/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000811.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, August 11, 2000, Vol. 4, No. 157 Headlines 1/2 OFF: Keen Realty to Organize Card Shop's 38-Store Bankruptcy Auction AGRIBIOTECH: Auction of Texas & Oklahoma Seed Operations to Start at $1.6MM BAPTIST FOUNDATION: Tega Debtors Enter Into DIP Project Financing Pact BIG PARTY: Hilco & Ozer to Close 21 Stores & iParty to Operate 33 Stores CARMIKE CINEMAS: Case Summary and 20 Largest Unsecured Creditors CARMIKE CINEMAS: NYSE Talks About Delisting Cinema Operator's Shares CORAM HEALTHCARE: Case Summary and 20 Largest Unsecured Creditors CORAM HEALTHCARE: Bankruptcy Court Approves First Day Motions CRIIMI MAE: CMBS Aggregate $43.8 Million of Sale Proceeds CROWN VANTAGE: CAC Offers to Purchase Substantially All Assets for $375.9MM DIMENSIONS HEALTH: Fitch Downgrades $84 Million of Bonds To 'BBB-' DOW CORNING: Eliminating 600 to 800 Jobs to Cut Expenses by at Least $50MM EAGLE FOOD: Reorganization Plan Paves Way to Ending Chapter 11 EINSTEIN/NOAH: Judge Case Approves Disclosure Statement; Confirmation Sept. 19 EQUALNET COMMUNICATIONS: Files Chapter 11 Petitions in Houston, Texas FRUIT OF THE LOOM: Harlingen ISD Wants Relief from Stay to Foreclose Tax Lien FIRSTPLUS FINANCIAL: Agrees to $3.8 Million Settlement for Borrower Class FURR'S RESTAURANT: NYSE Says it Will Apply to Delist Shares from Exchange GENESIS HEALTH: Elucidates Financial Results for Third Quarter GENESIS/MULTICARE: U.S. Trustee Expresses Concern About Blank Rome Employment GLENOIT CORPORATION: Case Summary and 20 Largest Unsecured Creditors GST TELECOMMUNICATIONS: CEO Tom Malone Sees Acquisition a Likely Scenario GULF STATES: Proposals to Cut Labor Costs Infuriates Steelworkers' Union HARNISCHFEGER INDUSTRIES: Beloit's Turns to Wausau for Workers' Comp Services IMPERIAL HOME: Enters into Insurance Premium Financing Agreement LIBERTY HOUSE: Judge King Rejects JMB Realty's Request for a Mediator LOEWEN GROUP: Motion To Reject Mattis And Murray Shareholder Agreements MEDPARTNERS PROVIDER: California Court Approves Debtors' Disclosure Statement MEDITRUST COMPANIES: 2nd Results Show "Five Point Plan" Working, Company Says MULTICARE COMPANIES: Eldercare Services Company Reports 3Q Results PIXELON CORP: Court Approves Balthaser To Purchase Shares PREMIER LASER: MediVision Pays $3,200,000 for Majority Interest in OIS ROBERDS: Gordon, Nassi & ALCO Report on Progress of Going-Out-Of-Business Sale SAFETY-KLEEN: Sells Vacant Ann Arbor Property To Mainline For $1.5MM SUN HEALTHCARE: Third Request for Extension of Exclusive Period -- to Nov. 9 TOYSMART.COM: 43 States Interpose Formal Objections To FTC Settlement UNIFRAX CORP: Moody's Places Senior Debt Ratings On Review For Downgrade UNITED HOMES: Sheldon Good To Auction $30 Million Of Residential Property WASTE MANAGEMENT: Announces Financial Results For Second Quarter Bond pricing for week of August 10, 2000 ********* 1/2 OFF: Keen Realty to Organize Card Shop's 38-Store Bankruptcy Auction ------------------------------------------------------------------------ The 1/2 Off Card Shop Inc., the Michigan-based discount card and stationery chain, has retained Keen Realty, LLC to organize a bankruptcy auction of the leaseholds on its 38 retail sites and corporate headquarters facility. Keen Realty is a real estate firm specializing in restructuring retail real estate and lease portfolios and selling excess assets. The 1/2 Off Card Shop filed for Chapter 11 protection in June. "Half Off's leaseholds represent an excellent opportunity for a retailer or investor who is looking to expand into the Mid-West," said Matthew Bordwin, Keen Realty's Vice President. "We expect the auction to take place on August 23rd and encourage prospective purchasers to put in their bids immediately while offers are being considered." Bordwin added, "We're moving quickly and would not want anyone to miss out." The auction will also be an opportunity for a company to purchase 1/2 Off as a going concern. Leases and inventory not sold as part of a going concern sale will be available through the auction process. For additional information on the going concern sale and inventory sale contact: Robert Johnson at The 1/2 Off Card shop at (248) 358-9300 x1115. The auction is currently set for August 23, 2000 (subject to bankruptcy court approval) at a soon-to-be determined location. Available to users and investors are leaseholds for 38 retail sites (27 located in Michigan, 9 located in Ohio, 1 in Maryland and 1 in Pennsylvania) and the leasehold on the Company's 15,000+ square-foot corporate headquarters facility in Southfield, Michigan. The store sites range in size from 6,000 square feet to 16,000 square feet. For over 15 years, Keen Consultants has had extensive experience solving complex problems and evaluating and selling real estate, leases and businesses in bankruptcies, workouts and restructurings. Keen Consultants, a leader in identifying strategic investors and partners for businesses, has consulted with over 130 clients nationwide, evaluated and disposed of over 165,000,000 square feet square of properties, and repositioned nearly 9,000 stores across the country. Companies that the firm has advised include: Edison Bros., Cosmetic Center, Long John Silver, Caldor, Citibank, N.A. (Ames Dept. Stores), Cumberland Farms, Fayva Shoe, Herman's Sporting Goods, K-Mart, Merry-Go-Round Stores, Neiman Marcus, Petrie Retail Inc., and Woodward & Lothrop. Most recently Keen has sold over $80 million of excess properties for Service Merchandise, raised approximately $5 million for Filene's Basement, $4 million for CODA/Jeans West, and raised $5.5 million for Learningsmith Inc. In addition to The 1/2 Off Card Shop, other current clients include: Stage Stores, Service Merchandise, Anamet Industrial, Matthews Studio Group and Family Golf Centers. AGRIBIOTECH: Auction of Texas & Oklahoma Seed Operations to Start at $1.6MM --------------------------------------------------------------------------- Agribiotech, Inc., filed a motion seeking court approval of the sale of debtor's business operations in Tulia, Texas; Cactus, Texas; and Hobart Oklahoma, developing processing, packaging and distributing varieties of forage (hay crops) sorghum sudangrass and other seeds. The proposed Buyer, Attebury Grain, Inc., will pay $1.6 million for the assets. The debtor seeks to establish bidding procedures that will allow third parties to bid at the sale hearing to purchase the assets by making an initial offer in an amount $150,000 greater than the purchase price and subsequent offers in $50,000 increments. A break-up fee of the lesser of the Buyer's costs and $35,000 is proposed. The sale price is greater than the aggregate value of the liens against the property. Many parties have expressed interest in the sale, and the debtor expects spirited bidding at the hearing. BAPTIST FOUNDATION: Tega Debtors Enter Into DIP Project Financing Pact ---------------------------------------------------------------------- The Tega debtors seek court authority to obtain post petition financing in an aggregate principal amount not to exceed the lesser of $1.5 million in DIP Financing or $13.5 million in combined outstanding Pre-petition debt and DIP Financing, from RFC Construction Funding Corp. on the terms set forth in the Settlement Agreement. The Tega debtors' sole business is the development of a master-planned golf-oriented community on approximately 550 acres adjacent to the City of Tega Cay in York County, South Carolina. The project includes an 18-hole golf course, a 9-hole golf course, a clubhouse, a day care center, a marina, approximately 1,180 unimproved residential lots being developed in phases for sale to builders, and an office pad for future development. As of the petition date, the Tega debtors' books and records reflect total assets of and total liabilities of the same amount, $12,250,455.44. BIG PARTY: Hilco & Ozer to Close 21 Stores & iParty to Operate 33 Stores ------------------------------------------------------------------------ The U.S. Bankruptcy Court approved an agreement under which The Big Party Corp has been sold to a joint venture group composed of Hilco Merchant Resources, and The Ozer Group, and iParty Corp. Hilco Merchant Resources, of Chicago, Ill., and The Ozer Group, of Needham, Mass., will manage the closing of 21 stores. Store closing sales will begin immediately and involve the liquidation of inventory with an approximate retail value of $10 million. iParty Corp. will assume operation of the remaining 33 Big Party stores. Big Party operates stores that offer a full selection of items required for a successful party, including such things as plates, cutlery, napkins, tablecloths and party favors. The 21 stores are currently stocked with merchandise perfect for birthday parties, dinner parties, Halloween, Thanksgiving, Christmas and more. Heavy discounts on all merchandise will be taken immediately at the 21 closing stores. "This is a unique situation with an upside for everyone. Not only is the chain being preserved in a leaner, healthier form, but the closing sale at 21 of the stores will provide an excellent opportunity for bargain-conscious consumers to stock up on merchandise for all their entertaining and social events," said Mike Keefe, President of Hilco Merchant Resources. Stephen Miller, Principal of The Ozer Group, added, "We're happy to be able to play a role in the iParty/Big Party transaction. A total wind-down of the The Big Party has been avoided and this will save many jobs and keep many stores open that otherwise may have closed." In addition to the inventory liquidation, Hilco Real Estate Services has been engaged to market the leases at the closing stores. Any parties interested in this aspect of the transaction are encouraged to contact Al Lieberman of Hilco at 847-501-6185, ext. 24. Based in Needham, Mass., The Ozer Group is one of the country's leading retail consulting, business evaluation and asset disposition firms. Ozer is quick, flexible and creative in offering solutions to retailers of all sizes throughout North America and Europe. In addition to helping companies maximize realization for their assets, Ozer manages human resources issues, real estate relationships and other critical areas that are affected when companies undergo change. Ozer's management and partners are retailers who have managed thousands of stores and billions of dollars in inventory. To learn more about The Ozer Group, visit www.ozergroup.com. Based in Chicago, IL, Hilco Merchant Resources, its parent company, Hilco Trading Co., Inc. and its affiliates provide strategic financial services for retailers, distributors, manufacturers, asset based lenders, venture capitalists, investment bankers and the professionals that serve them. Hilco Trading Co., Inc. has offices across North America with national and international resources, capabilities and experience. For more than 25 years, Hilco Trading Co., Inc., has sold more than $15 billion of retail inventories in over 500 major liquidations involving 5,000 locations. To learn more about Hilco Merchant Resources, visit http://www.hilcotrading.com. CARMIKE CINEMAS: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Carmike Cinemas, Inc. 1301 First Avenue Columbus, Georgia 31901-2109 Chapter 11 Petition Date: August 8, 2000 Court: District of Delaware Bankruptcy Case No: 00-03302 Debtor's Counsel: Mark D. Collins Esq. Richards, Layton & Finger PA One Rodney Square Wilmington, Delaware 19899 Harvey R. Miller, Esq. Weil Gotshal & Manges LLP 767 Fifth Avenue New York, N.Y. 10153 Total Assets: $ 841,178,000 Total Debts : $ 652,859,000 20 Largest Creditors: Bank of New York, Indenture Trustee 101 Barclay Street Floor 21 West 9 3/8% Senior New York, NY 10286 Subordinate Notes $ 209,375,000 Wachovia Bank, N.A.,Agent Revolving Credit Loans 191 Peachtree Street, NE under Amended and Restated Atlanta, Georgia 30303 Credit Agreement (1/29/99) $ 192,000,000 Wachovia Bank, N.A., Administrative Agent Loan Credit Agreement, Term Loans under Term Loan 191 Peachtree Street, NE Credit Agreement, dated as Atlanta, Georgia 30303 of 2/25/99 as amended $ 71,272,500 Dreamworks 100 Universal Plaza #477 Universal City,CA 91608 Tom Jung Tel:(818) 733-7736 Film Rental $ 5,092,455 Miramax Films 2600 Olive Blvd. Suite 754 Burbank, CA 91521 Elliot Slutsky Tel:(818) 972-4786 Film Rental $ 4,659,678 20th Century Fox 10201 W. Pico Blvd. Bldg. 89 Room 362 Century City, CA 90067 Scott Toay Tel:(310) 369-2627 Film Rental $ 4,644,179 Universal Pictures P.O. Box 650572 Dallas, TX 75265-0572 Shelley Hammel Tel:(808) 678-3456 Film Rental $ 2,641,149 Warner Brothers 8144 Walnut Hill Lane Suite 500 Dallas, TX 75231 Danny Chinich Tel:(214) 360-3051 Film Rental $ 2,425,418 New Line Cinemas 4501 Circle 75 Parkway Suite A-1270 Atlanta, GA 30339 Don Osley Tel:(770) 952-0056 Film Rental $ 1,985,979 Buena Vista Pictures 350 S. Buena Vista Street Burbank, CA 91521 Marlene Waggoner Tel:(818) 567-5000 Film Rental $ 1,398,482 Sony Pictures Releasing 10202 W. Washington Blvd. Tri Star Building #325B Culver City, CA 90232-3195 Jan McClay Tel:(310) 244-6148 Film Rental $ 1,396,377 Paramount Pictures 5555 Melrose Ave. MOB 4108 Hollywood, CA 90038 Steve Rapaport Tel:(323) 956-8418 Film Rental $ 1,237,990 Coca-Cola USA One Coca-Cola Plaza USA 873A P.O. Drawer 1734 Atlanta, GA 30313 Trade $ 500,000 ARTECH Design Group 1410 Cowart St. Chattanooga, Tn. 37408 Trade $ 490,000 Irwin Seating Company Dept. 78033 P.O. Box 7800 Detroit MI, 48278 Trade $ 307,000 Destination Film Rental $ 159,648 Gramercy Film Rental $ 156,298 Capital City Supply Trade $ 135,000 Legacy Film Rental $ 131,000 Artisan Entertainment Film Rental $ 129,000 CARMIKE CINEMAS: NYSE Talks About Delisting Cinema Operator's Shares -------------------------------------------------------------------- The New York Stock Exchange said that it is reviewing the continued listing status of the Class A Common Stock of Carmike Cinemas, Inc., trading under ticker symbol CKE. The NYSE halted trading on Tuesday, August 8, 2000 after the Company's announcement that it and its subsidiaries filed voluntary petitions to reorganize their business under Chapter 11 of the U.S. Bankruptcy Code. The NYSE will continue the trading halt of the Company's Class A Common Stock until such time as the NYSE has completed its evaluation of the continued listing status of the security. Upon completion of that review the NYSE may resume trading with the new ticker symbol "QCKE" and continue to monitor events at the Company or move forward with suspension and delisting procedures. CORAM HEALTHCARE: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Coram Healthcare Corporation 1125 Seventeenth Street-Suite 2100 Denver, Colorado 80202 Type of Business: CHC is a leader in providing comprehensive infusion care and related services to high acuity and often chronically ill patients. Its debtor and non- debtor direct and indirect operating subsidiaries provide the following services, among others: a) administering to patients in their homes injectable and intravenous antibiotic and antiviral therapies; b) intravenous life sustaining nutrients; c) blood products for immune deficiencies and Hemophilia d) chemotherapy; e) blood transfusions Chapter 11 Petition Date: August 8, 2000 Court: District of Delaware Bankruptcy Case No: 00-03299 Debtor's Counsel: David M. Friedman, Esq. Kasowitz, Benson, Torres & Friedman, LLP 1301 Avenue of the Americas New York, New York 10019 (212) 506-1700 Laura Davis Jones, Esq. Pachulski, Stang, Ziehl, Young & Jones, PC 919 North Market Street Wilmington, DE 19801 (302) 652-4100 Total Assets: $ 389,875,000 Total Debts : $ 416,457,000 20 Largest Unsecured Creditors Cerberus Partners, L.P. 450 Park Avenue 28th Flr. Mr. Stephen Feinberg New York, NY 10022 $ 116,243,168 Goldman Sachs Credit Partners L.P. 85 Broad Street 6th Flr. Mr. Ed Mule New York, NY 10004 $ 88,968,736 Foothill Capital Corporation 11111 Santa Monica #1500 Mr. Ed Stearns Los Angeles, CA 90025 $ 47,362,633 Cardinal Health 7000 Cardinal Place Mr. John Grimm Dublin, OH 43017 Under Tel:(614) 757-7762 Review $ 2,259,272 Aetna U.S. Healthcare 980 Lolly Road Mr. J Edward Neugebauer Blue Bell, PA 19422 $ 2,000,000 Baxter Healthcare Corp. Route 120 & Wilson Road Technology Building RLT-06 Mr. Gregory c. Neier Round Lake, IL 60073-0490 Tel:(847) 270-5235 $ 1,417,109 Tbob Enterprises, Inc. 12738 Davenport Plaza Mr. Bob Dudziuski Omaha, NE 68154 $ 1,267,394 Medical Specialties Co. Inc. 58 Norfolk Avenue Mr. John Sills South Easton, MA 02375-0600 Tel:(800) 967-6400 $ 874,247 Farmers Insurance Group of Companies Truck Insurance Exchange 4601 Wilshire Blvd. Ste 2508 Los Angeles, CA 90010 $ 616,748 Baxter/Sabratek Route 120 & Wilson Road Technology Building RLT-06 Round Lake, IL 60073-0490 Gregory C. Neier Tel:(847) 270-5235 $ 495,869 Richard M. Smith 571 Silver Oak Grove Colorado Springs, CO 80906 Tel:(719) 226-1020 $ 433,076 B. Braun Medical/McGaw, Inc. 6021 South Syracuse Way Suite 190A Mr. William C. Warner Englewood, CO 80111 Tel:(303) 220-7111 $ 356,019 Thomas Nash, et Al. 250 Park Avenue Suite 1500 Mr. Frederick A. Nicoll, Esq. New York, NY 10177 $ 250,000 Joseph Smith $ 245,000 Genetics Institute, Inc. $ 242,050 McGAw-Los Angeles $ 217,464 Federal Express $ 145,980 Resource Realty of Northern New Jersey $ 129,176 Novo Nordisk Pharmaceuticals $ 104,976 Metrix Company, The $ 86,583 CORAM HEALTHCARE: Bankruptcy Court Approves First Day Motions ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved handfuls of First-Day Motions filed by Coram Healthcare Corporation (OTCBB:CRHE). These First-Day Motions allow the healthcare company to maintain business as usual from the perspective of the Debtors' patients, employees and vendors. Patient care, Debtor-attorney David M. Friedman, Esq., of Kasowitz, Benson, Torres & Friedman, LLP, stressed, is Coram's focus at Day One. The company's balance sheet will be restructured under a plan of reorganization through the chapter 11 process, but if high-quality patient care is not maintained at this early stage, the company will have no business to restructure. CRIIMI MAE: CMBS Aggregate $43.8 Million of Sale Proceeds --------------------------------------------------------- CRIIMI MAE Inc. (NYSE: CMM) sold five classes of subordinated commercial mortgage-backed securities ("CMBS") rated BB to B-and unrated from Chase Commercial Mortgage Securities Corp., Series 1998-1 (the "Chase Bonds") generating aggregate sale proceeds of $43.8 million. CRIIMI MAE sold the Chase Bonds to German American Capital Corporation ("GACC") pursuant to a consent order entered by Bankruptcy Judge Duncan W. Keir on August 3, 2000. This CMBS sale, combined with CRIIMI MAE's previous CMBS sales this year, have generated approximately $230 million in aggregate gross sales proceeds and are part of CRIIMI MAE's strategy of selling a portion of its CMBS in order to fund the Company's emergence from protection under Chapter 11. Of the aggregate $43.8 million of sale proceeds, CRIIMI MAE used approximately $36.6 million from the sale of four classes of the Chase Bonds to pay down secured financing provided by GACC. Remaining net proceeds of approximately $7.2 million will be used primarily to help fund CRIIMI MAE's plan of reorganization. CRIIMI MAE also received approximately $3.8 million from GACC representing its portion of net interest income that had accumulated since October 1999. Since filing for protection under Chapter 11 of the U.S. Bankruptcy Code on October 5, 1998, CRIIMI MAE has suspended its loan origination, loan securitization and CMBS acquisition businesses. The Company continues to own a substantial portfolio of subordinated CMBS and, through its servicing affiliate, acts as a servicer for commercial mortgage loans. CROWN VANTAGE: CAC Offers to Purchase Substantially All Assets for $375.9MM --------------------------------------------------------------------------- Crown Paper Co. and Crown Vantage Inc. request that the court enter an order approving Crown Paper Co.'s entry into and performance under a certain letter agreement between the debtor and Crown Acquisition Corp. Crown Paper proposes to sell substantially all of its assets to Crown Acquisition Corp. The Letter Agreement defines a list of purchased assets -- substantially all of Crown Paper's assets. The aggregate consideration is $375.9 million in cash, to be adjusted. The purchaser agrees to assume certain liabilities of the debtors including up to $28 million of Crown Paper's accrued medical benefit obligations to employees hired by the purchaser at closing. Under the terms of the Definitive Agreement, the purchaser shall use its reasonable efforts to assume up to $39.1 million of Crown Paper's industrial revenue bonds. The agreement is conditioned on due diligence, environmental conditions and financing. The debtors will be able to solicit and accept certain qualified higher and/or better offers for the purchased assets. Qualified bids must be received at least 7 days prior to the auction. A qualifying bid bust have a cash component of at least an amount sufficient to satisfy the Topping Fee ($13.5 million and Working Fee (not to exceed $2 million of purchaser's actual expenses) and all other administrative expense claims against the estates. A hearing on the motion is scheduled before the Honorable Randall J. Newsome, US Bankruptcy Court for the Northern District of California, 1300 Clay St., Oakland, California on August 17, 2000 at 10:00 AM. DIMENSIONS HEALTH: Fitch Downgrades $84 Million of Bonds To 'BBB-' ------------------------------------------------------------------ Fitch downgrades to `BBB-` from `BBB` approximately $80.0 million Prince George`s County, MD, project and refunding revenue bonds, series 1994 and approximately $4.2 million Prince George`s County, MD, hospital revenue bonds, series 1992, all issued on behalf of Dimensions Health Corp. In addition, Fitch places the bonds on Rating Watch Negative, meaning the bonds may be further downgraded. Fitch will review Dimensions` fiscal 2000 audit and will have a further discussion with management within the next two months to determine if additional action is warranted. The downgrade to `BBB-` results from an accelerated decline of operating performance, as Dimensions lost $10.7 million net through 11 months (5/31/00) of fiscal 2000, reflecting an excess margin of negative 5.3%. Management estimates that this performance will cause a failure for Dimensions to achieve its debt service rate covenant of 1.10 times (x) for fiscal 2000 (6/30/00). Dimensions` maximum annual debt service (MADS) coverage of earnings before interest, taxes, depreciation, and amortization (EBITDA) through 11 months of fiscal 2000 was 0.7x. Management has successfully petitioned a waiver to this violation, as the accounting firm of KPMG, LLC, has verified that Dimensions` failure to achieve its rate covenant was due to circumstances within the Maryland Rate Setting Commission`s system; an acceptable justification per the Master Trust Indenture. KPMG`s verification of these non-recurring circumstances, which include delayed receipt of uncompensated care payments due to the failure of Dimensions` Medicaid fiscal intermediary and no rate increases for the past two years, will avoid a technical default for Dimensions. KPMG estimated that non-recurring rate issues have reduced revenues by $8.9 million in fiscal 2000. Much of the impact involves lags in the reimbursement of uncompensated care ($2.7 million) and an increase in case-mix below the Dimensions` rate target ($1.8 million). The addition of $8.9 million to EBITDA would produce MADS coverage of 1.8x for the 11-month period. Dimensions has received a rate increase of 4.3% that is estimated to increase gross revenues by $10 million in fiscal 2001. Additional non-recurring expenses include a one-time retrospective bad debt adjustment totaling $2.3 million, Y2K expenses that approximated $3 million, and payment of a malpractice claim for $3 million. In concert with its receding profitability, Dimensions has experienced an erosion of its liquidity position. Since fiscal 1996, which was the last time Dimensions posted an operating surplus, its unrestricted cash and investments have been cut by more than half- 58.6%- from $62.5 million as of June 30, 1996 to $25.9 million as of May 31, 2000. Days cash on hand through 11 months of fiscal 2000 was 51.9 days, less than half of fiscal 1996`s 114.8 days. Fitch believes that, although there were many one-time, non-recurring items that contributed to Dimensions` operating performance in fiscal 2000, the operating performance of the system has shown deterioration over the past four years. Of particular concern is that Dimensions` core operating units, its two hospitals which comprise approximately 88% of the system`s revenue, combined to lose $12.4 million net through 11 months of fiscal 2000, while its smaller and non-acute operations posted a net profit of $1.7 million. Fitch believes that Dimension`s central challenge is to effectively manage its expenses while operating in a highly regulated and competitive market. Dimensions Health Corp. is a not-for-profit corporation comprises four obligated group members and several non-obligated affiliates. The obligated group members include PGHC, a 447-bed acute care teaching facility, two miles north of Washington D.C.; Greater Laurel Regional Hospital, a 185-bed acute care community facility, midway between D.C. and Baltimore; Spellman Nursing Center a 110-bed long term care facility located on PGHC`s campus; and Bowie Health Center, an outpatient facility approximately ten miles northeast of PGHC. The obligated group comprises about 97% of total system revenues. All the facilities are situated in three separate locations throughout Prince George`s county. DOW CORNING: Eliminating 600 to 800 Jobs to Cut Expenses by at Least $50MM -------------------------------------------------------------------------- Dow Corning Corp. announced its intention to implement a worldwide work force reduction program that will eliminate approximately 600 to 800 positions, which is expected to reduce expenses by at least $50 million. Management will select employees for this program based on two primary criteria: the position being eliminated and/or specific employee skills no longer needed or skills that do not meet projected company needs. The program accelerates an expense reduction effort that has been ongoing in the company for the past two years, according to Gary E. Anderson, Dow Corning president and CEO. "In the case of our employees, the decision to take this course of action was difficult and not taken lightly," Anderson, said. "While we continue to see solid profit-after-tax increases through the second quarter this year, we have not yet seen the kind of improvements in operating profits we need to fund the exciting opportunities we see for innovation and service to our customers." In the locations where it is feasible, Dow Corning will provide the employees selected for the program with the option of accepting an outplacement program or rejecting it and being redeployed with the company. In some countries, however, offering that option will not work due to local laws and practices. In all geographic regions, the specific outplacement program will be consistent with Dow Corning's values and Code of Business Conduct. Dow Corning currently has 9,500 employees worldwide. Dow Corning, which develops, manufactures and markets diverse silicon- based products, currently offers more than 10,000 products to customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. EAGLE FOOD: Reorganization Plan Paves Way to Ending Chapter 11 -------------------------------------------------------------- Dow Jones reports that Eagle Food Center Inc. emerged from bankruptcy after its reorganization plan was confirmed by the U.S. Bankruptcy Court in Wilmington, Delaware. According to a press release, the company's stock trading, which was removed from the Nasdaq after the chapter 11 filing will resumed. The senior notes of EFCI would be swapped with new notes having an 11% interest rate and maturity date of April 15, 2005. The holders of the senior notes will receive 15% of EFCI's stock and a buy-back option. EINSTEIN/NOAH: Judge Case Approves Disclosure Statement; Confirmation Sept. 19 ------------------------------------------------------------------------------ Following hearings on July 27 and 28, the U.S. Bankruptcy Court in Phoenix approved Einstein/Noah Bagel Corp.'s Disclosure Statement with respect to its Joint Plan of Reorganization. With a Disclosure Statement in hand which Judge Case says provides adequate information pursuant to 11 U.S.C. Sec. 1125, the Debtors may now transmit their Joint Plan to creditors for voting. Judge Charles G. Case II has scheduled a hearing to consider confirmation of Einstein/Noah's Plan of Reorganization for Sept. 19. Any confirmation objections must be filed with the Court by Sept. 11. J. Eric Ivester, Esq., John K. Lyons, Esq., and Alesia Ranney-Marinelli, Esq., at Skadden, Arps, Slate, Meagher & Flom, represent Einstein/Noah in their chapter 11 restructuring. Logan & Co. will transmit copies of the Joint Plan, solicitation materials and ballots to all known creditors by August 14. Creditors must return their Ballots by Sept. 11 for tabulation. EQUALNET COMMUNICATIONS: Files Chapter 11 Petitions in Houston, Texas --------------------------------------------------------------------- Equalnet Communications Corp. (OTC Bulletin Board: ENET) announced that it and three subsidiary companies, EqualNet Corporation, USC Telecom, Inc. and Netco Acquisition Corp., filed voluntary petitions for relief under title 11, chapter 11 of United States Code today, August 9, 2000, in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, Houston, Texas. EqualNet, Hoovers says, equals cheaper long-distance phone bills. The national switch-based provider of discounted long-distance and other telecommunications services has more than 59,000 residential and small business customers. It focuses on clients that average less than $500 in monthly long-distance charges. The company's operations are focused in geographic regions around six switches located in Chicago, Dallas, Houston, Los Angeles, Miami, and New York. The company is also testing a proprietary advertiser-sponsored long-distance service, dubbed FreeCaller. Chairman Mark Willis leads an investment group that owns 60% of the company. FRUIT OF THE LOOM: Harlingen ISD Wants Relief from Stay to Foreclose Tax Lien ----------------------------------------------------------------------------- The Harlingen Independent School District presents the Bankruptcy Court in Wilmington, Delaware, with a motion for relief from the automatic stay in Fruit of the Loom's chapter 11 cases. The School District provides public education to residents within its district. Fruit of the Loom owes the School District $683,127 for 1999 ad valorem taxes. The School District claims this debt is secured by a first priority ad valorem liens created by law under Section 32.01 of the Texas Property Code. Those liens take priority over the claims and interests of all other creditors pursuant to Section 32.05 of the Texas Property Tax Code. The real property that secures the liens is described as No. 1, Block 1, Lot 1, 83.739 acres in Cameron County Texas. The lien is also secured by personality located at 5810 Harris Street, Cameron County Texas. The School District depends on matching funds from the State of Texas. Under the public school funding system, the amount of matching funds is determined by ad valorem taxes collected by the School District. Based on a formula contained in Chapter 42 of the Texas Education Code, every ad valorem tax dollar collected results in receipt of $2.2852 in funds from the State of Texas. The School District is considered poor. It is greatly dependent on the State of Texas to meet basic operational needs. In order to receive full matching funds from the State, the School District must collect approximately $20.8 million on or before August 31, 2000. It is estimated that only $20.2 million will be collected. The School District claims that the anticipated shortfall is attributable to Fruit of the Loom's nonpayment of 1999 ad valorem taxes. The shortfall will cause the School District to lose an estimated $1.3 million in matching funds. The loss of funds will cause irreparable harm and hinder the ability to provide public education to the children within the district. The School District argues that these facts constitute cause for a modification of the automatic stay pursuant 11 U.S.C. Section 362(d)(1). This will allow the School District to enforce its liens against Fruit of the Loom property or force the Company to pay the prepetition ad valorem taxes of $683,126.80 plus interest at the statutory rate of 1% monthly under Section 33.01 of the Texas Property Tax Code. Fruit of the Loom tells the School district to do its legal homework. The School District is nothing more than a secured creditor from which the Bankruptcy Code gives a debtor temporary protection from. The motion violates the spirit and letter of the law because, if granted, any secured creditor could make a similar claim and statutes passed by the Congress would be rendered mere rhetoric. Midatlantic National Bank v. New Jersey Department of Environmental Protection, 474 U.S. 494, 503(1986), makes it clear that the automatic stay afforded to bankrupt debtors pursuant to Section 362(a) is "one of the most fundamental protections provided by the Bankruptcy laws." To strip Fruit of the Loom of this protection, the School District must meet the requirements of Section 362(d) to show cause for a lifting of the stay. While the Bankruptcy Code does not define cause, Courts generally hold that it does not to exist when: (a) a creditor had an equity cushion and is adequately protected, (b) when no bad faith or malfeasance was shown, and (C) when the property was being used and was integral to the debtor's operations. See In re Kerns, 111 B.R. 777, 790-91 (S.D. Ind. 1990). In re Morysville Body Works, Inc., 86 B.R. 51, 55 (Bankr. E.D. Pa. 1988), goes on to say that a secured creditor, like the School District, must establish a prima facie case that cause to lift the stay exists, because "the underlying philosophical basis for this requirement is that debtor should not be forced to defend the automatic stay, one of a debtor's most fundamental protections." Fruit of the Loom says that it will not put a band-aid on the School District's scraped knee; the School District, FTL suggests, should arrange its finances independently. The School District offers no evidence that it has sought a waiver or extension for the matching funds deadline from the State of Texas. There is no certainty that, were the School District allowed to execute the lien, it would be able to liquidate the property and transmit the proceeds to the State before the deadline. The hardship suffered by the School District is similar to that imposed upon all secured creditors, Fruit of the Loom continues. The Debtors contend that the School District is "grossly oversecured" by a more-than-ample equity cushion as the property value far exceeds the amount of taxes owed. The Debtors have an appraisal report showing that the collateral value exceeds $45 million in contrast to the $683,128 claim. The Harlingen textile plant is a major component of operation and essential to Fruit of the Loom reorganization efforts, the Debtors tell Judge Walsh. The Debtors also remind Judge Walsh that his granting relief from the stay would constitute an immediate event of default under the DIP Financing Agreement. It would also allow the School District to step in front of other secured creditors. (Fruit of the Loom Bankruptcy News, Issue No. 9; Bankruptcy Creditors Service Inc., 609/392- 0900) FIRSTPLUS FINANCIAL: Agrees to $3.8 Million Settlement for Borrower Class ------------------------------------------------------------------------- As alleged in a class action complaint referred to by the court as the Kahler adversary proceeding, over 30,000 people applied for and/or obtained loans secured by real property from Capital Direct Funding Group, Inc. or FIRSTPLUS Direct. The plaintiffs allege excessive loan fees and interest, misrepresentation with respect to interest rates, improper charges to borrowers, kickbacks from third party services providers and manipulation of documents to hide interest rates, costs and fees. The debtor, plaintiffs, and non-debtor defendants agree to settle the Complaint. Under the terms of a Settlement Agreement, the Plaintiffs will receive $510,000 in cash. Participating individual claimants will share pro rata in an allowed general unsecured claim in the debtor's bankruptcy case in the amount of $3.3 million. No one individual will receive in excess of $10,000. The debtor claims that its probability of success in the Kahler Adversary Proceeding is uncertain. There is also a risk that the court order denying class certification could be overturned on appeal, resulting in potential certification of a class of over 30,000 claimants with asserted claims totaling in excess of $54 million. FURR'S RESTAURANT: NYSE Says it Will Apply to Delist Shares from Exchange ------------------------------------------------------------------------- The New York Stock Exchange announced that trading in the common stock of Furr's Restaurant Group, Inc., and the 12% Senior Notes due 2001 of its subsidiary, Cafeteria Operators, L.P.-- ticker symbols FRG and CAFLP01, respectively -- will be suspended in conjunction with the Company's representation that the AMEX will commence trading of both securities on that date. Following suspension, application will be made to the Securities and Exchange Commission to delist the issues. The Exchange's action is being taken in view of the fact that the Company is below the NYSE's continued listing criteria relating to total stockholders' equity less than $50 million in conjunction with global market capitalization less than $50 million. The NYSE had previously accepted a Plan provided by the Company that would have brought it into conformity with continued listing standards. After discussions with the Company, the NYSE has concluded that the Company cannot provide assurance that it will meet the listing standards within the required time frame. NESIS HEALTH: Elucidates Financial Results for Third Quarter -------------------------------------------------------------- Genesis Health Ventures, Inc. (OTCBB:GHVIQ) announced its operating results for the third quarter of fiscal 2000. Revenues were $615.9 million for the quarter ended June 30, 2000, up from $604.8 million for the quarter ended March 31, 2000. Revenues for the nine months ended June 30, 2000 were $1.8 billion. Earnings before interest, taxes, depreciation and amortization excluding the impact of debt restructuring and reorganization costs and other charges and the impact of exited businesses (EBITDA) were $54.7 million for the quarter ended June 30, 2000 compared to $64.0 million for the quarter ended March 31, 2000. EBITDA for the nine months ended June 30, 2000 were $182.7 million. The $9.3 million decline in EBITDA from the preceding quarter is attributable to: $4,200,000 relative to a conversion of the Company's incentive compensation program from stock-based to cash-based; 2,300,000 on account of a decline in pharmacy and medical supply margins due to increased cost of sales and delivery costs; 1,600,000 from a decline in rehabilitation therapy margins due primarily to a decline in volume; 800,000 reduction in management fee revenue; 500,000 increased general liability insurance costs; and (100,000) for attributable to Other items. Occupancy in the Company's eldercare centers improved to 91.3% compared to the previous quarter of 90.6%. Medicare census mix improved to 13.1% compared to 12.8% in the prior quarter. "Our strategies of capturing market share through our open admission policy, and the penetration of institutional pharmacy and contract rehabilitation market continued to produce strong revenue growth. This achievement is outstanding in light of the current market contraction," commented Michael Walker, Genesis chairman and CEO. "I'm encouraged by the reaction and support we have received from our customers, employees and vendors since our Chapter 11 filing. We will continue to work diligently to expedite the reorganization process. "Additionally, the Health Care Financing Administration has deferred the RUGS update scheduled for October 1st. This will allow for the previously implemented 20 percent increase to 15 payment categories to continue as well as the implementation of the previously scheduled 5.8 percent increase. The industry is continuing to work on the elimination of the unlegislated Medicare cuts," Walker concluded. On June 22, 2000, Genesis Health Ventures, Inc. and certain of its direct and indirect subsidiaries filed for voluntary relief under Chapter 11 of the United States Code (the "Bankruptcy Code") with the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). On the same date, Genesis' 43.6% owned affiliate, The Multicare Companies, Inc. and certain of its affiliates also filed for relief under Chapter 11 of the Bankruptcy Code with the Bankruptcy Court. Both companies are currently operating as debtors- in-possession subject to the jurisdiction of the Bankruptcy Court. Genesis has secured $250 million in debtor-in-possession financing from a lender group led by Mellon Bank. Debt Restructuring and Reorganization Costs and Other Charges During the quarter ended June 30, 2000, Genesis and Multicare incurred fees of approximately $11.1 million for legal, accounting and consulting services, as well as bank and court fees in connection with the respective companies' debt restructuring negotiations and for the costs of the subsequent reorganization filings with the Bankruptcy Court. The Company anticipates that such costs will be incurred throughout the duration of the bankruptcy. During the quarter ended June 30, 2000, the Company recorded a charge of approximately $19 million to reserve the trade receivables due from healthcare providers that filed for bankruptcy protection. During the quarter ended March 31, 2000, in connection with the Companies' debt restructuring negotiations Genesis and Multicare incurred legal, bank, accounting and other professional costs of $5.0 million. Additionally, the non-payment of interest under the Senior Credit Agreement triggered certain provisions under existing interest rate swap arrangements. Genesis was notified by Citibank that they elected to force early termination of the interest rate swap arrangements as permitted under the arrangements. As a result of this notification, the company has recorded a $28.3 million obligation. The charges described above for both quarters are reflected in the consolidated statement of operations as debt restructuring and reorganization costs and other charges. Businesses Exited During the quarter ended June 30, 2000, the Company decided to close two underperforming owned eldercare centers with 415 combined beds. As a result, a charge of $6.1 million was recorded to account for certain impaired assets of the two owned eldercare centers. In addition, effective May 31, 2000, Multicare sold 14 eldercare centers with 1,128 beds located in the state of Ohio for approximately $36.5 million. The sale proceeds were used to repay senior debt. The Company recorded a loss on the sale of the Ohio properties of $7.9 million. During the quarter ended March 31, 2000, the Company decided to close an underperforming 130 bed eldercare center in its New England region and terminate the lease of an 85 bed eldercare center in its Chesapeake region. As a result, a charge of $3.1 million was recorded to account for certain impaired assets of the eldercare center located in New England. During the quarter ended December 31, 1999, Genesis did not renew operating leases which came to term on five eldercare centers with 480 beds. Multicare Joint Venture Restructuring Charge As a result of the restructuring of the Multicare joint venture agreement in November 1999, Genesis consolidated, with minority interest, the results of Multicare beginning the first quarter of fiscal 2000. In connection with the Multicare restructuring, The Cypress Group (Cypress) and Texas Pacific Group (TPG) invested $50 million in Genesis in exchange for 12.5 million newly issued common shares and warrants to purchase two million shares of common stock with a $5.00 exercise price. In addition, Cypress and TPG terminated their right to put their 56% equity interest in Genesis ElderCare Corp. to Genesis in exchange for convertible preferred stock in Genesis with a $420 million face amount, a 5% dividend rate (payable in kind for the first five years) and a conversion price of $8.75. In the quarter ended December 31, 1999, Genesis recorded a charge of $420 million for the termination of the Multicare put arrangement. Change in Accounting Principle Effective October 1, 1999, Genesis adopted the provisions of the American Institute of Certified Public Accountants Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" (SOP 98-5), which requires start-up costs to be expensed as incurred. The cumulative effect of expensing all unamortized capitalized start-up costs was $16.3 million pretax and $10.4 million after tax. Loss attributed to common shareholders before debt restructuring and reorganization costs and other charges was $26.0 million ($0.53 per share) for the quarter ended June 30, 2000 compared to $21.5 million ($0.44 per share) for the quarter ended March 31, 2000. Loss attributed to common shareholders before the Multicare joint venture restructuring charge, debt restructuring and reorganization costs and other charges and the cumulative effect of an accounting change was $62.4 million ($1.34 per share) for the nine months ended June 30, 2000. Loss attributed to common shareholders before the cumulative effect of an accounting change for the three and nine months ended June 30, 2000 was $60.9 million ($1.11 per share) and $566.1 million ($11.94 per share), respectively. Genesis Health Ventures provides eldercare in the eastern United States through a network of Genesis ElderCare skilled nursing and assisted living centers plus long term care support services nationwide including pharmacy, medical equipment and supplies, rehabilitation, group purchasing, consulting and facility management. GENESIS/MULTICARE: U.S. Trustee Expresses Concern About Blank Rome Employment ---------------------------------------------------------------------------- The U.S. Trustee reminds the Court that both Genesis Health Ventures, Inc., and The Multicare Companies, Inc., seek to employ Blank Rome Comisky & McCauley LLP as Special Corporate Counsel. Given that the Genesis/Multicare entities elect to administer the two sets of cases separately, any employment of the same law firm to provide general corporate advice/services to both may be adverse to the interest of the debtors or the estates, the United States Trustee for Region III tells the U.S. Bankruptcy Court in Wilmington, Delaware. The U.S. Trustee points out that as revealed in the Affidavit of Stephen E. Luongo, Esq., a senior Blank Rome corporate partner, he serves as a Director of Genesis Health Ventures, Inc. and is an equity holder in GHV. The US Trustee suggests that the details of Mr. Luongo's relationships with the Debtors should be explored in further detail. The U.S. Trustee also points out that the fact that the Affidavit reveals a number of matters in which Blank Rome will not represent the Genesis or the MultiCare Debtors indicates that any employment of Blank Rome by both Genesis and Multicare may be adverse to the Debtors and their estates. Further investigation, the U.S. Trustee suggests, is appropriate. (Genesis/Multicare Bankruptcy News, Issue No. 3; Bankruptcy Creditors Service Inc., 609/392- 0900) GLENOIT CORPORATION: Case Summary and 20 Largest Unsecured Creditors --------------------------------------------------------------------- Debtor: Glenoit Corporation 111 West 40th Street New York, NY 10018 Type of Business: Manufacturer of fabrics, textiles, and rugs; holding company Chapter 11 Petition Date: August 8, 2000 Court: District of Delaware Bankruptcy Case No: 00-03309 Judge: Peter J. Walsh Debtor's Counsel: Joel A. Waite, Esq. Pauline Morgan, Esq. Young, Conaway Stargatt & Taylor, LLP 11th Floor, The Wilmington Trust Center 1100 N. Market Street P.O. Box 391 Wilmington, DE 19899-0931 (302) 571-6600 Neal Batson, Esq. Matthew Levin, Esq. Mark Duedall, Esq. Alston & Bird LLP 1201 West Peachtree Street Atlanta, GA 30309-3424 Total Assets: $ 202,505,490 Total Debts : $ 265,105,634 20 Largest Unsecured Creditors: Mattel Carpet & Rug, Inc. 1900 Willowdate Road Dalton, GA 30720 Trade $ 792,471 Sterling Fibers 5005 Sterling Way Charlotte, NC 28241 Trade $ 699,500 Textile Rubber & Chemical 1300 Tiarco Drives S.W. St. Jean, QC J3B 1L7 Canada Trade $ 373,319 Thantex Inc. Trade $ 153,148 Global Textile Services Trade $ 149,651 Flexo-Craft Print Trade $ 104,203 American Fibers & Yarns Co. Trade $ 92,539 Smurfit-Stone Container Div. Trade $ 86,932 Firestone Polymer $ 52,237 The Fire & Casualty Group $ 47,184 Unichem, Inc. Trade $ 46,828 Louis Dreyfus Textiles Trade $ 41,056 EI Dupont de Nemours Trade $ 40,845 Solutia Inc. Trade $ 39,622 Beaulieu United Trade $ 27,240 Quality Finishers $ 24,781 J&J Southeast Trade $ 23,455 Caraustar $ 19,196 Global Stone Filler $ 17,779 American & Effird Trade $ 17,719 GST TELECOMMUNICATIONS: CEO Tom Malone Sees Acquisition a Likely Scenario ------------------------------------------------------------------------- GST Telecommunications Inc.'s chief executive officer, Tom Malone, is cautiously optimistic about the future of GST, the Bellevue, Washington, firm which filed Chapter 11 in May. While Mr. Malone is keeping open the possibility that GST will emerge from bankruptcy protection as a debt-free independent company, he admits that a more likely scenario is for GST to be acquired by a national telecommunications firm. In the meantime, GST claims that its operations have been stabilized and has been able to maintain nearly normal service despite the filing. (New Generation Research, Inc. 08-Aug- 2000) GULF STATES: Proposals to Cut Labor Costs Infuriates Steelworkers' Union ------------------------------------------------------------------------ The following statement was released by the United Steelworkers of America: Steelworker officials reacted angrily today to revelations that Gulf States Steel's bankruptcy filings include cuts to health care benefits, long- term disability payments, and the elimination of all benefits for the surviving spouses of retirees. "These inhumane proposals were not even part of the company's negotiations with us," said Homer Wilson, Director of Steelworker District 9. "It's a disgrace. Gulf States' executives are trying to build a bankruptcy case on the backs of workers and their families, when our members have already made significant sacrifices in contract negotiations to keep the company from going under." Wilson found the company's latest ploy particularly offensive because the Steelworkers worked aggressively to minimize the impact of illegal foreign steel dumping that pushed Gulf States into bankruptcy in the first place. "By the company's own admission," Wilson said, "our members are cooperating with them. To underhandedly launch an assault on the well-being of our members' families, widows and the disabled, when we're in the midst of negotiations is nothing short of a betrayal." Wilson pointed out that, to the best of the Union's knowledge, Gulf States has made no similar attempt to minimize or reduce benefits for management. In fact, he said, the company has plans to pay its executives bonuses, if Gulf States should work its way out of bankruptcy. HARNISCHFEGER INDUSTRIES: Beloit's Turns to Wausau for Workers' Comp Services ----------------------------------------------------------------------------- Beloit Corp. seeks Bankruptcy Court authority to enter into a Service Agreement for Employers Insurance of Wausau, a Mutual Company, to furnish claims services in connection with Beloit's obligations under the workers' compensation laws or the state or federal jurisdictions in which Beloit has qualified as a self insurer. Beloit tells Judge Walsh, who oversees the restructuring of Harnischfeger Industries, Inc., Beloit's parent company, that Wausau's services are necessary because Beloit has lost the personnel needed to service workers' compensation claims. The fees that Wausau will charge Beloit are: Type of Claim Administrative Fee Fee for Each Claim ------------- ------------------ ------------------ Claims reported to $ 1,100 $ 1,000/claim Wausau after June 15, 2000 Takeover Claims $ 30,888 $ 750/claim Beloit intends to deposit, after the Service Agreement is effective, sufficient funds to cover 2-1/2 months' expected claim payments in a loss payment fund with Wausau. The term of the Service Agreement is June 15, 2000 through June 15, 2001. Either Beloit or Wausau can terminated the Service Agreement by providing 90 days written notice. Beloit asserts that entry into the Service Agreement is in the ordinary course of business. It is out of an abundance of caution that Beloit files the motion with the Court to seek approval. (Harnischfeger Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service Inc., 609/392-0900) IMPERIAL HOME: Enters into Insurance Premium Financing Agreement ---------------------------------------------------------------- The Imperial Home Decor Group Inc., et al., filed a motion for entry of an order authorizing the debtors to enter into an insurance premium financing arrangement with Cananwill, Inc. The annual premiums for the insurance policies covered by the agreement total $530,117. Cananwill has advised the debtors that it will not agree to finance the debtors' insurance premiums on an unsecured basis. Cananwill will have a security interest under the premium financing arrangement in any unearned premiums under the insurance policies. According to the debtor, the agreement will benefit these estates by preserving borrowing availability under the DIP Facility and, in addition, reducing interest costs. The Imperial companies currently operate manufacturing, distribution and office facilities in the United States, Canada and the United Kingdom. In fiscal year 1999 the Imperial Companies generated revenue exceeding $411 million. As of May 27, 2000, the Imperial Companies had approximately $363 million in assets and $609 million in liabilities on a consolidated basis. The Imperial Companies currently employ approximately 3,200 full-time employees. LIBERTY HOUSE: Judge King Rejects JMB Realty's Request for a Mediator --------------------------------------------------------------------- Bankruptcy Judge Lloyd King rejected JMB Realty Corp.'s petition to appoint a mediator to help settle the differences on the value of Liberty House, Associated Press reports. JMB, in its equity position, values the Hawaiian department store chain at $285 million. Bank of America and other creditors value the enterprise at $190 million. Judge King, the AP says, did not see much modification in Liberty House's condition since it filed for bankruptcy protection thus eliminating the idea of having a mediator. Liberty House's lenders have filed a reorganization plan and Judge King will convene a hearing on the adequacy of a disclosure statement filed in support of that plan on September 7. If Judge King approves the Disclosure Statement, the Plan will be transmitted to creditors for voting. LOEWEN GROUP: Motion To Reject Mattis And Murray Shareholder Agreements ----------------------------------------------------------------------- Loewen Group International, Inc., seeks authority from the Bankruptcy Court in Delaware to reject the Mattis Shareholder Agreement and the Murray Shareholder Agreement because the acquisition provisions are no longer necessary and the provisions to impose restrictions may limit LGII's flexibility in the ongoing restructuring process. The Mattis Shareholder Agreement Pursuant to the Agreement, the parties agree to certain terms and conditions with respect to the ownership and activities of Martin P. Mattis Holding Company, Inc. Mattis Holdings Company later changed its name to Family Funeral services Group, Inc. and is a Debtor in these chapter 11 cases. Mattis and LGII hold all of the outstanding shares of common stock of FFSG. Mattis holds 10 shares of Class A common stock, and LGII holds 90 shares of Class B common stock. * Sale of Shares and Restrictions Mattis is prohibited from selling his FFSG stock to any party other than LGII. FFSG is prohibited from issuing any additional shares of its stock, granting stock options or creating any new subsidiaries without the consent of Mattis. Mattis may exercise a put right to require LGII, on 120 days notice, to purchase Mattis' shares of Class A common stock at an agreed price according to a formula set forth in the Agreement. LGII has the right to call Mattis' shares in the event that Mattis is no longer employed by LGII or any of its affiliates or subsidiaries. The minimum agreed price is the greater of contributions for acquisitions or the outstanding balance of Mattis' loan from LGII for his equity contributions, including accrued but unpaid interest. * Financing of Acquisitions With respect to the first $10 million of acquisitions by FFSG, Mattis was to be responsible for funding 3.3% of the acquisition cost, or $330,000. LGII would lend Mattis up to $330,000 on terms and conditions set forth in a separate loan agreement. Under this provision, Mattis borrowed $330,000 from LGII for his equity contributions for acquisitions by FFSG. Mattis has never made any payments on that loan. With respect to acquisitions in excess of $10 million, LGII is required to fund the full acquisition cost. * Capital Expenditures Payment for capital expenditures is required to be made from current cash flow in certain circumstances and from long-term debt in others. Net after-tax proceeds from sales of capital items are required to be applied as a reduction of long-term debt. * Legend on Shares Each share certificate of FFSG stock must include a legend noting that such share is subject to the terms and conditions set forth in the Mattis Shareholder Agreement. * Company Management The Mattis Shareholder Agreement contains provisions relating to the election of the board of directors and officers of FFSG and the management of the company in general. * Management Fee LGII is entitled, within its sole discretion, to charge a periodic management fee to FFSG. The Murray Shareholder Agreement Pursuant to the Murray Shareholder Agreement, LGII and Murray agreed to certain terms and conditions with respect to the ownership and activities of Community Funeral Homes of Wisconsin, Inc. Murray and LGII hold all of the outstanding shares of common stock of CFHW. Murray holds 10 shares of Class A common stock, and LGII holds 90 shares of Class B common stock. The Murray Shareholder Agreement provides for: * Sale of Shares and Restrictions Murray is prohibited from selling his CFHW stock to any party other than LGII. Murray has a "put" right pursuant to which Murray may require LGII, on 120 days notice, to purchase Murray's shares of Class A common stock at an "agreed price" to be determined by a formula set forth in the Agreement. LGII has the right to call Murray's shares in the event that Murray is no longer employed by LGII or any of its affiliates or subsidiaries. CFHW is prohibited from issuing any additional shares of its stock, granting stock options or creating any new subsidiaries without the consent of Murray. * Sales Commissions Unlike the Mattis Shareholder Agreement, the Murray Shareholder Agreement provides that Murray is entitled to a commission for each funeral home that Murray identifies for purchase by LGII. The commission is equal to 2% of the acquired funeral home's gross revenues for the year preceding the acquisition. * Financing of Acquisitions With respect to the first $10 million of acquisitions by CFHW, Murray was to be responsible for funding 3.3% of the acquisition cost, or $330,000. Murray, however, has never made any equity contributions. With respect to acquisitions in excess of $10 million, LGII is required to fund the full acquisition cost. * Legend on Shares Each share certificate of CFHW stock must include a legend noting that such share is subject to the terms and conditions set forth in the Murray Shareholder Agreement. * Management Fee LGII is entitled, within its sole discretion, to charge a periodic management fee to CFHW. * Capital Expenditures Payment for capital expenditures is required to be made from current cash flow in certain circumstances and from long-term debt in others. Net after-tax proceeds from sales of capital items are required to be applied as a reduction of long-term debt. * Company Management The Murray Shareholder Agreement contains provisions relating to the election of the board of directors and officers of CFHW and the management of the company in general. (Loewen Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) MEDPARTNERS PROVIDER: California Court Approves Debtors' Disclosure Statement ----------------------------------------------------------------------------- The U.S. Bankruptcy Court for Central District of California entered an order approving the Disclosure Statement to accompany the Second Amended Chapter 11 plan of MedPartners Provider Network, Inc., dated July 7, 2000. Hearings to consider confirmation of the plan will commence on August 29, 2000 at 10:00 AM. The plan contemplates the liquidation of MedPartners Provider Network, Inc.'s assets and the distribution of the proceeds therefrom to creditors holding Allowed Claims. The plan, the amended settlement agreement and supplemental plan agreement interact to provide holders of MPN Provider Claims that become allowed claims against MPN with a choice to elect to participate in a settlement structure whereby the pro rata distributions from the estate on account of such allowed claims will be substantially supplemented by funds made available from: voluntary subordination of substantial amounts of claim by other similarly situated creditors; and MedPartners' agreement to make available additional funds to those eligible creditors that elect to participate in the settlement. The plan provides holders of Allowed MPN Provider claims with two alternatives: (i) opt into the settlement structure by agreeing to grant releases to Medpartners, consenting plans and certain related entities, in exchange for which such holder will become a consenting provider entitled to receive an initial distribution of 85% of the amount o fits provider claims that become allowed claims, along with interim supplemental estate distributions and a final distribution one year later of an estimated additional 12-14% of the amount of such Allowed Claim; (or, in the alternative to receive a one-time distribution of 90% of the amount of its MPN Provider Claims that become allowed MPN claims); and (ii) elect not to participate in the settlement structure and instead receive a pro rata distribution from the estate, anticipated to be 2.5-3% of the amount of any such allowed claims, while reserving any and all rights such holder may have to pursue MedPartners, the Health Plans and any other third parties. MEDITRUST COMPANIES: 2nd Results Show "Five Point Plan" Working, Company Says ----------------------------------------------------------------------------- The Meditrust Companies (NYSE: MT) announced funds from operations, revenues, and results of operations for the three and six months ended June 30, 2000. On a diluted basis, FFO for the three months ended June 30, 2000 was $46,727,000 or $0.33 per share (based on 141,431,000 shares) compared to $80,303,000 or $0.57 per share (based on 141,134,000 shares) for the same period in 1999. The results for the three months ended June 30, 2000, were significantly impacted by non-cash charges associated with the Companies' continuing sale of healthcare assets, the impairment of a real-estate related security (the Companies investment in Nursing Home Properties Plc), and the Five Point Plan of reorganization (announced in January 2000). Effective January 1, 2000, the National Association of Real Estate Investment Trusts adopted a new definition of FFO. The Companies believe that FFO has been calculated in accordance with the new definition for all periods presented. Revenues for the three months ended June 30, 2000 were $219,452,000 versus $239,714,000 for the same period in 1999. The decline in revenues is primarily attributable to the decrease in the number of healthcare assets in the Companies' portfolio; from 394 at June 30, 1999 to 310 at June 30, 2000. The Companies' revenues were also impacted by a decline in revenues in the lodging division. For the three months ended June 30, 2000, the Companies incurred a loss from continuing operations of $83,478,000 compared to income of $47,643,000 for the same period in 1999. The loss from continuing operations for the three months ended June 30, 2000 includes other expenses of $108,958,000 compared to $4,316,000 for the same period in 1999. Other expenses during the three months ended June 30, 2000 principally relate to provisions for assets and mortgages, the impairment of a real estate related security, and expenses related to the Five Point Plan. Other expenses during the three months ended June 30, 1999 principally related to the implementation of the comprehensive restructuring plan, which included professional and advisory fees and costs arising from the early repayment and modification of certain debt. For the six months ended June 30, 2000, FFO was $94,429,000 or $0.67 per diluted share (based on 141,330,000 shares), compared to $117,242,000 or $0.81 per diluted share (based on 144,548,000 shares) for the same period in 1999. Revenues for the six months ended June 30, 2000 were $434,200,000 versus $467,018,000 for the same period in 1999. The decline in revenues is primarily attributable to the decrease in the number of healthcare assets in the Companies' portfolio. For the six months ended June 30, 2000, the Companies incurred a loss from continuing operations of $73,196,000 compared to income of $62,518,000 for the same period in 1999. The loss from continuing operations for the six months ended June 30, 2000 includes other expenses of $121,322,000 compared to $39,203,000 for the same period in 1999. Other expenses during the six months ended June 30, 2000 principally consisted of provisions for assets and mortgages, impairment of a real estate related security, costs related to the Companies' separation agreement with David F. Benson, former CEO of Meditrust Corporation, and expenses related to the Five Point Plan. Other expenses during the six months ended June 30, 1999 principally consisted of costs related to the Companies' separation agreement with Abraham D. Gosman, former Chairman of Meditrust Corporation and Meditrust Operating Company, and implementation of the comprehensive restructuring plan, which included professional and advisory fees, and costs arising from the early repayment and modification of certain debt. Francis W. ("Butch") Cash, Chief Executive Officer of Meditrust said, "While we are disappointed with the operating results of La Quinta for the second quarter, the Companies have made progress during my first 90 days as CEO toward addressing these operating challenges and building the foundation from which to continue execution of the Five Point Plan and focus the Companies on the long-term growth potential of the lodging division." Mr. Cash has brought together a new senior management team for La Quinta that includes a new CFO, a new Senior Vice President of Sales and Marketing, and a new Chief Development Officer to spearhead the franchising efforts. In addition, a new yield management structure, and a new operations structure along with two new group Vice Presidents of Operations, have been put in place. Mr. Cash stated, "With its senior management team solidified and a new organizational structure in place, La Quinta is positioned to begin the process of improving its results and to once again grow through the recently announced franchise program." Regarding the healthcare financing division of Meditrust, Mr. Cash stated, "Our healthcare financing division continues to function in a mixed environment. While there are signs that operating results for healthcare facility operators are stabilizing, the healthcare market is still suffering from scarce capital, excessive leverage, and ongoing labor, regulatory, and litigation issues." During the second quarter, the Companies successfully completed nearly $55 million of healthcare transactions and, consistent with the Five Point Plan, expects to continue to sell healthcare assets during the remainder of 2000. Lodging Lodging related revenues for the second quarter of 2000 were $158.2 million compared to $162.3 million for same period of 1999. The decline in revenues is primarily attributable to the decline in occupancy from 73.0% during the three months ended June 30, 1999 to 67.4% during the three months ended June 30, 2000. As a result RevPAR declined 3.5 percent from $44.14 during the second quarter of 1999 to $42.58 during same period in 2000. During the second quarter of 2000, La Quinta incurred incremental operating expense of approximately $12.1 million primarily related to increases in salary and wage rates, the implementation of new information systems, certain severance and other employment related expenses, as well as certain other operating expenses. EBITDA for the second quarter of 2000 was $63.4 million compared to $79.7 million for the comparable period of 1999. EBITDA margins for the second quarter of 2000 decreased 9.0 percentage points to 40.1% from the comparable quarter in 1999. In addition, Telematrix Inc., a provider of telephone software and equipment for the lodging industry, acquired in October 1999, contributed revenue of $3.8 million and EBITDA of $0.6 million to the quarter. Meditrust's portfolio of hotels operating under the La Quinta name included 230 Inns and 70 Inn & Suites hotels as of June 30, 2000. Supplementary schedules are attached and present summary Occupancy, Average Daily Rate (ADR) and RevPAR data. Healthcare Healthcare related recurring revenue for the three months ended June 30, 2000 was $57.5 million compared to $77.4 million during the same period in 1999. The decrease in revenue is primarily the result of healthcare asset sales and mortgage repayments made over the last twelve months. Operating expenses, which include rental property and general and administrative expenses, for the three months ended June 30, 2000, were $4.1 million compared to $6.3 million during the same period in 1999. The decrease in operating expenses is primarily the result of the sale of medical office buildings and a related management company, reductions in state tax expenses arising from a reformation of certain healthcare subsidiaries and reductions in personnel expenses. Resulting EBITDA was $53.4 million for the three months ended June 30, 2000 compared to $71.1 million during the same period in 1999. During the three months ended June 30, 2000, Meditrust sold healthcare properties and received mortgage repayments totaling $55 million and completed $0.9 million in development financing for healthcare investments that were committed to prior to 1999. Meditrust had mortgage maturities and principal repayments during the quarter of approximately $2.7 million. As of June 30, 2000, Meditrust had financing commitments of approximately $5 million for ongoing healthcare real estate projects. A supplemental schedule is attached which presents the real estate portfolio as of June 30, 2000. Bankruptcies within the Healthcare Industry Citing the negative impact of changes in Medicare reimbursement rates, increases in labor costs, and increases in their debt leverage, several long- term care companies have filed for protection under Chapter 11 of the US Bankruptcy Code ("Chapter 11"). Currently, Meditrust has exposure to four operators who have filed for protection under Chapter 11: Sun Healthcare Group ("Sun"), Mariner Health Group ("Mariner"), Integrated Health Services ("Integrated"), and Genesis Health Ventures, Inc. ("Genesis"). On June 26, 2000, Genesis filed for protection under Chapter 11. As of June 30, 2000, Meditrust had a portfolio of four owned properties representing net assets of approximately $15,330,000 and four mortgaged properties representing a net asset value of approximately $18,439,000 operated by Genesis. During the six months ended June 30, 2000, rental income derived from these properties was $826,000, and interest income derived from mortgages was $976,000. Debt Repayment and Capital Resources During the six months ended June 30, 2000, the Companies retired $58.5 million of its debt prior to maturity date, and as part of sale transactions repaid secured debt totaling $15 million. As a result of these early repayments of debt, a net gain of $1.4 million was realized and is reflected as an extraordinary item. On June 30, 2000, the Companies also repaid $34.8 million of its 8.54% convertible debentures, which were scheduled to mature on July 1, 2000. During July, the Companies repaid $38.5 million of secured debt and $87 million of 7.375% Notes Payable on their scheduled maturity dates. Meditrust has approximately $224 million available on its revolving credit line as of August 1, 2000. Dividend As part of the Five Point Plan, Meditrust Corporation suspended the payment of its common share dividend. Meditrust Corporation expects that its board of directors will declare the minimum dividend required, if any, to maintain its REIT status in December 2000, which will equal at least 95% of its ordinary taxable income for the year ended December 31, 2000. The timing of, and gains and losses from the sales of the healthcare assets as well as the operating results of both the healthcare and lodging divisions, during the year 2000, will impact any minimum dividend required to maintain Meditrust Corporation's REIT status. The quarterly dividend for the 9% Series A preferred stock was paid on March 31, 2000 and June 30, 2000, respectively. The board of directors also expects that the dividend on the cumulative preferred will remain at 9% and will continue to be paid quarterly. Asset Sales During the year 2000, the Companies have completed $321 million of asset sales and mortgage repayments. On February 2, 2000, the Companies announced the completion of asset sales totaling $236 million. Total consideration included $176 million in cash, repayment of $8 million of assumed debt and $52 million of subordinated indebtedness due January 2005 bearing interest at 9%. The transactions involved the sale of the Companies' medical office building management company, 23 medical office buildings, three medical office building mortgage loans, 12 assisted living facilities, and the partial repayment of one mortgage loan. On March 3, 2000, the Companies were repaid $8 million from a mortgage related to a long-term care facility. On March 13, 2000, the Companies completed a $22 million sale of four long-term care facilities. On April 7, 2000, the Companies received $48 million related to mortgage loans on two medical office buildings. In 1998 and 1999, the Companies recorded a loss provision for "assets held for sale", related to the above described transactions, of approximately $72 million. On June 21, 2000, the Companies also completed the sale of one mortgage loan on a retirement living facility for $7 million. The cash proceeds from the sale of assets were used to repay a portion of the Companies' revolving credit facility. Meditrust noted that quarterly financial results for the period ended June 30, 2000 can be found in the Companies' Joint Quarterly Report on Form 10-Q that was filed with the Securities and Exchange Commission this past week. MULTICARE COMPANIES: Eldercare Services Company Reports 3Q Results ------------------------------------------------------------------ Genesis ElderCare Corp., the joint-venture that owns The Multicare Companies, Inc., announced Multicare's results for the third quarter of fiscal 2000. Revenues for the quarter ended June 30, 2000 were $161.8 million, compared to revenues of $163.2 million for the quarter ended March 31, 2000. Effective May 31, 2000, Multicare sold all of its Ohio operations which included 14 eldercare centers with 1,128 beds, to Trans Healthcare, Inc. for $36.5 million in cash. As a result of the sale, revenues in the June quarter declined by $4.0 million. The offsetting increase of $2.6 million in revenues in the June quarter is due to increased per diem rates and growth in Medicare census. Excluding Ohio, the Medicare per diem rate increased by $9 and the Medicare average daily census increased by 37 days resulting in $1.1 and $0.9 million increase in revenue, respectively. The remaining $0.6 million is due to increases in private and Medicaid per diem rates. Occupancy rates increased to 91.5% in the June quarter from 91.3% in the March quarter. Earnings before interest, taxes, depreciation, amortization, rent, management fees, and debt restructuring, reorganization, and other expense (EBITDARM) for the quarter ended June 30, 2000 were $25.8 million compared to $26.5 million for the quarter ended March 31, 2000. EBITDARM declined $0.5 million due to the sale of Ohio assets. The Company recorded $1.0 million in expenses associated with the transition of its incentive compensation program from stock-based to cash-based. On a pro forma basis for the sale of Ohio assets and excluding the costs associated with the incentive compensation program, EBITDARM margins increased to 16.4% from 16.1% in the second quarter. During the quarter ended March 31, 2000, Multicare did not renew an operating lease which expired on an eldercare center with 85 beds in Virginia. The loss before income taxes, share in net loss of unconsolidated affiliates and debt restructuring, reorganization and other expense was $16.1 million and $14.7 million for the quarter ended June 30, 2000 and March 31, 2000, respectively. On June 22, 2000 The Multicare Companies, Inc. and certain of its affiliates filed voluntary petitions with the U.S. Bankruptcy Court in Delaware to reorganize its capital structure under Chapter 11 of the U.S. Bankruptcy code. On the same date, Genesis Health Ventures Inc. (Multicare's principal owner and manager) and certain of Genesis' direct and indirect subsidiaries filed for voluntary petitions with the U.S. Bankruptcy Court in Delaware to reorganize its capital structure under Chapter 11 of the U.S. Bankruptcy code. Both companies are currently operating as debtors-in-possession subject to the jurisdiction of the Bankruptcy Court. Multicare has secured $50 million in debtor in possession ("DIP) financing with a lender group led by Mellon Bank. To date the Company has not borrowed under this commitment. During the quarter ended June 30, 2000, Multicare incurred and expensed fees of $4.5 million for legal, accounting and consulting services as well as bank and court fees in connection with debt restructuring negotiations and subsequently the costs of reorganization filings with the Bankruptcy Court. Included in debt restructuring, reorganization and other expense was $1.0 million in bank charges and $3.5 million in legal and financial consultant expense. Also included in debt restructuring, reorganization and other expense was a $7.9 million loss on the sale of the Ohio assets. In connection with the restructuring of the Multicare joint-venture agreement, beginning in the first quarter of Fiscal 2000, Multicare is a consolidated subsidiary of Genesis Health Ventures for financial reporting purposes and continues to be managed by Genesis. Multicare is a leader in providing eldercare services in the eastern and mid-western United States through skilled nursing and assisted living centers. Genesis Health Ventures provides eldercare in the eastern United States through a network of Genesis ElderCare skilled nursing and assisted living centers and long term care support services nationwide including pharmacy, medical equipment and supplies, rehabilitation, group purchasing, consulting and facility management. PIXELON CORP: Court Approves Balthaser To Purchase Shares --------------------------------------------------------- Pixelon Corp., based in San Juan Capistrano, California, received approval from the U.S. Bankruptcy Court to sell its shares to Balthaser Online, Inc., of San Francisco. Balthaser will pay $175,000 in cash and waive $300,000 in claims that it holds against Pixelon, according to a report from New Generation Research, Inc. As previously reported in the TCR, officials and backers of Pixelon Corp., filed for Chapter 11 bankruptcy protection in July after ousting top managers. Officers of the troubled San Juan Capistrano start-up were sued by former investors for allegedly withholding critical information when the Company raised money in a private placement. PREMIER LASER: MediVision Pays $3,200,000 for Majority Interest in OIS ---------------------------------------------------------------------- Irvine, California-based Premier Laser Systems Inc., California, obtained authority from Judge Alberts and the U.S. Bankruptcy Court for the Central District of California, for authority to sell its majority interest in Ophthalmic Imaging Systems of Sacramento to MediVision Medical Imaging Ltd. of Israel for $3.2 million. As reported previously in the TCR, Premier Laser hired Magnum Group as its financial advisor to assist the Company in the disposition of various assets, including OIS. ROBERDS: Gordon, Nassi & ALCO Report on Progress of Going-Out-Of-Business Sale ------------------------------------------------------------------------------ The joint venture of Gordon Brothers Retail Partners, LLC, The Nassi Group LLC and ALCO Capital Group, LLC, retained as liquidation agent for Roberds, Inc., submits a reports on the progress of the Roberds, Inc. going-out-of business sale to the U.S. Bankruptcy Court for the Southern District of Ohio. As of July 23, 2000 the GOB Sale had generated approximately $25 million in total sales. Based on the results of the GOB sale to date with respect to augmented inventory, the debtor is not currently and likely will not be entitled to receive any monies in excess of the $3.1 million guaranteed to Roberds by the Joint Venture. SAFETY-KLEEN: Sells Vacant Ann Arbor Property To Mainline For $1.5MM -------------------------------------------------------------------- Pursuant to 11 U.S.C. Sec. 363, Safety-Kleen Corp. sought and obtained authority to sell certain real property, together with all improvements thereon, located at 3895 Research Park Drive in Ann Arbor, Michigan to Mainline Technologies, Inc. Skadden Arps lawyer J. Gregory St. Clair, Esq., tells Judge Walsh that as part of the plan to restructure their operations, the Debtors intend to identify and divest themselves of underperforming or non-core assets. The Ann Arbor Property is one of those non-core assets. For 10 years, Safety-Kleen (Encotec), Inc., operated an analytical laboratory at the facility. The Ann Arbor property is vacant and the Debtors do not intend to occupy or otherwise use the property in the future. The Ann Arbor Property, the Debtors say, is not essential to their successful reorganization. At present, the Debtors' remain liable for property taxes and other carrying costs associated with the Ann Arbor Property, including, among others, insurance. The Debtors are not, however, deriving any benefit from continued ownership of the Ann Arbor property. Consequently, the Debtors believe that a sale of the Ann Arbor Property will maximize its value for the benefit of the Debtors, estates and their creditors. On May 19, 2000, the Debtors accepted a $1,500,000 cash offer from Mainline for the purchase of the Property. The Debtors relate that Cushman & Wakefield marketed the Ann Arbor Property for nearly a year through the use of signs, brochures, e-mail, announcements on Internet web pages, mailings to laboratory users and competing brokers, and telephone solicitations to potential prospects. Mainline's offer is the highest and best offer received to date and the Debtors believe that it extremely unlikely that additional marketing would result in significantly greater net proceeds to the Debtors' estates. Based on this record, Judge Walsh approved the Debtors' sale of the Property to Mainline. Judge Walsh directs that the sale will be free and clear of all liens, claims, interests, and encumbrances, and determined, at the Debtors' behest, that the sale is exempt from any stamp, transfer, recording or similar tax. Additionally, Judge Walsh authorized payment of a 6% brokerage fee to Cushman & Wakefield. (Safety-Kleen Bankruptcy News, Issue No. 6; Bankruptcy Creditors Service Inc., 609/392- 0900) SUN HEALTHCARE: Third Request for Extension of Exclusive Period -- to Nov. 9 ---------------------------------------------------------------------------- Sun Healthcare Group, Inc., asks Judge Walrath for a further extension of the Exclusive Period during which they may file a plan of reorganization through November 9, 2000 and through January 8, 2001 to solicit acceptances of the plan. The Debtors tell Judge Walrath that issues have taken longer to resolve than anticipated at the time of the previous motion. They explain that they have made significant progress in their negotiations with the federal government regarding the disposition of underperforming facilities and a global settlement of the claims, but there are still outstanding issues that need to be resolved before they are able to accurately assess the changes that will have to be made to the existing agreement in principle with their bank lenders and senior subordinated noteholders. The Debtors also report that they and their creditor representatives have made significant progress in documenting the plan of reorganization and the debt and corporate documents necessary to effectuate the agreement in principle that they negotiated with their two largest and most senior creditor constituencies before the filing of their chapter 11 cases. They note that two significant areas of uncertainty must be clarified before completion of the documentation: (1) the magnitude of the claims of general unsecured creditors, excluding the Debtors' senior bank lenders and the holders of public debt securities of Sun Healthcare Group, Inc. and (2) the cost to the Debtors of resolving outstanding issues with the government. The agreement in principle is also subject to the resolution of potential overpayment claims by federal and state government agencies, the Debtors observe. According to the Debtors, some of the remaining issues under discussion with HHS could have a material effect on the post-confirmation operations of the Debtors and their ability to comply with some of the terms of the agreement in principle. Therefore, they believe they need additional time to advance the discussions with HHS and assess the economic implications of such a global settlement. As justification, the Debtors also reiterate the size and complexity of the cases, that they are working closely with creditors and lenders on a plan of reorganization, and are generally making postpetition payments and effectively managing their businesses and properties. (Sun Healthcare Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392- 0900) TOYSMART.COM: 43 States Interpose Formal Objections To FTC Settlement --------------------------------------------------------------------- Attorneys general for a total of 43 states, two territories, and the District of Columbia filed formal objections with the U.S. Bankruptcy Court to the proposed settlement between Toysmart.com, Inc., and the Federal Trade Commission. As previously reported, the proposed settlement allowed for Toysmart to sell its customers' personal information, under certain circumstances. The objection maintains that the sale of this information would violate both the Company's stated privacy policy and consumer protection laws. The objection states that the attorneys general applaud the FTC's stipulation requiring that prospective buyers must offer identical privacy protections; however, it further insists that former Company customers be notified before any such sale and, additionally, be given the opportunity to remove their information from the lists. Specifically, the objection states, "Although the FTC settlement provides some safeguards, it fails to address the core issue in this proposed transaction--that consumers were promised and are entitled to the right not to have their personal information transferred without their knowledge or consent." Toysmart has been operating under Chapter 11 protection since May 2000. (New Generation Research, Inc. 08-Aug-2000) UNIFRAX CORP: Moody's Places Senior Debt Ratings On Review For Downgrade ------------------------------------------------------------------------ Moody's Investors Service placed the ratings of Unifrax Corporation on review for possible downgrade following the company's announcement on July 31, 2000 that it has entered into a definitive agreement to purchase the ceramic fiber business of Carborundum Insulation Technologies (CIT), an operating unit of the Paris based Compagne de Saint-Gobain (Saint-Gobain). The ratings include the B2 rating of its $96 million senior notes, due 2003, the Ba3 rating of its $22 million senior secured credit facility, maturing 2001, the B2 senior unsecured issuer rating, and the B1 senior implied rating. The purchase price, the bank debt and seller financing arrangements, and financial information on the business being acquired have not been disclosed. The transaction is expected to close by the end of September 2000 and will double Unifrax sales (CIT had 1999 ceramic fiber sales of about $80 million, roughly the same as Unifrax 1999 sales of $85 million). The acquisition will reunite Unifrax, which is the former North American Fibers Division of The Carborundum Company that was acquired by Kirtland Capital Partners in 1996 from British Petroleum, with its former international ceramic fiber operations that was acquired by Saint-Gobain. Moody's review will focus on the pro forma cash flow, interest coverage, and leverage, the acquisition integration risk, and the benefits of the increased international market for its products. Unifrax Corporation, headquartered in Niagara Falls, New York, is a leading producer of heat resistant ceramic fiber products in North America. UNITED HOMES: Sheldon Good To Auction $30 Million Of Residential Property ------------------------------------------------------------------------- United Homes Inc., which declared Chapter 11 bankruptcy in March, hired Sheldon Good & Co. Auctions of Chicago to auction 313 properties in Illinois, Michigan and Arizona. The properties in the three states are valued at $25 million to $30 million. Houses and sites in Illinois to be auctioned are in the following areas: Fields of Bayberry in Waukegan, Cyprus Pointe in Gregg's Landing in Vernon Hills, Harvest Run in Crystal Lake, Sienna Pointe in Cary, Tiffany Farms in Antioch and Brentwood Estates in Palatine. The Illinois auctions are expected to take place Sept. 14 and 17. The company also sent notice of the auctions to anyone who had submitted interest in the properties in the past. (New Generation Research, Inc. 07-Aug-2000) WASTE MANAGEMENT: Announces Financial Results For Second Quarter ---------------------------------------------------------------- Waste Management Inc. (NYSE:WMI) announced financial results for its second quarter ended June 30, 2000. Revenues for the quarter were $3.27 billion as compared to $3.32 billion in the year ago period. The Company reported net income of $0.3 million for the period or $0.00 per diluted share, compared with $318.3 million, or $0.50 per diluted share, for the second quarter 1999. On a pro forma basis, after adjusting for unusual costs and certain other items discussed below, second quarter 2000 net income was $200.4 million, or $0.32 per diluted share. The unusual costs and other items adjusted for in the pro forma analysis include: $125.1 million in losses, net of gains, on sales of assets and $77.6 million in impairments on assets held-for-sale, primarily related to international operations, $13.8 million for the planned termination of the former Waste Management pension plan, and $54.2 million of SG&A costs primarily related to business consulting, accounting and stabilization efforts. Additionally, for the pro forma analysis an effective tax rate of 41.7% is utilized, and $32.1 million of suspended depreciation related to the assets-held-for-sale is charged to expense. For the six months ended June 30, 2000, Waste Management reported operating revenues of $6.48 billion as compared to $6.40 billion for the comparable period last year. Net income was $55.3 million and diluted earnings per share was $0.09 for the six months ended June 30, 2000 compared to $665.0 million and $1.05, respectively, for the same period in 1999. "During the second quarter the Company made significant progress on a number of important projects. And, I am pleased with the consistency of operations that is beginning to be evidenced in our quarterly results," said A. Maurice Myers, chairman, president, and chief executive officer of Waste Management. "The divestiture program announced last year advanced substantially in the past few months. To date we have announced sales of assets totaling about $2 billion and have collected $1.1 billion of those proceeds. The approximately $1 billion of proceeds received during the second quarter combined with free cash flow from operations resulted in a total debt reduction of $1.2 billion in the quarter. Bond pricing for week of August 10, 2000 ======================================== Data is supplied by DLS Capital Partners, Inc. Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 13 - 15 (f) Advantica 11 1/2 '08 67 - 69 Asia Pulp & Paper 11 3/4 '05 67 - 69 Conseco 9 '06 66 - 67 E & S Holdings 10 3/8 '06 40 - 43 Fruit of the Loom 6 1/2 '03 50 - 52 (f) Genesis Health 9 3/4 '05 9 - 11 (f) Globalstar 11 1/4 '04 25 - 27 GST Telecom 13 1/4 '07 48 - 51 (f) Iridium 14 '05 4 - 5 (f) Loewen 7.20 '03 33 - 35 (f) Paging Network 10 1/8 '07 38 - 40 (f) Revlon 8 5/8 '08 51 - 53 Service Merchandise 9 '04 7 - 9 (f) Trump Atlantic 11 1/4 '06 71 - 73 TWA 11 3/8 '06 38 - 40 ********* A list of Meetings, Conferences and seminars appears in each Tuesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Bond pricing, appearing in each Friday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* 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, Ronald Ladia, Zenar Andal, and Grace Samson, 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 * * *