/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/001027.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 27, 2000, Vol. 4, No. 211 Headlines 1824 WEEKS HOLDING: Case Summary and 11 Largest Unsecured Creditors ALLIED DIGITAL: Case Summary and 42 Largest Unsecured Creditors ALLIED DIGITAL: Video and Audio Duplicator and Affiliates Files Chapter 11 ARKOOSH PRODUCE: Case Summary and 11 Largest Unsecured Creditors ARMSTRONG WORLD: Moody's Downgrades Ratings & Places Them Under Review BUILDING MATERIALS: Moody's Places Debt Ratings Under Review For Downgrade CANFIBRE GROUP: Parent Company Makes Statement About Subsidiary's Filing CINCINNATI CORDAGE: Champion Industries Bid Accepted By Paper Manufacturer CORRECTIONS CORP.: Announces Issue of Additional Shares for Series B Stock CROWN CRAFTS: Plans to Lay-Off 250 Workers on Dec. 29, 2000 DIMON, INC.: Moody's Downgrades Senior Ratings to Ba3 & Says Outlook Poor EDWARDS THEATRES: Gets Court Approval To Use Cash Proceeds Until Nov. 13 FRUIT OF THE LOOM: Obtains Extension of Exclusive Period through Year-End GRAND UNION: Grocery Chain Asks Judge Winfield for Nov. 16 Auction Date HARNISCHFEGER INDUSTRIES: INTERPOOL INC: Moody's Cuts Ratings Following Transamerica Finance Purchase MICROBEST, INC.: Files Motion in Florida Court to Dismiss Chapter 11 Case NU-KOTE HOLDING: Tennessee Court Confirms Debtors' Chapter 11 Plan ORBCOMM GLOBAL: Signs Komatsu Ltd. Up as its Newest Customer OWENS CORNING: Court Okays Payment of Import Fees & Possessory Liens PACIFICARE HEALTH: President Robert O'Leary Resigns Effective Immediately SAFETY-KLEEN: Seeks to Pay Superfund Obligations through November 30 SERVICE MERCHANDISE: Winding-Up Non-Debtor Insurance Subsidiary SILVER CINEMAS: Fed Up, Committee Moves for Conversion or Dismissal TOKHEIM CORPORATION: Chapter 11 Plan Declared Effective on October 20 TRI VALLEY: Several Prospective Buyers for Bankrupt Tomato Grower VENCOR, INC: Delaware Court Extends DIP Financing Until January 31, 2000 WASTE MANAGEMENT: Announces Investment Conferences for Fourth Quarter * BOOK REVIEW: The Failure of the Franklin National Bank: Challenge to the International Banking System ********* 1824 WEEKS HOLDING: Case Summary and 11 Largest Unsecured Creditors ------------------------------------------------------------------- Debtor: 1824 Weeks Holding Corp. c/o Levites Realty Management 341 East 149th Street Bronx, New York 10451 Type of Business: Real Estate Chapter 11 Petition Date: October 25, 2000 Court: Southern District of New York Bankruptcy Case No.: 15005 Judge: Prudence Carter Beatty Debtor's Counsel: A. Mitchell Greene, Esq. Robinson Brog Leinwand Greene et al. 1345 Avenue of the Americas New York New York 1010 (212) 586-4050 Total Assets: $ 1,386,000 Total Debts : $ 433,318 11 Largest Unsecured Creditors: NYC Dept. of Environmental Protection NYC Water Board $ 92,558 New York City Dept. of Finance $ 53,339 Baron Associates $ 19,709 Nicholas Chimenti $ 9,037 Maizes and Maizes $ 5,000 Ligia Velez $ 4,783 Bruce Kashkin, CPA $ 2,500 Rakaj Aleks $ 1,986 New York Boiler Repair Group $ 1,134 Peter Vuksanaj $ 572 Ligia Velez $ 138 ALLIED DIGITAL: Case Summary and 42 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Allied Digital Technologies Corporation 15 Gilpin Avenue Hauppauge, NY 11788 Affiliates: Allied Digital, Inc. HRM Holdings Corporation Vaughn Communications, Inc. HMG Digital Technologies Corporation Chapter 11 Petition Date: October 25, 2000 Court: District of Delaware Bankruptcy Case No.: 00-04020 Debtor's Counsel: William H. Sudell, Jr., Esq. Derek C. Abbott, Esq. Gregory W. Werkheiser, Esq. Morris, Nichols, Arsht & Tunnell 1201 North Market Street P.O. Box 1347 Wilmington, Delaware 19899-1347 (302) 658-9200 Joel H. Levitin, Esq. Dechert, Price & Rhodes 30 Rockefeller Plaza New York, NY 10112 (212) 698-3500 Total Assets: $ 1 Million above Total Debts : $ 100 Million above 30 Largest Unsecured Creditors: Fleet Bank c/o Tina Brozman, Esq. Projected $ 90,000,000 Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ New York, NY 10022 Loans other lenders) Provident Capital Corp. Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) ING Capital Advisors Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Creditanstalt Corporate Finance, Inc. Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Deutsche Financial Services Corp. Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) US Bank National Association Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Societe Generale Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Greater Bay Bank Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Wachovia Bank Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Pilgrim America Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) IBJ Whitehall Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Sovereign Bank Tina Brozman Projected $ 90,000,000 c/o Bingham Dana LLP Undersecured (in aggregate, 399 Park Avenue Portion of Bank together w/ NY, NY 10022 Loans other lenders) Fleet Corporate Finance Inc. Robert Ziemer 1185 Avenue of the Americas Mailstop: NYNYS16F New York, NY 10036 (212) 819-6111 Fax:(212) 819-6244 Financing loan $ 10,021,350 Sachan Media America, Inc. P.O. Box 51178 Los Angeles, CA 90051-5478 Trade Debt $ 2,582,179 Infiniti Media Inc. Katherine Wu 7251 Ethel Avenue North Hollywood, CA 91605 (818) 764-8818 Fax:(818) 764-9063 Trade Debt $ 1,697,576 Viva Magnetics Canada Ltd. Jim Ware 7167 Progress Way Delta, British Columbia, Canada CA V4G 1K8 (843) 322-0002 Fax:(843) 322-0003 Trade Debt $ 1,148,977 Sony Music Entertainment Mike Gamble 550 Madison Avenue New York, NY 10022 (770) 836-2467 Fax:(770) 836-2189 Trade Debt $ 1,125,614 Titron Media HK Room 1109-11 Shun Tak Center 200 Connaught Road Central Hong Kong Trade Debt $ 907,476 Disc Graphics Inc. Traci Baumann P.O. Box 18031 Hauppauge, NY 11788 (516) 300-1272 Fax:(516) 582-9428 Trade Debt $ 856,444 3M Company Rich Ligthsey P.O. Box 601095 Charlotte, NC 28260-1095 (612) 737-1197 Fax:(612) 733-7899 Trade Debt $ 850,677 GE Plastics Dave Devito Lockbox Dept. # 640389 Pittsburgh National Bank 960 Fort Duquesne Blvd. Pittsburgh, PA 15222 (413) 448-5719 (704) 948-4952 Trade Debt $ 771,791 John K. Mangini 50 Pheasant Run Old Tappan, NJ 07675 (201) 750-1423 Severance Payment $ 662,879 U.S. Phillips Corporation Edward Blocker 580 White Plains Road Tarrytown, NY 10591-5190 (914) 332-0222 Fax:(914) 332-0615 Trade Debt $ 484,294 Discovision P.O. Box 19616 Irvine, CA 92623 (949) 660-5000 Fax:(949) 660-1801 Trade Debt $ 446,675 Alpha Media Packaging Tammy Novack P.O. Box 711489 Cincinnati, OH 45271-1489 (330) 490-2000 Ext. 243 Fax:(330) 490-2012 Trade Debt $ 423,495 Shape Inc. Norma Grenier 135 So. Lasalle Street Dept. # 2797 Chicago, IL 60674-2797 (207) 985-4972 Fax:(207) 985-2105 Trade Debt $ 302,760 JD Edwards Tom Gabriele World Solutions Inc. Department 770 Denver, CO 80271 (303) 334-4000 Fax:(303) 334-4678 Trade Debt $ 273,840 Great Lakes Lithograph 4005 Clark Avenue Cleveland, OH 44109 (216) 651-1500 Fax:(216) 651-8311 Trade Debt $ 261,102 Spiro-Wallach/Unisource Tony Valente 21 Banfi Plaza Farmingdale, NY 11735 (516) 501-3200 Fax:(516) 501-5333 Trade Debt $ 261,046 Hero Kingdom Ltd. Trade Debt $ 245,565 Gordon Cross Trade Debt $ 236,880 Discovision Associates Trade Debt $ 230,528 Emtec Pro Media Inc. Trade Debt $ 172,232 Robert Harmon Non-Compete Payment $ 166,666 Jeffrey Johnson Non-compete Payment $ 166,666 Printed Specialties, Inc. Trade Debt $ 145,102 PolyMatrix Inc. Trade Debt $ 138,311 United Parcel Service/03 Trade Debt $ 135,889 Steag Hamatech Inc. Trade Debt $ 129,427 LIPA Trade Debt $ 126,040 Alan Gill Trade Debt $ 118,867 Ernst Wong Non-Compete Payment $ 118,867 ALLIED DIGITAL: Video and Audio Duplicator and Affiliates Files Chapter 11 -------------------------------------------------------------------------- Dow Jones reports on Allied Digital Technologies Corp. and four affiliates filing for Chapter 11 in U.S.B.C. in Wilmington, Del. The company posted assets ranging from $1 million to $50 million and debts of over $100 million. The four affiliates that filed together with ADTC are Allied Digital Inc., HRM Holdings Corp., Vaughn Communications Inc., and HMG Digital Technologies Corp. ADTC has hired the following firms to aid them on their bankruptcy reorganization: Deloitte Consulting LLC - auditor Deloitte & Touche LLP - accountant Gordian Group LP - financial adviser KPMG LLP - special auditor and tax consultant According to Dow Jones, Allied Digital Technologies is an independent provider of duplication and replication services of video, audio and CD-ROM products for businesses such as the entertainment industry. It provides a complete line of CD, DVD video and audio formats. As of September, the company employed 1,750 people. ARKOOSH PRODUCE: Case Summary and 11 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Arkoosh Produce, Inc. 1045 Agrilane Gooding ID 83330 Chapter 11 Petition Date: October 24, 2000 Court: District of Idaho Bankruptcy Case No.: 00-41817 Judge: Jim D. Pappas Debtor's Counsel: William Thomas Thurman, Esq. McKay, Burton, Thurman 10 East South Temple St., #600 Salt Lake City, UT 84133 (801) 521-4135 Total Assets: $ 3,622,577 Total Debts : $ 7,956,701 11 Largest Unsecured Creditors: Kober Farms Western Bank 559 Woodhad Drive Twin Falls, ID 83301 Trade Debt $ 262,679 Friedman Bag Company Trade $ 247,214 Internal Revenue Service Taxes $ 209,566 Baker Farms, Inc. Trade $ 203,425 Karl Joslin Trade Debt $ 126,072 Jensen Carlson Farms $ 124,914 Scott Farms Trade $ 97,737 Ron Pierce Trade $ 89,447 D&L Hansen, Inc. Trade $ 87,736 Mark & Ryan Thiel Trade $ 81,634 Vemile Staker Trade $ 62,067 ARMSTRONG WORLD: Moody's Downgrades Ratings & Places Them Under Review ---------------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Armstrong World Industries Inc. (senior to Baa3) and placed the ratings under review for further possible downgrade. The rating action is prompted by several factors including concerns regarding a reduction in committed credit facilities, potential deterioration in the external business environment and continued uncertainty regarding the course of asbestos litigation. In combination, these factors could negatively affect the company's ability to achieve targeted debt reduction. Ratings downgraded and placed under review for further downgrade are: Armstrong World Industries, Inc. a) senior unsecured debentures, medium-term notes and revolving credit facility to Baa3 from Baa1; b) shelf registration for senior unsecured debt to (P)Baa3 from (P)Baa1; c) commercial paper rating to Prime-3 from Prime-1. Yesterday, Armstrong disclosed that upon the expiration of a 364-day credit facility, it had not renewed the expiring facility. Given current commercial paper outstandings of approximately $350 million, the company currently has available credit of approximately $100 million on its $450 million long-term facility expiring in 2003. While Armstrong will continue efforts to establish additional liquidity sources, the near-term availability of credit is constrained. In addition, while operating results year-to-date have been positive, potential weakness in markets, combined with raw material cost pressures, suggests that prospects for future cash flow generation have weakened to the extent that, absent non-recurring items such as asset sales, projected debt reduction targets will be more difficult to achieve. Finally, the environment regarding asbestos litigation remains highly uncertain. Armstrong increased its reserve for asbestos liability by $236 million in the second quarter. In the wake of the Owens Corning bankruptcy, the asbestos litigation environment is evolving and highly uncertain. The review is focusing on Armstrong's vulnerability to additional asbestos-related charges and further erosion in its operating environment. Given the potentially significant liability that could result from this litigation, and the extended time frame that will likely be necessary to achieve ultimate resolution of all future liability, Armstrong's rating could be subject to multiple-notch reductions. Armstrong World Industries, headquartered in Lancaster, PA, had revenues of $3.4 billion in 1999. BUILDING MATERIALS: Moody's Places Debt Ratings Under Review For Downgrade -------------------------------------------------------------------------- Moody's Investors Service has placed the debt ratings of Building Materials Corporation of America, under review for downgrade following comments by the company's parent GAF Corporation. The following ratings are under review: (1) The Ba3 senior implied rating (2) The Ba3 rating on the 10.50% of $35 million senior notes, due 2002 (3) The Ba3 rating on the 7.75% of $150 million senior notes, due 2005 (4) The Ba3 rating on the 8.63% of $100 million senior notes, due 2006 (5) The Ba3 rating on the 8.00% of $100 million senior notes, due 2007 (6) The Ba3 rating on the 8.00% of $155 million senior notes, due 2008 (7) The Ba3 issuer rating GAF has advised BMCA that the filing by Owens Corning for protection from creditors under the federal bankruptcy laws could increase, by a substantial factor, the financial burden on the remaining asbestos defendants in the tort system, including GAF, and thus is a significant adverse event affecting GAF's asbestos-related litigation. As part of its review, Moody's will consider the company's exposure and financial flexibility in light of its parents revised expectations for asbestos litigation claims. Building Materials Corporation of America, headquartered in Wayne, New Jersey, which operates under the name of GAF Materials Corporation, is a subsidiary of GAF Corporation, and is a leading national manufacture of steep slope and low slope roofing products and specialty building products. CANFIBRE GROUP: Parent Company Makes Statement About Subsidiary's Filing ------------------------------------------------------------------------ The CanFibre Group Ltd. (CDNX:YCF.) reports that its wholly owned subsidiary, CanFibre of Riverside, Inc. has voluntarily filed for reorganization under Chapter 11 of the United States Bankruptcy Code. This action is a result of failure of the facility to be completed on a timely basis which resulted in a liquidity crisis. The Company will return to operation following the filing. No such filing was made for CanFibre's second MDF facility, CanFibre of Lackawanna, LLC. Construction of CanFibre of Lackawanna's MDF facility is expected to be completed in November 2000 with a 6 month start-up period expected to commence soon thereafter. The filing, made in Wilmington, Delaware, will enable CanFibre Riverside to focus on operating its business and serving its customers, while it develops a plan of reorganization that will allow completion of the facility and provide a suitable capital structure for long-term growth. CanFibre also announced that it has obtained an agreement from certain of its lenders to release, upon bankruptcy court approval, the necessary funds to meet CanFibre Riverside's future cash needs and fulfill obligations associated with operating its business on an ongoing basis. Employees will continue to be paid in the normal manner and their health benefits will not be disrupted. CanFibre anticipates that the combination of cash on hand, existing cash flow from inventory sales, and the new financing commitment, will provide CanFibre Riverside sufficient liquidity to meet all future financial obligations to employees, suppliers and vendors. CINCINNATI CORDAGE: Champion Industries Bid Accepted By Paper Manufacturer -------------------------------------------------------------------------- Champion Industries, Inc. announced that its bid to purchase the Huntington, West Virginia paper distribution division of The Cincinnati Cordage Paper Company was accepted by Cordage at an auction held by the U.S. Bankruptcy Court for the Southern District of Ohio, in Cincinnati, Ohio on October 23, 2000. The accepted bid covers the building, leased real property, fixed assets, receivables and inventory of the Huntington Cordage operation. The final purchase price will be determined at closing, based on various adjustments calculated as of closing. Subject to entry of a final order of the Bankruptcy Court, closing is scheduled for Nov. 6, 2000. (New Generation Research, Inc. 25-Oct-00) CORRECTIONS CORP.: Announces Issue of Additional Shares for Series B Stock -------------------------------------------------------------------------- Corrections Corporation of America (formerly Prison Realty Trust, Inc.) (NYSE: CXW) announced that it will issue approximately 1,589,112 additional shares of its Series B Cumulative Convertible Preferred Stock on Monday, November 13, 2000, to its common stockholders of record on Monday, November 6, 2000, in connection with the company's election to be taxed and qualify as a real estate investment trust, or REIT, with respect to its 1999 taxable year. As a result of this distribution, the company's common stockholders will be entitled to receive 1 share of Series B Preferred Stock, having a stated value of $24.46 per share, for every 100 shares of common stock held by them on the record date. Cash will be paid in lieu of issuing fractional shares of Series B Preferred Stock. The company is distributing the shares of Series B Preferred Stock in order to satisfy its remaining distribution requirements in connection with its election to be taxed and qualify as a REIT with respect to its 1999 taxable year. The company previously issued 5,927,805 shares of Series B Preferred Stock on September 22, 2000 in connection with its 1999 REIT distribution requirements, but because the fair market value of the shares issued in the initial distribution, as discussed below, was not sufficient to satisfy the company's 1999 distribution requirements, the company is required to make the additional distribution at this time. Terms of the Series B Preferred Stock Like the shares of Series B Preferred Stock previously issued by the company, the additional shares of Series B Preferred Stock to be issued will provide for dividends payable in additional shares of Series B Preferred Stock at a rate of 12% per year for the first three years following the issuance of the shares and cash dividends at a rate of 12% per year thereafter, payable for the period from issuance through December 31, 2000 and quarterly thereafter in arrears. The additional shares of the Series B Preferred Stock will be callable by the company, at a price per share equal to the stated value of $24.46, plus any accrued dividends, at any time after six months following the later of (i) November 13, 2003 or (ii) the 91st day following the redemption of the company's $100.0 million 12% senior notes, due 2006. The additional shares of Series B Preferred Stock will be convertible into shares of the company's common stock only from Thursday, December 7, 2000 to Wednesday, December 20, 2000, at a conversion price based on the average closing price of CCA's common stock on the New York Stock Exchange ("NYSE") during the period beginning on Wednesday, November 22, 2000 and ending on Wednesday, December 6, 2000 (i.e., the 10 trading days prior to the first day of the conversion period), provided, however that the conversion price used to determine the number of shares of CCA's common stock issuable upon conversion of the Series B Preferred Stock shall not be less than $1.00. The number of shares of common stock that will be issuable upon the conversion of each share of Series B Preferred Stock will be calculated by dividing the stated price ($24.46) plus accrued and unpaid dividends as of the date of conversion of each share of Series B Preferred Stock by the conversion price established for the conversion period. The company has applied to list the additional shares of Series B Preferred Stock, and the shares of the company's common stock into which the Series B Preferred Stock is convertible, on the NYSE, pending official notice of issuance. The previously issued shares of Series B Preferred Stock are currently listed on the NYSE under the symbol "CXW PrB". Tax Consequences and Fair Market Value of Distributions The distribution of the additional shares of Series B Preferred Stock will generally be treated as a taxable dividend, and thus stockholders receiving such shares will recognize ordinary income equal to the fair market value of the shares received. Future dividends on the additional shares Series B Preferred Stock, whether paid in stock or cash, also will generally be taxable as ordinary income. The company has determined the fair market value of the shares of Series B Preferred Stock initially distributed by the company on September 22, 2000 to be $18.00 per share. Accordingly, the company's common stockholders who received Series B Preferred Stock in the initial distribution generally will be required to include as ordinary income on their tax returns $18.00 for each share of Series B Preferred Stock received, which amount will constitute the stockholders' basis in such shares. The fair market value of the additional shares of Series B Preferred Stock to be distributed on November 13, 2000 will be determined following the distribution of such shares. Conversion of Shares of Previously Issued Series B Preferred Stock During Initial Conversion Period The shares of Series B Preferred Stock previously issued by the company on September 22, 2000 were convertible during an initial conversion period, which began on Monday, October 2, 2000 and ended on Friday, October 13, 2000. The conversion price for the initial conversion period was established at $1.4813, thereby resulting in each share of Series B Preferred Stock being convertible into approximately 16.6 shares of the company's common stock during the initial conversion period (calculated by dividing the stated price ($24.46) plus accrued and unpaid dividends as of the date of conversion of each share of Series B Preferred Stock by the conversion price ($1.4813)). During the initial conversion period, approximately 1,302,486 shares of the Series B Preferred Stock were converted, resulting in the issuance of approximately 21,621,267 shares of the company's common stock. The shares of Series B Preferred Stock previously issued by the company will also be convertible during the period beginning on Thursday, December 7, 2000 and ending on Wednesday, December 20, 2000. The conversion price for this subsequent conversion period will be set based upon the average closing price of the company's common stock on the NYSE from Wednesday, November 22, 2000 to Wednesday, December 6, 2000, subject to the $1.00 floor. The number of shares of common stock that will be issuable upon the conversion of each share of Series B Preferred Stock during the period will be calculated by dividing the stated price ($24.46) plus accrued and unpaid dividends as of the date of conversion of each share of Series B Preferred Stock by the conversion price established for the conversion period. CCA and its affiliated companies are the nation's largest provider of detention and corrections services to governmental agencies. The company is the industry leader in private sector corrections with approximately 68,000 beds in 75 facilities under contract or under development and ownership of 45 facilities in the United States, Puerto Rico and the United Kingdom. CCA's full range of services includes design, construction, ownership, renovation and management of new or existing jails and prisons, as well as long distance inmate transportation services. CCA has recently completed a series of previously announced restructuring transactions which included, among other things, the merger of the company with its primary tenant. In connection with the merger, the company, formerly known as Prison Realty Trust, Inc., changed its name to Corrections Corporation of America. CROWN CRAFTS: Plans to Lay-Off 250 Workers on Dec. 29, 2000 ----------------------------------------------------------- Crown Crafts, Inc. (NYSE: CRW), gave notice to effected employees that there will be a layoff at its Timberlake (Roxboro), North Carolina facility on December 29, 2000. Approximately 250 of the current 392 employees are expected to lose their jobs. Crown Crafts' CEO Michael Bernstein, who personally made the announcement at Roxboro explained, "In order to be competitive in the home furnishings industry, we must focus our resources in those areas that add the most value for our customers. After an extensive review, we concluded that we should shift our strategy to be a marketing and distribution business and to outsource most manufacturing. We deeply regret the impact that this has on our employees and the community, but we must face the reality of competitive forces in the international economy." 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. DIMON, INC.: Moody's Downgrades Senior Ratings to Ba3 & Says Outlook Poor ------------------------------------------------------------------------- Moody's Investors Service downgraded to Ba3 the senior implied rating of Dimon Incorporated, the rating of the $125 million 8 7/8% senior notes due 2006 and the rating of the $250 million revolving credit facility due 2002. The issuer rating is downgraded to B1. The rating action reflects the expected weak free cash flow generation of the company relative to its debt, prospects for low tobacco consumption growth over the medium term, and expected pressure on Dimon's operating margins due to the bargaining power of its clients. The rating outlook is negative. Significant reduction in cash flow available for debt repayment could put pressure on the ratings. This concludes the rating review for possible downgrade initiated on June 20, 2000. Ratings downgraded: a) senior implied, to Ba3 b) $125 million 8 7/8% senior notes due 2006, to Ba3 c) $250 million revolving credit facility due 2002, to Ba3 d) issuer rating, to B1 Following price increases on packs of cigarettes tied to the implementation of the Master Settlement Agreement in 1998 between cigarette companies and the states, the volume of cigarettes sold and the volume of tobacco purchased by cigarette companies from suppliers such as Dimon have dropped significantly in a key market for cigarette companies: the US. In 1999, cigarette shipments dropped 9%; Moody's expects that this decline will continue -- though not always as steeply -- over the long term, as potential new excise taxes and regulations lead to further decrease in cigarette use. However, it is outside of the US that a majority of the processed tobacco sold by Dimon is ultimately consumed as cigarettes. Moody's believes that outside of the US, overall cigarette consumption trends should be positive over the long term, driven mainly by favorable demographics. Overall, overall demand for tobacco sold by Dimon should be only slightly positive. Moody's expects that Dimon's operating margins will continue to be under pressure as a result of the strong bargaining power of its clients. Dimon's client concentration is high, with the company's top three clients representing 35% of its sales. The loss of one client could have a significant impact on the company's results. Still, while some cigarette companies are experimenting with direct procurement of US-grown tobacco, Moody's believes that most of the value added by Dimon's activity lies in its procurement networks and tobacco-processing expertise, and that these cannot be easily replicated. Also, while procurement and processing are integrated within the British American Tobacco cigarette company, the trend in the last years has been for cigarette companies to divest and subcontract these activities. Leaf tobacco processing being asset- intensive, a move back into these activities would depress these companies' return on assets. Over the last two years, Dimon's operating results have been negatively impacted by volume drops tied to the implementation of the Master Settlement Agreement and to economic crises in certain emerging markets. Operating incomes achieved in fiscal year 1999 and 2000 ($39 million and $81 million, respectively) are significantly lower than those achieved in prior years ($167 million in FY1997, $140 million in FY1998). This drop in performance has led the company to engage in a restructuring of its manufacturing activity. The company has also significantly reduced its working capital, by a cumulative net amount of $280 million over the last two fiscal years. This has been achieved largely by reducing inventory not backed by customer orders, or "uncommitted inventory". The substantial free cash flow generated by Dimon thanks to this working capital improvement has allowed it to decrease its debt by a cumulative net amount of $412 million over the last two fiscal years. However, Moody's expects that Dimon's free cash flow levels will be significantly reduced over the medium term, as further large reductions in working capital are unlikely and operating income could continue to be constrained by the strong bargaining power of cigarette companies. In view of the still high level of debt ( $678 million at the end of fiscal year 2000), Dimon's expected low levels of free cash flow give it only a reduced ability to decrease its debt over the medium term. In the financing of its activity, Dimon makes significant reliance on seasonal lines, often provided by banks located in the countries in which it operates. Their uncommited nature weakens the liquidity profile of the company. DIMON Incorporated is the world's second largest dealer of leaf tobacco with operations in more than 30 countries. EDWARDS THEATRES: Gets Court Approval To Use Cash Proceeds Until Nov. 13 ------------------------------------------------------------------------ A bankruptcy court has entered an agreed upon final order authorizing Edwards Theatres Circuit Inc. to use certain of its cash that is subject to the liens of Bank of America N.A., which serves as agent for some of the theatres' secured lenders. In an order entered last week, the U.S. Bankruptcy Court in Santa Ana, Calif., authorized the Newport Beach, Calif.-based theatre operator to use the post-petition cash proceeds of its accounts receivable and inventory through Nov. 13. The proceeds, which are subject to the bank's liens, is considered cash collateral under the Bankruptcy Code and isn't available for use by the theatre without the court's or bank's consent. (ABI 25-Oct-00) FRUIT OF THE LOOM: Obtains Extension of Exclusive Period through Year-End ------------------------------------------------------------------------- Fruit of the Loom sought and obtained a second extension of its exclusive periods during which to file a plan of reorganization and solicit acceptances. FTL asked Judge Walsh for an extension through December 31, 2000 to file a plan of reorganization and until March 1, 2001, to solicit creditors' acceptances of its plan. Fruit of the Loom gave the Court many reasons to support its request. The apparel-manufacturing environment is very competitive. The process of developing a business plan and a reorganization plan is arduous and time consuming given the size and complexity of its estate. Fruit of the Loom asserts that matters of vital importance continue to distract management. For example, Fruit of the Loom received more than 12,000 claims aggregating over $54 billion (including duplicate claims). Fruit of the Loom was party to more than 1,300 executory contracts and expired leases at the petition date. There was a 2,000-employee workforce reduction. Litigation with former chief executive officer, William Farley, continues. Fruit of the Loom maintains it cannot file a meaningful and agreeable plan of reorganization within the time given. A plan standing a chance of approval cannot be finalized and formulated by the end of the year. All progress will evaporate if the exclusivity period is not extended. FTL's main focus is the stabilization of business along with the maintenance and repair of trade support and customer loyalty. To stabilize operations, Fruit of the Loom needs three things: (a) an adequate supply of merchandise; (b) customers willing to place orders on favorable economic terms; and (c) employees dedicated to and comfortable with Fruit of the Loom. Debtor incurred operating losses from continuing operations of over $400,000,000 during fiscal year 1999. It is not realistic to expect a financial institution to provide exit financing to Fruit of the Loom in the absence of a turnaround. The time left is insufficient to establish credibility with potential lenders. Fruit of the Loom acknowledges that some requests for extension of the exclusive period are used as bargaining leverage over creditor constituencies. However, the request before the Court is not a negotiation tactic but an indication that the situation is not ripe for formulation and confirmation of a viable reorganization plan. (Fruit of the Loom Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) GRAND UNION: Grocery Chain Asks Judge Winfield for Nov. 16 Auction Date ----------------------------------------------------------------------- Grand Union, the troubled Northeast supermarket chain, Tribune Business News reports, will go to court on Oct. 30 to ask Judge Novalyn Winfield to approve a Nov. 16 auction at the offices of its New York law firm, Weil, Gotshal & Manges. The chain wants to sell assets but that "does not mean we are obligated to go forward if their are no acceptable bids," WG&M attorney Adam Rogoff, Esq., said. "We reserve the right to withdraw any or all assets from auction. We are hopeful we will get a number of acceptable bids. We are talking to a number of interested parties." HARNISCHFEGER INDUSTRIES: Joint Plan & Disclosure Statement Filed Yesterday --------------------------------------------------------------------------- Harnischfeger Industries, Inc. (OTC Bulletin Board: HRZIQ) filed a Joint Plan of Reorganization and Disclosure Statement yesterday in its Chapter 11 proceeding. The Plan, which covers HII and 57 of its domestic subsidiaries, reflects a consensual arrangement with both the official HII and Beloit creditors committees appointed in the proceeding. If confirmed, the Plan generally will provide for full payment to the creditors of Joy, P&H and most of their subsidiaries and the payment of unsecured creditors of HII with new common stock of HII. Beloit creditors would receive the net proceeds from the liquidation of Beloit Corporation. No distribution to HII's current shareholders is anticipated by the Plan and all of the existing HII shares will be canceled. The Plan allows HII, Joy and P&H to emerge from Chapter 11 as a global supplier of equipment and services to the surface and underground mining business. HII expects to emerge with a favorable capital structure that will allow it the flexibility to respond to and take advantage of the changing dynamics of its industry. Yesterday's filing is one of the last steps HII must take to emerge from Bankruptcy. The Disclosure Statement is subject to approval of the U.S. Bankruptcy Court in the District of Delaware before being mailed to creditors for solicitation of their approval of the Plan. Because bankruptcy law prohibits solicitation of an acceptance or rejection of a Plan until a Disclosure Statement relating to the Plan has been approved by the Court, this announcement is not intended to be, nor should it be construed as, a solicitation for a vote on the Plan. HII will emerge from bankruptcy once the Plan is approved by creditors and confirmed by the Court. It is expected that HII will emerge in early spring of 2001. INTERPOOL INC: Moody's Cuts Ratings Following Transamerica Finance Purchase --------------------------------------------------------------------------- Moody's has downgraded the ratings of Interpool, Inc. and its subsidiaries following its purchase of certain assets of Transamerica Finance Corporation. Moody's has also assigned a senior implied rating of Ba2 to Interpool, Inc., and confirmed the rating of Interpool Acquisition L.L.C.'s bank facility at Ba1. This rating action concludes a rating review that commenced July 28, 2000. The outlook for all of the ratings is stable. Moody's believes that the Transamerica Finance acquisition is strategically sound for Interpool, particularly given the combined entity's sizable chassis business. Interpool is now the leader in the chassis marketplace with nearly 50% market share in the US. Additionally, Interpool's overall asset mix has shifted toward this segment. This shift is beneficial because Interpool should now command greater market strength and operating leverage in the chassis business. In Moody's view, the acquisition of Transamerica Finance's rail trailer and domestic container units is less strategically compelling. Moody's concerns regarding the transaction focus on several issues. For one, Interpool has financed this transaction entirely with secured debt. This exposes the company to material risks by increasing its leverage and reducing its financial flexibility. Such conduct is reflective of the company's governance and risk appetite. Interpool is majority owned by its management team and, therefore, the balance in pursuing the interests of shareholders and bondholders is tilted in favor of shareholders, in Moody's view. Moody's also believes that this culture leads to higher event risk as it increases the chances that the company may pursue similar opportunities in the future. Moody's also commented on the fact that Interpool is faced with several layers of execution risk. First, Interpool must successfully integrate the acquired business units. This will likely be a challenge given the different customer segments that Transamerica Finance targeted. Additionally, systems integration needs to be carefully managed in order to avoid disruptions to customer service, and potentially, to cash flows. Interpool has not faced these issues in the past. Moody's is also concerned about the company's ability to execute its plan to sell non-core assets in an effort to reduce its significant debt burden after the acquisition. The potential market for these types of assets is quite limited, and the company may find it difficult to achieve a sale at expected levels or in the time frame that it would like. This could result in increased risk for bondholders. Finally, Moody's points out that the transportation leasing business that the company operates in is cyclical, and Interpool will be further leveraging itself at what may be a peak in the business cycle. Moody's noted that Interpool attempts to mitigate this risk by entering into long - term leases on a significant portion of its fleet. Moody's also noted that the chassis leasing business, in its current form, has never experienced a significant economic downturn. Given the equipment's long economically useful life, it may take some time to rebalance supply and demand, thus exposing Interpool to reduced cash flows. Therefore, Interpool's additional leverage exposes its bondholders to significant risks. In its rating analysis of Interpool's various classes of debt, Moody's strongly considered the position of each obligation in Interpool's capital structure, and structural enhancements resident in different debt classes. For example, the Interpool Acquisition L.L.C. facility benefits not only from a guarantee by Interpool, but also from substantial over- collateralization. The Interpool secured bank facility benefits from a security interest in certain assets as well as from the fact that the obligation resides not only at the holding company, but also at Interpool's various operating company subsidiaries. Interpool's senior unsecured debt is at the holding company level and, given the structure of the Interpool Acquisition L.L.C. facility, is in an equity-like position supporting this facility's over-collateralization. The following ratings were downgraded: * INTERPOOL, INC. ..TO..FROM a) Senior secured bank credit facility to Ba2 from Ba1 b) Senior unsecured debt to B1 from Ba2 c) Junior subordinated debt to B3 from B1 * INTERPOOL CAPITAL TRUST a) Preferred stock, guaranteed by Interpool, Inc to "b3" from "b1" The following rating was confirmed: * INTERPOOL ACQUISITION L.L.C. a) Senior secured bank credit facility..Ba1 The following rating was assigned: * INTERPOOL, INC. a) Senior Implied..Ba2 Interpool, Inc., based in Princeton, NJ, is a lessor of marine containers and chassis. As of June 30, 2000 the company reported total assets of $1.5 billion. MICROBEST, INC.: Files Motion in Florida Court to Dismiss Chapter 11 Case ------------------------------------------------------------------------- Microbest, Inc., (OTC Bulletin Board: MBST) announced that it has filed a Motion To Dismiss under Chapter 11 in the United States Bankruptcy Court for the Southern District of Florida. Microbest filed its voluntary petition for protection under Chapter 11, on June 1, 2000 to ward off a hostile attempt made to take over the company by two former insiders aggressively attempting to satisfy a judgment. A signed resolution has been executed, resolving the dispute, and protection by the court is no longer necessary. Michael J. Troup, C.E.O. said, "This action confirms that Microbest's strategy to use the protection of the bankruptcy court effectively allowed us to work out the settlement, bringing this matter to closure." Troup went on to say, "The timing could not be better as the company is poised to close some of the most significant opportunities in its history both with private enterprise and government." Microbest's BioCleansing(R) Product Line provides enormous sales opportunities and leads the way to compliance with Presidential Executive Order 13148 mandating that Federal agencies implement Environmentally Preferable Purchasing focused on the reduction of toxic chemicals, hazardous substances and pollutants. "While this aggressive action by our Federal Government mandating environmental stewardship is overdue, the benefits will begin to evidence themselves in the short term," said Troup. He further explained, "It is causing government agencies at all levels and other responsible purchasing parties to look for alternatives that comply yet provide high quality results. Biological components are the future in this process, bringing natural attributes to the function that caustic chemicals cannot provide. We have clearly been the pioneers in the development of alternative BioCleansing(R) applications and we are very happy to be here as the market is finally demanding the technology." NU-KOTE HOLDING: Tennessee Court Confirms Debtors' Chapter 11 Plan ------------------------------------------------------------------ Nu-kote Holding, Inc. (OTC Bulletin Board: NKOT) announced that the U.S. Bankruptcy Court for the Middle District of Tennessee has confirmed the Company's Plan of Reorganization allowing the Company to emerge from Chapter 11. In accordance with the terms of the Plan of Reorganization, the Company will become an affiliate of Richmont Capital Partners I, LP, a private merchant banking partnership headquartered in Dallas, Texas. The Company will continue operating as a going concern with its existing products and its current management team. "We are very excited about the future of Nu- kote," said Pat Howard, Chief Executive Officer of Nu-kote International. "Nu-kote has achieved an incredible accomplishment by not only reorganizing the Company, but actually growing the business while in Chapter 11." "Today is especially rewarding for Nu-kote's customers, suppliers and employees," said Ron Baiocchi, Nu-kote's President and Chief Operating Officer. "The past two years have been very challenging. Today Nu-kote emerges from its struggle with renewed stability and strength. Because of the dedication and loyal support we have received, Nu-kote is now able to regain its position as a premier provider of aftermarket imaging supplies." As part of the Plan of Reorganization, the Company's outstanding common stock will be canceled and will no longer be publicly traded. The holders of Nu-kote stock will receive no distributions or other consideration under the terms of the Plan of Reorganization. Nu-kote is America's favorite aftermarket brand of ink jet, fax, ribbons, copier and laser printer supplies. With a commitment to quality, value, innovation and superior service, Nu-kote produces more than 3,000 products for use in more than 30,000 types of imaging devices. Nu-kote is "The Brand of Choice for Quality & Value." ORBCOMM GLOBAL: Signs Komatsu Ltd. Up as its Newest Customer ------------------------------------------------------------ After filing for Chapter 11 on Sept. 15, Satellite Today reports, Orbcomm Global L.P. has enticed Komatsu Ltd. into joining its customer list. Komatsu's fleet of construction equipment will be monitored and covered by Orbcomm worldwide. Komatsu will be using the global satellite network to pass on vital information about equipment location and engine hours to Komatsu's rental dealers and service managers. "We are enthusiastic about the exciting partnership we have developed with Komatsu to provide global tracking and monitoring capabilities to their growing worldwide network of construction equipment dealers," said Scott Webster, chairman and CEO of Orbcomm. "The Orbcomm network remains in full operation, and we are proud to offer Komatsu's customers quality service and support and the benefits of low-cost, ubiquitous satellite data communications." OWENS CORNING: Court Okays Payment of Import Fees & Possessory Liens -------------------------------------------------------------------- As of October 1, 2000, Owens Corning estimates that $18,000,000 of Imported Goods had been ordered from foreign suppliers, including the Debtors' foreign subsidiaries, but had either not yet arrived in the United States or not yet cleared U.S. Customs. The Debtors estimate that they owe approximately $3,000,000 of Import Obligations (including customs duties, ocean freight, air freight, surety bond premiums and customs brokerage fees, and the like) and ask for permission to pay these prepetition claims. In the ordinary course of business, the Debtors relate, they purchase significant quantities of both raw materials and finished goods from abroad. For example, the Debtors' Composites Division imports glass fiber materials and products into North America from Composite Division operations in Brazil and Europe and elsewhere; the Debtors' Insulatioia Division likewise imports insulation products from Columbia, Mexico and sometimes China; the Roofing Division imports a large amount of asphalt from Venezuela; and the Debtors' Insulation and Composite Divisions both import crude borate ores from Turkey. Virtually all Imported Goods are subject to customs import duties imposed by the laws of the United States.' in addition to the Customs Duties, the Debtors must also pay certain incidental expenses, including, but not limited to, general order penalties, ocean freight, air freight, trucking charges, brokerage fees, detention and demurrage fees, surety bond premiums and deconsolidation charges to effectuate the release of the Imported Goods to the Debtors. The Import Obligations generally are paid by freight forwarders who have been engaged by the Debtors to take all actions necessary on the Debtors, behalf to obtain possession of the Imported Goods. Additionally, Distributors who (a) move goods to, from and between the Debtors' various facilities, (b) store and deliver finished products to the Debtors' customers in and outside the United States, and (c) store such goods and finished products, as necessary, during the distribution process, can assert possessory or other liens on supplies and goods currently in their possession. The Debtors tell Judge Walrath that the Imported Goods are necessary to complete orders already placed by customers and point-out that the orders are worth far more to the Debtors (both in terms of future receipts and the maintenance of valuable goodwill) than the aggregate amount of accrued, but unpaid, Import Obligations. If the flow of Imported Goods were to be interrupted, the result would be a disaster: First, if the prepetition Distribution Charges are not paid, many Distributors may refuse to perform additional services for the Debtors. Locating entities to replace the Distributors will be difficult, if not impossible. At the very least, replacing a Distributor will delay the transport and delivery of goods to the Debtors, facilities. Considering the merits of the Debtors' request, Judge Walrath granted the Debtors' Motion in all respects. Judge Walrath directs that any Freight Forwarder or Distributor accepting payment pursuant to her Order must agree to continue the uninterrupted provision of services on the credit terms as existed immediately prior to the Petition Date. (Owens-Corning Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFICARE HEALTH: President Robert O'Leary Resigns Effective Immediately ------------------------------------------------------------------------- PacifiCare Health Systems, Inc. (Nasdaq: PHSY) announced the resignation of Robert W. O'Leary, president and chief executive officer, effective immediately. The Board of Directors appointed Chief Financial Officer Howard G. Phanstiel to assume the position on an interim basis. Phanstiel was also named to the Board. "PacifiCare's short-term and long-term priorities have changed substantially from what they were perceived to be earlier this year," O'Leary said. "Unfortunately, that change in perception has brought with it my realization that my skills and background are not a good fit to address the company's immediate priorities. PacifiCare is a great company, with a dedicated and talented workforce, and I am proud to say has a very competent management team in place. I believe that the shareholders deserve, and the management team needs, a leader well-grounded in the fundamentals of managed care to lead the company through the time immediately ahead, in order to position the company to unlock its real value and future potential." PacifiCare Chairman David A. Reed commented, "It is with regret that the Board of Directors accepted Rob O'Leary's resignation. We wish him well. Well-known to Wall Street, Howard Phanstiel has a background in financial management, information technology and managed care that makes him well- suited to guide the company over the months ahead, and he has the full support of the Board." Phanstiel, 51, joined the company in July 2000 from ARV Assisted Living, where he was chairman and chief executive officer. Prior to ARV he gained his managed care experience as the principal financial officer for Wellpoint Health Networks, serving as executive vice president of finance and information services. Previously he was chairman and chief executive officer of Prudential Bache International Bank, and managing director of finance at Prudential Securities. Earlier in his career, Phanstiel was director of the Office of Management and Budget for the U.S. Health Care Financing Administration. "I will be working with an outstanding and collaborative team, led by PacifiCare Health Plans CEO Brad Bowlus and Chief Strategic Officer Bary Bailey, " Phanstiel said. "I have also been impressed with PacifiCare's regional health plans and specialty company leadership teams. It will truly be a collaborative effort as we face the challenge of improving PacifiCare's current performance and positioning the company to achieve its future growth potential." PacifiCare Health Systems is one of the nation's largest health care services companies. Primary operations include managed care products for employer groups and Medicare beneficiaries in nine states and Guam serving approximately four million members. Other specialty products and operations include behavioral health services, life and health insurance, dental and vision services, pharmacy benefit management and Medicare+Choice management services. SAFETY-KLEEN: Seeks to Pay Superfund Obligations through November 30 -------------------------------------------------------------------- Safety-Kleen and its affiliates are obligated to pay certain prepetition potentially responsible party obligations under the Comprehensive Environmental Response, Compensation and Liability Act of 1930, as amended, and comparable state "Superfund" laws. By this Motion, the Debtors sought and obtained authority to pay certain prepetition potentially responsible party obligations now due, and (ii) potentially responsible party obligations that will become due on or before November 30, 2000. The Debtors, estimate that these Superfund Obligations will consist of approximately $770,000 of payments now due or that will become due prior to November 30, 2000. The Debtors, with the consent of their Secured Lenders and Creditors' Committee, agree to a $1,000,000 cap on these Superfund Payments. The Debtors believe that the Superfund Obligations are prepetition claims, however, if and to the extent the obligations are postpetition obligations, the Debtors believe that payment would be permitted in the ordinary course of business, without the necessity of Court approval. The Debtors make it clear that their Motion is not intended to seek authority to pay obligations for Superfund sites where payments are not foreseen before November 30, 2000, or in instances where the Debtors have not reached and do not foresee reaching an agreement obligating them to make assessment or other payments on account of Superfund liabilities. The Debtors tell Judge Walsh that, generally, a Superfun site involves the identification of potentially responsible parties by a federal or state agency. In most cases, a PRP is a former owner or operator of a Superfund site, or a generator, transporter or arranger of waste deposited at a Superfund site. In most cases, the agencies will serve the PRPs with a notice or an information request under 42 U.S.C. Sec. 9604(e). Upon receipt of all responses from the PRPS and the assimilation of information discovered at the site itself, the agency will typically call a meeting requiring all of the PRPs to collectively perform an initial site remedial investigation/feasibility study to better understand what will be required to clean-up the site. During this initial phaE@;e, the PRPs often perform an allocation, usually based on volumes of waste each PRP allegedly sent to the site. All allocation allows for cost responsibility to be divided appropriately among the PRPs. After what can be several years of negotiations, public meetings, studies and investigations, the PRP group generally enters into a consent order with the appropriate government agency, obligating the PRP group to undertake the site cleanup. From that point on, the PRP group remediates the site under the oversight of such agency, The PRP group is required to raise its own money, manage the remedial project and collectively resolve any issues that may arise along the way. The Debtors, and other PRP's are jointly and severally liable for the various clean-up obligations at respective Superfund sites. As a result of the S@iperfund process outlined above, the Debtors and other 5 PRP's have entered into, or anticipate entering into, a number of agreements and/or administrative orders in connection with the Debtors, participation in various Superfund remediation site8. The Superfund sites in which the Debtors have active involvement are: Angelillo Site -- Southington, Connecticut Bayonne Barrel -- Newark, New Jersey Beede Waste Oil -- Plaistow, New Hampshire Breslube-Penn -- Corapolis, Pennsylvania BROS Site -- Bridgeport, New Jersey Cam-Or Site -- Westville, Indiana Casmalia Resources -- Santa Barbara County, California Combustion, Inc. -- Denham Springs, Louisiana Croton Point Landfill -- Croton-on-Hudson, New York Divex Site -- Columbia, South Carolina Ekotek Superfund -- Salt Lake City, Utah N.W. El Monte-Operable Unit -- El Monte, California Estes Landfill -- Phoenix, Arizona Florida Petroleum Reprocessors (FRP) -- Davie, Florida Four County Landfill -- South Bend, Indiana Hardage Supefund -- McClain County, Oklahoma Helen Kramer Landfill -- Mantau, New Jersey J. C. Pennco -- San Antonio, Texas Jonas Sewell Transfer Station -- Deptford, New Jersey M & J Solvent Company -- Norcross, Georgia H & M Drum Sites -- Dartmouth and Freetown, New Hampshire Malvern TCE -- Malvern, Pennsylvania Marcon Erectors -- Lackawanna, New York Northside Sanitary Landfill -- Zionsville, Indiana PCB Treatment, Inc. -- Kansas City, Missouri Peak Oil Site -- Tampa, Florida Petroleum Products -- Pembroke Park, Florida RAMP Industries -- Denver, Colorado Spectron/Galaxy Site -- Elkton, Maryland Solvent Recovery Services of New England -- Southington, Connecticut Sydney Mines -- Brandon, Florida Third Site Enviro-Chem -- Zionsville, Indianna Union Chemical -- Southhope, Maine Western Processing -- Kent, Washington Wichita (North Industrial Corridor) -- Wichita, Kansas Port of Redwood City Site -- Redwood City, California Safety-Kleen's lawyers express the Debtors' grave concern about the impact on their businesses if the Debtors are not permitted to pay the Superfund obligations and meet their apportioned responsibilities to the PRP groups, thereby resulting in other PRP's having to pay or otherwise be Responsible for the Debtors' share of the Superfund obligations. As a result of these concerns, the Debtors' believe that it is in the best interests of the Debtors' estates, their creditors and other parties in interest for the Debtors' to pay the Superfund obligations in the ordinary course as they come due. Many reasons, David S. Kurtz, Esq., of Skadden, Arps, Slate, Meagher & Flom, argues, exist for authorizing the Debtors to pay the Superfund Obligations. Chief among those reasons -- and perhaps most compelling -- is the simple fact that absent payment of the Superfund obligations in the ordinary course of business, there is a substantial likelihood that the Debtors, businesses will be damaged beyond repair, severely jeopardizing the Debtors' chances for a successful reorganization. Mr. Kurtz reminds Judge Walsh of his previous statements to the Court that the Debtors have no intention of using their bankruptcy filings as a tool to avoid paying the Superfund Obligations, as this would be inherently contrary to the Debtors' overall business philosophy. In fact, as explicitly stated at the hearing before the Court on June 13, 2000, "it is not the [Debtors'] intention in this bankruptcy proceeding to walk away from or discharge any of its environmental commitments or obligations under environmental laws." Hearing Transcript, June 13, 2000 at p. 5. Moreover, even if the Debtors' wanted to walk away from the Superfund Obligations, the Debtors believe that such actions would send a message throughout the industry, from generators of hazardous waste to competitors who dispose of such waste, that the Debtors have not and will not take responsibility for their environmental obligations. This would negatively impact on their relationships with other PRPs, their customers, potential customers and regulatory agencies. In connection with active Superfund sites where the Debtors have ongoing financial, legal or technical obligations, the Debtors have working relationships with the other PRPs to remediate such sites. These working relationships typically resulted from years of negotiating with the federal and state regulators and the other PRPs. At a site where the Debtors are a major PRP, any disruption in the Debtors' involvement would have significant repercussions among the PRP group and would likely result in the Debtors, inability to continue those relationships going forward. In many cases, the loss of even one PRP in a PRP group at a Superfund site can have a detrimental effect on the entire PRP group, especially if that lost PRP had a significant percentage of the allocation. The trust and cooperation that have been a crucial part of the formation of the PRP groups will be jeopardized if the Debtors fail to comply with their Superfund obligations. (Safety-Kleen Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) SERVICE MERCHANDISE: Winding-Up Non-Debtor Insurance Subsidiary --------------------------------------------------------------- At the Debtors' behest, Judge Paine authorized Service Merchandise Corp., pursuant to 11 U.S.C. sections 105 and 363(b), to wind up and dissolve Service Merchandise's wholly-owned, non-debtor subsidiary, Ser Plus Assurance Company, a Class II insurance company incorporated in mid-1998 under the laws of Bermuda. The main reason for this determination, the Debtors tell Judge Paine, is that Ser Plus is not being used, and is not expected to be used, to its full potential due to changes in Service Merchandise's expectations with respect to the utility of, and the costs and benefits associated with Ser Plus. As a result, Ser Plus generates limited economic benefit and does not form a part of the Debtor's core business. Considering these factors and the continuing expense and distraction associated with managing and operating an offshore insurance company, the Debtors have concluded that it is prudent to suspend this insurance business for the time being. At the time of its incorporation, it was contemplated that Ser Plus would insure the Debtors against three types of risk associated with Service Merchandise's business: (a) the self-insured retention or deductible amounts under Service Merchardise's General Liability Insurance policies; (b) the self-insured retention or deductible amounts under Service Merchandise's Workers' Compensation Insurance policies; and (c) a portion of the risk associated with the policies insuring Service Merchandise Warranties. Ser Plus realized income through the insurance premiums paid by Service Merchandise, generated interest income on reserves required by Bermuda law, and also benefited Service Merchandise with certain tax advantages from transactions. However, as a result of certain Commutation Transaction in May 1999 as part of Service Merchandise's review of its insurance and cash needs, Ser Plus's business relates only to the Warranty Insurance. While Ser Plus's original business plan called for the generation of annual premiums in the amount of almost $20 million in 2000, the current operations generate only a small percentage of that amount because approximately half of the anticipated premiums related to General Liability Insurance and Workers' Compensation Insurance and would not be realized subsequent to the change in operation due to the Commutation Transaction, and another $5 million in premiums were originally expected from a projected expansion of third party insurance business but that did not occur. Nonetheless, Ser Plus still incurs many of the same expenses such as local fees associated with its Class II insurance license, fees and expenses of its local managers, including AON Insurance Managers (Bermuda) Ltd., fees and expenses for required auditors, Deloitte & Touche (Bermuda) Ltd., fees and expenses for counsel, fees and expenses for actuaries required under Bermuda law, and expenses incurred by Service Merchandise's representatives for meetings and other necessary corporate functions in Bermuda. In their business judgment, the Debtors have determined that it is in the best interests of the Debtors' estates to wind down the operations of Ser Plus and exit the insurance business, at least for the foreseeable future. Accordingly, the Debtors request: (A) authority to take all steps necessary to wind down and dissolve Ser Plus, and (B) approval of the Commutation Transaction, including, but not limited to: (1) Issuance of a letter of instruction to Ser Plus to wind down its operations and cease writing reinsurance; (2) Engagement of professionals necessary to prepare and issue audited financial statements, and make such filings as required by Bermuda law; (3) Ratification of any transactions as required by Bermuda law in connection with the dissolution; (4) Issuing a letter of indemnity to the Monitor appointed under Bermuda law to wind up the affairs of Ser Plus and to the directors of Ser Plus who will be assisting the Monitor; (5) Engagement of professionals in connection with any necessary approvals for the dissolution of Ser Plus; (6) Disposal of assets and satisfying debts of Ser Plus; and (7) Termination or otherwise resolving any remaining contracts on which Ser Plus owes performance. (Service Merchandise Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) SILVER CINEMAS: Fed Up, Committee Moves for Conversion or Dismissal ------------------------------------------------------------------- The Official Committee of Unsecured Creditors of Silver Cinemas International, Inc., tells Judge Farnan that its time for the curtain to fall in this theater chain's chapter 11 case. Silver Cinemas has no cash in the bank, can borrow no more than $26,000 under its debtor-in-possession financing facility, the DIP Lenders say that the DIP Financing Agreement is in default, and administrative priority claims are swelling as the Company is unable to perform post-petition obligations under assumed construction contracts. These facts, the Committee argues, make it impossible for the Debtors to propose a confirmable plan of reorganization. Accordingly, the Debtors' chapter 11 cases should be converted to a chapter 7 liquidation or the cases should be dismissed. Robert Jay Moore, Esq., and David B. Zolkin, Esq., of Milbank, Tweed, Hadley & McCloy LLP, lead counsel to the Committee remind Judge Farnan that, at the outset of these chapter 11 cases, the Debtors made it very clear that "[a] crucial component of the Debtors' long term viability and success" was the successful financing and completion of the build-out of five new, state of the art movie theatres located in key cities throughout the country. Silver Cinemas represented that once completed, the New Theatres would add between approximately $26 million and $35 million in enterprise value to the Debtors' estates. On the basis of these and other representations, early in these Cases the Committee consented to and the Bankruptcy Court approved: (a) a $50 million debtor in possession financing facility, including a $17 million construction loan component to fund the New Build Program; (b) the repayment in full of the Debtors' pre-petition loan facility, which also included a construction loan component; and (c) the Debtors post-petition assumption or execution of numerous leases and construction and other contracts associated with the New Theatres. Now, ironically, the DIP Lenders declare that the very financing that was so critical to the success of the New Build Program and to the estates' ability to reorganize have rendered the estates virtually incapable of reorganizing. Committee Chair Oaktree Capital Management, LLC, as general partner and/or investment manager of certain funds and accounts it manages, a holder of an unsecured claim against the estate in excess of $60 million, presented a term sheet dated earlier this month for a new DIP construction loan facility underwritten by Oaktree and a related chapter 11 plan. Oaktree's Construction Loan Proposal provided that, rather than requiring the Construction Loan to be repaid (as required under the DIP Loan) or rolled over into exit financing upon confirmation of a plan of reorganization, the outstanding balance under the proposed facility would have converted to a controlling equity interest in the reorganized Debtors. The DIP Lenders refused even to enter into negotiations with the Committee regarding the Construction Loan Proposal unless Oaktree, its proponent, would also agree to fund ongoing working capital needs of the Debtors during the negotiation and confirmation process, funding that would be required of the DIP Lenders in the context of a chapter 11 sale process in any event! The Committee doesn't fault Oaktree for declining to provide piecemeal financing without any game plan in place. Absent fruitful out-of-court negotiations to resolve the business issues underpinning the Committee's Motion, Judge Farnan will entertain the Committee's arguments at high-noon hearing on November 9 in Wilmington. TOKHEIM CORPORATION: Chapter 11 Plan Declared Effective on October 20 --------------------------------------------------------------------- Tokheim Corporation (OTCBB:TOKM) announced that it has completed its financial restructuring plan, effective October 20, 2000. The Company also announced results for the three and nine months ended August 31, 2000 reflecting business trends consistent with those experienced in the Company's fiscal first half ended May 31, 2000. On October 4, 2000, the Company's previously announced prepackaged financial restructuring plan under Chapter 11 (the "Plan") was confirmed by the United States Bankruptcy Court for the District of Delaware, only 38 days after Tokheim filed its Plan with the Court. The Plan became effective as of October 20, 2000. The Company also announced that the Common Stock of the reorganized company has been issued to its bondholders and certain other creditors under the terms of the Plan. The new Common Stock's trading symbol is expected to be assigned shortly. The Company's previously issued Common Stock, which had been trading under the symbol "TOKM" on the OTC Bulletin Board, has ceased trading and has been cancelled pursuant to the Plan. Information regarding the exchange of old Common Stock for warrants to purchase new Common Stock, pursuant to the Plan, will be sent to holders of old Common Stock shortly. Douglas K. Pinner, Chairman, President and Chief Executive Officer, stated: "Our ability to achieve confirmation of our prepackaged financial restructuring Plan in only 38 days is a testament to the underlying strengths of the Company and is also largely attributable to the developed knowledge and understanding of our business by our lenders, the dedication of our management team, and the support of our employees, vendors, and customers. "While a difficult process, this reorganization has enabled us to effectively move past a number of challenges and establish a strong foundation for solid performance and growth. "Going forward, we intend to continue to build Tokheim's position as the global leader in the industry, bringing continued leadership in technology, quality focus and customer service. We are very excited about the future of our business." Consolidated sales for the fiscal 2000 third quarter were $122.7 million compared to $169.2 million in the comparable quarter a year ago. Consolidated sales for the nine month period ended August 31, 2000 were $389.9 million compared to $512.4 million in the comparable 1999 nine month period. The impact of exchange rate fluctuations, especially the weakening of the Euro, was a decrease in sales for the three and nine month periods ended August 31, 2000 of 9.3% and 7.7%, respectively. On August 11, 2000, the Company settled out of court for $7 million, a claim made by the former shareholders of MSI. This award has been accrued for in the third quarter and classified as a "liability subject to compromise" in the consolidated condensed balance sheet. These claimants will receive common stock in the newly reorganized company. For the three months ended August 31, 2000, the loss applicable to common stock was $30.6 million or $2.41 per diluted common share compared to a loss applicable to common stock of $5.8 million or $0.46 per diluted common share for the same period in 1999. For the nine month period ended August 31, 2000, the loss applicable to common stock was $69.2 million or $5.46 per diluted common share compared to a loss applicable to common stock of $32.0 million or $2.52 per diluted common share for the comparable 1999 period. Tokheim, based in Fort Wayne, Indiana is the world's largest producer of petroleum dispensing devices. Tokheim Corporation manufactures and services electronic and mechanical petroleum dispensing systems. These systems include petroleum dispensers and pumps, retail automation systems (such as point-of-sale systems), dispenser payment or "pay-at-the-pump" terminals, replacement parts, and upgrade kits. TRI VALLEY: Several Prospective Buyers for Bankrupt Tomato Grower ----------------------------------------------------------------- Terry Brennan of TheDailyDeal.com reports that Tri Valley Growers is placing its assets up for sale. Del Monte, Conagra, Chiquita Brands, and Seneca are the most likely buyers of the bankrupt co-op's assets. According to a recent company statement, Tri Valley is engaged in serious talks with other prospective buyers too. The fruit and tomato cooperative hired Goldsmith-Agio-Helms of Minneapolis to handle disposition of the assets. "There have been quite a few companies that have come forward and we think it could turn into an auction process," said spokeswoman Maya Pagoda of Sitrick and Co., a Los Angeles public relations firm hired to handle Tri Valley's bankruptcy. Tri Valley Growers, considered the nation's largest canned fruit and tomato processors, filed for Chapter 11. The petition was filed in the U.S. Bankruptcy Court for the Northern District of California in Oakland. VENCOR, INC: Delaware Court Extends DIP Financing Until January 31, 2000 ------------------------------------------------------------------------ Vencor, Inc. announced that the United States Bankruptcy Court for the District of Delaware approved an amendment to the Company's debtor-in- possession financing to extend its maturity until January 31, 2001. The Amendment also revises and updates certain financial covenants. In addition, the Amendment extends through November 22, 2000 the period of time for the Company to file the appropriate pleadings to request confirmation and consummation of its plan of reorganization. The DIP Financing and existing cash flows will be used to fund the Company's operations during its restructuring. As of October 25, 2000, the Company had no outstanding borrowings under the DIP Financing. The Court also approved an amendment to the previously announced commitment letter among the Company and certain of the DIP lenders to extend the date by which Court approval must be obtained for the Commitment Letter to be effective through January 31, 2001. Pursuant to the Commitment Letter, certain of the DIP lenders would finance an amended and restated debtor-in- possession credit agreement that would become effective in the event the Company became involved in legal proceedings against Ventas, Inc. (NYSE: VTR). The amendment to the Commitment Letter also extends to January 31, 2001 the date by which litigation would need to be commenced with Ventas. The consummation of the Restated DIP also would be subject to other customary conditions contained in the Commitment Letter. On September 29, 2000, the Company filed its proposed plan of reorganization with the Court. At this time, the Company has adjourned the hearing seeking approval of the Commitment Letter and the Restated DIP in light of the status of the current negotiations with its major constituencies to finalize the terms of its proposed plan of reorganization. Vencor and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 with the Court on September 13, 1999. Vencor, Inc. is a national provider of long-term healthcare services primarily operating nursing centers and hospitals. WASTE MANAGEMENT: Announces Investment Conferences for Fourth Quarter --------------------------------------------------------------------- Waste Management Inc. (NYSE:WMI) announced that executives of the Company currently plan on attending and presenting at the following investment conferences during the fourth quarter 2000: October 27th First Analysis European Conference November 15th 2000 Chase Bond Conference November 30th Deutsche Bank Alex Brown Basis Industries Conference Although these presentations are not expected to include any material non-public information, the Company will post the presentation slides on its Web site. The slides will be posted some time during the 24-hour period prior to the scheduled presentation time. The slides may be accessed via the Investor Relations section of the Company's corporate Web site, which is located at www.wm.com. Waste Management Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial and residential customers throughout North America. * BOOK REVIEW: The Failure of the Franklin National Bank: Challenge to the International Banking System ------------------------------------------------------------ Author: Joan E. Spero Publisher: Beard Books Softcover: 235 Pages List Price: $34.95 Order a copy today from Amazon.com at http://www.amazon.com/exec/obidos/ASIN/1893122344/internetbankrupt Review by Susan Pannell In 1974 the international financial system faced its most serious crisis since the 1930s. The stresses and shocks of that year, including the failure of the Franklin National Bank, led to a crisis of confidence that brought the international banking system dangerously close to disaster. Franklin's failure forced United States and foreign regulatory authorities to devise new ways to avert an international banking crisis, and served as a catalyst for later efforts to bring international banking under public management. The author's case study, first published in 1979 when events were very fresh, examines the failure of the Franklin--once the twentieth largest bank in the United States within the context of the banking crisis. Franklin's collapse was both cause and effect: changes in banking regulation and practice contributed to the bank's problems, while its collapse forced bank regulators and policymakers to address the new international nature of banking and to cooperate in addressing dramatic changes in international financial markets, and, hopefully, avoiding a repeat of the crisis. The book begins by reviewing the economic and political factors that led to the internationalization of American banks as many banks became multinational corporations. This phenomenon surged during the 1960s and 1970s, carrying the Franklin (which even acquired a foreign owner, Italian financier Michele Sindona) with it. The work then examines the extent to which the Franklin's demise was cause by its international activities and, in turn, the manner in which Franklin's insolvency threatened the international banking system. After analyzing the crisis's antecedents, the book moves to a discussion of United States regulatory responses to control it, and explains how American authorities were forced to take innovative steps to manage the international dimensions of the Franklin crisis. Those steps included a massive Federal Reserve loan and the use of that loan to cover foreign branch outflows, assistance in managing foreign exchange operations and the eventual purchase of Franklin's foreign exchange book, and the FDIC sale. Not even those bold regulatory approaches sufficed to stem the crisis, however, United states regulators were obliged to seek assistance from other nations' financial authorities. The cooperative approach not only prevented the crisis from devolving into a crash, but also laid the groundwork for increased cooperation in the future. This achievement, the author concludes, was the lasting (and beneficial) effect of the failure of the Franklin National Bank. The Franklin episode, thus, revealed both the weaknesses and the strengths of the United States' regulatory system as it applies to international banking. Joan E. Spero is president of the Doris Duke Charitable Foundation. She served as Undersecretary of State for Economic, Business, and Agricultural Affairs from 1993 to 1997, and taught for several years at Columbia University. She is a member of the Council of American Ambassadors. ********* 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 * * *