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/raid1/www/Hosts/bankrupt/TCR_Public/001115.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 15, 2000, Vol. 4, No. 224 Headlines ABRAXAS PETROLEUM: Successful Restructuring Improves 3Q Results AMERICAID TEXAS: S&P Gives Insurer Bpi Financial Strength Rating AMERISERVE FOOD: Reclamation Creditors Gripe Over Litigation Costs CAMBRIDGE INDUSTRIES: Dec. 28 Hearing to Confirm Liquidating Plan CAREMATRIX CORP: Founder Gosman Leaves Post Upon Bankruptcy Filing CENDANT/PHH CORP: Moody's Confirms Ratings in Light of Avis Deal CHA HMO INC: S&P Assigns Insurer CCCpi Financial Strength Rating CORRECTIONS CORP: Moves 3rd Quarter Conference Call To Nov. 17 DOW CORNING: Judge Hood Releases Opinion on Confirmation Appeals FARMERS COOPERATIVE: $100K Settlement for Stolen Lottery Tickets FINOVA GROUP: Leucadia Makes $350 Million Equity Purchase FRUIT OF THE LOOM: Employs Fogel Feldman As Litigation Counsel GIBBS CONSTRUCTION: Emerges from Chapter 11 GRAND UNION: Employs Excess Space as Real Estate Consultant GRAND UNION: C&S Inks Definitive Agreement to Purchase Assets HARNISCHFEGER INDUSTRIES: Settling PPM 3 & MPM 11 Contract Claims HEALTH PARTNERS: S&P Gives Insurer CCCpi Financial Strength Rating ICG COMMUNICATIONS: Communications Upstart May Seek Chapter 11 LOEWEN GROUP: 2 Funeral Homes & 7 Cemeteries Sell For $3,300,000 METALS USA: Moody's Changes Rating Outlook to Negative MISSISSIPPI CHEMICALS: Fitch Puts BB Rating on Senior Secured Debt OCHSNER HEALTH: S&P Affirms CCCpi Financial Strength Rating OWENS CORNING: Official Unsecured Creditors' Committee Appointed PHYSICIANS HEALTH: S&P Cuts Strength Rating Noting Weak Earnings PITTSBURGH CORNING: Seeks Settlement Fund For Insurance Proceeds PRIME RETAIL: Director Orchestrates Recapitalization Plan & Deal PSINET, INC: Weighs Options in Wake of $1.4 Billion 3Q Loss SHOPKO: Fitch Cuts Ratings on Bank Loans & Senior Notes to BBB- TRI VALLEY: Court Grants Bonus Package for Executives After Sale UNITED ARTISTS: Announces Financial Results for Third Quarter 2000 VENCOR, INC: Announces $27MM Loss on $717MM of Revenue in 3rd Qtr. VISION METALS: Case Summary and 20 Largest Unsecured Creditors * Meetings, Conferences and Seminars ********* ABRAXAS PETROLEUM: Successful Restructuring Improves 3Q Results --------------------------------------------------------------- Abraxas Petroleum Corporation (AMEX:ABP) released financial and operating results showing cash flow improving by 165% and 259% on a recurring basis in the third quarter and nine months respectively due to the Company's successful restructuring, increased capital expenditures and improved commodity prices. Chairman and CEO, Robert L. G. Watson, commented on the Company's current operations in United States and Canada. "Abraxas made significant progress in proving up our major exploitation plays -- Brooks Draw in Wyoming, the Sundre/Caroline and Pouce Coupe areas in Alberta, Canada and the Montoya in west Texas. Each of these plays has significant potential that is beginning to be realized. In Wyoming, the Company put its first two wells on production at a combined initial rate of over 700 BOPD. We expect to have gas processing facilities on line in the first quarter of 2001 to allow for the sale of the very rich gas that is being produced along with the oil. "In Sundre/Caroline, Alberta, Canada, the Company and its 49% owned public subsidiary, Grey Wolf Exploration Inc. (TO:GWX), now control 100% of over 45,000 acres as well as the gas plant and gathering facilities. We are drilling our fourth well and doing our fourth recompletion in the field and are in the process of upgrading the gas plant and gathering facilities to handle the incremental production. We expect to have the plant capable of processing 20 MMcfpd by the end of the year which would be double the current production rate. "In Pouce Coupe, the Company and Grey Wolf completed a second successful Montney test at a rate of 2.2 MMcfpd, acquired 1,280 acres offsetting existing production and are negotiating to acquire additional working interest in certain of its wells in this area. During the third quarter, under a previously announced drilling agreement, EOG Resources Inc. (NYSE:EOG) spudded the first of up to five carried wells on Abraxas' west Texas Montoya acreage. Abraxas has acquired additional acreage on trend with Montoya potential. This winter the Company plans three 3D seismic surveys in Wyoming and Canada to further delineate the potential." Based on stock price performance during the quarter, potential CVR dilution has been permanently reduced to 8.5 million shares based on the December trigger date and continued improvement in stock price in the near term could further reduce or eliminate potential dilution from the CVR's. As of Nov. 1, all of our oil production and approximately two-thirds of our gas production is unhedged which will add substantially to EBITDA and cash flow in the fourth quarter and for 2001. Looking forward, the Company expects significant improvement in EBITDA and cash flow in the fourth quarter. The Company currently estimates cash flow of $0.35-$0.40 per share for the fourth quarter with EBITDA estimated between $0.65-$0.75 per share, on a primary basis. Due to the uncertainty of timing in getting production on stream due to regulatory, construction and completion issues, production increases in our major project areas are not projected to have a material impact on the fourth quarter but should impact the first quarter of 2001. In addition, the Company continues to review sales of non-core assets with the proceeds used to fund capital expenditures and reduce outstanding indebtedness. All the Company's public debt is callable by March 2001 and the Company may review alternatives for refinancing a portion of that indebtedness, reducing overall leverage and interest expense. The Company held a conference call yesterday to review the results of the third quarter. For a replay, call 888/203-1112; confirmation code 739828, through November 21. Additional information on recent events as well as a complete transcript of the conference call and Form 10-Q will be available directly from the Company or on its Web site at www.abraxaspetroleum.com. Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploration and production company that also processes natural gas. It operates primarily along the Texas Gulf Coast, in the Permian Basin of western Texas, western Canada, and Wyoming. AMERICAID TEXAS: S&P Gives Insurer Bpi Financial Strength Rating ---------------------------------------------------------------- Standard & Poor's has assigned its single-'Bpi' financial strength rating to Americaid Texas Inc. The rating reflects the company's weak risk-based capitalization and very weak earnings, offset by good liquidity. This wholly owned subsidiary of AMERIGROUP Corp. was incorporated in 1995 to create a community-focused managed care company with an emphasis on the public sector healthcare market in Texas. Major Rating Factors: -- The company's risk-based capitalization is weak, as indicated by a Standard & Poor's capital adequacy ratio of 37.1% at year-end 1999. Total statutory capital was $7.5 million at year-end 1999, of which $2.2 million was in surplus notes from AMERIGROUP Corp. -- The company's operating performance has been weak, as indicated by net underwriting losses from 1996 to 1998. However, earnings rebounded to a net underwriting gain of $5.6 million in 1999. -- Liquidity is strong, with a Standard & Poor's liquidity ratio of 127.5% at year-end 1999. AMERISERVE FOOD: Reclamation Creditors Gripe Over Litigation Costs ------------------------------------------------------------------ Thirty-four of the 38 creditors that joined in the Consolidated Objection to AmeriServe's motion for further procedures to value allowed Reclamation Claims, formally withdrew their objections prior to last week's hearing in the Chapter 11 Case in the US Bankruptcy Court in Wilmington, DE. Three of the four remaining are represented by a Wilmington firm, with total allowed Reclamation Claims of approximately $4 million, while the fourth appeared without counsel. According to one of the attorneys involved in the matter, the holder of the fourth allowed Reclamation Claim has other issues than pure reclamation. Ameriserve put on testimony from its Chief Reorganization Officer to the effect that the prepetition secured lenders' liens on the Company's inventory were undersecured, according to F&D Reports. The Objecting Reclamation Creditors represented by the law firm attempted to counter the Company's valuation by citing the Company's first Monthly Operating Report filed in the Chapter 11 Case wherein it stated it had assets of over $1 billion. There was, however, no testimony to counter that put forward by the Company. In continuing the matter until November 17, the Bankruptcy Judge indicated that absent testimony from the Objecting Reclamation Creditors, he would accept the valuation set by the Company. Counsel for the Objecting Reclamation Creditors indicated that it could cost over $1 million to have counter- testimony as to valuation. The expectation, F&D Reports says based on its observation of the proceedings and contact with the core parties-in-interest, is that objections will be resolved prior to November 17. CAMBRIDGE INDUSTRIES: Dec. 28 Hearing to Confirm Liquidating Plan ----------------------------------------------------------------- Cambridge Industries Holding Inc. moved a small step closer to confirming a liquidating chapter 11 plan, although there's some unfinished business to wrap up before that can be achieved. Cambridge, with the consent of its official committee of unsecured creditors, obtained an 80 day extension of the period during which it maintains the exclusive right to solicit plan acceptances at a hearing before Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington, Del. A hearing to consider the adequacy of the disclosure statement relating to the former plan has been scheduled for Dec. 28. The automotive parts supplier filed the disclosure statement over a month ago. (ABI 13-Nov-00) CAREMATRIX CORP: Founder Gosman Leaves Post Upon Bankruptcy Filing ------------------------------------------------------------------ Founder Abraham Gosman of CareMatrix Corp. left the company's headquarters when the company filed for Chapter 11, Modern Healthcare reports. Mr. Gosman, CareMatrix's 71-yr-old chairman and chief executive officer tendered his resignation simultaneously upon the bankruptcy filing. A company spokesman said Gosman returned as CEO in 1999 to complete a deal, and resigned to pursue different alternatives. Michael Zaccaro relates that the company assets are tied up in real estate, and its cash isn't adequate to cover its debts. Mr. Zaccaro is the president and chief operating officer of CareMatrix. CareMatrix reports assets of $228.7 million and debts totaling to $119 million in its bankruptcy petition. That petition was filed in Delaware on Nov. 9 is assigned to case number 00-04159. Paul D. Moore of Duane, Morris & Heckscher in Boston, serves as counsel to the company. CENDANT/PHH CORP: Moody's Confirms Ratings in Light of Avis Deal ---------------------------------------------------------------- Moody's Investors Service confirmed the ratings of Cendant Corporation and PHH Corporation, following Cendant's announcement that it had reached agreement to acquire the 82% of Avis Group Holdings Inc. that it does not already own for $33 per share or $946 million in cash. The confirmation of the ratings are based upon the incremental cash flow from Avis, the stability of the cash flow from Cendant's other businesses, limited asset risk, and the expectation that the equity portion of the transaction will be financed with cash, debt issuance and equity. The rating outlook remains negative due to continued uncertainty regarding the company's strategic direction and business model. The ratings of Avis Group Holdings remain on review for possible upgrade. Ratings Confirmed: A) Cendant Corporation a) Senior Unsecured at Baa1 b) Senior Unsecured Shelf at (P) Baa1. c) Growth Prides at A3 d) Subordinated debt at (P) Baa2 e) Preferred shelf at (P)"baa2" f) Short-term at Prime-2 B) Cendant Capital I a) Guaranteed FELINE PRIDES at "baa1" C) Cendant Capital II and Cendant Capital III a) Guaranteed Preferred stock at (P) "baa2" D) HFS Inc. a) Senior unsecured at Baa1 (Assumed by Cendant Corporation) E) CUC International, Inc. a) Subordinated debt at Baa2 (Assumed by Cendant Corporation) F) Sierra On-Line, Inc. a) Subordinated debt at Baa2 H) PHH Corporation a) Senior unsecured at Baa1 b) Senior unsecured shelf at (P) Baa1. c) Senior unsecured MTN at Baa1. e) Issuer Rating at Baa1 f) Short-term at Prime-2 Moody's expects Avis' Wright Express and North American vehicle management businesses to be acquired by its wholly owned subsidiary PHH Corporation for $780 million cash plus the assumption of about $541million in new debt, as well as the debt associated with the fleet leasing securitization. The remaining consideration is expected to be funded by Cendant through the issuance of common equity. The return of Avis' fleet leasing business will reduce PHH's tangible equity and weaken debt protection measures as a result of the proposed financing structure, however, this risk is partially offset by the improved business diversification and additional cash flow provided by the fleet business. PHH's rating outlook remains negative reflecting the reduction of net tangible equity at PHH and the overall influence of Cendant on PHH's financial profile. Moody's sees significant strategic and financial linkages between PHH and Cendant. The firewall that exists between PHH and Cendant has not prevented Cendant from realizing and upstreaming the economic gain on the previous sale of the fleet assets from PHH. Moody's notes, PHH did reduce debt with the proceeds from the that sale. The prior sale of PHH's fleet business and the related dividend payment to Cendant, as well as the proposed structure of this transaction, illustrate Cendant's ability and willingness to capture value created at its subsidiary. Additionally, PHH's relocation and mortgage banking businesses have meaningful tie-ins with Cendant's real estate brokerage franchise operations. Cendant will retain the rental car business which adds operating and asset risk to the company's overall risk profile,which is partially mitigated by the incremental cash flow from the rental car operations, as well as the familiarity Cendant has with managing this business. Moody's analyzes Cendant's financial ratios on a consolidated basis, as well as net of PHH. Under both scenarios, debt protection measures weaken as a result of this transaction but remain acceptable given the stability of the cash flows. Cendant Cendant's negative rating outlook reflects the high level of event risk resulting from the company's return to acquisition mode, as well as continuing uncertainty regarding the company's strategic direction. The ratings also consider the company's obligation to pay $2.85 billion to settlement shareholder lawsuits. Moody's includes the tax adjusted settlement liability into its leverage calculations. Given the high probability that the appeals process will move slowly, Moody's believes that Cendant will have sufficient time to pre-fund the settlement from its substantial recurring earnings stream and so avoid a sharp increase in debt levels. Moody's notes that debt protection measures could be stressed if the appeals process moves more quickly than the company's ability to fund the Trust, particularly if acquisition activity continues. Cendant Corporation, headquartered in Parsippany, New Jersey is a leading provider of real estate, travel and direct marketing related consumer and business services. PHH Corporation, a wholly owned subsidiary of Cendant Corporation, provides relocation and mortgage banking services. CHA HMO INC: S&P Assigns Insurer CCCpi Financial Strength Rating ---------------------------------------------------------------- Standard & Poor's has assigned its triple-'Cpi' financial strength rating to CHA HMO Inc. The rating reflects the HMO's very weak risk-based capitalization and earnings, offset by good liquidity. Headquartered in Lexington, Ky., the company began operations in 1995. Major Rating Factors: -- CHA HMO's risk-based capitalization is extremely weak, as indicated by a Standard & Poor's capital adequacy ratio of 21.2% at year-end 1999. This ratio includes full credit for $10.9 million in surplus notes from CHA Service Co. -- The company's operating performance has been weak, with underwriting losses of $300,000 in 1999 and of $22.2 million in 1998. -- Liquidity is good, with a Standard & Poor's liquidity ratio of 123.8% at year-end 1999. CORRECTIONS CORP: Moves 3rd Quarter Conference Call To Nov. 17 -------------------------------------------------------------- Corrections Corporation of America (NYSE:CXW) has rescheduled its third quarter conference call for Friday, November 17, 2000 at 10:00 a.m. (eastern time). The Company plans to file its third quarter 10-Q on a timely basis after the close of the market on November 14, and will issue its third quarter release prior to the market opening on Wednesday, November 15, 2000. The live broadcast of Corrections Corporation's third quarter conference call will be available on-line at www.streetevents.com on November 17, 2000, beginning at 10:00 a.m. (eastern time). The on-line replay will follow immediately and continue for 30 days. 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 that 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. DOW CORNING: Judge Hood Releases Opinion on Confirmation Appeals ---------------------------------------------------------------- On November 13, 2000, the Honorable Denise Page Hood, United States District Judge, issued a 168-page opinion relating to the appeals from and motions regarding the Bankruptcy Court's November 30, 1999 Confirmation Order in the Dow Corning Corporation chapter 11 proceeding. Judge Hood also issued various orders relating to the appeals and motions, including Case Management Order No. 1. Following is a summary prepared by Judge Hood. Judge Hood affirmed the Bankruptcy Court's November 30, 1999 Confirmation Order finding that the Bankruptcy Court did not err in its conclusion that the classification of the various claims was proper and that the claimants within a class received equal treatment. Judge Hood further affirmed the Bankruptcy Court's finding that the Amended Joint Plan of Reorganization was proposed by the Debtor Dow Corning and the Official Committee of Tort Claimants in good faith and is in the best interests of the creditors. Judge Hood reversed the Bankruptcy Court's December 21, 1999 Opinion regarding the release and injunction provisions concluding that the Bankruptcy Court did have the authority to issue an injunction and that the release and injunctions provisions set forth in the Plan applied to all claimants who accepted and rejected the Plan. A copy of the opinion/order may be obtained without charge from the Court Administrator's Office, 814 Theodore Levin United States Courthouse, 231 W. Lafayette, Detroit, Michigan. The order/opinion has also been posted on the Court's web site and can be obtained in PDF format via the World Wide Web at: http://www.mied.uscourts.gov/dow/TheBigOpin/CONFAPPEAL.PDF FARMERS COOPERATIVE: $100K Settlement for Stolen Lottery Tickets ---------------------------------------------------------------- The co-op that sought bankruptcy protection blames not just the agricultural economy for its $19.7 million debt, The Tribune Business News reports. Farmers Cooperative Assn. awaits a $100,000 settlement from when its Ampride convenience store in DeSoto was ransacked for Kansas Lottery tickets. Dwane Schaake, an FCA board member stated that the payment will cover a portion of $238,000 in tickets stolen. Sgt. Brian Clark, investigations unit head of the Johnson County Sheriff's Office said, "This was a continuous, daily occurrence. We believe employees were involved [and it] wasn't one specific date." The settlement may be used to pay claims of creditors in its bankruptcy case, Co-op's President Don Dumler said. Filing for Chapter 11 in Kansas on Sept. 27, Farmers Cooperative posted assets and liabilities of more than $ 10 million each. John J. Cruciani of Lentz & Clark serves as counsel for the distressed co-op. FINOVA GROUP: Leucadia Makes $350 Million Equity Purchase --------------------------------------------------------- The FINOVA Group Inc. (NYSE: FNV) and Leucadia National Corporation (NYSE: LUK; PCX) announced that they signed a letter agreement under which Leucadia National would invest up to $350 million in FINOVA. Under the terms of the transaction, Leucadia National agreed to purchase 10 million shares of a new Payment in Kind Convertible Preferred Stock ("PIK Convertible Preferred") for $250 million. The PIK Convertible Preferred will have a liquidation preference of $25 per share and a 14% coupon payable in kind for a period of five years, after which time the coupon will, at FINOVA's option, be payable either in cash or in kind. The shares will be convertible into 100 million FINOVA common shares from June 30, 2006 until the tenth anniversary of issuance. The PIK Convertible Preferred will vote with the common stock and receive 20 votes per share. The agreement is subject to reaching a mutually satisfactory arrangement with FINOVA's bank group and certain other customary conditions, including regulatory approvals. As soon as practical following the purchase of the PIK Convertible Preferred by Leucadia, FINOVA will issue up to an additional $150 million of PIK Convertible Preferred by way of a rights offering to its existing common shareholders. Leucadia National has agreed to act as a standby purchaser of $100 million of that offering. The transaction contemplates that a minimum of $350 million and up to $400 million in equity capital will be infused into FINOVA. FINOVA has also agreed to issue, concurrent with the purchase of the PIK Convertible Preferred, a 10-year warrant to Leucadia National, allowing it to acquire up to 20% of FINOVA's outstanding shares (subject to anti-dilution provisions) for $125 million. The agreement includes a provision that could result in a distribution to common shareholders or holders of PIK Convertible Preferred and the Leucadia warrant in 2006, based upon the performance of FINOVA's loan and lease portfolio. In conjunction with the investment, Leucadia National will have the right to appoint six members to a newly constituted ten member Board of Directors. FINOVA Chairman John Teets said, "We are delighted to be associated with Leucadia National. Their long history of highly successful investments in the financial services industry brings a wealth of experience to FINOVA as we seek to regain the confidence of the market and build the value of our franchise for the benefit of our shareholders, customers and employees." Matt Breyne, FINOVA's President and Chief Executive Officer stated, "This agreement follows due diligence by Leucadia National and is the culmination of our strategic review process. We expect to work quickly with Leucadia and Jay Alix & Associates to present a comprehensive plan to our bank group." The FINOVA Group Inc., through its principal operating subsidiary, FINOVA Capital Corporation, is one of the nation's leading financial services companies focused on providing a broad range of capital solutions primarily to midsize business. FINOVA is headquartered in Scottsdale, Ariz., with business development offices throughout the U.S. and London, U.K., and Toronto, Canada. For more information, visit the company's website at www.finova.com. Leucadia National Corporation is a holding company for its consolidated subsidiaries engaged in property and casualty insurance (through Empire Insurance Company and Allcity Insurance Company), manufacturing (through its Plastics Division), banking and lending (principally through American Investment Bank, N.A.) and mining (through MK Gold Company). Leucadia also currently has equity interests of more than 5% in the following domestic public companies: Carmike Cinemas, Inc. (6% of Class A Shares), GFSI Holdings, Inc. (6%), Fidelity National Financial, Inc. (9%), Jordan Industries, Inc. (10%) and PhoneTel Technologies, Inc. (7%). FRUIT OF THE LOOM: Employs Fogel Feldman As Litigation Counsel -------------------------------------------------------------- Judge Walsh approved a request by Fruit of the Loom for permission to employ the law firm of Fogel, Feldman, Ostrov, Ringler & Klevens as special counsel in its chapter 11 cases. Fogel Feldman is located in Santa Monica, California. Fogel, Feldman represented Fruit of the Loom in the litigation against LMP Corporation, captioned LMP Corporation et al. v. Universal Manufacturing Corp., Alamada County, Case No. 590001-7. The LMP litigation has been settled, but Fruit of the Loom wants the freedom to employ Fogel, Feldman expertise in similar legal disputes under the terms of an on-going retainer agreement. J. Kate Stickles Esq., counsel for Fruit of the Loom, tells Judge Walsh that Fogel, Feldman has extensive knowledge and experience in prosecuting complex claims. Ms. Stickles reminds Judge Walsh that on December 30, 1999, he approved Fruit of the Loom's retention of Fogel, Feldman as an Ordinary Course Professional. However, because Fogel, Feldman's compensation going forward will be based on a contingency fee, it is expected to exceed the authorized limit for ordinary course professionals. Since the petition date, Fogel, Feldman has invoiced Fruit of the Loom $50,093.49. Fogel, Feldman will receive a contingency fee based on three scenarios of recovery in the LMP litigation: a) 15% of the recovery if obtained prior to action in the LMP litigation b) 33-1/3% of the recovery if obtained after action but prior to commencement of trial c) 40% of the recovery if obtained at or following the trial Fogel, Feldman will be reimbursed for all out-of-pocket expenses and litigation costs incurred in relation to the LMP litigation. Fogel, Feldman and Fruit of the Loom agree that time expended and ultimate recovery, if any, in pursuit of the LMP litigation, could be de minimis or substantial. Fruit of the Loom holds that a $100,000,000 judgment against LMP is not out of the question. Fogel, Feldman agrees that disbursements are subject to ultimate approval by the Bankruptcy Court. Robert M. Turner Esq., a Fogel Feldman member, assures the Court that the partners and associates of Fogel, Feldman have no connection with Fruit of the Loom, its creditors or other parties- in-interest that would render the firm disinterested. Fogel, Feldman, Mr. Turner relates, conducted an extensive review of its client database to determine that the firm has no relationships with any party that present any conflict. (Fruit of the Loom Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) GIBBS CONSTRUCTION: Emerges from Chapter 11 ------------------------------------------- Gibbs Construction, Inc. (Pink Sheets:GBSE) announced that the Bankruptcy Court approved its motion to extend the effective date of its Plan of Reorganization to November 10, 2000. Gibbs is completing the transactions approved by the plan and will continue its operations as a Reorganized Company. Gibbs filed a Petition pursuant to Chapter 11 of the United States Bankruptcy Code on April 20, 2000 after suffering heavy losses on hotel construction projects. The Company has been operating in its normal course of business pending the effective date of its Plan of Reorganization. The Company's Plan of Reorganization provides for the purchase of assets from Thacker Asset Management, LLC in exchange for stock and establishment of a trust for the benefit of creditors comprised of stock in the Reorganized Company and other assets. Current Company President, Danny Gibbs, will serve as Vice President - Business Development and Director of the Reorganized Company. Gibbs stated, "We have been working with the Thacker Group for the past twelve months to bring this transaction to fruition, and we are certainly pleased that Gibbs can continue to operate as a viable Public company." Gibbs intends to expand its Board of Directors, establish an Advisory Board, and elect Walter R. Huntley Jr., former President of the Atlanta Economic Development Corporation, as Chairman and Chief Executive Officer. Huntley commented, "We will immediately begin to incorporate the Thacker organization into Gibbs and formalize our business plan for presentation to the Board." Huntley continued, "The timing of this transaction is ideal as we are beginning to see our backlog of work increase in the public sector, such as our construction management role in the fifth runway at Hartsfield International Airport in Atlanta. We also plan to expand our services in the private sector with major corporations that have headquarters or regional offices in the Metro Atlanta and Southeastern US markets." Gibbs will operate in the future as Thacker-Gibbs, reflecting the combination of staff and business relationships of the respective organizations. The Company also expects to receive certification as a minority and women-owned business enterprise by virtue of its organizational structure and stock ownership by TOC, Inc. and its affiliates. In addition, the Company plans to retain an investment advisory firm to assist with its capital and banking requirements. The Company's business plan will center upon its ability to win minority and diversity components of public and private sector contracts through its marketing arrangement with TOC, Inc. and its staff expertise in negotiated construction, infrastructure projects, and construction services. Gibbs is a provider of engineering, construction services, and negotiated general contracting to the private and public sectors. Its stock was formerly traded on the Nasdaq Exchange and currently trades on "pink sheets" (GBSE). The Company plans to maintain an office in the Dallas Fort Worth area with its corporate operations located in Atlanta, Georgia. Additional information can be viewed on Gibbs' corporate web site at www.gibbsconstruction.com. GRAND UNION: Employs Excess Space as Real Estate Consultant ----------------------------------------------------------- A U.S. Bankruptcy Court judge in Newark has approved The Grand Union Company's (Nasdaq: GUCO) retention of Excess Space Disposition, Inc. as a consultant on real estate issues. In this capacity, the Lake Success, N.Y.-based firm will evaluate fee-owned property and leases on the chain's entire portfolio of 197 operating stores, and also direct the disposition of certain of those properties. The stores being handled by Excess Space range in size from approximately 13,000 square feet to 60,000 square feet. The properties are located in Connecticut, New Jersey, New York and Vermont, as well as Georgia, Tennessee and Texas. "Our role in the portfolio-wide evaluation and marketing of individual properties is to enhance the return on these locations," said Michael Wiener, President and Chief Executive Officer of Excess Space. "The majority of the properties we are marketing are well-located stores in mature markets. These locations offer excellent opportunities for independent or affiliated grocers, natural foods markets, as well as non-food retailers." Excess Space Disposition, Inc., with offices in Lake Success, N.Y. and Huntington Beach, Ca., is the leading specialist in real estate disposition and lease restructuring for retailers nationwide. Working on behalf of its retailer clients, the firm leases, subleases or sells locations; negotiates lease terminations, bulk sale transactions and rent reductions; and renegotiates lease terms. The firm works with a network of over 175 brokers covering all 50 states. Since its founding in 1992, the firm has worked on behalf of chains seeking to shed under-performing or under-sized locations or depart from designated geographic markets. These have included assignments for such prominent merchants as The Kroger Company, Winn-Dixie, Pathmark Stores, Kmart, Eckerd, Staples and Payless ShoeSource. During 1999 alone, the firm was exclusively retained to dispose of over 30 million square feet of retail space. For additional information on Excess Space, visit the company's website at http://www.excessspace.com. GRAND UNION: C&S Inks Definitive Agreement to Purchase Assets ------------------------------------------------------------- The Grand Union Company (OTC BB: GUCO), announced that it has entered into a definitive agreement for the purchase by C&S Wholesale Grocers, Inc. of substantially all of the Company's assets and business. Consistent with the terms of the previously announced letter of intent, C&S, which is Grand Union's principal supplier, will pay$301.8 million in cash upon closing of the transaction. Included in the assets to be acquired are 185 of Grand Union's 197 stores and the Company's distribution center in Montgomery, New York. C&S intends to operate certain of these stores and to assign its right to purchase certain other of these stores to other supermarket operators. The closing of the transaction is subject to customary closing conditions, including governmental antitrust approval and Bankruptcy Court approval. The agreement is also subject to higher or better bids for Grand Union's assets, which may be obtained at an auction to be held on November 16, 2000, pursuant to Bankruptcy Court procedures. Grand Union has the right to accept a higher or better bid which might be received at the auction and terminate the C&S agreement, subject to the payment of a break-up fee. Grand Union filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court in Newark, New Jersey on October 3, 2000, with the stated intention to facilitate the planned sale of the Company and provide for additional funding during the sale process. Grand Union operates 197 retail food stores in Connecticut, New Jersey, New York, Pennsylvania and Vermont. HARNISCHFEGER INDUSTRIES: Settling PPM 3 & MPM 11 Contract Claims ---------------------------------------------------------------- Harnischfeger Industries, Inc. and Beloit Corporation seek the Court's approval of a Settlement Agreement between HII, Beloit, Beloit Asia Pacific (L) Inc. (BAPL), Beloit Asia Pacific P.E. Ltd. (BAP), Asia Pulp & Paper Co., Ltd. (APP), P.T. Indah Kiat Pulp & Paper TBK (IKPP) and P.T. Pabrik Kertas Tjiwi Kimia (TK) to settle all disputes, claims, and controversies over the PPM 3 and MPM 11 Contracts governing the sale and purchase as well as services of two paper making machines known as PPM 3 (808) and MPM 11 (807) and the letters of credit issued in connection with the contracts. The Contracts and LCs The PPM 3 and MPM 11 Contracts refer to two contracts dated July 10, 1996 executed by APP and BAPL for the sale and purchase of two paper making machines and subsequently two service contracts dated July 10, 1996 for the machines. APP's rights and obligations pursuant to Clause 12 of the PPM 3 and MPM 11 Contracts were taken over by IKPP and TK respectively pursuant to two written agreements dated May 12, 1997. Pursuant to the terms of the PPM 3 and MPM 11 Contracts, HII and BAPL arranged for the issuance of two standby 10% letters of credit to IKPP, TK and APP (LC# P-346903 and P-346904) from The Chase Manhattan Bank for US $11,971,447 and US $11,891,923 for MPM 11 and PPM 3, respectively. The parties now agree that: (1) three business days after the Court's approval, the APP Parties are permitted to draw US $8.5 million from each 10% L/Cs for a total of US $17 million but not more than that and after the draws are made, the 10% L/Cs will be canceled, leaving US $6,863,370 undrawn and canceled; (2) twelve business days after the APP Parties draw these funds, the APP Parties will pay Beloit, as full satisfaction of the Services Contracts, US $794,130 comprising of US $408,630 for MPM 11 and US $385,500 for PPM 3. (3) during the 30 day period after entry of the Court's order of approval, the Beloit Entities shall assign, to the extent assignable, all residual obligations, if any, of the Beloit Entities' suppliers and subsuppliers relating to the MPM 11 and PPM 3 Contracts to APP for any item delivered within the last 12 months of the date of the Settlement Agreement with a value of more than US $15,000. (4) the Beloit Entities will diligently prosecute delivery of certain spare parts as agreed between the parties and will keep APP informed on the status thereof on a monthly basis; (5) APP agrees that the Beloit Entities are not providing Beloit Entity warranties or guarantees with respect to these spare parts or any other parts; (6) if a supplier or subsupplier defaults on its obligations, the Beloit Entities shall assign their rights under such purchase orders to APP, to the extent assignable. The Debtors have determined that entry into the Settlement Agreement is in the best interests of their estates and creditors, without the risks and costs associated with litigation. (Harnischfeger Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) HEALTH PARTNERS: S&P Gives Insurer CCCpi Financial Strength Rating ------------------------------------------------------------------ Standard & Poor's has assigned its triple-'Cpi' financial strength rating to Health Partners of Alabama Inc. The rating reflects the HMO's extremely weak risk-based capitalization and earnings, as well as marginal liquidity. The company is licensed and operates in Alabama. Major Rating Factors: -- The company's risk-based capitalization is extremely weak, as reflected by a Standard & Poor's capital adequacy ratio of 12.8% at year-end 1999. -- Operating performance has been weak, with net losses of $8.4 million in 1999 and $22 million in 1998. -- Liquidity is marginal, with a Standard & Poor's liquidity ratio of 95.5% at year-end 1999. ICG COMMUNICATIONS: Communications Upstart May Seek Chapter 11 -------------------------------------------------------------- ICG Communications Inc. was fueled for several years by the demand for Internet service, but by last June the telecommunications up- start was plagued with technical problems, according to the Wall Street Journal. Key customers, which included Microsft Corp., NetZero Inc. and Earthlink Inc., complained that users trying to connect to the Internet through the ICG network were cut off or blocked by busy signals. Now ICG's stock is trading for 44-cents a share, down 98.9 percent from $39.25 in March. The company is expected this week to file chapter 11 protection while it attempts to reorganize. (ABI 13-Nov-00) LOEWEN GROUP: 2 Funeral Homes & 7 Cemeteries Sell For $3,300,000 ---------------------------------------------------------------- As part of the Disposition Program undertaken by The Loewen Group, Inc., Loewen Louisiana Holdings, Inc. and other Selling Debtors seek the Court's authority: (1) to sell 2 funeral home and 7 cemetery businesses located in various states and related assets used in the operation of those businesses, clear of liens, claims and encumbrances, to the entity that the Debtors determine to have submitted the highest and best offer; (2) for them or Kraeer Funeral Homes, Inc., to assume and assign related unexpired leases and contracts including trust fund management agreements, pre-need escrow agreement, non-compete agreement, and various equipment, supplies and service contracts; (3) to reject a consulting agreement. An Initial Bidder has agreed to purchase and the Debtors have agreed to sell the Property for $3,300,000, subject to higher and better offers, and to the Court's approval. Pursuant to a Purchase Agreement between the Debtors and the Initial Bidder, the Debtors contemplate to sell the businesses to the Initial Bidder with substantially all personal property located there and used in connection with the businesses. All accounts receivable, transferable permits relating to the businesses conducted at the Sale Locations will be transferred to the Initial Bidder. The Initial Bidder also agrees to assume all of the Selling Debtors' rights and obligations under the Assignment Agreements. The Initial Bidder paid the Selling Debtors a deposit of $165,000 upon the execution of the Purchase Agreement and agrees to pay the remainder of the Purchase Price at the closing. The Initial Bidder is entitled to Expenses in the amount up to $66,000 if the Selling Debtors fail to consummate the transaction for a better and higher offer or materially breach obligations under the Purchase Agreement and the Initial Bidder does not materially breach its obligations. In accordance with the Net Asset Sale Proceeds Procedures, the Debtors will use the proceeds generated to repay any outstanding balances under the Replacement DIP Facility and deposit the net proceeds into an account maintained by LGII at First Union National Bank for investment, pending ultimate distribution on court order. Funds necessary to pay bona fide direct costs of a sale may be paid from the account without further order of the Court. The deposit will not include the portion of the Purchase Price allocated to Neweol under the Neweol Purchase Agreement with respect to accounts receivables. The amount of such portion will be determined prior to closing and will be paid to Neweol. (Loewen Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) METALS USA: Moody's Changes Rating Outlook to Negative ------------------------------------------------------ Moody's Investors Service changed its rating outlook for Metals USA to negative from positive. The change in outlook reflects the company's diminished margins, cash flow, and liquidity in the current soft metals market and its vulnerability to a potentially weaker US economy. Moody's ratings for Metals USA remain unchanged, including its Ba3 senior implied rating, B1 senior unsecured issuer rating, and the B2 rating for its $200 million of 8.625% senior subordinated notes due 2008. Moody's assigned a Ba3 rating to Metals USA's amended secured credit facility, which matures February 2003. In the quarter ended September 30, 2000, Metals USA experienced lower demand across most of the metal markets it serves, and the onset of lower prices. Reduced shipments, combined with high levels of higher-priced inventories purchased in the second quarter, squeezed margins and tied up working capital. Metal USA's operating income fell to $14.6 million in the third quarter, from $30.6 million in the previous quarter, and its lowest since the first quarter of 1998. Margin pressure is likely to continue over the next several quarters, as demand is expected to remain soft and spot prices have fallen more rapidly than the cost of metal the company carries in inventory. Moody's expects the company's operating cash flow to benefit from working capital reductions in the near term, and its operating margins to rebound once the higher-priced inventory is sold. However, cash flow, as expressed in terms of EBITDA, may decline in the fourth quarter and is likely to continue to be weaker than prior-year's quarters for as long as metal demand and prices remain weak. Metal USA's 3Q00 EBITDA was $21.4 million, compared to $33.8 million in 2Q00 and $36.2 million in 3Q99. Moody's noted that a continuation of third quarter's EBITDA into 2001 could put Metals USA in danger of violating several financial covenants in its recently amended credit facility. One of the covenants requires quarterly EBITDA, as defined, to be no less than $18.5 million in 4Q00, $23 million in 1Q01, and $27 million in 2Q01. Complying with the fixed charge coverage and leverage covenants could also be a challenge in 2001 should quarterly EBITDA hover around $25 million per quarter. By confirming Metals USA's ratings, Moody's anticipates a stronger performance than this, but any forecast for Metals USA is currently clouded by uncertainties related to the ability of the US economy to overcome the impact of higher interest rates, higher energy costs, and slower business spending. Metals USA amended its credit facility on November 1, 2000. The credit facility was reduced from $350 million to $300 million, pricing increased, and it is now secured by substantially all of the company's accounts receivables, inventories, and equipment. The credit facility will reduce to $275 million on June 30, 2001, and to $250 million on December 31, 2001. On November 7, there was $30 million available for use under the facility. The company believes this will expand to $60 million by the end of the year. Metals USA, headquartered in Houston, Texas, is the second-largest metals processor and distributor in North America. MISSISSIPPI CHEMICALS: Fitch Puts BB Rating on Senior Secured Debt ------------------------------------------------------------------ Fitch has assigned a 'BB' rating to Mississippi Chemical's senior secured debt and concurrently lowered the company's senior unsecured debt rating to 'BB-' from 'BB+'. The senior secured debt rating of 'BB' applies to the company's $200 million senior secured bank facility due 2002 and the senior unsecured debt rating of 'BB-' applies to the company's $200 million of outstanding senior unsecured notes due 2017. The Rating Outlook is Negative. The one notch differential between the senior secured credit facility and the unsecured notes is based on the limited nature of assets pledged under the company's credit facility. The credit facility has been secured as permitted under the senior note indenture. Mississippi Chemical continues to experience poor operating margins primarily as a result of sustained high natural gas costs. While nitrogen fertilizer prices have improved in recent months, high natural gas costs have largely offset improvements in product prices. For the quarter ending Sept. 30, 2000, Mississippi Chemical generated net sales of $120 million with a negative EBITDA of $1.2 million. Due to unfavorable industry conditions, the company has eliminated its quarterly dividend payments. Mississippi Chemical maintains current levels of total debt to capitalization of approximately 45%. The company's total debt as of Sept. 30, 2000 was approximately $323 million. During the first half of this year, the company secured its $200 million credit facility that was previously unsecured. Under this secured credit facility, the company had $74 million available at fiscal year-end 2000 (ended June 30). Credit protection measures have weakened in the last 12 months, ending Sept. 30, 2000, with EBITDA interest coverage of less than 1.0 times (x). Debt levels are modest despite the major capital expenditures completed in recent years. No significant capital expenditures outside of standard maintenance and minor improvements are expected. As a result of high domestic natural gas costs, flat agricultural demand and rising fertilizer imports, the U.S. fertilizer market is likely to continue to experience trough cash margin levels. Shorter term, a decline in operating rates could provide some support for higher pricing levels, however, high natural gas costs are likely to offset pricing strength. With few signs of a substantial near-term improvement in the cyclical fertilizer business given the ramp-up of new offshore capacity and sustained high natural gas costs, Fitch maintains a negative outlook on the debt ratings. OCHSNER HEALTH: S&P Affirms CCCpi Financial Strength Rating ----------------------------------------------------------- Standard & Poor's has affirmed its triple-'Cpi' financial strength rating on Ochsner Health Plan. The rating reflects the HMO's very weak risk-based capitalization, extremely weak earnings, and marginal liquidity. This federally qualified HMO, incorporated in 1984, provides comprehensive medical services to members, primarily through contractual arrangements with Ochsner Clinic, Alton Ochsner Medical Foundation, and other health care providers in Louisiana. Major Rating Factors: -- The plan's risk-based capitalization is very weak, as indicated by a Standard & Poor's capital adequacy ratio of 29.6% at year-end 1999. This ratio includes full credit for $15 million in surplus notes from Alton Ochsner Medical Foundation. -- The company's operating performance has been weak, with net income losses of $22.3 million in 1999 and $8.4 million in 1998. -- Liquidity is marginal, with a Standard & Poor's liquidity ratio of 90%. OWENS CORNING: Official Unsecured Creditors' Committee Appointed ---------------------------------------------------------------- Patricia A. Staiano, the United States Trustee for Region III, acting through Frederick J. Baker, Esq., and Frank J. Perch, III, Esq., of that office, appoints these institutions to serve on the Official Committee of General Unsecured Creditors in Owens Corning's chapter 11 cases: Credit Suisse First Boston Attention Jan Kofol, Director 11 Madison Avenue New York, New York 10010 (212) 325-9057 The Chase Manhattan Bank Attention Elizabeth Kelley 380 Madison Avenue New York, New York 10017 (212) 622-4868 Barclays Bank Attention Dennis J. Diczok 222 Broadway, 11th Floor New York, New York 10038 (212) 412-7518 Fleet National Bank Attention Charles R. Bowman 100 Federal Street Boston, Massachusetts 02110 (617) 434-2356 Metropolitan Life Insurance Company Attention Lisa A. Glass New York, New York 10010 (212) 578-2508 John Hancock Life Insurance Company Attention Valeda Britton 200 Clarendon Street Boston, Massachusetts 02117 (617) 572-9214 Jackson National Life Insurance Company Attention F. John Stark, III 225 West Wacker, Suite 1200 Chicago, Illinois 60606 (312) 634-2527 Minnesota Mining & Manufacturing Company ("3M") Attention Charles Gilligan 3M Center, Building 224-5N-41 St. Paul, Minnesota 55114 (651) 733-7860 Enron Energy Services Operations, Inc. Attention William D. Rapp 1400 Smith Street Houston, Texas 77002 (713) 853-5269 (Owens-Corning Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHYSICIANS HEALTH: S&P Cuts Strength Rating Noting Weak Earnings ---------------------------------------------------------------- Standard & Poor's has lowered its financial strength rating on Physicians Health Plan Inc. to single-'Bpi' from double-'Bpi'. This rating action reflects the HMO's weak risk-based capitalization, weak earnings profile, and limited financial flexibility given its single-state concentration, offset by strong liquidity. This for-profit HMO, headquartered in Columbia, S.C., operates in all 46 counties in South Carolina. Major Rating Factors: -- The HMO's risk-based capitalization is weak, as indicated by a Standard & Poor's capital adequacy ratio of 64% at year- end 1999. -- Earnings are also weak, as measured by a Standard & Poor's earnings adequacy ratio of 44%. Net income dropped to $700,000 in 1999 from $3.3 million in 1998. -- Liquidity is strong, with a Standard & Poor's liquidity ratio of 147%. Enrollment growth is very strong, based on average enrollment growth of 26% over the past three years. PITTSBURGH CORNING: Seeks Settlement Fund For Insurance Proceeds ---------------------------------------------------------------- Pittsburgh Corning Corp., a 50-50 equity investment of Corning Inc. and PPG Industries Inc. (PPG), has asked a bankruptcy court to establish a qualified settlement fund to hold insurance proceeds the company receives to settle asbestos-related personal injury claims, according to a newswire report. The fund would protect the Pittsburgh glass block and insulation manufacturer from having to recognize and pay income taxes on the proceeds. Based on the amount of proceeds received since its April 16 bankruptcy filing alone, the company could owe about $9 million in taxes. Pittsburgh Corning's chapter 11 petition listed assets of $140.4 million and liabilities of $62.9 million, excluding potential liability for asbestos claims. Before its chapter 11 filing, the company used the proceeds to satisfy the related settlement and defense costs and took a corresponding tax deduction. While in bankruptcy, however, the company is prohibited from distributing the proceeds until after confirmation of a chapter 11 plan. The company has already received about $44 million of proceeds in 2000 and expects to receive more proceeds before a chapter 11 plan is confirmed in its case. Pittsburgh Corning said in its bankruptcy petition that it is defending more than 140,000 lawsuits that seek billions of dollars in damages from alleged exposure to the company's asbestos-containing insulation products. (ABI 13-Nov-00) PRIME RETAIL: Director Orchestrates Recapitalization Plan & Deal ---------------------------------------------------------------- An SEC filing states that Director Michael Reschke entered into a joint venture to recapitalize the distressed Prime Retail Inc., Dow Jones reports. Prime Retail's board got a letter on Oct. 13 outlining the terms under which Outlet Mall Acquisition Co. LLC offered a $100 million five-year loan and a $30 million equity contribution to Prime Retail's operating partnership. As stated in the filing, Outlet will also pursue a separate agreement with Prime Retail's board to buy most of the company's common and preferred stock. In June, suggestions about a possible bankruptcy filing appeared in published reports. PSINET, INC: Weighs Options in Wake of $1.4 Billion 3Q Loss ----------------------------------------------------------- Suffering from a huge third quarter loss, PSINet Inc. seeks other alternatives including a possible sale of the company, Mergers and Acquisitions reports. Even seeking bankruptcy protection is an option, an unknown Street source said. PSINet was hit by a whopping $1.4 billion loss, including a $504 million write-off from its plans to sell its Metamor Worldwide Inc. unit. Drake Johnstone, an analyst at Davenport & Co., said that aside from its Web hosting division, its PSINet's businesses has been losing revenue. Even though web hosting could fetch as much as $ 2.5 billion in revenues, Johnstone doesn't think anyone will come at the time. "Why would anyone step in and pay 10 times revenue, when they could wait for a fire sale," if the company lands in bankruptcy court, an outcome Johnstone said he expects. M&A adds that PSINet is a highly leveraged company with $3.6 billion in debt. Even though PSINet has $1 billion in cash, its money burn rate is $500 million quarterly. Not to forget, the company needs an additional $600 million in 2001 to finance operating losses. The Ashburn, Va.-based PSINet is a provider of Internet and eCommerce solutions to businesses. The $450 million market cap company offers high speed Internet service, in addition to e-mail and managed security services, throughout the United States, Canada, Latin America, Europe and Asia. SHOPKO: Fitch Cuts Ratings on Bank Loans & Senior Notes to BBB- --------------------------------------------------------------- Fitch has lowered its ratings on Shopko's (SKO) $485 million bank credit agreement and its $343 million senior notes from 'BBB' to 'BBB-'. At the same time, Fitch placed the company on Rating Watch Negative. In October 2000, Fitch changed its Rating Outlook on SKO to Negative from Stable following the company's announcement that third quarter and full year results would be below expectations as a result of weakening conditions of the retail environment. Subsequent to that announcement, SKO reported third-quarter earnings that were significantly below expected results. The company reported a loss from operations and expects continuing weak results into the important fourth quarter (SKO generates approximately 60% of its operating income during the fourth quarter). SKO is currently in the midst of refinancing a short- term bank credit line that begins to mature in January 2001. While we anticipate that the company will be successful in refinancing short-term maturities, the company will likely face higher interest expense. The downgrade reflects SKO's overall weakened financial and business profile. The company's poor operating results, increased competition, particularly from Target and Wal- Mart, and refinancing risks are key near to intermediate concerns. SKO plans to reduce capital spending by approximately $80-$100 million next year, reduce overall costs by $15-$20 million, and continue to aggressively manage inventories. Cost savings will likely be used to retire long-term debt. While these cost saving measures are positive, there is still uncertainty surrounding the retail environment. Fitch's Rating Watch Negative designation reflects concern as to the timing of a turnaround, as well as deteriorating credit fundamentals and higher debt balances. Reduced leverage should improve interest expense, however, increased competition and the potential for price reductions could impact operating margins. Finally, like most retailers, SKO generates a substantial portion of its operating income during the fourth-quarter, thus the ability to manage margins over the next three months will be a key indicator to overall expected weaker EBITDA results. TRI VALLEY: Court Grants Bonus Package for Executives After Sale ---------------------------------------------------------------- A U.S. bankruptcy judge has approved a bonus package for the chief executive of Tri Valley Growers and five top officers, according to a newswire report. Tri Valley Growers Chief Executive Officer Jeff Shaw and his top five officers can expect bonuses when the financially troubled food processor is sold, but the package will not be near the $4.3 million they were seeking. The executives had asked for bonuses totaling $4.3 million. The bonus pool could increase if the company's sale price exceeds that figure. The money is intended to compensate the executives for the performance bonuses they might have earned had the processor not filed for bankruptcy protection. Tri Valley filed for bankruptcy protection after losing nearly $200 million over three years; the company is more than $400 million in debt. (ABI 13-Nov-00) UNITED ARTISTS: Announces Financial Results for Third Quarter 2000 ------------------------------------------------------------------ The United Artists Theatre Group announced results for the thirteen and thirty-nine weeks ended September 28, 2000. Total consolidated revenues for the Group's parent company, United Artists Theatre Company, for the thirteen weeks ended September 28, 2000, were $149.5 million, down 17.0% from $180.2 million for the thirteen weeks ended September 30, 1999. Cash flow, or EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), for the current thirteen week period decreased to $19.4 million from $26.7 million in the 1999 thirteen week period. Revenue for the current thirty-nine week period declined to $413.5 million, down 14.3% from $482.6 million for the 1999 thirty-nine week period. EBITDA for the current thirty-nine week period declined to $41.1 million, versus $49.3 million during the 1999 thirty-nine week period. The decline in revenue relates primarily to a 23.1% and 22.6% decrease in the weighted average number of theatres operated by the Company for the 2000 thirteen and thirty-nine week periods, respectively, and to industry-wide attendance declines during late summer and early fall. Despite these significant revenue declines, year-to-date EBITDA margins remained relatively constant, reflecting the disposition of underperforming theatres. The net loss available to common stockholders for the 2000 thirteen week period was $54.8 million, versus $23.4 million in the 1999 thirteen week period, and increased to $112.0 million in the current thirty-nine week period, versus $67.9 million for the 1999 thirty-nine week period. These increases in net loss reflect lower EBITDA, higher interest expense, significant increases in lease impairment and termination costs, and costs associated with the Company's financial and corporate restructuring and reorganization. A summary of the United Artists' consolidated results for the 2000 and 1999 thirteen week and thirty-nine week periods is as follows ($ in millions): Thirteen Weeks Thirty-nine Weeks -------------- ----------------- 2000 1999 2000 1999 ---- ---- ---- ---- Revenues: Admissions $101.3 125.2 280.1 332.9 Concessions 42.4 49.5 116.7 133.1 Other 5.8 5.5 16.7 16.6 ------ ------ ------ ------ Total Revenues 149.5 180.2 413.5 482.6 ------ ------ ------ ------ Expenses: Film rental and advertising costs 56.5 69.6 153.5 186.4 Direct concession costs 5.1 6.7 14.3 17.8 Other operating costs 62.9 71.8 188.4 211.9 General and administrative costs 5.6 5.4 16.2 17.2 ------ ------ ------ ------ 130.1 153.5 372.4 433.3 ------ ------ ------ ------ EBITDA 19.4 26.7 41.1 49.3 Amortization and depreciation (11.1) (13.8) (34.5) (41.0) Asset impairment, lease exit and restructure costs (30.3) (16.1) (56.2) (25.9) ------ ------ ------ ------ Operating Income (Loss) (22.0) (3.2) (49.6) (17.6) Interest expense, net (18.2) (17.1) (56.8) (49.1) Gain on sale of assets 6.6 0.8 15.8 4.3 Reorganization costs (17.4) - (17.4) - Other (3.7) (3.7) (3.4) (5.0) ------ ------ ------ ------ Income (Loss) before Income Taxes (54.7) (23.2) (111.4) (67.4) Income taxes (0.1) (0.2) (0.6) (0.5) ------ ------ ------ ------ Net Loss $ 54.8 (23.4) (112.0) (67.9) ====== ====== ====== ====== Commenting on the Company's results, Kurt C. Hall, President and Chief Executive Officer, said: "While there has been a significant decline in new theatre construction and an increase in theatre closures as companies restructure their balance sheets and lease portfolios, excess screen and seat capacity in the industry continue to adversely affect overall industry results. While the rationalization of the industry over-screening appears to have started, it is going to be a very long recovery period." Mr. Hall continued: "Our efforts to dispose of underperforming theatres and reduce certain operating and corporate costs have allowed us to stabilize our cash flow margins, while year-to-date industry margins continue to decline. Improvements in operating performance included an increase in our year-to-date admissions per theatre of 8.7% and concession sales per theatre of 13.2%, and a 7.7% year-to-date increase in EBITDA per weighted average theatre." Mr. Hall concluded: "Our Chapter 11 proceedings continue to move forward as planned with the Confirmation hearing with respect to our Plan of Reorganization scheduled for January 22, 2001. Thankfully, all of the hard work of our employees, attorneys and consultants prior to our filing and during the proceedings has not only allowed us to continue to operate our business in the ordinary course, but has allowed us to focus on improving our business and executing our business plan implicit in our Plan of Reorganization." United Artists is a leading operator of motion picture theatres with 1,623 screens in 218 locations. United Artists is a privately held company that has issued publicly traded debt securities. VENCOR, INC: Announces $27MM Loss on $717MM of Revenue in 3rd Qtr. ------------------------------------------------------------------ Vencor, Inc., announced its operating results for the third quarter ended September 30, 2000. Revenues for the quarter totaled $717 million compared to $682 million in the year-earlier period. The Company reported a net loss of $27 million or $0.38 per share in the third quarter of 2000 compared to a net loss of $42 million or $0.61 per share in the third quarter of 1999. The net loss for both quarterly periods included certain unusual items. In the third quarter of 2000, the Company recorded a write-off of $9 million related to an impaired investment and incurred costs of approximately $5 million in connection with its restructuring activities. Third quarter results for 1999 included $5 million of costs related to restructuring activities. For the nine months ended September 30, revenues aggregated approximately $2.1 billion for both periods. The Company reported a net loss of $48 million or $0.69 per share for the nine months ended September 30, 2000 compared to a net loss of $107 million or $1.53 per share for the same period a year ago. The net loss for both nine month periods included certain unusual transactions. Operating results for 2000 included a gain of $5 million on the sale of a closed hospital, the previously discussed investment write-off and restructuring costs of $10 million. Operating results for 1999 included a $15 million write-down of an investment, a $6 million charge for the cancellation of a software development project and restructuring costs of $12 million. In addition, operating results for the nine months ended September 30, 1999 included a charge of $9 million or $0.13 per share for a change in accounting for start-up costs adopted on January 1, 1999. Vencor and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 with the United States Bankruptcy Court for the District of Delaware on September 13, 1999. Vencor, Inc. is a national provider of long-term healthcare services primarily operating nursing centers and hospitals. VISION METALS: Case Summary and 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Vision Metals, Inc. 24 Frank Lloyd Wright Drive Ann Arbor, Michigan 48106 Affiliate: Vision Metals Holdings, Inc. Chapter 11 Petition Date: November 13, 2000 Court: District of Delaware Bankruptcy Case No.: 00-04205 Debtor's Counsel: Neil H. Glassman, Esq. Steven M. Yoder, Esq. Elio Battista Jr., Esq. The Bayard Firm 222 Delaware Avenue, Suite 900 P.O. Box 25130 Wilmington, DE 19899 (302) 655-5000 Salvatore A. Barbatano, Esq. Donald A. Workwam, Esq. Foley & Lardner 150 W. Jefferson Avenue Suite 1000 Detroit, Michigan 48226 (313) 963-6200 Total Assets: $ 67,000,000 Total Debts : $ 74,500,000 20 Largest Unsecured Creditors: Mac Steel - Hear Treating Div. P.O Box 67000 - Dept. 79901 Detroit, MI 48267-0799 (800) 876-7839 $ 1,276,620 Duferco 135 S. LaSalle, Dept. 2782 Chicago, IL 60674-2782 (630) 513-7885 $ 567,290 Weirton Steel Corp. P.O. Box 100350 Atlanta, GA 30384-0350 (304) 797-2307 $ 390,689 North Star Steel Company P.O. Box 201601 Houston, TX 77216-1601 (800) 634-6612 Fax:(281) 456-7247 $ 390,313 Rocky Mountain Steel Mills 23011 Network Place Chicago, IL 60673-1230 (719) 561-6000 Fax:(719) 561-7256 $ 300,893 Brighton Electric Steel $ 224,658 Structural Metals, Inc. $ 204,400 AETNA U.S. Healthcare $ 204,130 Dylon Industries, Inc. $ 171,679 Plymouth Tube Co. $ 153,788 Qualitech Steel SBQ LLC $ 152,136 Hunrco Steel Inc. $ 139,766 CMS Marketing, Services & Trading $ 137,048 Mannesmann Demag $ 117,589 Inland Steel Co. $ 82,426 Houghton International Inc. $ 81,859 Alliance Tubular Products $ 76,322 Crucible Service Centers $ 68,380 Pelican Waste Services, Inc. $ 58,931 Consumers Energy $ 57,068 * Meetings, Conferences and Seminars ------------------------------------ November 16-20, 2000 COMMERCIAL LAW LEAGUE OF AMERICA 80th Annual New York Conference Marriott World Trade Center, New York City Contact: CLLAmember@aol.com November 27-28, 2000 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. Third Annual Conference on Distressed Investing The Plaza Hotel, New York, New York Contact: 1-903-592-5169 or ram@ballistic.com November 30-December 2, 2000 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800 January 9-14, 2001 LAW EDUCATION INSTITUTE, INC. National CLE Conference on Bankruptcy Law Marriott, Vail, Colorado Contact: 1-800-926-5895 or www.lawedinstitute.com February 22-23, 2001 ALI-ABA Commercial Real Estate Defaults, Workouts, and Reorganizations Wyndham Palace Resort, Orlando (Walt Disney World), Florida Contact: 1-800-CLE-NEWS February 25-28, 2001 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute I Marriot Hotel, Park City, Utah Contact: 770-535-7722 or Nortoninst@aol.com February 28-March 3, 2001 TURNAROUND MANAGEMENT ASSOCIATION Spring Meeting Hotel del Coronado, San Diego, CA Contact: 312-822-9700 or info@turnaround.org March 28-30, 2001 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. Healthcare Restructurings 2001 The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com March 29-April 1, 2001 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute II Flamingo Hilton; Las Vegas, Nevada Contact: 1-770-535-7722 or Nortoninst@aol.com April 19-21, 2001 ALI-ABA Fundamentals of Bankruptcy Law Some Hotel in San Francisco, California Contact: 1-800-CLE-NEWS May 17-18, 2001 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel, San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com June 13-16, 2001 Association of Insolvency & Restructuring Accountants Annual Conference Hyatt Newporter, Newport Beach, California Contact: 541-858-1665 or aira@ccountry.com June 28-July 1, 2001 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 770-535-7722 or Nortoninst@aol.com July 26-28, 2001 ALI-ABA Chapter 11 Business Reorganizations Hotel Loretto, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS The Meetings, Conferences and Seminars column appears in the TCR each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 * * *