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/raid1/www/Hosts/bankrupt/TCR_Public/000724.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, July 24, 2000, Vol. 4, No. 143 Headlines AMERICAN BIOMED: Files Chapter 7 AMERITEL COMMUNICATIONS: Last Date For Filing Proofs of Claim AVIAN FARMS: Ceased Operations, Liquidates AVIVA PETROLEUM: Subsidiary Files Voluntary Chapter 11 Petition BUCYRUS INTERNATIONAL: Moody's Downgrades Senior Unsecured Notes CAJUN ELECTRIC: $169M Refunds For Former Customers CAPITOL COMMUNITIES: Subsidiary Files Voluntary Chapter 11 CERPLEX GROUP: Agrees to Sell Repair Sites and Call Center CERPLEX GROUP: Consents to Involuntary Chapter 11 Filing COMPLETE WELLNESS: May File for Bankruptcy CREDITRUST: Confirms Class Action Lawsuit DAEWOO INT'L (America): Committee Files Limited Objection DIAGNOSTIC HEALTH: Files Reorganization Plan DRKOOP.COM: Lawfirm Files Lawsuit DRKOOP.COM: Millenium Offers Merger FLORIDA POWER & LIGHT: Conditional Settlement Agreement GENEVA STEEL: Files Reorganization Plan GENICOM CORP: Motion To Extend Time to Assume or Reject Leases GOLDEN OCEAN: Frontline's Disclosure Statement JOAN & DAVID: Business to be Sold ; Subject to Better Offers KCS ENERGY: Committee Applies to Employ Hite, McNichol LUTHERAN SOCIAL: May File For Chapter 11 MARTIN COLOR-FI: Emerges From Chapter 11 METROTRANS CORP: Order Approves Disclosure Statement NEXTEL INTERNATIONAL: Moodys Assigns Caa1 To New Senior Notes OAKWOOD HOMES: Moody's Lowers Ratings PHYSICIANS ALLIANCE: Files For Chapter 11 PPG INDUSTRIES: Reports On 2nd Quarter PRIME SUCCESSION: Hunter's Homes Stay Open ROBERDS: Joint Memorandum in Support of Sale to Burlington SAFETY-KLEEN: Bondholders Sue Controlling Shareholder SCHEIN PHARMACEUTICAL: Ratings Remains Under Review TOYSMART: Permitted to Sell Customer List VERSATECH: Firm Up For Sale WORLDTEX: Below NYSE Continued Listing Standards ********* AMERICAN BIOMED: Files Chapter 7 -------------------------------- American BioMed Inc. filed a voluntary chapter 7 petition in the Northern District Court of Texas in Dallas. After unsuccessfully pursuing alternate sources of funds and thereby unable to complete its plan of recapitalization, the company's said its board of directors authorized retention of bankruptcy counsel and then determined that all of the Dallas-based company's assets needed to be liquidated. Chairman and Chief Executive Officer Justine B. Corday commented, "As shareholders and creditors of the company ourselves, we wish other courses had been available, and we genuinely regret the necessity of these steps." AMERITEL COMMUNICATIONS: Last Date For Filing Proofs of Claim ------------------------------------------------------------- The Honorable Jeffrey Gallet, United States Bankruptcy Judge for the United States Bankruptcy Court for the Southern District of New York entered an Order on July 18, 2000 requiring all creditors to file any claims they may have against Ameritel Communications, Inc. (the "Debtor"), arising, or deemed to arise, prior to October 29, 1999 (the date the Chapter 11 Petition was filed), on or before August 28, 2000 (the "Bar Date"). Any creditor that fails to file a proof of claim in accordance with the procedures approved by the court before the Bar Date shall be barred forever from asserting a claim against the Debtor or its property. AVIAN FARMS: Ceased Operations, Liquidates ------------------------------------------ The Associated Press reports that the 15-year-old chicken- breeding company is ending operations and is liquidating its Maine holdings. Avian Farms covers 70 countries and had a workforce of 500 to produce chickens for breeding. It had operations not just in Maine, but also in Georgia, Kentucky, Texas, Europe and China. AVIVA PETROLEUM: Subsidiary Files Voluntary Chapter 11 Petition --------------------------------------------------------------- Aviva Petroleum Inc. (OTC Bulletin Board: AVVPP.OB) announced that its wholly-owned subsidiary Aviva America, Inc. ("AAI") has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. AAI is a Delaware corporation which owns oil and gas properties offshore Louisiana. The filing, in the Northern District of Texas, was initiated in order to achieve a comprehensive restructuring of the corporation. BUCYRUS INTERNATIONAL: Moody's Downgrades Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service downgraded to Caa1 from B1 the ratings on Bucyrus International's ("Bucyrus") $150 million of 9 3/4% senior unsecured notes due 2007, and downgraded to B2 from Ba2 the rating on its $75 million senior secured revolving credit facility, due 2001. The senior implied rating is B3. The issuer rating is Caa1. The outlook is negative. The ratings downgrades reflect the company's weak performance caused by several factors: loss of market share in 1999 attributable to aggressive price competition from Harnischfeger Corporation, which is operating under chapter 11 bankruptcy; internal turmoil and loss of key marketing managers in 1999 (in addition to the resignation of the President); and lackluster industry demand for mining equipment caused in part by weak commodity copper prices. Operating income is currently insufficient to cover interest expense, causing management to operate the company for cash through balance sheet transactions and reduced capital expenditures. The negative outlook incorporates Moody's expectations that performance will continue to be weak throughout most of 2000. Moody's notes further that the although the senior secured revolving credit facility is well-collateralized in event of liquidation, the senior unsecured notes are effectively subordinate and support most of the capital structure, indicating the likelihood of principal loss in the event of a default. Notwithstanding the downgrades, Moody's notes that the September, 2000, coupon payment on the senior unsecured notes is about 80% funded, making the more pertinent question whether or not the company will pay the March, 2001 coupon. It is difficult to predict this outcome, given the complex dynamics surrounding the company. In this respect, Bucyrus represents an interesting case study and a potential asset play, in Moody's opinion. First, internal operations seem to have stabilized with the return of several key, long-time marketing and operations managers. Second, despite the loss of market share in 1999, Bucyrus remains one of only two global market players in the surface mining equipment business, making it a potentially attractive asset and strategic fit with a much larger, multinational manufacturing company serving the mining industry. The problem with Bucyrus is the lack of a balanced product portfolio; as a company which sells a relatively small number of high-priced draglines and electronic mining shovels (even during cyclical peaks) - and whose aftermarket sales include parts bundled with new equipment sales, the company can experience wide swings in performance driven by a relatively few number of unit sales. The final dynamic driving performance is a wild card: predicting the timing of improvement in the mining cycle. From this analysis, it follows that a relatively few number of unit sales could buy Bucyrus some time. Moody's notes that sales of completed equipment in inventory could be as much as $20 million at any point. In addition, given the sizeable ($143 million) equity investment by American Industrial Partners, Inc. ("AIP" - the financial sponsor), if industry conditions are expected to improve in 2001, it might make sense for the financial sponsor to fund coupon payments as necessary, until anticipated unit sales improve the company's cash flow and hence, valuation. Based on Bucyrus' current performance, however, Moody's cautions that a sale of the company would likely result in significant debt principal loss. The company has yet to report results of operations for the quarter and six months ended June 30, 2000. In Q1-00, sales, adjusted EBIT, and adjusted EBITDA were $66 million, ($6 million), and ($4.4 million), respectively, compared to $75 million, $3.3 million, and $7.5 million, respectively, in Q1-99. Interest expense was $5.3 million in Q1-00 compared to $4.8 million in Q1-99. Total debt at 3/31/00 was $231 million, with $81 million of book equity (negative tangible net worth of $27.4 million). Bucyrus International, Inc. based in South Milwaukee, Wisconsin, manufactures and services large-scale excavation equipment used in surface mining and other earth moving operations, including rotary blast holes, electric mining shovels, and draglines. CAJUN ELECTRIC: $169M Refunds For Former Customers -------------------------------------------------- Former customers of the defunct Cajun Electric Power Cooperative (CEPC) will get checks in the mail. An average refund of $350 per person for nearly 300,000 former customers should be sent in less than 30 days. It was six years ago when CEPC filed for Chapter 11 with a $4 billion debt on its tail. CAPITOL COMMUNITIES: Subsidiary Files Voluntary Chapter 11 ---------------------------------------------------------- Capitol Communities Corporation (OTC Bulletin Board: CPCY) announced that its wholly owned subsidiary, Capitol Development of Arkansas, Inc., has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The petition was filed in the United States Bankruptcy Court for the Eastern District of Arkansas, Little Rock Division. The filing will allow the company to operate while Capitol seeks approval of a plan of reorganization. Capitol had announced on July 16, 2000 that its planned sale of 1,000 acres of land in Maumelle, Arkansas to MACANUSA, Inc. had been delayed and that it was seeking another buyer for the land. The cash proceeds from the MACANUSA sale were to be applied to senior debt that is presently secured by the property, including payment of the Settlement Agreement with Nathaniel S. Shapo, Director of Insurance of the State of Illinois, as Liquidator of Resure Inc., the present note holder and mortgagee on 701 acres of the land. With the sale being delayed, the Resure Liquidator was unwilling to postpone a foreclosure hearing scheduled for Monday, July 24, 2000 on the 701 acre portion of the property, wherein he was seeking a judgment for approximately $6,000,000, an amount that is about $2,000,000 greater than the settlement amount. "This filing was necessary to preserve the equity in the property so that a reasonable sale can be effected that will pay off all of our creditors, not just this one mortgage holder," said Michael G. Todd, president of Capitol. Capitol had requested the Resure Liquidator to postpone the hearing when it advised the Resure Liquidator that it was negotiating with a new buyer for the property. Capitol was advised that the request would be approved only if Capitol would sign a Consent Order for the full foreclosure amount. "The Consent Order would be most detrimental to our other creditors and shareholders. This filing will permit us to pursue an equitable sale transaction without the added burden of the foreclosure action by the Resure Liquidator," said Todd. In a separate development, Capitol announced it had completed a sale of 32.16 acres of land which adjoins the newly developed subdivision of Osage Falls and is zoned for residential development. The company disclosed the sale price to be approximately $707,520. Terms of sale were $250,000 cash at the closing and a 90 day wrap mortgage for the $457,520 balance. Approximately $120,000 of the cash proceeds were applied to the senior mortgage secured by the sold property. When the wrap mortgage is paid, $300,000 of it will be paid to First Arkansas Valley Bank as a release price. When that is paid, Capitol's remaining obligation to the Bank will be $995,000 secured by approximately 288 acres of Maumelle land. CERPLEX GROUP: Agrees to Sell Repair Sites and Call Center ---------------------------------------------------------- The Cerplex Group, Inc. (OTC Bulletin Board: CPLX) announced that its wholly-owned subsidiary, Cerplex, Inc., has entered into a definitive agreement to sell selected elements of its repair business to Teleplan Holdings USA, Inc. Specifically, Cerplex intends to sell to Teleplan its Louisville, Kentucky, Tewksbury, Massachusetts and Livermore, California repair centers and its Irvine based Technical Support Call Center. As a part of the transaction, it is expected that approximately 250 employees located in these four facilities will be retained by Teleplan, giving them a total of eight locations and more than 750 employees in the United States. CERPLEX GROUP: Consents to Involuntary Chapter 11 Filing -------------------------------------------------------- According to a newswire report on July 21, 2000, the Cerplex Group, Inc. (OTC Bulletin Board: CPLX) announced that it has filed a response consenting to the involuntary Chapter 11 bankruptcy petition (case no. 00-2471) filed against it on June 20, 2000 in the United States Bankruptcy Court for the District of Delaware. The involuntary petition was filed by certain of Cerplex's bondholders after Cerplex failed to make interest and principal payments due on April 17, 2000. COMPLETE WELLNESS: May File for Bankruptcy ------------------------------------------ Complete Wellness Centers, Inc. (Nasdaq: CMWL CMWLW) announced that it is undercapitalized and is experiencing operating cash flow difficulties that have caused the Company to be unable to meet its obligations or to achieve its business plan objectives. The three predominant reasons for its current financial condition are a withdrawn SB-2 public offering in January of this year due to internal underwriter issues, a failed merger and financing deal with Dr. Alt.com Corporation, a privately held Internet company, at the end of May, and the Company's inability to attract new investors or underwriters to infuse new capital. These attempts to recapitalize the Company were unsuccessful due to problems stemming from the two and a half year ongoing federal investigation, failed acquisitions, accumulated debt and accounts payable, and the cash flow drain of its clinic business model, all items initiated under the prior management. Joe Raymond, CEO, said, "The Company has cleaned up many of the obstacles and has developed a sound business plan but the past problems continue to make it difficult to execute. The Company is exploring options to bring closure to the past problems including negotiations with creditors. If these negotiations are unsuccessful the company may have to contemplate reorganization through a bankruptcy proceeding. If these negotiations are successful, the Company will be able to take advantage of funding opportunities. The Company has been extremely frustrated since it believes the healthcare industry needs their solutions." The Company currently faces the prospect of delisting if it can not execute its restructuring plan satisfactory to meet NASDAQ requirements. CREDITRUST: Confirms Class Action Lawsuit ------------------------------------------ Creditrust Corporation (Nasdaq: CRDTQ) announced that it has become aware of a suit filed against some of its officers and directors alleging certain Securities Exchange Act violations. The Company and its officers and directors have not yet had an opportunity to review the complaint, they stand behind the Company's public filings and intend to vigorously defend the suit. Founded in 1991, Creditrust Corporation acquires, manages and collects delinquent consumer receivables, utilizing an information-driven strategy. The Company uses proprietary technology to acquire receivables primarily consisting of charged-off Visa(R), MasterCard(R), and private label credit card accounts issued by major banks and merchants. DAEWOO INT'L (America): Committee Files Limited Objection --------------------------------------------------------- The Official Committee of Unsecured Creditors of Daewoo International (America) Corp., debtor, filed a limited objection to the debtor's application for an order extending the debtor's exclusive periods to file a plan of reorganization and solicit acceptances thereto. The Committee requests that any extension be limited to 60 days. The Committee states that even if the offer to purchase the claims of foreign banks is accepted by all eligible creditors, it will not change the amount or identity of the holders of priority and trade claims against the debtor, nor will it affect the claims of the Korean banks in this case. Based on the debtor's schedules of assets ad liabilities, these three groups of creditors were owed approximately $300 million as of the commencement of the case on March 17, 2000. The Committee has urged the debtor to discuss its intentions for the treatment of these claims in a plan. The debtor has thus far refused to begin that process, choosing instead to use the pendency of the purchase offer as justification for delay. As more time passes without a reasonable proposal for dealing with the claims of creditors who cannot, or choose not to participate in the purchase offer, and without reasonable assurances that such a proposal can be implemented, there is an increasing risk that the value of the assets available for these creditors will be impaired. The Committee believes that the interests of unsecured creditors can be served only if the debtor is required to promptly address their claims. Toward that end any extension of the exclusivity periods should be limited. The Committee states that the requested 90-day extension of exclusivity should be denied. The debtor has made no meaningful progress toward reorganizing. Its "efforts" have been limited to statements of an intention to propose a plan that is "consistent" with the claims purchase offer negotiated by the debtor's parent company and a committee of foreign banks. According to the Committee, despite the committee's request, the debtor has not shared with the Committee any ideas as to how the claims not covered by the Purchase Offer might be dealt with in a plan, even though these claims, which total ore than $300 million, must be addressed whether or not the purchase Offer is successful. The pendency of the Purchase offer, according to the Committee, is not a sufficient reason to delay the process of discussing a plan with the Committee. The Committee is distressed that the debtor has not explained transfers to its affiliates through borrowings made from the bank creditors. The Committee states that the Purchase Offer is only one part of the contemplated restructuring of the Daewoo entities. It is also expected that at least two Daewoo entities (including the debtor's parent) will be split into multiple separate entities, and assets and liabilities will be reallocated among the newly created companies. In addition, certain other Daewoo entities are being sold. There is no assurance that these transactions will preserve the value of the debtor's claims against it s affiliates. The Committee states, "normally, the passage of time impairs the collectability of accounts receivable. In this case, the passage of time may eliminate them all together." The Committee believes that under these circumstances only a short extension of exclusivity is warranted. Therefore, the Committee requests that any extension be limited to no more than 60 days. DIAGNOSTIC HEALTH: Files Reorganization Plan -------------------------------------------- Diagnostic Health Services, Inc. (OTCBB:DHSM) announced that it and its various subsidiaries who are in Chapter 11 proceedings in the Northern District of Texas filed their Joint Plan of Reorganization (the "Plan") and Disclosure Statement on Tuesday, July 18, 2000. The Plan calls for the consolidation of the Company's various subsidiaries and an exchange of its indebtedness for equity. The Plan does not provide any distribution for current equity holders, and, upon consummation of the Plan, the stock held by its current equity holders will be cancelled. A hearing to approve the Company's Disclosure Statement has been set for August 22, 2000. Diagnostic Health Services anticipates a hearing to confirm its Plan of Reorganization approximately 40 days after the Bankruptcy Court approves the Disclosure Statement. Diagnostic Health Services, Inc. is a leading provider of medical outsourcing services to hospitals and other healthcare facilities. Diagnostic Health Services provides radiology and cardiology diagnostic services and equipment to healthcare facilities on an in-house and shared basis. The Company operates in 17 midwestern, western and southern states. DRKOOP.COM: Lawfirm Files Lawsuit ---------------------------------- Finkelstein, Thompson & Loughran filed a securities class action lawsuit in the United States District Court for the Western District of Texas on behalf of investors who bought common stock of drkoop.com, Inc. (Nasdaq: KOOP) ("drkoop" or the "Company") between February 15, 2000 and March 30, 2000, inclusive (the "Class Period"). The complaint alleges that the Company and certain of its officers and directors, namely: Donald Hackett, Pres. & CEO; Dr. C. Everett Koop, Chairman of the Board; Neal K. Longwill, Sr. VP (Corporate Development); and Directors Nancy L. Snyderman and John F. Zaccaro, violated the federal securities laws by providing materially false and misleading information about the Company's business and financial condition during the Class Period. Specifically, on February 15, 2000, the Company's auditors signed and delivered their opinion letter, which contained a "going concern" qualification, a statement which indicated that the auditors harbored substantial doubt as to the Company's continuing viability. The defendants concealed the going concern qualification and instead made optimistic statements about the Company's earnings and operations. At the same time, the insider defendants were liquidating their stock positions in the Company. Indeed, between February 18 and February 25, 2000, while in possession of the materially adverse non-public information concerning the qualified auditor's opinion, insiders sold more than 400,000 shares of drkoop stock, for aggregate proceeds of more than $4.5 million. It was not until March 30, 2000, when drkoop filed its Annual Report on Securities and Exchange Commission ("SEC") Form 10-K, that defendants disclosed for the first time the material fact that its auditors doubted the Company's ability to continue as a "going concern." Following these revelations, the Company's stock plummeted from a previous close of $6.25 (which itself was down from the Class Period high of $13 5/8) to a close of $3 11/16 on March 31, 2000 -- a one day drop of approximately 41%. Plaintiff seeks to recover damages on behalf of all investors who purchased drkoop stock during the Class Period and who suffered damages as a result, and is represented by the law firm of Finkelstein, Thompson & Loughran, of Washington, DC, among others. DRKOOP.COM: Millenium Offers Merger ------------------------------------ MilleniumHealth Communications Inc. of Reston, offered to merge with the financially challenged Drkoop.com Inc. [Nasdaq: KOOP]. Founded in May 1999, MilleniumHealth provides broadband health care communications and commerce. FLORIDA POWER & LIGHT: Conditional Settlement Agreement ------------------------------------------------------- Florida Power & Light Company announced that it has entered into a conditional settlement agreement that would resolve all of the litigation involving the Okeelanta and Osceola co-generation power plants located in Palm Beach County and save FPL's customers hundreds of millions of dollars. The litigation, which dates back to January 1997, began when a dispute arose between FPL and the owners of the plants as to whether the plants had accomplished commercial operation by the date specified in the 30-year power purchase agreements obligating FPL to purchase the output of the plants. FPL filed a petition in a Florida circuit court for a declaratory judgment that FPL had no further obligation under the agreements, and shortly thereafter the owners of the plants filed for bankruptcy protection. Under the terms of the settlement, which is subject to approval by the bankruptcy court and the Florida Public Service Commission, the trustee for the holders of $288.5 million of tax exempt bonds that financed the construction of the plants would receive $222.5 million plus some security deposits to be distributed as directed by the bankruptcy court, and the power purchase agreements would be terminated. FPL estimates the net present value of the savings to its customers from the settlement versus the payments that would have been due under the power purchase agreements to be in excess of $350 million. Florida Power & Light Company is the principal subsidiary of FPL Group, Inc. (NYSE: FPL), one of the nation's largest providers of electricity-related services with annual revenues of more than $6 billion. The company serves 3.8 million customer accounts in Florida. FPL Energy, LLC, FPL Group's U.S. and international energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.fpl.com , www.fplgroup.com , www.fplenergy.com and www.fplfibernet.com . GENEVA STEEL: Files Reorganization Plan --------------------------------------- Geneva Steel Company announced on July 20, 2000 that it has filed a proposed Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court for the District of Utah. The Plan is proposed jointly by the Company and the Official Committee of Bondholders in the Company's Chapter 11 case. The Plan will significantly reduce the Company's debt burden and provide additional liquidity in the form of a $25 million capital infusion through the issuance of convertible preferred stock, a $110 million term loan that is guaranteed 85% by the United States government, and a $125 million revolving line of credit. The Company's prebankruptcy unsecured creditors will receive, in lieu of cash payments, substantially all of the common stock of the Company and the right to purchase the convertible preferred stock. The prebankruptcy holders of the Company's common and preferred stock will not receive a distribution under the Plan. In the event that creditors do not purchase all of the preferred stock, the Company has entered into a standby purchase agreement that ensures the full $25 million in new capital will be raised. The objective of the Plan is to restructure the Company's balance sheet to (i) significantly strengthen the Company's financial flexibility throughout the business cycle; (ii) fund required capital expenditures and working capital needs; and (iii) fulfill those obligations necessary to facilitate emergence from Chapter 11. As previously reported, the Company, with Citicorp USA, filed an application on January 31, 2000, for a U.S. government loan guarantee under the Emergency Steel Loan Guarantee Program. The application sought an eighty-five percent guarantee for the $110 million term loan incorporated into the Plan. The Emergency Steel Loan Guarantee Board extended an offer of guarantee to Citicorp, USA on June 30, 2000. The Bankruptcy Court will conduct a hearing on the adequacy of the Disclosure Statement on August 24, 2000. Should the Disclosure Statement be approved at that time, a hearing on confirmation of the Plan has been scheduled for October 13, 2000. "We believe that the Plan will achieve our stated objectives and position Geneva as a strong competitor. Although the Chapter 11 process has been difficult, it has allowed the Company to address the financial issues that made us vulnerable to market disruptions," said Joseph A. Cannon, chairman and chief executive officer of the company. The Company is represented by the firms of Cadwalader, Wickersham & Taft and LeBoeuf, Lamb, Greene & MacRae LLP, as bankruptcy counsel, and The Blackstone Group, L.P., as financial advisor. There can be no assurance at this time that the Plan proposed by the Company and the Bondholders' Committee will be confirmed by the Bankruptcy Court either on the schedule set forth above or at all, or that, if confirmed and consummated, the Plan will achieve the objectives described above. Similarly, there can be no assurance that the financings contemplated by the Plan can be obtained on terms favorable to the Company, or at all. Geneva Steel is an integrated steel mill operating in Vineyard, Utah. The Company manufactures steel plate, hot-rolled coil, pipe and slabs primarily in the Western and Central United States. GENICOM CORP: Motion To Extend Time to Assume or Reject Leases -------------------------------------------------------------- The debtor, Genicom Corporation, is conducting negotiations with numerous entities for the sale of certain aspects of the business. It is anticipated that many of the negotiations will include as part of the sale a transfer of the leases of real property held by the debtor. In order to sell the businesses as going concerns, the debtor requires a second extension of time to assume or reject leases of non-residential real property. A second extension will not prejudice the debtor or creditors and will likely increase the amount recoverable for the creditors because the prospective purchasers will be e required to comply with all provisions of section 365 of the Bankruptcy Code including curing any monetary defaults thereby reducing the amount of damages the debtor will be required to pay. Cause exists to grant an extension of an additional 90 days, from July 10, 2000 through and including October 9, 2000. GOLDEN OCEAN: Frontline's Disclosure Statement ---------------------------------------------- The Disclosure Statement accompanying Frontline Ltd's plan of reorganization for Golden Ocean Group Limited, et al. under Chapter 11 is summarized as follows: Under the plan, which contemplates the substantive consolidation of the debtors for all purposes, the debtors are divided into classes according to their seniority and other criteria. The plan proposes the reorganization of the debtors pursuant to which Frontline shall acquire 100% of the New Common Stock. AS of the Confirmation Date, the directors and officers of each of the debtors will be terminated. Immediately thereafter, Frontline will appoint new officers and directors to Reorganized Golden Ocean Group Limited. On the Effective Date immediately following the substantive consolidation of the debtors, Reorganized Golden Ocean Group Limited shall be authorized to issue 100 shares of New Common Stock, no par value, all of which shall be issued to Frontline. Under the provisions of the plan, it is anticipated that Unsecured Claimants (Class 3) shall receive a cash payment of up to 17% on the dollar. The distribution assumes that the amount of Allowed Unsecured Claims does not exceed $305 million in the aggregate. If the Allowed Class 3 claims exceed $305 million, distributions to Class 3 shall be reduced on a pro rata basis. JOAN & DAVID: Business to be Sold ; Subject to Better Offers ------------------------------------------------------------ Newmark Retail Financial Advisors LLC announced today the execution of a letter of intent for the sale of the assets of joan and david helpern incorporated (together with its subsidiaries and an affiliate, the "Company"), including the Joan & David retail boutiques and outlets, concession arrangements, certain foreign operations and international trademarks, to International Brand Development, Inc. for $17.5 million in cash and convertible notes and the assumption of certain liabilities. As the Company's financial and restructuring advisor, Newmark arranged and structured the sale, and will continue to solicit offers culminating in an auction (subject to Bankruptcy Court approval) currently scheduled to occur in September. The parties intend to incorporate the terms of the letter of intent into a definitive agreement expected to be signed shortly. The proposed sale represents the culmination of a five-month effort to restructure the Company's operations, assets and liabilities and position it for sale. The Company filed its Chapter 11 petition March 9th of this year in the Bankruptcy Court for the Southern District of New York. Joan and David, the prominent designer, retailer and wholesaler of luxury women's footwear, apparel and accessories internationally, is currently owned by its founders Joan Helpern, David Helpern, Sr., and members of the Helpern family. Joan & David operates (and distributes merchandise under its name) through 60 locations throughout the United States, Europe and Asia. The Company reported $4.73 million and $4.02 million in sales for the months of April and May, respectively, and$716,000 and $384,000 in EBITDA for the same period. International Brand Development, Inc. is a corporation whose shareholders include Structured Capital Group, Inc. and Skender Perolli and/or their affiliates. Structured Capital is an investment firm specializing in complex financing transactions and, in recent years, has completed several billion dollars in such transactions. Skender Perolli has more than 20 years experience in the retail and apparel industry and was a former Executive Vice President of Escada. KCS ENERGY: Committee Applies to Employ Hite, McNichol ------------------------------------------------------ The Official Committee of Unsecured Creditors of KCS Energy Inc. and its affiliated debtors represents that in connection with the joint plan of reorganization that it has co-proposed with Credit Suisse First Boston, the Committee seeks to retain Hite, McNichol & Associates, Inc. as a consulting expert to counsel for the Committee and the Bank, as a testifying expert at confirmation on issues regarding the debtors' oil and natural gas reserves. The court has authorized the debtors to employ a reserve engineer to testify with respect to such issues. Hite McNichol will assist counsel (Andrews & Kurth LLP) in estimating and valuing the debtors' oil and natural gas reserves and, as appropriate, assist the Committee and Bank, their respective counsel and the committee's financial advisors in determining the value of the debtors as a going concern; and Assist counsel with preparation for the confirmation hearing, including, if counsel so elects, the preparation and providing of expert testimony on oil and natural gas reserves valuation and other relevant confirmation issues, including (to the extent necessary) analysis of the debtors' solvency, the debtors' value as a going concern, and other valuation information that my be presented to the court by other parties in interest. LUTHERAN SOCIAL: May File For Chapter 11 ---------------------------------------- According to a recent audit of the Wichita-based Lutheran Social Services, it's debts are currently $9.8 million and it has $7.3 million of assets. Lutheran's COO, Mark Bloomingdale says, "And if bankruptcy were to happen, it would be to reorganize, not to liquidate. We have every intention of remaining involved in the lives of Kansas children." MARTIN COLOR-FI: Emerges From Chapter 11 ---------------------------------------- Martin Color-Fi, Inc. ("MCF") announced the completion of its acquisition by Dimeling, Schreiber & Park ("DS&P"), a private investment partnership that makes equity investments in a broad range of middle-market companies. Under terms of the agreement, MCF will retain its name in all current locations and maintain approximately 550 employees. MCF produces polyester and other synthetic fibers from recycled materials for a wide range of markets around the world, including automotive and industrial. The Company has a longstanding reputation for its abilities in color matching and providing solutions for specialized needs. In addition to its lines of polyester fiber, the Company manufactures synthetic yarn and produces pigments and additives. DS&P specializes in investments, primarily in the form of leveraged acquisitions, recapitalizations and Chapter 11 reorganizations. Since the founding of DS&P in 1982, the firm has completed acquisitions totaling in excess of $1 billion. According to William R. Quinn, a principal in DS&P, "The purchase of Martin Color-Fi is consistent with our strategy of finding significant value creation opportunities by selectively investing in companies that are in need of restructuring or are operating under Chapter 11 of the Bankruptcy Code. Consistent with that strategy, we have purchased Martin Color-Fi and created a capital structure that will allow it to fund its product and growth needs. We fully expect that the strength of the recapitalized balance sheet, combined with the experienced and capable management team led by Steve Zagorski, will put the Company back on the path of successful growth and enhanced profitability." MCF filed for Chapter 11 protection on November 16, 1998. The Company has since improved profitability by stabilizing and refocusing on its core operations, liquidating non-core assets and reorganizing its capital structure. While admitting that the past 18 months have been difficult, Company executives believe the process has been a valuable learning experience and, ultimately, good for the business. "We have streamlined operations and made our processes more efficient. Our productivity has improved as we continue to focus on the needs of our customers," said Steve Zagorski, who has now assumed the role of Chief Executive Officer and President. "While the acquisition by DS&P strengthens MCF, the Company's management team and employees deserve credit for gaining credibility through a difficult period. We are especially pleased that we continued to meet our customers' demands during the reorganization. We did what we said we were going to do and we have positioned ourselves for growth," he concluded. METROTRANS CORP: Order Approves Disclosure Statement ---------------------------------------------------- The Revised Disclosure Statement filed by Metrotrans Corporation and Bus Pro, Inc. on June 30, 2000 is approved by the US Bankruptcy Court for the Northern District of Georgia, Newnan Division as containing adequate information. August 11, 2000 is fixed as the last day for filing written acceptances or rejections of the Revised Plan; August 18, 2000 is fixed for the hearing on confirmation of the revised plan. The hearing will be held at 10:00 AM, US Bankruptcy Court, 18 Greenville, Street, Newnan, Georgia. Under the plan, the debtors, by and through a Liquidating Agent, will oversee the liquidation of the remaining assets of the debtors, which primarily consist of claims and causes of action against third parties. The debtors will remain in existence for the purpose of winding up their affairs and effectuating the plan. The Committee will remain in existence to oversee and monitor the postconfirmation administration of the cases. NEXTEL INTERNATIONAL: Moodys Assigns Caa1 To New Senior Notes -------------------------------------------------------------- Moody's Investors Service today assigned a Caa1 rating to Nextel International, Inc. for its proposed $500 million issue of Senior Notes due 2010. Further, Moody's placed this rating, and the Caa1 rating on the company's 13% Senior Discount Notes due 2007 and 12.125% Senior Discount Notes due 2008, on review for possible upgrade. The ratings reflect the high leverage of the company, as well as the risks and uncertainties (political, economic, and currency) associated with doing business in lesser developed countries, some of which have been subject to high inflation and steep currency devaluation. Positively, the ratings recognize the strength of the unique Nextel wireless service offering, the recent success the company has experienced in its markets, and the support the company has received from its parent, Nextel Communications, Inc. (senior implied Ba3). The review for possible upgrade reflects management's intention to explore various financing alternatives including issuing equity later this year to fully fund Nextel International's business plan to free cash flow. Should the company raise a meaningful amount of equity and its operations continue on their positive trends, the ratings on the company's senior notes are likely to be upgraded. Moody's expects to conclude this review by the end of the year. Nextel International manages operations in the major cities of Brazil, Argentina, Mexico, and Peru and has recently acquired spectrum in Chile. The company began offering its integrated digital dispatch and wireless telephone service in 1998 in Brazil, Argentina and Mexico and launched service in Peru in 1999. While performance to date has not been up to Moody's expectations when we first assigned the ratings in 1998, we are encouraged by the recent performance of these markets over the past few quarters. Nextel International has proven that the unique Nextel service, which has attracted over 5.6 million subscribers in the US, can be successfully exported. While not quite up to the metrics of Nextel's US operations, Nextel International has been acquiring high revenue generating subscribers with modest churn levels, and the trends of these metrics are improving. However, this is a capital intensive business operating in jurisdictions subject to economic instability. In order to continue to successfully execute its business plan, Nextel International will require substantial additional capital. The acquisition of a meaningful amount of equity capital will lower the financial risk of the company. The further demonstration of the ability to attract and retain large volumes of high revenue subscribers will imply a lowered business risk. The combination of these two, the infusion of substantial amount of equity capital and continued high quality subscriber growth, is likely to result in an ratings upgrade in the near term. Nextel International, Inc., a wholly-owned subsdiary of Nextel Communications, Inc., manages wireless operations in Latin America with licenses to serve over 149 million people, and holds minority investments in other wireless operations licensed to serve 74 million people on a proportionate basis. OAKWOOD HOMES: Moody's Lowers Ratings -------------------------------------- Moody's has lowered the ratings of the Class B-2 certificates for Oakwood's 1997-D, 1998-D and 1999-C manufactured housing transactions to B2, Caa1 and Caa1, respectively, from Ba3, B1 and B3, respectively. In addition, Moody's has confirmed the B1 ratings for the Class B-2 certificates issued in Oakwood's 1999-A and 1999-B deals. Moody's analyst Phil Wubbena explained that the Class B-2 certificate downgrades were prompted by the fact that these classes rely primarily on an Oakwood Homes' corporate guarantee for credit support. On July 6, 2000, Oakwood Homes Corporation's senior debt rating was lowered by Moody's to Caa1 from B3. Wubbena added that the protection afforded the Class B-2 certificates from the excess spread alone is not sufficient to maintain the ratings of these securities, issued in the 1998-D and 1999-C transactions, at a level higher than the corporate guaranty. However, the protection provided from available spread for the B- 2 certificates issued in Oakwood's 1997-D, 1999-A and 1999-B transactions is sufficient to support a rating higher than Oakwood's senior debt rating. While the performance history is limited for these transactions, the ratings reflect other factors including the characteristics and seasoning of the pool's backing the deals. The complete rating actions are as follows: Oakwood Mortgage Investors, Inc. Senior/Subordinated Pass-Through Certificates Series 1997-D, $10.1 million, 7.550% Class B-2 Certificates, downgraded to B2 from Ba3 Series 1998-D, $25.5 million, 8.650% Class B-2 Certificates, downgraded to Caa1 from B1 Series 1999-A, $24.5 million, 7.950% Class B-2 Certificates, confirmed B1 Series 1999- B, $17.9 million, 9.050% Class B-2 Certificates, confirmed B1 Series 1999-C, $20.8 million, 6.900% Class B-2 Certificates, downgraded to Caa1 from B3 PHYSICIANS ALLIANCE: Files For Chapter 11 ------------------------------------------ According to U.S. Bankruptcy Court in Riverside, Physicians Alliance Medical Group filed for creditors protection in Chapter 11. Distressed Physicians listed assets of $2.4 million and debts amounting to $2.8 million. PPG INDUSTRIES: Reports On 2nd Quarter -------------------------------------- PPG Industries (NYSE:PPG) reported second-quarter net income of $205 million, or $1.17 a share, on record sales for any quarter of $2.21 billion. In the same quarter last year, net income was $184 million, or $1.05 a share, on sales of $1.95 billion. For the first six months of 2000, PPG's net income was $344 million, or $1.96 a share, on sales of $4.30 billion. First-half 1999 net income was $307 million, or $1.75 a share, on sales of $3.75 billion. Raymond W. LeBoeuf, board chairman and chief executive, said higher energy prices "that adversely affected our second-quarter results may continue throughout the year. Mitigating actions include selective price increases and additional cost-containment efforts, and we are hedging future natural gas purchases. "Integration of acquisitions completed during the past year is also progressing well or has been completed, and returns on those investments continue to rise as their performance improves," he added. Record coatings segment sales and earnings in the second quarter were driven by acquisitions and volume improvements, compared with a year ago, for automotive original and industrial coatings. Glass segment sales and earnings rose on increased volumes in all businesses as well as pricing gains for fiber glass and automotive replacement glass products. Continued strength in global demand contributed to improved fiber glass prices. Glass earnings also benefited from manufacturing efficiencies. "Our auto replacement glass business will benefit from the recently-announced distribution venture with Apogee Enterprises to form PPG Auto Glass," LeBoeuf said. "In September we expect the unit to take a charge, equivalent to two to three cents a share for PPG, to rationalize the business. This charge should be recovered in 2001." PPG will own 66 percent of the auto replacement glass distribution venture. PPG's chemical segment sales and earnings improved in comparison with the year-ago period, largely on commodity chemical price improvements, despite higher energy prices. PRIME SUCCESSION: Hunter's Homes Stay Open ------------------------------------------ According to the Sun-Sentinel, Prime Succession, Inc.'s Chapter 11 bankruptcy petition did not affect Fred Hunter's seven funeral homes' operations. With about 175 employees, the operations of the funeral homes are functioning normally. The funeral homes were established in South Florida in 1960 though it was founded in Detroit in 1890. PSI became associated with the homes in 1992. Hunter's homes, located in Broward County, are the only funeral homes of PSI in South Florida. PSI remains in possession of the Fred Hunter's funeral homes and controls its operations unless a court rules otherwise as stated in Chapter 11. ROBERDS: Joint Memorandum in Support of Sale to Burlington ---------------------------------------------------------- Roberds, Inc., debtor and Burlington Coat Factory Warehouse Corporation, by and through their respective undersigned counsel, submit a memorandum of law in support of the debtor's amended motion for confirmation of sale, assumption, and assignment of lease or the approval of lease termination agreement with respect to Seminole Leasehold Interest. On May 30, 2000, the debtor held an auction of the sale of the debtor's leasehold interest in approximately 88,000 square feet of space in Seminole, Florida situated among a small group of stores. At the auction, Burlington bid $1.1 million and was declared the successful bidder by the debtor and the court. The Landlord has filed an objection to the sale and assignment and assumption of the lease to Burlington. The debtor argues that the Landlord objections, that the "tenant mix" will be adversely affected and that the use of the premises as a Burlington Coat factory violates the permitted use clause are merely an attempt to enforce anti-assignment rights as the Landlord is attempting to obtain more money. According to the debtor and Burlington, the Landlord offered the premises to Burlington in a direct lease, and admitted that it would rent to Burlington "if the economics of the situation were appropriate." But now , the landlord objects to the assignment of the lease to Burlington. The debtor states that this case involves a proposed tenant that the Landlord actually desires and will benefit what is presently a partially-leased moribund collection of stores. The only question is whether the Landlord can successfully shift the economic value of the lease. SAFETY-KLEEN: Bondholders Sue Controlling Shareholder ----------------------------------------------------- Two bondholders of bankrupt Safety-Kleen Corp. Tuesday sued controlling shareholder Laidlaw Inc. and others in a move that could trigger a clash between bondholders and bank lenders and delay Safety-Kleen's exit from bankruptcy, according to Reuters. The Wilmington, Del.-based hazardous waste management company filed chapter 11 on June 9 after it failed to make principal and interest payments on a secured $1.9 billion credit facility and to pay interest due on a promissory note and the 2008 bonds. The plaintiffs seek unspecified compensatory damages on 11 counts of alleged violations of the Securities and Exchange Act. They have a combined investment of about $50 million, and claim the support of other investors including Franklin Advisers Inc., Pacholder Associates Inc. and Oak Tree Capital Management. "While (Safety- Kleen) has not as yet disclosed how its financial statements are materially false...actions taken by the company make clear that defendants acted improperly in inflating Safety-Kleen's financial results during the class period," court papers stated. (ABI 21-July-00) SCHEIN PHARMACEUTICAL: Ratings Remains Under Review ---------------------------------------------------- Moody's Investors Service raised the rating of Schein Pharmaceutical, Inc.'s (Schein) $50 million senior notes, due 2004, to B3 from Caa1. Its ratings remain under review for possible upgrade. The senior implied rating is B3, and the senior unsecured issuer rating is Caa1. The ratings were placed under review for possible upgrade on May 30, 2000, following the announcement of the agreement by Watson Pharmaceutical, Inc. (Watson- Senior Implied Ba1) to acquire Schein and the expectation that Schein's notes would be repaid. The upgrade of the senior notes rating reflects the fact that the notes are no longer subordinated to a substantial amount of senior debt in view of Watson's July 6, 2000 announcement that Watson had paid off the outstanding secured bank debt of Schein in the amount of approximately $190 million. The loan payment was funded by an unsecured intercompany loan from Watson to Schein. Watson is now the majority owner of Schein. Schein and Watson expect that the senior notes of Schein will be paid either under the change of control provisions of the indenture governing the Schein notes or under the notice of redemption that has been given. When the notes are paid, Schein's ratings will be withdrawn. Schein Pharmaceutical, Inc, headquartered Florham Park, NJ, develops, manufactures and markets specialty and generic pharmaceutical products. TOYSMART: Permitted to Sell Customer List ----------------------------------------- The bankrupt online toy retailer, Toysmart.com, was allowed by the Federal Trade Commission to sell its customer list, according to Dow Jones. Toysmart made a settlement with FTC to sell the list of customer information only if the buyer will abide by the toy retailer's earlier privacy promises. FTC's staff lawyers recommended that the commissioners approve the settlement. Commissioners previously filed an objection to the sale of Toysmart's customer list in U.S. District Court in Boston last week alleging that the company broke a promise to customers to keep their information private. Digital Research Inc. of Kennebunk, Maine will bid on the customer list and agrees with the settlement. According to the lawyers managing the sale of the customer list, a deposit of at least $25,000 from prospective bidders is required. This is to emphasize that the customer list has great value. VERSATECH: Firm Up For Sale ---------------------------- The Plastic News reports that included in the sale of Versatech Group Inc. are its subsidiaries, Versatech Canada Ltd., Apex Metals Inc., Versatech Sealing Systems Inc. and Tarxien Components Corp. except for Hi-Craft Engineering Inc. The defunct auto parts maker owes Canadian Imperial Bank of Commerce an amount of C$80 million (US$54 million). WORLDTEX: Below NYSE Continued Listing Standards ------------------------------------------------ Worldtex, Inc. (NYSE: WTX) announced on July 20, 2000 that it has been notified by the New York Stock Exchange ("NYSE") that it does not currently meet the newly effective NYSE continued listing standards. These standards require, among other things, that listed companies have a total market capitalization of not less than $50 million and total stockholders' equity of not less than $50 million. As required by the NYSE, Worldtex, Inc. has presented a plan to the NYSE's Listings and Compliance Committee outlining how the Company plans to comply with the continued listing standards. After reviewing the plan, the Committee will either accept it (following which the Company will be subject to quarterly monitoring for compliance with the plan), or not (in which event the Company will be subject to NYSE trading suspension and delisting. Worldtex has been adversely affected by a decline in demand for ladies hosiery that utilizes covered elastic yarn, softness in the European textile market and strengthening of the U.S. dollar, a sales shift toward lower margin narrow elastic fabrics and the bankruptcy filing of its largest customer, Fruit of the Loom. However, Barry D. Setzer, Chairman and Chief Executive officer, said: "Our experienced management team is working diligently to improve Worldtex's financial results, notwithstanding these challenging times for the textile industry. Worldtex is proud to have been listed on the New York Stock Exchange since 1992, and we are optimistic that the Exchange will continue our listing." With current annual revenues of nearly $300 million, Worldtex is a market leader in the covered elastic yarn and narrow elastic fabric markets throughout the Americas and Europe. Worldtex supplies a broad range of component products to the apparel, textile, medical and specialty end-use markets. ********* 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 * * *