lower. A one cent change in lead price changes EBITDA by approximately $7.5 million per year. As of April 30, 2000, Doe Run had net debt of $388 million and equity of $5 million. Moody's ratings are supported by Doe Run's position as the largest primary lead producer in the western world, its low-cost secondary lead recycling facility, and increasing demand for lead, primarily for lead-acid batteries. The Doe Run Company, a fully-integrated US lead producer and a processor of complex polymetallic mineral concentrates in Peru, is headquartered in St. Louis, Missouri. GENESIS/MULTICARE: GHV to Employ Weil, Gotshal as Lead Counsel ------------------------------------------------------------- Genesis Health Ventures, Inc., and its debtor-affiliates seek the Court's authority to employ Weil, Gotshal & Manges LLP as its lead counsel in its chapter 11 cases. Beginning in March, WG&M advised the Debtors concerning their overall capital structure, debt and lease obligations, restructuring alternatives, and various related corporate and other legal issues. The Debtors believe that WG&M is both well- qualified and uniquely able to represent them in the chapter 11 cases. The Debtors contemplate that WG&M will render professional services to protect and preserve the Debtors' estates, including making prosecution and defense of actions, negotiate in disputes, prepare objections to claims, prepare applications, answers, orders, reports, and papers in connection with the administration of the Debtors' estates, negotiate and prepare plan(s) of reorganization and related documents, and perform other legal services in connection with GHV's chapter 11 cases. The Debtors propose to employ WG&M under a general retainer. The Debtors also agree to pay WG&M customary hourly rates, which are subject to change: Members and Counsel $ 360 - $ 650 Associates $ 155 - $ 490 Paraprofessionals $ 45 - $ 115 WG&M represents that it does not hold or represent an interest that is adverse to the Debtors' estates, and is a "disinterested person" as such term is defined in section 1014 of the Bankruptcy Code. WG&M assures that it will continue to attend to the issue on disinterestedness and will file supplemental disclosure with the Court if necessary. (Genesis/Multicare Bankruptcy News Issue 2; Bankruptcy Creditors' Services Inc.) GEOTELE.COM: Hearing on Confirmation of Plan -------------------------------------------- On June 29, 2000, the US Bankruptcy Court for the Southern District of New York approved the debtor's amended Disclosure Statement. A hearing will be held to consider confirmation of the plan on July 27, 2000. The plan provides that holders of General Unsecured Claims will receive a pro-rata distribution of the sum of $100,000 (between 3% and 3.7% distribution) in full satisfaction of their Allowed General Unsecured Claims on the Effective Date. The Reorganized Debtor will continue its attempt to expand its operations to additional foreign countries by installing telephone switching equipment which will allow the debtor to retain increased profits by carrying its voice call over its own network. GLOBAL OCEAN: Taps Arthur Anderson, LLP as Auditors --------------------------------------------------- The debtors, Global Ocean Carriers Limited, et al. Seek to employ Arthur Anderson, LLP as auditors to the debtors. The firm will complete the audit of the debtors' consolidated balance sheet as of December 31, 1999 and their Consolidated Statement of income and Cash Flow for the year then ended and provide such other services as may be required by the debtors throughout the Chapter 11 process. GREAT TRAIN: Rejection of Leases -------------------------------- Effective as of June 29, 2000, the debtor rejects the leases covering the following locations: Scottsdale Fashion Square 7014 East Camelback Road, #2248 Scottsdale, Arizona 85251 Southern Park Mall 7401 Market Street, Space 1400 Youngstown, Ohio 44512 Grapevine Mills 3000 Grapevine Mills Parkway Grapevine, Tx The Source 1504 Old Country Road Westbury, NY Carolina Place Mall 11025 Carolina Place Parkway, B-26 Pineville, NC 28134 St. Louis Union Station 122 St. Louis Union Station St. Louis, MO 63103-2245 The Carousel 9621 Carousel Center Syracuse, NY Oxmoor Center 7900 Shelbyville Road Louisville, KY The Westchester 125 Westchester Avenue White Plains, NY HARNISCHFEGER: Beloit Committee Taps Stroock as Lead Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Beloit Corporation seeks Court authority to retain Stroock & Stroock & Lavan LLP as their Counsel, nunc pro tunc to March 27, 2000. The Stroock attorneys leading the engagement are: Hourly Rate ----------- Lewis Kruger, Esq. $ 600 Wendell H. Adair, Jr., Esq $ 500 Curtis C. Mechling, Esq. $ 435 Christopher R. Donoho III, Esq. $ 335 The Beloit Committee believes that Stroock is a disinterested person as defined in section 101(14) of the Bankruptcy Code. (Harnischfeger Bankruptcy News Issue 24; Bankruptcy Creditors' Services Inc.) HEDSTROM HOLDINGS: Seeks Authority to Hire Temporary Management --------------------------------------------------------------- The debtors, Hedstrom Holdings, Inc., et al. seek an order authorizing the employment of Executive Interim Management to provide temporary management services for the debtors. The debtors are engaging EIM to provide an Interim General Manager to act as Vice President and General Manager of the ERO Division of Hedstrom Corporation to render the following services: play a lead role in enhancing working relationships with all key licensors; ensure the timely introduction of new products within the market cycles for key retailers; Implement processes and procedures within the new product development process that integrate the whole business team and shorten development cycle times; lead the ERO Division to meet or exceed its 2000 business objectives; assist in identifying and hiring the permanent General Manager. EIM will also provide consulting services as follows: ensure that EIM is informed of any changes/revisions to the scope and nature of the assignment of a material nature, maintain regular contact with the EIM Principal; prepare a detailed end-of assignment report, and assist in the recruitment process of permanent resources and staff as is required to sustain an acceptable level of operation upon completion of the assignment. The debtors agree to pay an up-front fee of $10,000. If the debtors retain EIM's candidate(Manager) there will be a fixed daily fee of approximately $2000 payable monthly in advance and based on the projected days to be worked that month. IMPERIAL SUGAR: Moody's Downgrades Ratings ----------------------------------------- Moody's Investors Service downgraded its ratings of Imperial Sugar Company ("Imperial Sugar"). Ratings affected include: Imperial Sugar's $310 million senior secured credit facilities, lowered to B2 from Ba3; its $250 million 9.75% senior subordinated notes, due 2007, lowered to Caa1 from B2; its senior implied rating, lowered to B2 from Ba3; and its senior unsecured issuer rating, lowered to B3 from B1. The ratings outlook is stable. The downgrades reflect the impact of sustained weak domestic sugar market conditions combined with Imperial Sugar's continued high leverage, which have reduced the company's cash flow and pressured financial flexibility. Sugar prices fell to fifteen year lows this year, and a persisting oversupply of sugar may maintain downward pressure on refined sugar prices through 2001, which could continue to constrain Imperial Sugar's cash flow generation and ability to reduce debt. The company has taken steps to raise cash to pay down debt and to accelerate cost savings and synergies from its large acquisitions in late 1997 and 1998, but its balance sheet and credit measurements remain weak. Due to several large, debt-financed acquisitions (including Savannah Foods & Industries, Inc., in December 1997, and Diamond Crystal, in November 1998), Imperial Sugar's leverage increased substantially. Subsequently, the company also experienced operational problems, and expected cost savings and synergies from the Diamond Crystal acquisition were challenging to realize and delayed, while sugar markets were weakening. With prolongation of weak markets and resultant tightening financial flexibility, management has focused on strategies to reduce debt levels. These have included: (a) suspension of the quarterly dividend beginning in fiscal 1Q00 (cash savings of $1 million/quarter), (b) cutbacks in capital spending (from $43 million in fiscal year 1998, to $27 million in fiscal year 1999, and $25 million planned for fiscal year 2000, which is essentially the maintenance level), (c) liquidation of its marketable securities portfolio (cash proceeds of $64 million, with $37 million applied to reduce term debt in the six months ending 3/31/00), (d) planned closure of two beet processing facilities in California at the end of calendar 2000 to enable the sale of surrounding land for development, and (e) cost savings initiatives targeted to reach a $15 million annual run rate starting in July 2000. Imperial Sugar also completed a five- year, $110 million receivables securitization facility on 6/30/99, applying $52 million to a permanent reduction in bank term loans and the remainder against outstandings under its revolver (Moody's views the receivables financing as debt equivalent). Yet, as of 3/31/00, the company's debt remained high ($658 million, including the receivables financing, compared with $675 million at 3/31/99), and the company had an operating cash flow deficit for the latest twelve months ("LTM") ending 3/31/00 (pro forma to treat the receivables securitization as if it were a financing). The company processed an above normal sized sugar beet crop in the Fall of 1999, which resulted in a significant increase in inventories (and working capital investment ) at 3/31/00. Looking forward, the company's working capital increases seasonally as beet crops are harvested in the fall and early winter, inventories build, and payments are made to beet farmers ahead of refined sugar sales to customers. Given persistent weak market conditions, the required working capital investment may become challenging for the company to manage, which may lead the company to pursue additional asset sales, cost saving initiatives, and financial strategies to preserve financial flexibility. The ratings recognize that Imperial Sugar is the leading processor and marketer of refined sugar in the U.S., accounting for approximately one third of the market. Up until now, Imperial Sugar also has benefited from a regulatory framework in the U.S. that has protected domestic producers of sugar with a loan program and import quota system designed to support domestic prices. During the past year, however, an over- supply of sugar has heightened to a level that has begun to potentially weaken the effectiveness of the loan program and quota system. Imperial Sugar's credit measures have weakened materially during 1999 and 2000. Debt has remained high, while earnings and cash generation have weakened. With a cash deficit from operations, maintenance capex of $25 million, and the expected prolongation of weak markets, prospects for material leverage reduction from internally generated cash flow over the intermediate term appear limited. As of 3/31/00 the company's liquidity consisted of $19 million of unused borrowing capacity under its revolver and a cash balance of $21 million. Imperial Sugar Company, based in Sugar Land, Texas, is a leading producer and marketer of refined sugar in the United States. The company operates four raw cane sugar refineries, produces beet sugar at 11 beet sugar factories, and seven foodservice distribution facilities in the U.S. ITHACA INDUSTRIES: Court Approves Bidding Procedures ---------------------------------------------------- By order dated June 30, 2000, the US Bankruptcy Court, District of Delaware entered an order authorizing and approving the bidding procedures and break up fee with respect to the motion of the debtor, Ithaca Industries, Inc. to sell certain assets and assume and assign an unexpired lease of real property. The court will hold a hearing on the sale of the assets and the assumption and assignment of the lease on July 7, 2000 at 2:00 PM. The sale is for all of the equipment used in connection with the Choloma No. 2 plant located in San Pedro Sula, Honduras. The purchaser is the Russell Corporation and the purchase price is $154,015. The debtor is willing to consider overbids in excess of Russell's purchase price and the $15,000 Break-up fee. KITTY HAWK: Seeks To Maintain Fort Wayne Authority ------------------------------------------------- Bankrupt Kitty Hawk filed a motion in a federal bankruptcy court in Dallas requesting permission to continue maintaining its Fort Wayne-Allen County Airport authority. Kitty Hawk intends to continue leasing Fort Wayne, for it has scheduled air freight operations. The motion states that Fort Wayne is crucial for Kitty Hawk's future business operations and promoting its reorganization efforts. The Texas-based carrier has been under Chapter 11 protection since May 1. If nobody objects to the motion on or before July 12, the court will then grant the request without having a hearing. ORBCOMM GLOBAL: Moody's Downgrades Ratings Of Sr Notes To Caa2 -------------------------------------------------------------- Moody's Investors Service downgraded the $170 million of 14% senior notes of ORBCOMM Global, LP to Caa2 from Caa1. The senior implied and issuer ratings have also been downgraded to Caa2, and the outlook for all these ratings is negative. The downgrade reflects ORBCOMM's need for additional financing and the uncertainty of receiving that funding. ORBCOMM is a satellite communications affiliate of Orbital Sciences Corp. (senior implied B2) that began commercial service in the fourth quarter of 1998. While orders for ORBCOMM units have been strong, converting this backlog into sales is taking longer than expected resulting in larger operating losses. Consequently, ORBCOMM requires substantial additional capital, the entirety of which will not be made available by its current shareholders, Orbital Sciences and Teleglobe (senior unsecured Baa1) as the company is now searching for additional investors. The very difficult capital market conditions for satellite companies will make this search especially challenging and could divert attention and resources from the task of selling and installing ORBCOMM units to grow the business. Based in Dulles, Virginia, ORBCOMM provides data messaging services through a fleet of low-Earth orbit satellites. PETSEC ENERGY: Hearing on Disclosure Statement ---------------------------------------------- The US Bankruptcy Court for the Western District of Louisiana has entered an order fixing July 31, 2000 as the date for a hearing on the Disclosure Statement of Petsec Energy, Inc. On June 16, 2000, the debtor reached an agreement in principle with the Official Committee of Unsecured Creditors appointed in the case, noteholders holding approximately 78% in principal amount of the outstanding Notes, and PUSA, the debtor's parent company to commence an orderly sale of Petsec's assets. In order to effectuate the plan, the debtor proposes to close one or more sales of all of its proved producing reserves prior to the Effective Date of the Plan. On the Effective Date, the existing Equity Interest of PUSA shall be canceled and the Reorganized Debtor will issue the New Common Stock. The Reorganized Debtor shall continue to sell its remaining assets and pursue causes of action, including any avoidance actions. The net sale proceeds, the New Common Stock and litigation recoveries shall be distributed pursuant to the plan to holders of Allowed Claims. PRISON REALTY: Restructuring Deal With Pacific Ended ----------------------------------------------------- Prison Realty Trust, discontinued its $200 million restructuring deal with Pacific Life Insurance Co., according to company officials. Thomas W. Beasley, prison company interim chairman told in an interview that Pacific Life was not discontented enough with the decision of Prison Realty to ask for a financial penalty. The deal with Pacific Life was for the prison firm to make $200 million rights offering for its shareholders and to obtain approval from bank lenders to extend maturities of certain loans to four years. The Nashville-based prison company instead plans to merge with its sister company, Corrections Corporation of America by Sept. 15, and employ a new senior management staff and be taxed as a REIT and not a C corporation. SAFETY KLEEN: South Carolina Seeks Transfer of Venue ---------------------------------------------------- Safety-Kleen's principal place of business is in South Carolina. South Carolina is the "nerve center" for all Safety-Kleen business transactions. All of the Debtors' key personnel are located in South Carolina. While Safety-Kleen's creditors are located throughout the United States, many of the Debtors' creditors and numerous other interested parties are located in South Carolina. The Safety-Kleen (Pinewood) site is the subject of several state and federal actions, one of which is a pending action in the South Carolina Supreme Court regarding the requirement to post a cash trust fund of up to $133 million by the Year 2004. Shareholder suits pend in South Carolina courts. These facts and others, the State of South Carolina argues, militate in favor of the Court finding that the venue for Safety- Kleen's chapter 11 cases should be transferred from the District of Delaware to the District of South Carolina, pursuant to 28 U.S.C. Sec. 1412 and Rule 1014(a) of the Federal Rules of Bankruptcy Procedure. The South Carolina Department of Health and Environmental Control (DHEC or the Department), an agency of the State of South Carolina, is one of the Debtors' largest creditors and is the South Carolina agency charged with environmental regulation and enforcement. The South Carolina Public Service Authority (known as Santee-Cooper) is a state owned public utility and owns the lake adjacent to the Debtors' Pinewood, South Carolina hazardous waste disposal facility and uses the water from this take to provide over 90,000 citizens with drinking water. E. Katherine Wells, Esq., from the Office of General Counsel for the SC DHEC and Charles P. Summerall, IV, of Buist Moore Smythe & McGee, P.A., representing the SC PSA, joined by James A. Quinn, Esq., Assistant Chief Counsel for the South Carolina Department of Natural Resources, argue that transfer of the bankruptcy cases to South Carolina would mean a more economic administration of the estate, as corporate officers are located in South Carolina and all parties interested in the Safety-Keen (Pinewood) site are located in South Carolina, as are a large number of the shareholders of Safety-Kleen Corporation. The controversies concerning Safety-Kleen Corporation, its subsidiaries and especially the Safety-Kleen (Pinewood) site, Ms. Wells and Messrs. Summerall and Quinn continue, are of special interest to the State of South Carolina, the taxpayers of South Carolina, and the businesses of South Carolina, all of whom can face financial burdens depending on the results of these bankruptcy cases. South Carolina asks Judge Walsh to determine that, although venue of Safety-Kleen's cases is proper as a technical matter, a transfer of the cases to South Carolina is in the interest of justice or for the convenience of the parties. South Carolina urges Judge Walsh to focus on the teaching of In re Standard Tank Cleaning Corp., 122 B.R. 174 (Bankr. E.D.N.Y. 1990) (citing In re Consolidated Pier Deliveries, Inc., 34 B.R. 327 (Bankr. E.D.N.Y. 1983)), explaining that the factors to be considered by courts in evaluating the appropriateness of a venue change based on the convenience of the parties and the interests of justice are: (1) proximity of creditors of every kind to the court, (2) proximity of the debtor to the court, (3) proximity of the court of the witnesses necessary to the administration of the estate; (4) location of the debtor's assets; and (5) the economic and efficient administration of the estate. In addition, South Carolina directs Judge Walsh's attention to the notion about the local interest in having controversies decided at home articulated in Laramie Limited v. Yes! Entertainment Corporation, 244 B.R. 56 (D. N.J. 2000), citing Jumara v. State Farm Ins. Co., 55 F.3d 973 (3d Cir. 1995). (Safety Kleen Bankruptcy News Issue 4; Bankruptcy Creditors' Services Inc.) SOUTHERN MINERAL: Agreement To Support Plan ------------------------------------------- Southern Mineral Corporation (OTC Bulletin Board: SMINQ.OB) announced an agreement among all parties contesting its current Plan of Reorganization ("the Plan") to support an amendment to its Plan to emerge from bankruptcy. Among other arrangements, the amendment will provide for the issuance of common stock to its current Convertible Subordinated Debentureholders that, when issued, will represent approximately 78% of the common shares. In addition, a cash payment of $5 million will be made on a pro rata basis to the Debentureholders. This agreement replaces the prior filed Plan that provided for an exchange into convertible preferred stock and a $1.4 million cash payment. The agreement also provides that the current common shareholders will receive warrants allowing them to increase their ownership to up to 40%. The Bankruptcy Court has set July 19, 2000 to complete the confirmation hearing on the Plan subject to certain restrictions. Upon confirmation, a new slate of seven directors will take office and be comprised of two members of the Company's current Board and five members selected by the contesting parties. Southern Mineral Corporation is an oil and gas acquisition, exploration and production company that owns interests in oil and gas properties located along the Texas Gulf Coast, Canada and Ecuador. The Company's principal assets include interests in the Big Escambia Creek field in Alabama and the Pine Creek field in Alberta, Canada. The Company's common stock is quoted on the OTC Bulletin Board under the trading symbol "SMINQ. OB". STONE & WEBSTER: The Shaw Group Inc. Submits Bid ------------------------------------------------ The Shaw Group Inc. (NYSE:SGR) ("Shaw" or "the Company") announced on July 6, 2000 that it has submitted a topping bid in the Federal Bankruptcy Court in Delaware for substantially all of the assets, and the assumption of certain liabilities, of Stone & Webster, Inc. ("S&W"), who in June 2000, filed for protection under the United States Bankruptcy Code. Shaw's qualified bid totaled $163 million in cash and Shaw Common Stock. As a result, the Company will participate in an auction for the acquisition of S&W's assets today, July 6, 2000, at which time it will bid against Jacobs Engineering Group Inc., who entered into an asset purchase agreement with S&W on June 1, 2000. Assuming it is the successful bidder, Shaw anticipates closing the transaction shortly thereafter. The Shaw Group Inc. is the largest supplier of fabricated piping systems in the United States and one of the leading suppliers of integrated piping systems and services for new construction, site expansion and retrofit projects in the world. Shaw distinguishes itself by offering its customers comprehensive piping solutions consisting of integrated engineering, design, fabrication, erection and maintenance of piping systems and the manufacture of specialty pipe fittings and supports. The ability to provide comprehensive piping solutions enables the Company to be a cost- effective single-source provider of fabricated piping systems and services for projects particularly in the power generation, chemical and petrochemical processing, crude oil refining, and oil and gas exploration and production industries. The Company operates facilities in California, Louisiana, New Hampshire, New Jersey, Oklahoma, South Carolina, Texas, Utah, Virginia, Australia, the United Kingdom, Venezuela and Bahrain, where it has a 49% interest in a joint venture. SYSTEM SOFTWARE: Seeks Extension of Time to Assume/Reject Leases ---------------------------------------------------------------- The debtor, System Software Associates, Inc. seeks an extension of time to assume, assume and assign, or reject five(5) unexpired leases of nonresidential real property. The leases relate tot he debtor's corporate headquarters in Chicago, Illinois and other regional and foreign offices of the debtor. Based on the advice from the debtor's proposed purchaser, the debtor needs additional time to determine which of the leases should be assumed or rejected. Accordingly, the debtor seeks a 60-day extension, until September 3, 2000, the time to assume or reject the Chicago and Atlanta leases and an extension of time until the scheduled hearing - July 10, 2000 - to assume or reject its Minnesota, Mexico City and Tokyo leases. TITAN ENERGY: Second Bankruptcy Filing Since Deregulation --------------------------------------------------------- The Atlanta Journal and Constitution reports on July 6, 2000 that the filing by Titan Energy of Georgia was the second bankruptcy filing by a marketer since the state's natural gas market was deregulated last year. Paul Woods, chairman of the Roswell-based company, said Wednesday that the Chapter 11 filing was prompted by a dispute with Titan's wholesale natural gas supplier. Titan wants "room to reorganize" so it can either sell its accounts to another marketer or continue operations in Georgia with a new partner, he said. But Atlanta Gas Light Co., Titan's largest Georgia creditor, and the Public Service Commission plan to press in bankruptcy court to have Titan's 50,000 customers transferred to Georgia Natural Gas Services and SCANA Energy. Those two companies are designated backup suppliers. Bankruptcy Court Judge W. Homer Drake scheduled a hearing in Newnan Friday. Roswell-based Peachtree Natural Gas cited billing problems in its Chapter 11 bankruptcy filing last October. The No. 3 supplier ended up selling its 171,800 customer accounts to Shell Energy for $ 19.3 million in a bankruptcy auction. Titan was formerly known as United Gas Management of Georgia, which last year made a $ 90,000 payment to the PSC to settle a "slamming" case involving charges that customers were switched to the company without proper authorization. The company serves about 3 percent of the deregulated market of almost 1.5 million homes and businesses. Woods said Titan was "doing quite well" in Georgia until a dispute with DukeSolutions, its wholesale supplier, forced it to switch wholesale gas suppliers and pay higher prices in March. DukeSolutions, a subsidiary of Charlotte-based Duke Energy, filed suit in May against Titan in federal court in Houston alleging breach of contract. Duke said Titan owes it more than $ 10 million. Atlanta Gas Light, in its filing with the bankruptcy court this week, said Titan owes it $2.8 million for distributing gas to Titan's customers and that it will cost $ 35,000 per day, or about $ 1.1 million for July, to continue those services. The utility sought authority to cut off Titan from its distribution system and assign its customers to the other marketers. BUSINESS PROFILE Titan Energy of Georgia Headquarters: Roswell No. 6 Georgia gas marketer with 50,000 customers A wholly owned subsidiary of Titan Energy, also based in Roswell, and which has 190,000 customers in Georgia, Pennsylvania and Ohio Web site: titanenergy.com/ Graphic Top Georgia natural gas marketers .................................. ..........Customers Marketer.................................. (estimated) Georgia Nat. Gas Services.................. 500,000 SCANA Energy............. ...................430,000 Shell Energy................................325, 000 Columbia Energy............................ *84,000 Energy America...... ........................ 60,000 Titan Energy................................ 50,000 Other marketers serve the rest of Georgia's customers, who total 1.5 million *Has announced plans to sell gas marketing business to New Power Co. TRANS-RESOURCES: Moody's Lowers Ratings Of Sr Unsecured Notes ------------------------------------------------------------- Moody's Investors Service lowered the ratings of Trans-Resources, Inc.'s (TRI) $100 million senior notes, due 2008, and its $135 million senior discount notes, due 2008, to Caa3 from B3, its senior implied rating to Caa1 from B1, and its senior unsecured issuer rating to Caa3 from B3. The rating outlook is negative. The rating action reflects the weakened prices and volumes and global supply-demand imbalance of its primary product (Potassium Nitrate (PN)), the company's weak balance sheet, and its low to negative quarterly operating income since mid-1999. The ratings further reflect high leverage (debt exceeds annual sales and was increased significantly in 1998 -1999 to fund acquisitions and capital expenditures), reduced production since the fourth quarter of 1999 and excess inventory, foreign currency exchange risk (over 25% of total sales are priced in Euros), the fact that the company's loan maturities increase in 2001 (to $41 million from $11 million in 2000), dependence on dividends from leveraged operating subsidiaries (especially foreign domiciled Haifa Chemical Ltd. (HCL)), dependence of HCL on one key supplier for potash, and subordination considerations. The ratings also recognize TRI's leading global market position in many of its products, its global reach and diversification of customers, the cost savings initiatives undertaken by the company, and its ability to sell certain securities held as investments that provides additional financial flexibility. The Caa3 rating of the senior notes reflects the structural subordination of the senior notes to significant secured debt at subsidiaries. Substantially all of the outstanding secured credit facility debt as of 3/31/00 totalling approximately $400 million is at various subsidiary operating companies and the credit facilities are governed by credit agreements that restrict the upstreaming of funds to TRI. The negative rating outlook reflects the weakened outlook for PN prices and volumes, and the uncertain level of future support of the financial community if problems persist. TRI is a privately owned holding company (100% owned by Arie Genger and his family through a holding company) operating through direct and indirect subsidiaries, including its principal operating subsidiaries, Haifa Chemical Ltd. (HCL) (Israel), Cedar Chemical Corp. (U.S.), and Cedar's subsidiary, Vicksburg Chemical Company (U.S.). The company produces specialty plant nutrients (about 70% of 1999 sales), horticulture products (18%), and organic chemicals (12%). Potassium Nitrate constituted 41% of total 1999 sales. TRI has many leading global market positions in its products, such as the largest global producer of agricultural grade PN (used for the growth of high-value crops such as fruits, vegetables, flowers and tobacco), the largest producer of technical grade PN, and the largest producer of propanil (a leading rice herbicide). TRI's annual PN capacity is 685,000 metric tons. The company believes it has an approximate 60% world market share. Annual PN global demand is about 1 million tons. After 1998 and 1999 capital expenditures totalling $140 million, the company expects that capital expenditures for maintenance and necessary expenditures in 2000 will be $20 million, which is less than depreciation and amortization of about $26 million. Trans-Resources, Inc., headquartered in New York, New York, produces specialty plant nutrients, organic chemicals and horticulture products. TRI VALLEY: May File For Bankruptcy ----------------------------------- Calilfornia's second-largest fruit and vegetable processing company may file for bankruptcy protection under Chapter 11. Tri Valley Growers' debt to Crown Cork & Seal, which supplies them with cans has reached $80 million. With this kind of debt, CEO Jeff Shaw expressed his doubts for the future of the company during a two-hour meeting. Crown Cork will cease deliveries unless the co-op diminishes its debt and guarantee immediate payments in the future. Tri Valley's estimated loss for this fiscal year is $29 million. About $165.2 million was the combined loss for 1998 and 1999. BOND PRICING FOR WEEK OF July 3, 2000 ===================================== DLS Capital Partners Inc., bond pricing for week of July 3, 2000 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 13 - 15(f) Advantica 11 1/4 '08 66 - 68 Asia Pulp & Paper 11 3/4 '05 70 - 71 Conseco 9 '06 69 - 71 E & S Holdings 10 3/8 '06 35 - 37 Fruit of the Loom 6 1/2 '03 49 - 51(f) Genesis Health 9 3/4 '05 11 - 13(f) Geneva Steel 11 1/8 '01 17 - 18(f) GST Telecom 13 1/4 '07 54 - 56(f) Iridium 14 '05 3 - 4(f) Loewen 7.20 '03 34 - 36(f) Paging Network 10 1/8 '07 44 - 45(f) Pathmark 11 5/8 '02 22 - 24(f) Revlon 8 5/8 '08 49 - 51 Service Merchandise 9 '04 7 - 9(f) Trump Atlantic 11 1/4 '06 70 - 71 TWA 11 3/8 '06 37 - 38 Vencor 9 7/8 '06 10 - 12(f) ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *