/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/001026.MBX T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 26, 2000, Vol. 4, No. 210 Headlines ADVANTA CORP: Moody's Downgrades Senior Rating & Still Down on Bank Ratings AMAZON.COM: Balance Sheet's Upside Down by a Half-Billion, But Who Cares? AMERIDA INC: Moody's Assigns Ba3 Rating to $408MM TravelCenters Loan Pact CANFIBRE OF RIVERSIDE: Case Summary and 21 Largest Unsecured Creditors CITIZENS COMMUNICATIONS: Moody's Lowers Ratings & Reviewing For Downgrade CROWN PAPER: CAC Terminates Offer to Purchase Debtors' Assets DOW CORNING: No Progress on the Chapter 11 Front, but Earnings are Positive FARMERS COOPERATIVE: Asset Sale Process Underway GLOBAL TISSUE: Strikes Final Deal for Continued Use of Cash Collateral GOLDEN OCEAN: Frontline's Plan Declared Effective October 10, 2000 GREYHOUND LINES: Closes on $125MM Financing Agreement with Foothill HARNISCHFEGER INDUSTRIES: Stipulates to Stay Relief on Insured Joy Claim INSIGHT MIDWEST: Moody's Assigns Ba1 Rating To $500MM 10-Year Senior Notes LAROCHE INDUSTRIES: Asks for Extension of 365(d)(4) Deadline to February 28 MALLINCKRODT INC: Moody's Maintains Baa2 Long-Term Rating after Tyco Buyout MOHEGAN TRIBAL: Moody's Confirms Ba1 & Ba2 Ratings With Negative Outlook MOLL INDUSTRIES: Commences Tender Offer for 11-3/4% Senior Notes due 2004 NATIONAL BOSTON: Infotopia Agrees To Provide $500,000 DIP Financing OWENS CORNING: Obtains Authority to Pay Pre-petition Contractor Liens PILGRIM AMERICA: Fitch Downgrades CBO's CDOs & Places On Watch Negative PURINA MILLS: Prepares Registration Statement for GSCP's New Shares ROCK-TENN COMPANY: Moody's Lowers Long-Term Debt Ratings To Baa3 SAFETY COMPONENTS: Plan Swaps 97% Equity Stake for $97MM of Old Bonds SAFETY KLEEN: Sells Martinez Property, Fetching $2,000,000 for Estate STROUDS, INC.: Judge Walrath Approves $50MM DIP Facility with CIT Group TESSERACT GROUP: Private & Charter School Operator Files for Chapter 11 TEXFI INDUSTRIES: Judge Gonzales to Consider $25MM DIP Pact with CIT Group VENCOR, INC.: In Exchange for Certain Waivers, Agrees to Stay Modification VIDEO UPDATE: Schedules Auction For Sale of 117-Store Leasehold Interests WEB PRODUCT: Internet Start-Up Files Chapter 7 Case in Rochester, New York ********* ADVANTA CORP: Moody's Downgrades Senior Rating & Still Down on Bank Ratings --------------------------------------------------------------------------- Moody's Investors Service downgraded the credit ratings of Advanta Corporation (Advanta)(senior to B2) and Advanta National Bank (ANB) (deposits to B1). ANB's bank financial strength rating is confirmed at E+, but all other ratings for Advanta and ANB remain on review for possible downgrade. Moody's views Advanta's announcement that it will sell its mortgage operation, and apply at least part of the proceeds to reducing its debt, as a positive step that should improve the company's liquidity position in the short to intermediate term. Given the holding company's cash position and the contemplated use of proceeds to retire outstanding medium-term notes, Moody's believes that Advanta should have adequate liquidity to meet its debt obligations over the near to intermediate term. After the sale of the mortgage unit, the rating agency said, Advanta will essentially be a monoline operation. The business card portfolio has grown rapidly, but asset quality has deteriorated somewhat despite a robust economy. In Moody's opinion, the creditworthiness of Advanta's client base could decline in the event of a recession. Furthermore, the rating agency added, there remain significant uncertainties regarding the ultimate form of Advanta's capital structure, the profitability of its business card unit on an operating basis, and the trends in asset quality for that portfolio. In addition, Moody's said, even if Advanta pays off all its medium-term notes, the company will have a very large debt burden, including its capital securities, relative to its cash generating capacity. Accordingly, Moody's review will focus on the prospects for further debt reduction as well as the outlook for the profitability and asset quality of the business card operation. The following ratings were downgraded: A) Advanta Corporation a) the rating for senior long-term debt to B2 from B1; b) the rating for junior subordinated long-term debt to Caa1 from B3; c) the preferred stock rating to "caa" from "b3". B) Advanta Capital Trust I a) the preferred stock rating to "caa" from "b3". C) Advanta National Bank a) the rating of the bank for long-term deposits to Ba3; b) the rating of the bank for other long-term senior obligations to B1; c) the rating of the senior bank notes to B1; d) the ratings of the subordinated bank notes to B2; e) the issuer rating to B1. The following ratings were confirmed: A) Advanta National Bank a) the Not Prime rating of the bank for short-term deposits and other short-term senior obligations and b) the bank's E+ financial strength rating. Advanta Corporation, headquartered in Spring House, Pennsylvania, had approximately $12 billion in managed assets as of September 30, 2000. AMAZON.COM: Balance Sheet's Upside Down by a Half-Billion, But Who Cares? ------------------------------------------------------------------------- Amazon.com, Inc., announced third quarter results this week. Sales doubled; gross margin increased; operating losses decreased; and sales per active customer increased. The only disappointing part in the announcement was a $240 million net loss for the three months ending September 30, 2000. That loss causes Amazon's liabilities to exceed assets by $487 million on the Company's September 30, 2000, balance sheet. On that news, Amazon's shares advanced by 15% into the mid-30's. AMERIDA INC: Moody's Assigns Ba3 Rating to $408MM TravelCenters Loan Pact ------------------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to TravelCenters of America, Inc.'s proposed $408 million secured bank loan facility, consisting of a $100 million six-year revolving credit and a $308 million eight-year term loan and a B3 rating to the $200 million 10-year senior subordinated notes to be issued as part of a recapitalization. Assuming that the recapitalization takes place and these new facilities are issued, Moody's will downgrade the existing Senior Implied rating to B1 from Ba3 and the Issuer rating to B2 from B1. The rating outlook post the recapitalization, however, will be positive reflecting Moody's expectations that leverage and interest coverage should show significant improvement over time as the Company's re-imaging program is brought to completion, the level of capital spending reduced and incremental return is realized on the program's investment. TravelCenters of America, Inc. (TA) is being recapitalized in connection with the acquisition of the Company by Oak Hill Capital Partners, L.P., a private equity investment group founded by Robert M. Bass. Oak Hill will invest $133.0 million to purchase 60.5% of TA's equity. Other institutional investors, all current owners, will invest $72.0 million to purchase 32.7%. Freightliner LLC (the nation's largest Class 8 heavy-duty truck manufacturer) will exercise an option to invest $3.3 million to purchase an additional 1.4%, increasing its stake in TA to 4.3%, while management will initially hold a 2.5% interest. As part of the transaction, management will be granted options which could increase their ownership to 14.2%. Total consideration for the transaction, excluding fees and expenses, will be $703 million, or 6.4x Adjusted LTM EBITDA ended June 30, 2000. $408.2 million of TA's existing debt will be refinanced as part of the transaction. A cash tender offer for the 1997 issued $125 million 10.25% senior subordinated notes, subject to the consummation of the acquisition by Oak Hill, was already announced October 6, 2000. Upon completion of the transaction, Moody's existing Ba2 rating on the $270 million senior secured facility and the B2 rating on the $125 million senior subordinated notes will be withdrawn. The ratings reflects TA's high and increased leverage level and required debt service, its dependence on national long-haul trucking fleets for the majority of its diesel fuel sales and traffic generation, vulnerability to slow downs in the economy, tight diesel fuel margins, and the on-going need for capital expenditures to sustain the Company's position within the highly competitive truck stop industry. Pro forma at year-end 2000, TA will have total debt to EBITDA of 4.7 times, EBITDA to interest coverage of 2.0 times with EBITDA less total capital expenditures to interest of 0.9 times (EBITDA less maintenance cap ex of 1.7x). At year-end, total debt is projected at $510.8 million against a recap accounting adjusted book equity of $28.2 million. Pro forma capitalization for the transaction will be 70% debt and 30% equity-- $313 million senior debt (42.7% of capital, 2.9x LTM Adjusted EBITDA-June 30, 2000), $200 million senior subordinated debt (27.4% of capital, 1.8x LTM Adjusted EBITDA) and $220 million of shareholder's equity. Moody's notes, however, that effectively $290.6 million will be used to purchase TravelCenter's existing common and preferred equity position and $42.5 million to cover debt tender costs and transaction expenses compared to $220.0 million of new common equity injected as part of the transaction. Total debt will increase from $411.2 million, as of June 30, 2000, to $513.3 million post the recapitalization. However, the ratings also recognize the Company's leading market position and strong brand name ("TravelCenters of America" and "TA") in the fragmented truck stop and travel center industry, its long-established relationships with the major national trucking fleets, its national geographic coverage, and its broad product and service offerings' appeal to professional truck drivers and the resulting diversity of high-margin revenue. The ratings also consider the high barriers to entry given the extensive zoning and permitting requirements, the high capital investment required per site (estimated in the $10 million plus range), the Company's significant investment in re-imaging its product and refurbishing many of their locations and the proven impressive returns on the investments, and the limited availability of suitable, attractive new site locations along or near interstate highways. TA has the largest nationwide truck stop network in the United States with 159 full-service sites in 40 states. The Company supplies diesel fuel to 49 of the top 50 largest long-haul trucking fleets and while it is the principal supplier to the two largest fleets and to four of the top five, no single customer represents over 6% of revenue. Fleet sales currently account for 68% of diesel fuel volume. The strong fleet relationship is cemented through competitive fuel pricing (typically market cost plus fixed fee), the broad availability of maintenance and repair shops-highlighted by the agreement with Freightliner permitting limited warranty work to be performed at TA's shops, and through marketing initiatives such as a "loyal fueler program" which rewards drivers with free amenities and discounted meals. The ratings also consider the consistent long-term growth of demand for diesel fuel (even during recessions of the early 1980s and early 1990s) and that this, combined with the full service travel center concept, provides the platform that attracts the customer and thus the opportunity to develop the higher margin non-fuel sales (59% versus 10+% for fuel). Moody's also notes that the Company has re-imaged and upgraded many of their sites resulting in increased throughput from truckers and from less cost sensitive general motorists. The Company indicated that about $260 million has been invested in the network since 1996. Both fuel and non-fuel revenues as well as EBITDA have increased at sites where re-image is completed. Moody's also notes the TravelCenters' management team has successfully integrated four different network operations since launching the Combination Plan in early 1997 with BP's network of 48 sites with the subsequent additions of the Unocal, Burns Bros. and Travel Ports of America operations. This is illustrated by same store fuel sales volume and non- fuel revenue compound growth rates of 11.9% and 17.6%, respectively, and EBITDA of 13.2%. (For perspective, TA operated sites derive approximately only 35% of total revenue from non-fuel products and services, yet 75% of total gross profit.) On a pro forma basis, for the twelve months ended June 30, 2000, TA had revenues of $1.8 billion and adjusted EBITDA of $109.1 million. The Ba3 rating on the secured bank facility, and the one notch improvement over the senior implied rating, considers the facility's secured position, the strong collateral coverage of the loans, even if fully drawn, and the significant amount of debt contractually subordinate to facility borrowings. The facility is fully guaranteed by each of the Company's domestic subsidiaries, other than TA Franchise Systems Inc., and is secured by essentially all of the tangible and intangible assets of the Company and its subsidiaries, including the capital stock. (TA Franchise represents approximately 6.7% of consolidated operating income and 0.2% of consolidated total assets.) The in-use value of TA's 150 company-owned operating locations is approximately $1.05 billion per a recent independent appraisal by Deloitte and Touche. This represents collateral asset coverage of 3.4x of the senior secured facility and 2.0x total debt coverage, without consideration of the approximately $135 million of receivables and inventory as of June 30, 2000. Moody's believes that the appraisal valuation reflects the Company's long-established and well-positioned site location on the interstate highway system and the impact of the re-imaging program, but also notes that the enterprise acquisition price is $703 million. Moody's also notes that near term interest coverage for the balance of year 2000 and for 2001, after consideration of planned capital expenditures, is modest-- 0.84x for the July-December period of 2000 and 1.23x for 2001. (Projected EBITDA of $117.5 million in 2001, compared with interest expense of $55.4 million and capital expenditures of $49.5 million for the year.) Post 2001, interest coverage is projected to significantly improve (1.78x in 2002 and 1.97x in 2003) as discretionary capital expenditure for growth is expected to decline from the $35 million per year range to about $25 million as the major re-imaging program is largely completed. This decline will however be partially off-set by expected growth in maintenance capital expenditures as the number of service centers is gradually increased (165 locations projected for 2005). The B3 rating on the senior subordinated notes, due 2010, reflects the noteholders' contractually junior claim in right of payment relative to the secured credit facility. Similar to the secured credit facility, the notes are fully guaranteed by each of the Company's domestic subsidiaries, other than TA Franchise Systems Inc. The senior subordinated notes will be sold in a privately negotiated transaction with registration rights under the Securities Act of 1933 under circumstances reasonably designed to preclude distribution in violation of the Act. The issue has been designed to permit resale under Rule 144A. TravelCenters of America, headquartered in Westlake, Ohio (a Cleveland suburb) operates the nation's largest full-service travel center network consisting of 159 sites located in 40 states-- 122 are owned and operated by the Company, 28 are owned and franchised and 9 are owned and operated by independent franchisees-- serving long-haul trucking fleets and their drivers, independent truck drivers and general motorists. Pro forma LTM revenue ended June 30, 2000 totaled $1.814 billion, split $1.258 billion fuel related and $0.556 billion non-fuel. CANFIBRE OF RIVERSIDE: Case Summary and 21 Largest Unsecured Creditors ---------------------------------------------------------------------- Debtor: CanFibre of Riverside, Inc. 1755 Brown Avenue Riverside, California 92509 Chapter 11 Petition Date: October 24, 2000 Court: District of Delaware Bankruptcy Case No.: 00-04019 Debtor's Counsel: Howard Seife, Esq. Joseph H. Smolinsky, Esq. N. Theodore Zink, Jr., Esq. Chadbourne & Parke LLP 30 Rockefeller Plaza New York, New York 10112 (212) 408-5100 James L. Patton, Jr., Esq. Brendan Linehan Shannon, Esq. Young, Conaway, Stargatt & Taylor P.O. Box 391 11th Floor Rodney Square North Wilmington, Delaware 19899 (302) 571-6600 Total Assets: $ 100 Million Above Total Debts : $ 100 Million Above 21 Largest Unsecured Creditors: Bank of New York Eladia Burgos BNY Western Trust Company (Indenture Trustee) 700 South Flower Street Suite 500 Los Angeles, California 90017 (213) 630-6231 Bond Debt $ 85,000,000 Enron Capital & Trade Resources, Inc. Randy Petersen c/o Enron Corp. 1400 Smith Houston, Texas 77002 Subordinated (713) 853-4334 Notes $ 15,000,000 Stone & Webster Engineering Corp. Joyce Bean 245 Summer Street Boston, MA 02210-2266 (617) 589-7180 Services $ 4,336,976 Stone & Webster Operating Corp. Joyce Bean 245 Summer Street Boston, MA 02210-2266 (617) 589-7180 Services $ 2,084,538 Paul, Hastings, Janofsky & Walker LLP Euclid A. Irving, Esq. 399 Park Avenue New York, New York 10022 (212) 318-6000 Trade $ 1,370,302 Southern Cal Edison Clara Rios P.O. Box 600 Rosemead, CA 91771-0001 (800) 990-7788 Utility $ 983,560 Borden Chemical Jayne E. Wieger P.O. Box 951114 Dallas, Texas (541) 744-3201 Trade $ 818,432 ECT Merchants Investment Corp. Randy Petersen c/o Enron Corp. 1400 Smith Houston, Texas (713) 853-4334 Notes $ 800,000 Johnson-Peltier Kim Rowell 12021 Shoemaker Santa Fe Springs, CA 90670 (562) 944-3408 Trade $ 592,720 Enron Power Marketing Bill Bradford 1400 Smith Street Houston, TX 77002-7361 (713) 853-3831 Trade $ 537,514 Enron North America Bill Bradford 1400 Smith Street Houston, TX 77002-7361 (713) 853-3831 Trade $ 488,533 County of Riverside Treasurer Paul McDonnel 4080 Lemon Street 4th Floor Riverside, CA 92502-2205 (909) 955-3900 Tax $ 429,636 FibreForm LLC Marc Seidner c/o FibreForm Wood Products, Inc. 1999 Avenue of the Stars Suite 250 Los Angeles, CA 90067 (310) 203-5401 Trade $ 396,815 CDK G.D. Moore 800 South Hutton Road Farmington, New Mexico 87401 (505) 327-5168 Trade $ 291,149 Western Pneumatics Trade $ 211,819 Hipp Engineering Ltd. Trade $ 193,491 West San Bernardino County Utility $ 192,674 Brownco Trade $ 173,180 Best Temporary Services Trade $ 147,214 Henry Viramontes Trade $ 137,101 Thomason Mechanical Trade $ 126,023 CITIZENS COMMUNICATIONS: Moody's Lowers Ratings & Reviewing For Downgrade ------------------------------------------------------------------------- Moody's Investors Service has lowered the long-term debt ratings of Citizens Communications Company to Baa2 from A2. Also downgraded is the fully guaranteed senior unsecured debt rating and issuer rating of Electric Lightwave, Inc. ("ELI"), its 86% owned subsidiary, to Baa2 from A2. The guaranteed preferred stock rating of Citizens Utilities Trust has also been lowered to "baa3" from "a2". At the same time, Moody's lowered the short- term rating on Citizens' commercial paper program to P-2 from P-1. All ratings remain on review for possible further downgrade. Moody's said that the actions reflect the strain on the company's debt protection measurements that will result from the approximately $3.65 billion cash acquisition of about 1.1 million access lines from Global Crossing Inc.'s local phone business. This pending transaction itself follows the earlier announced acquisitions of nearly 930,000 rural access lines from U.S. West (now Qwest) and GTE (now Verizon). Citizens expects to fund these access line purchases with the proceeds of approximately $2.0 billion in public utility asset dispositions, $550 million cash and investments, $240 million of operating cash flow, $500 million of equity- like securities and $3.1 billion in commercial paper backed by $6.5 billion of short-term senior unsecured revolving credit facilities. Moody's review will focus on a number of issues including Citizens' ability to successfully raise equity capital for the proposed transaction as well as management's plans to finance future access line growth. Pro forma for all announced acquisitions and dispositions, Moody's expects Citizens' leverage ratio, as measured by total debt to EBITDA, to increase from around 3.0x to over 4.0x. Of further concern to Moody's is the status of ELI. ELI is a competitive local exchange carrier ("CLEC") which, like many other CLECs, has lost a significant amount of its market value in recent months. Given present market conditions, the monetizable value of ELI has declined. Moody's believes ELI could continue to require significant amounts of capital and management's resources. Offsetting these concerns is the relatively low business risk Moody's believes is present in the rural local exchange business. Rural local exchanges are the beneficiaries of regulatory protections resulting from the 1996 Telecommunications Act and further benefit from demographic profiles that make major capital investments from competitors unlikely. As a result, Citizens will have a significant base of stable cash flows from which it can service its debt or fund further access line growth. Citizens Communications Company, headquartered in Stamford, Connecticut, provides telecommunications services to one million customers across the nation, including Internet, long-distance, wireless, data, teleconferencing, cable television, advanced calling features and basic telephone services. CROWN PAPER: CAC Terminates Offer to Purchase Debtors' Assets ------------------------------------------------------------- Crown Vantage Inc. and its wholly owned subsidiary Crown Paper Co., announces that the letter of intent dated September 11, 2000, between Crown Acquisition Corporation and Crown Paper has been terminated by CAC. As previously announced, the letter of intent contemplated the sale to CAC of substantially all of the assets of Crown Paper. CAC stated that it terminated the letter of intent because the definitive agreement had not been executed by September 27, 2000, and alleged that certain conditions precedent could not be satisfied by Crown Paper. Despite terminating the letter of intent, CAC has expressed interest in acquiring the St. Francisville mill. Bob Olah, CEO of Crown Vantage and Crown Paper, commented, "While we are disappointed that the CAC transaction will not progress as planned, we feel that certain requested changes to the letter of intent did not yield fair market value for the assets being discussed. However, we are encouraged by the interest shown by other parties, not only in the mills that CAC was to purchase, but in all of the company's mills. We are currently working with these parties in the diligence process." Olah continued, "The Crown management team remains focused on our responsibility to negotiate a deal or package of deals that delivers maximum value and provides both the ability to continue serving our customers and the avenue to emerge from bankruptcy." Prior to the termination of the letter of intent, Crown sought and received an extension of the exclusivity period until December 25, 2000, for producing a plan of reorganization. DOW CORNING: No Progress on the Chapter 11 Front, but Earnings are Positive --------------------------------------------------------------------------- Dow Corning Corp. reports consolidated net income of $13.6 million for the third quarter of 2000. This was half of the $27.3 million net income reported in Q3 of 1999 and included restructuring charges of $36.8 million before tax ($24.3 million after tax), chiefly related to the work force reduction program announced in August. Net income for the first three quarters of 2000 was $77.1 million, up 3 percent from $74.6 million in same period last year. Third-quarter 2000 sales were $684 million, representing 5 percent growth compared with sales of $650 million reported in the same quarter last year. Sales through the first three quarters were $2.08 billion, up 8 percent from $1.93 billion through three quarters in 1999. "While it was a decision that was not taken lightly, the work force reduction program was necessary to ensure a healthy financial future," said Gifford Brown, Dow Corning's vice president for planning and finance and chief financial officer. "We will now begin to reap the rewards of a leaner cost structure, which will help make us more competitive." Dow Corning, which develops, manufactures and markets diverse silicon- based products, currently offers more than 10,000 products to customers around the world. Dow Corning is a global leader in silicon-based materials with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. FARMERS COOPERATIVE: Asset Sale Process Underway ------------------------------------------------ Farmers Cooperative Assn. has asked the U.S. Bankruptcy Court in Kansas City, KS for authorization to begin liquidating certain assets. The Co-op has already been granted permission to sell off elevators in Leavenworth and Tonganoxie - for $15,000 and $7,500 each. The co-op owes up to $20 million, including more than $10 million to a cooperative bank that had loaned the organization money for operations. The co-op has grown from its Lawrence roots in 1953 to include 19 locations, from Burlingame to Rushville, Mo. A creditors committee was also appointed on Monday to represent the interests of unsecured creditors in the case. Members are Jim Carpenter, Eudora; Byron Finley, Edgerton; Richard Knabe, Eudora; R. Edwin Longanecker, Edgerton; Darin Dahl, representing Burlington Northern Railroad; Ron Osgood, Harrisonville, Mo.; and Joe Weiler, representing the Jean A. Knipp Trust in Topeka. (New Generation Research, Inc., 24-Oct-00) GLOBAL TISSUE: Strikes Final Deal for Continued Use of Cash Collateral ---------------------------------------------------------------------- The US Bankruptcy Court, District of Delaware, entered an order on October 11, 2000 authorizing Global Tissue LLC final use of cash collateral and resolving objections with respect thereto. With the consent of the Agent, Bank of America NA and the Banks, Christiana Bank og Kreditkasse ASA, OCM Opportunities Fund II LP and Columbia/HCA Master Retirement Trust (Separate Account II), the debtor is authorized to reserve, subject to further orders of the Court, existing and/or future cash collateral in the amount of $444,000. As compensation for use of cash collateral, the Banks shall have and are granted a replacement security interest and lien in and to all of the debtor's assets of the bankruptcy estate. The Committee carve-out has been increased to $75,000. The general unsecured creditors' reserve has been increased from $250,000 to $500,000, provided the amount otherwise distributable to the Banks is increased by at least $250,000 in cash as the result of the increase in the purchase price specified in the Purchase Agreement to at least $40.75 million. The debtor's estate and the Banks shall divide equally the first Net Proceeds up to $750,000. The debtor's estate shall receive all Net proceeds in excess of $750,000 up to $1,125,000. Any Net Proceeds in excess of $1.125 million shall be divided 2/3 to the debtor's estate and 1/3 to the Banks, provided however, that the maximum Net Proceeds received by the Bank shall in no circumstance exceed $1 million and the debtor's estate shall be entitled to all additional Net Proceeds after the Banks have received $1 million. GOLDEN OCEAN: Frontline's Plan Declared Effective October 10, 2000 ------------------------------------------------------------------ The Effective Date of Frontline Ltd's Plan of Reorganization for Golden Ocean Group Limited, Golden Ocean Tankers Limited and Channel Rose Holdings Inc. under Chapter 11 of the United States Bankruptcy Code dated as of July 7, 2000, as amended, occurred on October 10, 2000. Co-counsel for Frontline Ltd. are the law firms Latham & Watkins and Pachulski, Stang, Ziehl, Young & Jones PC. GREYHOUND LINES: Closes on $125MM Financing Agreement with Foothill ------------------------------------------------------------------- Greyhound Lines, Inc. announced yesterday that it closed a financial arrangement with Foothill Capital Corporation, a wholly-owned subsidiary of Wells Fargo & Company (NYSE: WFC), for a two-year revolving line of credit of up to $125 million. With the closure of this agreement, Greyhound Lines, an operating company of Laidlaw, Inc., will be independent of its parent company with respect to near-term financing needs. "We are pleased the Laidlaw bondholders consented to the financing and that our parent can now focus on working towards a consensual resolution of its long-term capital structure and liquidity issues," said Craig Lentzsch, president and CEO of Greyhound Lines. "With this facility in place, our customers can be confident that we will continue to provide the high level of service they've come to expect. The agreement will provide us with the working capital needed to fund our seasonal cash flow needs and capital expenditure requirements, as well as repay a $43 million intercompany advance due to Laidlaw." Greyhound Lines, Inc. is the largest North American provider of intercity bus transportation, serving more than 3,700 destinations with 20,000 daily departures across the continent. The company also provides package and courier express service, charter and tour services and food service at certain terminals. HARNISCHFEGER INDUSTRIES: Stipulates to Stay Relief on Insured Joy Claim ------------------------------------------------------------------------ The Debtors consent to modification of the automatic stay to permit Christopher Boggs to continue prosecution of their prepetition lawsuit captioned Boggs v. Oak Mountain Energy, L.L.C., Civil Action No. CV09902034, pending before the Circuit Court for Jefferson County, Alabama. Modification of the stay is limited to permit (i) the Plaintiff to liquidate his claim, (ii) collect any available insurance proceeds under Joy's policies, and (iii) file proofs of claim against the Debtors. In Alabama, W. Lee Pittman, Esq., and J. Chris Cochran, Esq., at Pittman, Hooks, Dutton & Hollis, represent the Plantiffs. (Harnischfeger Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) INSIGHT MIDWEST: Moody's Assigns Ba1 Rating To $500MM 10-Year Senior Notes -------------------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to the proposed $500 million offering of 10-year senior notes to be issued by Insight Midwest, L.P. (Insight), and confirmed the B1 rating for Insight's existing $200 million of 9-3/4% senior notes due 2009. Moody's also assigned Ba3 ratings to the proposed $1.75 billion of combined senior secured (stock only) bank credit facilities being arranged for Insight's operating subsidiaries, which will refinance the company's existing $1.225 billion of combined bank credit facilities and the Ba3 ratings for which will be withdrawn at that time. The senior implied and senior unsecured issuer ratings for Insight are Ba3 and B1, respectively, and the outlook for all ratings is stable. The ratings broadly reflect the company's high financial leverage and moderate debt service coverage levels; ongoing planned capital investment of a material amount for completion of plant upgrades, headend consolidation, and equipment deployment and marketing expenditures to support telephony and other advanced services; execution risks related to the in-process system rebuilds and upgrades, further system integration, potential incremental expansion and acquisition activity, and new product offerings; heightened competitive risk from direct broadcast satellite (DBS) operators and cable/telco overbuilders; and structural considerations related to the company's corporate organization and capitalization. The ratings garner support, however, from the expanded scope and scale of the consolidated entity proforma for the pending acquisition of the Illinois cable properties from AT&T; the technologically advanced state of its cable plant, the rebuild of which will be substantially completed over the next year; the resultant improvement in subscriber retention and economic prospects stemming from the provisioning of new and enhanced services to its customer base; the benefits afforded by its AT&T partial ownership, which include greater programming discounts and equipment purchasing power; and greater financial flexibility under the assumption that the proposed new financings will be successfully completed. The Ba3 ratings for the bank credit facilities further reflect their senior-most position in the capital structure, specifically by virtue of their benefiting from subsidiary upstream guarantees (as well as a downstream guarantee from Insight), and the high implicit support that accrues to this class of debt from the solid asset value coverage that exists even under a distress scenario. It is noteworthy, however, that the high percentage of bank debt in the company's overall capitalization (although minimized proforma for the pending financings relative to that of today), coupled with the absence of a security interest in the assets of the operating companies, serve to constrain the rating to that on a level equivalent to the senior implied rating. The B1-rated senior notes sit at a holding company and, as such, are structurally subordinated to the bank debt, which is growing in size and is expected to be largely drawn within the near-to-intermediate term rating horizon. The bank credit agreement does allow for cash interest payments to be made on the notes, however, provided there is no event of default. Moody's notes that the existing and proposed senior debt of Insight is somewhat weakly positioned in its rating category, particularly relative to the more typical two-notch distinction between the senior implied rating and structurally subordinated debt for other credits within the pay television industry sector. However, the compressed one-notch rating differential in Insight's case continues to ultimately be justified given Moody's expectation that Insight's ability to meet demand for enhanced services will move the company to a free cash flow positive position prior to the rest of the peer group, and indeed the rating remains predicated on the company's successfully achieving meaningful cash flow growth and commensurate credit improvement in fairly short order. Moody's further believes that Insight has reached the inflection point of its business strategy, and that the debt overhang related to the Coaxial (Insight Communications of Central Ohio) operation should not be material to the Insight credit. With the majority of its fixed capital investment nearly behind it, Insight should be focused on deploying more success-based capital moving forward. In March, Insight Communications (unrated) and AT&T (A1 senior unsecured with negative outlook) announced the planned expansion of their 50%-50% Insight partnership. Proforma for the announced transactions, which include a more than 50% increase in the size of the partnership through the contribution of various systems in Illinois and Ohio, Insight will serve approximately 1.4 million subscribers in four states off of 12 headends. The existing Insight systems in Kentucky and Indiana have been largely upgraded to the company's 750 Mhz two-way standard, while the systems being contributed in Ohio and Illinois will require additional capital investment. The high level of technology advanced cable infrastructure embedded in the Insight systems puts it in a better position from which to defend its existing subscriber base from additional losses to DBS and and other alternative overbuild competition, and also enhances the company's prospects for improved subscriber economics (ARPU, cash flow and margins) through the provisioning of its suite of additional services, and on a more immediate basis than that which exists for most of Insight's comparative peer group. Moody's expects that the available bank credit facilities will be sufficient to cover the debt being contributed by AT&T and Insight Communications to the expanded partnership; on going capital expenditures for plant upgrades and headend consolidation; variable-based spending for cable modems, set-top boxes and telephony equipment; funding of the capital needs for Coaxial; and a fairly comfortable measure of excess availability that should represent a sufficiently appropriate liquidity cushion. It is important to note that leverage is extremely high at Coaxial, and that liquidity is extraordinarily tight at this now 100%-owned entity. The bank credit facilities include a carve-out that provides Coaxial with access to a limited basket ($40mm) of funding. Additionally, Insight will need to continue to make capital contributions through the next year to Coaxial to complete plant upgrades at the Ohio subsidiary. Insight Midwest owns and operates cable television systems serving approximately 1.3 million subscribers proforma for the pending transactions. The company maintains its headquarters in New York, New York. LAROCHE INDUSTRIES: Asks for Extension of 365(d)(4) Deadline to February 28 --------------------------------------------------------------------------- Laroche Industries, Inc. and Laroche Fortier Inc., seek to extend time to assume or reject leases of nonresidential real property. A hearing will be held on October 27, 2000 at 12:00 PM before the Honorable Joseph J. Farnan, US District Court, Wilmington, DE. The debtors lease various locations around the country that they use as manufacturing facilities, office space, distribution facilities, and warehouse space in addition to other leases, such as rail car leases, easements, pipeline leases, etc. that could be considered nonresidential real property leases. The debtors seek a second order extending the time for the debtors to assume or reject the leases for an additional 120 days, through and including February 28, 2001. The leases are among the primary operating assets of the debtors. The debtors lease their headquarters as well as some of their distribution facilities and warehouse space. The debtors have over 40 nonresidential real property leases that have not been assumed or rejected. The debtors are in the process of ensuring the continued viability of their business operations in the short term while at the same time analyzing business plans for their reorganization efforts. The debtors claim that they need additional time to act intelligently in making a judgment to assume or reject the leases. MALLINCKRODT INC: Moody's Maintains Baa2 Long-Term Rating after Tyco Buyout --------------------------------------------------------------------------- Moody's Investors Service announced today that it has confirmed the Baa2 long-term debt rating of Mallinckrodt, Inc., following the announcement on October 17, 2000 that Tyco International Ltd. has completed the purchase of Mallinckrodt in an equity-financed transaction valued at $3.2 billion, but has not legally assumed or guaranteed the existing Mallinckrodt debt. This rating action completes the rating review for upgrade that began June 29, 2000. Tyco's senior debt rating is currently Baa1 with a stable outlook. In a related action, Moody's has withdrawn the Baa2 rating on Mallinckrodt's revolving credit agreement, the (P)Baa2 rating on its 415 shelf registration, and its Prime-2 short-term debt rating. Mallinckrodt's Baa2 rating recognizes the benefits of the inclusion of Mallinckrodt's respiratory care, diagnostic imagining and analgesic pharmaceuticals operations into Tyco's Healthcare and Specialty Products business segment, and the likelihood of meaningful cost saving opportunities. Tyco's proven track record of taking out costs and improving operating margins should enhance Mallinckrodt's financial performance, which has recently been under pressure because of ongoing cost control issues affecting the healthcare industry. Ratings confirmed are: a) Baa2 for senior unsecured notes and debentures, industrial revenue bonds. Ratings withdrawn are: a) (P)Baa2 for senior unsecured securities issued pursuant to the 415 shelf registration; b) Baa2 for the bank revolving credit facility; and c) the Prime-2 short-term rating. Mallinckrodt's Prime-2 short-term debt rating has been withdrawn because Tyco has terminated Mallinckrodt's commercial paper program, and repaid all outstanding commercial paper. Also, Moody's has withdrawn the Baa2 ratings for Mallinckrodt's $1.0 billion Revolving Credit Agreement and its 415 shelf registration following Tyco's announcement that they, too, have been terminated. Mallinckrodt Inc. is based in St. Louis and is a major producer of diagnostic imaging agents, medical devices, analgesic pharmaceuticals, catalysts and laboratory and microelectronic chemicals. Tyco International Ltd., headquartered in Hamilton, Bermuda, is a diversified global manufacturing and service company of industrial and commercial products serving the fire protection, electronic security service, disposable medical products, packaging materials, flow control, electrical and electronic components, and underwater telecommunication markets MOHEGAN TRIBAL: Moody's Confirms Ba1 & Ba2 Ratings With Negative Outlook ------------------------------------------------------------------------ Moody's Investors Service confirmed the debt ratings of Mohegan Tribal Gaming Authority, and changed the rating outlook to negative from stable. The rating actions follow the announcement of revised expansion and financing plans for the Mohegan Sun Casino complex. The following ratings were confirmed: a) Ba1 senior implied rating; b) Ba1 rating of the $459 million secured revolving credit facility; c) Ba2 rating of the $200 million 8.125% senior unsecured notes due 2006, and Ba2 senior unsecured issuer rating; d) Ba3 rating of the $300 million 8.75% senior subordinated notes due 2009. The confirmation of the ratings reflects Moody's view that the Authority's financial measures will not be materially impacted by the change in plans. The ratings had already anticipated that leverage would rise materially through 2002 due to construction of additional gaming, hotel and convention facilities, but would be paid down rapidly with free cash flow following completion. Revision of expansion plans will result in higher construction costs due to cost overruns as well as additional expansion. The Authority has decided to expand its slot facilities through conversion of a bingo hall to a 650-seat smoke-free slot facility at a cost of $20 million in early 2001. Moody's expects this facility to ramp up quickly, providing incremental cash flow sufficient to service the planned increases in debt. As a result, debt service coverage should remain strong during the construction period. Moody's expects the existing operations will allow 12- month EBIT to interest coverage to remain well above 2.5 times during the next two years. Furthermore, Moody's believes the renovations provide a competitive advantage by further differentiating Mohegan Sun against its sole competitor today and against potential new development in the upstate New York and New England area. The negative outlook reflects Moody's belief that the increase in debt combined with greater uncertainty due to the project expansion and delayed hotel opening decreases the financial cushion available to protect debtholders. Leverage at conclusion of the expansion will be higher than originally anticipated. Moody's expects that, at the end of this fiscal year, debt borrowings could be over 4.5 times EBITDA less management fees. Total borrowings could exceed $1 billion by the end of the project, which has also been extended by six months to end with the opening of the hotel in April 2002. The negative outlook reflects concerns about the ultimate contract price, which has not been guaranteed; increased risks of weather delays due to the extended construction period; concerns about the utilization of the conference facilities due to the delays in the hotel construction and the size of the planned facilities relative to the number of hotel rooms and the scarcity of lodging alternatives in the immediate area; and difficulty in attracting sufficient high-quality labor due to the continued low unemployment within the region. Debtholders are partly protected from cost overruns by a $40 million construction contingency account funded by the Tribe. However, variances from the current financial plan or difficulty in raising additional capital as planned during the next few months could result in a downward ratings revision. The confirmed ratings continue to reflect the expectation that expanded capacity will be quickly absorbed given the capacity constraints on the current casino relative to demand; the superior demographics of the gaming market in the Northeastern U.S.; and the strong operating results that Mohegan Sun has experienced since its opening. The ratings also consider the Authority's dependence on a single property; the sizable dividend being paid to the Mohegan Tribe of Indians of Connecticut; and the potential for longer term competitive threats to Mohegan Sun's currently protected market position. The ratings also continue to reflect the difficulties that secured and unsecured debtholders could face in recovering their investment in a liquidation scenario. The Authority announced that the facility expansion already underway has been revised to enlarge the gaming area and enhance the quality of the hotel and entertainment facilities. The planned cost of the expansion has been increased to $1.07 billion from $800 million. The cost increases represent some budget overruns, enhanced facilities, The enlarged facility, which is scheduled to open in phases during April and October 2001, will have 6,227 slot machines. This represents a 100% increase over today's capacity, and a 20% increase over the original plan. Parking spaces will also be increased to by roughly the same proportions to a total of 15,600 through the addition of a new covered garage. The number of hotel rooms is unchanged at 1,200, but the average size of the rooms and quality of furnishings has been upgraded. The new facilities will include a 10,000 seat arena; a 65% increase in gaming area versus today's facility; and 130,000 of retail square footage, down about 50% from the original renovation plan but still up substantially from today's modest shopping facilities. The revised plans also include addition of a day-care center, which Moody's believes will aid employee retention, and a substantial utility upgrade package. The Authority is looking into alternative financing for this project, including a potential tax-advantaged financing. The Mohegan Tribal Gaming Authority is an instrumentality established by the Mohegan Tribe of Indians of Connecticut, with the exclusive power to operate the Mohegan Sun casino in Uncasville, Connecticut. MOLL INDUSTRIES: Commences Tender Offer for 11-3/4% Senior Notes due 2004 ------------------------------------------------------------------------- Moll Industries, Inc.has commenced a tender offer for all of its outstanding 11 3/4% senior Notes due 2004. The company purchased $50.0 in aggregate principal amount of the Notes in a tender offer and consent solicitation which was settled on August 11, 2000. The company is now offering to purchase the remaining $50 million aggregate principal amount of Notes for cash. Each owner of Notes has the following two options in connection with the Offer: * TENDER NOTES BY THE EXPIRATION DATE (5:00 P.M., NEW YORK CITY TIME, ON NOVEMBER 8, 2000). Holders of Notes that are validly tendered and not withdrawn prior to the Expiration Date will receive a price of $850 per $1,000 of Notes that are accepted for purchase, plus accrued and unpaid interest up to but not including third business day following the Expiration Date. HOLDERS WHO DESIRE TO TENDER THEIR NOTES PURSUANT TO THE OFFER AND RECEIVE THE PURCHASE PRICE ARE REQUIRED TO TENDER ALL OF THEIR NOTES ON OR PRIOR TO THE EXPIRATION DATE. * DECLINE TO VALIDLY TENDER NOTES. Holders of Notes in this category will NOT be eligible to receive the Purchase Price. Holders who do not wish to tender their Notes pursuant to the Offer need take no action. The company's obligations in respect of the Offer are conditioned upon the satisfaction of the conditions set forth in the Offer, including, the condition that the company close the proposed sale of its Cosmetics Division to subsidiaries of Pechiney, S.A., a company organized under the laws of France, whereby the company would obtain funds to settle all payment obligations with respect to Notes accepted for purchase pursuant to the Offer. D.F. King & Co., Inc. is acting as information agent for the Offer. The depositary for the Offer is State Street Bank & Trust Company. Moll Industries, Inc. is a full-service manufacturer and designer of custom molded and assembled plastic components for a broad array of customers and end markets throughout North America and Europe. Products using Moll's plastics components are sold in a wide range of end markets, including end markets for consumer products, telecommunications/business equipment, household appliances, automobiles and medical devices. NATIONAL BOSTON: Infotopia Agrees To Provide $500,000 DIP Financing ------------------------------------------------------------------- National Boston Medical Inc. and its debtor affiliates seek interim and final order authorizing the debtors to obtain post petition secured financing in the original principal amount of $500,000 with interest at the fixed rate of 8% per annum, the financing due and payable in full within twenty four months following the disbursement of the proceeds of the loan. In accordance with the terms and terms and conditions pursuant to certain proposed loan documents, Infotopia, Inc. has agreed to provide financing to the debtors in the aggregate sum of $500,000. In accordance with the terms of the proposed financing, Infotopia shall have the right to convert the principal amount outstanding under the post-petition loan to equity in their sole and complete discretion, after confirmation of a plan of reorganization as submitted by the debtors. The $500,000 to be provided by Infotopia will allow the debtors to pursue and otherwise "ramp up" the Bontempi business line. Infotopia shall also acquire 100% of the stock of National Boston Medical , Inc. for the sum of $500,000. The sale will be subject to court approval and the acquisition price will be due and payable at the time of the closing. The debtors' two largest creditors are Thompson Kernaghan and Co. Limited, owed approximately $2.5 million and Oxford Capital, owed approximately $630,000 will accept stock in consideration of their respective claims against the estate under a plan of reorganization. The debtors believe that the proposed financing is in the best interests of the estate. OWENS CORNING: Obtains Authority to Pay Pre-petition Contractor Liens --------------------------------------------------------------------- Owens Corning and its debtor-affiliates employ a variety of Miscellaneous Contractors to improve and refurbish their equipment and physical plants, to install new equipment and to perform maintenance at the Debtors' 100 facilities across the United States. The dollar value of the Miscellaneous Contractor projects generally ranges from about $10,000 to $500,000, with the majority of such projects costing less than $100,000. The underlying services that these Contractors provide, the Debtors explain, are critical to Owens Corning's on-going operations. The Debtors assure the Court that they will not pay a Contractor Claim unless the Contractor has perfected or, in the Debtors' judgment, is presently capable of perfecting or may be capable of perfecting in the near future one or more Liens or Interests to secure payment. Additionally, any Contractor accepting payment pursuant to the Order granting this Motion must agree to continue providing postpetition goods or services on ordinary and customary trade terms. Judge Walrath makes it clear that nothing in this Motion or her Order granting the Motion shall be construed as an assumption of any executory contract, nor does her Order confer on a Contractor the right to demand payment. (Owens-Corning Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILGRIM AMERICA: Fitch Downgrades CBO's CDOs & Places On Watch Negative ----------------------------------------------------------------------- Fitch has taken rating actions on Pilgrim America CBO I, Ltd., which is a collateralized debt obligation (CDO) backed entirely by high yield bonds. Three tranches from this transaction have been downgraded, the class A, class B, and class C notes. One of the downgraded tranches, the class C notes, had been placed on Rating Watch Negative on Aug. 21, 2000, and will be taken off from Rating Watch after the downgrade. These rating actions are taken after careful review of the performance of this transaction and after extensive dialogue with the portfolio manager. Increased levels of defaults, lower than expected recoveries on defaulted assets and deteriorating credit quality on the remaining assets have increased the credit risk of these securities to the point the risk is no longer consistent with the tranches' ratings. Fitch will continue to closely monitor the developments in this transaction, particularly the defaulted assets and the 'CCC' rated assets, and may take further action pending further developments. The following securities have been downgraded: Pilgrim America CBO I, Ltd.: a) $207,000,000 class A notes from 'AA-' to 'A'; b) $41,000,000 class B notes from 'A' to 'BBB-'; c) $41,000,000 class C notes from 'BB' to 'B-'. PURINA MILLS: Prepares Registration Statement for GSCP's New Shares ------------------------------------------------------------------- Purina Mills Inc. has prepared a prospectus to allow GSCP Recovery, Inc. and its transferees, as selling stockholders, to sell up to 2,356,168 shares of the company's common stock. GSCP Recovery acquired the common stock from Purina Mills by operation of the company's plan of reorganization under the Bankruptcy Code, which became effective on June 29, 2000. ROCK-TENN COMPANY: Moody's Lowers Long-Term Debt Ratings To Baa3 ---------------------------------------------------------------- Moody's Investors Service lowered the long term debt ratings of Rock-Tenn Company to Baa3 from Baa2. This completes the review begun August 21, 2000. These rating actions are prompted by what we anticipate will be the continuing difficult operating environment in the company's core paperboard business as well as by our concerns that the company's new management team will face time-consuming challenges in executing the company's strategic plan; taken together we believe that debt levels will remain elevated and debt protection measurements weaker than anticipated for the near to intermediate term. Ratings Lowered: Rock-Tenn Company - $100 million senior notes to Baa3 from Baa2, - shelf registration to (P)Baa3 from (P)Baa2 Moody's notes that business fundamentals in paperboard remain difficult. Excess capacity and competition from other substrates has kept pricing from rising significantly, despite rising input prices. We believe that substantive industry consolidation is not likely to occur in the near-term, and that as a result the fragmented sector will continue to be negatively impacted by low pricing. While Rock-Tenn has low-cost mills, this production advantage is not expected to be sufficient to compensate for the pricing environment and results from this core business are likely to remain pressured. We note that the company has expanded into other business areas, particularly custom packaging and plastics, which have shown strong growth, but in the near term these are not expected to compensate for the weakness in paperboard. The continuing difficult operating environment has led to much slower than anticipated debt reduction at the company; debt has, in fact, risen over the last twelve months. The 1997 Waldorf acquisition, which led to a sharp rise in debt levels at Rock-Tenn, has not generated the returns anticipated at the time. Debt protection measurements have not recovered to earlier levels, and Moody's believes that sharp improvement is not likely in the next 18-24 months. In addition, due to continuing heavy capital spending, free cash flow remains weak. We are also concerned that the company's new management team will face time-consuming challenges in executing the company's strategic plan. Offsetting these difficulties, Moody's points to a business that is comparatively stable from a demand perspective, one that should, in time, grow into the current capacity levels. Rock-Tenn has a history of solid business relationships which, together with the company's low cost production and continuing cost cutting programs, should ensure the continuation of a steady cash flow. The expansion of the company's new businesses has been rapid and profits from these investments are growing. Taken together, we anticipate that debt protection measurements will improve gradually from their current levels, but will not recover to their pre-1997 levels. Rock-Tenn's stable rating outlook assumes that the new management team will be successful in improving the fundamental operating performance of the company, and that Rock-Tenn will refrain from major debt-financed acquisitions, and that share repurchases, which are expected to continue at the levels of the recent past, will remain balanced with debt reduction. Rock-Tenn Company, headquartered in Norcross, Georgia is a producer and converter of paperboard and folding cartons. SAFETY COMPONENTS: Plan Swaps 97% Equity Stake for $97MM of Old Bonds --------------------------------------------------------------------- Safety Components International, Inc. and certain of its United States subsidiaries, including Safety Components Fabric Technologies, Inc. and Automotive Safety Components International, Inc., a leading, low cost supplier of automotive airbag fabric and cushions in the United States, have emerged from their chapter 11 cases in accordance with their plan of reorganization approved by the District Court of the State of Delaware on August 31, 2000. Under the Plan, all of the 10-1/8% senior notes due 2007 issued by the company, amounting to almost $97 million, have been converted into 96.8% of the company's post-bankruptcy equity and the holders of the company's pre-bankruptcy common stock, excluding Robert Zummo (former Chairman of the company), have received 3.2% of the company's post-bankruptcy equity and warrants to acquire an additional 12% of such equity. All trade suppliers and other creditors will be paid in full pursuant to the terms of the Plan within 90 days. In connection with its emergence, Safety Components announced the closing of a three-year $35 million credit facility with Congress Financial Corporation (Southern). The Congress facility has allowed the company to pay off its debtor-in-possession credit facility with Bank of America and is expected to provide adequate funding for Safety Components' ongoing global operating needs. In addition to the Congress facility, Safety also closed a two-year subordinated secured note facility with its pre- bankruptcy secured lenders for $20.9 million. Safety Components' Board of Directors, in accordance with the terms of the Plan, now consists of the following new non-employee directors: Carroll R. Wetzel, Jr. (Chairman), Andy Goldfarb, W. Allan Hopkins and Ben E. Waide III. John C. Corey continues as a director and has been promoted to Chief Executive Officer and President of the company. Mr. Wetzel, Chairman, stated "We are pleased that the company has emerged from its chapter 11 case in accordance with its schedule and that the management team lead by John Corey has done such an excellent job in turning the company around." Mr. Corey stated "The company's operations have continued to improve over the past few months, exceeding our projections. The company's operating results and the flexible credit arrangements provided by Congress Financial have placed the company in a solid financial position and we are now able to return our primary focus to the fulfillment of our goals: increasing productivity and profitability from the core airbag automotive business; capitalizing on continuing growth opportunities in the airbag automotive business and divesting non-core operations. We believe that the broad and varied business experiences of the incoming members of the Board enhance our ability to fulfill these goals. We also would like to express our appreciation to Robert Zummo, the company's founder, and to Joseph DioGuardi, and Robert Torok, former directors, for their invaluable assistance on behalf of the company during the chapter 11 cases." Mr. Corey continued, "We are also very appreciative for all of the support provided by our customers, suppliers, employees and advisors during the past few months, which has enabled the company to emerge from Chapter 11 on a timely basis." SAFETY KLEEN: Sells Martinez Property, Fetching $2,000,000 for Estate --------------------------------------------------------------------- Safety-Kleen owns a 7,000 square foot office/shop building situated on approximately 6.28 acres and located at 4501 Pacheco Boulevard in Martinez, California. As part of their plan to restructure their operations, the Debtors have begun, among other things, to identify and divest themselves of underperforming or non-core assets. Toward this end, the Debtors have determined that the Martinez Property is not essential to their successful reorganization. The Debtors thus have further determined, in an exercise of their sound business judgment, to sell the Martinez Property. The Martinez Property was formerly occupied and used by the Seller as a transportation terminal and transfer station to repair and dispatch vehicles, and to store metal bins. Cushman & Wakefield marketed the Property for 8 months, soliciting a $1,825,000 offer from Bridge Martinez LLC and a $2,000,000 offer from 680, LLC. By this Motion, the Debtors sought and obtained authority from Judge Walsh to accept 680's offer and consummate the property sale. Lawrence V. Gelber, Esq., advises the Court that the Debtors are holding a $100,000 non- refundable deposit from 680 which they will keep if 680 defaults. Additionally, the Debtors sought and obtained permission to consummate a sale to Bridge Martinez in the event the sale to 680 falls through for any reason. C&W will collect a 6% brokerage commission from the proceeds of the sale. (Safety-Kleen Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) STROUDS, INC.: Judge Walrath Approves $50MM DIP Facility with CIT Group ----------------------------------------------------------------------- On October 12, 2000, at 1:00 PM, a hearing was held before the Honorable Mary F. Walrath, US Bankruptcy Judge, US Bankruptcy Court, Wilmington, DE to consider the emergency motion for an order granting interim approval of DIP Financing Facility between The CIT Group/Business Credit, Inc. as agent and lender, and Foothill Capital Corporation as Lender and Strouds, Inc., borrower. As of the Petition Date the debtor was indebted to certain lenders in the aggregate sum as of September 1, 2000 of not less than $44,722,276. The court granted the debtor authority to borrow from and incur secured indebtedness to lenders with respect to certain advances and other terms of the Postpetition Loan Agreement, on a final basis, pursuant to the terms of the order. The Lenders have agreed to amend and restate the Existing Financing Agreement pursuant to the Financing Agreement to continue to make available to the Company a revolving credit facility in an amount not to exceed $50 million upon the terms and conditions in the Financing Agreement. TESSERACT GROUP: Private & Charter School Operator Files for Chapter 11 ----------------------------------------------------------------------- The TesseracT Group, Inc., along with its wholly-owned subsidiary Sunrise Educational Services, Inc., filed voluntary petitions under Chapter 11 of the Bankruptcy Code on October 6, 2000 in the U.S Bankruptcy Court for the District of Arizona. TesseracT is a national leader in the operation of quality education programs through private and charter schools, and Sunrise owns preschools in Arizona which are part of the overall operations of TesseracT. Dr. Lucian Spataro, TesseracT's president and chief executive officer, stated "TesseracT and Sunrise have filed for Chapter 11 protection as part of an ongoing effort to work out our financial problems with creditors while working in the best interests of students, employees and other interested parties. TesseracT's and Sunrise's school facilities remain open and fully operational." Dr. Spataro further stated: "Chapter 11 reorganization is designed to allow a business that is experiencing financial difficulties to restructure its business affairs." The companies believe that their normal operations will not be interrupted by the Chapter 11 filings. Prior to the Chapter 11 filings, TesseracT and Sunrise received a loan commitment of up to $1.2 million from TAI, LLC, for a line of credit to finance post-petition operations in the event cash flow of the companies are not sufficient to fund operations. This post-petition financing is subject to Court approval. The companies continue to act as debtors-in- possession. TEXFI INDUSTRIES: Judge Gonzales to Consider $25MM DIP Pact with CIT Group -------------------------------------------------------------------------- A final hearing on the motion of Texfi Industries, Inc. authorizing the debtor to obtain post-petition financing will be held before the Honorable Arthur J. Gonzalez, US Bankruptcy Court, Southern District of New York, on Wednesday October 18, 2000 at 10:30 AM. Attorneys for Texfi Industries, Inc. are Stephen B. Selbst and Barbra R. Funt, McDermott, Will & Emery, New York, NY. The proposed order provides that the debtor may obtain financing and other extensions of credit from The CIT Group/Commercial Services, Inc. As of the Petition Date, the debtor was indebted to the Revolving Lenders in the approximate aggregate principal amount of $16.85 million and debtor was indebted to the Revolving Lenders under the Revolving Lender Post- Petition Financing Agreement in the approximate aggregate principal amount of $18.29 million, plus interest, fees and expenses. The Financing Agreement provides for a Revolving Credit Note in the amount of $25 million. Exhibits to the agreement include a Factoring Agreement and an Intercreditor Agreement between The CIT Group/Commercial Services, Inc. and Back Bay Capital Funding, LLC. which sets forth a schedule of priorities among the parties. VENCOR, INC.: In Exchange for Certain Waivers, Agrees to Stay Modification -------------------------------------------------------------------------- The Debtors consent to and have obtained Judge Walrath's stamp of approval of an agreement and stipulation with Lee Richardson to permit her to prosecute her pre-petition claim in the action captioned Lee Richardson v. Red Lion Hotels. Inc., et al,, Case No. 97-2-20243-4 KNT, in the Superior Court of Washington for King County, for the sole purpose of determining issues of liability and damages, if any, of the Debtor to the extent necessary to permit the Plaintiff to pursue any available insurance proceeds. Plaintiff shall not be entitled to any other or further distribution from the Debtors' estates on account of any judgment that may he entered against the Debtor in the action. The Debtors have determined that there is an insurance policy issued in favor of Vencor defendant. Except as specifically provided in the stipulation, the Plaintiff shall not engage in any efforts to collect any amount from the Debtors or any of Debtors' current and former employees, officers and directors, or any person or entity indemnified by Debtors. Plaintiff waives any and all claims for punitive damages against the Debtor Defendant and its present or former employees, officers and directors, any person or entity indemnified by the Debtors, and the Debtors' insurers. Plaintiff further specifically agrees that any settlement of the Underlying Action will include a general release of all claims against the Debtors, their current and former employees, their current and former officers and directors, their insurers, and any person or entity indemnified by the Debtors. The Debtors agree that any settlement of the Underlying Action will, include a general release of the Plaintiff. Plaintiff agrees not to name as a defendant and, if already so named, to dismiss ftom the Underlying Action any of Debtors' current and former employees, current and former officers and directors, and any person or entity indemnified by the Debtors or listed as an additional insured under any of the Debtors' liability policies. (Vencor Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) VIDEO UPDATE: Schedules Auction For Sale of 117-Store Leasehold Interests ------------------------------------------------------------------------- Video Update, Inc., together with certain of its direct and indirect subsidiaries seeks entry of an order authorizing and scheduling an auction for the sale of the debtors' right, title and interest in and to leasehold interests in certain non-residential real properties. The debtors seek a court order authorizing a sale of approximately 117 retail store leases. By closing less profitable or unprofitable stores, the debtors will substantially improve postpetition profitability and cash flow, thereby enhancing their ability to successfully reorganize. In addition, the proposed lease auction will generate cash which will reduce the debtors' need for additional liquidity, reduce or eliminate substantial lease rejection and other lessor claims; and enable the debtors to redistribute existing inventory, furniture, fixtures and equipment to more profitable stores. The debtors request authorization from the court to schedule and conduct an auction of the leases on Tuesday, November 14, 2000 at noon. The sale of the leases through the auction process will enable the debtors to realize the highest value for such properties. Keen Realty LLC will conduct the auction at the offices of Duane, Morris & Heckscher LLP, Philadelphia, Pa. WEB PRODUCT: Internet Start-Up Files Chapter 7 Case in Rochester, New York -------------------------------------------------------------------------- According to a report in the Rochester Business Journal, Web Product Realization Network Inc. has filed a bankruptcy petition seeking to liquidate. The bankruptcy petition, comes less than a year after the Monroe Fund LLC invested $500,000 into the Internet start- up, which did business under the name WebPRN.com. The firm's Chapter 7 petition states $1.4 million in debt all of it unsecured -- against $39,767 in assets. WebPRN assets consist of cash on hand, money in a checking account and security deposits held by landlords in Rochester and Palo Alto, where WebPRN has a four-person office, the bankruptcy filing states. Its assets also include the WebPRN service mark with an unknown value. (New Generation Research, Inc. 24-Oct-00) ********* 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. 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