/raid1/www/Hosts/bankrupt/TCR_Public/000822.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, August 22, 2000, Vol. 4, No. 164
Headlines
AGNEW SHOES: Applies For Protection From Creditors Under CCAA
AMERICAN METROCOMM: Case Summary
AMERICAN METROCOMM: Case Summary and 2 Largest Unsecured Creditors
AMERICAN PAD & PAPER: Motion To Sell Oakwood, Georgia, Property for $850K
AMERISERVE: Announces Agreement With McLane To Purchase Certain Assets
APPONLINE.COM: Schiffrin & Barroway Continues Officer & Director Suit
BARNEY'S NEW YORK: Announces $3,600,000 Million Loss in Second Quarter
BIG PARTY: Asks for Extension of Lease Decision Period through December 31
BREED TECHNOLOGIES: Johnnie Breed Reports 46.3% Equity Stake
CROWN VANTAGE: Hopeful it Can Make Decisions About 23 Leases by January 15
DYNACORE HOLDINGS: Seeks to Extend 365(d)(4) Period through October 16
ELDER BEERMAN: Shareholders' Annual Meeting to Convene on August 24
FILENE'S BASEMENT: CEO Schlesinger Announces Vision On Future Merchandising
FRUIT OF THE LOOM: Bookshester Announces Improvements On 2000 First Half
GENESIS/MULTICARE: Obtains Authority To Pay All Prepetition Taxes
GLOBAL TISSUE: Taps Thomason Hendrix as Special Litigation Counsel
HARNISCHFEGER INDUSTRIES: Fourth Motion For Extension Of Exclusive Periods
HECHINGER: Committee Applies to Retain Kasowitz Benson for Litigation
HEILIG-MEYERS: Case Summary and 20 Largest Unsecured Creditors
HEILIG-MEYERS: Judge Tice Enters First-Day Orders as Company's Behest
HEILIG-MEYERS: Fitch Lowers Bank Credit and Senior Notes From 'CCC' To 'D'
HOME INTERIORS: Moody's Lowers Debt Ratings; Outlook Remains Negative
INTEGRATED HEALTH: Lawyers Representing Debtors and their Turnaround Firm
JUDGE.COM: Announces Change in Accounting & Auditing Firm
LAROCHE INDUSTRIES: US Nitrogen Bids $34.75MM for Ammonium Nitrate Business
MAXIM CRANE: Moody's Lowers Senior Unsecured Notes From Caa1 To Caa2
MERRILL LYNCH: Fitch Affirms Commercial Mortgage Pass-Through Cert. At CCC
OXFORD AUTOMOTIVE: Moody's Junks 10-1/8% Senior Subordinated Notes
PAGING NETWORK: Metrocall Supplements Competing Plan & Objects to PageNet's
PRIMARY HEALTH: Creditor Seeks Conversion of Cases to Chapter 7 Proceeding
PRIME SUCCESSION: Committee Selects Munger Tolles/Pachulksi Team as Counsel
SAFETY COMPONENTS: VTECH Offers to Purchase Valentec Subsidiary for $4.1MM
SAFETY-KLEEN: Applies To Employ Obermayer Rebmann As Special Labor Counsel
SAFETY-KLEEN: Appoints Larry Singleton As New Chief Financial Officer
SANITARY SERVICES: Manchester Trash Collector Shuts Down Operations
SMART WORLD: Prepping for Sept. 6 Evidentiary Hearing on Juno's "Good Faith"
SUN HEALTHCARE: Motion To Assume & Assign Michigan & Arkansas Leases
TURBODYNE: Latest News on TST, Heartland, Jamison, & Willet Cases
UNITED COMPANIES: Bankruptcy Court Approves Modified Disclosure Statement
*********
AGNEW SHOES: Applies For Protection From Creditors Under CCAA
-------------------------------------------------------------
Shoe retailer Agnew (3226727 Canada Inc.) applied to the Ontario Superior
Court for protection from its creditors under the Companies' Creditors
Arrangement Act, pending the finalization and filing of a Plan of
Arrangement on behalf of the Company.
Agnew Shoes, a mainstay of the Canadian shoe business, is being forced to
close their stores because of a decline in business. "It is unfortunate
that we have to close these stores" stated Brian Lindy, Vice-President
Finance, of Agnew. "Agnew was purchased in 1996 and we used our best
efforts to make a go of this venerable retailer. We suffered heavy losses
in sales during the winter and spring/summer periods due to unseasonable
weather. This coupled with various computer problems has put us into this
difficult position. We are grateful to our employees for the last four and
a half years. We had a great team. We are confident that our employees,
with their great skills, will be able to find other employment quickly.
Many of our head office employees have already found other employment."
"Over the next few months we will be finalizing the sale of inventory,
leases, leaseholds and other assets. We have been in discussion with many
Canadian and U.S. retailers for the purchase of part or the whole chain. To
date we have finalized some transactions and are in discussions with
others. We have not been able to find a retailer that wanted the entire
chain, so it is unlikely that Agnew will continue as a chain unto itself.
We are trying to maximize as much return as possible for our creditors, by
attempting to get as much as possible for inventory, leases, leaseholds and
other assets. The National Bank of Canada is the largest secured creditor.
They have been working with management in an incredibly professional
manner."
John Agnew started the company in 1879 in Brantford, Ontario. In 1928 the
company was merged with Surpass stores and continued under the name Agnew
Surpass, which grew to become Canada's largest footwear chain.
Hilco Merchant Resources announced today that the Ontario Superior Court of
Justice in Toronto has, pursuant to the Companies' Creditors Arrangement
Act, approved the selection of Merchant Resources, Inc. to manage the
liquidation process in the 223 closing Agnew Shoe stores across Canada.
The stores that are closing operate under the following names: Agnew, Agnew
Family, Agnew Surpass, Aggies, San Marina, 2BU, Solemate, Ashton, Ashton
C2, World of Shoes, and Chaussures Vincent.
Anton Caracciolo, Chief Operating Officer of Hilco Merchant Resources said
that "During the store closing sales it is an excellent opportunity for
bargain-conscious consumers to stock up on their fall and winter shoe
needs. This sale is happening just in time for shoppers to stock up on all
their back to school needs."
"We are extremely pleased to have been selected to lend our expertise to
this situation", said Mike Keefe, President and Chief Executive Officer of
Hilco Merchant Resources, "our group is the foremost specialist in helping
retailers and their financial partners realize value."
AMERICAN METROCOMM: Case Summary
---------------------------------
Debtor: American MetroComm Networks Corp.
1615 Poydras Street, No. 1050
New Orleans, Louisiana 70112-1254
Type of Business: The Company, together with its affiliates, is a
Digitally-based Competitive Local Exchange Carrier
(DLEC) headquartered in New Orleans, Louisiana
providing corporate-class, fully integrated voice and
data services in the southeastern United States. The
Company utilizes digital subscriber line (DSL)
technology and unbundled network elements on the "last
mile connection" and the latest soft-witch technologies
to provide local and long-distance services.
Chapter 11 Petition Date: August 16, 2000
Court: District of Delaware
Bankruptcy Case No: 00-03365
Debtor's Counsel: Neil B. Glassman, Esq.
Steven M. Yoder, Esq.
Elio Battista, Jr., Esq.
The Bayard Firm
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, DE 19899
(302) 655-5000
J. Douglas Bacon, Esq.
Josef s. Athanas, Esq.
Timothy A. Barnes, Esq.
Peter P. Knight, Esq.
Latham & Watkins
233 S. Wacker Drive
Chicago, IL 60606
(312) 876-7700
Total Assets: $ 68,086,635
Total Debts : $ 70,096,717
AMERICAN METROCOMM: Case Summary and 2 Largest Unsecured Creditors
-------------------------------------------------------------------
Debtor: American MetroComm Regional Networks Corp.
1615 Poydras Street, No. 1050
New Orleans,Louisiana 70112-1254
Type of Business: The Company, together with its affiliates, is a
Digitally-based Competitive Local Exchange Carrier
(DLEC) headquartered in New Orleans, Louisiana
providing corporate-class, fully integrated voice and
data services in the southeastern United States. The
Company utilizes digital subscriber line (DSL)
technology and unbundled network elements on the "last
mile connection" and the latest soft-witch technologies
to provide local and long-distance services.
Chapter 11 Petition Date: August 16, 2000
Court: District of Delaware
Bankruptcy Case No: 00-03367
Debtor's Counsel: Neil B. Glassman, Esq.
Steven M. Yoder, Esq.
Elio Battista, Jr., Esq.
The Bayard Firm
222 Delaware Avenue, Suite 900
P.O. Box 25130
Wilmington, DE 19899
(302) 655-5000
J. Douglas Bacon, Esq.
Josef s. Athanas, Esq.
Timothy A. Barnes, Esq.
Peter P. Knight, Esq.
Latham & Watkins
233 S. Wacker Drive
Chicago, IL 60606
(312) 876-7700
Total Assets: $ 43,203,985
Total Debts : $ 43,866,921
2 Largest Unsecured Creditors
General Electric Capital Corp
501 Corporate Centre Drive
Suite 600
Franklin, TN 37067-0000 Executory Contract $ 36,869,851
Heller EMX, Inc.
500 West Monroe Street
Chicago, IL 60661-0000 Executory Contract $ 4,509,893
AMERICAN PAD & PAPER: Motion To Sell Oakwood, Georgia, Property for $850K
-------------------------------------------------------------------------
American Pad & Paper Company and its debtor affiliates filed a motion
seeking court approval for the sale of real property located in Oakwood,
Georgia, and payment of a commission with respect to the sale.
A hearing with respect to the motion will be held on September 5, 2000 at
4:30 PM before Judge Roderick R. McKelvie, District of Delaware.
Debtor AP&P Manufacturing owns a certain industrial building and real
property located at 3701 Old Oakwood Road, Oakwood, Georgia. The property
was at one time used in the operation of the debtor's business. The debtors
are not currently using the property for any purpose. Through the efforts
of Coldwell Banker Commercial-North Metro Realty, the debtors received an
offer of $850,000 from Doug and Larry Tanner. The debtors seek court
approval of the sale of the property, and court approval of an 8% broker's
commission, pursuant to the terms of the Sales Agreement.
AMERISERVE: Announces Agreement With McLane To Purchase Certain Assets
----------------------------------------------------------------------
AmeriServe Food Distribution, Inc. announced that it has signed a
definitive sale agreement with McLane Company, Inc. The proposed sale of
certain assets related to AmeriServe's U.S. distribution business to McLane
is subject to, among other conditions, approval by the U.S. Bankruptcy
Court.
"This transaction will fulfill AmeriServe's obligation to maximize value to
its creditors, while continuing to serve customers and employees well,"
said Ron Rittenmeyer, AmeriServe president and chief executive officer.
"Subject to Bankruptcy Court approval of the agreement, AmeriServe and
McLane are committed to an orderly transition that allows those who depend
on us to carry on business as usual."
McLane Company, the only nationwide distributor to convenience stores,
operates 16 distribution centers in the United States.
AmeriServe, headquartered in Addison, Texas, a suburb of Dallas, is a major
distributor specializing in chain restaurants, serving leading quick
service systems such as KFC, Long John Silver's, Pizza Hut and Taco Bell.
APPONLINE.COM: Schiffrin & Barroway Continues Officer & Director Suit
---------------------------------------------------------------------
Notice is hereby given that a class action lawsuit was filed in the United
States District Court for the Eastern District of New York on behalf of all
purchasers of the common stock of AppOnline.com Inc., (AMEX: AOP; OTC BB:
AMNF; OTC BB: APLY; OTC BB: AOPL) from June 1, 1999 through June 30, 2000
inclusive.
The complaint charges certain of AppOnline's officers and directors with
issuing false and misleading statements concerning the Company's business
and financial condition. Throughout the Class Period, the Company
misleadingly publicized that they were becoming "a dominant player in the
growing online home mortgage business." As a result, Apponline's stock
price was artificially inflated throughout the Class Period. In fact, the
defendants were siphoning cash from the Company and were violating banking
regulations. When the truth regarding the Company's operations was
revealed, its stock price plunged.
Contact Schiffrin & Barroway, LLP (Marc A. Topaz, Esq. or Robert B. Weiser,
Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at
info@sbclasslaw.com.
BARNEY'S NEW YORK: Announces $3,600,000 Million Loss in Second Quarter
----------------------------------------------------------------------
According to a Reuters report, Barney's New York, Inc. had a net loss for
its second quarter of $3.6 million, compared to last year which was twice
as much. "We are particularly pleased with the strength of our full-price
stores, which registered double-digit comp increases," said Allen Questrom,
Barneys chairman, president and chief executive.
As reported in the TCR earlier this month, Allen Questrom is scheduled to
resign his post as Barney's CEO on September 15, 2000. He will continue in
his role as Chairman of Barney's Board of Directors as he assumes the top
post at J.C. Penney Company, Inc.
Barneys New York is a luxury retailer with flagship stores in New York
City, Beverly Hills and Chicago. In addition, the company operates five
regional full price stores, eight outlet stores and two semi-annual
warehouse sale events. The company also maintains corporate offices in New
York City, and an administrative and distribution center in Lyndhurst, New
Jersey and has 1,400 employees.
BIG PARTY: Asks for Extension of Lease Decision Period through December 31
--------------------------------------------------------------------------
The Big Party Corporation seeks entry of an order extending the debtor's
time to assume or reject unexpired leases of nonresidential real property,
through and including December 31, 2000.
The court recently approved the a comprehensive asset acquisition proposal
submitted by a joint venture formed by iParty Retail Store Corp., Hilco
Trading Co., Inc. and The Ozer Group, LLC, which transaction provides for
the acquisition of substantially all of the debtor's assets. Hilco and Ozer
as joint venturers shall serve as the exclusive agent to conduct store
closing sales at the remaining 21 retail locations not be acquired by
iParty, and they will market the debtor's leaseholds for the Closing
Locations. The Hilco/Ozer Designation Rights extend through and including
December 22, 2000.
In view of the anticipated duration of the GOB Sales, the debtor requires
additional time to market the Closing Location Leases for potential sale,
assumption and assignment. The debtor believes that some or all of the
leases are potentially valuable assets of the estate. To date, the debtor,
together with Hilco/Ozer has had insufficient time to review or appraise
the value of each of the leases.
BREED TECHNOLOGIES: Johnnie Breed Reports 46.3% Equity Stake
------------------------------------------------------------
J. Breed Ltd., and Johnnie Breed, Inc., beneficially own 16,955,500 shares
of the common stock of Breed Technologies Inc. with sole voting and
dispositive powers, representing 46.0% of the outstanding common stock of
the company. Johnnie Cordell Breed, as Trustee of a Trust, holds shared
voting and dispositive powers over an additional 109,200 shares, as well as
sole powers over the 16,955,500 shares mentioned above. In the aggregate
Johnnie Cordell Breed beneficially owns 17,064,700 shares representing
46.3% of the outstanding common stock of the company.
The securities were originally held by the founder of the company, Allen K.
Breed, and transferred to the entities named above in connection with
various estate planning transactions entered into prior to, and subsequent
to, the death of Mr. Breed.
On September 20, 1999, the company and certain of its subsidiaries filed
voluntary petitions in the United States Bankruptcy Court for the District
of Delaware seeking to reorganize the company under Chapter 11 of the
Bankruptcy Code. The Board of Directors of Breed Technologies, with the
permission of the Bankruptcy Court, retained the investment banking firm of
Wasserstein Perella & Co. to evaluate the alternatives available to the
company and to advise them in developing a reorganization plan or evaluate
other options available to the company to emerge from its Chapter 11
bankruptcy case, including the potential sale of the company or
substantially all of its assets to a third party.
In connection with the foregoing, an investor group, which includes Johnnie
Cordell Breed, the company's current Chairman of the Board and CEO,
submitted a proposal to the Board of Directors of the company on March 24,
2000 offering to purchase substantially all of the assets of Breed
Technologies through a corporation to be formed. The proposal was
subsequently withdrawn, however, the investor group remains interested in
pursuing an acquisition of the company. Acceptance of any proposed
transaction is subject to the approval of the Board of Directors of the
company and the Bankruptcy Court.
CROWN VANTAGE: Hopeful it Can Make Decisions About 23 Leases by January 15
--------------------------------------------------------------------------
Crown Vantage Inc. and Crown Paper Co. filed a motion for entry of an order
(US Bankruptcy Court Northern District of California) pursuant to Section
365(d)(4) further extending the time within which the debtors must assume
or reject its approximately 23 unexpired nonresidential real property
leases.
Crown Paper has entered into a letter agreement with Crown Acquisition
Corp., pursuant to which Crown Paper proposes to sell substantially all of
its assets to Crown Acquisition or its affiliates. An auction, if
necessary, may take place as late as September 21, 2000. The sale of the
debtors' assets, whether to Crown Acquisition or to a third party bidder,
and assignment of certain leases to the ultimate purchaser are scheduled to
be heard on September 21, 2000.
The existing deadline of September 15, 2000 would be premature for the
debtors to realistically determine which leases to assume or reject.
After the sale, the debtors will needed to consider the disposition of its
assets including the leases not assigned to the court-approved purchaser
and the debtors will develop a Chapter 11 plan.
Therefore, the debtors ask that the court grant an extension of the
debtors' time to assume or reject all leases through and including January
15, 2001. A hearing has been scheduled for August 29, 2000 at 10:00 AM.
DYNACORE HOLDINGS: Seeks to Extend 365(d)(4) Period through October 16
----------------------------------------------------------------------
Dynacore Holdings Corporation f/k/a Datapoint Corporation filed a motion
pursuant to Section 365(d)(4) of the Bankruptcy Code seeking extension of
time within which the debtor may assume or reject unexpired leases of
nonresidential real property.
The debtor is currently a party to three unexpired leases of nonresidential
real property. The debtor states that it requires additional time to
analyze the leases in order to determine which best serve the debtor's
business going forward from a financial and operational perspective. These
unexpired leases cover office space that may be required to sustain the
debtor's business as it emerges from Chapter 11. The debtor will not be
able to complete this analysis prior to the current deadline imposed by the
Bankruptcy Code, August 16, 2000.
Specifically, the debtor seeks a sixty-day extension through and including
October 16, 2000. The leases pertain to space that is used by the debtor in
its day-to-day operations. The debtor anticipates that it will file a plan
and disclosure statement in the next few weeks. The process of preparing
the debtor's schedules and statements of financial affairs has proved to be
time consuming, and the debtor is not in a position to make a prudent
decision with respect to the leases.
ELDER BEERMAN: Shareholders' Annual Meeting to Convene on August 24
-------------------------------------------------------------------
The annual meeting of shareholders of The Elder-Beerman Stores Corp. will
be held on August 24, 2000, at 8:00 a.m., eastern daylight time, at The
Dayton Marriott Hotel, 1414 South Patterson Boulevard, Dayton, Ohio 45409.
The principal business of the meeting will be:
(1) To elect four Directors for a three-year term expiring in
2003. Nominees are, Mark F. C. Berner, Dennis S. Bookshester,
Eugene I. Davis and Charles H. Turner. If the amendment to Article
IX of the company's Amended Articles of Incorporation is approved
by the shareholders at the annual meeting, the entire Board of
Directors must be re-elected at the company's annual meeting of
shareholders in 2001.
(2) To act upon a proposal of the Board of Directors to increase by
500,000 the number of shares of common stock covered by The
Elder-Beerman Stores Corp. Equity and Performance Incentive Plan.
(3) To act upon a proposal of the Board of Directors to amend Article X
of the company's Amended Articles of Incorporation to reduce from
72% to a majority of the company's outstanding shares of common
stock the shareholder approval required to amend or repeal any
section of the Articles including those dealing with cumulative
voting rights, preemptive rights to acquire shares, share
repurchases by the company, the classification of and staggered
election system for the Board of Directors and the Amendment of
Article X of the Articles itself.
(4) To act upon a proposal of the Board of Directors to amend Article
IX of the Articles to eliminate the classification of the
company's Board of Directors (which is currently divided into
three separate classes and elected on a staggered basis) and to
replace this structure with a single class board of directors
under which all directors of the company are elected by the
shareholders on an annual basis.
(5) To act upon a proposal to adopt a new Article XIV to the Articles
pursuant to which Elder-Beerman would opt out of the provisions of
Chapter 1704 of the Ohio Revised Code, which Chapter sets forth
certain restrictions on the ability of an Ohio corporation to
engage in certain business combinations and other transactions
that involve shareholders that have the ability to exercise 10% or
more of the voting power of such corporation.
(6) To act upon a proposal of the Board of Directors to amend
Regulation 34 of the company's Amended Code of Regulations to
lower from 72% to a majority of the company's outstanding shares
of common stock the shareholder approval requirement needed to
amend or repeal any Regulation in the Regulations including those
dealing with the time and place of shareholder meetings, who may
call special meetings of the shareholders, the order of business
(including advance notice of business to be brought) at
shareholder meetings, the size of the Board of Directors, the
filling of newly-created directorships and Board of Directors
vacancies, the removal of directors, the nomination of directors
(including advance notice of the intent to nominate directors) and
the amendment of the Regulations.
(7) To act upon a proposal of the Board of Directors to amend
Regulation 9 of the Regulations to lower from 72% to a majority of
the company's outstanding shares of common stock the shareholder
approval required to alter the size of the Board.
(8) To act upon a proposal of the Board of Directors to amend
Regulation 3(a) of the Regulations to permit a shareholder or
shareholders who own 10% rather than 50% of Elder-Beerman's
outstanding shares of common stock to call special meetings of
shareholders.
(9) To act upon a proposal of the Board of Directors to amend
Regulation 7(c) of the Regulations to provide that any shareholder
who desires to bring business before an annual meeting of Elder-
Beerman's shareholders must notify Elder-Beerman not more than 90
days, but not less than 45 days (rather than not less than 60
days), in advance of such meeting of its intent to do so and of
the nature of such business.
(10) To act upon a proposal of the Board of Directors to amend
Regulation 12 of the Regulations to provide that any shareholder
who desires to propose any nominees for election to Elder-
Beerman's Board of Directors must notify Elder-Beerman not more
than 90 days, but not less than 45 days (rather than not less than
60 days), in advance of such meeting of its intent to do so.
(11) To act upon a proposal of the Board of Directors to adopt a new
Regulation 35 to the Regulations, pursuant to which the company
would opt out of the provisions of the Ohio Control Share
Acquisition Act, which Act sets forth certain restrictions on the
ability of persons to acquire 20% or more of the stock of an Ohio
corporation.
(12) To transact any other business that may properly come before the
meeting. Only shareholders of record on June 27, 2000, will be
entitled to notice of and to vote at the annual meeting.
FILENE'S BASEMENT: CEO Schlesinger Announces Vision On Future Merchandising
---------------------------------------------------------------------------
According to published reports, Filene's Basment Corp.'s new chief
executive officer, Alan Schlesinger, has a focused vision for the Company.
Filene's recently emerged from Chapter 11 protection. Schlesinger stated,
"We've got to get back to our roots." Among other moves, this includes a
renewed emphasis on marketing designer labels at discount prices. According
to Schlesinger, this emphasis is once again possible for the Company
because of new owner Value City Department Stores, Inc.'s formidable
purchasing power. Schlesinger further explained that Value City acquired
only the profitable segments of the Company, shutting down all unprofitable
stores and even discontinuing Aisle 3 altogether. Schlesinger concluded,
"Filene's Basement has a great history," he said. "Now we have to do
something with that history. We've rested on our laurels too long." (New
Generation Research, Inc. 18-Aug-2000)
FRUIT OF THE LOOM: Bookshester Announces Improvements On 2000 First Half
------------------------------------------------------------------------
Fruit of the Loom, Ltd. (OTC Bulletin Board: FTLAQ), one of the world's
leading marketers and manufacturers of basic family apparel, reported
operating results for its second quarter. Dennis Bookshester, Chief
Executive Officer commented, "We have made significant progress in
restructuring the operations of the Company in our effort to emerge from
bankruptcy. Although our second quarter financial results reflect the
carryover of the costs associated with problems which occurred in the
second half of 1999, we have experienced significant operational and cost
improvements in the first half of 2000 versus 1999." Fruit of the Loom
filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code on December 29, 1999 and is currently working through its
restructuring in bankruptcy proceedings.
The Company reported sales of $446.0 million for its second quarter ended
July 1, 2000 compared to $517.7 million for the second quarter of 1999.
Loss from continuing operations for the second quarter of 2000 was $55.9
million ($.83 per share) compared to earnings from continuing operations of
$4.5 million ($.07 per share) for the second quarter of 1999. Including
discontinued operations, the net loss for the second quarter of 2000 was
$55.9 million ($.83 per share) compared to a net loss of $2.3 million ($.03
per share) for the second quarter of 1999.
For the six months ended July 1, 2000, the Company reported sales of $820.9
million compared to $888.3 million for the corresponding period in 1999.
Loss from continuing operations for the six months ended July 1, 2000 was
$135.1 million ($2.02 per share) compared to a loss from continuing
operations of $0.4 million ($.00 per share) for the corresponding period in
1999. Including discontinued operations, the net loss for the six months
ended July 1, 2000 was $137.7 million ($2.06 per share) compared to a net
loss of $11.3 million ($.16 per share) for the corresponding period in
1999.
The Company's earnings before interest, taxes, depreciation, amortization
and restructuring costs ("EBITDAR"), as defined in the Company's debtor-in-
possession credit facility ("DIP"), was $84.1 million compared to $ 49.4
million during the second quarter of 1999. EBITDAR excludes the Company's
inventory variances (which are additional product costs in excess of
standard costs) capitalized in 1999, gains and losses on nonoperating asset
sales and the restructuring costs associated with the bankruptcy. For the
six months ended July 1, 2000, EBITDAR was $138.0 million compared to $84.6
million during the corresponding period of 1999.
The borrowing availability under the DIP is $338.5 million and there was no
usage of the revolver component of the DIP as of August 17, 2000.
Management believes that the size of the DIP provides the Company adequate
financial flexibility and liquidity to pay its suppliers and meet customer
expectations.
The Company reported an operating loss from continuing operations in the
second quarter of $11.4 million compared to $26.6 million in operating
earnings from continuing operations during the same period last year. The
operating loss from continuing operations includes $72.2 million of fourth
quarter 1999 inventory variances which represent actual product costs
incurred in excess of 1999 standard costs. These additional product costs
were incurred in 1999 as a result of the Company's manufacturing and
operating difficulties and were charged to gross earnings as the inventory,
which included such costs, was sold during the second quarter of 2000. The
total impact of the $149.1 million in higher manufacturing costs incurred
during the last six months of 1999 has been recognized in the six months
ended July 1, 2000 and will not affect future periods. Actual production
costs incurred in the first six months of 2000 were substantially improved
and in line with expected operating performance.
Inventory costs in excess of standards for the first six months of 2000
amounted to $24.4 million and will be absorbed in operating results in the
second half of 2000 as the inventory associated with these costs is sold.
RESTRUCTURING UPDATE
Dennis Bookshester, Chief Executive Officer commented, "With the changes
that have been implemented in our operations, we have been able to service
our customers at a higher level. The entire organization is focused on
reducing costs, improving product quality and delivering superior value to
our customers. The Company is now benefiting from improved manufacturing
efficiencies associated with higher volume per style and the consolidation
of production into Company owned facilities. The investment we made at the
beginning of the year in improving controls, reengineering standards,
improving planning and production scheduling and reducing the number of
product offerings has resulted in improvements in key reporting metrics
including order fill rates, plant efficiency and material utilization. The
benefits of the improvements have been reflected in product quality and
timeliness of production. At the same time, we have reduced selling,
general and administrative expenses to further improve our cost
competitiveness.
As part of the Company's restructuring we have sold the Gitano business,
closed the Pro Player operations and discontinued non-core products. With
the elimination of non-core businesses and products, the Company is
evaluating production capacities and will adjust production to meet
expected future sales demand. Any reduction in production capacities may
have a material adverse affect on future results of operations due to the
incurrence of one time costs.
I am proud of the contributions made by all of Fruit of the Loom's
employees to improve the Company's performance."
GENESIS/MULTICARE: Obtains Authority To Pay All Prepetition Taxes
-----------------------------------------------------------------
In the ordinary course of their businesses, Genesis Health Ventures, Inc.,
and The MultiCare Companies, Inc., collect sales taxes from purchasers of
medical supplies, therapy devices, and pharmaceuticals on a per sale basis
and remit them periodically to the Taxing Authorities. The Debtors incur
use taxes when the vendor failed to collect a sales tax from the Debtors.
The Debtors are also obligated to remit use taxes on a periodic basis to
the applicable Taxing Authorities.
For the month of March 2000, the Debtors collected approximately $88,000 in
sales taxes on behalf of the Taxing Authorities, of which approximately
$54,000 was due and payable during April 2000. For use taxes, the Debtors
accrued during February 2000 approximately $48,000 that are owed to the
Taxing Authorities during the month of March 2000.
The sales taxes constitute "trust fund" taxes which are not property of the
Debtors' estates and should be paid to the Taxing Authorities. Moreover,
sales and use taxes are afforded priority status under section 507(a)(8) of
the Bankruptcy Code and must be paid in full before any general unsecured
obligations of a debtor may be satisfied. Therefore, the proposed relief
will only affect the timing of the payment of prepetition taxes to the
extent that the Debtors are successful in confirming a plan of
reorganization and will not prejudice the rights of any other creditors or
parties in interest. On the other hand, if these are not paid, the Debtors'
officers and directors are personally held liable for collecting under
applicable state statues. Any litigation of this kind will distract the
Debtors and their officers and directors in their attempt to implement a
successful reorganization strategy.
Therefore, the Debtors seek authority to pay the prepetition taxes owed to
the Taxing Authorities on an unaccelerated basis as such payments become
due and payable, to issue postpetition checks or make postpetition fund
transfer in replacement of prepetition sales and use tax obligations
dishonored, and to authorize the banks to act accordingly.
Judge Walsh granted the Debtors' Motions in all respects. (Genesis/
Multicare Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
GLOBAL TISSUE: Taps Thomason Hendrix as Special Litigation Counsel
------------------------------------------------------------------
Global Tissue LLC seeks authority to retain and employ the law firm of
Thomason, Hendrix, Harvey, Johnson & Mitchell PLLC as its special
litigation counsel to provide advice with respect to pending state court
litigation and other local litigation matters. Compensation to the firm
will be on an hourly basis, plus expenses. The attorneys presently
designated to represent the debtor and their hourly rates are:
Christopher L. Vescovo, Esq. $175
Robert L. Moore, Esq. $175
Bruce A. McMullen, Esq. $150
HARNISCHFEGER INDUSTRIES: Fourth Motion For Extension Of Exclusive Periods
--------------------------------------------------------------------------
In a fourth Motion for an extension of their exclusive periods pursuant to
11 U.S.C. Sec. 1121, Harnischfeger Industries, Inc., et al., ask the U.S.
Bankruptcy Court for the District of Delaware for an extension of their
exclusive right to file a plan of reorganization through December 13, 2000,
and have the exclusive right, through February 28, 2001, to solicit
acceptances of that plan.
The Debtors again tell Judge Walsh that they seek these extensions to avoid
"premature filing" of a plan and to ensure that the plan takes into account
the interests of all of the Debtors, their employees, their creditors and
their estates. The Debtors say that they could file a plan today, but it
would not be a consensual plan and would likely result in disputes which
would delay confirmation and add significant administrative expense to the
estate. If the exclusive period is extended to December 13, 2000, the
Debtors are optimistic of filing a plan that can be confirmed without
costly and unnecessary litigation.
Before reiterating that the size and complexity of the cases alone would
justify an extension and that the requested extension will not harm their
creditors, the Debtors draw the Court's attention to their progress
towards filing a feasible plan of reorganization and try to explain how
this relates to the requested extension of exclusive periods.
The Debtors report that the Blackstone Group, L.P. and their other
professionals have already drafted a plan, and Blackstone has begun
discussing this plan with the Committees' professionals in an effort to
consensually resolve certain plan issues, including intercompany claims.
Specifically, the Debtors report on their progress with respect to
resolving claims, asset sales, treatment of executory contracts, reaching
agreements with Committees, Lenders and professionals:
I. Claims
The Debtors have 18,850 scheduled and filed claims. These claims represent
an alleged potential aggregate liability of $8,831,326,672. Because of the
significant disparity between filed claims and the Debtors' books and
records, the Debtors need additional time to reduce the claims filed
against them. The Debtors anticipate reducing filed claims by utilizing
traditional court procedures and the ADR procedures. The Debtors have
already eliminated $1,493,712,276 in claims.
Based on the Debtors' analysis, there appears to be sufficient value to
pay in full all claims against P&H and Joy. However, to satisfy these
claims utilizing only the Debtors' projected available cash and debt
capacity, such claims must not exceed $180 million. Such filed claims are
currently approximately $2,148,868,776 for Joy and $714,772,137 for P&H.
The Debtors' management believes that the claims subject to compromise
against Joy and P&H will not exceed $180 million.
The Debtors and their professionals anticipate that simultaneous use of
both procedures will by December 13, 2000 reduce the claims against Joy
and P&H to a level that is near the Debtors estimate of pre-petition
claims. If exclusivity is terminated and the Debtors are forced to proceed
with a plan without better knowing the approximate amount of claims
against Joy and P&H, the post-confirmation value of the Debtors' equity
may become a significant matter of dispute between the Joy and P&H
creditors, on the one hand, and HII creditors on the other.
The Debtors present to the Court a summary of the claims objection
process:
No. of Value of Claims
Claims Value of Expunged & Continued Against
Objected Claims Disallowed Claim to Another
Objection to Objected to Claims Objections Debtor
--------- -------- ----------- ----------- ---------- -------
1st Omnibus 351 295,479,279 180,565,998 110,119,928 0
2nd Omnibus 577 468,386,461 431,272,995 33,342,231 48
3rd Omnibus 834 70,902,746 1,092,577 69,810,169 40
4th Omnibus 78 23,064,436 1,182,226 21,882,210 13
5th Omnibus 1005 433,239,593 223,056,454 209,692,267 87
6th Omnibus 114 251,864,180 216,493,920 33,558,181 6
7th Omnibus 64 105,047,001 70,019,662 4,939,312 0
8th Omnibus 71 33,755,262 29,553,739 75,048 0
9th Omnibus 69 4,392,775 4,197,492 195,283 0
10th Omnibus 209 328,398,105 326,158,229 708,785 0
11th Omnibus 112 14,086,914 10,118,983 3,960,136 0
Rockwell 59 1,890,748,670 -- -- 0
Objection
12th Omnibus 21 6,453,727 -- -- 0
13th Omnibus 17 5,926,152 -- -- 0
14th Omnibus 56 205,689,859 -- -- 0
15th Omnibus 90 32,760,560 -- -- 0
----
Total 3727 4,170,195,722 1,493,712,276 488,283,550 194
The Debtors intend to file additional omnibus objections in the future.
Resolution of the objections is necessary before Joy and P&H can propose a
meaningful plan.
II. Negotiations and Agreements
The Debtors report that they and their professionals met with the
Creditors Committee, the lenders under the $500,000,000 Revolving Credit
Agreement and their counsel, and with the Equity Committee's professionals.
If the Debtors and the Committees do not reach agreement on the
significant issues, the Debtors cannot file a consensual plan. If a
consensual plan is not filed, the confirmation process may take months
longer than if a consensual plan is filed.
In addition, the Debtors tell Judge Walsh, the Beloit Committee appointed
by the U.S. Trustee has added new complexity and activity to the plan
process. Since the appointment, the Debtors have
(i) responded to extensive requests for a large number of documents
and
(ii) met with the Beloit Committee to explain a variety of issues
related to:
(a) the sale of Beloit's assets,
(b) intercompany claims,
(c) potential causes of action held by the Beloit estate
(d) the parameters of a potential plan.
However, the Debtors have not been able to reach consensual resolution of
the outstanding issues. For example, treatment of insurance proceeds and
intercompany claims of approximately seven hundred million dollars must be
addressed before a consensual plan is proposed.
III. Asset Sales
The Debtors continue to complete the sale of substantially all of the
Beloit's operating assets, including closing these asset purchase
agreements:
Entity Name Debtor-Shareholder % Held
----------- -------------------------
Beloit Industrial Ltda. Beloit 82.09%
(Brazil)
Princeton Paper Beloit 100%
Beloit Africa Pty. Ltd. BWRC 100%
(South Africa)
Beloit Australia Pty. Ltd. Beloit 100%
Beloit GmbH Winder Product Center BWRC 100%
(Germany)
The Debtors expect to close the following Court approved sales of Beloit
assets within the next month:
Entity Name Debtor-Shareholder % Held
----------- -------------------------
Beloit Poland, S.A. Beloit 99.9%
Beloit Holdings, Inc. 0.6%
Beloit Tullins, S.A. France) Bobo S.A.R.L. 100%
(
Beloit Italia, S.p.A. BWRC 99.98%
The Debtors tell Judge Walsh that the sales process is an arduous
undertaking that requires a significant amount from Beloit's senior
management and the Debtors' professionals.
IV. Executory Contracts
The Debtors report that they are analyzing the thousands of executory
contracts and leases. Treatment of these complicated contracts, including
prepetition divestiture contracts and insurance programs, must be
addressed before any party can file a feasible plan of these cases.
V. Other Issues
The Debtors tell Judge Walsh that they and their professionals are also
analyzing issues related to tax, Intercompany debt, organizational
structure, insurance and litigation matters (including asbestos claims and
future demands). For example, the post-confirmation Beloit estate must be
properly structured to avoid inadvertent taxes and retain certain tax
advantages, and the significant net operating losses must be properly
attributed among the Debtors.
The Debtors report that they have also made progress with respect to other
key components:
a) retained Merrill Lynch, Pierce, Fenner & Smith Incorporated to sell
the $110 million APP Note;
b) negotiated and obtained Court approval of the amendment of the
debtor-in-possession financing agreement;
c) negotiated the refinancing of various loans of its foreign
affiliates;
d) rejected certain burdensome executory contracts;
e) terminated unprofitable business ventures;
f) resolved certain motions to lift the automatic stay;
g) further developed a cohesive bankruptcy litigation strategy,
including asbestos claims;
h) sold de minimis assets and settle certain claims in consultation
with the Committee; and
i) sold certain real estate and other assets.
* * *
The United States Trustee for Region III complains to Judge Walsh that
the Debtors have had several prior extensions of the exclusive periods.
Moreover, Daniel K. Astin, Esq., an Attorney-Advisor for the U.S.
Trustee tells the Court, the U.S. Trustee speculates that "expiration of
the exclusive period may have a salutary effect on the plan confirmation
process." The UST therefore objects to the Debtors' motion. Judge Walsh
dismissed the UST's Objection with little comment.
"During the past several months," Lindsee P. Granfeield, Esq., and Kurt A.
Mayr, Esq., of Cleary, Gottlieb, Steen & Hamilton, representing the
Official Committee of Unsecured Creditors appointed in Harnischfeger
Industries, Inc.'s chapter 11 cases, told Judge Walsh Monday afternoon in
a hearing convened in Wilmington, Delaware, "the Committee and the Debtors
have negotiated and substantially agreed upon" the terms of a plan of
reorganization under which the company can emerge from chapter 11
protection. The Committee's lips are sealed when it comes to talking
about the economic aspects or structural framework of the plan to which
they've "substantially agreed." The Committee also gives not hint about
how similarly or differently HPH, Beloit and Joy creditors may be treated
under the draft plan.
Because the Committee and the Debtors are in substantial agreement on the
terms of a plan, the Debtors, at the Committee's behest, reduced the
length of time they requested for an extension of their exclusive periods.
Earlier this month, as reported in the TCR, the Debtors thought they would
need to extend their exclusive period into December. With the prospect of
a consensual plan now in hand, Harnischfeger sought and obtained, with the
support of the Creditors' Committee, an extension of their exclusive
period during which to file a plan of reorganization through September 15,
2000. Provided that a plan is filed by that date, Judge Walsh further
ordered that the Debtors will have the exclusive right to solicit
acceptances of that plan through November 14, 2000.
There are only a few remaining plan-related issues for the Committee and
the Debtors to hammer-out, James H.M. Sprayregen, Esq., and Anne Marrs
Huber, Esq., confirmed, and the parties are confident those few issues can
be resolved within the next 30 days. (Harnischfeger Bankruptcy News, Issue
No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900)
HECHINGER: Committee Applies to Retain Kasowitz Benson for Litigation
---------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Hechinger Investment seeks
court approval to employ and retain the law firm of Kasowitz, Benson,
Torres & Friedman LLP as special litigation counsel in connection with the
Committee's continued investigation and potential prosecution of claims
arising under or relating to the DIP Financing Order.
Specifically the firm will provide the following services:
a. to assist and advise the Committee in connection with the Committee's
investigation of the security interests, liens and claims of the
debtors' pre-petition lenders;
b. to commence, if necessary, and prosecute adversary proceedings
against the pre-petition lenders and their predecessors-in-interest,
which shall include all aspects of discovery;
c. to attend meetings and negotiate with the representatives of the
debtors and/or any party which is the subject of investigation by
the Committee or against which the Committee may commence an
adversary proceeding;
d. to take all necessary action to protect and preserve the interests of
the Committee, including the prosecution of actions on their behalf,
and negotiations concerning all litigation in which the debtors are
involved;
e. to generally prepare on behalf of the committee all necessary
adversary complaints and related motions, applications, answers,
orders, reports and other papers in support of positions taken by
the Committee in any adversary proceeding;
f. to appear, as appropriate, before any courts necessary and the US
Trustee to protect the interests of the Committee.
The Committee is informed that the attorneys presently designated to
represent the Committee and their current standard hourly rates are:
David M. Friedman -- $525 per hour
Adam L. Shiff -- $325 per hour
Robert M. Novick -- $285 per hour
Athena F. Foley -- $250 per hour
HEILIG-MEYERS: Case Summary and 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Heilig-Meyers Company
12560 West Creek Parkway
Richmond, VA 23238
Type of Business: Heilig-Meyers Company, together with its predecessors
and subsidiaries, is engaged primarily in the retail
sale of home furnishings and bedding in the United
Sates. Collectively, Heilig-Meyers and its
subsidiaries operate approximately 872 stores in 29
states, primarily in rural markets located in the
Southeast. Heilig-Meyers Company is the parent company
of Heilig-Meyers Furniture Company, Heilig-Meyers
Furniture West, Inc., HMY Star, Inc., HMY RoomStore,
Inc. and MacSaver Financial Services, Inc. which are
also debtors and debtors in possession in cases pending
before this court.
Chapter 11 Petition Date: August 16, 2000
Court: Eastern District of Virginia
Bankruptcy Case No: 00-34533
Judge: Douglas O. Tice Jr.
Debtor's Counsel: H. Slayton Dabney, Jr., Esq.
McGuireWoods LLP
One James Center
901 E. Cary Street
Richmond, Virginia 23219
(804) 778-1000
Myron Trepper, Esq.
Willkie Farr & Gallagher
787 Seventh Ave.
New York, New York 10019
(212) 728-8000
Total Assets: $ 1,354,710,000
Total Debts : $ 836,298,000
20 Largest Unsecured Creditors:
First Union National Bank, as
Successor Indenture Trustee
for the Debtors' Publicly
Held Bonds
Corporate Trust Department
P.O. Box 26944 Publicly Held
Richmond, Virginia 23261 Bonds $ 475,000,000
Action Industries
P.O. Box 60015
Charlotte, NC 28260-0015 Trade $ 9,395,508
William C. DeRusha
1686 Broad Street Road
P.O. Box 212
Oilville, Virginia 23129 Contract $ 8,343,153
Klaussner Furniture Ind., Inc.
P.O. Box 60475
Charlotte, NC 28260-1242 Trade $ 7,007,914
Barber Martin & Assoc. Inc.
7400 Beaufont Springs Dr.
Suite 201
Richmond, VA 23225 Trade $ 5,016,482
Berkline Corporation
P.O. Box 751740
Charlotte, NC 28275-1740 Trade $ 4,745,565
Simmons Co/Merchandise
P.O. Box 945655
Atlanta, GA 30394-5655 $ 4,335,656
Avon Home Furnishings LLC
P.O. Box 830876
Birmingham, AL 35283-0384 Trade $ 3,633,717
Astro Lounger/Phillips
Factors
P.O. Box 890011
Charlotte, NC Trade $ 2,943,922
Franklin Mfg. Co.
P.O. Drawer 569
Houston, MS 38851 Trade $ 2,787,757
Pilliod Furniture/Ladd
Financi
P.O. Box 198826
Atlanta, GA 30384-8826 Trade $ 2,776,340
Kroehler Furniture/CIT
Group
P.O. Box 1036
Charlotte, NC 28201 Trade $ 2,771,377
Ashley Furniture Industries
Dept. 665
Milwaukee, WI 53259-0665 Trade $ 2,633,197
Samuel Laurence Furniture Co.
SDS 12-1432
P.O. Box 86
Minneapolis, MN 54486-1432 Trade $ 2,212,317
Whirlpool Corporation
2000 M63 North
Benton Harbor, MI 49022 Trade $ 2,197,426
Guildcraft California
P.O. Box 9094
Rancho Dominguez, CA 90224-9094 Trade $ 2,062,163
Thomson Consumer Electronics
P.O. Box 751310
Charlotte, NC 28275 Trade $ 1,880,276
Douglas Furniture of CA, Inc.
P.O. Box 2559
Chicago, IL 60674-2559 Trade $ 1,730,590
Vaughan Bassett Furniture
P.O. Box 85080
Richmond, VA 23285-4256 Trade $ 1,425,142
LEA Industries
P.O. Box 65210
Charlotte, NC 28265 Trade $ 1,348,506
HEILIG-MEYERS: Judge Tice Enters First-Day Orders as Company's Behest
---------------------------------------------------------------------
Heilig-Meyers Company (NYSE: HMY), the nation's largest retailer of home
furnishings and related items, announced that it has received Bankruptcy
Court approval to, among other things, pay pre-petition and post-petition
employee wages, salaries and benefits during its voluntary restructuring
under Chapter 11, which commenced on August 16, 2000.
The Court also approved interim debtor-in-possession (DIP) financing for
immediate use by the Company to continue operations, pay employees, and
purchase goods and services going forward. In conjunction with the filing,
Heilig-Meyers received a commitment for $215 million in DIP financing from
a group of lenders led by Fleet Retail Finance, Inc. The final hearing on
the DIP agreement has been set for September 27, 2000.
President and Chief Executive Officer Donald S. Shaffer said he was pleased
with the Bankruptcy Court's prompt approval of these first-day orders. "We
expect the DIP financing, together with the successful completion of
strategic restructuring initiatives we announced in conjunction with the
filing, to provide adequate funding to support post-petition trade and
employee obligations." On August 16, 2000, the Company announced it had
identified three key initiatives aimed at improving its overall financial
performance, including the outsourcing of all aspects of future Heilig-
Meyers credit operations, the closing of stores in underperforming markets
over the next 30 to 60 days, and reducing the overall cost of operations.
The Company noted that certain of these initiatives are subject to final
Bankruptcy Court approval. The Company reiterated that stores in its
RoomStore and Homemakers divisions are not included in this store-closing
program.
The Company filed Chapter 11 petitions in the U.S. Bankruptcy Court for the
Eastern District of Virginia in Richmond for Heilig-Meyers Company, Inc.,
on August 16, 2000.
Heilig-Meyers is the nation's largest retailer of home furnishings and
related items. Customers may visit the Company's retail web sites at
http://www.heiligmeyers.comand http://www.roomstore.com.
HEILIG-MEYERS: Fitch Lowers Bank Credit and Senior Notes From 'CCC' To 'D'
--------------------------------------------------------------------------
Fitch has lowered the ratings on the bank credit of Heilig-Meyers Company
(HMY) to 'D' from 'CCC' and the senior note of HMY's MacSaver Financial
subsidiary to 'D' from 'CCC'. The action reflects the company's
announcement that it filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code. The ratings have been removed from
Rating Watch Negative where they were placed on August 1, 2000. The
assignment of the 'D' rating to the bank credit facility reflects
uncertainty regarding whether this asset class received preferential
treatment concerning the partial securing of the facility in May 2000.
As part of the company's plan of reorganization, HMY plans to close 302
stores throughout the United States, as well as outsource its credit
operations. As noted in the company's press release, HMY will immediately
convert to its third-party credit source and complete store closings and
various components of the restructuring over the next 60 days. Fitch will
be monitoring the situation as more details are available.
Heilig-Meyers is a furniture retailer operating more than 873 stores under
the names of Heilig-Meyers and The RoomStore.
Fitch is an international rating agency that provides global capital market
investors with the highest quality ratings and research. Dual headquartered
in New York and London with a major office in Chicago, Fitch rates entities
in 75 countries and has some 1,100 employees in more than 40 local offices
worldwide. The agency, which is a combination of Fitch IBCA and Duff &
Phelps Credit Rating Co., provides ratings for Financial Institutions,
Insurance, Corporates, Structured Finance, Sovereigns and Public Finance
Markets worldwide.
HOME INTERIORS: Moody's Lowers Debt Ratings; Outlook Remains Negative
---------------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Home Interiors &
Gifts, Inc. ("HI&G") following news of continued deterioration in revenues
and profitability. The downgrades reflect Moody's expectation that HI&G
will not easily recover from franchise problems, and that operating
profitability will remain depressed as the company continues to operate
with a less-experienced sales force and less productive orders.
The following debt issues are affected by this action:
i) $340 million secured term loan and revolving credit facility
expiring through 2006 to B1 from Ba3
ii) Senior implied rating to B1 from Ba3;
iii) $200 million senior subordinated notes due 2008 to B3 from B2;
iv) Senior unsecured issuer rating to B2 from B1.
The ratings reflect lowered expectations for medium term financial
performance as well as:
a) HI&G's high leverage;
b) negative asset coverage;
c) greater than expected operating disruptions during consolidation of
its warehouse facilities; and
d) risk of competition and changing customer tastes.
The ratings are supported by the financial flexibility and cash flow
generation resulting from HI&G's relatively high proportion of variable to
fixed costs; the company's long history; and the expectation that higher
operating expenses will continue to be partly offset by higher gross
product margins.
The rating outlook remains negative. Moody's believes that the difficulties
which HI&G is experiencing will be difficult to resolve in the near term.
The difficulties in recruiting and retaining independent salespeople (known
as "displayers") could result in further deterioration to the franchise,
which comprises virtually all of the company's enterprise value. The number
of active displayers, and the level of sales per displayer, have continued
to decline during 2000. As a result of high turnover in the past twelve
months, Moody's expects displayer productivity will remain lower for the
near term than in past years.
Moody's expects the declining pattern shown through the first half of this
year to continue through 2000. The pattern is due to long term issues,
including the economic environment of full employment which is poor for in-
home sales. The environment makes it difficult to retain an experienced
sales force and weakens interest in in-home selling, which are the most
productive types of sales for the company. The average order size has
dropped, and HI&G has not been able to pass through pricing to compensate
for higher handling costs.
As a result of these factors, Moody's expects this year's EBITDA margin to
be below last year's margin of 20%, compared to 1998's margin of almost
23%. Interest coverage could remain adequate with EBIT to interest at close
to two times. However, total debt service coverage including mandatory
amortization will be thin, raising the possibility of an amendment to the
amortization schedule. Moody's anticipates the company will need to borrow
under its unused revolving credit facility to finance capital expenditures
and seasonal needs. HI&G has agreed in principal with its banks to raise
its revolving availability to $70 million from $40 million, although the
banks have not formally committed to the increase.
In addition to longer-term operating challenges, HI&G's short term
operating results are being impacted by disruptions due to consolidations
of its six warehouses into one facility. The company has warned that these
problems could result in additional charges during 2000, but Moody's
believes the consolidation will lower costs through improved efficiencies
in later years. In the near term, problems in fulfilling orders could lead
to dissatisfaction among customers and the sales force at a time when the
company is trying to retain salespeople. These problems may have a longer
term impact on reputation and franchise value.
Home Interiors and Gifts, headquartered in Dallas, Texas, is a direct sales
distributor specializing in decorative home accessories. Revenues were $503
million in 1999.
INTEGRATED HEALTH: Lawyers Representing Debtors and their Turnaround Firm
-------------------------------------------------------------------------
Aware of the Debtors' proposed retention of Alvarez & Marsal, Inc. as
restructuring consultants with the provision of one of A&M's principals,
Mr. Joseph Bondi, to serve as Chief Restructuring Officer, and eventually
as Chief Executive Officer of IHS, Lee W. Stremba, Esq., a partner at
Parker Chapin, advises the Court that certain newly joined partners and
associates at Parker Chapin, led by partner Joel A. Poretsky, Esq.,
rendered services to A&M before they joined Parker. These services,
performed while the attorneys were partners and associates at the law firm
of Gordon Altman Weitzen Shalov & Wein LLP, included matters of a general
corporate nature and matters relating to investment transactions and estate
planning.
Mr. Stremba notes that the attorneys concerned may continue to render
similar services to the Alvarez firm, its affiliates and principals. In
this regard, Mr. Stremba assures the Court that Parker Chapin, including
Mr. Poretsky and his colleagues from Gordon Altman, does not represent, has
not represented, and will not represent Mr. Bondi, the Alvarez firm, its
affiliates or its principals in any matter even remotely related to the
Debtors or their chapter 11 cases. (Integrated Health Bankruptcy News,
Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900)
JUDGE.COM: Announces Change in Accounting & Auditing Firm
---------------------------------------------------------
JUDGE.com (formerly "The Judge Group, Inc.") a leader in the field of IT
Staffing Solutions, will now be using the Certified Public Accounting firm
of McGladrey & Pullen, LLP as its independent auditing and accounting firm.
With more than 70 offices nationwide, McGladrey services more than 100
entities with publicly held securities, including a wide array of middle
market and emerging businesses.
According to JUDGE.com's Chief Financial Officer, Robert Alessandrini, CFA,
"We believe that a national firm of McGladrey's caliber has the resources
to fit the needs of a public company like JUDGE.com. We also believe that
our investors and the investment community will look favorably on the
transfer to McGladrey and the name recognition that McGladrey brings to the
table."
JUDGE.com had, until today, used the services of Rudolph Palitz, LLC as its
auditing firm. Rudolph Palitz merged with the national McGladrey firm
effective August 1.
JUDGE.com is tying talent to technology by integrating 30 years of IT
staffing services experience with cutting edge technology to deliver
efficient client services over the Internet. With locations in 14 cities
and a national presence, JUDGE.com offers total Internet and information
technology staffing solutions through its web-based staffing, IT skills
training, and food and pharmaceutical placement divisions. It is the
mission of the company to service the needs of its clients, its contractors
and applicants with the urgency required by the customer through
professionalism, ethics, and state of the art technology.
LAROCHE INDUSTRIES: US Nitrogen Bids $34.75MM for Ammonium Nitrate Business
---------------------------------------------------------------------------
LaRoche Industries, Inc., entered into a Stalking Horse Agreement with
Beechwood, Ohio-based US Nitrogen, LLC, on August 16, 2000. The Agreement,
subject to higher and better offers, calls for the purchase of LaRoche's
ammonium nitrate business assets by US Nitrogen for $34,750,000 in cash.
The asset sale consists of LaRoche's four ammonium nitrate production
facilities and is a key part of LaRoche's financial reorganization under
Chapter 11. The LaRoche ammonium nitrate manufacturing plants are located
in Alabama, Missouri, Illinois and Utah; employ about 250 employees; and
have a combined production capacity of 1.1 million tons annually.
Neal Batson, Esq., of Alston & Bird in Atlanta, lead counsel to LaRoche,
explains that the sale is subject to the sale procedures approved by Judge
Farnan and set forth in an August 10, 2000 Order of the United States
Bankruptcy Court for the District of Delaware. LaRoche will accept
competitive bids for the ammonium nitrate assets through August 23, 2000,
and hold an auction the next day. Competing bids must top US Nitrogen's
bid by 4%. In the event that US Nitrogen's bid is topped by another
purchaser, US Nitrogen is entitled to a 2% Break-Up Fee. LaRoche will ask
Judge Farnan to approve the sale of these assets, pursuant to 11 U.S.C.
Sec. 363, to the highest and best bidder emerging from the auction process
at a hearing on August 31.
Kevin D. Barnes, Esq., of Kahn, Kleinman, Yanowitz & Arnson Co., L.P.A., in
Cleveland, serves as counsel to US Nitrogen in this multi-million dollar
transaction.
LaRoche Industries is a global manufacturer of nitrogen, chlor-alkali and
fluorocarbon chemical products, with operations in the United States,
Germany and France.
MAXIM CRANE: Moody's Lowers Senior Unsecured Notes From Caa1 To Caa2
--------------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Maxim Crane Works
(fka Anthony Crane Rental, L.P.) as follows:
a) $425 million secured revolving credit facilities, maturing 2004, to
B2 from B1;
b) $250 million first priority term loan, due 2006, to B2 from B1;
c) $50 million second priority term loan, due 2006, to B3 from B2;
d) $155 million of 10 3/8% senior unsecured notes, due 2008, to Caa1
from B3.
e) The senior implied rating was lowered to B3 from B2.
f) The senior unsecured issuer rating was lowered to Caa2 from Caa1.
The outlook is stable.
The downgrades reflect the company's very high leverage contrasted against
modest pro forma results for 12 months ended 6/30/00. The company's
financial performance is not yet sufficient to support total debt
oustanding, including debt incurred in 1999 and through the first 6 months
of 2000 to fund seven acquisitions for $221 million, as well as to buy $193
million of gross new equipment, in addition to the debt issued in 1998 to
effect the recapitalization of the company. LTM pro forma EBITA is
insufficient to cover total interest expense. In addition, the company
continues to make debt-financed acquisitions which have yet to produce
incremental returns sufficient to support the company's immense debt
burden.
Notwithstanding the downgrades, the ratings recognize MCW's improving EBITA
and EBITA margins over the last three quarters. They also acknowledge MCW's
national market position and efforts to control costs, including plans to
limit capital spending in the year 2000.
For Q2-00, revenues increased by 62% to $99 million versus Q2-99, as a
result of acquisitions, and to a lesser extent, internal growth. Management
believes that revenues are tracking projections. Consolidated gross profit
for Q2-00 was $36 million, or 36% of sales, compared to $20.5 million, or
33.5% of sales in Q2-99. Better profitability on equipment rentals resulted
from the Carlisle acquisition and various cost improvement actions. Q2-00
S, G & A was $19.2 million, or 19.4% of sales, compared to $11.6 million,
or 19% of sales in Q2-99. EBIT was $16.8 million, or 17% of sales compared
to $8.9 million, or 14.5% of sales in Q2-99. EBIT, however, has failed to
meet original projections. EBITA of $18.8 million barely covered $18.6
million of total interest expense. (EBITDA of $31.9 million covered
interest expense by 1.7x, although gross capital expenditures of $32.4
million in Q2-00 more than offset EBITDA). Management previously announced
plans to limit year 2000 net capital spending (net of asset sales) to $35
million.
For the latest 12 months ("LTM") ended 6/30/00, pro forma for all
acquisitions, the company produced EBITA and EBITDA of $62.3 million and
$112.5 million, respectively, which covered pro forma annual total interest
expense of $68 million by .9x and 1.7x, respectively.
Total debt at 6/30/00 was $714.1 million, a 11.5x multiple of LTM pro forma
EBITA (6.3x on an EBITDA basis). Moody's notes total debt is $124 million
more than total pro forma debt at 6/30/99 and $34 million more than total
debt at 12/31/99. In addition, according to Moody's estimates, total debt
is almost 1.8x pro forma revenues, a challenging level to absorb. Of total
debt, $257 million was drawn under the company's $425 million revolving
credit facility. Total equity was $5.6 million, resulting in total debt-to-
book capitalization of approximately 99%. Intangibles approximated $84
million, creating negative tangible equity.
Maxim Crane Works (formerly Anthony Crane Rental. L.P)., located in West
Mifflin, Pennsylvania, is the largest provider of crane and lifting
equipment rentals and services in North America, and the only national
crane rental company in North America. Over 60% of the company's crane
fleet is rented on an operated and maintained basis, which means that
rentals include an experienced operator. The company also sells new and
used equipment.
MERRILL LYNCH: Fitch Affirms Commercial Mortgage Pass-Through Cert. At CCC
--------------------------------------------------------------------------
Merrill Lynch Mortgage Investors Inc., commercial mortgage pass-through
certificates, Series 1998-C1-CTL transaction has been reviewed by Fitch.
The $58.1 million Class F, the $3.2 million Class G, the $4.8 million Class
H and the $1.6 million Class J are affirmed at 'CCC'. Classes A-1, A-2, A-
3, A-PO, A-IO, B, C, D, E and K are not rated by Fitch. The review follows
the announcement made by Heilig-Meyers Co. to reorganize under Chapter 11
effective Aug. 16, 2000.
The certificates are currently collateralized by 111 Credit Tenant Lease
mortgage loans. The ratings of Credit Tenant Lease transactions are highly
sensitive to the movements of the corporate credit ratings of the
underlying tenants. The Class F, G and H certificates were downgraded by
Fitch on July 25, 2000, primarily a result of the decline of two corporate
credits, Rite Aid and Heilig-Meyers. Twenty loans or 5.1% of the
transaction are secured by Heilig-Meyers.
Since the downgrade on July 25, Fitch has lowered its ratings on the senior
unsecured debt rating of Heilig-Meyers twice. On August 1, the rating was
lowered to 'CCC' from 'B'. Heilig-Meyers' senior unsecured debt rating was
further lowered today from 'CCC' to 'D'. In addition to filing for
restructure under Chapter 11, Heilig-Meyers also announced that it will
close 302 of its stores within the next 30 to 60 days. Approximately 10 of
the 20 stores in this pool are anticipated to be affected by the closings.
Fitch will continue to monitor the situation as it pertains to Heilig-
Meyers and the effect the bankruptcy and store closings may have on the
overall performance of the pool in order to determine if further rating
actions are required.
Fitch is an international rating agency that provides global capital market
investors with the highest quality ratings and research. Dual headquartered
in New York and London with a major office in Chicago, Fitch rates entities
in 75 countries and has some 1,100 employees in more than 40 local offices
worldwide. The agency, which is a combination of Fitch IBCA and Duff &
Phelps Credit Rating Co., provides ratings for Financial Institutions,
Insurance, Corporates, Structured Finance, Sovereigns and Public Finance
Markets worldwide.
OXFORD AUTOMOTIVE: Moody's Junks 10-1/8% Senior Subordinated Notes
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Oxford Automotive Inc.'s
("Oxford") aggregate $175 million of new senior secured bank credit
facilities due 2005 (which refinanced prior senior secured credit
facilities also rated B1). Moody's assigned the Caa1 rating of its $199.6
million of 10-1/8% series D senior subordinated notes due 2007 (which
replaced an equivalent amount of Series A, B and C notes with identical
terms in June 1999). Moody's also confirmed Oxford's B2 senior implied
rating and B3 senior unsecured issuer rating. The outlook is downgraded to
stable from positive for the senior secured credit facility ratings and is
confirmed as positive for all other ratings.
The ratings reflect Oxford's ongoing debt-financed acquisition strategy:
i) high leverage;
ii) low return on assets;
iii) significant capital expenditures requirements and
iv) integration challenges as the company continues to grow at an
aggressive pace.
The company has completed 10 debt-financed acquisitions since it was
created only five years ago with negligible up-front cash equity. (The
company remains privately held by the Chairman and a limited number of
individual investors, including members of management.) Oxford's capital
expenditure requirements are expected to remain substantial, in part
because of its new business awards but also because the company tends to
focus on turnaround opportunities. The top four customers comprise 69% of
revenues, albeit on a more globally diversified basis than previously.
Furthermore, the ratings also reflect Oxford's focus on the SUV market at
what is believed to be a highpoint in the economic cycle, as well as the
fact that Oxford operates in a fragmented and competitive operating
environment where several of Oxford's non-captive OEM competitors are
larger and better capitalized. Additionally, the captive OEM manufacturers
still control 70% or more of overall production. While Oxford has recently
won some significant contracts for complete systems, it is behind its key
competitors in generating this higher-margin business. Oxford's expansion
into foreign markets has resulted in a higher effective tax rate, a greater
dispersion of assets and revenues outside the US and increased exposure to
foreign currency fluctuations.
However, the ratings also consider Oxford's achievement of a $1 billion
revenue critical mass; its increased geographic, customer and platform
diversification; its apparent ability to improve operations at its acquired
facilities and its increasing technological and manufacturing capabilities
to design entire "black box" programs and quote on higher-content systems.
This is most notable at Oxford's new Ramos Arizpe, Mexico plant, which is
producing complex high-value-added systems for General Motors. In addition,
Moody's anticipates improvement in the company's return on assets, profit
margins and retained cash flow as the integration process is completed and
greater operating leverage is achieved by virtue of the company's larger
overall size. The company currently enjoys Tier I supplier status and was
fourth in overall independent automotive stamping production in 1999. The
trend toward increased outsourcing by the automotive OEM's is expected to
further enhance the company's prospects (particularly in Europe where only
about 10% of production is currently given to independents).
The new five-year senior secured credit agreement closed during August
2000. The facilities consist of a five-year senior secured $125 million
revolving credit and a five-year senior secured $50 million term loan. A
$100 million accordion feature was also put in place, which must be
utilized in $50 million increments. This provision can be implemented to
facilitate swift increases of the overall bank commitments according to
preset terms. Loan outstandings at closing were approximately $55 million,
which refinanced the prior credit agreement and funded a portion of the
roughly $50 million up-front cash payment for the August 2000 acquisition
of AIMDF, a French door closure mechanism manufacturer. Acquisitions in the
same line of business are permitted under the new credit facility, subject
to pro forma compliance with covenants, a maximum of $150 million in
aggregate consideration and certain other requirements.
The B1 rating of the $175 million of secured bank facilities reflects the
benefits and limitations of the collateral package. Obligations under the
facility are secured by a first priority lien on substantially all the
assets of Oxford and its existing and future domestic operating
subsidiaries (and of its Canadian subsidiaries to the extent of outstanding
Canadian debt). Guarantees are provided by those same domestic
subsidiaries. Pledges have been obtained for 100% of the stock of all
domestic subsidiaries and up to 65% of the stock of all foreign
subsidiaries (with the exception of Wackenhut). The ability to upgrade the
senior secured bank ratings is constrained by the under-capitalization of
the company, combined with the $120 million in remaining availability at
closing and the potential to draw an additional $100 million under the
accordion feature. Additionally, in the event that Oxford continues to
utilize its bank facilities to expand in foreign markets or draws down the
$100 million accordion feature, there may be inadequate domestic collateral
to continue justifying senior secured bank ratings above the senior implied
rating. As at June 30, 2000, domestic assets comprised only 43% of total
assets, compared to 82% at fiscal year end March 31, 1998 (prior to all of
the foreign acquisitions).
The Caa1 rating of the approximately $200 million of senior subordinated
notes reflects their contractual subordination to Oxford's bank debt and
their large relative size. The notes are issued by Oxford and guaranteed on
a senior subordinated basis by each subsidiary that is a guarantor under
Oxford's senior bank credit agreement.
Pro forma as of June 30, 2000 for Oxford's senior secured bank refinancing
and the full year performance of its latest acquisitions of AIMDF (France),
Gessaroli (Italy) and two small technology companies, Oxford's total funded
debt outstandings remain substantial at approximately $390 million
(including the $41 million in redeemable preferred stock and $58 million of
guaranteed debt under a synthetic lease financing for the new Mexican
manufacturing facility). Pro forma leverage, as measured by "total debt-to-
EBITDA" on a last-twelve-month basis is roughly 4.1 times. Debt-to-book
capitalization is 98%. Oxford has additional obligations including $47
million of pension liability and post-retirement medical benefits and off-
balance sheet obligations under a non-recourse French factoring agreement.
The preferred stock has certain debt characteristics including mandatory
redemption of 20% a year if a public offering does not occur by December
31, 2001 or in total on December 31, 2006. Total pro forma shareholders'
equity is thin at $7.2 million (not including the preferred stock). Pro
forma "EBITDA less CapEx" coverage of interest expense is marginal at
approximately 1.0 times. Retained cash less capital expenditures is
negative on a pro forma basis and is expected to remain negligible until
fiscal 2002. While management has indicated that Oxford's rapid expansion
policy is on the verge of producing stronger returns, Oxford's pro forma
EBITA return on assets is weak for its rating category at under 8%.
Oxford's acquisition strategy has provided opportunities for growth
consistent with the trends toward consolidation, globalization, increased
technology and systems integration. Oxford has achieved a critical mass to
more effectively compete for business and control costs, but is still in
the middle of a transition period whereby it is replacing old lower-margin
component programs with new full service design programs. Oxford's
expansion into Mexico ahead of several key competitors demonstrated to the
market that the company can design and produce more complex, high-margin,
high-content-per-vehicle systems. The undercapitalized company has remained
highly leveraged with poor interest coverage. This is attributable to the
fact that most of Oxford's acquisitions are initially under-performing and
completely debt-financed, while the benefit of the associated cash flows
occurs over time. The rapid pace of such acquisitions, together with
significant capital expenditure programs, has prevented Oxford from
exhibiting materially improved trends in its returns. Once the company's
cash flows and coverages have strengthened and have proven to be
sustainable, or incremental equity is raised, it is likely that Oxford's
ratings (with the exception of the senior secured bank ratings) will
improve.
Oxford Automotive Inc., headquartered in Troy, Michigan, is a Tier I
designer and producer of engineered metal components, assemblies, and
modules. The company's core products are complex, value-added products,
primarily assemblies containing multiple stamped parts, forgings, and
various welded, hemmed, and stamped components.
PAGING NETWORK: Metrocall Supplements Competing Plan & Objects to PageNet's
---------------------------------------------------------------------------
Metrocall, Inc. (Nasdaq: MCLL) announced that it filed a supplement to its
August 4th motion requesting that the U.S. Bankruptcy Court for the
District of Delaware terminate PageNet's exclusivity period as to permit
Metrocall to expeditiously submit a competing plan of reorganization in the
Chapter 11 cases of Paging Network, Inc. and its operating subsidiaries and
a limited objection to PageNet's July 25th motion for approval by the
Bankruptcy Court of a break-up fee and window-shop provisions in connection
with PageNet's merger agreement with Arch Communications.
The filing identifies improvements to Metrocall's proposal to the PageNet
Board dated July 18, 2000 and is the result of discussions held on August
14, 2000 between Metrocall, members of the Official Committee of Unsecured
Creditors appointed in PageNet's bankruptcy case and their respective
professional advisors. These improvements are as follows:
a) In the event that Metrocall's proposal becomes the basis of a plan of
reorganization for PageNet that is both confirmed by the Bankruptcy
Court and consummated by the parties thereto, Metrocall shall
increase the cash component of its proposal by $40 million to fund
the break-up fee that would be payable to Arch Communications under
the pending merger agreement with PageNet, provided that such break-
up fee is approved by order of the Bankruptcy Court.
b) 10.0 million additional shares of new Metrocall common stock shall be
reallocated to holders of PageNet's senior subordinated notes from
the 13.0 million shares of new Metrocall common stock proposed to be
distributed to PageNet's shareholders under Metrocall's July 18th
proposal, providing holders of PageNet's senior subordinated notes
with a total distribution of 96.8 million shares of new Metrocall
common stock.
c) Metrocall shall arrange for a credit facility to fund the working
capital needs of Vast on terms no less favorable than those proposed
by Arch under the pending merger agreement with PageNet.
Metrocall's enhancement of its proposal is conditioned upon:
(a) an agreement by the Committee to support, both in pleadings to be
filed by the Committee and during the hearing on August 21, 2000,
at least that portion of the relief requested in Metrocall's August
4th motion relating to:
(i) Metrocall's conducting of expedited due diligence regarding
the operating and financial performance of PageNet and its
U.S. operating subsidiaries, and
(ii) PageNet's full and prompt cooperation with Metrocall in
connection with the filing of documents necessary to obtain
clearances and approvals from, among others, the Federal
Trade Commission, the Department of Justice, the Federal
Communications Commission, the Securities and Exchange
Commission and Metrocall shareholders, and
(b) the entry by the Bankruptcy Court of an order providing Metrocall
with, at a minimum, the above described relief. Notwithstanding its
agreement with the Committee, Metrocall intends to seek to
terminate PageNet's exclusivity period so as to permit Metrocall to
submit a competing plan of reorganization pursuant to the timetable
set forth in its motion.
Metrocall indicated that, in all other respects, the terms of its proposal
to the PageNet board remain the same, including the various conditions to
the proposed acquisition of PageNet that are described in Metrocall's July
19, 2000 press release.
As indicated in the Supplement, Metrocall also objects to PageNet's motion
for approval of a $40 million break-up fee and window-shop provisions filed
on July 25, 2000, provided that Metrocall will withdraw that portion of its
objection relating solely to PageNet's request for approval of the "break-
up fee" in the event that the Bankruptcy Court enters an order granting
Metrocall at least the relief supported by the Committee.
In addition to TD Securities (USA), Inc., which has been advising Metrocall
since May 1999, Metrocall has also recently retained DLJ Securities Corp.
as its financial advisor in connection with its proposed bid to acquire
PageNet.
Metrocall, Inc., headquartered in Alexandria, Virginia, is one of the
largest wireless data and messaging companies in the United States
providing both products and services to more than six million business and
individual subscribers. Metrocall was founded in 1965, became a publicly
traded company in 1993 and currently employs approximately 3,800
professionals coast to coast.
The Company offers two-way interactive messaging, wireless e-mail and
Internet connectivity, cellular and digital PCS phones, as well as one-way
messaging services. Metrocall operates on many nationwide, regional and
local networks, including a new Two-Way Interactive Network (TWIN), and can
supply a wide variety of customizable Internet-based information content
services. Also, Metrocall offers totally integrated resource management
systems and communications solutions for business and campus environments.
Metrocall's wireless networks operate in the top 1,000 markets all across
the nation and the Company has offices and retail locations in more than
forty states. Metrocall is the largest equity-owner of Inciscent, an
independent business-to-business enterprise, that is a national full-
service "wired-to-wireless" Application Service Provider (ASP).
PRIMARY HEALTH: Creditor Seeks Conversion of Cases to Chapter 7 Proceeding
--------------------------------------------------------------------------
Interactive Health Computing, Inc. seeks a court order converting Primary
Health Systems, Inc.'s chapter 11 cases to cases under Chapter 7 of the
Bankruptcy Code. Interactive holds a large administrative and general
unsecured claim and apart from the secured lenders, First Union National
Bank and Key Corporate Capital, Inc., has the largest unsecured claims in
these cases.
The claims arise out of a license agreement to use its computer system
granted to the debtors, which operated a series of hospital (and continue
to operate their last remaining hospital, Deaconess), in exchange for a
monthly license fee.
According to Interactive, the cases remain in Chapter 11 exclusively for
the benefit of the Lenders. While administrative creditors, such as
Interactive are "funding" the debtors' cases without being paid for their
goods or services by the debtors or the Lenders. Interactive claims that
the debtors lack the resources to pay Interactive's claim and that the
Lenders have not committed to fund such administrative expense claim.
According to the debtors' last operating report, in April, 2000, (the
debtor did not file reports for May or June) the debtors' net loss for the
month was $5.4 million and the net loss for the year-to-date was $37.38
million. The debtors' consolidated balance sheet indicates that the
debtors' cash, accounts receivable and other assets have each eroded since
the Petition Date, and according to Interactive Deaconess Hospital's net
loss for April was $2.2 million.
Interactive points out that there is no longer a possibility of
reorganization, and that Chapter 7 would be more appropriate for the
continuing liquidation. Interactive states that the debtors cannot
effectuate a plan, and that it is unjust to permit the cases to continue in
Chapter 11 while administrative creditors remain unpaid without the
commitment of the Lenders, to fund the expenses of such administrative
creditors.
PRIME SUCCESSION: Committee Selects Munger Tolles/Pachulksi Team as Counsel
---------------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Prime Succession, Inc., et
al., seeks entry of a court order authorizing it to retain and employ
Munger, Tolles & Olson LLP as its lead counsel.
On July 26, 2000, the office of the United States Trustee organized and
appointed the committee. The Committee includes:
* PPM America, Inc.
* U.S. Trust
* American Express/IDS
* Donald D. and Betty H. Taylor
* Jeff Gamble
The Committee elcted to employ Munger, Tolles & Olson LLP as its lead
counsel and Pachulski, Stang, Ziehl, Young & Jones to act as its local
counsel.
Munger, Tolles & Olson LLP will perform the following services:
a) Consult with the Committee concerning the administration of these
cases;
b) Consult with, aid and advise the Committee with respect to the
investigation of the acts, conduct, assets, liabilities and
financial condition of the debtors, the operations of the debtors'
businesses, and any other matter relevant to the cases or the
formulation of a plan of reorganization;
c) Advise the Committee of its fiduciary duties and responsibilities to
the unsecured creditor body and to direct necessary communication
with same;
d) Take such acts as are necessary to aid the Committee in preserving
and protecting the assets of the debtors' estates, to prepare on
behalf of the Committee all necessary pleadings, reports,
applications, answers, orders and other legal documents, including
the review and, as necessary the negotiation, drafting and filing of
a plan or plans of reorganization, disclosure statement and other
related documents;
e) To evaluate and potentially pursue claims against parties;
f) To insure that all possible funds are recovered for the benefit of
the estates from any and all avoidance actions;
g) To represent the committee's interest in any hearings before the
Court;
h) To Review all applications, motions, pleadings, orders or other
matters filed in the debtors' cases;
i) To perform all such other legal services for the committee which may
be required or necessary herein;
j) To monitor actions taken, or to be taken, by the debtors in
connection with the disposition of property of the estates, the
assumption and/or rejection of executory contracts, unexpired
leases, and/or lease restructurings;
k) To take all steps necessary to insure that the Committee is aware of
all bar dates or key issues that might impact on the interests of
the Committee and its constituents; and
l) To consult with the Committee regarding the appointment of a trustee
or examiner, if necessary; and
m) To consult with, and to advise the Committee with respect to its
participation in the negotiation and formulation fohte plan of
reorganization, to aid the committee in advising the Unsecured
Creditors of the committee's determinations as to any plan of
reorganization formulated, and to aid the committee in collecting
and filing with the court the acceptances and rejections of a plan
of reorganization.
The range of the firm's customary hourly rates is $285 to $480 for
partners; $160 to $275 for associates, $100 to $145 for paralegals; and $50
for law clerks. These rates are adjusted on a periodic basis.
It is anticipated that the attorneys who will primarily work on this
matter, and their respective billing rates, are as follows:
Thomas B. Walper - $415
Mark Shinderman - $340
Jay M. Fujmitani - $340
Compensation will be payable to Pachulski, Stang, Ziehl, Young & Jones on
an hourly basis. The principal attorneys and paralegals presently
designated to represent the committee and its current standard hourly rates
are:
Laura Davis Jones: $365 per hour
Christopher Lhulier: $175 per hour
Patricia Cuniff: $90 per hour
SAFETY COMPONENTS: VTECH Offers to Purchase Valentec Subsidiary for $4.1MM
--------------------------------------------------------------------------
Safety Components International, Inc., et al., seeks entry of a court order
approving a stock purchase agreement with VTECH Corporation. A hearing on
the motion will be held before Judge Joseph J. Farnan, Jr., US District
Judge, US District Court for the District of Delaware on August 30, 2000 at
8:00 AM.
Specifically, the debtor seeks approval of the sale of all of the issued
and outstanding common stock, par value $.01 per share of Valentec Systems,
Inc., a wholly-owned subsidiary of the debtor and a Delaware Corporation,
and the corporate name and logo for each of the "Valentec International
Corporation" and "Valentec Systems, Inc." to VTECH Corporation, Purchaser,
subject to higher and better offers.
The debtor has determined that Valentec Systems Inc. and its business are
not within the debtor's core businesses and that the continued ownership of
Valentec Systems will distract the debtor from its core businesses.
The debtor and the Creditors' Committee entered into extensive negotiations
with the Purchaser. The Purchaser offers to purchase the assets for
$4,148,000, subject to certain adjustments.
The transactions to be implemented are, in essence, a management led buy-
out of VSI that is being financed by Soltam, Ltd., an Israeli corporation
whose primary products are mortar and artillery weapons systems and
ammunition for such systems. Soltam, Ltd. owns approximately 50% of the
Purchaser. In an effort to ensure that the debtor obtains maximum value for
the assets, the debtor is asking the court to approve the sale and
assignment of the purchased assets to the purchaser pursuant to the
Agreement, subject to any higher and better offers received by the debtor
prior to the conclusion of the hearing. The debtor states that the purchase
price represents the fair and reasonable value of the purchased assets.
The debtor is represented by counsel, Milbank, Tweed, Hadley & McCloy LLP
(NY) and Morris Nichols, Arsht & Tunnell (DE).
SAFETY-KLEEN: Applies To Employ Obermayer Rebmann As Special Labor Counsel
--------------------------------------------------------------------------
Safety-Kleen Corp. seeks Bankruptcy Court authority to employ Philadelphia-
based Obermayer Rebmann Maxwell & Hippel LLP as Special Labor Counsel in
its chapter 11 cases. Pursuant to an engagement letter dated as of July
27, 1998, the Debtors engaged Obermayer to advise and represent them in all
matters concerning labor relations and human resource management and
employment law, including, as appropriate and necessary, matters which
include, but are not limited to, litigation throughout the United States
concerning issues relating to allegations of unlawful employment,
discrimination, wrongful termination, OSHA, Wage & Hour matters,
enforcement of non-compete agreements, and employee benefits/ERISA issues.
The Debtors file this Application, pursuant to 11 U.S.C. Sec. 327(e), to
continue that prepetition engagement. It the Debtors lose the expertise,
experience, and institutional knowledge of Obermayer, Rebmann, the Debtors
say their estates undoubtedly will incur significant and unnecessary
expenses, as Safety-Kleen is forced to retain other labor counsel, without
similar background arid expertise, to represent them.
Julius M. Steiner, Esq., discloses that Obermayer in the past has
represented, currently represents, and in the future likely will represent
certain creditors of the Debtors and other parties-in-interest in matters
unrelated to the Debtors, the Debtors' reorganization cases or such
entities' claims against or interests in the Debtors. A conflicts review
shows that Obmayer has client relationships with Bank of America, Bankers
Trust, Textron Financial Corporations, HSBC Bank, Societe General,
Sumitomo Bank, Ltd., The First National Bank of Chicago, Raymond James &
Assoc., Inc., First Union National Bank, State Street Bank & Trust, and
The Chase Manhattan Bank. Obermayer's representation of these entities,
Mr. Steiner assures the Court, will not affect the firm's representation
of the Debtors in these cases. Mr. Steiner strsses that Obermayer does
not represent these entities in any matters adverse and/or related to the
Debtors.
Pursuant to the Engagement Letter, Obermayer charges the Debtors $150,000
per year, plus disbursements, for general advice and representation in
labor and employment matters. In matters involving litigation, Obermayer
bills the Debtors on an hourly basis at a negotiated rate for the services
of each attorney and paraprofessional performing professional services:
Professional Hourly Rate
------------ -----------
Larry Besnoff $170.00
Joseph J. Centeno $145.00
Steven T. Davis $145.00
Todd J. Glassman $145.00
Lori E. Halber $145.00
Michael E, Heston $145.00
Kenneth L. Oliver, Jr. $170.00
Kara Peischl Zidek $145.00
James M. Penny, Jr. $170.00
Michael S. Pepperman $145.00
Jason E. Reisman $145.00
Daniel F. Schranghamer $145.00
Jacqueline Z. Shulman $170.00
Julius M. Steiner $170.00
Michaune D. Tillman $145.00
The Engagement Letter provides that each attorney agrees to cap any
billing at 8 hours each day and the Firm does not bill Safety-Kleen for
travel time.
As of June 9, 2000, Mr. Steiner discloses, Obermayer held a $20,580
retainer. And, in the year prior to the Petition Date, Obertnayer
received $510,977.30 for services rendered and expenses incurred in
connection with the firm's representation of the Debtors. (Safety-Kleen
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
SAFETY-KLEEN: Appoints Larry Singleton As New Chief Financial Officer
---------------------------------------------------------------------
Safety-Kleen Corp. announced the appointment of Larry W. Singleton as Chief
Financial Officer of the company. Mr. Singleton, of Orlando, FL, is an
expert in financial restructuring, most recently serving as an advisor to
the government of the Czech Republic in restructuring several of that
country's industrial companies in anticipation of joining the European
Union.
"Larry Singleton brings more than 28 years of finance, tax and
restructuring expertise to Safety-Kleen," said CEO David E. Thomas, Jr. "He
has exactly the skills and experience we need, and we're pleased and
fortunate to have him join the management team during this critical time."
In addition to his efforts in the Czech Republic, Mr. Singleton was
Executive Vice President of Gulf States Steel in Gadsden, AL, and played a
key management role during that company's Chapter 11 bankruptcy
proceedings, including securing debtor-in-possession financing and
developing and negotiating the company's alternative plans for
reorganization or shut-down.
Mr. Singleton has also assisted in the financial restructuring of several
other corporations, including Alliance Entertainment Corp. of Coral
Springs, FL, New Energy Corp. of South Bend, Indiana, Alert Centre Inc., of
Denver, CO, and The Charter Company of Jacksonville, FL. He has also served
as the official bondholder committee representative during the
reorganization proceedings of a $100 million recreational vehicle
manufacturer, and as the secured creditor representative for a consortium
of bank creditors prior to and during the reorganization of a $300 million
title insurance company.
"One of the unique benefits Larry brings to Safety-Kleen is that he has
been through numerous Chapter 11 reorganizations in a variety of
capacities," Safety-Kleen CEO Thomas said. "He has seen the process from
numerous viewpoints, and as such is well-equipped to help guide us through
this process in as efficient and productive a manner as possible."
Mr. Singleton received his Bachelor of Science degree in accounting from
Florida State University, and his Masters in Business Administration from
the University of North Florida. He is also a Certified Public Accountant
in Florida.
SANITARY SERVICES: Manchester Trash Collector Shuts Down Operations
-------------------------------------------------------------------
After filing for Chapter 11, troubled garbage collector Sanitary Services
Corp. will cease collecting trash. The chapter 11 reorganization attempt
failed, the Associated Press reports. Sanitary Services Corp. hired Roy
David to serve as a turnaround consultant for the bankrupt Manchester
company. "[President] Michael Botticello regrets it. But there is no
practical alternative to ceasing operations at this time," Mr. David told
the AP. Attorney General Richard Blumenthal said, "Municipalities may now
sue Sanitary Services for damages for terminating its contracts illegally."
Sanitary Services sought bankruptcy protection in the U.S. Bankruptcy Court
in Manchester, Conn. According to Mr. Botticello, the filing was due to
insurance costs, other expenses and the rise of fuel prices. Towns that
are affected by the shutdown of Sanitary Services include Hamden,
Montville, Newington, Seymour, West Hartford, West Haven and some
condominium complexes in South Windsor.
SMART WORLD: Prepping for Sept. 6 Evidentiary Hearing on Juno's "Good Faith"
---------------------------------------------------------------------------
Douglas T. Tabachnik, Esq., of Old Bridge, New Jersey, representing Smart
World Technologies, et al., in their chapter 11 cases pending before the
U.S. Bankruptcy Court for the Southern District of New York, served notices
on Juno Online Services, Inc., demanding that Juno officers appear for
depositions and that Juno produce documents. These notices follow the Judge
Blackshear's direction on August 9, 2000, that the Court will hold an
evidentiary hearing on September 6, 2000, on the issue of Juno's "good
faith" in connection with a certain sale of the Debtors' assets.
On or before August 28, 2000, Smart World demands that Juno produce 22
categories of documents:
1. All documents, including, without limitation, technical manuals,
related to the transfer of subscribers, including, without limitation,
documents exchanged prior to June 19, 2000, between Juno, Worldcom,
UUNet and the Debtors.
2. All correspondence, including without limitation, e-mail, memoranda,
notes and the like related to the transfer of Freewwweb, LLC's ("FW")
subscribers to Juno.
3. All internal notes, memoranda and correspondence between and among
employees of Juno regarding the transfer of FW subscribers to Juno.
4. Any and all documents relating to the identity and number of new
subscribers formerly of Freewwweb, who signed on to the Juno services
from and after July 19, 2000, broken down by city and state.
5. All documents related to the preparation, negotiation, and execution of
the Term Sheet, including, without limitation, all drafts, internal
memoranda, letters of intent, initial offers for the purchase or
transfer of subscribers, all preliminary and subsequent drafts of the
Term Sheet predating the June 29, 2000 Term Sheet that was presented
to the Court for approval.
6. All documents, including but not limited to all technical manuals
regarding the ability of Juno to track the transfer of subscribers
from FW to Juno.
7. All documents relating to the tracking or accounting and intended
methods of accounting for the transfer of subscribers to Juno from FW.
8. Any and all documents relating to the tracking, or methods of tracking
intended to track subscribers referred by master distributors of FW to
Juno.
9. Any documents relating to data concerning the capacity of Juno to
service online subscribers at any one time, including, but not limited
to "dial-in port" availability, bandwidth availability between Juno's
POP sites and its data center or centers; Internet bandwidth
connectivity.
10. Any and all documents related to Juno's ability to provided software
downloads prior to June 29, 2000 and on a day by day basis from the
date of July 19, 2000 to the present, for both the Freewwweb referral
site and the Juno home page site, located at www.Juno.com.
11. All documents containing any data that would evidence or relate to the
number of new customers Juno signed up on a daily basis for the sixty
days prior to June 29, 2000 and each and every day thereafter, broken
down by day, separated for both the pay and free services offered by
Juno.
12. Any and all documents reflecting telephone calls taken from customers
of Freewwweb who indicated problems of any kind, including but not
limited to downloading, registering a new account, accessing the
Internet and/or obtaining their Freewwweb E-mail.
13. Any and all documents reflecting server capacity necessary to provide
service to subscribers, including but not limited to E-mail servers,
newsgroup servers, new user registrations, end-user authentication,
end-user utilization tracking, domain name services (DNS); radius
accounting, web page hosting.
14. Any and all documents related to any systems used to track new users
and specifically, the manner in which Juno tracks the source of such
new users.
15. Any and all documents indicating the identity of sources of new
subscribers and the tracking of the sources of such new subscribers.
16. All records indicating the daily quantity of CD-ROM programs sent to
prospective users upon request for the sixty day period prior to July
19, 2000 and thereafter.
17. Any and all documents relating to the tracking of the source of
Freewwweb customers requesting CD-ROMs who may have signed up for the
Juno service without requesting the forwarding of their Freewwweb e-
mail.
18. All documents relating to the user to modem ratios on a daily basis at
minimum and at daily peak usage times for the period June 1, 2000 to
the date hereof, for both the free service and the pay services
offered by Juno.
19. All documents related to the daily modem availability, at all times,
including at peak usage, as a percentage of total capacity on a daily
basis for the period of June 1, 2000 to the present, for both the
free service and the pay services offered by Juno..20. Any and all
documents related to any discussions, correspondence, agreements or
other communication between Juno and Snap.com for the period of June
29, 2000 to the present.
21. Any and all documents related to any other Internet services
competitive to Juno and Freewwweb being marketed via e-mail on the
Juno servers to former Freewwweb subscribers.
22. Any and all documents that Juno intends to introduce at the hearing on
the matter of "good faith" on September 6, 2000, or on any adjourned
date of such hearing.
Pursuant to Federal Rule of Bankruptcy Procedure 30(b)(6) [sic.], Smart
World directs Juno to designate one or more officers, directors, managing
agents or other persons to testify about:
A. The means and manner of tracking Freewwweb subscribers that have
transferred to Juno Online Services, Inc.
B. All negotiations and discussions by and among employees, officers
and/or directors concerning the transfer of subscribers from
Freewwweb to Juno Online Services.
C. All technical aspects of the transfer of subscribers from Freewwweb
to Juno and the means by which such transfer was and is to be
accomplished.
D. Any aspect of the discussions, negotiations, offers related to that
certain Term Sheet, date June 29,2000, and addressed to the Court
on July 19, 2000.
SUN HEALTHCARE: Motion To Assume & Assign Michigan & Arkansas Leases
--------------------------------------------------------------------
Sun Healthcare Group, Inc., and its debtor-affiliates have decided to
dispose of:
(i) an adult and child foster care facility commonly known as Battle
Creek NeuroRehabilitation Center located in Battle Creek,
Michigan, and
(ii) a rehabilitation facility providing post acute head injury care
commonly known as Timber Ridge Ranch, located in Benton,
Arkansas.
In this regard, the Debtors sought and obtained the Court's authority for
Mediplex Ohio and Mediplex Texas to (i) assume and assign the respective
leases and subleases to an Assignee of the Landlord, (ii) reject related
Medicare and Medicaid Provider Agreements and other related agreements, and
(iii) enter into a Lease and Sublease Assumption, Assignment and Release
Agreement and Stipulation with the Landlord.
Mediplex Management of Ohio, Inc. leased the Michigan Facility from the
Michigan Landlord (Meditrust Acquisition Company LLC, as successor in
interest by merger to Meditrust Company, LLC, as successor in interest by
merger to Meditrust Tri-States, Inc. Mediplex Management of Texas, Inc.
leased the Arkansas Facility from the Arkansas Landlord (Meditrust
Acquisition Company LLC, as successor in interest by merger to Meditrust
Company, LLC, as successor in interest by merger to Meditrust of Benton,
Inc.
With the knowledge and consent of the Landlords, the Facilities were
subleased to Timber Ridge Group, Inc. and the Subtenant is operating the
Facilities.
Monthly rent for each of the Facilities is $97,931. The Sublease runs
through the term of the respective Leases. The Supplemental Rent payable by
Mediplex is $29,244 for the Michigan Lease and $31,380 for the Arkansas
Lease. For a year, Mediplex's liability is $350,931 with respect to the
Michigan Lease and $376,571 with respect to the Arkansas Lease.
Pursuant to the Agreement and Stipulation, Mediplex and the Landlords have
agreed to release each other and their affiliates from further obligations
and liability under the Leases. The parties have also agreed that the cure
obligations of Mediplex will be limited to unpaid monetary rent and
property taxes under the Leases and the Sublease from the Commencement Date
to the Effective Date which is the date of the Court's final order granting
the motion. As to the Sublease, Mediplex does not believe that any
defaults, other than those of the type specified in section 365(b)(2) of
the Bankruptcy Code exist.
The Stipulation also provides that if the Landlords demonstrate by July 15,
2000 that the termination and rejection of the Provider Agreements have an
adverse impact on future operations of the Facilities, Mediplex will not
terminate or reject such Provider Agreements until the time of confirmation
of a Plan or such issues are resolved. In such event, the Landlord will
indemnify Mediplex from and against any liability under the Provider
Agreements from the Effective Date to the date the Provider Agreements are
actually terminated, except for liability due to Mediplex's actions.
Notwithstanding this, Mediplex reserves the right to terminate the Provider
Agreements after the Effective Date if Mediplex deems it necessary and
appropriate. (Sun Healthcare Bankruptcy News, Issue No. 13; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
TURBODYNE: Latest News on TST, Heartland, Jamison, & Willet Cases
-----------------------------------------------------------------
Turbodyne Technologies Inc. (EASDAQ:TRBD) announced developments in several
legal matters that are currently pending.
TST v. Turbodyne
As previously reported on Feb. 18, 2000, one materials vendor from Pacific
Baja bankruptcy has filed a suit against Turbodyne and several other
defendants as guarantors of the debt. TST Inc. filed suit on March 13,
2000, for approximately $1.5 million plus interest, costs and attorneys'
fees. The suit is in the discovery phase.
Heartland Financial v. Turbodyne
On May 8, 2000, Heartland Financial, a service provider whose claim was
heard in the Pacific Baja bankruptcy, filed for arbitration against
Turbodyne for approximately $465,000 plus interest, costs and attorneys'
fees. This matter was previously heard and ruled upon by the bankruptcy
court in the Pacific Baja bankruptcy proceedings.
The company's position is that the bankruptcy court's decision is final and
that the matter has already been adjudicated. Heartland maintains that it
has the right to sue Turbodyne outside of the bankruptcy proceedings. The
matter has been assigned to Fresno for arbitration to determine the
jurisdictional issues and the parties are still in the process of choosing
an arbitrator.
Jamison v. Turbodyne
On Jan. 21, 2000, Jamison Capital, a service provider for Pacific Baja,
filed a complaint against Turbodyne demanding payment of $115,000, plus
interest and costs, in New Jersey State Court. The matter was later removed
to federal court. On Aug. 15, 2000, Turbodyne was awarded summary judgment
against Jamison Capital. The Court awarded Jamison a "break-up" fee of
$21,000. Turbodyne has already paid $10,000 of the $21,000 total judgment.
Jamison Capital has 30 days from Aug. 15, 2000, in which to file an appeal.
Willett v. Turbodyne
On June 21, 2000, the company was served with a demand for arbitration by
David Willett, a former employee. The company did not oppose the demand.
Willett is seeking approximately $45,000 plus 200,000 stock options plus
consequential damages allegedly suffered. The parties are in the process of
choosing an arbitrator. The matter is expected to go to arbitration on or
before Feb. 13, 2001.
Turbodyne Technologies Inc., a California-based high-technology company,
specializes in the development of charging technology for internal
combustion engines plus the development and manufacturing of high-tech
assemblies for electrically assisted turbochargers and superchargers.
Turbodyne Technologies's headquarters is located in Carpinteria; the
European business location is Frankfurt, Germany. Additional information
about the company is available on the Internet at http://www.turbodyne.com.
UNITED COMPANIES: Bankruptcy Court Approves Modified Disclosure Statement
-------------------------------------------------------------------------
United Companies Financial Corporation (OTC:UCFNQ) announced that, in
connection with the chapter 11 cases of United Companies and certain of its
subsidiaries, which cases are pending in the U.S. Bankruptcy Court for the
District of Delaware in Wilmington, the Bankruptcy Court approved the
Debtors' Modified Disclosure Statement and modified form of ballots in
connection with the Debtors' Third Amended Plan of Reorganization. The
Debtors have retained an Information Agent to respond to inquiries
regarding the Debtors' Plan and the submission of ballots. The Information
Agent can be reached at 888/559-9367. For voting purposes and mailing of
notices, June 30, 2000 shall be the Record Holder Date for the holders of
claims and interests. The deadline for the Balloting Agent's receipt of
ballots is 4:00 PM Eastern time on September 11, 2000. A hearing to
consider confirmation of the plan of reorganization is scheduled to
commence on September 13, 2000. As previously announced, United Companies
reached an agreement with a representative of the holders of Subordinated
Debenture Claims and the Official Committee of Equity Security Holders to
support its modified plan of reorganization.
As previously announced, the Company signed an Asset Purchase Agreement and
a Mortgage Loan and REO Property Purchase Agreement for the sale of
substantially all of its whole loan portfolio and REO properties, assets
related to its mortgage servicing operations and its interest only and
residual interests as of December 31, 1999, to EMC Mortgage Corporation and
EMC Mortgage Acquisition Corp., subsidiaries of The Bear Stearns Companies,
Inc., for an aggregate cash purchase price of approximately $781 million,
subject to adjustments, plus the assumption of certain liabilities. Today,
the Company also announced that, pursuant to bidding procedures previously
approved by the Bankruptcy Court, EMC was the successful bidder with an
overall increased bid amount of approximately $65 million. A Bankruptcy
Court hearing to approve the sale of assets pursuant to the Asset Purchase
Agreement is scheduled for August 30, 2000. The Bankruptcy Court approved
the sale of the Company's whole loan portfolio and REO properties on August
15, 2000.
"We believe that these transactions, and the Bankruptcy Court approval
process, have allowed the Company to maximize its value and substantially
complete its reorganization efforts. We look forward to working with the
EMC organization to ensure an orderly transfer of servicing for our home
equity loans," said Lawrence Ramaekers, Chief Executive Officer of United
Companies.
United Companies Financial Corporation is a specialty finance company that
historically provided consumer loan products nationwide and currently
provides loan services through its lending subsidiary, UC Lending(R). The
Company filed for chapter 11 on March 1, 1999.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is provided by
DLS Capital Partners in Dallas, Texas.
A list of Meetings, Conferences and Seminars appears in each Wednesday's
edition of the TCR. Submissions about insolvency-related conferences are
encouraged. Send announcements to conferences@bankrupt.com.
Each Friday's edition of the TCR includes a review about a book of interest
to troubled company professionals. All titles available from Amazon.com --
go to http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt--
or through your local bookstore.
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 * * *