/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/001010.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 10, 2000, Vol. 4, No. 198 Headlines ALLIED PRODUCTS: NYSE Suspends Trading in Wake of Chapter 11 Filing AUTOZONE INC: Moody's Lower Long-Term Ratings as Short-Term Leverage Soars BANKERS NATIONAL: S&P Affirms Insurer's Bpi Financial Strength Rating BAPTIST FOUNDATION: Summary of Liquidating Plan and Disclosure Statement BAYVIEW: Fitch Downgrades Franchise Loan Receivable With Negative Watch COMPLETE MANAGEMENT: Tees-Up Auction Process to Sell Mobile MRI Equipment CYPRESS HILLS: Cemetery Files For Bankruptcy Protection To Stall Lawsuits DICKINSON THEATRES: Mission Bank Extends $1.2 Million DIP Financing Package DIMAC HOLDINGS: Seeks to Extend 365(d)(4) Deadline to Plan's Effective Date EAGLE PRECISION: Q1 Loss Narrows as Brantford, Ontario, Unit Shows Profits FRANCHISE MORTGAGE: S&P Places Loan Servicer Rating On Watch Negative FREEINTERNET.COM: Another Dot.Com Files Chapter 11 in Seattle, Washington FREEINTERNET.COM: Assets to Be Acquired by NetZero GRAND UNION: Never File for Bankruptcy the Third Time HEILIG-MEYERS: Akin Gump Approved as Committee Counsel HEILIG-MEYERS: Equity Committee Retains Navigant as Financial Advisor HILLSBOROUGH RESOURCES: Sees Light at the End of the CCAA Protection Tunnel HOGIL PHARMACEUTICAL: Court to Consider Disclosure Statement on Oct. 18 J.C. PENNY: Fitch Cuts Ratings on $7.7 Billion of Debt to BBB- NU-KOTE HOLDING: Plan Offers Unsecured Creditors Roughly 20% Recovery PAGING NETWORK: Arch Wireless Shareholders Approve Merger Deal With PageNet PAGING NETWORK: Metrocall Renews Pitch to Terminate Exclusivity SJI WHOLESALE: Cigars Distributor Files Chapter 11 Petition In Tennessee SOUTHERN ENERGY: Fitch Lowers Rating on Senior Notes to BBB STROUDS, INC.: Judge Walrath Approves Brincko Associates' Employment STROUDS, INC.: Linen Retailer Says it Will Cut 50 Jobs at Headquarters SURETY MUTUAL: S&P Affirms Insurer's Bpi Financial Strength Rating TOKHEIM CORPORATION: Court Confirms Prepackage Financial Restructuring Plan VIDEO UPDATE: Proposes Key Employee Retention Program WABASH LIFE: S&P Affirms Insurer's Bbpi Financial Strength Rating ********* ALLIED PRODUCTS: NYSE Suspends Trading in Wake of Chapter 11 Filing ------------------------------------------------------------------- The New York Stock Exchange announced that it determined that the common stock of Allied Products Corporation -- ticker symbol ADP -- should be suspended immediately. The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange. Application to the Securities and Exchange Commission to delist the issue is pending the completion of applicable procedures, including any appeal by the Company of the NYSE staff's decision. The Exchange's action is being taken in view of the fact that on October 2, 2000 the Company announced that it has filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The Exchange has not traded the Company's common stock since that announcement as the Exchange completed its evaluation of the Company's continued listing status. In addition, the Exchange noted that the Company's current 30 day average global market capitalization is $14.4 million which is below the NYSE's continued listing criteria of a 30 day average global market capitalization of less than $15 million. AUTOZONE INC: Moody's Lower Long-Term Ratings as Short-Term Leverage Soars -------------------------------------------------------------------------- Moody's Investors Service lowered the long term ratings of AutoZone, Inc. based on the company's increasingly aggressive financial policy that includes significant debt-financed share repurchases and a predominately short term capital structure. The rating outlook is negative, incorporating the risk that a new Chief Executive Officer could change operating strategy, as well as Moody's expectation that AutoZone could well continue to incur debt to finance share repurchases. The company's Prime-2 short term rating is confirmed, based on AutoZone's leading industry position, improved operating profitability and acceptable debt protection measures. Ratings downgraded: * AutoZone, Inc.: a) Multiple seniority shelf to (P)Baa2 from (P) Baa1 for senior unsecured debt, b) to (P)Baa3 from (P) Baa2 for subordinated unsecured debt and c) to (P)"baa3" from (P) "baa2" for preferred stock. d) Senior unsecured debentures, notes and bank agreements to Baa2 from Baa1. * Chief Auto Parts Inc.: a) Senior unsecured notes to Ba1 from Baa3. Rating confirmed: a) Commercial paper at Prime-2. For the fiscal year ended on August 26, 2000, AutoZone's comparable store sales rose 5% and its operating profit margin increased to about 11.4% of sales, up from about 10.5% of sales in the prior fiscal year. For the year, the company's free cash flow before share repurchases was in excess of $200 million. Debt, however, has grown from $198.4 million in fiscal 1997 to over $1.2 billion currently; the majority of this debt -- $871 million or nearly 70% -- has funded share repurchases. (The company has also committed to $280 million of forward share repurchases). AutoZone continues to spend in excess of its free cash flow to repurchase shares. In addition, only about $345 million of debt is long term, as AutoZone funds itself heavily with commercial paper. Moody's expects outstanding commercial paper to be fully covered by the company's unused and available committed bank credit agreements that aggregate $1.3 billion. AutoZone is a specialty retailer of automotive parts and accessories, operating in a highly competitive, fragmented and consolidating industry. While AutoZone is a leading player in this industry, its share of the Do- It-Yourself market is probably not in the double digits. The company's strategic focus remains the DIY segment, which is expected to grow more slowly than the service segment of the industry. AutoZone's initiative to increase sales to professional installers should allow the company to benefit somewhat from service segment growth. Headquartered in Memphis, AutoZone, Inc. operates 2915 stores in 42 states and the District of Columbia and 13 stores in Mexico. BANKERS NATIONAL: S&P Affirms Insurer's Bpi Financial Strength Rating --------------------------------------------------------------------- Standard & Poor's affirmed its single-'Bpi' financial strength rating on Bankers National Life Insurance Co. (Bankers National Life). Key rating factors include high affiliated-equity holdings, strong but volatile operating results, and weak liquidity. Based in Carmel, Ind., this company mainly writes group annuity and individual life, specializing in universal life. The company's major states of operation: New Jersey, California, Florida, Pennsylvania, and Maryland account for slightly less than half of the company's business. Banker's National Life is a downstream subsidiary of Conseco Inc. (counterparty credit rating double-'B'-minus), a publicly traded (NYSE: CNC) financial services holding company offering insurance, investment and lending products which had $58 billion in assets as of June 2000. Bankers National Life, which began operations in 1955, is licensed in all 50 states, except New York, and the District of Columbia. Major Rating Factors: -- Although the capital ratio is strong, the company is somewhat aggressive with respect to risk assets as a percent of capital. The largest class of risk assets (excluding $383.4 million in Series E redeemable preferred stock issued by Conseco Inc., which is carried at a statement value of zero) is $98.3 million in occupied real estate, which represents 74.6% of total adjusted capital. -- While management has been able to achieve above average profitability, as measured by a five-year average return on assets of 14.3%, returns have volatile and the company has no retained earnings. -- The company's volatile earnings, in the context of the current Standard & Poor's liquidity ratio of 74.5%, are a limiting factor. -- Capital and surplus have grown at a compound annual rate of 13.7% since 1991. Total adjusted capital was $131.8 million at year-end 1999 versus $162.7 million in 1998, a decrease of 19.0%. The decline in surplus of $27.4 million from 1998 was caused by $36.0 million in dividends to stockholders, $28.2 million of net unrealized capital losses, and a $14.6 million decrease in non-admitted assets, partly offset by $40.8 million in net income and a favorable $9.8 million paid-in surplus adjustment from its parent. -- Although the company (NAIC: 71900) is a member of the Conseco group, the rating does not include additional credit for implied group support BAPTIST FOUNDATION: Summary of Liquidating Plan and Disclosure Statement ------------------------------------------------------------------------ Under the liquidating plan of Baptist Foundation of Arizona, and its affiliates, a liquidating trust will be created with the name "BFA Liquidation Trust." All of the assets of BFA and the 92 other Chapter 11 debtors will be transferred to the Liquidating Trust. Once the orderly liquidation of assets is accomplished and the litigation against potentially responsible parties is concluded, the Liquidating Trust and the two subsidiaries will terminate and go out of existence. Investors purchased one of two general types of debtor securities from the debtors. Some of the debt securities were allegedly secured by collateral and some were unsecured. The first $80 million of money that is received from the sale of the debtors' assets will be paid to the collateralized investors and unsecured investors on a "pro rata" basis. This means that the collateralized investors will receive approximately 76.5% of the distributions to be made to investors under the liquidating plan, and the unsecured investors will receive approximately 23.4% of the distributions to be made to investors under the liquidating plan. This ratio of 76.5% to 23.4% results from the fact that collateralized investors were owed approximately $448 million, while the unsecured investors were owed approximately $137 million, as of November 9, 1999. After the investors have receive the initial $80 million, the collateralized investors share of the distributions to be made to investors under the liquidating plan will rise to approximately 93% and the unsecured investors share of the distributions to be made to investors under the liquidating will decline to approximately 6.9%. This means that the collateralized investors will receive $13.2 million more than the pro rata share of distributions to be made to investors under the Liquidating Plan. When the investors have received $160 million in distributions from the sale of the debtors' assets, the distributions will again be distributed on a pro rata basis. Accordingly, the collateralized investors share of the distributions to be made to investors under the liquidating plan will return to approximately 76.5% and the unsecured investors share of the distributions to be made to investors under the liquidating plan will return to 23.4%. The debtors claim that the total amount received under the liquidating plan will be greater than that creditors would receive if all of the debtors' assets were sold immediately in a "fire sale" liquidation. The debtors estimate that a "fire sale" liquidation of the debtors' assets would yield approximately $115 million, and that under the liquidating plan, after payments to other legitimate creditors who are not investors and expenses of the Liquidation, the debtor estimates that between $230 and $240 million will be available for distribution to the Collateralized Investors, the Unsecured Investors and other general unsecured creditors. Assuming $240 million of distributions from the sale of the debtors' assets are ultimately distributed to Investors, the Collateralized Investors will receive approximately $.44 for every dollar invested and the unsecured investors will receive approximately $.31 for every dollar invested. However, the debtors point out that these are estimates. BAYVIEW: Fitch Downgrades Franchise Loan Receivable With Negative Watch ----------------------------------------------------------------------- Fitch downgrades Franchise Loan Receivables Trust 1996-B (1996-B) Class A from 'A' to 'A-', the Class B from 'BBB' to 'BB+' and the Class C from 'B+' to 'B'. Classes D and E, currently rated 'CCC' remain on Rating Watch Negative. This rating action is a result of BayView/FMAC's (BVFMAC) removal of $4 million previously pledged to support the ratings following the restructuring and write-down of one large obligor concentration in May 1999. Although the removal of pledged collateral does not violate any documents, the ratings on 1996-B were preserved at the time of restructuring because the pledge of $4 million was considered credit enhancement. In addition, all classes of 1996-B remain on Rating Watch Negative due to continued deterioration in the strength of certain obligors within the collateral pool of franchise loans. The below transactions are also placed on or remain on Rating Watch Negative. These rating actions reflect an increase in the percentage of loans in each of the pools that are delinquent, have defaulted or are in breach of their FCCR covenants. In addition, Fitch is monitoring the quality of BVFMAC's servicing process given the recent announcement regarding the closing of BVFMAC's franchise loan originations. Fitch expects to meet with BVFMAC within the next 30 days to discuss the details of the delinquent, defaulted and underperforming loans as well as the overall status and quality of BVFMAC's servicing operations. Recently, BVFMAC has indicated to Fitch that they will continue to maintain the current level of servicing to their securitizations. In addition, the company is currently seeking the sale of unsecuritized franchise loans and does not anticipate new originations of franchise loans in the future. The following classes of securities are placed on Rating Watch Negative by Fitch: * Franchise Loan Receivables Trust 1995-B a) Class C on Rating Watch Negative * Franchise Loan Receivables Trust 1996-A a) Classes B1 & B2 on Rating Watch Negative b) Classes C1 & C2 on Rating Watch Negative * Franchise Loan Receivables Trust 1997-A a) Class D on Rating Watch Negative b) Class E on Rating Watch Negative c) Class F on Rating Watch Negative * Franchise Loan Receivables Trust 1997-B a) Class C on Rating Watch Negative b) Class D on Rating Watch Negative c) Class E on Rating Watch Negative d) Class F on Rating Watch Negative * Franchise Loan Receivables Trust 1998-A a) Class C on Rating Watch Negative b) Class D on Rating Watch Negative c) Class E on Rating Watch Negative d) Class F on Rating Watch Negative * Franchise Loan Receivables Trust 1998-B a) Class C on Rating Watch Negative b) Class D on Rating Watch Negative c) Class E on Rating Watch Negative d) Class F on Rating Watch Negative * Franchise Loan Receivables Trust 1998-C a) Class C on Rating Watch Negative b) Class D on Rating Watch Negative c) Class E on Rating Watch Negative d) Class F on Rating Watch Negative The following classes remain on Rating Watch Negative as they were placed on June 1, 2000: * Franchise Loan Receivables Trust 1997-C a) All Classes Remain on Rating Watch Negative The following transaction ratings are affirmed: * Franchise Loan Receivables Trust 1991-A a) Class A at 'A' * Franchise Loan Receivables Trust 1993-B a) Class A at 'A' * Franchise Loan Receivables Trust 1994-A a) Class A at 'A' * Franchise Loan Receivables Trust 1998-D a) Class A at 'AAA' Fitch will continue to monitor the workout process of each defaulted borrower to determine the potential impact on each securitization once recoveries are realized by BVFMAC as special servicer. COMPLETE MANAGEMENT: Tees-Up Auction Process to Sell Mobile MRI Equipment ------------------------------------------------------------------------- Want to be in the mobile magnetic resonance imaging business? On October 17, 2000 at 11:00 a.m., Complete Management, Inc., a chapter 11 debtor in possession, will move before the Honorable Jeffry H. Gallet, United States Bankruptcy Judge, at the Old Custom House, One Bowling Green, New York, New York, (i) for authority to sell, at public auction, CMI's Picker Vista 1.0 Tesla Mobile Magnetic Resonance Imaging Unit and Trailer (the "Picker Vista Unit"), free and clear of all claims, liens, encumbrances, and interests; (ii) to approve certain auction bidding procedures; (iii) to approve the form, manner and sufficiency of notice; (iv) to authorize the consummation of the sale immediately upon entry of an order approving the sale; and (v) finding the successful bidder to be a "good faith purchaser." The United States Bankruptcy Court for the Southern District of New York has issued an order dated September 22, 2000, approving the form, manner and notice of the Motion and approving certain bidding procedures. Copies of the Motion and its exhibits and of the Order to Show Cause may be obtained electronically by accessing the Court's Web site at http://www.nysb.uscourts.govor by request to counsel for CMI, named below. The Picker Vista Unit is a state-of-the-art portable magnetic resonance imaging unit. The Unit is comprised of the Picker Vista Q Ultra MRI Mobile #ab122 and the Picker Site #79680, date of manufacture June 1996. The Arden Hill Unit is equipped with the following features: calumet coach, 60KVA generator; OR 42 active shielded magnet with single gas cold head; passive magnetically shielded room; RF shielded room; no ramping necessary; Vistar auxiliary console; 9.5 software (Y2K compliant); Angio package; Fast Spin Echo; Digital gating package; C/T/L/ phase array coil; head/neck array coil; quad volume neck coil; quad/knee foot coil; quad head coil; small joint coil; large joint coil; pelvic array coil; tower assembly (DEC alpha computer); ETO RF amplifier; and PCI performance control gradients. The Picker Vista Unit is presently in storage at Cryomag Services, Inc., Building 3 Unit 7 Stryker Lane, Belle Meade, NJ 08502. To view the Unit, please contact David Giffin at (908) 281-0331 or counsel for CMI, listed below. All bidders shall be deemed to acknowledge that they have had the opportunity to examine and review the Picker Vista Unit prior to making offers, and that they rely solely upon their own independent review, investigation and inspection of the Unit in making offers. No bidder shall be entitled to make any claim against CMI or its bankruptcy estate for such bidder's fees, expenses or costs, or to assert any claim that it is entitled to any payment or claim by reason of its having made a bid or participated in the auction. Bidders interested in making bids must adhere to the Auction Procedures approved in the Order to Show Cause. All parties interested in making bids should contact either (i) CMI's counsel, Alec P. Ostrow, Esq., or Gary I. Selinger, Esq., Salomon Green & Ostrow, P.C., 485 Madison Avenue, New York, New York 10022, (212) 319-8500, or (ii) CMI's financial advisors, Loeb Partners Corporation, 61 Broadway, New York, New York 10006, attention: Harvey L. Tepner and Bruce Kaufman, and should appear at the hearing on October 17. CYPRESS HILLS: Cemetery Files For Bankruptcy Protection To Stall Lawsuits ------------------------------------------------------------------------- A day before settling a $1.1 million lawsuit, Cypress Hills Cemetery filed for Chapter 11 bankruptcy protection, the New York Times reports. On Sept. 19 that Lester Lazarus placed the 152-year-old cemetery into bankruptcy, saying, "We felt the potential loss from the various suits could be so great that it could make it impossible for them to operate." The lawsuits relate to complaints by relatives that their departed loved ones were commingled with a pile of construction rubble and refuse. Cypress Hills lists assets of $9 million and $2.4 million of debts in its bankruptcy petition. Those debts include $864,000 for various court- ordered disinterments. Lazarus added that $6.6 million of assets are in trust and can only be used for caring for the graves. DICKINSON THEATRES: Mission Bank Extends $1.2 Million DIP Financing Package --------------------------------------------------------------------------- Dickinson Theatres, Inc., The Kansas City Star reports, obtained bankruptcy court approval of a debtor-in-possession financing package. The DIP Facility, backed by Mission Bank, will provide $1.2 million of financing to fund on-going working capital needs. The Company told the Court that it had no cash available at the time of its bankruptcy filing. Dickinson lead attorney, Paul Hoffmann says, "This is a one-time shot in the arm to get (Dickinson) to the fourth quarter, which historically is a strong period." The financing will be used primarily for: a) To repay a $275,000 emergency loan Mission Bank had made to Dickinson on Sept. 29; b) To set up a $125,000 tax escrow account; c) To provide $775,000 to pay critical costs, including film rentals, advertising costs, payroll, and mortgage and lease payments. Dickinson Theatres filed for bankruptcy protection under Chapter 11 in Topeka. The company listed assets amounting to $ 58 million and over debts of $ 42 million, announced it intends to repay in full all of the creditors, both secured and unsecured. DIMAC HOLDINGS: Seeks to Extend 365(d)(4) Deadline to Plan's Effective Date --------------------------------------------------------------------------- The debtors seek court approval of an extension of the time within which they may assume or reject unexpired leases of nonresidential real property. As of the Commencement Date, the debtors were lessees under 44 leases, and the annualized rental obligations under the leases was approximately $6.2 million. The unexpired leases will be a key component of the debtors' reorganization. The debtors request entry of an order further extending the period during which the debtors may reject or assume leases to the effective date of a Chapter 11 plan of reorganization confirmed in these cases. The debtors expect to file their Chapter 11 plan with the court in the next few weeks, and anticipate obtaining confirmation of the plan before year-end. A hearing on the motion will be held on October 13, 2000 before the Honorable Mary F. Walrath, US Bankruptcy Court, District of Delaware. EAGLE PRECISION: Q1 Loss Narrows as Brantford, Ontario, Unit Shows Profits -------------------------------------------------------------------------- Eagle Precision Technologies Inc. reports that sales for the first quarter ended May 31, 2000 were $26.9 million versus $25.2 million during the same period last year. Net loss for the quarter was $954,000, compared to a net loss of $4.4 million for the same period last year. The company has seen considerable change in the last six months. The focus of this change has been primarily on the Brantford, Ont., facility since the company filed for protection from its creditors under the Companies Creditor's Arrangement Act in November, 1999. The Brantford location returned to profitability for the first quarter of fiscal 2001, however, operations in California and the United Kingdom showed losses for the same period. As part of the restructuring for the future, management has decided to move the manufacture of mid-range benders from its California operation to Brantford. This will reduce overhead spending and administrative costs in California with an anticipated return to profitability of this operation by the fourth quarter. The move required the rationalization of approximately 40 employees at the Carlsbad facility. The consolidated sales order backlog at the end of the first quarter was $38.0-million compared with $34.5-million in the same period in fiscal 2000. Much of the increase in backlog is in Burger GmbH, the subsidiary in Germany. FRANCHISE MORTGAGE: S&P Places Loan Servicer Rating On Watch Negative --------------------------------------------------------------------- Standard & Poor's placed Franchise Mortgage Acceptance Co.'s (FMAC) Above Average franchise loan servicer ranking on CreditWatch with negative implications. FMAC is a subsidiary of Bay View Bank N.A., whose parent company is Bay View Capital Corp. This CreditWatch placement follows the recent lowering of Bay View Bank's credit rating on Oct. 3, 2000, to single-'B'-minus on CreditWatch with negative implications, from double-'B'. At the same time, Bay View Capital Corp.'s credit rating was lowered to triple-'C'-minus from double-'B'- minus, and placed on CreditWatch with negative implications. However, the FMAC servicer ranking action is based on the credit rating of the bank, not the parent holding company. This is due to the particular circumstances surrounding the parent holding company's lowered rating. The bank and parent company remain above the regulatory "well-capitalized" level. It is unlikely that the bank will be further affected by the parent company's situation, at least in the near term. Bay View Capital Corp. has recently announced a cessation of FMAC's loan origination activities. The servicer ranking CreditWatch action is due to the lower credit rating and CreditWatch action on the bank, rather than to any known deterioration detected in FMAC's servicing capabilities. Standard & Poor's continues to closely monitor the quality of FMAC's servicing operation.--CreditWire FREEINTERNET.COM: Another Dot.Com Files Chapter 11 in Seattle, Washington ------------------------------------------------------------------------- Freeinternet.com announced that it filed Chapter 11 bankruptcy with the Federal District Court, Western District of Washington, at Seattle. Freeinternet.com registered users, totaling over 3.2 million nationwide, will experience absolutely no interruption of service. News regarding continued service to the users will be displayed on the freeinternet.com Web site in the near future. FREEINTERNET.COM: Assets to Be Acquired by NetZero -------------------------------------------------- NetZero, Inc. (Nasdaq:NZRO), a leading provider of advertising- and commerce-supported Internet access, announced that it has signed a non- binding letter of intent to acquire certain assets of FreeI Networks, Inc., a national provider of free Internet access. FreeI Networks, Inc., which is also known as Freeinternet.com, filed for protection under Chapter 11 of the United States Bankruptcy Code. The terms of the proposed transaction were not disclosed. The closing of the transaction is subject to a number of closing conditions, including the execution of definitive agreements and approval of the transaction by the bankruptcy court. One goal of the transaction is to ensure Freeinternet.com users experience no interruptions in service. It is expected that users will be referred to NetZero's service, and will be able to keep their current email address. Freeinternet.com launched service in December 1998 in the Seattle metropolitan area and expanded to five major metropolitan areas in May 1999. In October 1999, the company launched service in all 50 states and currently serves users in cities throughout North America. "Our intent is to provide maximum continuity for Freeinternet.com users. NetZero intends to help Freeinternet.com users transition as smoothly as possible so they can continue to enjoy the benefits of free Internet access and e-mail," said Mark R. Goldston, Chairman and CEO, NetZero. About NetZero, Inc. NetZero, Inc. is a leading provider of advertising- and commerce-supported Internet access offering a broad range of interactive marketing, research and measurement solutions. NetZero offers consumers free access to the Internet, free e-mail and customizable navigation tools that provide "speed dial" to key sites on the Internet. Through proprietary technologies, NetZero offers advertisers unique targeting capabilities through numerous online advertising and sponsorship channels. The company's CyberTarget division offers marketers and advertisers mass-scale, online market research and measurement services. NetZero is a Cisco Powered Network, providing its access services to over 5 million registered users in more than 4,000 cities across North America. For more information, please visit www.netzero.net. To obtain a CD, please call 800/DEFENDER. GENEVA STEEL: Utah Steel Firm Optimistic Chapter 11 Plan Will Be Approved ------------------------------------------------------------------------- After filing for bankruptcy last year, New Steel relates that Geneva Steel might finally come out from the mires of bankruptcy. A hearing will be held on Oct. 13, for the confirmation of its reorganization plan that was submitted in July. Creditors, bondholders and stockholders will submit votes whether to accept the plan. "The judge will receive the results of the balloting, and we fully expect he will confirm our plan," Ken Johnsen, Geneva's executive vice president told New Steel. "We're in good shape." Vineyard, Utah-based Geneva will be closing in on three financial plans, including a $110 million loan from Emergency Steel Loan Guarantee Program. They would also get a $125 million revolving credit line and a $25 million stock-equity offering. "At that point, we'll be out of bankruptcy," Johnsen says. "It should be the end of October or the first part of November." GRAND UNION: Never File for Bankruptcy the Third Time ----------------------------------------------------- The Mergers and Acquisitions reports that this might be it for The Grand Union Co., which is now on its third filing for bankruptcy protection. An unnamed analyst said, "They are going to have a very difficult time selling the company. If they don't, that's it," according to an unnamed analyst. "At the end of the day, they're probably going to slice and dice the company," he added. Stated in its recent filing, Grand Union is already in talks with potential buyers. Having no deadlines yet, Grand Union spokeswoman related that they intend to complete the sale ASAP. CFO Jeffrey Freimark didn't respond to M&A's requests for comment. Suffering from a mountain of debt, Wayne, N.J.-based Grand Union files its third Chapter 11 in under five years. The grocery chain filed first in 1995, and in 1998 for having a load of debt. The company having Merrill Lynch on its back, listed liabilities of $ 804 million over assets of $ 750 million. HEILIG-MEYERS: Akin Gump Approved as Committee Counsel ------------------------------------------------------ The US Bankruptcy Court, Eastern District of Virginia entered an order authorizing the Official Committee of Unsecured Creditors of Heilig-Meyer to retain Akin, Gump, Strauss, Hauer & Feld LLP as its lead counsel, nunc pro tunc to August 17, 2000. HEILIG-MEYERS: Equity Committee Retains Navigant as Financial Advisor --------------------------------------------------------------------- The Official Committee of Equity Security Holders of Heilig-Meyers Company and its affiliated debtors seek court authorization to employ Navigant Consulting, Inc. as accountant and financial advisor to the Committee. The services which the Committee may require of the firm include, without limitation: a) Assessment of the debtors' post-petition and pre-confirmation financial condition; b) Valuation of the reorganized debtors and assessment of their ability to pay pre-petition debts; c) Evaluation and response to debtors' motions to assume and/or reject leases and/or sell company-owned real estate; d) Evaluation of liquidation analysis prepared by the debtors or Creditors' Committee; e) Evaluation and response to plans of reorganization proposed by the debtors or Creditors' Committee; f) Provide assistance to the Committee with negotiations regarding material financial or business matters that would impact shareholder value; g) Other financial analyses and/or investigations required to enable the Committee to make informed decisions regarding the strategic direction of the case; h) Provide expert testimony, as required. The firm will charge by the hour: Accountant Hourly Rate ---------- ----------- Kenneth Malek $325 Guy A. Davis $215 Suzanne B. Roski $215 Other staff $75 to $195 HILLSBOROUGH RESOURCES: Sees Light at the End of the CCAA Protection Tunnel --------------------------------------------------------------------------- Hillsborough Resources Limited ("TSE - HLB") announced that: - At a special shareholders' meeting held on September 21, 2000, disinterested shareholders overwhelmingly approved the re-financing plan and associated warrant issue by which Belkin Enterprises Ltd. ("Belkin") a major shareholder of the Company will acquire from Northgate Exploration Ltd. The $3.1 Million (approximately) secured term loan owing by Quinsam Coal Corporation. - At the second general meeting of creditors of Quinsam Coal Corporation also held on September 21, 2000, creditors approved a revised plan of arrangement allowing them to receive up to 25% of the excess cash flow of Quinsam for a period of three years to a maximum of 20% of proven claims. - Also, on October 5, 2000 the Toronto Stock Exchange ("TSE") approved, subject to receipt of executed documents and payment of the listing fee, the issuance to Belkin of a 5 year warrant to purchase 4,000,000 shares in Hillsborough at a price of 36 cents per share as well as the conversion, at 36 cents per share of any unpaid debt due to Belkin on October 31, 2000 under its convertible debenture. However, Management expects that the debenture will be repaid in full prior to October 31, 2000 from its own cash resources as well as a refinancing of its operating loan to Quinsam Coal. - In the light of the above, the BC Supreme Court on October 5, 2000 approved a plan of arrangement in respect of Quinsam, and subject to implementation of the plan, directed that the outstanding protective orders under the Companies Creditors Arrangement Act in respect of Hillsborough and Quinsam be lifted. - The transactions necessary to implement Quinsam's plan of arrangement were implemented, including: - the acquisition by Belkin of the Northgate term loan and the execution of amendments to the loan agreement extending the maturity date. - the payment by Hillsborough to Belkin of $4.0 Million on account of the amount due under the $5.0 Million convertible debenture and the execution of an agreement amending the conversion terms. - the issuance to Belkin of a warrant to purchase 4.0 Million shares at $0.36 per share. Hillsborough President and CEO, David Slater said: "The events of the last few weeks, culminating in Hillsborough and Quinsam coming out of CCAA protection are significant in the history of the Company. The Companies are now ready to move on to better things, including taking advantage of what is now a much more robust coal market. As well, Hillsborough is in active discussions with several owners of coal resources with a view to exploiting Quinsam's high level of expertise in underground room-and-pillar mining techniques. A great weight has been lifted from your Company's shoulders. I wish to applaud all of our employees for the last sixteen months of stress filled hard work and dedication to the job at hand." HOGIL PHARMACEUTICAL: Court to Consider Disclosure Statement on Oct. 18 ----------------------------------------------------------------------- The US Bankruptcy Court, Southern District of New York has fixed October 18, 2000 at 10:00 AM as the time and place at which a telephonic hearing will be held before the Honorable John J. Connelly, to consider approval of the amended disclosure statement filed by Hogil Pharmaceutical Corp. on September 21, 2000. A confirmation hearing has been set for November 21, 2000 at 10:00 AM. The funding of all payments under the plan shall be made from three sources: i) the debtor's operations, ii) the Wendy Investment Vehicle and iii) the Refinancing. On the Effective Date, the Wendy Investment Vehicle shall contribute funds to Hogil, pursuant to the Wendy Investment Vehicle Contribution, in an amount sufficient to make the cash in the reorganized debtor on the Effective Date equal to $1 million. In exchange for the Wendy Investment Vehicle Contribution, the Wendy Investment Vehicle shall receive 100% of the New Common Stock in the reorganized debtor. J.C. PENNY: Fitch Cuts Ratings on $7.7 Billion of Debt to BBB- -------------------------------------------------------------- J. C. Penney Co., Inc.`s (Penney) $5.7 billion senior debt and $2.0 billion senior debt shelf registration are lowered to `BBB-` from `BBB` by Fitch following the company`s announcement that third quarter operating results and fiscal 2000 as well will be down significantly from expected levels. At the same time the rating on J.C. Penney Funding Corp.`s 4(2) commercial paper program is lowered to `F3` from `F2`. The ratings are placed on Rating Watch Negative given the negative operating trends and the uncertainty regarding longer-term operating and strategic plans. The rating actions reflect the continued weakness at Penney`s department stores and Eckerd drugstore operations. Comparable store sales for the department stores have not improved as anticipated, but instead have decreased 3.0% in the first eight months of fiscal 2000. While some of the sales weakness can be attributed to the overall weak retail environment, the company`s department stores are also suffering from the lagging effect of old merchandising strategies. Eckerd`s sales and operating performance is also weaker than expected due to slow sales of high-margin front-end merchandise, coupled with increased promotions. Despite the closure of nearly 300 underperforming drugstores earlier in the year, the drugstores face ongoing operational difficulties. In an effort to improve performance, the department stores have centralized their buying operations and both business segments continue to refine many other operating strategies. However, Fitch does not expect benefits from the changes implemented to be evident until the second half of fiscal 2001. In light of the current operating difficulties, Fitch expects that fiscal 2000 EBITDA (earnings before interest, taxes, depreciation and amortization) is likely to be down more than 20% from the $2.0 billion generated in fiscal 1999 and that profitability margins may deteriorate as well. As a result, bondholder protection measures remain weak for investment grade. Despite nearly $800 million in debt reduction in the first half of the year, leverage (total debt plus eight times rent expense as a multiple of EBITDA + Rents) remains high at 5.1x as of July 29, 2000. Therefore, the rating action also reflects that any improvement in credit measures has been delayed well beyond year-end. The Rating Watch Negative status reflects the uncertainty regarding the company`s ability to restore operating performance to previous levels and what actions the company will implement to improve its financial posture. Fitch expects to meet with management to review any revised long-term strategic operating plans as outlined by the new CEOs of Penney and its Eckerd operation in response to the current environment. NU-KOTE HOLDING: Plan Offers Unsecured Creditors Roughly 20% Recovery --------------------------------------------------------------------- By order entered on September 13, 2000, the US Bankruptcy Court, Middle District of Tennessee approved the third amended disclosure statement for the third amended joint plan of reorganization for Nu-Kote Holding, Inc. and its affiliates. October 18, 2000 is fixed as the last day for filing written acceptances or rejections of the plan. A hearing on confirmation of the plan will be held on October 24, 2000 at 10:00 AM before the Honorable Keith M. Lundin. The plan provides for two classes of unsecured creditors. Class 3 consists of those creditors who have claims of $1500 or less. Class 4 consists of those creditors who have claims in excess of $1,500. Creditors with claims of $1,500 or less will receive a cash payment equal to 20% of their claim. Creditors with claims in excess of $1,500 will be paid a pro rata share of the sum of $600,000 and receive a beneficial interest in the Creditors' Trust established under the plan whereby they will participate in 25% of the net recoveries from causes of action. To ensure that most of the $600,000 will go to Nu-kote's trade creditors, the plan provides that Nu- Kote Acquisition Corporation will contribute its pro rata share of the $600,000 (by virtue of its $100 million unsecured claim to the trade creditors and Nu-kote has negotiated certain subordination agreements with other large creditors. The plan provides for the continuation of business of Nu-kote. All of the stock of Nu-kote will be acquired by Nu-Kote Acquisition Corporation, an entity formed by Richmont, a merchant banking partnership headquartered in Dallas. The plan is a product of cooperative effort by the debtors, the Committees and Richmont Capital Partners I, LP. PAGING NETWORK: Arch Wireless Shareholders Approve Merger Deal With PageNet --------------------------------------------------------------------------- Arch Wireless, Inc. (Nasdaq: ARCH) announced that shareholders approved the company's pending merger with Paging Network, Inc. at a special meeting of shareholders. The vote of Arch shareholders was one of the remaining approvals necessary to complete the transaction. The transaction still requires the approval of PageNet stakeholders. PageNet is currently soliciting stakeholder votes for its plan of reorganization, filed in its Chapter 11 proceeding, which implements the Arch merger. A hearing on the confirmation of the PageNet plan is scheduled for October 26, 2000. Arch and PageNet expect to consummate the plan of reorganization and merger shortly thereafter. In addition, the U.S. Bankruptcy Court for the District of Delaware yesterday denied a motion by Metrocall, Inc. to terminate exclusivity in connection with PageNet's plan of reorganization. The court also denied Metrocall's request to file a competing plan. At the hearing, representatives of PageNet's banks and noteholders again expressed their support for PageNet's plan of reorganization and the Arch merger. Arch and PageNet announced their merger agreement last November. The merger, which will include an exchange of Arch common stock for PageNet's senior subordinated notes as well as a spin-off to PageNet's noteholders of 80.5% of the stock of PageNet's wireless solutions subsidiary, Vast Solutions, remains subject to approval by PageNet's secured and unsecured creditors and the bankruptcy court. PageNet is a leading provider of wireless messaging and information services in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and Canada. The company offers a full range of messaging services, including two-way wireless e-mail. PageNet's wholly- owned subsidiary, Vast Solutions, develops integrated wireless solutions to increase productivity and improve performance for major corporations. Additional information about PageNet and Vast is available on the Internet at www.pagenet.com and www.vast.com. Arch Wireless, Inc., Westborough, MA, is a leading U.S. Internet messaging and wireless information company providing local, regional and nationwide wireless communications services to customers in all 50 states, the District of Columbia and in the Caribbean. Arch operates through sales offices and company-owned stores across the country. Additional information about Arch is available on the Internet at www.arch.com. Arch Wireless, Inc. has filed with the U.S. Securities and Exchange Commission a registration statement on Form S-4 in connection with the debt exchange being undertaken in connection with the merger (File No. 333- 93321) and has filed definitive proxy materials containing information about the merger. Investors and security holders are urged to read the registration statement and the definitive proxy materials carefully. The registration statement and the proxy materials contain important information about Arch Wireless, Inc., Paging Network, Inc., the merger and related matters. Investors and security holders are able to obtain free copies of these documents through the web site maintained by the Securities and Exchange Commission at http//www.sec.gov. In addition to the registration statement and the proxy materials, Arch Wireless, Inc. and Paging Network, Inc. file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements and other information filed by them at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the Commission's other public reference rooms in New York, NY and Chicago, IL. Please call the Commission at 1-800-SEC-0330 for further information on public reference rooms. These filings with the Commission also are available to the public from commercial document-retrieval services and at the web site maintained by the Commission at http//www.sec.gov. You may also obtain for free each of these documents, when available, from Arch Wireless, Inc. at (508) 870- 6700 or write to: Investor Relations Department, Arch Wireless, Inc., 1800 West Park Drive, Suite 250, Westborough, MA 01581. PAGING NETWORK: Metrocall Renews Pitch to Terminate Exclusivity --------------------------------------------------------------- Metrocall, Inc., through its attorneys, Pachulski, Stang, Ziehl, Young & Jones, PC and Schulte Roth & Zabel LLP submit a renewed, amended and restated motion seeking to terminate the exclusive periods within which PageNet can propose a reorganization and solicit acceptances thereof. Metrocall seeks a court hearing on October 25, 2000 for approval of Metrocall's Disclosure Statement provided Metrocall files its Disclosure Statement, the Metrocall Plan and its merger agreement on or before October 9, 2000. Metrocall says the time has come to "put up or shut up." The sources of cash for the Metrocall Plan include the following: a) Proceeds from the sale of certain of PageNet's SMR licenses for a purchase price of $175 million; b) proceeds of equity investments in New Metrocall in the aggregate amount of $105 million; c) proceeds from the sale of certain senior unsecured notes in the aggregate amount of $57 million and commitments from certain of Metrocall's existing secured lenders and from DLJ Securities Corp. to provide the necessary funding for New Metrocall's consolidated bank facility. Metrocall believes that the court should terminate exclusivity not only because the Metrocall Plan is confirmable and offers superior consideration to creditors, but because PageNet's amended plan is unconfirmable and will cause a considerable delay to be "fixed." Metrocall recognizes that it faces an enormous challenge in convincing the PageNet banks and the Creditors' Committee to support this amended motion. The Committee has taken an oath to support the PageNet plan. However, according to Metrocall, PageNet's amended plan now requires a principal payment of $110 million to be made to the PageNet/Arch Banks on or before the first anniversary of the Effective Date, but provides no assurance that reorganized Arch/PageNet will be capable of making such payment. Metrocall points out that PageNet's recent plan amendments requiring post-effective date asset sales violate the Federal Communications Act. Metrocall also states that PageNet's plan improperly classifies general unsecured creditors, improperly effects a substantive consolidation, improperly designates and treats certain general unsecured creditors and improperly grants PageNet insiders and others a release. PageNet's Amended Plan is not feasible because one-year pro forma projections are insufficient to demonstrate financial stability and the plan fails to provide a separate liquidation analysis for each debtor. SJI WHOLESALE: Cigars Distributor Files Chapter 11 Petition In Tennessee ------------------------------------------------------------------------ iCommerce Group, Inc. (OTC:ICGI) reported that its wholly owned subsidiary, SJI Wholesale, Inc., has voluntarily filed a Chapter 11 Bankruptcy petition and will reorganize its business. The filing was made in the United States Bankruptcy Court for the Eastern District of Tennessee, Knoxville. The Company noted that its SJI Wholesale subsidiary plans to continue to operate its business, including shipping to and servicing its customers. iCommerce Group, through its subsidiaries is involved in the Dominican Republic in the development of an Industrial Park (Free Trade Zone) and the operation of a cigar manufacturing facility. In the U.S. its subsidiary SJI Wholesale is involved in the distribution of cigars direct to consumers via the Internet and mail order and on a wholesale basis to retail tobacco shops. The Company has distributors in Germany, South Africa, Ukraine, Nova Scotia, Philippines, Ireland, Antigua, Australia, Estonia, Lithuania, Cyprus, China, and Israel. For more information regarding iCommerce Group, Inc. visit the Company's Web site at http://www.i-cgi.com SOUTHERN ENERGY: Fitch Lowers Rating on Senior Notes to BBB ----------------------------------------------------------- Fitch has lowered the long-term senior credit rating of Southern Energy, Inc. (SEI) to reflect the sale to the public of a 19.6% interest in SEI and the anticipated full divestiture of SEI within 12 months thereafter by its parent, Southern Company (Southern or SO). SEI`s senior notes are downgraded to `BBB` from `BBB+`, and the short-term commercial paper rating of `F2` is affirmed. These ratings are removed from Rating Watch Negative, and the rating outlook of SEI is now stable. Fitch also established a rating of `BBB-` for SEI Trust I`s $335 million offering of 6.25% trust convertible preferred securities backed by a like amount of SEI junior subordinated deferrable debentures. SEI`s credit standing is now evaluated independently from that of Southern; the new ratings no longer reflect any implied parental financial support, despite SO`s continuing controlling ownership in its subsidiary until the full spin-off assumed to occur within one year. Today`s actions do not affect Fitch`s ratings of Southern (implied senior debt rating `A`) or any of SO`s other subsidiaries. SEI, currently 80% owned by Southern, is a competitive provider of electricity and energy-related products and services. SEI owns and operates electric power plants (12,652 net MW owned and 11,212 MW under advanced development or in the process of acquisition in the Americas, Europe, and Asia.) Through its wholly owned subsidiary Southern Company Energy Marketing L.P. (SCEM), SEI markets electricity, gas, energy-linked commodities and risk-management products. SEI owns interests in electric and water utilities in Europe (UK and Germany) and electric utilities in Caribbean and South America. SEI`s investment-grade credit rating now rests upon SEI`s strong and diverse asset portfolio within the global electric power and gas business and the portfolio`s ability to produce cash dividends and distributions that are ample to service the limited amount of SEI corporate recourse debt. SEI`s revised ratings take into consideration the company`s highly diversified asset base in terms of geography, sovereign risk, business risk, fuel source and the mix of operating assets and development assets. In addition, SEI benefits from significant levels of contractual and franchise cash flows balancing merchant cash flows, an increasing focus on North American markets, and low reliance on any one project or business unit for a disproportionate amount of cash flow. Expected dividends from the US, UK, and other `AAA` rated sovereign jurisdictions comprise roughly 60% of expected cash available to service SEI corporate debt. To support SEI`s growing investment in merchant electric power generation assets, the company has built a significant gas and power marketing and trading capability in its affiliate SCEM. SCEM is ranked among the top 10 U.S. electricity and gas wholesale traders. In Sept. 2000 SEI bought out Vastar`s 40% interest in SCEM and increased its ownership to 100%, thereby increasing the ability to integrate SCEM into SEI`s business strategies and to maximize the profitability of the entire SEI portfolio. Fitch has reviewed control procedures, systems, and risk management policies and practices at SCEM and is satisfied with the management of these risks. Various credit concerns arise from SEI`s business in rapidly changing power and gas markets, its growth strategy, and the structural subordination of holding company debt. SEI`s cash flows are derived from upstream dividends or distributions from subsidiaries, some of which are in other countries. Most subsidiaries have individual debt, so SEI can receive cash from subsidiaries only after the debt service of direct obligations and operating expenses of subsidiaries. Some subsidiaries are development-stage companies with high leverage and are unlikely to pay dividends initially. The majority of SEI`s holdings are controlling interests, but some investments are minority interests in which the company has less control over dividends and other policies. For the next several years, nearly a third of dividends and distributions available to serve SEI corporate debt derive from several contractually-based power projects in China and the Philippines. Political, legal and sovereign risks associated with these jurisdictions are offset in part by the economic advantages of the projects` production to energy supply in each of these nations. Also, many of SEI`s electric generating assets, and in particular the roughly 8,000 net MW`s of coal-fired generating capacity, are potentially subject to higher costs or capital spending requirements in future to meet changes in environmental laws and regulations or changes in the application of existing regulations. SEI has planned for a high degree of financial flexibility at the parent level to balance the risks cited above and establish a good financial foundation for growth. SEI will have ample liquidity after receiving the proceeds of the common stock offering and issuance of SEI Trust I securities. Proceeds of approximately $1.8 billion will be used to reduce outstanding commercial paper and drawings under bank bridge facilities and to build cash reserves, leaving over $1 billion in unused committed bank facilities to meet future needs, including investments and working capital needs of SEI and its subsidiaries. The company projects that its transitional contract to supply power to Potomac Electric Power at prices below market may produce losses estimated at up to $1 billion over five years; SEI has decided to prefund with cash approximately 18 months of estimated requirements and maintain committed credit for the balance, providing added liquidity assurance. Although SEI has paid dividends to SO in the recent past, no further common dividends will be paid to SO, and SEI plans to retain all of its earnings to provide equity funding for future growth without increasing debt leverage. While total consolidated debt of SEI and its subsidiaries is under 65% of consolidated capitalization in 2001, SEI`s corporate debt is relatively small. Total corporate debt of SEI (including subordinated debt) is estimated to be $1.15 billion at the beginning of 2001, while total non- recourse debt and leases of consolidated subsidiaries is nearly $7 billion and total consolidated capitalization including subsidiary debt is $12.3 billion. The ratio of consolidated cash from operations to consolidated interest expense is estimated at over 3 times in 2001, while cash available to SEI to service corporate debt is estimated at 5 times interest on total corporate debt. STROUDS, INC.: Judge Walrath Approves Brincko Associates' Employment -------------------------------------------------------------------- By order entered on September 28, 2000, US Bankruptcy Judge Mary F. Walrath authorized Strouds, Inc. to employ Brincko Associates Inc. as its financial restructuring consultant, effective as of September 7, 2000. STROUDS, INC.: Linen Retailer Says it Will Cut 50 Jobs at Headquarters ---------------------------------------------------------------------- The Plain Dealer reports that Strouds, Inc., a bed and bath linen retailer which filed for bankruptcy protection last month, will lay-off 29% of its work force. It needs to cut 50 jobs in order to reduce costs and reorganize its business. The company employs 170 workers and jobs will be cut at Stroud's headquarters and its distribution center, spokeswoman Ann Julsen said. SURETY MUTUAL: S&P Affirms Insurer's Bpi Financial Strength Rating ------------------------------------------------------------------ Standard & Poor's today affirmed its single-'Bpi' financial strength rating on Surety Mutual Life & Casualty Co. The rating is based on the company's aggressive investment portfolio, high product-line and geographic concentration, as well as poor and volatile earnings, offset somewhat by its currently strong capitalization. Based in Fargo, N.D., this company writes mainly individual accident and health. The company is licensed only in North Dakota, where it derives 97% of its total revenue. The company began operations in 1936. Major Rating Factors: -- Although the capital ratio is strong, the company is somewhat aggressive with respect to risk assets as a percent of capital (55.8%). The largest class of risk assets is $0.1 million in unaffiliated preferred stocks, representing 29.7% of total adjusted capital. -- The company has high geographic and product-line concentration, with 97% of its business in North Dakota and more than 95% of its direct business in accident and health related lines. -- Operating performance has been weak, with a five-year average return on assets of negative 1.9% and a five-year average ROR of negative 6.4%. Since 1995, ROR has varied from negative 20.6% to positive 2.2%. -- Revenue growth has been modest. Net premiums written declined 1.0% in 1998 and then increased 2.3% in 1999, to $0.4 million. The company (NAIC: 69329) is rated on a stand-alone basis and is not a member of any insurance group. TOKHEIM CORPORATION: Court Confirms Prepackage Financial Restructuring Plan --------------------------------------------------------------------------- Tokheim Corporation (OTCBB:TOKM) announced that its previously announced prepackaged financial restructuring plan under Chapter 11 has been confirmed by the United States Bankruptcy Court for the District of Delaware. Confirmation comes only 38 days after Tokheim filed its prepackaged restructuring plan with the Court. Douglas K. Pinner, Chairman, President and Chief Executive Officer, stated: "This is the most important date in the life of the new Tokheim Corporation. The restructuring and recapitalization has significantly reduced the outstanding debt of the old Company and has provided $48 million in new credit facilities. With the restructuring behind us, the new Tokheim is now positioned to capitalize on its technological superiority and thus reinforce its leadership position in the industry. "We are very appreciative of the strong support provided by our customers, suppliers, employees and advisors throughout the restructuring period, which has enabled the Company's prepackaged restructuring plan to be confirmed on an accelerated timetable. We believe we will demonstrate that such support was fully warranted by maintaining and enhancing our strong business and market leadership position going forward." The Company's current management will continue to lead the newly reorganized company. A new Board of Directors will be announced shortly with Douglas K. Pinner, President and Chief Executive Officer, continuing to serve as Chairman of the Board. Cancellation of existing common stock and distribution of warrants to previous shareholders and distributions of new common stock to bondholders, as outlined in the Plan of Reorganization, are expected to begin shortly. Tokheim, based in Fort Wayne, Indiana is the world's largest producer of petroleum dispensing devices. Tokheim Corporation manufactures and services electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (such as point-of-sale systems), dispenser payment or "pay-at-the-pump" terminals, replacement pats, and upgrade kits. VIDEO UPDATE: Proposes Key Employee Retention Program ----------------------------------------------------- The debtors, Video Update, Inc., et al. seeks court authority to implement an Employee Retention Program. A hearing on the motion will be held before the Honorable Peter J. Walsh, US Bankruptcy Court on October 20, 2000 at 3:00 PM. The proposed Employee Retention Program includes both an immediate cash "stay bonus" component as well as a twelve month retention bonus component to help the debtors meet their principal objective of formulating, proposing and confirming a Chapter 11 plan which satisfies the companies' future working capital needs, while maximizing the return to creditors. The Employee Retention Program includes approximately 150 of the debtors' 6000 employees. Under the program, eligible employees will receive a stay- on bonus ranging from 25% to 150% of their existing annualized salary payable upon entry of an order approving the program. In addition, employees will receive a Retention Bonus, payable quarterly, ranging from 50%-250% of their existing annualized salary. Six Senior management employees will receive a stay on bonus ranging from $49,350 to $540,000 and a retention bonus (quarterly) ranging from $24,675-$225,000. Thirteen middle management employees will receive a stay on bonus ranging from $11,250-$27,000. They will receive a retention bonus (quarterly) from $5,625-$13,500. 140 Regional and District managers will receive a $500,000 retention bonus to be paid based upon employee performance. WABASH LIFE: S&P Affirms Insurer's Bbpi Financial Strength Rating ----------------------------------------------------------------- Standard & Poor's affirmed its double-'Bpi' financial strength rating on Wabash Life Insurance Co. (Wabash Life). The rating is based on weak capital adequacy, low liquidity, as well as investment and operating volatility. Based in Carmel, Ind., this company mainly writes individual life and individual accident and health, with a specialization in whole life. It is an indirect, wholly owned subsidiary of Conseco Inc. (counterparty credit rating double-'B'-minus), a publicly traded (NYSE: CNC) financial services holding company offering insurance, investment and lending products which had $58 billion in assets as of June 2000. Wabash Life is geographically well diversified, with its major states of operation: Texas, Kansas, Ohio, Illinois, and Florida constituting just 46% of the company's business. The company, which began operations in 1980, is licensed in 34 states and the District of Columbia. Major Rating Factors: -- Wabash Life has a significant portion of its capital in surplus debentures issued to its parent, CIHC, Inc. In addition, loan-backed bonds and CMOs account for 21.7% of invested assets. The company's resulting capital adequacy ratio is viewed as less than secure. -- Total adjusted capital was $241.2 million at year-end 1999 versus $243.4 million in 1998, a decrease of 0.9%. Surplus, however, increased by $1.8 million from 1998. The increase came primarily from $38.4 million in net income, offset by $22.5 million in dividends to stockholders, a $13.7 million rise in net unrealized capital losses, and a negative $0.3 million change in valuation reserves. -- The company's liquidity ratio of 89.3%, in conjunction with historical instability in premiums, is a rating factor. -- The company's investment risk profile, as measured by historical yield volatility and the relative yield indices, is somewhat more aggressive than that of its peers. -- The company's (NAIC: 92436) historical return on assets displays high volatility, which in the context of a low two-year average ratio of cash inflows to cash outflows (43%) is a rating factor. A drop in net income of $22.9 million in 1999 over 1998 was caused mainly by a decline of $28.3 million, or 39%, in net investment income. ********* 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. 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