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             T R O U B L E D   C O M P A N Y   R E P O R T E R

                Friday, September 29, 2000, Vol. 4, No. 191

                                 Headlines
   
AMERICAN METROCOMM: Cisco Systems Asks for Appointment of a Trustee
AMERISERVE: $75 Million of Wal-Mart $110 Million Bid Goes to Tricon
BROADSTREET NURSING: State Scrambles as Facility Closes Without Notice
CARMIKE CINEMAS: Committee Applies to Retain Houlihan as Financial Advisor
CARMIKE CINEMAS: Seeks Authority to Retain Ernst & Young as Accountants

COMPLETE WELLNESS: Signs Merger Deal with Cyfit.com & Obtains Financing
FINE AIR: Air Cargo Carrier Files for Bankruptcy Protection in Florida
FRONTIER INSURANCE: Obtains Reinsurance & Announces Management Changes
FRUIT OF THE LOOM: Alabama Power's Wants Long-Term Power Contract Decision
GENESIS/MULTICARE: Manorcare Enforces Arbitration with Debtor Neighborcare

GEOGRAPHICS, INC: Stationery Maker Signs Letter of Intent with Smead
HARNISCHFEGER INDUSTRIES: Joy Technologies Seeks to Assume Cooper Agreement
HEDSTROM HOLDINGS: Asks for Extension of Lease Decision Period to Feb. 7
HEILIG-MEYERS: Equity Committee Challenges Propriety of DIP Financing
HEILIG-MEYERS: Equity Committee Taps Hunton & Williams as Lead Counsel

INTEGRATED HEALTH: Rejecting Massachusetts Facilities Management Agreements
KEYSTONE CONSOLIDATED: Moody's Says Markets Weak & Liquidity is Limited
LAIDLAW, INC.: Stephen Cooper Pleads for Bondholders Support in Conference
LOEWEN GROUP: Debtors Revise Chairman & CEO's Compensation Package
METAL MANAGEMENT: Moody's Lowers $250 Mln Sr Secured Credit Facility To B3

PLEASANT EAST: Case Summary and 4 Largest Unsecured Creditors
PRO AIR: National Transportation Safety Board Clips Airline Wings
REGAL CINEMAS: CEO Michael Campbell Pushes for Out-of-Court Restructuring
REGAL CINEMAS: Tejas Securities Initiates Covers Senior Subordinated Notes
RITE AID: DLJ Analyst Edward Comeau Improves View About Drugstore Chain

SAFETY-KLEEN: Outsourcing Data Processing Services to Acxiom Technology
SUN HEALTHCARE: Stipulation Provides 366 Adequate Assurance To Pacific Gas
SUPERIOR NATIONAL: Kemper Insurance Companies Acquires Renewal Rights
SUPREME BEEF: Family Business Forced To File for Bankruptcy Protection
VENCOR, INC.: Begins Reconciliation of 8,600 Filed Proofs of Claim

XEROX CORPORATION: Moody's Cuts Senior Unsecured Rating Two Notches To Baa2

* BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of Eastern  
                Airlines

                                 *********

AMERICAN METROCOMM: Cisco Systems Asks for Appointment of a Trustee
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American MetroComm Corp., New Orleans, La., has seen one of its suppliers,
Cisco Systems Corp. of San Jose, Ca., recommend that a trustee be appointed
in the American MetroComm Chapter 11 bankruptcy case.  Cisco believes that
there is no chance for the company to successfully reorganize and that the
current chief executive officer is preventing the company from dealing with
its creditors and equity holders.  (New Generation Research, Inc. 27-Sep-
00)


AMERISERVE: $75 Million of Wal-Mart $110 Million Bid Goes to Tricon
-------------------------------------------------------------------
Dow Jones reports that Wal-Mart Stores Inc.'s purchase of substantially all
assets of troubled Ameriserve Food Co., for $110 million will give $75
million to its DIP lender Tricon Global Restaurants Inc.  Tricon,
Ameriserve's biggest customer, will be getting the money in consideration
of its inventory in Addison, Texas-based food distributor. The terms of the
sale were not disclosed during the announcement.  Three days prior to the
court that will be held in the Delaware Court, McLane will designate which
contract and lease captures its eye.  Among the three bids for Ameriserve's
assets that were submitted in June, McLane had the highest and best offer.


BROADSTREET NURSING: State Scrambles as Facility Closes Without Notice
----------------------------------------------------------------------
Michigan Department of Consumer & Industry Services Director Kathy Wilbur
announced that a state team has been assembled to safely move residents out
of the Broadstreet Nursing Center in Detroit after the owner of the
facility gave the state less than 48 hours notice of her intent to close as
of today, Wednesday, Sept. 27, 2000.

"Since the call came in from Broadstreet on Monday afternoon, staff from
our department as well as Community Health and Family Independence Agency
have really hustled to help make the best of a very difficult situation and
to ensure that we do right by the vulnerable residents who have called this
facility home," said Wilbur.

State law requires a facility to give at least 30 days notice before
voluntarily closing a nursing home to allow for ample time to find other
suitable placements for residents. The owner of Broadstreet, Diane Haugh,
indicated both verbally and then in writing on Tuesday that she did not
have the money to meet payroll and would not have the staffing to continue
to operate the facility.

"It is alarming that this center chose to close so abruptly, especially
when they have received more than $460,000 over the last eight weeks to
provide nursing home care to Medicaid beneficiaries," said Michigan
Department of Community Health Director James K. Haveman, Jr. "It is
outrageous that this center had given us no indication they were
experiencing financial difficulties and would try to shut the door on
patient needs."

Since there was little other choice and the welfare of these residents is
of paramount concern, CIS today revoked the facility's license and named a
temporary manager to run the facility while the closure team from CIS,
Community Health and FIA work with residents and their families to safely
relocate residents to other facilities.

The State has also made arrangements to pay existing Broadstreet staff
during the transition period to ensure that residents' care needs continue
to be met and notified the State Ombudsman, Citizens for Better Care, about
the situation at Broadstreet.


CARMIKE CINEMAS: Committee Applies to Retain Houlihan as Financial Advisor
--------------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Carmike Cinemas, Inc.,
seeks an order authorizing its retention of Houlihan Lokey Howard & Zukin
Capital as its financial advisors.  The Committee asks Houlihan Lokey to
assist by:

    a) Analyzing and reviewing the financial and operating statements of the
        debtors and their subsidiaries;

    b) Analyzing the business plans and forecasts of the debtors and their
        subsidiaries;

    c) Providing such specific valuation analyses as the Committee may
        require in connection with these cases;

    d) Devising appropriate strategies to maximize the value to be received
        by the unsecured creditors in the debtors' cases;
  
    e) Assessing the financial issues and options concerning the debtors'
        plan of reorganization;

    f) Preparation, analysis and explanation of the plan to various
        constituencies; and

    g) Providing testimony in court on behalf of the Committee, if
        necessary.

Houlihan Lokey will be paid a monthly fee of $125,000 and a Deferred Fee
payable upon consummation of a Restructuring Transaction based upon a
percentage of the Aggregate Consideration received by the Unsecured
Creditors plus reimbursement for expenses.



CARMIKE CINEMAS: Seeks Authority to Retain Ernst & Young as Accountants
-----------------------------------------------------------------------
Carmike Cinemas, Inc., et al., seeks court authority to retain Ernst &
Young LLP as accountants, auditors and tax services provider for the
debtors.  A hearing on the application has been scheduled for October 3,
2000 at 4:30 PM before the Honorable Sue L. Robinson, US District Court
Judge, District of Delaware.

The debtors request that the court approve the employment of Ernst & Young
to perform auditing and tax consulting services necessary for continued
financial and income tax reporting during the debtors' cases.

The firm's auditing services will include auditing and reporting on the
debtors' financial statements for the years ending December 31, 2000 and
December 31, 2001.  E&Y will also review the Debtors' unaudited quarterly
financial information before Carmike files its Forms 10-Q.

Ernst & Young will seek compensation in accordance with its customary
hourly rates. Partners and principals will receive $372-426; Senior Manager
$268-345; Manager $201-236; Senior $133-160; Staff $90-110.

Tax consulting services include:

    a) Working with the debtors in developing an understanding of the
       business objectives, that may result in a change in the ownership of
       the debtors or their assets;

    b) Advising the debtors in their bankruptcy restructuring objectives and
       postpetition bankruptcy operations by determining the most optimal
       tax manner to achieve those objectives;

    c) Tax consulting regarding availability, limitations, preserving and
       maximizing tax attributes, such as net operating losses, alternative
       minimum tax creditors and work opportunity tax credits, minimizing
       tax costs in connection with stock or asset sales, and assisting with
       ordinary course tax issues;

    d) Assisting with settling tax claims;

    e) Assisting with the tax impact of e-commerce initiatives of the
       debtors;

    f) Assisting in assessing the validity of tax claims, including working
       with bankruptcy counsel to reclassify tax claims as nonpriority;

    g) Analyzing legal and professional fees incurred during the bankruptcy
       period for purposes of determining future deductibility of such
       costs;

    h) Documenting tax analysis, opinions, conclusions for any restructuring
       alternative or tax matter;

    i) Assisting with federal or state tax audits; and
    j) Assisting in preparing the debtors' income tax provisions.

The hourly rates for Ernst & Young's tax consulting professionals range
from

       $ 412 - 485 for partners and principals
       $ 330 - 408 for Senior Managers
       $ 249 - 289 for Managers
       $ 196   for Seniors and
       $ 129 - 156 for staff

For tax preparation, the firm will charge $48,000 for the returns to be
filed for the year ending December 31,2000 and $51,000 for the returns to
be filed for the year ending December 31, 2001.


COMPLETE WELLNESS: Signs Merger Deal with Cyfit.com & Obtains Financing
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Complete Wellness Centers, Inc. (Nasdaq: CMWL and CMWLW) announced that it
has entered into a binding letter of intent to merge with Cyfit.com, Inc.,
a private Delaware corporation, in a tax-free exchange of shares.  Cyfit is
in the business of interactive health and fitness emphasizing a healthy
lifestyle based on exercise, nutrition, weight management, wellness and
sports training that is delivered through multiple distribution channels.  
For information about Cyfit, visit its Web site at http://www.cyfit.com

The merger is subject to, among other things, preparation of definitive
agreements, completion of due diligence reviews, restructuring of debt and
equity and approval by the companies' shareholders at special meetings to
be held in late November 2000, when the merger is expected to close.  After
closing, Complete Wellness Centers will be the surviving entity and will
then change its name to Cyfit, Inc.

Chairman Jack Pawlowski stated, "The merger of CWC and Cyfit will allow us
to execute our long-standing plan of delivering consulting services via
seminars and the internet along with offering products and services to our
respective customer bases."  Eugene Fernandez, CEO of Cyfit.com, Inc.
indicated, "The joining of CWC and Cyfit provides the operating environment
for the new entity to deliver a complete wellness package to its members
and constituents through existing channels and future distribution
methods."

CWC also announced that, in connection with the merger, the investment-
banking firm of Hornblower & Weeks, Inc. has made a firm commitment to
underwrite an equity offering of a minimum of $4,000,000 and a maximum of
$9,000,000.

The merger, including the contemplated restructuring of debt and equity,
and the related investment banking commitment are two of the steps the
Company is taking to strengthen its business and financial position and
condition in order to enhance shareholder value and to satisfy the
continued listing requirements of the Nasdaq Stock Market.  Nasdaq has
notified the Company that it fails to meet the net tangible assets and
minimum bid price requirements for continued listing.  The Company plans to
demonstrate, at a hearing to be held Thursday, September 28, 2000, that the
merger, investment banking commitment and related restructuring steps it is
taking should result in compliance with all listing requirements.  
Delisting of CWC's shares from Nasdaq would have an adverse effect upon the
market liquidity for the Company's shares and shareholders may experience
difficulties in buying and selling the Company's shares.

Complete Wellness Centers, Inc. is a nationwide organization that
endeavors to provide member healthcare practices with administrative,
developmental, financial and practice management consulting assistance, as
well as to provide consumers access to traditional and alternative health
information, products and services.  


FINE AIR: Air Cargo Carrier Files for Bankruptcy Protection in Florida
-----------------------------------------------------------------------
Fine Air Services Corp., along with its subsidiaries which include Arrow
Air, Inc., filed for protection and reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District
of Florida. Fine Air will continue to operate as a scheduled air cargo
carrier with no interruption of service between the United States, South
America, Central America, and the Caribbean.

"We want to assure our customers that we will seamlessly continue to
provide our services to Latin America and the Caribbean, and we intend to
retain our position as the largest scheduled air cargo carrier operating
out of Miami International Airport. We are confident that with the help of
the Court and our creditors, we will be able to fashion a solution which
will benefit everyone including our employees, our customers, our vendors,
our community, and our lending institutions," said Barry H. Fine, the
Company's President and Chief Executive Officer.

The Company cites skyrocketing fuel prices and an economic downturn in
Latin America over the past two years as the major causes of its present
financial situation. The Company had been attempting to negotiate an out-
of- court restructuring with its bondholders to avoid the necessity of the
filing.

"The Company regrets that it was unable to reach a restructuring agreement
with our bondholders. This step is now necessary to protect our company,
our employees, our customers, and our creditors so that service is not
interrupted during this process of reorganization," said Fine.
Fine Air intends to restructure its debt and obtain financial liquidity in
order to implement a long-term solution to the financial challenges it now
faces. Fine Air has sought authorization from the Court to obtain post-
filing financing of up to $55 million from Banc of America, its current
lending institution.

Since 1994, the Company has been the largest air cargo carrier serving
Miami International Airport, based on tons of international freight
transported to and from that airport. The Company's services include (i)
integrated air and truck cargo transportation and other logistics services;
(ii) long and short term ACMI (aircraft, crew, maintenance and insurance)
services and ad hoc charters; and (iii) third party aircraft and engine
maintenance, repairs and overhauls, training and other services. The
Company's scheduled cargo services provide seamless transportation through
its Miami International Airport hub linking North America, Europe, Asia and
the Pacific Rim with 28 South and Central American and Caribbean cities.

The Company's customers include international and domestic freight
forwarders, integrated carriers, passenger and cargo airlines, major
shippers and the United States Postal Service


FRONTIER INSURANCE: Obtains Reinsurance & Announces Management Changes
----------------------------------------------------------------------
Frontier Insurance Group, Inc. (Frontier) (NYSE:FTR) announced it exercised
its option to purchase $800 million in aggregate reinsurance for Frontier
Insurance Company from National Indemnity Company, a subsidiary of
Berkshire Hathaway, Inc.  The reinsurance covers approximately $514 million
in loss and loss adjustment expense (LAE) reserves held on June 30, 2000
for accident years 1999 and prior. The agreement also provides for up to
$286 million in adverse development cover for loss and LAE reserves above
the held reserves. Benfield Greig LLC represented Frontier in this
transaction.

                Continuation of expense management measures

Frontier also announced the implementation of salary reductions for senior
management and a reduction of staff. Since February of this year,
Frontier's Executive Management Group (EMG) has been reduced from eleven to
seven members, creating an annualized savings of approximately $1.2
million.

Effective immediately, President and Chief Executive Officer, Harry W.
Rhulen, and each of the other six members of the EMG are taking salary
reductions that amount to an additional annualized decrease of 25% in total
current EMG compensation. In addition, several other members of Frontier's
senior management will take salary reductions, resulting in further expense
savings.

The reduction in staff was predominately within the Underwriting and
Information Technology areas of the Rock Hill, New York location. In
connection with the staff reduction, Frontier will take a restructuring
charge for severance benefits in the third quarter 2000. During the fourth
quarter, the Company will continue to restructure, resulting in the
elimination of additional positions. The reduction in work force is part of
the Company's ongoing expense management plan that began in 1999. Since
January of 2000, Frontier's total employee count has decreased from
approximately 1600 to 680 through asset sales, attrition and job
elimination.

Harry W. Rhulen, President and Chief Executive Officer, stated, "Although
the implementation of salary cuts and additional lay-offs are difficult,
these actions are necessary to reach appropriate staffing and related
expense levels to support Frontier's current and forecasted volume of
business. Both the purchase of the aggregate stop loss and the continued
implementation of expense measures are important steps toward achieving our
goals of protecting the Company's surplus, improving our outlook and
supporting Frontier's ongoing viability."

Frontier is an insurance holding company, which through its subsidiaries,
is a national underwriter and creator of specialty insurance products
serving the needs of insureds in niche markets


FRUIT OF THE LOOM: Alabama Power's Wants Long-Term Power Contract Decision
--------------------------------------------------------------------------
Union Underwear is the sole owner of four subsidiaries: Union Yarn Mill
Inc., Winfield Cotton Mill Inc., Fayette Cotton Mill Inc., and Aliceville
Cotton Mill Inc. The subsidiaries are located in the utility district of
Alabama Power Company.

In January 1996, Fruit of the Loom and Alabama Power Company entered into a
long-term contract that provided power at a reduced rate compared to a
year-to-year contract. Alabama Power Co. estimates that Fruit of the Loom
received a discount of at $2,614,381 annually. To procure the reduced
rate, Fruit of the Loom agreed to reduce its power consumption upon notice
from Alabama Power Co. to a predetermined level. Alabama Power Co.
committed to maintain 35,000 kilovolt amperes at Debtors' premises as
"Total Capacity" with 2,750 kilovolt amperes as "Firm Capacity." The
remaining 32,750-kilovolt amperes was designated as "Non-Firm Capacity."

Alabama Power Co. reserved the right, with at least thirty minutes advance
notice, to suspend delivery of "Non-Firm Capacity." Total suspension time
was not to exceed eight hours per day or two hundred hours per year. Fruit
of the Loom agreed to reduce its power load to the "Firm Capacity" level
when requested by Alabama Power Co. Representatives of the four mills and
Roger C. Vaughan, Manager of Power Contracts for Alabama Power Co, signed
the agreement.

Clark R. Hammond Esq., of the Birmingham, Alabama firm Johnston, Barton,
Proctor and Powell LLP, states that Fruit of the Loom currently owes his
client $787,235. In a letter dated January 24, 2000, Alabama Power Company
offered Fruit of the Loom two choices: either pay a security deposit of
$1,415,200 or assume a year-to-year contract with a higher rate and pay the
cure amount of $787,235. Mr. Hammond asserts that Debtor has yet to take
action.

The motion asks Judge Walsh to compel Fruit of the Loom to accept or reject
the contract. The cure amount should be paid immediately if Debtor chooses
to accept. If Fruit of the Loom rejects, Alabama Power Co. requests that
Debtor pay the difference between the long-term contract rate and the year-
to-year contract rate for power purchased between January and June of 2000.
They also request payment of a security deposit in the amount listed above.
(Fruit of the Loom Bankruptcy News, Issue No. 12; Bankruptcy Creditors'
Service, Inc., 609/392-0900)


GENESIS/MULTICARE: Manorcare Enforces Arbitration with Debtor Neighborcare
--------------------------------------------------------------------------
HCR Manor Care, Inc. (n/k/a Manor Care, Inc.), Manor Care, Inc. (n/k/a
Manor Care of America, Inc.) and ManorCare Health Services, Inc. ask the
Court to compel Debtor NeighborCare Pharmacy Services, Inc. to complete
the arbitration relating to billing and provision of pharmaceutical and
therapeutic products and services. Manor Care tells the Judge that the
arbitration was commenced by NeighborCare against Mancor Care more than a
year ago but in May, 2000 NeighborCare convinced the Arbitrator, former
federal judge Charles B. Renfrew to vacate the upcoming hearing dates set
for the weeks of June 12 and July 3, 2000 on the ground that NeighborCare
was likely to file for bankruptcy.

The matter dates back to 1991, when ManorCare Health, formerly known as
Manor Healthcare Corp., entered into three agreements with its then
wholly-owned subsidiary, TotalCare Pharmacy Services, Inc., later known as
Vitalink Pharmacy Services, Inc., in contemplation of an initial public
offering of TotalCare:

     (i)   the Master Pharmacy Services Agreement;

     (ii)  the Master Infusion Therapy Services Agreement; and

     (iii) the Master Pharmacy Consulting Agreement

These Master Agreements made TotalCare the preferred provider of
pharmaceuticals, infusion therapy products and services, and pharmacy
consulting services to many of the skilled nursing facilities then owned
and/or operated by ManorCare Health.

On or about September 19, 1997, Vitalink and ManorCare Health executed
three separate amendments to the Master Agreement, which changed the terms
of the Master Agreements in two principle respects. First, they extended
the terms of all three Master Agreements from May 31, 2001 to September
30, 2002, and second, they set forth new formulae for calcuating Vitalink
Pharmacy pricing to ManorCare Health facilities.

According to the movants, NeighborCare inherited the Master Agreements
including the 1997 Amendments from Vitalink in August of 1998 when Genesis
acquired Vitalink and merged it into NeighborCare's existing pharmacy
operations.

About a month after the NeighborCare-Vitalink merger, HCR of America's
parent corporation, Health Care and Retirement Corporation (HCR), acquired
Manor Care, including its wholly-owned subsidiary ManorCare Health.
Following the acquisition, Manor Care survived as a wholly-owned
subsidiary of HCR, ManorCare Health survived as a wholly-owned subsidiary
of Manor Care, and HCR of America remained a separate wholly-owned
subsidiary of HCR.

                          Change in Law Regarding PPS

Under the old "reasonable cost plus" system, the federal government had
reimbursed ManorCare Health for Vitalink's pharmaceutical charges based on
the actual, reasonable costs of such charges plus additional amounts to
account for overhead and the like.

On August 5, 1997, President Clinton signed into law the Balanced Budget
Act of 1997, which instructed the Health Care Financirg Administration to
replace the "reasonable cost plus" Medicare reimbursement regime with a
Prospective Payment System (PPS) beginning on or after July 1, 1998. On
May 12, 1998, the HCFA published interim final rules for a proposed PPS
program which was finalized and implemented thereafter on a rolling basis
for skilled nursing facilities across the country. With this shift,
Medicare reimbursement is based not on actual expenditures, but rather on
a flat per diem amount that must cover all services rendered to the
Medicare patient.

As a result, skilled nursing providers like ManorCare Health and Genesis
strive to reduce and eliminate ancilliary costs like drug charges because
they could no longer he passed on to the federal government on a
"reasonable cost plus" basis for reimbursement.

               Disputes on the Heels of Change in Law

In mid-October of 1998, ManorCare Health formally requested NeighborCare
to provide it with a proposal to reduce its costs and eliminate the
premium itswas paying under the current contract for the Manor Care
facilities and supporting document for NeighborCare's supply of pharmacy
products to the Manor Care facilities at prices consistent with the terms
of the Master Agreements.

On or about December 1, 1998, NeighborCare admitted that it had been
overcharging ManorCare Health under the Pharmacy Agreement by about 4%.
NeighborCarc also admitted that it could not calculate the overcharge for
IVs under the Infusion Therapy Agreement and that even the calculation of
Pharmacy overcharges was uncertain because "[NeighborCare was] not sure
how to analyze the contract terms of [fiftieth percentile] pricing...."

The parties then continued to negotiate both the amount of NeighborCare's
past overbilling and the issue of new pricing terms for the approaching
June 1, 1999 effective date of PPS at ManorCare Health facilities.

Three specific provisions of the Master Agreements are subjects of
dispute:

(1) Equitable Amendment on Change of Law and Right to Termination

     The Master Pharmacy and Infusion Therapy Agreements provide the parties
     with a right to demand an equitable amendment of the Master Agreements
     upon the occurrence of a material change in Medicare reimbursement law.

      "In the event the Medicare program or Medicaid program laws, rules,
      regulations or practices are changed or amended, in whole or in part,
      in any material manner so as to materially alter the expectations of
      the parties or so as to materially alter the reimbursement for
      Pharmaceutical Services or the provision of Pharmaceutical Services,
      the parties agree to amend this Agreement and each Pharmacy Services
      Agreement, in an equitable manner and so as to comply with applicable
      law."

    The Master Agreements also provide that, in the event the parties are
    unable to agree upon an equitable amendment, either party may terminate
    the Master Agreements upon forty-five days' written notice, Manor Care
    briefs the Judge.

(2) Pricing Methodology

     Under the 1997 Amendments, there are two standards of pricing:

     (a) Fiftieth Percentile Pricing for non-managed care patients,

           "Vitalink's charges for pharmaceuticals under each separate
         Pharmacy Services Agreement shall be based on prevailing market
         rates for each Facility, ... defined as those within the fiftieth
         percentile (50%) of charges paid by similarly licensed non-
         [ManorCare Health] facilities that receive similar services from
         Vitalink ..."

     (b) Exhibit A Pricing for managed care patients.

         The 1997 Amendments specify that Vitalink's charges are to be set
         in accordance with a detailed schedule.

(3) Right to Provide Service

     The 1991 Master Agreements provide NeighborCare's predecessor a limited
     right to service certain additional ManorCare Health skilled nursing
     facilities acquired or developed after the execution of the Master
     Agreements.

       "[ManorCare Health] shall give TotalCare the option, during the term
     of this Agreement or any renewal thereof, to provide Pharmaceutical
     Services to any of its present or future facilities owned or licensed
     by [ManorCare Health, or any present or future facilities owned or
     licensed by any wholly-owned subsidiary or affiliate of [ManorCare
     Health], that TotalCare has the capability of so servicing."

     Manor Care notes that by its plain terms, the limited right becomes
     effective only "at the expiration of the pharmacy services agreement
     then in effect at such facility . . . or at such time as a Facility
     can terminate the existing pharmacy services agreement with no penalty
     or liability.

                                 Arbitration

On April 1, 1999, ManorCare Health sent NeighborCare notices of termination
of the Master Agreements based upon NeighhorCare's admitted overbilling and
the parties' inability to agree upon an equitable amendment, citing the
term under the the Master Service Agreements that NeighhorCare had 45 days
in which to cure the overbilling breaches and to reach an equitable
amendment or the terminations would become effective on June 1, 1999.

NeighborCare responded with letters claiming that ManorCare Health had no
right to terminate the Master Agreements, drawing upon the language in the
Master Agreements that NeighborCare had the right to service all of the
facilities owned or operated by HCR Manor Care, Inc. and its subsidiaries
or affiliates.

On May 7, 1999, NeighborCare filed the Demand For Arbitration and a
related state court case seeking to enjoin the terminations and claimed
the purported new right to service the HCR of America facilities.

After discussions between counsel, NeighborCare agreed to dismiss "with
prejudice as to jurisdiction" its state court case and to consolidate it
with the arbitration demand. The parties also agreed that the termination
dates shall he stayed until 10 days after a final decision by the
Arbitrator. Manor Care points out that the parties also expressly provided
that, "[this Agreement shall not he construed to alter the running of the
45-day `negotiation' or `cure' period as specified in the Master Service
Agreements, which periods shall run on May 15, 1999." At NeighborCare's
suggestion, the parties agreed to the appointment of the Honorable Charles
B. Renfrew, a former General Counsel of Chevron and a seasoned and well-
respected jurist, to serve as the Arbitrator.

Manor Care tells Judge Walsh that the parties have labored for over a year
to complete virtually all fact and expert discovery in preparation for
trial dates the weeks of June 12, and July 3, 2000.

At a hearing on May 23, 2000, at NeighhorCare's request and over Manor
Care's objection, fudge Renfrew orally vacated the hearing dates set for
the weeks of June 12, and July 3. He also ordered Manor Care to continue
paying one hundred (100%) of the face value of NeighhorCarc's disputed
invoices, with ninety percent (90%) to be paid directly to NeighborCare
and the remaining ten percent (10%) to be paid into a segregated account
for disposition in accordance with a final judgment in the matter. Judge
Renfrew also granted leave for additional, limited 30(b)(6) discovery
concerning newly produced documents and extended the expert discovery
schedule in view of the vacated hearing dates.

              Manor Care Seeks Relief from Automatic Stay

Manor Care submits that it is entitled to relief from the to permit Judge
Renfrew to immediately resolve the parties' claims because:

    (a) the Court is required to enforce the parties' pre-petition mandatory
         arbitration agreement regardless of the applicability of the
         automatic stay; and

    (b) "cause" exists under Section 362(d) because:

        (i)   the automatic stay is essentially inapplicable given that the
              Arbitration is the Debtor's action against Manor Care, not
              Manor Care's action against the Debtor;

        (ii)  given NeighborCare's anticipated employment and retention of
              its pre-petition arbitration counsel, Paul, Weiss, Rifkind,
              Wharton & Garrison, the remaining trial preparation will not
              be very burdensome to NeighborCare or the estate, and the
              immediate continuation of the Arbitration may even benefit
              NeighborCare in the sense that the adjudication of Master
              Agreement claims is a pre-requisite to its own reorganization.

        (iii) Manor Care is now required to pay 90% of the face value of
              NeighborCare's monthly invoices to Neighborcare and to pay the
              remaining 10% into a segregated account for later allocation
              following the hearing in this matter.

Moreover, NeighhorCare asserts in the Arbitration that it has the right to
service all of the HCR of America facilities while other pharmacy
providers are currently serving those facilities resulting in potential
increase of damages every day.(Genesis/Multicare Bankruptcy News, Issue No.
4, Bankruptcy Creditors' Service, Inc., 609/392-0900)


GEOGRAPHICS, INC: Stationery Maker Signs Letter of Intent with Smead
--------------------------------------------------------------------
Geographics, Inc. (OTC BB: GGIT), a manufacturer of value-added and
designer stationery paper and office products, announced the signing of a
letter of intent to license Geographic's products of its Geographics
Europe, Ltd. subsidiary to Smead Manufacturing Corporation's European
subsidiary Atlanta Group BV.

Smead/Atlanta Group BV will include certain assets of Geographics Europe,
Ltd., and will also pay Geographics a royalty for the License to use
Geographics names and logos.

According to the agreement, Atlanta Group BV/Smead Corp. will acquire
certain assets of Geographics Europe, Ltd., including inventory, customer
files, customer records, sales history, sales orders, supply contracts,
designs, goodwill and know-how, which represent substantially all of the
assets necessary to operate the Business. Geographics shall retain
ownership of its copyrights and trademarks, but shall license them to
Smead/Atlanta Group.

Geographics shall also grant Smead/Atlanta Group BV, an exclusive license
of all brand names and logos. The License shall also include the name
"Geographics" for the paper and filing products on a non-exclusive basis.
"Upon completion of this deal, Geographics, Inc.'s inventory will transfer
to cash, giving Geographics, Inc. capital and an upside potential of
additional cash through royalty payments," commented James L. Dorman,
President and CEO of Geographics, Inc.

Further financial terms were not disclosed.

Dorman added, "Atlanta Group BV, headquartered in Hoogezand, The
Netherlands also has distribution facilities in Austria, Belgium, England,
France, Germany, Spain, Portugal and Switzerland. Atlanta has established
distribution of its products in an additional 50 countries via
distributors. This will greatly expand the sales of Geographics products to
many new prospects and enhance our relationship with our major customers.
Our service levels will also improve by having stocks in all major European
countries."

Atlanta manufactures products based on three technologies: injection
molding, paper and metal. Atlanta has exclusive distribution rights to sell
a number of leading brands in several European countries.

Sharon Avent, President and CEO of Smead, said, "this agreement further
shows our commitment to position the Atlanta Group as one of the leading
suppliers in Europe and beyond."

Dorman continued by saying, "We are especially pleased with this proposed
Agreement, because through this sale of our licenses and products, a newly-
formed relationship will be created with Smead/Atlanta Group BV. We look
ahead with great expectations that our new relationship will create an
exciting synergy between two companies that are committed to offering the
finest products and services worldwide. In the meantime, we continue to
focus on future prospects and execution of our growth strategy."

Geographics, Inc., a manufacturer of value-added and designer stationary
paper and office products, distributes its products in North America,
Australia and Europe. Geographics, Inc. maintains its headquarters and
principal production/warehousing facilities in Blaine, Washington.
Geographics also has sales offices and warehousing/distribution facilities
in Milwaukee and Madison, Wisconsin and Toronto, Canada. Information about
Geographics and its products is available on the Internet at
www.geographics.com.

Smead Manufacturing Company manufactures and markets filing systems and
records management products for large and small businesses as well as for
individual and home office use. In addition to the UltraColor series, Smead
also offers standard file folders, Flex-I-Vision(R) hanging folders and
related Viewables (labeling products, color-coded filing supplies, Alpha-
Z(R) self-adhesive label products, filing accessories, expanding files and
wallets, shelving products, made-to-order products and state-of-the-art
Smeadlink(R) document management software). Smead products are available
through office product distributors and retail office product outlets.
Founded in 1906, Smead is a leading worldwide manufacturer and distributor
of office filing and records management supplies headquartered in Hastings,
Minn., Smead is a privately held, majority woman-owned business with about
3,000 employees in 10 manufacturing plants located across North America and
Europe.

Smead acquired Atlanta in early 1998 to enhance its capability to offer
products to its customers on a global basis.

"Flex-I-Vision," "Alpha-Z" and "Smeadlink" are registered trade names of
Smead Manufacturing Company. "InnDura," "UltraColor" and "Viewables" are
trademarks of Smead Manufacturing Company.


HARNISCHFEGER INDUSTRIES: Joy Technologies Seeks to Assume Cooper Agreement
---------------------------------------------------------------------------
Joy Technologies Inc. has determined that it is in its best interests to
assume the Cooper Industries Agreement. Accordingly, pursuant to section
365(a) of the Bankruptcy Code, JTI asks the Court for authority to assume
the Purchase Agreement between JTI Joy Manufacturing Company (Canada) Ltd.
(Joy Canada), Joy Manufacturing Company (U.K.) Limited (Joy U.K.) and
Cooper Industries, Inc., dated July 3, 1987.

Pursuant to the Agreement, Cooper purchased from the Joy Entities (a) the
shares of IC Group Inc. owned by JTI, (b) certain accounts receivable of
the Industrial Compressor Group, a group of divisions formerly owned by
Joy Manufacturing Company and engaged in the manufacture and sale of
stationary compressors , and (c) the foreign assets of the Business owned
by Joy Canada and Joy U.K.

As part of the Cooper Industries Agreement, Cooper assumed all current and
future liabilities of the Business, whether known or unknown, and
indemnified the Joy Entities for the Liabilities.

In 1993, Cooper assigned its rights and obligations under the Cooper
Industries Agreement to Gardner Denver Inc. While Cooper remains
responsible to Joy for Cooper's obligations under the Cooper Industries
Agreement, Gardner has been fulfilling these obligations since the
assignment.

Over the years, Cooper and Gardner have defended and indemnified the Joy
Entities under the Cooper Industries Agreement for, among other things,
certain asbestos claims and environmental obligations. Environmental
obligations related to the Business are the largest Liability indemnified
by Cooper/Gardner to date. Specifically, waste shipped from the Business'
plant located in Michigan City, Indiana is the subject of an EPA order.
Cooper/Gardner's allocated portion of the clean-up cost, both past and
future, is estimated to be between $2 million and $2.5 million. The amount
may be reduced by recoveries from other responsible parties and may
increase if the final remedy for the site were to be modified.

In return, Joy's only foreseeable current or future obligation is to make
available to Cooper/Gardner the benefit of any prepaid insurance coverage
related to the Business. In this regard, the Joy Entities and Gardner are
named plaintiffs in a lawsuit against the Insurance Carriers over denial
of coverage.

JTI believes that Cooper/Gardner's indemnification of the Liabilities is
valuable to the Joy Entities because (a) the Clean-Up Expenses are
substantial and (b) additional environmental clean-up costs or other
Liabilities may arise in the future. Moreover, future Liabilities may
arise because (i) some plants involved in the Business are old
manufacturing sites and (ii) the Business' products, air compressors, have
a useful life often to twenty years.

Given this, JTI believes that assumption of the Contract will benefit the
Joy Entities while rejection could result in Cooper/Gardner asserting a
claim of $2 million or more for the Clean-Up Expenses, and possibly other
damages.(Harnischfeger Bankruptcy News, Issue No. 27, Bankruptcy Creditors'
Service, Inc., 609/392-0900)


HEDSTROM HOLDINGS: Asks for Extension of Lease Decision Period to Feb. 7
------------------------------------------------------------------------
Hedstrom Holdings, Inc., et al. seeks court authority to extend the period
within which the debtors may assume or reject unexpired leases of
nonresidential real property.

The debtors are party to various unexpired leases of nonresidential real
property, consisting of office, showroom, manufacturing and warehouse
facilities. The debtors request entry of an order extending for an
additional 120 days to and including February 7, 2001 the period within
which they may assume or reject the leases. The debtors have begun the
process of developing their business plans as the foundation for their
emergence from Chapter 11. The unexpired leases are an integral part of
that analysis.


HEILIG-MEYERS: Equity Committee Challenges Propriety of DIP Financing
---------------------------------------------------------------------
Heilig-Myers Co. (HMYRQ) is scheduled to ask for final bankruptcy court
approval of a loan on Wednesday to help the furniture retailer through its
Chapter 11 reorganization, but the request is drawing fire from creditors
and shareholders. With its request for court approval of the $215 million
debtor-in-possession loan, Heilig-Myers is asking the court to grant
"adequate protection" to financial institutions that loaned Heilig-Myers
around $95.6 million before its filed its petition for bankruptcy
protection on Aug. 16. (ABI 27-Sep-00)

In greater detail, the Official Committee of Equity Security Holders
objects to the motion of Heilig-Meyers Company et al. for authority to
obtain secured post-petition financing.

The motion seeks authority to incur two tranches of secured post-petition
financing: a revolving tranche of up to $200 million provided by Fleet
Retail Finance, Inc. and a term tranche of up to $15 million provided by
Back Bay Capital LLC secured by the Term Tranche, in each case secured
substantially all of the debtors' assets.

Fees include an annual commitment fee of $125,000 and a quarterly
"commitment fee" of .5% of the unused portion of the Revolving Tranche.
Fees payable in connection with the Term Tranche include an initial
$525,000 commitment fee and a quarterly commitment fee of $93,750 and an
annual agent's fee of $75,000.

On the Petition Date, the court granted the debtors interim authority to
borrow up to $160 million under the Revolving Tranche and the Entire $15
million of the Term Tranche.

According to the Committee, the debtors have drawn down significantly less
than 50% of the maximum balance of the Revolving Tranche and none of the
Term Tranche. The debtors have used the proceeds of the $30 million paid by
various liquidators to repay all outstanding draws under the Revolving
Tranche. And in addition, the debtors entered into various credit
agreements, converting the debtors' credit sales into cash sales, enhancing
the debtors' liquidity.

As a result, the debtors propose to pay extremely onerous fees and granted
liens on substantially all of their previously unencumbered assets for
post-petition financing they apparently do not need.

The Committee seriously questions the debtors' business judgment and states
that the motion should be denied unless and until the debtors establish the
necessity of the proposed post-petition financing , particularly the
relatively small Term Tranche, and justify the related fees. In addition,
the Committee questions the $5 million "melt-down" carve-out for
professional fees.


HEILIG-MEYERS: Equity Committee Taps Hunton & Williams as Lead Counsel
----------------------------------------------------------------------
The Official Committee of Equity Security Holders of Heilig-Meyers Company
and its affiliated debtors seeks entry of an order authorizing the
employment of Hunton & Williams as counsel to the Committee.  The Firm will
assist the Equity Committee by:

    a) Advising the Committee on how to best preserve value for security
       holders in connection with any restructuring and reorganization of
       the debtors;

    b) Advising the Committee in connection with pleadings filed in the
       debtors' bankruptcy cases Investigating the acts, conduct, assets,
       liabilities and financial condition of the debtors;

    c) Participating in the formulation of any plans of reorganization;

    d) Advising the Committee and equity security holders and the debtors in
       connection with the confirmation of any plans of reorganization;

    e) Generally advocating positions that further the interests of equity
       security holders of the debtors; and

    f) performing such other services as are in the best interests of equity
       holders of the debtors.

The initial hourly rates for the attorneys and paralegals range from
$165-$335 per hour for attorneys and $60-$75 per hour for paralegals.


INTEGRATED HEALTH: Rejecting Massachusetts Facilities Management Agreements
---------------------------------------------------------------------------
Integrated Health Services, Inc., operate two facilities in Massachusetts.  
IHS 148 operates Greenery Extended Care Center at North Andover,
Massachusetts and IHS 155 operates Greenery Extended Care Center at
Worcester, Massachusetts.

Under Management Agreements with Horizon/CMS Healthcare Corporation, the
Debtors as Managers are entitled to retain all net revenues generated by
the operation of the Facilities but are responsible for all costs and
expenses.

The Debtors conclude that the Facilities provide little or no financial
benefit to them:

                                   This Year's          Projected
         Facility                  EBTDA-CapEx         EBTDA-CapEx
         --------                  -----------         -----------
         Greenery-Worcester          $ 803,816            $ 27,154
         Greenery-North Andover     ($328,467)          ($602,687)

Although the Greenery-Worcester Facility is projected to generate a profit
in 2000, the Debtors do not believe it will be cost-effective to retain
the Management Agreement for this Facility because it would be the
Debtors' only operation in Massachusetts.

The Debtors tell Judge Walrath they have thoroughly reviewed the
Agreements relating to the Facilities, have talked with Horizon and
Horizon has agreed to assume the management of the Facilities as of
October 1, 2000. The Debtors believe that the rejection of the Agreements
is a prudent and proper exercise of their business judgment, and is in the
best interest of their estates and creditors.(Integrated Health Bankruptcy
News, Issue No. 8, Bankruptcy Creditors' Service, Inc., 609/392-0900)


KEYSTONE CONSOLIDATED: Moody's Says Markets Weak & Liquidity is Limited
-----------------------------------------------------------------------
Moody's downgraded its ratings for Keystone Consolidated Industries, Inc.
due to weak wire product markets, declining operating results, and limited
liquidity.  Moody's lowered its rating for Keystone's $100 million of
9.625% senior secured notes, due 2007, to B3 from B2, and dropped its
rating for the company's $60 million senior secured revolving credit
facility to B2 from B1. Keystone's senior implied rating was lowered to B3
from B2 and its senior unsecured issuer rating was lowered to Caa1 from B3.
The outlook for all ratings was changed to negative from stable.

Keystone has been hurt by operating problems and weak wire product prices
in the last year-and-a-half. In 1999, Keystone earned $20.7 million in
EBITDA, excluding $2.7 million of graphite electrode settlements, which
covered interest 1.5 times. Business conditions have deteriorated in 2000,
with demand easing, wire and rod prices reversing from the April and May
price increases, and energy costs rising. While operating improvements and
lower scrap costs will offset some of the adverse market developments,
Moody's does not expect Keystone's EBITDA to cover interest for the
remainder of 2000.

Keystone has very restricted liquidity, $16 million on June 30, 2000. Its
liquidity will diminish in the current operating environment, foreboding
problems for the first quarter of 2001, when Keystone's working capital
needs peak for the seasonal fabricated wire products business.

Keystone's $60 million revolving credit facility is secured by accounts
receivable and inventory, which totaled $99 million on June 30. The senior
secured notes are secured by a second priority lien on substantially all of
Keystone's fixed assets, which had a book value of $148 million on June 30.
The lien will become a first priority lien upon the January 1, 2001
extinguishment of the first priority lien in favor of the Keystone Master
Retirement Trust, a lien that dates back to when the company's defined
benefit plan was underfunded. The defined benefit plan was overfunded by
$39 million on December 31, 1999.

Keystone Consolidated Industries, Inc., headquartered in Dallas,
manufactures fabricated wire products, industrial wire, and carbon steel
rod for the agricultural, industrial, construction, OEM, and retail
consumer markets.


LAIDLAW, INC.: Stephen Cooper Pleads for Bondholders Support in Conference
--------------------------------------------------------------------------
During a conference call held recently with holders of Laidlaw Inc.
(NYSE:LDW; TSE:LDM) bonds, Mr. Stephen Cooper, vice chairman of Laidlaw's
board of directors and chief restructuring officer discussed the benefits
of achieving bondholder consent to permit the establishment of secured
financing facilities for the company. During Mr. Cooper's discussion and in
response to questions from bondholders, the following topics, among others,
were discussed.

Laidlaw expects earnings before interest, taxes, depreciation and
amortization (EBITDA) for the fiscal year ended August 31, 2000 to be
approximately $575 million -- $450 million from its continuing school bus
and Greyhound businesses and $125 million from its discontinued healthcare
operations. For FY 2001 it expects approximately $575 million -- $440
million from its continuing school bus and Greyhound businesses and $135
million from discontinued operations for the full fiscal year. Free cash
flow (EBITDA less sustenance capital) is expected to be approximately $330
million for FY 2000 and for FY 2001, $250 to $275 million including $40
million of free cash flow from Greyhound and approximately $90 million free
cash flow from discontinued businesses (assuming such discontinued
businesses are not sold during FY 2001).

The company continues to pursue alternatives with respect to its previously
announced decision to sell American Medical Response (AMR) and EmCare --
its discontinued healthcare-related businesses. Subject to adequate
financing being in place, Laidlaw intends to escrow any net proceeds
received from sales of such businesses for distribution to the company's
creditors as part of its restructuring. While there are no assurances, the
company is hopeful that the sale of AMR will be finalized during the first
quarter of calendar year 2001.

Laidlaw traditionally has high working capital needs in the fall as the
school bus business starts up and Greyhound Lines experiences a seasonal
slowdown between Labor Day and Thanksgiving. The company therefore needs a
credit facility upon which it can draw during its fall quarter. Laidlaw
says its interim working capital needs can be met if the bondholders
consent to the bridge facility and the Greyhound facility and both
facilities are entered into, thereby providing financing arrangements
totaling $275 million as outlined in the company's news release of
September 20, 2000. If the bondholders consent to both proposals and both
proposals are entered into, the bridge facility would be reduced from $200
million to $150 million.

Laidlaw believes these secured financings, if approved by the bondholders,
will be sufficient to meet day-to-day obligations and fund anticipated
capital expenditures through March 31, 2001, which is the anticipated
period needed for the company to arrange for a viable, long-term capital
structure through a consensual process. In the event the company is unable
to secure these financings or obtain other sources to finance Greyhound,
Greyhound may not be able to pay the $8.6 million coupon payable on October
15 on its 11 1/2 % Senior Notes due 2007. Mr. Cooper indicated that the
current intercompany indebtedness between Greyhound and Laidlaw is
approximately $70 million.

Mr. Cooper said the company has canvassed alternatives to the proposed
financings including a filing under the provisions of Chapter 11 of the
U.S. Bankruptcy Code and, in Canada, under the Companies Creditors'
Arrangement Act. For a variety of factors discussed during the conference
call, the company estimates that it would need debtor-in-possession
financing of up to $750 million if the company pursued an in-court
restructuring.

"We believe Laidlaw's strong annual cash flows argue fundamentally against
the expense and considerable loss of value which could be experienced in a
filing at this stage of our reorganization efforts. By the nature of our
businesses we believe such an in-court restructuring could trigger a
substantial decline in revenue, thereby reducing our consolidated
enterprise value. We have a short-term need for a relatively modest access
to cash and I'm strongly encouraging our bondholders to vote in favor of
establishing such secured credit facilities," said Mr. Cooper.

Mr. Cooper said that while the final outcome from such a restructuring is
unknown he expects that the company's creditors will emerge owning
virtually all the equity in a restructured Laidlaw.

In connection with issues relating to Safety-Kleen, Inc., Mr. Cooper
indicated that he has been in discussion with their representatives in an
effort to agree on a framework for assessing Safety-Kleen's claims and
Laidlaw's counter claims. Mr. Cooper further indicated that no matter the
outcomes of this negotiated process, maintaining Laidlaw's value in an out-
of- court restructuring would be best for all interested parties.

A replay of the conference call is available at laidlaw.com or by dialing
800-558-5253 and providing confirmation No. 16444674.

Laidlaw Inc. is a holding company for North America's largest providers of
school and intercity bus transportation, municipal transit, patient
transportation and emergency department management services. All dollar
amounts are in U.S. dollars.


LOEWEN GROUP: Debtors Revise Chairman & CEO's Compensation Package
------------------------------------------------------------------
The Debtors ask Judge Walsh to approve, pursuant to 11 U.S.C. Sec. 363,
revised compensation and retention arrangements between The Loewen Group
Inc., John S. Lacey, the Chairman of the Board of Directors of TLGI, and
Paul Houston, TLGI's President and Chief Executive Officer.

Despite progress made in the restructuring and operation of business, the
plan of reorganization will be delayed, the Debtors tell the Court, due to
certain unforeseeable developments, which, most notably, lie with the
uncertainty that has arisen regarding the secured status of approximately
$1.1 billion of prepetition indebtedness under the Collateral Trust
Agreement. Such uncertainty could also result in different percentage
recoveries by different groups of CTA creditors.

Under existing arrangements, incentive payments of Loewen's Board Chairman
and the CEO are based on the timing of emergence from bankruptcy and a
uniform percentage recovery by CTA creditors. The Debtors believe prior
arrangements now no longer fulfill their intended purpose of providing the
Chairman and the CEO with compensation commensurate with contributions to
the Debtors' reorganization and incentives to encourage their retention.
These prior arrangements also fall short of providing incentives for the
Chairman and the CEO to remain with TLGI after the Effective Date, the
Debtors note.

The Debtors' attorneys represent that, in light of these and the value of
the services of Loewen's Chairman and the CEO, the Debtors have negotiated,
in consultation with their professionals and the Committee's advisors, for
revised compensation and retention arrangements with the Chairman and the
CEO pursuant to a new three-year employment contract respectively.

(I) With the Chairman, the Revised Arrangement provides for:

     As before,

     (1) Base Salary of $500,000 per annum;

     (2) Short-Term Performance Incentive such that,

         -- the chairman will continue to be a participant in the Corporate
            Incentive Plan and will be eligible to receive:

            * Target Performance Incentive Payment equal to 50% of base
              salary;
  
            * Maximum Performance Incentive Payment equal to 100% of base
              salary;

            * Performance Incentive Payment of 25% of base salary if a
               minimum of 95% of budgeted goals are achieved;

     In addition,

     (3) Long-Term Performance Incentive

         -- under a Management Pool of option that the Debtors contemplate
            to establish for the Debtors' senior management team,
            representing 5% of the issued and outstanding shares of common
            stock of the reorganized parent company, so that,

         -- the Chairman will be entitled to receive 20% of the options in
            the Management Pool, with

             * 25% of the options vesting after one year,

             * an additional 25% of the options vesting after two years,
             * the remaining 50% of the options vesting at the end of the
               third year;
  
     (4) Severance Benefits so that,

         -- if the Chairman is terminated other than for cause, the Chairman
            will be entitled to receive:

            * 24 months base salary,

            * benefits for the same 24-month period,
         
            * pro-rated incentive payment under the CIP for the year in
              which he is terminated,

            * immediate vesting of all unvested options, and

         -- if a change of control occurs, the Chairman will be entitled to:

            * 24 months base salary,

            * benefits for the same 24-month period and

            * Target Performance Incentive Payment equal to 50% of base
              salary for the 24-month period,

         -- payable immediately upon a change of control and regardless of
            whether the Chairman is terminated by the Debtors or its
            successor,

         -- the Chairman will have no mitigation obligations with respect to
            these severance benefits;

     (5) Other Benefits consistent with ordinary corporate practices;

     Unlike prior arrangments,

     (6) Cash confirmation incentive payment will be,

         -- equal to $3 million, payable upon the Loewen companies'
            successful emergence from the chapter 11 cases in the Delaware
            Bankruptcy Court and the Canadian Cases,

         -- the Chairman will invest 25% of the after-tax amount of this
            cash confirmation incentive payment in the stock of the
            reorganized Debtors;

         [Under prior arrangement, the Chairman is eligible to receive a
          cash confirmation incentive payment, the amount of which is
          dependent on the Effective Date of any plan(s) of reorganization
          filed by the Debtors, and is eligible to receive an incentive
          payment payable in a combination of cash and equity interests in
          the reorganized Debtors in an amount contingent on (i) the value
          ultimately recovered by the senior secured public debtholders in
          these cases as a percentage of their claims and (ii) the timing of
          the Effective Date.

(II) With the CEO, the Revised Arrangement provides for:

     (1) Increase in the base salary from $425,000 per annum to $600,000 per
         annum in one or two steps:

         (a) if the Effective Date does not occur on or before January 1,
             2001, the CEO's base salary (i) will increase to $500,000 per
             annum on that date and (ii) will increase to $600,000 per annum
             on the earlier of June 1, 2001 or the Effective Date; or

         (b) if the Effective Date occurs on or before January 1, 2001, the
             CEO's base salary will increase to $600,000 per annum on the
             Effective Date.

     As before,

     (2) Short-Term Performance Incentive such that,

         -- the CEO will continue to be a participant in the Corporate
            Incentive Plan and will be eligible to receive:

            * Target Performance Incentive Payment equal to 50% of base
              salary;

            * Maximum Performance Incentive Payment equal to 100% of base
              salary;

            * Performance Incentive Payment of 25% of base salary if a
              minimum of 95% of budgeted goals are achieved;

     In addition,

     (3) Long-Term Performance Incentive

         -- the CEO will be entitled to receive 20% of the options in the
            Management Pool, with

            * 25% of the options vesting after one year,

            * an additional 25% of the options vesting after two years,

            * the remaining 50% of the options vesting at the end of the
              third year;

     (4) Severance Benefits

         -- if the CEO is terminated other than for cause, the CEO will be
            entitled to receive:

            * 24 months base salary,

            * benefits for the same 24-month period,

            * pro-rated incentive payment under the CIP for the year in
              which he is terminated,

            * immediate vesting of all unvested options, and

         -- if a change of control occurs, the CEO will be entitled to:

            * 24 months base salary,

            * benefits for the same 24-month period and

            * Target Performance Incentive Payment equal to 50% of base
              salary for the 24-month period,

         -- payable immediately upon a change of control and regardless of
            whether the CEO is terminated by the Debtors or its successor,

         -- the CEO will have no mitigation obligations with respect to
            these severance benefits;

     (5) Other Benefits consistent with ordinary corporate practices;

     Unlike prior arrangments,

     (6) Cash confirmation incentive payment will be,

         -- equal to $1.5 million, payable upon the Loewen companies'
            successful emergence from the chapter 11 cases in the Delaware
            Bankruptcy Court and the Canadian Cases,

         -- the CEO will invest 25% of the after-tax amount of this cash
            confirmation incentive payment in the stock of the reorganized
            Debtors;

         [Under prior arrangement, cash confirmation incentive payment to
          the CEO, as with the Chairman, is dependent on the Effective Date
          of any plan(s) of reorganization filed by the Debtors, and the
          value ultimately recovered by the senior secured public
          debtholders in these cases as a percentage of their claims.]

The Debtors' attorneys represent that the Debtors have made substantial
progress in the restructuring of their businesses and have commenced
negotiations on a plan of reorganization, and the Chairman and the CEO,
have been critical to these efforts.

Given the respective knowledge, experience and expertise of the Chairman
and the CEO, the Debtors believe that the terms of the Revised Arrangements
are fair and reasonable and will encourage the Chairman and the CEO to
continue to focus on the Debtors' successful reorganization and remain with
the reorganized Debtors after emergence from chapter 11. In addition, the
Creditors' Committee has advised the Debtors that it supports the relief
requested by the Motion.

Accordingly, the Debtors ask Judge Walsh to approve, pursuant to 11 U.S.C.
Sec. 363, their revised compensation and retention arrangements between The
Loewen Group Inc., John S. Lacey, the Chairman of the Board of Directors of
TLGI, and Paul Houston, TLGI's President and Chief Executive Officer.
(Loewen Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


METAL MANAGEMENT: Moody's Lowers $250 Mln Sr Secured Credit Facility To B3
--------------------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Metal Management, Inc.
based on an expected weakening of the company's credit fundamentals due to
weaker demand and prices for ferrous scrap and reduced liquidity. Moody's
lowered its ratings for Metal Management's $250 million senior secured
credit facility to B3 from B2; lowered its rating for the company's $30
million of 12.75% senior secured notes due 2004 to Caa1 from B3; and
dropped its rating for the $180 million of 10% guaranteed senior
subordinated notes due 2008 to Ca from Caa2. Metal Management's senior
implied rating was lowered to Caa1 from B3 and its senior unsecured issuer
rating was lowered to Caa2 from Caa1. The outlook for all ratings was
changed to negative from stable.

Weaker domestic steel market conditions over at least the next two quarters
are expected to reduce Metal Management's scrap sales to EAF-based steel
producers. Both scrap prices and scrap margins are likely to be lower for
the remainder of 2000, which will lead to operating losses in the next two
quarters and EBITDA to interest in the 0.3 to 0.4 range, in Moody's
estimation. If correct, this will cause Metal Management to breach the
minimum interest coverage covenant in its credit facility at the end of the
December 2000 quarter. Even before taking a potential covenant violation
into account, the company had limited availability, only $11 million at
August 3.

The downgrades also reflect the value of the assets securing the credit
facility and senior secured notes, and the unsecured status of the senior
subordinated notes, which are guaranteed by the company's subsidiaries on a
subordinated basis. The credit facility is secured by all of the assets and
properties of the company, including pledges of the capital stock of its
subsidiaries. The senior secured notes are secured by a second priority
lien on substantially all the company's PP&E.

At June 30, 2000, Metal Management had debt of $393 million, or
approximately 15 times Moody's projected EBITDA for the fiscal year ending
March 2001. The book value of its receivables, inventories, and net PP&E
was $377 million on June 30, and the value of the current assets will
likely shrink in the current environment. Using these indications, the
value of the company's assets does not fully cover all its debt, although
the book value of its assets covers the $213 million of secured debt about
1.7 times. The poor residual coverage of the subordinated notes explains
Moody's downgrade, from Caa2 to Ca, for the subordinated notes.

Metal Management, Inc., headquartered in Chicago, is one of the largest
full-service metals recyclers in the United States, with 50 recycling
facilities in 14 states.


PLEASANT EAST: Case Summary and 4 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Pleasant East Associates
          c/o Pleasant East Renewal Corp.
          426-34 East 118th Street
          New York, NY 10035

Type of Business: Owner and operator of residential apartment buildings
                    located at 428/36,442/44,446/48 East 117th Street and
                    234/36,226/28 East 119th Street New York, New York

Chapter 11 Petition Date: September 26, 2000

Court: Southern District of New York

Bankruptcy Case No.: 00-14524

Judge: Robert E. Gerber

Debtor's Counselor: Ira L. Herman, Esq.
                      Parker, Durvee, Rosoff & Haft P.C.
                      529 Fifth Avenue 8th Floor
                      New York, New York 10017
                      (212) 599-0500

Total Assets: $ 5,000,000
Total Debts : $ 3,600,000

4 Largest Unsecured Creditors:

Controlled Plumbing, Co., Inc.           Trade           $ 13,362

Lance Investigation Service              Trade            $ 5,496

East Coast Petroleum                     Trade            $ 1,659

Parkway Exterminating Co., Inc.          Trade              $ 351


PRO AIR: National Transportation Safety Board Clips Airline Wings
-----------------------------------------------------------------
Last week Pro Air filed its appeal of the FAA's Revocation Order with the
National Transportation Safety Board (NTSB).  At the same time, Pro Air
requested that it be permitted to continue flying while the appeal was
pending.

The NTSB denied such request stating that at this stage in the proceedings,
it was required to assume that all of the FAA allegations were correct.  
These allegations are not correct and are based on outdated and erroneous
information.

Pro Air is confident that its appeal will be successful when the NTSB
hears the matter on its merits and expects to resume flying at that time.


REGAL CINEMAS: CEO Michael Campbell Pushes for Out-of-Court Restructuring
-------------------------------------------------------------------------
Regal Cinemas, like many of the theaters these days, is in serious trouble,
according to The Wall Street Journal. Regal's stumble is startling amid the
current theater crisis, however, because of the financial muscle of its two
owners: buyout firms Kohlberg Kravis Roberts & Co. of New York and Hicks,
Muse, Tate & Furst of Dallas. Instead of passing other national movie
chains and dominating the market, each firm now has a paper loss of about
$500 million on its investment, ranking Regal among the biggest setbacks in
their histories. Regal, which has amassed $1.9 billion in debt, has brought
its expansion to a near halt and plans to open just two new theaters next
year.

Chairman and Chief Executive Michael Campbell said Regal would "clearly
prefer" to restructure its debt through voluntary negotiations with its
creditors, rather than enter bankruptcy proceedings. A chapter 11 filing
now could be embarrassing for KKR and Hicks Muse at a time when both firms
are raising money for new buyout funds. They have raised several billion
dollars already, but a restructuring would force the firms to write down
their investments in Regal, lowering their recent returns and potentially
hampering their ability to raise more money.  (ABI 27-Sep-00)


REGAL CINEMAS: Tejas Securities Initiates Covers Senior Subordinated Notes
--------------------------------------------------------------------------
Tejas Securities Group, Inc. issued a research report on Regal Cinemas,
Inc., authored by Senior Research Analyst John J. Helms, CFA. In the
report, he initiates coverage with a SELL rating on the Company's 9 1/2%
and 8 7/8% Senior Subordinated Notes.

Tejas Securities Group, Inc. is a full service brokerage and investment-
banking firm based in Austin, Texas with branch offices in Atlanta, Georgia
and Houston, Texas. Tejas is a wholly owned operating subsidiary of Westech
Capital Corporation (NYSE: WSTE). Further information can be obtained by
calling (800) 846-6803 and speaking with a Tejas account representative.
Information about Tejas Securities Group, Inc. and access to research
reports can also be obtained through our web site at www.tejassec.com.
Tejas Securities Group, Inc. is a member of the NASD/SIPC.


RITE AID: DLJ Analyst Edward Comeau Improves View About Drugstore Chain
-----------------------------------------------------------------------
Rite Aid has escaped its bondage from Donaldson, Lufkin & Jenrette's
analyst Edward Comeau as a "market perform" from "underperform,",
NewsTraders.com relates.  According to a research report, Comeau says, "the
sell off of the shares may be approaching an end and the near term outlook
appears to be stabilizing from an operational and liquidity standpoint."
Mr. Comeau added, the company's long-term outlook "remains quite uncertain
and the shares offer little more than a speculative call at this point."

Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation operates one
of the largest domestic drugstore chains, with about 3800 stores in 30
states and the District of Columbia.


SAFETY-KLEEN: Outsourcing Data Processing Services to Acxiom Technology
-----------------------------------------------------------------------
Safety-Kleen Corp. asks the U.S. Bankruptcy Court in Wilmington for
authority to enter into a Technology Services Agreement with Acxiom
Corporation. Under the Agreement, Acxiom will operate, maintain, and manage
certain information technology services and functions for the Debtors,
including data center, processing, networking, print and insertion, help
desk and disaster recovery services. Currently, those services are provided
by the Debtors' corporate data center in Elgin, Illinois. Because the Elgin
Facility is being sold and the Elgin Data Center Staff will be terminated
on August 31, 2000, the Debtors need to implement a rapid, low-risk
alternative for critical data center services.  After analyzing capital,
operating expenses, and risks, the Debtors determined to outsource the
operation.

The Debtors indicate that they solicited proposals for the outsourcing.
Acxiom submitted the best proposal in response to that solicitation. The
salient terms of the Acxiom Technology Services Agreement are:

    (1) Services. Acxiom will assume responsibility for:

       (a) the operation, management, and support of the current mainframe
           and server processing and print platforms at the Data Center,

       (b) support for the Debtors, applications development group,
           including help desk support, problem management, and systems
           maintenance, and

       (c) other services, such as disaster recovery, asset management,
           physical security, and capacity planning services.

       Acxiom will be migrating the platforms from the Data Center to
       Acxiom's facilities in Downers Grove, Illinois (for mainframe and
       server platforms), and to Acxiom's facilities in Bolingbrook and
       Lombard, Illinois (for print operations).

    (2) Term. The Services Agreement provides for:

        (a) an initial term of 5 years following the successful completion
            of the migration of the platforms from the Data Center to
            Acxiom's facilities and

        (b) the Debtors' right to renew for up to 5 additional one-year
            terms.

    (3) Human Resources. Acxiom will offer employment to certain of the
        Debtors' employees whose jobs are being replaced by the outsourcing
        of the Data Center functions.

    (4) Pricing. $585,000 per month, which very closely approximates the
        Debtors' current cost of operating the Data Center.

    (5) Performance Standards. Acxion will perform the specified services at
        the same level and with at least the same degree of accuracy,
        quality, completeness, timeliness, responsiveness, and efficiency as
        currently performed by the Data Center.

     (6) Termination. At any time, for cause. On 6-months' notice, the
         Debtors can (i) terminate the contract for convenience, without
         cause, on payment of a predetermined "termination for convenience"
         charge designed to compensate Acxiom only for its unrecovered
         start-up costs, and/or (ii) scale down or eliminate any of the
         print and server related services, with no termination payment.

The Debtors suggest that their entry into, and performance under, the
Technology Services Agreement is a transaction in the ordinary course of
their business, within the meaning of 11 U.S.C. Sec. 363(c)(1), that does
not require prior Bankruptcy Court approval. The Debtors seek Court
approval of the Agreement only out of an abundance of caution and because
(a) the Services Agreement, by its terms, is not effective until an order
of this Court approving the Debtors' entry into the Services Agreement
becomes a final order and (b) the Debtors' access to data processing
services clearly is of tremendous importance to their creditors and other
parties-in-interest in these Chapter 11 cases, the Debtors determined it
appropriate to give notice of the Transaction.(Safety-Kleen Bankruptcy
News, Issue No. 7, Bankruptcy Creditors' Service, Inc., 609/392-0900)


SUN HEALTHCARE: Stipulation Provides 366 Adequate Assurance To Pacific Gas
--------------------------------------------------------------------------
At the request of Pacific Gas and Electric Company, pursuant to a provision
in the Court's order for utilities to request additional assurance of
payment, Sun Healthcare Group, Inc., agrees that PG&E may apply pre-
petition security deposits against pre-petition indebtedness and agree to
pay PG&E for pre-petition services not covered by the pre-petition deposits
plus accrued interest.

The Debtors also agree to pay the calculated amount of $575,152 for
services for the period from the petition date of October 14, 1999 to
December 31, 1999. Starting from January 1, 2000, the Debtors agree to
advance payments, on the 1st and 15th of each month, or the immediately-
preceding business day if these fall on a weekend or legal holiday. The
advance payment base was $110,606 which was adjusted to $167,584 due to
more accounts uncovered, effective with the Advance Payment due on June
30, 2000.

"However, subject to Underpayments or Overpayments from prior payments by
the Debtors to PG&E as compared with actual amounts owed as a result of
actual meter readings, which calculations shall be itemized in
Reconciliation Statements faxed to the Debtors prior to the Advance
Payments (as so adjusted) due on the 1st or 15th of each month, the
Debtors shall make payment to PG&E only for the actual, total amount due,
as set forth in each Reconciliation Statement, and the Debtors shall not
make payment of the base amount of each Advance Payment. Further, the
Debtors shall not pay the amounts due set forth in Invoices or when such
amounts would be due thereunder, and the Debtors shall not pay the base
amount or Advance Payments; rather, the Debtors shall pay only the total
amounts due in the Reconciliation Statements by ths due date set forth
therein."

In an Amended Stipulation, the parties agree that to accommodate for any
future increase in accounts, they will exchange additional exhibits
without filing another amended stipulation.(Sun Healthcare Bankruptcy News,
Issue No. 14, Bankruptcy Creditors' Service, Inc., 609/392-0900)


SUPERIOR NATIONAL: Kemper Insurance Companies Acquires Renewal Rights
---------------------------------------------------------------------
The Kemper Insurance Companies announced that it has finalized an agreement
with the California Department of Insurance to acquire the renewal rights
of the five Superior National Insurance Companies in conservation.
The agreement is part of an overall plan designed to assist with the
liquidation of the five companies that was approved yesterday by a Los
Angeles Superior Court.

"Superior business and producers provide Kemper with a unique business
opportunity to acquire the renewal rights to a major book of California
business on a profitable basis," said John G. Pasqualetto, senior vice
president of the Kemper Insurance Companies. "The agreement also allows
Kemper to strengthen its position as a market leader in the workers' comp
business. "

In addition to acquiring the renewal rights, Kemper has finalized its
agreement with the California Insurance Guarantee Association (CIGA) to act
as a third party administrator for certain statutorily covered
CIGA/Superior National claims. The liquidation order triggers the claims
paying responsibilities of the CIGA and the guaranty funds in other states.
Finally, Kemper has acquired the Superior National operating assets
necessary for renewals of the Superior National insurance business and for
performing claims administration duties. Kemper has not acquired any
ongoing operations or liabilities.

On June 30, 2000, the Superior Court accepted Kemper's bid to acquire the
renewal rights on Superior's existing workers' compensation policies and
certain operating assets.

The rehabilitation plan agreements were completed and signed in August by
all involved parties, including the California Department of Insurance,
Kemper and CIGA.

In March, the California Department of Insurance took control of the
financially troubled Superior National by obtaining a court-issued
conservation order. Since April, Kemper has been providing "cut through"
reinsurance for certain Superior National business.

The Kemper Insurance Companies, with 1999 revenues of $3.0 billion, is a
leading provider of property-casualty insurance and risk management
services. It operates countrywide and in many foreign markets. For more
information about Kemper Insurance, visit its website at
www.kemperinsurance.com.

Prior to its bankruptcy and the conservation of its insurance company
units, Superior National Insurance Group had been the ninth largest
workers' compensation insurance group in the nation and the largest private
sector underwriter of workers' compensation insurance in California.


SUPREME BEEF: Family Business Forced To File for Bankruptcy Protection
----------------------------------------------------------------------
Following is a statement by Steven F. Spiritas, President and Chief
Executive Officer of Supreme Beef Processors, Inc. and Supreme Beef
Packers, Inc., on the companies' decision to cease operations September 29,
2000.

"USDA's Food Safety Inspection Service has pursued a campaign of
harassment, intimidation and disinformation against our company after we
sought legal protection under the law, as is our Constitutional right, in
hopes of saving our company. The federal government's assault on our
business following our court victories against USDA has left us with no
other option than to file Chapter 11 bankruptcy. Their actions have taken
away a successful family business, robbed our employees of their
livelihood, and denied customers, including the school lunch program, of
our product.

"We are disappointed in USDA's decision to continue litigation, with its
appeal of the Dallas Federal Court's decision. Efforts by our company to
have discussions with the department to resolve matters have been met with
a deaf ear.

"Pursuit of unjustifiable changes in ground beef purchasing specifications
for the school lunch program, implemented after the Dallas court decision
of May 25th, has not only caused USDA difficulty in filling its purchase
requirements, but has compelled the agency, and hence taxpayers, to pay
excessive prices for its ground beef contracts.

"USDA admits there is nothing that any ground beef processor can do to
remove Salmonella that is delivered in meat purchased from other USDA-
inspected production facilities. Their unworkable "performance standard"
has simply created a problem for which there are no solutions.

"Furthermore, USDA continues to use misleading estimates of Salmonella-
caused food borne illness. The government lumps contamination levels of all
poultry products together with beef to create an erroneous suggestion of
risk to the consumer from beef products. USDA does not address separately
the incidence levels of Salmonella in beef, and specifically in ground
beef, when it comes to public health statistics. Their risk estimates of
meat and poultry have never had anything to do with our company or with
ground beef produced in the United States.

"We are very proud of our family-owned business' reputation for providing
high-quality and wholesome meat. We have never had even one case of food-
borne illness linked to any of the billions of pounds of beef products we
have provided to the public in our 30-year history."


VENCOR, INC.: Begins Reconciliation of 8,600 Filed Proofs of Claim
------------------------------------------------------------------
Approximately 8,600 proofs of claim have been filed against Vencor, Inc.,
et al., in their chapter 11 cases pending before the U.S. Bankruptcy Court
for the Distirct of Delaware.  In reviewing their books and records and the
claims filed, the Debtors have identified 80 proofs of claim in the
aggregate amount of $119,309,233 that are duplicative and 12 Proofs of
claim in the aggregate amount of $13,351,634 that have been superseded.  
The Debtors ask Judge Walrath that these be disallowed and expunged
pursuant to 11 U.S.C. Sec. 502(b)(1). (Vencor Bankruptcy News, Issue No.
16; Bankruptcy Creditors' Service, Inc., 609/392-0900)


XEROX CORPORATION: Moody's Cuts Senior Unsecured Rating Two Notches To Baa2
---------------------------------------------------------------------------
Moody's Investors Service lowered the long term senior unsecured credit
rating of Xerox Corporation (Xerox) and its financially supported
subsidiaries to Baa2 from A3. The rating outlook is stable. The action
reflects the sharp earnings and cash flow deterioration, increased
financial leverage, and the increased uncertainty surrounding the company's
ability to improve operating performance over the intermediate term as
management continues to contend with a number of internal and competitive
challenges. Already weak debt protection measures will likely weaken
further over the next year. The stable ratings outlook considers the weaker
operating metrics, expectations that the company will not repurchase its
common stock, and that the financial control issues in its Mexican
operations that led to a special provision last quarter are confined only
to that business.

Moody's said that its expectation for continued weak operating results stem
from a number of issues, including the company's ongoing implementation and
execution struggles related to its wide ranging April 1998 restructuring
plan, competitive pressures, and to a lesser extent, signs of softening
demand. While the restructuring is intended to reduce its manufacturing,
administrative and selling cost, and to realign its sales force to target
industry specific rather than geographic customer sets, poor implementation
has resulted in new senior management, customer relation disruptions,
duplicative costs, and a less focused sales force, all at a time when
competitive pressures have intensified. Moody's expects these issues will
persist over the next several quarters.

Ratings lowered include:

    A. Xerox Corporation

        (a) senior unsecured to Baa2 from A3;

        (b) subordinated to Baa3 from Baa1;

        (c) preferred stock to "baa2" from "a3";

    B. Xerox Credit Corporation
  
        (a) senior unsecured to Baa2 from A3;

        (b) support agreement from Xerox Corporation;
  
    C. Xerox Capital (Europe) PLC

        (a) senior unsecured to Baa2 from A3, guaranteed by Xerox
             Corporation;

    D. Xerox Overseas Holdings Limited

        (a) senior unsecured to Baa2 from A3, guaranteed by Xerox
             Corporation

In the wake of the organizational turmoil and competitive pressures, the
company has significantly reduced its expectations for fiscal 2000 net
operating cash flow several times this year (most recently in July 2000) to
levels that are insufficient to cover approximately $585 million of annual
dividend payments. Combined with the increasingly challenging competitive
environment, the new rating incorporates the expectation that net operating
cash flow (including working capital and capital expenditures for the non
finance business) may be further diminished over the next few quarters.
As a result, instead of declining, debt levels and financial leverage will
likely increase such that fiscal 2000 non finance retained cash flow to
debt will approximate 10%, as compared to the company's average of over 30%
prior to its operating difficulties beginning in 1999. Because of the
aforementioned challenges, Moody's does not foresee meaningful improvement
over the intermediate term in these debt protection measures.

As a result of higher debt levels, lower profitability, potentially
negative net cash flow from operations for fiscal 2000, and the typical
cash usage in the first half of a year, Moody's views financial flexibility
as more limited than before, but expects the company will continue to have
solid access to the capital markets. The company's liquidity is also
supported by a $7 billion committed revolving credit facility which matures
in October 2002. While the company has recently sold and licensed some
technology and non core commodity paper operations, with potentially more
of these actions to come over time, the key to improving financial
flexibility relates to restoring its document processing profitability and
cash flow generation. In Moody's view, given the operational turmoil within
the company and the external challenges in terms of economic activity,
competitor products and pricing, this will take at least several quarters.

The stable rating outlook reflects several expectations including the
outlook for weak debt protection measures through 2001; the expectation
that the financial control issues in Mexico, which caused the company to
take a $115 million pretax provision last quarter while a review continues
for potentially additional charges in that operation, is materially limited
to that operation; and that management will not engage in share repurchase
activity.

Moody's said that while the copier market is a mature, slow growth, price
competitive market that is being challenged by distributed networked
printing on the lower end, the market is still growing at the mid and high
end ranges and Xerox retains a solid global market position throughout the
range of its product line, including document outsourcing. Xerox has also
entered the faster growing inkjet printer market as a longer term strategy,
which, over the next few years, will generate losses as it invests in
developing an installed base against entrenched competitors.

Xerox Corporation, headquartered in Stamford, Connecticut, develops,
manufactures and markets document processing equipment and provides
document facilities management services worldwide.


* BOOK REVIEW: GROUNDED: Frank Lorenzo and the Destruction of Eastern  
                Airlines
---------------------------------------------------------------------
Author: Aaron Bernstein
Publisher: Beard Books
Softcover: 272 Pages
List Price: $34.95
Order a copy today from Amazon.com at
http://www.amazon.com/exec/obidos/ASIN/1893122131/internetbankrupt

Review by Susan Pannell

Barbara Walters once referred to Frank Lorenzo as "the most hated man in
America." Since 1990, when this work was first published and Eastern
Airlines' troubles were front-page news, there have been many worthy
contenders for the title. Nonetheless, readers sensitive to labor-
management concerns, particularly in the context of corporate
restructurings, will find in this book much to support Barbara Walters'
characterization.

To recap: For a few brief and discordant years, Frank Lorenzo was boss of
the biggest airline conglomerate in the free world (Aeroflot was larger),
combining Eastern, Continental, Frontier, and People Express into Texas Air
Corporation, financing his empire with junk bonds. TAC ultimately comprised
a fleet of 451 planes and 50,000 employees, with revenues of $7 billion.

But Lorenzo was lousy on people issues, famously saying, "I'm not paid to
be a candy ass." The mid-1980s were a bad time to take that approach. Those
were the years when the so-called Japanese model of management, which
emphasized cooperation between management and labor, was creating a stir.
The Lorenzo model was old school: If the unions give you any trouble, break
'em.

That strategy had worked for him at Continental, where he'd filed Chapter
11 despite the airline's $60 million in cash reserves, in order to exploit
a provision in Bankruptcy Code allowing him to abrogate his contracts with
the unions. But Congress plugged that loophole by the time Lorenzo went to
the mat with Charles Bryan, I AM chapter president. Lorenzo might have
succeeded in breaking the machinists alone, but when flight attendants and
pilots honored the picket lines, he should have known it was time to deal.  
He didn't.

Instead he tried again for a strategic advantage through the bankruptcy
courts, by filing Chapter 11 in the Southern District of New York where
bankruptcy judges were believed to be more favorably disposed toward
management than in Miami where Eastern was headquartered. Eastern had to
hide behind the skirts of its subsidiary, Ionosphere Clubs, Inc., a New
York corporation, in order to get into SDNY. Six minutes later, Eastern
itself filed in the same court as a related proceeding.

The case was assigned to Judge Burton Lifland, whom Eastern's bankruptcy
lawyer, Harvey Miller, knew well, but Lorenzo was mistaken if he believed
that serendipitous lottery assignment would be his salvation. Judge Lifland
a year later declared Lorenzo unfit to run the airline and appointed Martin
Shugrue as trustee.

Most hated man or not, one wonders whether the debacle was all Lorenzo's
fault. Eastern's unions, in particular the notoriously militant machinists,
were perpetual malcontents, and Charlie Bryan was an anti-management
zealot, to the point of exasperating even other IAM officers.

The book provides a detailed account of the three-and-a-half-year period
between Lorenzo's acquisition of Eastern in the autumn of 1986 and Judge
Lifland's appointment of the trustee in April 1990. It includes the history
of Eastern's pre-Lorenzo management, from World War I flying ace Eddie
Rickenbacker to astronaut Frank Borman.

Aaron Bernstein has won numerous awards during his twenty-year career as a
professional journalist. He is an associated editor for Business Week.

                               *********

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
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