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/raid1/www/Hosts/bankrupt/TCR_Public/000719.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, July 19, 2000, Vol. 4, No. 140 Headlines AGRIBIOTECH: Idaho Alfalfa Growers May Receive Partial Payment AMERICAN PAD: Signs Letter of Intent With Saratoga Partners AMERISERVE: Founder Denies Improperly Pulling Millions BAPTIST FOUNDATION: Lawsuit Comeback To Superior Court CONCENTREX INC: Announces $140 Million Sale DECORA: Ratings Lowered; Outlook Negative ENAMELON: Creditors File Involuntary Bankruptcy Petition FREEWEB: Debtors File Motion Seeking Approval of Co-Counsel FREEWEB: Notice of Intent to Bid on Assets FRONTIER INSURANCE: Announces Completion Sale of Regency FRUIT OF THE LOOM: Motion To Assume and Assign Office Lease GLOBAL TISSUE: Files for Chapter 11 Bankruptcy Protection GST TELECOMMUNICATIONS: Extends Dates For Bidding on Assets HYUNDAI MOTORS: Spinoff Plan Enters Critical Stage INTEGRATED HEALTH: Motion for Sale of Assets of LTC LEVITZ FURNITURE: Posts $66.9 Million Net Loss LIVENT INC: CIBC Faces Lawsuit Against Creditors LOEWEN: Motion For Approval of Flanagan Family Trust Settlement MESQUITE STAR: Judge Approves Motion To Postpone Sale NSC CORPORATION: Case Summary RADIO ONE: Moody's Assigns Ratings SAFETY-KLEEN: Motion For More Time To File Schedules & Statements SEIYO: Japan Suffers Second Major Bankruptcy In A Week STONE & WEBSTER: Sale to The Shaw Group Inc. Approved SUN HEALTHCARE: No Air Conditioning For SunBridge Despite Deaths ********* AGRIBIOTECH: Idaho Alfalfa Growers May Receive Partial Payment -------------------------------------------------------------- According to an article in The Idaho Statesman on July 12, 2000, most of the assets of defunct Henderson-based AgriBioTech Inc. have now been sold at auction, giving Idaho alfalfa seed growers hope that they will receive at least partial payment for last year's crop by the end of the year. The sale of the assets, which included three seed warehouses in Treasure Valley, also means growers are assured they'll have a market for this year's seed, which is already growing and will be harvested later this year. However, the sale of ABT's assets didn't bring in as much money as farmers had hoped, meaning they may not receive full payment for the crop. Idaho alfalfa seed growers have claims against the company for $ 8 million to $ 9 million for seed they produced last year and haven't been paid for. Combined with claims from grass seed growers in North Idaho, the amount owed to Idaho farmers could be as high as $ 34 million. The sale brought in about $60 million, well short of the $100 million creditors had hoped for. But there is still an estimated $5 million to $6 million in other assets set to go on the auction block. The downside is that ABT's main lending institution, Bank of America, is owed around $45 million and growers in other states have claims against the company. Still, growers are happy that the seed warehouses will keep operating and their contracts will continue. "A lot of them are relieved," said Marsing farmer Jim Briggs, the chairman of the Idaho ABT Growers Committee. "Now that they're putting the bees on (to pollinate the crop), they know it's got a home to go to and know the price," Briggs said. At the auction: 7 ABT's Allied facility in Nampa, some proprietary seed varieties and some assets outside Idaho were purchased by Research Seeds for $ 15.5 million. Research Seeds already operates a seed operation in Nampa under the name Forage Genetics. 7 Dairyland Seed purchased the ABT seed warehouse in Homedale for $ 1.6 million. 7 Northwest Seeds bought the ABT-owned Clark Seeds facility in Nampa for $ 2.7 million. 7 A consortium of three companies, which includes Simplot Turf and Horticulture, a division of the J.R. Simplot Co., purchased most of the grass seed assets of ABT for $ 24.5 million. The companies will not operate together, instead splitting the various assets between them. Simplot bid on the assets because they fit in well with the company's existing turf operations in North Idaho, company spokesman Fred Zerza said. As part of the winning bid, Simplot will get seed distribution centers in Phoenix, Las Vegas and Florence, Ky. and rights to some of the proprietary seed sold to golf courses, Zerza said. AMERICAN PAD: Signs Letter of Intent With Saratoga Partners ----------------------------------------------------------- American Pad & Paper Company (OTCBB:AMPPQ) (AP&P) announced today that it has signed a Letter of Intent with Saratoga Partners for the sale of the assets of its Williamhouse division. The sale is subject to a number of conditions including execution of a definitive sale agreement and bankruptcy court approval. As previously announced, AP&P has been pursuing the sale of its various business assets in order to reduce debt. The sale of Williamhouse will be the Company's second sale of a major business asset. On May 9, AP&P concluded the sale of its Chicago- based Creative Card division to Taylor Corporation. The Company is also pursuing the sale of its Ampad and Forms divisions. "We are pleased to have a financial buyer of Saratoga's caliber express its intent to purchase the Williamhouse business," stated James W. Swent III, chief executive officer. "This transaction will create a stronger Williamhouse and generate benefits for our customers, suppliers and employees. Williamhouse has long been a major force in the marketplace and combined with Saratoga Partners will have the opportunity to bring its market leadership to a new level." "Williamhouse is widely known and respected," stated Christian L. Oberbeck of Saratoga Partners. "This acquisition fits well with our strategy of investing, in partnership with management, in businesses with a strong market share and brand equity. We look forward to providing the financial strength to ensure Williamhouse remains the vendor of choice for its customers." Saratoga Partners, a New York-based Merchant Bank, founded in 1984, has led buyout and private equity investments in 28 companies with an aggregate acquisition value exceeding $3.3 billion. Saratoga's investments have included Koppers Industries, CapMAC, Formica Corporation and telecommunications related companies, including EUR Data Center. American Pad & Paper Co., which invented the legal pad in 1888, is a leading manufacturer and marketer of paper-based office products in North America. Product offerings include envelopes, writing pads, file folders, machine papers, greeting cards and other office products. The key operating divisions of the Company are Williamhouse, AMPAD and Forms. AP&P has been operating under Chapter 11 protection since January 10, 2000 and has secured debtor-in-possession (DIP) financing adequate for its operations while in Chapter 11. Company revenues in 1999 were $573 million, additional information is available on the Company's Website at http://www.americanpad.com. AMERISERVE: Founder Denies Improperly Pulling Millions ------------------------------------------------------ The Wall Street Journal reports on July 18, 2000, that AmeriServe founder and former Chief Executive John Holten, denied an allegation that he had improperly pulled millions of dollars out of the food distributor prior to the company's bankruptcy filing in January. The allegation was made in a suit AmeriServe filed in May in U.S. Bankruptcy Court in Wilmington, Del. The response by A, made in a filing late Friday to the court, is his first formal answer to that suit. Mr. Holten is chief executive and controlling shareholder of Holberg Industries Inc., a closely held Greenwich, Conn., firm that in turn has a controlling stake in AmeriServe. In the response, Holten said his firm put far more money into AmeriServe than it took out. Further, he said, the transactions occurred under a longstanding and legitimate agreement between AmeriServe and its controlling shareholders. Creditors in this case are expected to take significant losses on the roughly $2 billion they are owed by the company. And bondholders are pursuing AmeriServe's underwriter, Donaldson, Lufkin & Jenrette Inc., for allegedly failing to properly disclose AmeriServe's troubles when it sold $200 million of AmeriServe junk bonds in September 1999. In his response, Mr. Holten said, "to the extent that [the AmeriServe suit] purports to allege that the defendants illegally siphoned off funds from [AmeriServe], it grossly mischaracterizes the business relationships between [AmeriServe] and its parent entities, and it misrepresents the actual financial transactions among them." BAPTIST FOUNDATION: Lawsuit Comeback To Superior Court ------------------------------------------------------- According to the Arizona Republic on July 12, 2000, the three- month class-action lawsuit of the defunct Baptist Foundation of Arizona is now back in Maricopa County Superior Court. Lead class-action attorney, Andrew Friedman says, "The suit is back where it belongs, so at least we cleared that obstacle," [and] "That's good news for the investors because this has been sitting for 90 days. This will finally get it moving." The lawsuit that was filed late last year represented BFA investors, alleging former foundation officials and Arthur Andersen & Co. of swindling them out of millions of money. BFA filed for Chapter 11 in November listing assets of $ 240 million and debts amounting to $ 590 million to 13,000 investors. CONCENTREX INC: Announces $140 Million Sale ------------------------------------------- Concentrex Incorporated (Nasdaq: CCTX) announced on July 17, 2000 that it has reached an agreement with John H. Harland Company (NYSE: JH) under the terms of which Harland will pay approximately $140 million for Concentrex, taking into account the Company's loan obligations and transaction-related expenses. The transaction will take the form of a tender offer of $7.00 per Concentrex share and is expected to close in August. The closing is subject to receiving a majority of Concentrex's outstanding shares in the tender offer, receiving regulatory approval and other closing conditions. "There is little overlap between Harland's software division and Concentrex in terms of products, and we believe this acquisition provides the best opportunity for our employees and our customers," said Matt Chapman, Concentrex Chairman and CEO. "Concentrex has been under extreme pressure because of concerns over our financial situation and a transaction of this type was essential for the Company. Getting the benefit of Harland's extremely strong balance sheet and cash generation will address this financial concern, while providing a material premium over the current share price for our shareholders." Concentrex also announced today that its second quarter results are expected to be substantially below analyst expectations, and, as a result, it is in default under the loan covenants with its lenders. "Our financial position with our lenders is a principal reason we have chosen to sell the company," added Chapman. Allen & Co. was retained by Concentrex to assist it in pursuing strategic alternatives and served as investment advisor in this transaction. Concentrex Incorporated, based in Portland, Oregon, is a provider of technology-powered solutions to deliver financial services, including a broad range of traditional software and services integrated with leading e-commerce solutions that already enable its customers to serve more than one million home banking customers. Concentrex serves over 5,000 financial institutions of all types and sizes in the United States. Concentrex has major offices in 11 additional cities across the country. Its World Wide Web site is www.concentrex.com Atlanta-based John H. Harland Company (www.harland.net) is listed on the New York Stock Exchange under the symbol "JH." Harland is a leading provider of checks, financial software and direct marketing to the financial institution market. Scantron Corporation (www.scantron.com), a wholly owned subsidiary, is a leading provider of software services and systems for the collection, management and interpretation of data to the financial, commercial and educational markets. At the time the offer is commenced Harland will file a tender offer statement with the U.S. Securities and Exchange Commission (SEC) and Concentrex will file a solicitation/recommendation statement with respect to the offer. DECORA: Ratings Lowered; Outlook Negative ----------------------------------------- According to an article in The Wall Street Journal on July 18, 2000, Decora Industries Inc.'s senior secured notes due 2005 were lowered to Caa3 from Caa1 by Moody's Investors Service Inc., the credit-ratings agency said. Concurrently, the company's senior implied ratings were lowered to Caa1 from B2 and its senior issuer ratings fell to Ca from Caa2. The Dun & Bradstreet Corp. unit also changed its outlook to negative. Moody's said the downgrade was in response to the Fort Edward, N.Y., company's "poor operating performance" for the fiscal year ended March 31, and that it was concerned that Decora, a manufacturer of surface-covering products, wouldn't be able to meet its debt-servicing obligations. Last week, Decora received a notice of default with regard to recent financing. Moody's also cited "distribution issues in North America, a weak Eastern European economy and unfavorable foreign-currency translation" as reasons for "extremely thin operating margins, inadequate interest coverage and an inability to reduce a large debt burden." Decora is pursuing a lawsuit against Rubbermaid Inc., charging that Rubbermaid made false representation concerning Decora's acquisition of Rubbermaid's decorative-coverings group. Robert Hanlon, Decora's chief financial officer, was quoted in the article as saying, "This is very poor timing, but we believe the company has a lot of upside. We have regained shelf space and reacquired significant customers lost during the Rubbermaid transition." ENAMELON: Creditors File Involuntary Bankruptcy Petition -------------------------------------------------------- In the Bankruptcy Court of the District of New Jersey, three creditors of Enamelon, Inc. filed an involuntary bankruptcy petition against the company. Enamelon is currently evaluating its options. The company tries to find domestic and foreign makers of oral care products to whom they would entrust the patented remineralizing technology of their products. Since early June, the company transferred into smaller offices and there are only about five full-time employees left after 75% of its work force was laid off. FREEWEB: Debtors File Motion Seeking Approval of Co-Counsel ----------------------------------------------------------------- On July 26, 2000, the debtors, Smart World Technologies LLC, et. Al. will move the court for the authority to retain the law offices of Douglas J. Tabachnik and Douglas J. Pick & Associates as co-counsel to the debtors. The Debtors have filed a motion to approve an agreement with Juno Online Services, Inc. for the referral of the Debtors' subscribers and the sale of the Debtors' domain names, subject to higher and better bids as provided in a Term Sheet. The Debtors believe that they can promptly formulate and file a liquidation plan with the Court. The debtors claim that if they do not succeed in moving quickly, the network and business of the Debtors will not be preserved in sufficient quantity to obtain a reasonable return for creditors. During the pendency of this chapter 11 case, the Debtors will require experienced Bankruptcy Counsel to, inter alia: (a) advise the Debtors with respect to their rights and duties as a debtors-in-possession; (b) assist and advise the Debtors in the preparation of their financial statements, schedules of assets and liabilities, statement of financial affairs and other reports and documentation required pursuant to the Bankruptcy Code and the Bankruptcy Rules; (c) represent the Debtors at all hearings and other proceedings relating to their affairs as chapter 11 debtors; (d) prosecute and defend litigated matters that may arise during these chapter 11 cases; (e) assist the Debtors in the formulation and negotiation of plans of reorganization and all related transactions; (f) assist the Debtors in connection with the finalization, Court approval and consummation of either the sale or, alternatively, refinancing of the Property; (g) assist the Debtors in analyzing the claims of creditors and equity interests and in negotiating with such creditors and interest holders; (h) prepare any and all necessary motions, applications , answers, orders, reports and papers in connection with the administration and prosecution of the Debtors' chapter 11 cases; and (i) perform such other legal services as may be required and/or deemed to be in the interest of the Debtors in accordance with its powers and duties as set forth in the Bankruptcy Code. Both firms' requested compensation for professional services rendered to the Debtors shall be based upon the time expended to render such services and at billing rates commensurate with the experience of the person performing such services and will be computed at the hourly billing rate customarily charged by the respective firms for such services. Douglas J. Pick and Associates' normal hourly rates are: $285 per hour and $110.00 per hour for paraprofessionals. Douglas T. Tabachnik's normal hourly rates are: $288.75 per hour and $110.00 per hour for paraprofessionals. FREEWEB: Notice of Intent to Bid on Assets ------------------------------------------ Mr. William M. Parker, CEO and President of Fanz.net, Inc. a Seattle based "free"Internet service, notified Douglas J. Pick & Associates and the Law Offices of Douglas T. Tabachnik that he will appear in United States Bankruptcy Court, on July 19, 2000 at the hearing to be held commencing at 2:00 p.m., for the purpose of bidding on the assets of FreeWeb and to provide to the court assurance of financial capacity. FRONTIER INSURANCE: Announces Completion Sale of Regency -------------------------------------------------------- Frontier Insurance Group, Inc. (Frontier) (NYSE-FTR) announced that it has completed the sale of Regency Insurance Company to Tomoka Re Holdings, Inc., an affiliate of Tower Hill Insurance Group, for $7.1 Million. On the completion of the sale, Harry Rhulen, Frontier's President and Chief Executive Officer, stated, "We are pleased to conclude this transaction and continue to execute our Corrective Action Plan. The proceeds of the sale will be used for corporate purposes, including repayment of debt." Frontier is an insurance holding company which, through its subsidiaries, is a national underwriter and creator of specialty insurance products serving the needs of insureds in niche markets. FRUIT OF THE LOOM: Motion To Assume and Assign Office Lease ----------------------------------------------------------- Fruit of the Loom Inc., a New York corporation and subsidiary of Debtor, motions the Court for an order approving the assumption and assignment of a lease for nonresidential real property to Inforocket Inc., for $1,300,000 in cash, under the terms of a June 12, 2000, Letter Agreement. Inforocket also will pay the current balance of Debtor's security deposit. On June 19, 1998, Fruit of the Loom entered into a lease for the twelfth floor of a building located at 525 Seventh Avenue in New York City. Judge Walsh approved two 365(d)(4) motions on February 28, 2000 and April 19, 2000, to extend the time within which to assume, assume or assign or reject its unexpired nonresidential real property leases, including the one at 525 Seventh Avenue. Fruit of the Loom states that the 525 Seventh Avenue office exceeds anticipated needs. Less costly alternative office space has been identified. Sale of the lease precludes liability under Section 502(b)(6) for potential rejection damages that the landlord may seek. As a result, sale of the lease substantially benefits the estate and its creditors. Fruit of the Loom estimates moving expenses at approximately $52,000. The relief requested by Fruit of the Loom includes a provision that allows acceptance of higher or better offers. They reserve the right to conduct an auction for the lease. Inforocket is entitled to a breakup fee of $52,000 if its bid is topped by another offer. The parties target a closing deadline of July 17, 2000. Fruit of the Loom retained broker Fashion Realty Group Ltd., which showed the office to over 30 potential buyers. Inforocket brought the highest and best bid. (Fruit of the Loom Bankruptcy News Issue 8; Bankruptcy Creditors' Service Inc.) GLOBAL TISSUE: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Global Tissue LLC filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware. Global Tissue is a paper products manufacturer and converter for private-label customers that is based in Memphis, Tenn. The five largest unsecured creditors are Memphis-based Ponderosa Fibres of America (X.PDF), the City of Memphis, International Forest Products Ltd. (IFP.A), Dupont (DD), and Kruger, Inc. Seventy-two per cent of the company is owned by, Kruger, Inc, a company based in Montreal. The total assets of Global Tissue are $79.2 million and liabilities total $93.1 million. GST TELECOMMUNICATIONS: Extends Dates For Bidding on Assets ----------------------------------------------------------- GST Telecommunications, Inc., an integrated communications provider (ICP) in California and the western United States, announced it is extending the dates originally established for bidding for substantially all of its assets. With the support of the Official Committee of Unsecured Creditors appointed in its bankruptcy case, the Company has extended the final date for bids to August 11 (from the original July 31 date) and moved the auction date to August 22 (from August 4). A hearing is scheduled on August 25 in the District Court for the District of Delaware with jurisdiction over the Company's bankruptcy proceedings to approve the winning bid. "Because the earliest hearing date for court approval of the highest bid is late August, the Company and the committee of unsecured creditors agreed the time could be well used for continued due diligence," stated Tom Malone, acting chief executive officer of GST. "Extending the dates allows GST to accommodate companies that have expressed strong interest in the Company. To date, over 35 companies have signed confidentiality agreements with GST in order to begin due diligence. This outpouring of interest has confirmed our original belief that GST's network assets, customer base, and employees together comprise a highly valued enterprise." GST Telecommunications, Inc., an Integrated Communications Provider (ICP) headquartered in Vancouver, Wash., provides a broad range of integrated telecommunications products and services including enhanced data and Internet services and comprehensive voice services throughout the United States, with a significant presence in California and the West. Visit GST's Web site at www.gstcorp.com. For more information, please contact: GST Telecommunications, Inc. Investor & Public Relations 800-667-4366 HYUNDAI MOTORS: Spinoff Plan Enters Critical Stage -------------------------------------------------- The Hyundai Group's stalled plan to spin off its automotive business is entering a critical stage in the wake of the government's offer last week to mediate the group's escalating family dispute. Jeon Yun-churl, chairman of the Fair Trade Commission, demanded Friday that Hyundai founder Chung Ju-yung split his 9.1-percent stake in Hyundai Motor into 6.1 percent in preferred stock carrying no voting rights and 3 percent in common stock to meet the legal requirements for the automaker's separation. In what sounded like an ultimatum, Jeon asked Hyundai to decide on his proposal by the end of this month. Chung's over-3 percent stake has been the last obstacle to the spin-off scheme. In order for Hyundai Motor to be considered legally independent from the group, Chung and all other Hyundai Group affiliates must reduce their shareholding in Hyundai Motor to less than 3 percent, according to the present law. Hyundai has not shown any immediate response, but analysts forecast the embattled conglomerate will have no choice but to accept the government proposal. "The ball is now in Hyundai's court," said an analyst. "Afraid of loss of confidence from the market, the Chung family may attempt to end its internal dispute." Hyundai's crashing image in contrast to rival Samsung Group's noticeable takeoff of late will also force the Chung family to bury the hatchet and hasten restructuring moves, he added. In this regard, Hyundai said it will submit a revised plan to spin off Hyundai Motor to the FTC within this month. An official of the group's restructuring committee said: "We are studying various ways to come up with a new separation plan acceptable by the government and the people." Another group executive said that there is no precedent in which ordinary shares are massively turned into preferred shares, calling the FTC chairman's proposal "confusing." "Above all, it is the founder that holds the key to the protracted dispute," he said, floating the idea of a gradual stock shift for a period of two to three years. The separation of Hyundai Motor is part of the government's greater efforts to reform the largest chaebol's family- controlled, sprawling empire by breaking it up into five smaller conglomerates, including electronics, construction, heavy industries and finance-service business. However, many analysts say that the outlook is not bright because of the Chung family's lingering managerial disputes. The cause for the delayed spin-off restructuring has often been traced to the severe sibling feud. The watchers speculate that the elder Chung's desire to hold strong managerial influence over Hyundai Motor is actually intended to eventually drive his eldest son, Chung Mong- koo, out of his chairmanship. They also predict that in the wake of Hyundai Motor's failure to separate itself from the group, the elder Chung's favored son, Chung Mong-hun, is expected to continue to work to remove his elder brother from Hyundai Motor's top post. Indeed, the Mong-koo camp has been steadily expanding its Hyundai Motor shares in a bid to defend its management right in a possible equity battle with the Mong-hun camp. Following a "let's buy our own share" campaign by Hyundai Motor employees, three parts suppliers to the nation's largest automaker bought 666,570 shares last week. In a counter move, the Mong-hun camp is said to be actively buying Hyundai Motor stock through offshore funds. Mong-koo is said to be capable of wielding 38.6 percent of voting rights in Hyundai Motor, including a 4 percent share owned by himself, a 7.8 percent stake by Hyundai Precision & Industry, 12 percent by Hyundai Motor employees and 4.8 percent by Mitsubishi Motors. (The Korea Herald 17-July- 2000) INTEGRATED HEALTH: Motion for Sale of Assets of LTC ---------------------------------------------------- LTC Laboratories, Inc., IHS's wholly owned subsidiary in the business of testing blood, urine or other specimens collected at long-term care facilities, has been running at break-even or at a slight loss since it was acquired by IHS from HealthSouth on January 1, 1998. In 1999 LTC had net revenues of $4.4 million and a net loss of approximately $200,000. The Debtors anticipate that with continued reductions in Medicare reimbursement rates, only the largest providers will survive and LTC cannot survive in such a rate-cutting environment. The Debtors therefore ask Judge Walrath to authorize the sale of substantially all of the assets of LTC to National Medical Financial Services, Inc., pursuant to an Asset Purchase Agreement which provides for an aggregate purchase price of $325,000, as well as for National Medical to assume certain of LTC's liabilities and obligations, and for LTC to retain gross accounts receivable totaling more than $3,000,000. The Debtors clarify that the Purchase Agreement does not dictate the terms of a plan of reorganization, as it does not attempt to restructure the rights of creditors. The distribution of LTC's assets, the Debtors iterate, will be managed consistent with the Bankruptcy Code and pursuant to a plan of reorganization Specifically, LTC will sell, assign, and transfer to National Medical substantially all of its property, including physical plant, equipment, supplies, inventory, and furnishings. The Agreement also provides for: * hiring by National Medical of LTC employees on a probationary basis subject to terms and conditions in the Asset Purchase Agreement; * the transfer of assets free and clear of Liens, except the Assumed Liens, * the assumption and assignment of executory contracts, * the assignment of licenses with respect to LTC's right and interest in the Clinical Laboratory Improvement Act, Registration No. 4500861062, and the City of Dallas Alarm Permit, in accordance with applicable law (the Assigned Licenses). * assumption of LTC's liabilities to include only those (i) under the Assigned Contracts, (ii) for employee vacation benefits due and accrued through the Closing Date, and (iii) with respect to the Assumed Liens. * exclusion of inventory and supplies disposed of after the date of the Purchase Agreement and prior to Closing, Medicare and Medicaid provider agreements and numbers, the State of Texas Permit for Precursor Chemicals and/or Laboratory Apparatus, and other governmental licenses and permits other than the Assigned Licenses, claims and rights under any contracts, leases, commitments, licenses, and permits relating to periods prior to Closing, The Debtors submit that the terms of the Purchase Agreement are fair and reasonable and they believe it is sound business judgment to sell the assets of LTC as soon as possible, given the business climate and LTC's performance. (Integrated Health Bankruptcy News Issue 6; Bankruptcy Creditors' Service Inc.) LEVITZ FURNITURE: Posts $66.9 Million Net Loss ---------------------------------------------- For the first quarter of the fiscal year 2000, Levitz Furniture, Inc. posted a $66.9 million net loss or $2.22 a share. Net sales for fiscal 2000 decreased to $535.1 million, or a decrease of 18%. Levitz had a 2.8% increase in store sales for fiscal 2000 compared to the previous years' store sales. Store sales continue to rise 9.3% in April, 4.7% in May, and 6.4% in June. Levitz is developing measures to help the company emerge from Chapter 11. The company plans to obtain additional capital from current vendors and suppliers and to obtain working capital financing to replace its current debtor-in-possession credit facility. It is anticipated that after the company emerges from bankruptcy, an exit financing of about $95 million would be used for working capital requirements. LIVENT INC: CIBC Faces Lawsuit Against Creditors ------------------------------------------------ The Ontario Globe and Mail reports on July 12, 2000 that unsecured creditors of defunct Livent Inc. filed a lawsuit against Canadian Imperial Bank of Commerce. The third lawsuit was filed at the U.S. Bankruptcy Court in Southern District of New York alleges CIBC as dishonest and is engaged in illegal acts. The suit charges CIBC doing some portrayals such as being a lender, backdoor lender, underwriter, research firm and sales office in its long relationship with Livent. "The grossly fraudulent and inequitable conduct of the CIBC entities created an unfair advantage for the CIBC entities and harmed Livent and its creditors by forcing Livent into bankruptcy." CIBC refused to comment on this latest lawsuit. LOEWEN: Motion For Approval of Flanagan Family Trust Settlement --------------------------------------------------------------- Pursuant to Rule 9019 of the Bankruptcy Rules and sections 363 and 365 of the Bankruptcy Code, five of the Debtors, Loewen Group International, Inc., The Loewen Group Inc., International Memorial Society, Inc., Palm Springs Mausoleum, Inc. and Security Plus Mini & RV Storage, Inc., move the court for an order authorizing (a) entry into settlement agreement with Honorine T. Flanagan (Flanagan) and the Flanagan Family Trust (b) entry into lease amendment and assumption of lease as amended and (c) deposit of cash security deposit, in the amount of $600,000 to secure its obligations under the Lease as amended by the Lease Amendment. Under a Purchase Agreement entered on July 17, 1995, LGII agreed to buy and the Trust, Flanagan and John Dillon Flanagan agreed to sell, all of the issued and outstanding shares of: (a) International Memorial, d/b/a Palm Springs Mortuary, Palm Springs Mortuary at Cathedral City and Desert Hot Springs Mortuary; (b) Palm Springs; and (c) Security Plus. By the Purchase Agreement, the Sellers also agreed to convey to LGII the Mausoleum Parcel of real property. On July 17, 1995, LGII, as tenant, and the Trust, as lessor, entered into a Lease. On November 1, 1996, the Trust assigned the Lease to John Dillon Flanagan and Flanagan, and John Dillon Flanagan assigned it to Flanagan. * The base rent under the Lease currently is $480,000 annually; * The term of the Lease currently expires on July 16, 2000, but the Lease includes an option for renewal for two additional consecutive terms of five years each. The base rent under the Lease for the first year of the renewal term would be $1,200,000; * Under the Lease, LGII has an option to purchase the Leased Premises on or before the end of the initial term or before the end of the second renewal term. On July 17, 1995, LGII and Flanagan entered into a Consulting Agreement and an Employment Agreement. According to the Debtors, Flanagan had failed to convey the Mausoleum Parcel to LGII. Honorine T. Flanagan, on the other hand, had complaints against the Debtors as evidenced in the lawsuit Honorine T. Flanagan v. Loewen Group International, Inc., The Loewen Group, Inc. and DOES (individuals related to the case) 1 through 100 commenced in December 1998 in California. The lawsuit alleges, among other things, that under the Asset Purchase Agreement, Loewen convenant that no claims, suits or proceedings were pending against Loewen. It was based on this, the lawsuit says, that the Flanagans agreed to enter into the Share Purchase Agreement which set forth a comprehensive business agreement by which the Flanagans agreed to sell their mausoleum and mortuary business assets to Loewen. The Aggregate Purchase Price was $10,200,000 to be paid $2,400,000 in cash and certain restricted common stock in TLGI to be of a dollar value equal to $7,800,000. However, as a result of the Gulf National Litigation and the Provident Litigation that Loewen was facing, the Exchange Shares do not have a valud equal to the consideration called for in the Stock Purchase Agreement of $7,800,000, Flanagan alleges. Flanagan and the Trust have asserted 15 proofs of claim and administrative expense claims against the Settlement Debtors on account of among other things, the Purchase Agreement, the Consulting Agreement, the Lease and the Flanagan Lawsuit. To resolve the dispute, the parties entered into a Settlement Agreement which provides for: (a) Entry Into Lease Amendment and Assumption of Lease as Amended. (b) The Lease Term will be extended for an additional period of five years commencing on July 17, 2000 and terminating on July 16, 2005. (c) The rent under the Lease as amended by the Lease Amendment will be: $600,000 annually for the first year of the extended lease term, $780,000 for the second and third years of the extended lease term, $840,000 for the fourth year of the extended lease term and $900,000 for the fifth year of the extended lease term. (d) LGII's option to renew the Lease for two additional five-year periods has been deleted. (e) LGII's option to purchase the Leased Premises has been deleted. (f) LGII has agreed to deposit with Flanagan a cash security deposit of $600,000, subject to a reduction in the amount of $75,000 on the first day of each of the last six months of the term of the Lease as amended by the Lease Amendment. (g) Conveyance of Mausoleum Parcel will be effected immediately upon the execution of the Settlement Agreement. (h) LGII and Flanagan acknowledge that the Employment Agreement expired in accordance with its terms on July 18, 1998 and that LGII has no liability to Flanagan on account of the Employment Agreement. (i) Flanagan will covenant with LGII that Flanagan will not compete with LGII within a 50 mile radius of the Leased Premises. (j) Flanagan and the Trust will release the Settlement Debtors and related persons and entities from claims (k) There will be mutual release of claims (l) Flanagan will agree to dismiss with prejudice the Flanagan Lawsuit, all causes of action or claims asserted therein and any other lawsuit, or proceeding, previously filed. Flanagan and the Trust on the one hand and the Settlement Debtors on the other have covenanted not to commence any lawsuit or proceeding or claims. (m) Each party to the Flanagan Lawsuit will bear its own attorneys' fees and costs previously incurred in connection with that lawsuit. (n) Flanagan and the Settlement Debtors will agree that the ADR Notices that the Debtors have sent will be withdrawn, and any procedures initiated thereby terminated. (Loewen Bankruptcy News Issue 24; Bankruptcy Creditors' Service Inc.) MESQUITE STAR: Judge Approves Motion To Postpone Sale ----------------------------------------------------- According to the Las Vegas Review-Journal on July 12, 2000, Judge Michael Douglas granted the motion to postpone the previously announced foreclosure sale of distressed Mesquite Star. The Lawyers representing some of the 276 employees of the hotel- casino brought forth the motion to the court for the protection of their clients interests before any sale takes place. Employees were somehow swindled from their own money with health coverages deducted from each paycheck and not able to use it when needed. Representing the workers, Attorney Matt Callister says, the postponement was necessary so he and co- counsel Richard Dreitzer could get a ruling on a Nevada statute granting employees a lien against a bankrupt corporation, for wages that are due. After opening in July 1998, Mesquite Star filed for Bankruptcy Protection under Chapter 11 in Dec. 1, reporting $ 22 million in assets and $23 million in debts. NSC CORPORATION: Case Summary ----------------------------- Debtor: NSC Corp. 40 Lydecker Street Nyack, NY 10960 Type of Business: Asbestos-abatement, demolition & dismantling and other specialty contracting services. Chapter 11 Petition Date: July 17, 2000 Court: Southern District of New York Bankruptcy Case No.: 00-13233 Debtor's Counsel: John Howard Drucker Laurence May Angel & Frankel, P.C. 460 Park Avenue New York, NY 10022 (212) 752-8000 Fax: (212) 752-8393 Email: Jdrucker@angelfrankel.com Total Assets: $ 37,054,941 Total Debts: $ 34,653,094 RADIO ONE: Moody's Assigns Ratings ----------------------------------- Moody's Investors Service confirmed the B3 rating of Radio One Inc.'s $84 million of 12% senior subordinated discount notes due 2004. At the same time, Moody's also assigned a "caa" rating to Radio One's $310 million of Remarketable Term Income Deferrable Equity Securities (HIGH TIDES). The senior implied rating and senior unsecured issuer rating at Radio One Inc. are B1 and B2, respectively. The outlook for the ratings is stable. The rating of its existing bank facility has been withdrawn. Despite the increase in leverage that will result from the partially debt-financed acquisitions and the HIGH TIDES issuance, Radio One's ratings are confirmed to reflect the continued progress in the execution of the company's strategy to become the preeminent operator of the urban radio format. The transactions include: the $1.3 billion acquisition of radio stations from Clear Channel, the $40.0 million acquisition from Shirk and IBL, the $24.0 million acquisition of stations from Davis Broadcasting, and the $16.0 million acquisition of KLUV-AM from Infinity Broadcasting (expected to close in the fourth quarter). The transactions will be financed with drawdowns under its new $750 million secured bank facility, its $310 million of proceeds from the HIGH TIDES issuance, and $505 million of cash proceeds from its completed follow-on equity offerings. Although leverage rises in the near term, Radio One is likely to become a more durable enterprise because it benefits from gains in cash flow diversification and an improved market presence. The pending transactions will increase Radio One's portfolio size from 27 stations to 50 stations while pro-forma EBITDA is tripled. The company's cash flow will also be diversified across 18 markets, instead of 9, which further insulates the company from advertising spending downturns in any of its markets. However, Radio One's ratings continue to be constrained by the company's high leverage, modest cash flow coverage of interest and dividends, its aggressive acquisition strategy, and the exposure associated with being a niche operator. The ratings also reflect the imbedded event risk and the residual integration risks of Radio One's ongoing acquisition strategy. Moody's also notes that Radio One's management depth will have to be increased. Radio One's ratings also reflect the potential difficulties of being a niche operator. Radio One may be exposed to a contraction in advertising spending targeting the African American community in a cyclical downturn. Additionally, a decline in the popularity of the urban radio format, though unlikely, would adversely impact Radio One. Radio One's ratings continue to be supported by the clarity and limits of its acquisition strategy, the company's leading presence in key African-American markets, the positive fundamentals associated the African-American market, and the company's substantial use of equity in the execution of its growth strategy. Since its inception, Radio One has articulated and executed a focused strategy aimed at growing its presence in the top 40 African American markets. This strategy immediately delineates a group of stations as ideal for Radio One's purposes, thus minimizing possible acquisition missteps. Lastly, the "caa" rating of the HIGH TIDES reflects its deep subordination within the capital structure to present and potential debt obligations at Radio One. The B3 rating on the subordinated notes reflects its legal subordination to a substantial level of bank debt in Radio One's capital structure. The outstanding senior debt under the bank facility, following the transactions, is expected to be $550 million. Radio One, pro forma for the pending transactions, will own and/or operate 50 radio stations in 19 markets. Forty-nine of the stations will be located in 18 of the top 40 largest African American markets in the country. Radio One is headquartered in Lanham, Maryland. SAFETY-KLEEN: Motion For More Time To File Schedules & Statements ----------------------------------------------------------------- The Debtors estimate they have tens of thousands of creditors. The process of identifying those entities and determining the nature and amount owed to each creditor by July 10, 2000, is impossible, the Debtors say. The Debtors tell Judge Walsh that they are diligently working to assemble all of the data necessary to produce coherent schedules of assets and liabilities and statements of financial affairs in order to comply with the requirements set forth in 11 U.S.C. Sec. 521. Reasonably, the Debtors estimate that process can be completed if granted an extension, through September 8, 2000, of the time period provided under Rule 1007 of the Federal Rules of Bankruptcy Procedure. (Safety-Kleen Bankruptcy News Issue 4; Bankruptcy Creditors' Service Inc.) SEIYO: Japan Suffers Second Major Bankruptcy In A Week ------------------------------------------------------ Seiyo Corp., a real estate unit of Seibu Department Store Ltd., filed for special liquidation with debts of 517.5 billion yen (US$4.79 billion), according to a newswire report. Tokyo-based Seiyo follows in the steps of Japanese department store operator Sogo Co., which last week sought bankruptcy court protection with debts of 1.87 trillion yen-Japan's second biggest corporate bankruptcy. A spokesman for Seibu Department Store, the core firm of the Saison group, said the Saison group and creditor banks had entered the final stages of talks on spreading the financial burden of liquidating Seiyo. Of the 30 companies in the Seiyo Corp group, 23 will be liquidated. Saison and Dai-Ichi Kangyo Bank Ltd., Saison's main creditor, agreed the Saison Group would repay between 80 to 90 billion yen to banks over two years. Saison group firms include consumer financing company Credit Saison Co., supermarket chain operator Seiyu Ltd., restaurant chain Seiyo Food Systems Inc. and shopping center operator Parco Co. (ABI July 18, 2000) STONE & WEBSTER: Sale to The Shaw Group Inc. Approved ----------------------------------------------------- Stone & Webster, Incorporated (OTC Bulletin Board: SWBIQ) announced on July 17, 2000 that the U.S. Bankruptcy Court for the District of Delaware approved the sale of substantially all of the Company's assets to The Shaw Group Inc. (NYSE: SGR) and the transaction was effectively closed on Friday, July 14, 2000. The Shaw Group was the successful bidder for Stone & Webster's assets in a sale proceeding under Chapter 11 of the U.S. Bankruptcy Code. Accordingly, Stone & Webster's previously announced asset sale agreement with Jacobs Engineering Group Inc. (NYSE: JEC) has been terminated. The sale produced a topping bid evaluated at approximately $147 million over the previous Jacobs agreement. Jacobs received a breakup fee of $10 million. Under terms of The Shaw Group's successful bid, Shaw acquired substantially all of the assets and assumed certain liabilities of S&W, for a total purchase price of approximately $38 million in cash and approximately $105.8 million of Shaw Common Stock (approximately 2.2 million shares). Shaw also assumed liabilities with a book value of approximately $450 million and acquired assets with a book value of approximately $600 million. Shaw has agreed to complete substantially all of Stone & Webster's contracts for current and future projects. Stone & Webster filed for court protection under Chapter 11 of the U.S. Bankruptcy Code on June 2, 2000. As the Company has previously stated, because the sale of assets is occurring in the context of a pending Chapter 11 case, it is not possible to determine at the present time what value, if any, will ultimately be received by Stone & Webster's stockholders. Such a determination can only be made after substantial resolution of Stone & Webster's Chapter 11 reorganization. Stone & Webster's Chairman and CEO, H. Kerner Smith, stated: "We are pleased that the value of the Company's assets was maximized through the bid process, and we believe that the combination with The Shaw Group will provide a strong competitor in the markets served and provide opportunities for growth." Stone & Webster's common stock is trading as an over-the-counter ("OTC") equity security under the symbol "SWBIQ." Quotation service is provided by the OTC Bulletin Board and the National Quotation Bureau, LLC "Pink Sheets." Market makers are providing orderly trading of the stock. Investors should call their brokers for daily pricing and volume information. SUN HEALTHCARE: No Air Conditioning For SunBridge Despite Deaths ---------------------------------------------------------------- Despite a congressman's insistence, a nursing home where three elderly people died during a blistering heat wave said it will not install air conditioning. On July 7, Rep. Tom Lantos, D-San Mateo, asked the company for a cooling system at the SunBridge Care and Rehabilitation home and talked about legislation to force installation of air conditioning at nursing homes. But on Friday, Greg Johnston, spokesman for Sun Healthcare Group, the company that acquired SunBridge in 1998, said no. "Sun Healthcare will not be installing air conditioning in the SunBridge facility primarily due to excessive costs," Johnston said. "We are looking at alternatives to some sort of complete air conditioning that won't be so cost prohibitive." The cost was estimated at $500,000. SunBridge has been in Chapter 11 bankruptcy since last fall, although officials expect it to be out of bankruptcy by the end of the year. Lack of air conditioning is blamed for excessive heat in the home June 14 and 15 when outside temperatures reached 108 degrees in the county. Besides the deaths, five others were treated or hospitalized during the two days. The state is investigating the 274-bed facility to decide whether the deaths and hospitalizations were the result of heat-related illnesses and, if so, if they were brought on by the lack of air conditioning or the facility's inability to provide proper care for patients during extreme temperatures. ********* 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 * * *