/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/001013.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 13, 2000, Vol. 4, No. 201 Headlines AMERICAN AIRCARRIERS: Pegasus Investment Delay Causes Bank Loan Default BABCOCK & WILCOX: Court to Consider Second Exclusivity Extension CARROLS CORP: Moody's Puts All Ratings Under Review For Possible Downgrade CROWN CRAFTS: Mohawk Industries Purchases Woven Products Business for $40MM CROWN CRAFTS: 1Q Financial Results Reflect Poor Sales and On-Going Losses FACTORY CARD: FCO Acquisition Pact Paves Way for Emergence from Chapter 11 GAZOONTITE.COM: Asthma and Allergy Products Retailer Files Chapter 11 GC COMPANIES: Theater Operator and Subsidiaries Files for Chapter 11 GC COMPANIES: Case Summary and 30 Largest Unsecured Creditors GC COMPANIES: Harcourt General Takes $100MM on Account of Lease Liabilities GC COMPANIES: NYSE Evaluates Theater Operator's Shares for Trading GENESIS/MULTICARE: Genesis Selling Vacant Land in Florida for $261,000 HARNISCHFEGER INDUSTRIES: Finalizes Sale of Beloit Australia Shares KMART CORPORATION: Vice Chairman Michael Bozic to Leave Post on Oct. 31 LAIDLAW, INC.: Extends Noteholder Solicitation Deadline to 5:00 p.m. Today LEVITZ FURNITURE: Hilco & Professional Sales JV To Liquidate 4 Stores MARINER HEALTH: Time for Making Lease Decisions Extended to Mar. 19 NEXTWAVE: Communications Company Loses Struggle on Broadcast Licenses NOVA SCOTIA: CBRS Assigns P-2 Rating To $125MM Preferred Shares PABST BREWING: Moody's Sees Tight Liquidity and Strained Cash Flow PACIFICARE HEALTH: Moody's Places Senior Ratings On Review For Downgrade PACIFICARE HEALTH: S&P Assigns BB+ Counterparty Credit Rating & Is Watching PHILIPS INTERNATIONAL: REIT Stockholders Approve Plan to Liquidate SAFETY-KLEEN: Laidlaw Discloses Exposure To $200 Million Preference Claim SUNSHINE MINING: Confirmation Hearing Scheduled for Nov. 7 in Wilmington SUNTERRA CORPORATION: Gregory F. Rayburn from Jay Alix Named as New CEO SUN HEALTHCARE: Debtors' Motion To Divest 22 Underperforming Facilities ZIONS BANCORP: Moody's Lowers Debt Rating to Baa1 & Reviewing for Downgrade * BOOK REVIEW: The Rise and Decline of the Medici Bank, 1397 - 1494 ********* AMERICAN AIRCARRIERS: Pegasus Investment Delay Causes Bank Loan Default ----------------------------------------------------------------------- American Aircarriers Support, Incorporated (Nasdaq: AIRS) announced that, due to the delay in the closing of Pegasus Aviation's proposed investment in American Aircarriers Support, the company is currently in default of a non-financial covenant in its bank loan agreement that required an additional equity investment. American Aircarriers has received no notice or reservation of rights from its bank lenders relating to this non- financial covenant default. American Aircarriers Support is currently in over-advance status on its bank line of credit. As previously announced, Pegasus Aviation stated on July 31, 2000 that it would invest in American Aircarriers and would merge International Aero Components, a parts distribution affiliate of Pegasus Aviation, into the parts distribution unit of American Aircarriers Support. Based on discussions between American Aircarriers Support and Pegasus Aviation, the company believes that the investment by Pegasus Aviation will not be closed by October 15, 2000. American Aircarriers Support and Pegasus Aviation expect to make an announcement concerning an updated schedule with respect to this investment and acquisition as soon as possible, but in no event later than October 16, 2000. Due to the delay in closing of the Pegasus Aviation investment, American Aircarriers Support, with no additional availability under its bank line of credit, continues to be cash constrained. American Aircarriers Support is continuing to seek to reduce overhead where practical and is exploring the possibility of a sale of one of its divisions in order to provide some liquidity for operations. Except for historical information contained herein, Company statements released may include forward-looking statements and projections (including statements concerning projections and objectives of management for future operations) that are based on management's belief, as well as assumptions made by, and information currently available to, management. While American Aircarriers Support, Incorporated believes that its expectations are based upon reasonable assumptions, there can be no assurances that the Company's objectives or goals will be realized. Numerous factors (including risks and uncertainties) may affect actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company. Some of these factors include the business conditions in the aircraft services and spare parts industry and the general economy, the extensive regulatory compliance required in the aircraft repair and maintenance business, the Company's rapid growth strategy, competitive factors, inventory concentration risks, availability of inventory, expansion of services and product lines, debt financing and the ability to finance future growth and other risks or uncertainties detailed in the Company's Form 10-KSB. BABCOCK & WILCOX: Court to Consider Second Exclusivity Extension ---------------------------------------------------------------- Bankrupt Babcock & Wilcox Co., a wholly owned unit of non-bankrupt McDermott International Inc., is seeking longer plan exclusivity periods that would allow it more time to determine its exposure for asbestos claims without having to deal with competing Chapter 11 plans. The U.S. Bankruptcy Court in New Orleans is scheduled to consider the request at a hearing Wednesday. In its second request for an exclusivity extension, the New Orleans-based designer and manufacturer of industrial power generation systems is seeking to maintain the exclusive right to file a Chapter 11 plan until the date falling 90 days after the expiration of the deadline for filing asbestos claims. The exclusive plan filing period is scheduled to expire on Oct. 19. (ABI 11-Oct-00) CARROLS CORP: Moody's Puts All Ratings Under Review For Possible Downgrade -------------------------------------------------------------------------- Moody's Investors Service placed all ratings of Carrols Corporation under review for possible downgrade. Ratings under review for possible downgrade include the Ba3 rated $155 million senior secured bank facility and the B2 rated $170 million 9.5% senior subordinated notes (due 2008). The company's senior implied rating of Ba3 and issuer rating of B1 were also placed under review for possible downgrade. The review for downgrade reflects concern over Carrols' leveraged financial condition as well as Carrols' potential acquisition of Taco Cabana, Inc. Adjusted debt to EBITDAR of 5.7 times (for the twelve months ending June 30, 2000) is currently higher than we had anticipated. Carrols has done better than many other franchisees in the Burger King system at maintaining sales and operating margins, but debt protection measures are weak for the current rating category. Moody's review will consider the potential for Carrols to strengthen debt protection measures in the near term. Besides analyzing the effect of Taco Cabana (last twelve months revenue $166 million) on Carrols Corporation, Moody's review will consider operating plans going forward at the company's Pollo Tropical restaurants (last twelve months revenue $86 million) and Burger King restaurants (last twelve months revenue $378 million). Moody's will also evaluate the company's capital structure (including whether the acquired debt will be assumed or repaid as part of the transaction), liquidity resources, and effective leverage following the possible incurrance of additional debt. The review follows the announcement that Carrols intends to acquire Taco Cabana for total consideration (including assumed debt) of about $152 million, or approximately 6 times trailing twelve months EBITDA. Taco Cabana operates and franchises 126 quick service Mexican restaurants principally in the San Antonio and Austin marketplaces. Moody's understands that Carrols has arranged a bank loan to finance the transaction. Carrols Corporation, headquartered in Syracuse, New York, operates 46 Pollo Tropical quick service chicken restaurants and, as one of the largest Burger King franchisees, 354 Burger King quick service hamburger restaurants. CROWN CRAFTS: Mohawk Industries Purchases Woven Products Business for $40MM --------------------------------------------------------------------------- Crown Crafts, Inc. (NYSE: CRW), announced it signed a definitive agreement to sell its woven products business to Mohawk Industries, Inc. (NYSE: MHK). Included in the sale will be inventory, buildings, machinery and equipment at sites in Calhoun, Dalton and Chatsworth, Georgia; Blowing Rock, North Carolina; and Manchester, New Hampshire. The sale proceeds are estimated at $40 million, subject to adjustment based upon the inventory at closing, which is projected to occur before the end of the year. The woven products business has annual sales of approximately $85 million and about 600 employees, most of which will receive offers of employment from Mohawk. Michael H. Bernstein, Crown Crafts' Chief Executive Officer, stated "Selling this business was an extremely difficult decision because wovens have been the core of Crown Crafts' business for many years. However, given the changes in the textile industry, we had to consider every alternative and Mohawk's strong manufacturing position will enable them to leverage the value of these assets. We will work with Mohawk to ensure a smooth transition for our employees, customers, and suppliers. Although we expect to incur a book loss of approximately $10 million on the sale, this transaction will enable us to make a substantial reduction in our debt and restructure the remaining businesses to restore profitability." Crown Crafts, Inc., headquartered in Atlanta, Georgia, designs, manufactures, and markets a broad line of home textile furnishings and accessories. The Company's three major product groups are bedroom products, throws and decorative home accessories, and infant and juvenile products. CROWN CRAFTS: 1Q Financial Results Reflect Poor Sales and On-Going Losses ------------------------------------------------------------------------- Crown Crafts, Inc. (NYSE: CRW), announced financial results for the fiscal 2001 first quarter, which ended July 2, 2000. First-quarter net sales decreased 11.5% to $58.2 million in fiscal 2001 from the $65.8 million in the first quarter last fiscal year. The Company recorded losses during the quarter, primarily due to the decrease in sales, lower margins, and closeout sales of merchandise consistent with its goal of reducing inventory and exiting the Studio adult bedding business. Fiscal 2001 first quarter's net loss was $10.9 million. In the first quarter of 2000 the Company reported a net loss of $3.8 million. Commenting on the results, Michael H. Bernstein, Crown Crafts' Chief Executive Officer, stated, "The first fiscal quarter is always difficult as it is the seasonal low, but results this year are even worse as we reposition the business to restore profitability. For example, sales of close-out inventories reduced margins by over 7%. The net loss would be $3.7 million less but we can't recognize any tax loss benefit until we return to profitability. Although we have implemented significant cost reductions, the impact will not be apparent until the second quarter, ending October 1, 2000. As bad as the results are, we can assure you that Crown Crafts' results from operations have bottomed out and should show significant improvement in succeeding quarters." FACTORY CARD: FCO Acquisition Pact Paves Way for Emergence from Chapter 11 -------------------------------------------------------------------------- Factory Card Outlet Corp. (FCPYQ) announced that the Company and the Creditors' Committee appointed in its Chapter 11 case have entered into a non-binding letter of intent with FCO Acquisition Corp. (FCOAC) regarding a potential transaction which would provide the Company with funding to enable it to emerge from Chapter 11. The letter of intent is subject to, among other things, the completion of due diligence, the execution of definitive documentation, and confirmation of a plan of reorganization that would have to be voted upon by creditors. The letter of intent outlines the general terms of a transaction and plan of reorganization in which FCOAC would invest $8 to $12 million in equity and subordinated debt. FCOAC would receive notes and at least 85% of the common stock of the Company upon its emergence from Chapter 11. General unsecured creditors, whose claims are estimated to approximate $43 million, would receive a total cash distribution approximating $6 million and notes in the aggregate amount of $10 million. Both the cash distribution and the note would be subject to downward adjustment under certain circumstances. Because the proposal would not result in creditors recovering the full amount of their claims, the letter of intent does not contemplate holders of the Company's outstanding common stock receiving any distribution. Consequently the existing stock would be cancelled. The letter of intent provides for FCOAC to receive an expense reimbursement of up to $750 thousand and a break up fee of $500 thousand under certain circumstances, including in the event that the Company decides to pursue an alternative transaction or course of action. The letter of intent is subject to approval by the United States Bankruptcy Court for the District of Delaware, where the Company's Chapter 11 case is pending. The Company also announced that Saunders Karp & Megrue ("SKM"), which had entered into a letter of intent with the Company and the Creditors' Committee in June 2000, terminated its letter of intent. SKM indicated in its notice to the Company that its termination of the letter of intent should not be deemed as an indication that SKM has lost interest in pursuing a possible transaction. "The Company has turned the corner, is exceeding expectations and is well positioned and ready to emerge from bankruptcy," said Chairman, Chief Executive Officer and President, William E. Freeman. "Although the proposal outlined in the FCOAC letter of intent contemplates a higher recovery to creditors than was contemplated under the SKM letter of intent, the Company will solicit and examine alternative proposals," he added. The Company has retained The Avalon Group, Ltd. as its investment bankers and Conway, Del Genio, Gries & Co., LLC as its financial advisors. Both firms are located in New York. The Company also reported second quarter 2000 net income of $303 thousand or $.04 per share, compared with a net loss in the second quarter of 1999 of $1.8 million, or $.23 per share. The second quarter 2000 income before reorganization costs associated with the Chapter 11 case was $1.7 million compared with an income of $249 thousand a year ago. Net sales for the second quarter of 2000 increased 13.8 percent to $59.4 million, compared with $52.2 million for the same period a year ago. "We continued the positive sales momentum with strong sales in our greeting card, party, gift and seasonal businesses," said Freeman. The Company reported a first half 2000 net loss of $2.4 million or $.32 per share, compared with a net loss in the first half of 1999 of $17.8 million, or $2.38 per share. The 2000 first half income before reorganization costs associated with the Chapter 11 case and extraordinary loss was $939 thousand, compared with a loss of $2.0 million a year ago. Net sales for the first half of 2000 were $113.9 million compared with $104.8 million for the same period a year ago. Comparable store sales for the first half increased 12.8 percent over a year ago after adjusting for closed stores in the first quarter of 1999. Turning to the outlook, Freeman said, "As we approach the fall and holiday seasons we are confident our merchandising assortment, in stock position and vendor support will allow the company to achieve solid financial performance." Factory Card Outlet operates 177 company owned retail stores, in 20 states, offering a vast assortment of party supplies, greeting cards, gift wrap and other special occasion merchandise at everyday value prices. On March 23, 1999, the company filed a petition for reorganization under Chapter 11 of Title 11 of the United States Code and is currently operating as a debtor in possession. GAZOONTITE.COM: Asthma and Allergy Products Retailer Files Chapter 11 --------------------------------------------------------------------- Gazoontite.com, once noted for being one of the first pure online retailers to open brick-and-mortar stores, filed chapter 11 bankruptcy in San Francisco, according to a newswire report. Though Gazoontite continues to operate its five physical stores-in Southern California, San Francisco, Schaumburg, Illinois, New York City and New York's Long Island-the company shut down its web store late last month. For more than two months, Gazoontite, which sells asthma and allergy relief products, has wrestled with a cash shortage. In August, the company laid off about 50 workers, reducing its staff by 41 percent and began an intense search for new funding. (ABI 11-Oct-00) GC COMPANIES: Theater Operator and Subsidiaries Files for Chapter 11 -------------------------------------------------------------------- GC Companies, Inc. (NYSE: GCX), parent company of General Cinema Theatres, Inc., announced that GC Companies and certain of its domestic subsidiaries, including General Cinema Theatres, Inc., are filing voluntary petitions to reorganize their business under Chapter 11 of the U.S. Bankruptcy Code. The Company further stated that certain of its subsidiaries in Florida, Georgia, Louisiana and Tennessee are filing Chapter 7 liquidation proceedings. The filings were made in the United States Bankruptcy Court for the District of Delaware. In its filings, the Company will report total assets of $328.9 million and total liabilities of $195.1 million as of August 31, 2000. The Company believes that Chapter 11 reorganization provides the Company with the most effective means to terminate and restructure unprofitable leases and position the Company to succeed in today's highly competitive marketplace. After a review of the various alternatives available by a Special Committee of its independent directors and outside professional advisors, the Company concluded that utilizing the Chapter 11 process to complete its restructuring is in the best long-term interests of the Company and all of its stakeholders. The Company believes that an oversaturation of the market created by a surge in the construction of multi-screen "megaplexes" during the past several years, has created intense competitive pressures. This has resulted in a downturn in the theatre industry due to the decline in attendance at older theatres in favor of state of the art megaplexes. A number of the Company's competitors including United Artists, Edwards, and Carmike theatres have filed Chapter 11 proceedings as a result of these industry pressures. Through the Chapter 11 process, the Company expects to be able to terminate unprofitable leases, reduce the Company's operating expenses and make necessary improvements to the business to create a strong competitive future for General Cinema. While the Company completes the restructuring, its operations are expected to continue. As a part of its previously announced plan to concentrate resources on its operations in the Northeast and Midwest, General Cinema recently closed 36 under-performing theatres with 264 screens in Florida, Georgia, Louisiana, North Carolina, Texas, Ohio, New Jersey, California and Washington, and will close 17 additional theatres with 103 screens in October. The Company is arranging up to $45 million of debtor in possession financing to provide the Company with resources to fund its operations during the Chapter 11 proceedings. Employees will continue to be paid and vendors will be paid for post-petition purchases of goods and services in the ordinary course. The Company intends to seek Court approval to honor policies regarding gift certificates, movies passes and other customer programs, as well as employee benefit programs. Richard A. Smith has resigned as Chief Executive Officer, and Robert A. Smith has resigned as President and Chief Operating Officer to avoid potential conflict, in implementing the reorganization, between their positions with GC Companies and those that they hold at Harcourt General, Inc., which has guaranteed certain of the Company's lease obligations. Also to avoid potential conflicts, John G. Berylson, son-in-law of Richard A. Smith, resigned as Senior Vice President and Chief Investment Officer of GC Companies. Richard A. Smith will continue to serve as Chairman of the Board of Directors of the Company, but he will not serve on the Special Committee of the Board which has been formed to address all issues that relate to Harcourt General, Inc. G. Gail Edwards, who has been with the Company since 1996, was named President and Chief Operating Officer in addition to her current position as Chief Financial Officer and will be responsible for the restructuring and the operations of the Company. Frank T. Stryjewski remains as President of General Cinema Theatres, Inc., the subsidiary which holds the Company's domestic theatre operations. Paul R. Del Rossi remains as Chairman of General Cinema International, Inc. which is not filing for reorganization and will continue to manage its joint venture in South America. GC COMPANIES: Case Summary and 30 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: GC Companies, Inc. 1300 Boyiston Street Chestnut Hill, MA 02487 Affiliates: General Cinema Theatres, Inc. G.C. Theatre Corp. of California GCC Investments, Inc. General Cinema Corp. of Clifton General Cinema Theatre of Columbia, Inc. General Cinema Theatres of Delaware, Inc. General Cinema Theatres of Florida, Inc. General Cinema Corp. of Georgia General Cinema Corp. of Greenwood General Cinema Corp. of Illinois, Inc. General Cinema Corp. of Indiana General Cinema Corp. of Landmark General Cinema Corp. of Maryland, Inc. General Cinema Corp. of Massachusetts General Cinema Corp. of Mayfair General Cinema Corp. of Mazza General Cinema Corp. of Minnesota, Inc. General Cinema Theatres of New Jersey, Inc. General Cinema Corp. of Mexico, Inc. General Cinema Corp. of New York, Inc. General Cinema Corp. of North Carolina General Cinema Corp. of Northwestern General Cinema Theatres of Ohio, Inc. General Cinema Corp. of Owings Mills General Cinema Corp. of Parkway Pointe General Cinema Corp. of Pennsylvania General Cinema Corp. of Plymouth Meeting General Cinema Corp. of Rhode Island General Cinema Corp. of South Carolina General Cinema Corp. of Tennessee General Cinema Corp. of Texas General Cinema Corp. of Virginia General Cinema Corp. of Washington General Cinema Corp. of West Palm Beach General Cinema Theatre of Yorktown, Inc. Chapter 11 Petition Date: October 11, 2000 Court: District of Delaware Bankruptcy Case No.: 00-03897 Judge: Joseph J. Farnan Jr. Debtor's Counsel: David M. Fournier, Esq. Pepper Hamilton LLP 1201 Market Street Suite 1600, P.O. Box 1709 Wilmington, Delaware 19899 and Daniel M. Glosband, P.C Goodwin, Procter & Hoar LLP Exchange Place Boston, MA 02109-2881 Total Assets: $ 328,900,000 Total Debts : $ 195,100,000 30 Largest Unsecured Creditors: Warner Brothers Distributing Bonnie Otto 16821 Ventura Boulevard Suite 686 Encinio, CA 91438 (818) 964-6328 Trade Debt $ 2,957,513 Dreamworks SRG Tom Jung 100 University City Plaza #10 University City, CA 91608 (818) 733-7738 Trade Debt $ 2,943,582 Miramax Films Eliot Slutsky 3800 West Alameda Burbank, CA 91505 (818) 872-1786 Trade Debt $ 2,936,315 Paramount Pictures Tony Rodriguez 1833 Broadway, 11th Floor New York, NY 10019 (323) 858-8482 Trade Debt $ 2,063,716 Universal Pictures Shelly Mammel 1770 Century Circle Suite 33 Atlanta, GA 30346 (214) 380-0022 Trade Debt $ 1,607,323 New Line Pictures David Keith 116 North Robertson Suite 508 Los Angeles, Ca 90048 (310) 967-6505 Trade Debt $ 1,581,012 Sony Pictures Eileen Lomis 550 Madison Avenue, 8th Floor New York, NY 10022 (310) 244-8067 Trade Debt $ 1,042,840 MGM, Inc. Debbie Lasater 2223 8th Avenue Port Worth, TX 78110 (310) 449-3325 Trade Debt $ 1,008,334 USA Films Linda Ditrinco 65 Bleecker St 2nd Floor New York, NY 10012 (212) 638-4028 Trade Debt $ 864,370 Shoppers World Community Center P.O. Box 85133 Cleveland, OH 44193 Rent $ 733,880 20th Century Fox Scott TDay P.O. Box 600 Beverly Hills, CA 90213 (310) 360-2827 Trade Debt $ 644,556 Destination Films 1299 Ocean Avenue 5th Floor Santa Monica, CA 90401 Trade Debt $ 616,361 Rouse Randhurst Shopping Center, Inc. P.O. Box 64373 Baltimore, MD 21264 Rent $ 461,230 Cook County Collector Room 112 County Building Chicago, IL 60802 Real State Taxes $ 443,482 Entertainment Plaza Inc. 31738 Rancho Viejo Rd Suite B San Juan Capistrano, CA 92675 Rent $ 362,500 Buena Vista Pictures Marlene Waggoner 360 50 Buena Vista Street Los Angeles Branch Burbank, CA 91521 Trade Debt $ 365,047 Carlson Marketing Group P.O. Box 96258 Chicago, IL 80683 Trade Debt $ 325,778 Pepsi Cola Company P.O. Box 75960 Chicago, IL 60675 Trade Debt $ 309,968 Franklin Mills Associates LP PO Box 277867 Atlanta, CA 30384-8558 Rent $ 300,533 Artisan Entertainment Steve Rothenberg P.O. Box 29159 New York, NY 10087 Trade Debt $ 285,285 Fallbrook Square Partners 6633 Fallbrook Ave Suite 628 West Hills, CA 91307 Rent $ 285,003 Lions Gate Films Jay Peckos 5750 Wilshire Blvd Los Angeles, CA 90036 Trade Debt $ 278,456 Bay Plaza Community Center LLC Bay Plaza Clearing P.O. Box 208 Laurel, NY 11948 Rent $ 278,165 Mayfair Property Inc. SOS 12-1637 P.O. Box 86 Minneapolis, MN 55486 Rent $ 272,130 WestCoast Estates SOS 12-1808 P.O. Box 68 Minneapolis, MN 55466-1608 Rent $ 269,866 VSA Inc. 12850 East Arapamoe Road Building D Englewood, CD 80112 Trade Debt $ 267,101 The Galleria At South Bay P.O. Box 72237 Cleveland, OH 44162 Rent $ 266,617 Westmark ITF Utah State Retirement P.O. Box 73558 Chicago, IL 69673 Rent $ 261,043 The Grinner & Broadbent Construction Company Trade Debt $ 228,336 Parkway Pointe Development Rent $ 226,502 GC COMPANIES: Harcourt General Takes $100MM on Account of Lease Liabilities --------------------------------------------------------------------------- Harcourt General, Inc. (NYSE:H) announced that the Company expects to record a one-time charge of approximately $100 million, net of taxes, in its fourth quarter ending October 31, 2000, to cover lease liabilities arising from the bankruptcy reorganization filed by GC Companies, Inc. (NYSE:GCX), the movie theatre exhibition business that it spun-off to shareholders in 1993. Harcourt General said that the charge, which would amount to about $1.38 per share, should be sufficient to cover costs associated with any liability on theatre leases which were guaranteed prior to the spin-off GC Companies. Harcourt General, a leading global multiple-media publisher, provides educational, training and assessment products and services to classroom, corporate, professional and consumer markets. In June, Harcourt General announced that it had retained Goldman, Sachs & Co. to explore a range of strategic alternatives to enhance shareholder value, including the possible sale of the Company. GC COMPANIES: NYSE Evaluates Theater Operator's Shares for Trading ------------------------------------------------------------------ Shares of GC Companies, which filed for Chapter 11 together with its subsidiaries in the Delaware court, is being reviewed by the New York Stock Exchange, Reuters reports. NYSE said that GC Companies is not in violation of any of the exchange listing criteria. According to the NYSE, it will not stop monitoring the theater operator, when it does cross the line its listing will be reevaluated. GC Companies, Inc. (NYSE: GCX), parent company of General Cinema Theatres, Inc., announced that GC Companies and certain of its domestic subsidiaries, including General Cinema Theatres, Inc., are filing voluntary petitions to reorganize their business under Chapter 11 of the U.S. Bankruptcy Code. The company posted assets of $328.9 million and total debts of $195.1 million as of August 31, 2000. GENESIS/MULTICARE: Genesis Selling Vacant Land in Florida for $261,000 ---------------------------------------------------------------------- Genesis Health Ventures, Inc., sought and obtained bankruptcy court authority to sell a vacant parcel of real property in Lakeland, Florida, by assuming a modified pre-petition Land Sale Contract. The 1.83 acre parcel of vacant land, owned by Meridian Healthcare Inc., is located at the north-east corner of Lakeland Hills Boulevard and Bella Vista Street in Lakeland, Florida. It is adjacent to a nursing home known as the Lakeland Hills Center managed by anther GHV Debtor, Genesis Eldercare Network Services, Inc. Originally, GHV intended to build a larger nursing care facility on the land through Meridian, and to convert the Facility to an assisted living facility. Subsequent to Meridian Healthcare's acquisition of it in 1995, GHV determined not to go forward with the Project but for four years could not sell the land. As of November 5, 1999 Hays Appraisal Group, Inc. valued the property at approximately $319,000. GHV then retained Cushman & Wakefield of Florida, Inc. as its broker to market and sell the Lakeland Property. Prospective purchasers William Thomas Mims and Paula McKay Mims emerged and entered into the Lakeland Sale Contract with GHV on June 18, 2000 at a purchase price of $290,000, which represents approximately 91% of the appraisal value of the Lakeland Property, but four days later GHV filed for bankruptcy under chapter 11. In exercise of their business judgment, the Debtors do not intend to construct another nursing facility on the Lakeland Property. Holding the property for investment purposes is inconsistent with GHV' core healthcare operations, not in line with the Debtors' business strategy, and would require continued payment of maintenance costs. Selling the property, on the other hand, with bring in cash consideration of $261,000 for the estates, the Debtors tell Judge Walsh. The Debtors have determined that it is sound business judgment to conclude the deal with the Mims. The Debtors submit that the transaction has been proposed and negotiated in good faith, that the purchase price is fair and reasonable and approval of the Lakeland Sale Transaction is in the best interests of the Debtors, their creditors and all other parties in interest. The Debtors are not aware of any existing liens relating to the Lakeland Property. Judge Walsh gave his stamp of approval, pursuant to section 365 of the Bankruptcy Code, to assume the Lakeland Sale Contract with modifications to accommodate for the delay in closing due to the commencement of the Debtors' chapter 11 cases, provided that in no event shall the Purchasers be required to consummate the Lakeland Sale Contract after October 31, 2000. Pursuant to section 363(b) of the Bankruptcy Code, Judge Walsh authorized the Debtors to consummate the Lakeland Sale Transaction, free from Transfer Taxes under section 1146(c), free and clear of liens, claims and encumbrances, pursuant to section 363, and to pay the commissions to Cushman and Tom Mims. (Genesis/Multicare Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) HARNISCHFEGER INDUSTRIES: Finalizes Sale of Beloit Australia Shares ------------------------------------------------------------------- Beloit Corporation owns all of the capital stock in Beloit Australia Pty. Ltd. By this Motion, Beloit sought and obtained authority to perform all acts necessary to effectuate the transfer of those shares to Utikyk Pty. Ltd. The Debtors outline for the Court the consideration Utikyk paid in connection with its purchase of Beloit Australia: (A) an AUD 335,000 cash payment to Beloit Corporation; (B) satisfaction of an AUD 160,000 intercompany debt Beloit Australia owed to Beloit Corporation; (C) satisfaction of an AUD 219,000 intercompany debt owed to Beloit Asia Pacific Pte Ltd.; and (D) a waiver and release of an AUD 1,561,000 intercompany claim Beloit Australia held against various Beloit Entities. (Harnischfeger Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORPORATION: Vice Chairman Michael Bozic to Leave Post on Oct. 31 ----------------------------------------------------------------------- Kmart Corporation (NYSE: KM) announced that its Vice Chairman, Michael Bozic will leave the company effective Oct. 31, 2000. In announcing his departure, Kmart Chairman and CEO Chuck Conaway said, "We are very grateful for Mike Bozic's many contributions to Kmart and BlueLight.com, especially during our recent executive leadership transition. Mike has been instrumental in developing cross-functional solutions to improving our supply chain and flow of goods as well as developing a systematic approach to fixing our infrastructure and upgrading technology. While his personal involvement will be missed, our new team is well- equipped to pursue the aggressive initiatives underway to achieve world- class execution throughout Kmart." Bozic has been with Kmart since December 1998 with responsibility during his tenure for finance, technology, distribution, construction, facilities management and supply procurement, legal and E-commerce. With Bozic's departure, his former duties will be spread among Kmart's senior leadership team. Kmart Executive Vice President and Chief Financial Officer Martin E. Welch will report directly to Chuck Conaway, assuming full responsibility for supply procurement and all financial matters. Randy Allen, Executive Vice President Strategic Planning and Chief Information Officer, will become the lead Kmart executive on matters related to BlueLight.com. David Rots, Executive Vice President Human Resources and Administration, will oversee Kmart's Legal Department. Mark Schwartz, Executive Vice President, Store Operations will assume responsibility for facilities management and construction. A 37-year retail veteran, Mike Bozic spent the majority of his career with Sears Roebuck & Company where he rose to the post of Chairman and CEO of the Sears Merchandise Group. For four years after leaving Sears in 1991, he was President and CEO of Hills Department Stores. From 1995 until joining Kmart, he was Chairman and CEO of Levitz Furniture Corporation. Kmart Corporation serves America with 2,164 Kmart, Big Kmart and Super Kmart retail outlets. In addition to serving all 50 states, Kmart operations extend to Puerto Rico, Guam and the U.S. Virgin Islands. LAIDLAW, INC.: Extends Noteholder Solicitation Deadline to 5:00 p.m. Today -------------------------------------------------------------------------- Laidlaw Inc. (NYSE: LDW; TSE: LDM) announced that it is extending the expiration date of the consent solicitations relating to its debentures and notes originally scheduled to expire on Tuesday, October 10, 2000, to 5:00 p.m., New York City time on Friday, October 13, 2000. Laidlaw Inc. is soliciting consents from its bondholders to permit certain of its operating subsidiaries to enter into previously disclosed secured financing facilities. Identified below are the securities and their related CUSIP numbers to which the consent solicitations relate. The terms and conditions of the consent solicitations are more fully described in the consent solicitation statements, each dated September 18, 2000, and related documents previously delivered to the Laidlaw bondholders. In order to amend the indentures governing the debentures and the notes, the registered holders, as of September 11, 2000, the record date, of at least 66 2/3% in aggregate principal amount of the debentures of each series issued under the 1991, 1992 and 1997 indentures, and a majority in aggregate principal amount of the notes issued under the 1995 indenture, must consent. All previously delivered consents will remain effective unless validly revoked. Questions regarding the terms of the consent solicitations, the delivery procedures for consents and requests for additional copies of the consent solicitation statements or related documents may be directed to Laidlaw Inc. at 800-563-6072 ext. 444. Documents are also available in the Investor Information section at http://www.laidlaw.com. LEVITZ FURNITURE: Hilco & Professional Sales JV To Liquidate 4 Stores --------------------------------------------------------------------- A joint venture composed of Hilco and Professional Sales & Consulting Company were recently appointed as agent by the US Bankruptcy Court in Delaware to liquidate the inventory in four Levitz Furniture Stores. The four stores are located in Massachusetts and New Hampshire. "We are extremely pleased to have been selected by Levitz," said Michael Keefe, Chief Executive Officer of Hilco Merchant Resources, "our group comprises the foremost specialists in retail liquidation and furniture liquidation in particular. This combination of firms has afforded a very high recovery to Levitz and will also provide the retail consumer excellent deals." "Hilco has assisted us before and performed well," said Michael McCreery, Senior Vice President of Levitz Furniture Corporation "these store closings will assist Levitz as we finalize our reorganization plans." Hilco Merchant Resources and its affiliates provide strategic financial services for retailers, distributors, manufacturers, lenders, venture capitalists, investment bankers and the professionals that serve them. For more than 25 years, Hilco has sold more than $15 billion of retail inventories in over 500 major liquidations involving 5,000 locations. To learn more about Hilco Merchant Resources a unit of Hilco Trading, visit www.hilcotrading.com. Levitz Furniture Store Closing List Street Address City State -------------- ---- ----- Liberty Tree Mall Danvers MA 160 Providence Highway Dedham MA 260 Turnpike Road Westborough MA 168 Daniel Webster Hwy Nashua NH MARINER HEALTH: Time for Making Lease Decisions Extended to Mar. 19 ------------------------------------------------------------------- Premature rejection of a non-residential real property lease, the HEALTH Debtors argue, may forfeit a valuable asset to the detriment of their estates and creditors. Premature assumption of a burdensome non-residential real property lease will saddle the HEATH Estates with unnecessary administrative claims. The Debtors continue to review and analyze the benefits and burdens of each non-residential real property lease to which they are a party in the context of their long-term business plan. Against that backdrop, pursuant to 11 U.S.C. Sec. 365(d)(4), the Debtors sought and obtained a further extension of the time within which they must decide whether to assume, assume and assign or reject the Lease Agreements. At the HEALTH Debtors' behest, Judge Walrath granted an extension through March 19, 2001. Judge Walrath makes it clear that this extension is granted without prejudice to the right of any Landlord to ask for an order shortening the time period and is without prejudice to the Debtors' right to request a further extension. (Mariner Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXTWAVE: Communications Company Loses Struggle on Broadcast Licenses --------------------------------------------------------------------- The Supreme Court recently refused to restore valuable broadcast licenses to a wireless communications firm that lost them because it missed payment deadlines, according to the Associated Press. The court, without comment, turned down NextWave Personal Communications' argument that a federal bankruptcy court could let it keep the licenses at a much lower cost than it originally promised to pay for them. NextWave, based in Hawthorne, N.Y., submitted a winning $4.7 billion bid for 63 airwaves licenses in 1996. But the company was unable to raise the money to pay for the licenses and filed for bankruptcy protection in 1998. NextWave sued the FCC, saying that by the time the government issued the licenses they were worth far less than the company had promised to pay. A bankruptcy judge ruled that NextWave could keep the licenses at a reduced cost of $1 billion. In the appeal action, NextWave's lawyers said the 2nd U.S. Circuit Court of Appeals' ruling would keep bankruptcy courts from deciding many questions involving regulatory actions by federal agencies. Bankruptcy courts are supposed to address all issues involving a debtor's rights and responsibilities, and the appeals court ruling would keep them from doing so, the lawyers said. Justice Department lawyers said the FCC has exclusive power to grant broadcast licenses, and that a winning bidder loses its entitlement to a license if it does not pay the amount it promised. (ABI 11-Oct-00) NOVA SCOTIA: CBRS Assigns P-2 Rating To $125MM Preferred Shares --------------------------------------------------------------- CBRS has assigned a rating of P-2(Low) to Nova Scotia Power Inc.'s $125MM issue of Preferred Shares. The rating outlook on the securities of the Company continues to be Stable. The NSPI's bought deal issue of First Preferred Shares, Series D, carries a 5.90% coupon and were issued at a price of $25.00 per preferred share. The First Preferred Shares of Series D will be exchangeable after 15 years, at the option of NSPI into the common stock of NSPI's parent, Emera Inc. Thereafter, these preferred shares could be exchanged at the option of a holder into Emera's common stock. The closing of this issue is expected on or about October 31, 2000. CBRS expects the proceeds of this issue to be used to repay short term debt incurred from the redemption of the 6% Preferred Shares, Series A, as well as for general corporate purposes and working capital financing. PABST BREWING: Moody's Sees Tight Liquidity and Strained Cash Flow ------------------------------------------------------------------ Moody's Investors Service placed the debt ratings of Pabst Brewing Company under review for possible downgrade. Under review are the Ba3 assigned to the original $185 million secured credit facility and the B1 senior implied rating. Moody's review will focus on Pabst's tight liquidity, strained cash flow and increasing financial leverage. The review will also include an assesment of the integration and absorption of the 1999 acquisition of the Stroh Brewing Company assets, pricing dynamics and competitive landscape, and Pabst's brand equity. Based in San Antonio, Texas, Pabst Brewing Company is marketer of brewed products under numerous brands including Pabst, Stroh's, Old Milwaukee, and malt liquors under the Schiltz, Colt 45, and St. Ides brands. PACIFICARE HEALTH: Moody's Places Senior Ratings On Review For Downgrade ------------------------------------------------------------------------ Moody's Investors Service placed PacifiCare Health System's senior ratings under review for possible downgrade following the announcement that the company expects earnings shortfalls through at least 2001 due to higher than expected medical costs driven by an acceleration of providers shifting from capitated to shared-risk contracts as well as an increase in provider insolvency. Moody's is concerned that these trends highlight a fundamental credit weakness - PacifiCare's lack of experience in managing risk in an environment where provider contracting and medical cost trends demand medical management . Further adding risk is the company's dependence on Medicare, which places greater limitations on actions that PacifiCare can take to rectify unforeseen medical cost trends. This is evidenced by the company's earlier submission of its Medicare ACR filings based on lower medical cost trends; unfortunately, next year's premium and benefit levels as well as markets have already been established. Finally, since the company's bank facility steps down from $1.1 billion to $950 million on January 1, 2001, we are concerned that the company may encounter liquidity issues if additional reserves need to be taken. Moody's review will consider the company's strategic and operational plans to address these trends, the status of subsidiary capital levels, the potential for additional reserve requirements related to these cost trends, and the company's ongoing access to liquidity. PacifiCare Health Systems, Inc., based in Santa Ana, California, is a leading managed care company serving approximately 4 million members. With healthplans in nine states, about 60% of its membership resides in California. PACIFICARE HEALTH: S&P Assigns BB+ Counterparty Credit Rating & Is Watching --------------------------------------------------------------------------- Standard & Poor's today placed its double-'B'-plus counterparty credit and senior debt ratings on PacifiCare Health Systems Inc. on CreditWatch with negative implications. This action followed PacifiCare's announcement yesterday that it expects losses in the third quarter of 2000. Major Rating Factors: -- PacifiCare's earnings profile is a primary concern because it has been a key strength of the ratings. Earnings before interest, taxes, and amortization of goodwill were $281.7 million in the first half of 2000 and were expected to be about $650 million for the full-year 2000. Full-year results could be $200 million lower based on yesterday's announcement. -- Liquidity is a renewed concern in the second half of 2000. Although earlier share purchases had been financed through cash flows and had brought the liquidity ratio to less than 100% in June 1999, the liquidity improvement to 130% as of March 31, 2000, (considered good based on Standard & Poor's model) reflects PacifiCare's use of long- term debt for its major share repurchases in the fourth quarter of 1999 and the first quarter of 2000. PacifiCare completed the repurchase of another 750,000 shares in August, which is expected to have reduced cash reserves for the end of the third quarter. Cash from operations is expected to be limited in the second half of 2000 and required for debt service of about $17 million per quarter. -- PacifiCare holds a strong business position as a regional managed care organization. However, Standard & Poor's remains uncertain about the new management team's long-term strategy. With more than 4 million members, PacifiCare operates HMOs in nine states, with key market shares in California, Colorado, and Texas. The February 2000 acquisition of Harris Methodist Health Plan's 300,000 members strengthened PacifiCare's Texas presence. PacifiCare covers more than 1 million members in its Medicare+Choice programs. Specialty products offered by the company include dental, vision, life, behavioral health, and pharmacy management. -- Standard & Poor's considers PacifiCare's risk-based capital position to be marginal, with a capital adequacy ratio for year-end 1999 of approximately 82%. Standard & Poor's expects PacifiCare's capital position to remain marginal in the near term, reflecting PacifiCare's corporate strategy of repositioning excess cash to the parent from regulated subsidiaries, particularly at the key California plan. -- Standard & Poor's notes that as of June 30, 2000, PacifiCare's level of goodwill is an aggressive 114% of equity. The goodwill is being amortized over periods ranging from three to 30 years and primarily reflects the strong Western region operations, including California. About half of this goodwill, held at regulated entities, is generally not recognized as an asset under statutory accounting principals. -- PacifiCare's debt-to-total-capital ratio as of June 30, 2000, was 30%, which Standard & Poor's finds compatible with the existing rating, and EBITDA interest coverage was previously considered strong at more than 8 times. Standard & Poor's expects the ratings to remain on CreditWatch negative until the third-quarter results are finalized and there is a better sense of the true magnitude of the greater-than-expected medical costs and the impact of the higher costs in future quarters. -- CreditWire PHILIPS INTERNATIONAL: REIT Stockholders Approve Plan to Liquidate ------------------------------------------------------------------ Philips International Realty Corp. (NYSE-"PHR"), a New York City based real estate investment trust, announced that its stockholders have approved a plan of liquidation for the Company, pursuant to which the Company plans to: (a) transfer its interests in affiliated entities that own eight shopping centers to Kimco Income Operating Partnership, L.P. for cash and the assumption of indebtedness, (b) transfer its interests in entities that own four shopping centers and two redevelopment properties, subject to certain indebtedness, to Philip Pilevsky, the chief executive officer, and certain of his affiliates and family members in exchange for cash and the redemption of units in the Company's operating partnership, (c) sell its remaining assets for cash, (d) pay or provide for its liabilities and expenses, (e) distribute the net cash proceeds of the liquidation, currently estimated at $18.25 per share of common stock, to the stockholders in two or more liquidating distributions, and (f) wind up operations and dissolve. On October 2, 2000, an action was filed against Philips International Realty Corp. and its directors by an entity which purchased 2,000 shares of common stock subsequent to the Company's April 17, 2000 announcement of its intended plan of liquidation. The action objects to the Company's plan of liquidation. The Company believes the claims asserted in the complaint are without merit and intends to pursue an expedited determination of the action. At the Special Meeting of Stockholders held on October 10, 2000, approximately 80% of the Company's 7,340,474 common shares outstanding were voted with 99.3% and 99.7% of these votes cast in favor of a charter amendment and the plan of liquidation, respectively. SAFETY-KLEEN: Laidlaw Discloses Exposure To $200 Million Preference Claim ------------------------------------------------------------------------- In its Third Quarter Form 10-Q filed with the Securities and Exchange Commission, Laidlaw, Inc., discloses that: "There is a significant risk of claims being asserted against [Laidlaw] by Safety-Kleen, including a claim that the $200.0 million received on August 27, 1999 as partial consideration for a $350.0 million Safety-Kleen Corp. Pay-in-Kind Debenture sold by the Company to Safety-Kleen, was a preferential payment. [Laidlaw] believes it has meritorious defences to any claims asserted and intends to vigorously defend them. The Company believes that no provision for the issue is required." Providing its investors with additional information about its investments in and relationships with Safety-Kleen Corp., Laidlaw further says: "During the second quarter, it was determined that the decline in the quoted market value of the investment in Safety-Kleen Corp. ("Safety- Kleen") was likely to be other than temporary. The quoted market value for the investment at the time was significantly below the book value of $603.8 million. As well, on March 6, 2000, Safety-Kleen reported that its previously reported income was being reviewed. The review stemmed from allegations of possible accounting irregularities that may have affected the previously reported financial results of Safety-Kleen since September 1, 1996. Three senior executives of Safety-Kleen were placed on administrative leave. Because of this review, no financial results for the quarters ended February 29, 2000 and May 31, 2000 are available. If restatements at Safety-Kleen are required, [Laidlaw] may have to restate its earnings to reflect its share of Safety-Kleen's revised earnings. Due to the significant decline in the quoted market value and the uncertainty of Safety-Kleen's future, [Laidlaw] has recorded no equity income during the quarters ended February 29, 2000 and May 31, 2000. As well, during the second quarter, [Laidlaw] wrote down its investment by $560.0 million to the then quoted market value. In addition, a deferred tax asset of $21.5 million relating to [Laidlaw]'s investment in Safety-Kleen was charged as an unusual tax expense during the second quarter. "On June 9, 2000, Safety-Kleen announced that it and 73 of its U.S. subsidiaries filed voluntary petitions for Chapter 11 relief in the United States Bankruptcy Court for the District of Delaware. Safety-Kleen's operations in Canada and Mexico were not part of the bankruptcy filings. As a result of these petitions and the subsequent further decline in the market value of the investment, [Laidlaw] has recorded an additional impairment charge totalling $43.8 million to reduce the investment in Safety-Kleen to a nominal amount. "On May 15, 1997, [Laidlaw] entered into a guaranty agreement in favor of Westinghouse Electric Corporation wherein [Laidlaw] guaranteed payment of a promissory note in the amount of $60.0 million payable by Safety-Kleen to Westinghouse Electric Corporation. Westinghouse Electric Corporation subsequently assigned its interest in the note and guaranty to third parties. Safety-Kleen failed to make payment of interest due on the note on May 30, 2000. The third parties by notices dated March 13, 2000 and June 7, 2000, demanded that [Laidlaw] immediately pay in full the principal amount of the note of $60.0 million. The third parties have filed a complaint demanding judgement [sic.] against [Laidlaw] in the amount of $60.0 million. During the nine months ended May 31, 2000, [Laidlaw] provided for $60.0 million ($60.0 million after-tax) ($45.0 million during the second quarter and $15.0 million during the third quarter) as an additional impairment charge. "Also, on May 15, 1997, [Laidlaw] indemnified Safety-Kleen with respect to any environmental liability arising as a result of any act or omission including any release occurring prior to May 15, 1997 but only to the extent such liability was known to [Laidlaw] and not disclosed in writing to the purchaser or related to the Marine Shale Processors or Mercier, Quebec facilities and exceeded an aggregate of $1 million in the particular year and an aggregate of $1 million times the number of years elapsed since May 15, 1997 but only to the extent of cash expenditures incurred six years after May 15, 1997. [Laidlaw] does not believe that these matters will be material to [Laidlaw]'s operations or financial condition. "Safety-Kleen is obligated to provide financial assurance for the costs of clean-up and/or environmental impairment restoration incurred following closure or following a final order to cease operations and commence closure of its hazardous waste management facility in Pinewood, South Carolina. The financial assurance is required by the South Carolina Department of Health and Environmental Control ("DHEC"). In 1994, the Board of DHEC decided that a cash funded trust in the amount of $133 million adjusted for inflation must be established over a ten year period as financial assurance for potential environmental clean-up and restoration. A cash payment of approximately $14 million was paid into the trust fund as a first instalment [sic.]. In June, 1995, DHEC promulgated, and the South Carolina legislature approved, regulations governing financial assurance for environmental cleanup and restoration giving owner/operators of hazardous waste facilities the right to provide financial insurance in several forms including insurance, a bond, a letter of credit or a cash trust fund. Subsequent to a declaratory ruling by DHEC that the financial assurance regulations were applicable to Pinewood, Safety-Kleen submitted an insurance policy to provide the financial assurance not covered by cash. On January 17, 2000, the State of South Carolina Court of Appeals held that DHEC did not properly promulgate these regulations and vacated them. Safety-Kleen appealed this decision but the South Carolina Supreme Court refused to hear the appeal. The Court also required Safety-Kleen to make an additional cash payment of $70 million into the trust fund. On June 14, 2000, DHEC directed the Pinewood facility to cease taking waste for disposal and submit a closure plan within 30 days. Safety-Kleen has announced that it will appeal these decisions in federal court. Related to this issue, [Laidlaw] agreed to maintain at its expense, until May 15, 2007, such form of financial mechanism as may be permitted by environmental laws to provide the required financial assurance. Safety-Kleen, however, remains responsible for the costs of any clean-up and/or any environmental restoration incurred. By agreement between Safety-Kleen and [Laidlaw], Safety-Kleen has provided insurance coverage to provide the majority of the required financial assurance. [Laidlaw] believes that no provision for this issue is required. "In addition, [Laidlaw] has guaranteed two industrial revenue bonds of Safety-Kleen in the amount of $15.7 million. These bonds are secured by the assets of the Safety-Kleen facilities to which these bonds relate. [Laidlaw] believes that no provision for this issue is required. "[Laidlaw] has provided to Safety-Kleen and certain of its affiliates, financial and management services including the provision of general liability and workers compensation insurance. These service arrangements have been provided on an arm's-length basis on terms comparable to those available in transactions with unaffiliated parties. The full-text of Laidlaw's latest Form 10-Q is available at no charge at http://www.laidlaw.com/laidlaw/investor/reports/sec/10q3_L0/index.html (Safety-Kleen Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) SUNSHINE MINING: Confirmation Hearing Scheduled for Nov. 7 in Wilmington ------------------------------------------------------------------------ A Nov. 7 hearing has been scheduled to consider confirmation of the reorganization plan in the Sunshine Mining and Refining Co. Chapter 11 bankruptcy. Sunshine Mining and Refining Co. and three affiliates, Sunshine Argentina, Sunshine Exploration, and Sunshine precious Metals Inc. sought Chapter 11 protection, listing assets of $33 million and debts of $55 million in papers filed in the U.S. Bankruptcy Court in Delaware. The Dallas mining company said the bankruptcy was triggered by operating losses brought on by a silver market depressed for the last 12 years, according to reports. (New Generation Research, Inc. 11-Oct-00) SUNTERRA CORPORATION: Gregory F. Rayburn from Jay Alix Named as New CEO ------------------------------------------------------------------------- The Board of Directors of Sunterra Corporation announced the appointment of Gregory F. Rayburn as Chief Executive Officer and President. Rayburn, 42, is a principal of the internationally known corporate turnaround firm, Jay Alix & Associates (JA&A), which has been engaged, subject to bankruptcy court approval, to lead the company's turnaround efforts. The company also announced that T. Lincoln Morison has resigned his position as CEO and President, and will assume the role of Vice Chairman of the Board of Directors of the company to assist in the transition. "Lin provided leadership and strategic direction to Sunterra during a difficult and critical time. The company appreciates his service," said J. Taylor Crandall, Chairman of the Board. "The Board of Directors and the management staff welcome Greg and the JA&A professionals to the team. Given the serious issues Sunterra faces as we move forward in our turnaround efforts, we believe the Company will be best served by a CEO with extensive experience in restructuring activities. Mr. Rayburn's team brings deep experience in leading companies through change and in successfully navigating the Chapter 11 process," said Crandall. Rayburn has more than 20 years experience leading financial and business turnarounds in a variety of companies, and in private equity investment. He is a former Chairman and CEO of Silas Creek Retail Inc., and a former partner with Arthur Andersen where he helped to create and develop their corporate recovery services practice. "My mandate is to provide leadership, expertise and a sense of urgency to the company's turnaround process," said Rayburn. "I look forward to getting to know the managers and employees of Sunterra, who will be a critical part of the turnaround. In addition, I will work closely with the company's outside constituents and stakeholders in seeking to build a consensual process." Sunterra filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on May 31, 2000 in Baltimore, Maryland. All of the 89 resorts operated by the company remain open for use by owners, Club Sunterra members, exchangers and guests. Jay Alix & Associates is a leading firm in the business of offering underperforming and troubled companies both consulting and interim management services to lead and support implementation of operational turnarounds, strategic repositioning and debt restructuring. They also provide IT strategy and turnaround -- valuation services and litigation consulting services. The firm, which has offices in New York, Chicago and Detroit, has extensive experience with large complex restructurings, including Zenith, Service Merchandise, Umbro International, Oxford Health Plans and National Car Rental Systems. Sunterra Corporation, the world's largest vacation ownership company, has 89 resorts throughout North America, Europe, the Caribbean, Hawaii, Latin America and Asia. Sunterra also manages 18 condominium resorts and hotels in Hawaii; and operates Club Sunterra, the world's most extensive points- based vacation system. Sunterra Corporation became a publicly traded company in 1996 and has subsequently grown from nine resorts to its current worldwide network of company owned and managed resorts. In addition, during this period its member base has expanded from 25,000 owners to more than 300,000 owners and members. Sunterra Corporation's website is www.sunterra.com. SUN HEALTHCARE: Debtors' Motion To Divest 22 Underperforming Facilities ----------------------------------------------------------------------- Sun Healthcare Group, Inc., and its debtor-affiliates have identified approximately 81 underperforming facilities which lose, in the aggregate, approximately $2,496,660 per month. These facilities must be disposed of, the Debtors say, because they represent a huge drain on economic resources which threatens the viability and vitality of SunHealth's businesses and reorganization. While the Debtors expect to be able to transfer more than 60 of the facilities as a going concern pursuant to the Court-approved Transfer Procedures described in the Government Stipulation arrived at after negotiations with HHS/DOJ, they have been unable to reach accord with the Health Care Capital Consolidated, Inc. (HCC), Landlord with respect to 18 of the Debtors' weakest facilities, and the Landlord of four additional underperforming facilities. Fifteen of these HCC Facilities constitute a substantial economic liability aggregating a negative EBITDA estimated to be in excess of $7.6 million over the twelve month period ending June 30, 2000. The other three facilities have operated with a positive EBITDA over the six months ending June 30, 2000 but their economic performance is only marginal. The Debtors have indicated to HCC their possible desire to retain the three marginal facilities but HCC has rejected that notion, based on the existence of certain cross-default provisions contained in the HCC Leases. The Debtors have determined that since the marginal facilities give no guarantee of continued economic viability, it is not worthwhile to litigate the issue of whether the cross-default provisions actually prevent the Debtors' assumption of individual HCC Leases while rejecting others. Therefore, the Debtors have determined to reject the Leases and Provider Agreements associated with all 18 of the HCC Facilities, and commence the Transition Process for those HCC Facilities. Of the remaining four underperforming facilities, two are leased from Beverly Enterprises and the other two each from Ventas Realty, LP and University Center Hotel, Inc. These four together result in negative EBITDA of approximately $3,309,261 accrued during the twelve months ending June 30, 2000. For the same reasons as with the HCC Facilities, the Debtors have determined that, these too, should be disposed of through the rejection of leasess and Provider Agreements. Through lease termination and the cessation of operational and financial responsibility, the Debtors expect to realize annual savings of approximately $10,401,055. The landlords' rejection claims subject to the limitations provided by section 502(b)(6) of the Bankruptcy Code, in the Debtors' estimation would be in excess of $30 milllion, in the absence of mitigation, based on 15% of the rental obligations remaining under the leases, not exceeding three years of the remaining term following the petition date. The Debtors do not anticipate rejection damages for rejecting the Medicare Provider Agreements, given that the Government Stipulation contemplates divestiture of these particular Divesting Facilities. Much as they would prefer to transfer facilities as going concerns, the Debtors tell Judge Walrath, they recognize that landlords are not required to enter into OTAs and LTAs. Indeed, HCC has previously asserted in court that it does not wish to, and it is HCC's prerogative not to, enter into the Debtors' proposed froms of OTAs or LTAs. After consultation with the Creditors' Committee, the Debtors do not believe it would be a responsible exercise of sound business judgment to enter into OTAs and LTAs on terms that are substantially more onerous than those agreed to by numerous other landlords. Therefore, in the Debtors' business judgment, the way to stop the drain on the estates' value would be to reject the leases and provider agreements. To divest the Facilities, the Debtors also seek approval of the Implementation Procedures which provide that: (1) Each Divesting Facility will be subject to divest in accordance with applicable state laws; (2) Within three days of the completion of divestiture of a Divesting Facility, the Debtors will file with the Court and provide the Transition Notice to the Committee, the DIP Lenders, the landlord, HHS/DOJ and the relevant state Medicaid agency of the completion of the state-law Transition Process (the Transition Date); (3) The rejection of Lease or Provider Agreement will be effective as of the Transition Date; (4) The landlord or state Medicaid agency will have thirty days from the date of the Transition Notice for submitting rejection damages claim(s); (5) Rent and other obligations accrued from the date the Court approves the motion to the Transition Date shall be treated as administrative expense, payable on the effective date of any plan of reorganization confirmed in the chapter 11 cases; (6) If the Debtors and the landlord agree on the transfer of a Divesting Facility as a going concern during the state-law transition process, the Debtors can opt out of the Transition Procedures. The Debtors draw Judge Walrath's attention to the opt-out provision in the Implementation Procedures the provision for the effective date for the rejection of the lease or provider agreement to be on the Transition Date. The opt-out mechanism enables the Debtors to transfer a Divesting Facility, upon the consent of the landlord, if a new operator is identified during the Transition Process, the Debtors submit. It also gives the Debtors an added window of opportunity to negotiate with the landlords regarding consensual transfer of the Divesting Facilities on economic terms that are beneficial to the Debtors, their estates and their creditors, the Debtors tell the Judge. With the effective date of the rejection of the Leases and Provider Agreements to be of the actual date of divestiture of the facilities, the Debtors can maintain operations for the benefit of the residents in the Divesting Facilities, the Debtors observe. The Debtors submit that the determination to reject the Leases and Provider Agreements and commence the Transition Process was arrived at in good faith, is based upon the sound business judgment of the Debtors, and should therefore be approved and authorized by this Court. The Debtors believe that establishing the Implementation Procedures are in the best interests of the Debtors, their estates and their creditors. Accordingly, the Debtors seek the Court's approval of: (1) the divestiture of 22 of the SunHealth Facilities in accordance with state law; (2) the rejection of the related real property leases and the Medicare and Medicaid Provider Agreements, effective as of the date of divestiture, pursuant to 11 U.S.C. section 365(a); and (3) the Implementation Procedures governing the transfer of the divesting facilities and the treatment of claims in connection with the divestiture, pursuant to section 363(b). Americorp Financial's Limited Objection Americorp Financial filed a limited objection with the Court voicing its objection to the extent that the Debtors have not specified whether they intend to retrieve equipment in the facilities and whether any of such equipment is Americorp's equipment. Americorp reminds the Court that the status of Americorp's interest in the equipment is an issue that need to be taken care of. (Sun Healthcare Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) ZIONS BANCORP: Moody's Lowers Debt Rating to Baa1 & Reviewing for Downgrade --------------------------------------------------------------------------- Moody's Investors Service has downgraded the subordinated debt rating of Zions Bancorp (Zions) to Baa1 from A3. The rating agency also downgraded the deposit ratings of the company's subsidiary banks. Moody's rating action reflects Zions' substantial commercial real estate concentration risk and relatively modest market shares outside of Utah and Idaho. The ratings were placed on review for possible downgrade following the termination of the merger agreement between Zions and First Security -- a transaction that would have strengthened Zions' existing market positions, achieved cost savings, and expanded its franchise into new markets. (Moody's had previoulsy upgraded Zions' ratings based on the First Security merger.) The rating outlook is stable, Moody's said. Moody's noted that Zions, helped by acquisitions, has experienced substantial loan growth, expecially in the increasingly competitive commercial real estate (CRE) sector. CRE exposure currently exceeds 45% of the loan book, although this includes the lower-risk owner-occupied segment. On the other hand, construction and land development loans, which are among the riskiest in the CRE category, approximate two times tangible common equity. The company still enjoys a solid core deposit base in attractive markets, although margins have declined as strong loan growth has been funded with higher cost borrowings. The rating agency added that recent earnings performance has been hurt by one-time charges associated with the failed merger. However, regulatory capital ratios remain strong. The following ratings have been downgraded: A) Zions Bancorp -- The subordinated debt rating to Baa1 from A3. B) Zions First National Bank - The long-term deposits rating to A2 from A1; - the long-term issuer rating to A2 from A1; - the other long-term senior obligations rating to A2 from A1; - the junior subordinated debt rating to A3 from A2; - and the bank financial strength rating to C from C+. - The Prime-1 short-term deposit rating and the Prime-1 rating on other short-term senior obligations were confirmed. C) California Bank & Trust - The long -term deposits rating to A2 from A1; - the long-term issuer rating to A2 from A1; - and the other long-term senior obligations rating to A2 from A1. - The Prime-1 short-term deposit rating, the Prime-1 rating on other short-term senior obligations and the D+ bank financial strength rating were confirmed. D) Zions Institutional Capital Trust A - The preferred stock rating to "a3" from "a2". Zions Bancorp, headquartered in Salt Lake City, Utah had assets of $21 billion at midyear 2000. * BOOK REVIEW: The Rise and Decline of the Medici Bank, 1397 - 1494 ------------------------------------------------------------------- Author: Raymond de Roover Publisher: Beard Books Softcover: 500 Pages List Price: $34.95 Order a copy today from Amazon.com at http://www.amazon.com/exec/obidos/ASIN/1893122328/internetbankrupt Review by Susan Pannell It's the name on the door that grabs you. The Medicis were wheeler-dealers extraordinaire. From modest beginnings as tradesmen in the thirteenth century, they became dukes of Tuscany, the richest family and de facto governors of Florence, builders of monuments (often to themselves for example, the churse of San Lorenzo), and compilers of an excellent library that still exists (the Biblioteca Laurenziana). Their political power shaped history; two Medicis sat in the Vatican; Machiavelli dedicated The Prince to a Medici, Lorenzo the Magnificent, in vain hopes of getting his job back; and the Medicis may have been indirectly responsible for the invastion of Italy in 1494 by Charles VIII of France. Despite their colorful splash in history, the Medicis' activities as bankers and traders have received less scrutiny--oddly, in view of the fact that it was financial power that quite literally bankrolled everything. Economic historian Raymond de Roovver puts business first in this book, a classic analysis of medieval period banking and trade. Founded by Giovanni di Bicci de Medici, the Medici Bank was the most powerful banking house of the fifteenth century, achieving its zenith in the years from 1429 to 1464 when Cosimo was in charge, and then skidding for the thirty years between his death and the expulsion of the Medici family from Florence in 1494. From its headquarters in Florence, the bank established branches everywhere that mattered. It served as financial agent of the Roman Catholic Church, extended credit to monarchs, and facilitated international trade in Western Europe. By their personal influence and the use of their profits, the owners and administrators of the bank contributed significantly to the development of Florence as the greatest center of the Renaissance. As the author points out, a study of the Medici Bank is worthwhile from a microeconomic perspective as well. In the pre-industrial era of the Medicis, banking and trade were synonymous with big business there was nothing bigger. While the techniques of modern business have changed in the past five to six hundred years, most notably in methods of communication, the human resources problems confronting business today are remarkably similar to those the Medicis wrestled with centuries ago; how to select the right manager for the right job, how to coordinate different branches and departments, when to retain personal control and when to delegate. The bank used the best methods available for handling every business problem, representing, therefore, not a typical business of the time but rather the optimum that was achieved in the Middle Ages and the Renaissance. Despite their stature, however, the Medicis were not immune to unfavorable economic conditions or political forces, such as organized consumer groups and the climate created by the War of the Roses in England. The book combines superb research and analysis with graceful writing. The numerous illustrations, diagrams, charts and tables (including genealogies), drawn from archival material, make this work as valuable now as when it was first published in 1963. Raymond de Roover was born in Belgium, and earned an M.B.A. from harvard and a Ph.D. from the University of Chicago ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles available from Amazon.com -- go to http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt-- or through your local bookstore. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Ronald Ladia, Zenar Andal, and Grace Samson, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *