/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/001121.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 21, 2000, Vol. 4, No. 228 Headlines ACME METALS: Citibank Loan Syndication Still Up in the Air AMERICAN GREETING: S&P Cuts Debt Rating to BBB; Outlook Negative AMERICAN STANDARD: Alliance Acquires Sanford's Stake AMF BOWLING: Attempting to Enhance Operating Performance AMF BOWLING: NYSE Suspends Trading & Moves To Delist Shares ARBELLA LIFE: S&P Assigns BBpi Financial Strength Rating CAREMATRIX CORPORATION: Nasdaq Delists Securities COLUMBIA UNIVERSAL: S&P Assigns BBpi Financial Strength Rating COMSTOCK HOTEL: Case Summary and 19 Largest Unsecured Creditors CONOR PACIFIC: Delivers CCAA Plan to Alberta Court CORAM HEALTHCARE: Shareholders Sue Lenders, Officers & Directors CRIIMI MAE: Judge Keir Finds Plan Meets Confirmation Standards DEVX ENERGY: Comerica Disloses 8.18% Equity Stake DIAGNOSTIC HEALTH: Plan Declared Effective on October 30 DIMAC HOLDINGS: Lease Decision Period Extended to Jan. 15 EMPIRE OF CAROLINA: Toy Manufacturer Files Chapter 11 in Florida EQUALNET COMMUNICATIONS: Committee Hires Navigant Consulting FOAMEX INTERNATIONAL: Bank of Nova Scotia Holds 24.4% Stake FRUIT OF THE LOOM: Osceola Plant Closing within 60 days GRAND UNION: C&S Acquires Assets for $301.8 Million in Auction HARRAH'S: Revenue Miscalculation May Lead to Chapter 22 ICG HOLDINGS (CANADA): Case Summary ICG HOLDINGS, INC.: Case Summary JCC HOLDING: Has Financing to Operate through March 31, 2001 JUMBOSPORTS: Three Property Sale Raises $4.3 Million KEY PLASTICS: Carlyle Bids Against JJM for Debtors' Assets KITTY HAWK: Committee Balks at Exclusive Period Revival KITTY HAWK: Committee Supports Appointment of Examiner M-CARE INC: S&P Lowers Financial Strength Rating to Bpi METAL MANAGEMENT: Reaches Accord with Banks and Bondholders OWENS CORNING: Makes Pitch to Acquire Foundry And Steel, Inc. PRANDIUM, INC.: Sells El Torito Division for $129.5 Million PRIMARY HEALTH: Judge Walrath Rejects Bid to Convert Case SELECTCARE HMO: S&P Lowers Financial Strength Rating to Bpi SERVICE MERCHANDISE: Outlines New Strategy to Aid Emergence SIENA HOLDINGS: Shareholders to Convene on Dec. 15 in Wilmington STELLEX TECH: Veritas Acquires Assets for $107 Million SUNBEAM CORP: Says Negotiations With Lenders Continue TELEQUEST: Bombay-based Essar Group Acquires Assets TITAN MOTORCYCLE: Celeste Trust Reports 9.9% Equity Stake VENCOR, INC: Stipulates to Relief from Stay for Insured Claim VISTA EYECARE: Asks for Exclusivity Extension through Apr. 16 VYTRA HEALTH: S&P Assigns HMO CCCpi Financial Strength Rating WHEELING-PITTSBURGH: Judge Bodoh Approves First Day Motions ********* ACME METALS: Citibank Loan Syndication Still Up in the Air ---------------------------------------------------------- The operating results of Acme Metals Inc. for the third quarter of 2000, ended September 26, 2000, improved over the third quarter 1999 results. Consolidated net sales of $117 million in the 2000 third quarter were $2 million lower than the same period in 1999. Decreased volume shipped adversely affected sales by $12 million, however, increased prices on the lower shipments offset the unfavorable volume effect by $10 million. Although demand decreased, total sales remained virtually unaffected. However, the net loss for the 2000 third quarter of $7,393. against the net loss for the same quarter of 1999 of $30,814 reflects improvement in operating results. Consolidated net sales of $373 million for the first nine months of 2000 were $26 million higher than the same period in the prior year, reflecting increased sales in the first two quarters. Increased prices and a higher margin sales mix contributed to the sales increase. The net loss experienced in the third quarter of 2000 was $16,495 as opposed to a net loss of $59,957 for the third quarter of 1999. In the first quarter of 2000, Citibank, N.A. filed an application for a $100 million loan guarantee with the Emergency Steel Guarantee Loan Program on behalf of Acme Steel. In October 2000, The Emergency Steel Guarantee Loan Board announced it had approved Citibank's application to guarantee 85 percent of the proposed $100 million loan to Acme Steel subject to certain conditions, including execution of an acceptable guarantee. In addition the syndication on the remaining non-guaranteed 15 percent portion has not been completed and there are no assurances that it will be completed. AMERICAN GREETING: S&P Cuts Debt Rating to BBB; Outlook Negative ---------------------------------------------------------------- Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on American Greeting Corp. to triple-'B'-plus from single-'A'-minus. It also lowered the preliminary shelf registration rating to preliminary triple-'B'- plus from preliminary single-'A'-minus. In addition, these ratings are placed on CreditWatch with negative implications. At the same time, Standard & Poor's affirmed its short-term corporate credit and commercial paper ratings for the company at 'A-2'. The lower ratings and CreditWatch listing reflect American Greetings' announcement that it expects substantially lower earnings than previously anticipated for the fiscal third quarter and for the fiscal year ending February 2001. The lower earnings expectations are attributable primarily to softness in greeting card sales resulting from continued pressure on retail inventory levels, increased competition from lower-price cards, general retail sales weakness, and the growth in Internet use. American Greetings is also initiating a major restructuring program that will rationalize brands, products, and facilities. Details of the program have not yet been made final. In addition, the company will be cutting its quarterly dividend by more than half. Adjusted for operating leases, operating cash flow to interest for fiscal 2001 is estimated at less than 5 times (x) and debt to operating cash flow in the 3x area. Standard & Poor's will review American Greetings ratings after evaluating the company's future operating strategies, as well as its financial goals. Headquartered in Cleveland, American Greetings is the second-largest manufacturer and distributor of greeting cards and other social-expression products. AMERICAN STANDARD: Alliance Acquires Sanford's Stake ---------------------------------------------------- On October 2, 2000, Alliance Capital Management L.P. acquired beneficial ownership of the shares of American Standard Companies that were formerly beneficially owned by Sanford C. Bernstein & Co., Inc. through Alliance's acquisition of the investment advisory assets of Bernstein. As a result of these transactions ownership of these shares will be reflected in the filings of AXA Financial, Inc. the parent company of Alliance. AMF BOWLING: Attempting to Enhance Operating Performance -------------------------------------------------------- AMF Bowling announced that, in conjunction with its financial restructuring, the company is implementing strategic organizational changes in each of its major businesses to strengthen its operations and enhance its financial performance. These changes include new initiatives in AMF's U.S. Bowling Centers business to streamline the organization and refocus on the bowling center manager, and several senior management changes in Bowling Products. Estimated annual cost savings of $8 million are expected from these changes. Over half of the savings will be used to fund new U.S. Bowling Center initiatives in training, as well as improved compensation and benefits programs for center managers and staff. "I believe the changes we are making today will create the right organizational structure to drive profitable growth in the future," said Roland Smith, AMF President and Chief Executive Officer. "These improvements should also help facilitate our discussions with creditors and lenders about ways to restructure and reduce the company's long-term debt." Bowling Center Initiatives Smith said, that during 2000, the top 60% of AMF's U.S. bowling centers were up 9% in revenue over prior year, and outperformed the remaining 40% by 16 percentage points of revenue and 8 points of EBITDA margin. "We found that the primary factor in a center's performance was the quality and skill of the manager and staff," he added. "Our objectives are to ensure that all managers and staff receive the training necessary to be successful, to retain AMF's better performing center managers, and to recruit strong manager candidates." As part of the focus on center management, AMF will implement the following initiatives: - Establish a center manager training school in Richmond to provide new managers with the management skills and other tools necessary to manage centers successfully. A new Director of Training will be hired, along with experienced bowling industry personnel from AMF's center operations, to lead this new training initiative. - Create an in-center training program and ongoing intranet- based training for managers and staff. - Increase the center managers' incentive compensation plan to allow managers to receive a higher bonus tied to the successful financial performance of their centers. - Expand the incentive compensation plan to include the Assistant Manager and Facility Manager for the first time. In addition, all full-time employees will become eligible for benefits, including participation in the company's health care and 401(K) programs. - Institute a required certification program for both managers and centers to assure higher quality facilities and improved customer service standards. "We are going to expect more from our center managers and their teams," Smith said. "At the same time, we're going to invest in their training and reward good performance with an enhanced incentive bonus program." To better develop a pride-of-ownership philosophy among center managers, the company will streamline the corporate and field support organizations. The U.S. center organization will consolidate from five to three operating regions, with Paul Barkley responsible for the West, Steve Crawley for the Central region and Lloyd Wrisley for the East (all three are currently Regional Vice Presidents). District Managers will focus more on personnel, training and the successful implementation of national programs. The positions of District Marketing Manager, Regional Organizational Development Manager and Regional Food & Beverage Manager have been eliminated. Bowling Products Changes "While we have made some progress towards improving our product quality and order fulfillment, we have not improved quickly enough to achieve our financial targets in Bowling Products in 2000," Smith said. "As a result, I believe a change in leadership is necessary to accelerate improvement." Randy Daniel, former President of AMF Bowling Products, has left the company. AMF has started a search for a new Chief Operating Officer for Bowling Products. In the interim, Smith will assume responsibility for Bowling Products, with the following management changes to occur, effective immediately: - John Walker, Vice President, North American Sales, assumes responsibility for Global Sales and Customer Service. - Walter Powers, Manager, Factory Certified Equipment, assumes responsibility for Manufacturing and Engineering. Mark Kilpatrick, who heads Manufacturing, and Ron Brown, who directs Engineering, will continue their responsibilities and report to Powers. - Tim Scott, Senior Vice President, Marketing, assumes leadership of Product Management. Corporate Changes In conjunction with these changes, corporate staff positions have been reduced to better meet the company's current business needs. "I believe we're taking the right actions to make AMF a more efficient, focused and competitive company," Smith said. "While we will realize cost reductions, over half of these savings will be reinvested in the U.S. Bowling Centers business, where we continue to see opportunities for enhanced profitability and growth." As the largest bowling company in the world, AMF owns and operates 527 bowling centers worldwide, with 408 centers in the U.S. and 119 centers in nine other countries. AMF is also a world leader in the manufacturing and marketing of bowling products. The company also manufactures and sells the PlayMaster, Highland and Renaissance brands of billiards tables. Information about AMF is available on the Internet at http://www.amf.com. AMF BOWLING: NYSE Suspends Trading & Moves To Delist Shares ----------------------------------------------------------- The New York Stock Exchange announced that it determined that the common stock, 10 7/8% notes due 3/15/06, and 12 1/4% notes due 3/15/06 of AMF Bowling, Inc. -- ticker symbols PIN, PIN 06, and PIN ZR06, respectively -- should be suspended immediately. The Company has advised the NYSE that it plans to make application to transfer the trading of its common stock to the OTC Bulletin Board. Application to the Securities and Exchange Commission to delist the issues is pending the completion of applicable procedures. The Exchange's action is being taken in view of the fact that the Company is below the NYSE's continued listing criteria relating to a minimum share price of $1 over a 30 trading-day period. In addition, on November 14, 2000 the Company announced that its restructuring alternatives are "likely to have a material adverse effect on the ability of shareholders and long-term debt holders to recover their investment in AMF." The Exchange has not traded the Company's common stock or notes since that announcement as the Exchange completed its evaluation of the Company's continued listing status. ARBELLA LIFE: S&P Assigns BBpi Financial Strength Rating -------------------------------------------------------- Standard & Poor's assigned its double-'Bpi' financial strength rating on Arbella Life & Health Insurance Co. Inc. The rating is based on the company's narrow and reduced operating scope and weak, volatile return on assets partially offset by strong liquidity and capitalization. Based in Quincy, Mass., Arbella Life (NAIC: 60056) writes mainly group accident and health (A&H). About 95% of the company's business lies within its only licensed states, Massachusetts and New Hampshire, and its products are distributed mainly through agents. The company began operations in 1995. Major Rating Factors: -- The company's limited capital base ($6.1 million in total adjusted capital), narrow operating scope (84% of direct business in Massachusetts), and product line concentration (97% of direct business in A&H) limit the rating. In 1999, the company significantly reduced its group A&H business to $14.4 million from $20.7 million in 1998, a decrease of 30%. -- Operating performance has been weak with five-year average declines in assets of 2.7% and in revenues of 5.6%. Since 1995, returns on revenue have ranged from negative 16.6% to positive 0.4%. -- The company's volatile earnings, a relatively low two-year average ratio of cash inflows to outflows (90%), and current capital level are limiting factors. -- The company has extremely strong liquidity, with a liquidity ratio of in excess of 260% as measured by Standard & Poor's model. -- Capitalization remains very strong, with a capital adequacy ratio of 163.9% as measured by Standard & Poor's model. Total adjusted capital increased only 1.3% in 1999 from the previous year to $6.1 million. The company's rating is based on stand-alone characteristics without implied support from the Arbella Insurance Group. Arbella Life is a member of Arbella Insurance Group, a large property/casualty (P/C) insurance group with 1999 surplus of $242.9 million. The company is wholly owned by Arbella, Inc., an insurance holding company, which is 99.6% owned by Arbella Mutual Insurance Co. (triple-'Bpi' financial strength rating), a P/C affiliate. CAREMATRIX CORPORATION: Nasdaq Delists Securities ------------------------------------------------- CareMatrix Corporation (Nasdaq: CMDC), a fully integrated assisted living company, announced that it has receive a notice from the Nasdaq Listing Qualifications Panel that the Company's securities will be delisted from the Nasdaq Small Cap Market. On November 9, 2000, CareMatrix announced that it and certain (but not all) of its subsidiaries have filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. CareMatrix Corporation is a leading provider of senior housing services including assisted living, supportive independent living and specialized programs for people with Alzheimer's disease. COLUMBIA UNIVERSAL: S&P Assigns BBpi Financial Strength Rating -------------------------------------------------------------- Standard & Poor's assigned its double-'Bpi' financial strength rating to Columbia Universal Life Insurance Co. Key rating factors included marginal capitalization, poor profitability and erratic premium revenues. Based in Austin, Texas, Columbia Universal writes mainly individual annuities. The company's major states of operation -- Texas and California -- constitute more than 70% of its business, and its products are distributed primarily through agents and brokers. Columbia Universal, which began operations in 1954, is licensed in 41 states, the District of Columbia and Puerto Rico. It is a wholly owned subsidiary of Columbia Universal Corp., a Nevada corporation and a wholly owned subsidiary of American Heritage Life Insurance Co. (AHL, double-'A'-plus financial strength rating). In turn, AHL is a wholly owned subsidiary of American Heritage Life Investment Corp., which is a wholly owned subsidiary of Allstate Corp.(single-'A'-plus counterparty credit rating). Major Rating Factors: -- Capitalization is less than good, as indicated by a Standard & Poor's capital adequacy ratio of 95.9%. The company's leverage, as measured by the ratio of capital and surplus to total liabilities, is aggressive at 4%. The low capitalization ratio stems, in part, from a high level of risk assets as a percent of total adjusted capital (172.5%). Medium- ($15.2 million) and low-quality ($9.1 million) bonds constitute 107% of total adjusted capital. Although capital and surplus have grown at a compound annual rate of 10.6% since 1991, total adjusted capital decreased 20.4% to $22.6 million at year-end 1999 from $28.5 million in 1998. The decline in surplus of $6.5 million from 1998 was caused by a loss of $2.7 million in net income, a negative $1.8 million change in surplus notes, a negative $0.7 million change in the company's asset valuation reserve, and a negative $1.3 million change in all other items. -- Profitability is poor. The time-weighted ROA for 1996-1999 is negative 0.2%. The drop in net income of $4.7 million in 1999 over the prior year was caused mainly by weaker results in the individual annuity business, which had a $3.3 million decline from 1998 on pretax income before dividends to policyholders. In addition, the company has very volatile earnings with respect to its current capital adequacy ratio. Since 1994, the ROA has varied from negative 0.6% to positive 1.3%. -- Historically, Columbia Universal has displayed an instability in its premium revenue, which -- together with a liquidity ratio of 127.7% -- is a limiting factor. Premiums have varied from negative 30.2% to positive 175.1% since 1995. -- Columbia Universal's geographic and product line concentrations are high. Currently, 60% of direct business is in Texas, with more than 87% in individual annuities, a limiting factor. -- The company's net premiums rebounded 175.1% in 1999 to $159.6 million. Although Columbia Universal (NAIC:77720) is a member of Allstate group of companies, the rating does not include additional credit for implied group support. COMSTOCK HOTEL: Case Summary and 19 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Comstock Hotel-Casino 200 West Second Street Reno, NV 89501 Chapter 11 Petition Date: November 14, 2000 Court: District of Nevada Bankruptcy Case No.: 00-33297 Judge: Gregg W. Zive Debtor's Counsel: Jeffrey L. Hartman, Esq. The Law Office of Jeffrey L. Hartman 419 West Plumb Lane Reno, Nevada 89509 Total Assets: $ 1 Million above Total Debts : $ 1 Million above 19 Largest Unsecured Creditors: IGT Goods/Services $ 66,575 Sierra Pacific Power Goods/Services $ 59,295 Young Electric Sign Co. Goods/Services $ 40,726 Bonanza Produce Goods/Services $ 38,370 Nugget Meat Packers Goods/Services $ 33,240 Model Dairy Goods/Services $ 26,814 Thyssen-Dover Elevator Goods/Services $ 23,092 Casino Data System Goods/Services $ 21,003 Lodging and Gaming Sys Goods/Services $ 18,894 U.S. Foodservice of Reno Goods/Services $ 18,201 Reno Food Distributors Goods/Services $ 16,325 Anchor Games Goods/Services $ 14,275 Sysco Food Service of SF Goods/Services $ 13,958 C&M Food Distributing Goods/Services $ 13,925 Mission Industries #37 Goods/Services $ 13,236 Farmers Brothers Co. Goods/Services $ 12,675 Red Hawk Golf Goods/Services $ 12,065 WMS Gaming Goods/Services $ 11,721 Central Credit LLC Goods/Services $ 10,848 CONOR PACIFIC: Delivers CCAA Plan to Alberta Court -------------------------------------------------- Conor Pacific Environmental Technologies Inc. announced that a Plan of Compromise and Reorganization pursuant to the Companies' Creditors Arrangement Act was filed on November 10, 2000. The Plan of Reorganization has been submitted to permit Conor Pacific to settle payment of its liabilities and to compromise the indebtedness owed to unsecured creditors on a fair and equitable basis, primarily by means of the disposition of common shares of Conor Pacific to the Creditors. In addition, a portion of the senior secured indebtedness currently held by 157692 Canada Inc. will also be converted to common shares of Conor Pacific. Approval of the Plan of Reorganization is required by the Creditors and therefore a meeting of the Creditors has been scheduled for 9:00 a.m. Monday, December 4, 2000 in Calgary Alberta. The meeting will take place at the Sheraton Suites, Wildrose South Room, Calgary Eau Claire, 255 Barclay Parade SW. Should the Creditors approve the Plan of Reorganization, approval will be sought from the Court of Queen's Bench of Alberta for a Plan of Arrangement under the Alberta Business Corporations Act. If the Plan of Arrangement is approved, it will result in the issuance of common shares of Conor Pacific in exchange for the indebtedness to be converted under the Plan of Reorganization. Upon issuance of the common shares to the Creditors and 157692 under the Plan of Reorganization and the Plan of Arrangement, the total issued shares outstanding of Conor Pacific will be held based on the following percentages: (a) 157692 will hold 55% of the common shares; (b) unsecured creditors will hold 40% of the common shares; and (c) existing shareholders will hold 5% of the common shares. KPMG Inc. has been appointed by the Court as the Monitor of the affairs of Conor Pacific pending approval of the Plan of Reorganization and Plan of Arrangement. Full details of both the Plan of Reorganization and the Plan of Arrangement along with a Notice of Meeting of General Creditors and Proof of Claim are currently being mailed to the Creditors. A full set of materials has also been delivered to Computer share Investor Services Inc., Conor Pacific's Transfer Agent. Conor Pacific is a provider of strategic and technical environmental solutions. From offices in Vancouver, Calgary and California, we integrate technical expertise, innovative technologies and business and risk management solutions to add the greatest possible sustainable and economic value to clients. Contact Robert (Bob) E. Nowack, Chairman and CEO for Conor Pacific Environmental Technologies Inc., at (604) 669-3373 for additional information. CORAM HEALTHCARE: Shareholders Sue Lenders, Officers & Directors ---------------------------------------------------------------- The Law Offices of G. Martin Meyers, P.C. announced, pursuant to Section 21(D)(a)(3)(A)(i) of the Securities Exchange Act of 1934, notice that a class action lawsuit was filed on November 8, 2000, in the United States District Court for the District of New Jersey, on behalf of all persons who were holders of shares of the common stock of Coram Healthcare Corporation, on or before August 8, 2000, and who sold some or all of their Coram common stock shares at any time on or after August 8, 2000, following the announcement of Coram's bankruptcy filing issued on that date. The Complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder. Specifically, the Complaint alleges that the defendants perpetrated a fraud upon the market for shares of Coram common stock, by circulating materially false and misleading statements and/or omissions in press releases and otherwise, designed to artificially deflate the market price of Coram stock, in furtherance of a plan designed to deprive its stockholders of the value of their equity in the said stock, and provide for Coram's emergence from bankruptcy proceedings as a "privately held company," depriving plaintiffs and the proposed class of Coram stockholders of fair compensation for the value of their Coram common stock. The Complaint names as defendants three entities holding long-term indebtedness of Coram in the approximate amount of $260 million, including Cerberus Partners, L.P., Goldman, Sachs Credit Partners, L.P., Foothill Capital Corporation, (collectively the "Lender Defendants"), and the present and former officers and directors of Coram, and of the Lender defendants or their affiliates, who participated in the alleged scheme of securities fraud which forms the basis for the action, including Stephen Feinberg, Daniel D. Crowley, Scott R. Danitz, Scott T. Larsen, Allen J. Marabito, Domenic A. Meffe, Vito Ponzio, Jr., Joseph D. Smith, Richard M. Smith, Donald J. Amaral, William J. Casey, L. Peter Smith, and Sandra L. Smoley, (collectively, the "Officer and Director Defendants"). Coram itself is not named as a defendant as it is or was the subject of bankruptcy proceedings, as of the date of the filing of the Complaint, and the filing of an Amended Complaint, on November 15, 2000. For additional information, contact G. Martin Meyers, Esq. Law Offices of G. Martin Meyers, P.C. 35 West Main Street, Suite 106 Denville, New Jersey 07834 973 625-0838 Fax: 973 625-5350 or garymeyers@nac.net by e-mail. CRIIMI MAE: Judge Keir Finds Plan Meets Confirmation Standards -------------------------------------------------------------- Calling CRIIMI MAE Inc.'s (NYSE: CMM) plan of reorganization "fair and reasonable," Judge Duncan W. Keir found that the Company's plan of reorganization meets all of the confirmation standards required by the Bankruptcy Code. The Company intends to submit a proposed confirmation order for the Judge's review and approval. Judge Keir said he would hold a hearing next Wednesday, November 22, 2000, if he has any questions about the proposed order submitted to him. Otherwise, he said he would sign the order confirming CRIIMI MAE's reorganization plan. To resolve objections to confirmation filed last week by Merrill Lynch Mortgage Capital Inc. and German American Capital Corporation, all parties agreed to include in the confirmation order a provision that the plan would become effective no later than March 15, 2001, unless the parties and the court agree to extend the date or the court extends that date. An attorney for CRIIMI MAE, Richard L. Wasserman of Venable, Baetjer and Howard, LLP, Baltimore, Md., indicated to the court that, notwithstanding the March 15, 2001 date, all of the parties are "endeavoring" to have CRIIMI MAE emerge from bankruptcy as soon as possible. DEVX ENERGY: Comerica Disloses 8.18% Equity Stake ------------------------------------------------- Comerica Bank, a Michigan banking corporation, benefically owns 6,600,00 shares of the common stock of Devx Energy Inc, representing 8.18% of the outstanding shares of common stock of the company. Comerica holds sole voting power only over the stock owned. DIAGNOSTIC HEALTH: Plan Declared Effective on October 30 -------------------------------------------------------- On October 17, 2000, the US Bankruptcy Court for the Northern District of Texas entered an order confirming the Second Amended Joint Plan of Reorganization filed by Diagnostic Health Services, Inc., et al. The Effective Date of the Plan occurred on October 30, 2000. Attorneys for the debtors are G. Michael Curran, Esq., and Keith M. Aurzada, Esq., of the law firm Akin, Gump, Strauss, Hauer & Feld LLP. DIMAC HOLDINGS: Lease Decision Period Extended to Jan. 15 --------------------------------------------------------- The US Bankruptcy Court, District of Delaware, entered an order on October 27, 2000, granting an extension of the period within which DIMAC Holdings Inc., et al. may assume or reject unexpired leases of nonresidential real property. Pursuant to section 365(d)(4) of the Bankruptcy Code, the time by which the debtors must assume or reject the unexpired leases is extended to and including January 15, 2001. Attorneys for the debtors are the law firm Weil, Gotshal & Manges LLP and The Bayard Firm. EMPIRE OF CAROLINA: Toy Manufacturer Files Chapter 11 in Florida ---------------------------------------------------------------- Empire of Carolina, Inc. (Amex: EMP), and Empire Industries, Inc., its wholly owned subsidiary, announced that they have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The filings took place in the United States Bankruptcy Court for the Southern District of Florida, West Palm Beach Division. Empire will remain in possession of its assets and properties, and its business and affairs will continue to be managed by Empire's directors and officers, subject in each case to the discretion and supervision of the Bankruptcy Court. Empire is best known for making toys, including the classic Big Wheel, Crocodile Mile waterslides, Buddy L trucks and cars, and Grand Champions collectible horses. The company has turned to sporting goods for a boost; it makes Wilson golf shoes, Mongoose snowboards, and other equipment. Empire also makes seasonal products, such as Easter baskets and plastic snowmen, and it supplies plastic molding to other manufacturers. Its products are made in the US and in the Far East. Retailers Wal-Mart, Toys "R" Us, and Target account for over half of Empire's sales. EQUALNET COMMUNICATIONS: Committee Hires Navigant Consulting ------------------------------------------------------------ By order entered on October 25, 2000, the US Bankruptcy Court for the southern District of Texas approved the application of the Joint Committee of Unsecured Creditors of Equalnet Communications Corp., and its affiliates to employ Navigant Consulting, Inc. as financial and accounting advisor to the Joint Committee of Unsecured Creditors. Attorneys for the Joint Committee of Unsecured Creditors are Joseph J. Wielebinski, Dean W. Ferguson and Mark H. Ralston, of the firm Munsch, Hardt, Kopf & Harr, PC. FOAMEX INTERNATIONAL: Bank of Nova Scotia Holds 24.4% Stake ----------------------------------------------------------- The Bank of Nova Scotia is reporting beneficial ownership of 5,750,426 shares of the common stock of Foamex Internaional Inc., representing a 24.4% holding of the common stock of the company. The Bank exercises sole voting and dispositive power over the stock. Calder & Co. of New York City is acting as Nominee for the Bank. Calder & Co. is a partnership established to hold securities in the partnership name for the account and subject to the order of the Bank of Nova Scotia. In the ordinary course of its business, from 1995 through 1999, the Bank made loans and advances, and extended credit and other financial accommodations to Trace International Holdings Inc. and/or Trace Foam Sub Inc. On July 21, 1999 Trace filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The Bank's claims of in excess of US $167,000,000 at the time Trace filed its petitions in addition to the assigned claims of certain other Trace creditors were secured by liens and security interests on certain Trace assets, including as to the assigned claims, 7,000,247 shares of company common stock. Under terms of the Stipulation of Settlement between the Bank and John S. Pereira, in his capacity as the Chapter 7 Trustee of Trace, entered as an Order by the U.S. Bankruptcy Court for the Southern District of New York on October 18, 2000, and which became final and non-appealable on or about October 31, 2000, the Bank became the owner of 1,500,000 shares of company common stock. After effectuating the transfer of 1,500,000 shares of company common stock to the company in exchange for 15,000 shares of company Preferred Stock to be held by the Calder & Co., the Trustee released the remaining shares of company common stock and the Bank, through Calder & Co. (its Nominee), became the owner of 5,697,426 shares of company common stock pursuant to the Settlement. As a result of these transactions and its prior holdings of 53,000 shares of company common stock, the Bank has become the owner of 5,750,426 shares of company common stock and 15,000 shares of company Preferred Stock. The Bank holds 5,697,426 of such shares of company common stock and all of the 15,000 shares of company Preferred Stock through its Nominee. FRUIT OF THE LOOM: Osceola Plant Closing within 60 days ------------------------------------------------------- The Associated Press reports that Fruit of the Loom gave 780 people employed at its Osceola plant their 60-day notices that the factory will close in January. This is a planned part of FTL's on-going chapter 11 restructuring, Barbara Pardue, director of the Arkansas Economic Development Department told the AP. GRAND UNION: C&S Acquires Assets for $301.8 Million in Auction -------------------------------------------------------------- The Grand Union Company (OTC BB: GUCO), announced that following the auction of its assets, it will be proceeding with the previously announced agreement for the purchase by C&S Wholesale Grocers, Inc. of substantially all of the Company's assets and business. 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 remains subject to customary closing conditions, including governmental antitrust approval and Bankruptcy Court approval. The Company also announced that as a result of the auction it entered into a definitive agreement to sell the store and building owned by the Company at 124-138 Bleecker Street in New York City to New York University for approximately $24 million. The sale is subject to Bankruptcy Court approval. 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. HARRAH'S: Revenue Miscalculation May Lead to Chapter 22 ------------------------------------------------------- After 3 1/2 years in bankruptcy, Harrah's New Orleans Casino may again seek protection after emerging two years ago, The Advocate reports. Harrah's executives says that the "friendly" bankruptcy filing may be done and over with in 90 days and wouldn't hinder the company's operations. The plan's focus are on reducing Harrah's $100 million annual state tax, lifting restrictions on the services it offered, and restructuring its debt. Miscalculating its revenue projections, Phil Satre says that the company won't be able to raise enough cash to cover its state tax and break even. "The fact is everyone missed on the $348 million projection. And by everyone, I mean Harrah's Entertainment, Wall Street bankers, analysts, and investors and professionals hired by government officials," Satre said. Harrah's Entertainment Inc. in Las Vegas, which Mr. Satre works as chairman, owns 43 percent of Harrah's stock. The Casino Tax Advisory Committee, which is studying the casino's financial situation, is scheduled to make recommendations. ICG HOLDINGS (CANADA): Case Summary ----------------------------------- Debtor: ICG Holdings (Canada) Co. 161 Inverness Drive West Englewood, CO 80112 Affiliates: ICG Services, Inc. ICG Equipment, Inc. ICG NetAhead, Inc. ICG Mountain View, Inc. ICG Canadian Acquisition, Inc. ICG Holdings (Canada) Co. ICG Holdings, Inc. ICG Telecom Group, Inc. NikoNet, LLC ICG Ohio LINX, Inc. ICG Enhanced Services, Inc. Communications Buying Group, Inc. ICG Telecom Group of Virginia, Inc. ICG DataChoice Network Services, L.L.C. PTI Harbor Bay, Inc. Bay Area Teleport, Inc. ICG Access Services - Southeast, Inc. Trans American Cable, Inc. ICG Telecom of San Diego, L.P. Western Plains Finance, L.L.C. ICG ChoiceCom Management, LLC ICG ChoiceCom, L.P. DownNorth, Inc. ICG Tevis, Inc. ICG Funding, LLC Type of Business: The Debtor and its affiliates are a facilities- based communications provider and, based on r revenue and customer lines in service, one of the largest non-incumbent competitive communications companies in the United States. The Company primarily offers voice and data services directly to business customers and offer network facilities and data management to Internet service provider (ISP) customers. Chapter 11 Petition Date: November 14, 2000 Court: District of Delaware Bankruptcy Case No.: 00-04244 Debtor's Counsel: David S. Kurtz, Esq. Skadden, Arps, slate, Meagher & Flom (Illinois) 333 W. Wacker Drive, Chicago, IL 60606 (312) 407-0700 and Gregg M. Galardi, Esq. Skadden, Arps, slate, Meagher & Flom LLP One Rodney Square, Wilmington, DE 19801 (302) 651-3000 Total Assets: $ 256,013,821 (as of September 30, 2000) Total Debts : $ 1,100,326,445 (as of September 30, 2000) ICG HOLDINGS, INC.: Case Summary -------------------------------- Debtor: ICG Holdings, Inc. 15 E 96th Street, New York, NY 10128 Affiliates: ICG Services, Inc. ICG Equipment, Inc. ICG NetAhead, Inc. ICG Mountain View, Inc. ICG Canadian Acquisition, Inc. ICG Holdings (Canada) Co. ICG Holdings, Inc. ICG Telecom Group, Inc. NikoNet, LLC ICG Ohio LINX, Inc. ICG Enhanced Services, Inc. Communications Buying Group, Inc. ICG Telecom Group of Virginia, Inc. ICG DataChoice Network Services, L.L.C. PTI Harbor Bay, Inc. Bay Area Teleport, Inc. ICG Access Services - Southeast, Inc. Trans American Cable, Inc. ICG Telecom of San Diego, L.P. Western Plains Finance, L.L.C. ICG ChoiceCom Management, LLC ICG ChoiceCom, L.P. DownNorth, Inc. ICG Tevis, Inc. ICG Funding, LLC Type of Business: The Debtor and its affiliates are a facilities- based communications provider and, based on r revenue and customer lines in service, one of the largest non-incumbent competitive communications companies in the United States. The Company primarily offers voice and data services directly to business customers and offer network facilities and data management to Internet service provider (ISP) customers. Chapter 11 Petition Date: November 14, 2000 Court: District of Delaware Bankruptcy Case No.: 00-04245 Debtor's Counsel: David S. Kurtz, Esq. Skadden, Arps, slate, Meagher & Flom (Illinois) 333 W. Wacker Drive, Chicago, IL 60606 (312) 407-0700 and Gregg M. Galardi, Esq. Skadden, Arps, slate, Meagher & Flom LLP One Rodney Square, Wilmington, DE 19801 (302) 651-3000 Total Assets: $ 1,418,830,390 (as of September 30, 2000) Total Debts : $ 2,442,015,952 (as of September 30, 2000) JCC HOLDING: Has Financing to Operate through March 31, 2001 ------------------------------------------------------------ JCC Holding Company (Amex: JAZ), released the following comments on a presentation made on November 13, 2000 to the New Orleans Casino Tax Advisory Committee which set forth a contemplated restructuring of the Company's financial obligations, as well as the American Stock Exchange's halt of trading in the Company's stock. (References to the "Company" include the Company's wholly- owned subsidiary Jazz Casino Company, LLC which operates the Company's casino in New Orleans, Louisiana.) On November 13, 2000, Jefferies & Company, Inc., financial advisors to the Company, on its behalf presented a proposed plan for restructuring the Company's financial obligations based upon Jefferies' analysis and advice, to New Orleans' Mayor Marc Morial's Casino Tax Advisory Committee. During this presentation, the Company proposed various concessions to be made by its securities holders, its lenders, its affiliates, Harrah's Entertainment, Inc., Harrah's Operating Company and Harrah's New Orleans Management Company (the manager of the casino and a wholly controlled affiliate of Harrah's Entertainment, Inc.), the State of Louisiana, and other parties to whom the Company has contractual or legal obligations. Among other things, the proposal included the recommendation of a pre-negotiated bankruptcy proceeding to achieve a reorganization of the Company's financial arrangements and capital structure. Jefferies advised that confirmation of a plan in bankruptcy to achieve such a result would likely involve the elimination of the equity held by the Company's current stockholders. The Company's financial advisors have concluded, after a thorough analysis, that as currently configured the Company's casino is not financially viable because current and projected revenue is not sufficient to pay all operating expenses, minimum taxes and debt service. While the financing required for the casino's operations has been arranged through March 31, 2001, the Company's ability to continue as a viable business beyond that time is in doubt absent a significant restructuring of its finances. The Company believes that unless the $100 million minimum payment due to the State of Louisiana is reduced and economic concessions are obtained from numerous other parties to whom the Company has financial obligations, the Company will not be able to continue as a viable business. These recommendations have not been formally considered or approved by the Company's board of directors or any other parties and cannot be implemented until such approval is received. On November 14, 2000, the Company filed an 8-K Current Report with the U.S. Securities and Exchange Commission covering the presentation and recommendation made to the Casino Tax Advisory Committee. In addition, the Company has been advised by the American Stock Exchange that it no longer meets the Exchange's continued listing requirements and the Company will not object to the removal of its common stock from the American Stock Exchange. The Casino Tax Advisory Committee was assembled by the Mayor of New Orleans to document its findings on the economic impact of the Harrah's New Orleans Casino, owned by Jazz Casino Company, LLC, the Company's wholly-owned subsidiary, and make recommendations to the Mayor regarding the $100 million minimum payment due to the State of Louisiana and other relevant matters. Jazz Casino Company, LLC, has the exclusive license to own and operate the only land-based casino in Orleans Parish, Louisiana. Harrah's New Orleans Management Company, a subsidiary of Harrah's Entertainment, is the manager of the casino. The casino directly employs approximately 3,000 people with an annual payroll and benefits of approximately $80 million. The 100,000 square foot casino is located at Canal Street at the Mississippi River in downtown New Orleans, and is adjacent to the French Quarter, the Aquarium of the Americas and the Ernest N. Morial Convention Center. JUMBOSPORTS: Three Property Sale Raises $4.3 Million ---------------------------------------------------- By separate orders of the US Bankruptcy Court Middle District of Florida Tampa Division, the debtors, Jumbosports, Inc. obtained authority to sell three parcels of real property: * 9350 Hickman Road, Des Moines Iowa to Greenspan Property Management for a total purchase price of $2,250,000. * 5000 West Holiday Drive, Peoria , Illinois to Charter Oak Development LLC for a purchase price of $1,900,000 * Undeveloped parcel of real property in Greensboro, North Carolina for $155,000 to T. David Pulliam. KEY PLASTICS: Carlyle Bids Against JJM for Debtors' Assets ---------------------------------------------------------- A new suitor has stepped forward with a bid for Key Plastics LLC, The Automotive News reports. Carlyle Group, a Washington, D.C.- based investment firm having former Secretary of State James Baker III in its management, was able to slip in and put its offer on the table. In the other corner is New York-based JJM LLC (headed by Joyce Johnson-Miller), also an investment firm. Joyce Johnson- Miller was present during the hearing held in U.S. Bankruptcy Court in Detroit on Nov. 6 that would have chosen her to be the preferred bidder. At a Nov. 8 hearing, The Honorable Judge Steven Rhodes delayed the action because of Carlyle's bid. Both companies were given until Nov. 28 to consider Key's holdings and submit plans to choose which of them would be the preferred bidder for the company. Key will then choose its preferred bidder on Dec. 4 midnight and that company will then have the inside track for Key's auction on Dec. 14. The one loosing the bid will get $ 1.25 million for its efforts. If either one of JJM or Carlyle voluntarily leaves the race before Nov. 28, they'll get $750,000. Novi, Mich.-based Key Plastics molds interior, exterior and under- the-hood components for the auto industry in North America and Europe. Key filed for Chapter 11 in March, listing assets of $ 331 million and debts of $ 353 million. The company's exclusive period during which to file a plan of reorganization runs through Dec. 31. KITTY HAWK: Committee Balks at Exclusive Period Revival ------------------------------------------------------- The Official Unsecured Creditors' Committee of Kitty Hawk, Inc., et al. objects to the debtors' second motion for an extension of the exclusive period. The Committee claims that exclusivity terminated on October 21, 2000, and should not now be revived, except for cause shown. There is no cause to extend exclusivity for the debtors to file a plan or to solicit acceptances thereon. The Committee claims that the Committee and the creditors which it represents are being held hostage by the debtors' plan and have lost all confidence in the debtors' ability to act in accordance with their fiduciary duty to general unsecured trade creditors. There is no cause to extend exclusivity. The Committee claims that exclusivity should be terminated immediately so as to allow the Committee to file, and solicit acceptances of, its own plan. KITTY HAWK: Committee Supports Appointment of Examiner ------------------------------------------------------ The Official Unsecured Creditors' Committee of Kitty Hawk, Inc., et al., filed a memorandum in support of its motion for appointment of an Examiner. In order to avoid the certainty of a contested confirmation fight, the Committee claims that an examiner is needed to address the multitude of issues raised in the debtors' plan of reorganization. The Committee claims that a disinterested third party could only help to ensure that all issues are fully explored. The Committee envisions that an examiner would investigate all issues relating to the debtors' plan, report his or her findings to the Court and the parties, and act as a bridge between the parties in an effort to reach consensual plan treatment. An examiner is needed to address the debtors' effort to substantively consolidate their estates for distribution purposes under a proposed settlement with the Noteholders which unfairly discriminates against general unsecured trade creditors. The examiner's investigation would (and should) delve into the propriety of the settlement with the Noteholders' in the proposed plan, the merits of fraudulent transfer claims against the Noteholders, the possibility of substantive consolidation, the treatment of creditors of all of the estates under the plan, the confirmability of the plan, and the issue of conflicts on the part of debtors, their counsel, and the Committee. The examiner could act as a bridge to a consensual plan, if possible. The Committee believes that there is a window of opportunity here leading up to confirmation to resolve the parties' disputes, rather than dragging these issues out in endless litigation. The Committee is represented by Kyung S. Lee, Esq., and Maxim B. Litvak, Esq., at Verner, Liipfert, Bernhard, McPherson & Hand, Chartered. M-CARE INC: S&P Lowers Financial Strength Rating to Bpi ------------------------------------------------------- Standard & Poor's has lowered its financial strength rating on M- Care Inc. to single-'Bpi' from double-'Bpi'. This rating action reflects the HMO's weak risk-based capitalization and weak earnings profile, offset by good liquidity. The rating is also based on implicit support from its parent, University of Michigan. This not-for-profit HMO, headquartered in Ann Arbor, Mich., and licensed and operating in Michigan, runs on an individual practice association model and does business mostly in the commercial group market. Major Rating Factors: -- Risk-based capitalization is weak, as indicated by a Standard & Poor's capital adequacy ratio of 18.8% at year- end 1999. Total statutory capital includes a surplus note of $4.3 million from University of Michigan, which was issued in 1989. -- Operating performance has been weak, with underwriting losses of $5.3 million in 1999 and $19.2 million in 1998. -- Liquidity is good, with a Standard & Poor's liquidity ratio of 112.9%. METAL MANAGEMENT: Reaches Accord with Banks and Bondholders ----------------------------------------------------------- Metal Management, Inc. (NASDAQ Smallcap: MTLM) announced that it reached an agreement in principle with an informal committee representing the holders of in excess of a majority in aggregate principal amount of its 10% Senior Subordinated Notes due 2008 and in excess of 90% of the holders of its 12-3/4% Senior Secured Notes due 2004, as well as 100% of the lenders under its senior secured credit facility, on a comprehensive restructuring of the Company's balance sheet. The agreement contemplates that the Company's scrap suppliers who continue to support the Company will continue to be paid in the ordinary course of business throughout the restructuring process. The agreement in principle provides that the current holders of the Company's 10% Senior Subordinated Notes due 2008 will exchange their Notes for 99% of the restructured company's common stock, and that its 12-3/4% Senior Secured Notes due 2004 would remain outstanding on their current terms. The Company's existing common and preferred stockholders would own the remaining 1% of the common stock of the restructured company together with new warrants to purchase an additional 7.5% of the outstanding common stock. As contemplated by the agreement in principle, the Company did not make the $9.0 million November 15 interest payment due on its 10% Senior Subordinated Notes. The Company expects the agreement to be implemented through a pre-arranged plan of reorganization under Chapter 11 of the Bankruptcy Code. In furtherance of this financial restructuring, the Company's senior bank lenders have agreed to provide the Company initially with $20 million of additional borrowing capacity. Albert A. Cozzi, Chairman and Chief Executive Officer of Metal Management, said, "The strong support of our banks and bondholders for our restructuring demonstrates their confidence in Metal Management's operations. We also appreciate the confidence that our customers have shown while we have negotiated this agreement. The fact that our banks and bondholders have agreed to allow the Company to continue to pay our scrap suppliers in the ordinary course of business demonstrates that they share our belief that the people we do business with every day are the lifeblood of our company. I am excited about the future of our company and look forward to operating this business with a balance sheet that has been dramatically strengthened by the conversion of $180 million of debt into new equity of the Company." Metal Management is one of the largest full service metals recyclers in the United States, with approximately 50 recycling facilities in 14 states and estimated annualized revenues of nearly $1 billion. OWENS CORNING: Makes Pitch to Acquire Foundry And Steel, Inc. ------------------------------------------------------------- Owens Corning seeks bankruptcy court authority to spend approximately $15,000,000 over five years to acquire one of its key suppliers. The Debtors have used Foundry and Steel, Inc., for over 50 years as their supplier of proprietary manufacturing equipment, including precision winding and chopping assemblies (used in the fabrication of glass fiber products) and related parts and service. Last year, OWC bought $17.8 million of goods from F&S, representing 80% of that company's total sales. Owens Corning has 1,800-some glass fiber winders and 86 glass filament choppers in current use around the world, producing a half-million metric tons of wound product annually. These winding systems and chopping assemblies, the Debtors note, are uniquely designed for Owens Corning and are not otherwise commercially available. The Debtors propose to make a $50,000 up-front cash payment and enter into leases (requiring payments totaling $13.2 million over the next 5 years) and non-competition agreements under which the Debtors will pay $800,000 to F&S' three principal shareholders (Ray Hopkins, Mike Connor and Keith Connor) over the next three- year period. The balance of the purchase price is attributable to inventory purchases at cost. The importance of F&S' products and expertise is critical to Owens Corning, David S. Kurtz, Esq., of Skadden, Arps, Slate, Meagher & Flom explains to Judge Walrath. And, Mr. Kurtz cautions, if OWC doesn't complete this acquisition, the Debtors are certain that a competitor will pursue an acquisition of this important supplier. The proposed acquisition, the Debtors argue, will redound to the Company's benefit in several material ways: (A) by gaining the means to produce winders and chopping assemblies within the Debtors' enterprise, the Debtors will immediately eliminate the margin associated with acquiring those products from a third party; (B) the Debtors themselves will bring considerable manufacturing and engineering expertise to F&S' operations, thereby eliminating redundancies and streamlining operations; and (C) the Debtors have performed extensive due diligence and already have identified specific inefficiencies that may be eliminated in F&S' processes, further creating cost savings for the Debtors. Accordingly, the Debtors ask Judge Walrath for permission to consummate this acquisition transaction without further delay. (Owens-Corning Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) PRANDIUM, INC.: Sells El Torito Division for $129.5 Million ----------------------------------------------------------- Prandium Inc. was incorporated in Delaware in 1986. The company is primarily engaged in the operation of restaurants in the full- service and fast-casual segments, through its subsidiaries. At September 24, 2000, the company operated 206 restaurants in 22 states, approximately 62% of which are located in California, Ohio, Pennsylvania, Indiana and Michigan, and franchised and licensed 13 restaurants outside the United States. On June 28, 2000, the company completed the sale of substantially all of the El Torito Division to Acapulco Acquisition Corp. in a transaction with an adjusted enterprise value of approximately $129.5 million. As a result of the El Torito Sale, the company received, subject to a preliminary $0.7 million post-closing adjustment based on a closing balance sheet, $128.8 million, consisting of $114.0 million in cash, the assumption of $9.8 million of long-term debt, consisting primarily of capitalized lease obligations, and $5.0 million deposited in escrow. The company recorded a pretax gain of $61.0 million in the third quarter of fiscal 2000 as a result of this transaction. A portion of the net cash proceeds was used to pay indebtedness outstanding under the Foothill Credit Facility of $25.9 million. The 95 full-service El Torito Division restaurants that were sold generated sales of $112,409,000 and $163,486,000 for the six months and two days ended June 27, 2000 (through date of sale) and the nine months ended September 26, 1999, respectively. The company's total sales of $78,040,000 for the third quarter of 2000 decreased by $56,224,000 or 41.9% as compared to the same period in 1999. For the first nine months of 2000, total company sales of $349,009,000 decreased by $59,828,000 or 14.6% as compared to the same period in 1999. These decreases were due to (i) the loss of sales from the El Torito Division which was sold, (ii) sales decreases in comparable restaurants and (iii) sales decreases for restaurants sold or closed, partially offset by sales from new restaurants. Net loss for the third quarter 2000 was $6,476 while the third quarter of 1999 reflected a net loss of $1,183. In the nine months ended September 24, 2000 the company's net loss was $2,639 whereas Prandium had seen a net gain in the first nine months of 1999 of $1,092. PRIMARY HEALTH: Judge Walrath Rejects Bid to Convert Case --------------------------------------------------------- Judge Mary Walrath denies converting the Chapter 11 case of Primary Health Systems to Chapter 7 liquidation, according to a report appearing in Crain's Cleveland Business. Judge Walrath made her decision on Oct. 24 when Interactive Health Computing Inc. of Prussia, Pa., an unsecured creditor of PHS, requested to convert the case to Chapter 7. The Bankruptcy Code states that under Chapter 11, the property and future income of a company are under the Bankruptcy Court's protection and there is a stay against litigation, liquidation and collection. Fearing that the action might increase administrative costs, other unsecured creditors had opposite views and opposed the request. Primary Health, which owned and operated four Greater Cleveland hospitals, including the former Mt. Sinai Medical Center, filed for bankruptcy protection under Chapter 11 in March 1999. SELECTCARE HMO: S&P Lowers Financial Strength Rating to Bpi ----------------------------------------------------------- Standard & Poor's has lowered its financial strength rating on SelectCare HMO Inc. to single-'Bpi' from double-'Bpi'. This rating action reflects the HMO's weak risk-based capitalization and limited financial flexibility, offset by good earnings profile and strong liquidity. This for-profit HMO, headquartered in Troy, Mich., and licensed and operating in Michigan, is a wholly owned subsidiary of SelectCare Inc., a holding company formed to manage and develop health care delivery systems and related services. Major Rating Factors: -- Risk-based capitalization is considered weak, as indicated by a Standard & Poor's capital adequacy ratio of 40.8% at year-end 1999. -- Earnings are considered good, as measured by a Standard & Poor's earnings adequacy ratio of 143%. -- Liquidity is strong, with a Standard & Poor's liquidity ratio of 150.7%. SERVICE MERCHANDISE: Outlines New Strategy to Aid Emergence ----------------------------------------------------------- Service Merchandise (OTC Bulletin Board: SVCDQ) is launching a new format in its 220 stores across the country. In addition, approximately 70 of these stores have been completely remodeled with wider aisles, brighter lighting and a more pleasant shopping experience for the customer. In April 2000, the Company announced the refocusing of its merchandise mix eliminating electronics, toys, and sporting goods. With the focus on jewelry and home products (small appliances, pantry ware, tabletop, cookware, etc.), less square footage was necessary for both the warehouse space and the selling space in their stores. For customers who remember days of "order-takers" and conveyor belts, the new configuration of Service Merchandise is exciting. Merchandise is readily accessible decreasing the need for vast warehouse space. "We have changed the look of the stores to create an open and inviting shopping atmosphere, with an emphasis on ease of shopping," says Charles Septer, President and COO of Service Merchandise Co., Inc. This reconfiguration provides Service Merchandise with additional opportunities. As the renovations of their stores are complete, approximately half of the previous space is made available. Maximizing their real estate potential, the Company leases the remainder of the space to other retailers. Current partners in this process include T.J.X. Company (the parent company of TJ Maxx and Marshalls), Bed Bath and Beyond, A.C. Moore, and Office Depot. A focus on jewelry also allows an expansion in the higher-end product category. In 33 selected stores in strong jewelry markets, The Gallery, a store within a store concept, will be used. Higher- end, designer jewelry with price points between $500 to $20,000 offer items such as whimsical diamond pins or three-carat total weight bridal sets in platinum. As a brick-and-mortar retailer, Service Merchandise also continues to gain recognition for its Internet presence. The Company proved its order fulfillment capacity as a catalog showroom. Today, they are leveraging that capability through the Internet. The on-line shopping experience offers easy navigation and advanced search functions. In addition, the "store, web, phone" shopping experience is interchangeable; returns, if necessary, can be made directly to the most convenient store. Internet kiosks can also be found conveniently within each store. Customers will find exclusive and expanded lines currently available in the store. Not only are the kiosks a source of additional product information, Septer says, but they also augment the selection. "If, for example, a customer wants a certain dishware item we don't carry, she can order it online immediately, and we'll give her the option of having it shipped to the store or to her home." The transformation of Service Merchandise Co., Inc. from a catalog showroom to a multi-channel specialty retailer is the business strategy expected to help the company emerge from Chapter 11 Bankruptcy protection the first half of the year. Visit a local store or the web site at http://www.servicemerchandise.comto experience the difference. SIENA HOLDINGS: Shareholders to Convene on Dec. 15 in Wilmington ---------------------------------------------------------------- The annual meeting of stockholders of Siena Holdings, Inc. will be held on December 15, 2000 at 10 o'clock EST, at The Hotel DuPont, Wilmington, Delaware, for the following purposes: 1. To elect five directors to serve until the next annual meeting and until their successors are elected and qualified; 2. To approve and authorize the Board to effect, in its discretion, a reverse stock split followed by a forward stock split of the company's common stock. 3. To ratify the appointment of KPMG LLP as independent public accountants for the company for the fiscal year ending June 30, 2001; and 4. To transact such other business that may properly arise. Only holders of record of common stock at the close of business on November 1, 2000 are entitled to receive notice of and vote at the meeting. STELLEX TECH: Veritas Acquires Assets for $107 Million ------------------------------------------------------ The Veritas Capital Fund, L. P. announced that it had agreed to acquire Stellex Electronics. Stellex, headquartered in San Jose, California, is a manufacturer of components and subsystems for the defense and telecommunications industries, with manufacturing facilities in San Jose, California and Telford, Pennsylvania. Stellex Electronics had sales of $107 million and 611 employees. Stellex and its parent company, Stellex Technologies, Inc., filed for Chapter 11 Bankruptcy Protection on September 12, 2000 in Bankruptcy Court in Delaware. The closing of any sale of the assets of Stellex Electronics will be subject to a public auction supervised by the Bankruptcy Court and to the final approval by the Bankruptcy Court. The auction is expected to occur in January 2001, and the transaction, which is expected to close on or before January 31, 2001, is subject to certain other regulatory approvals. The Veritas Capital Fund is a private equity firm based in New York City that has been an active investor in defense and telecommunications. Most recently, Veritas completed the $182 million acquisition of NYSE listed Tech-Sym Corporation, a leading manufacturer of electronic systems for the defense industry and subsystems for the telecommunications industry, whose primary operations include Metric Systems, Enterprise Electronics, and Trak Communications. It is Veritas' intention to retain all of the Stellex employees and management. In addition to the Tech-Sym acquisition, Veritas portfolio companies include Integrated Defense Technologies Inc., Trak Communications, Worthington Precision Metals, Inc., Baltimore Marine Industries, and Republic Technologies International Inc. Robert B. McKeon of Veritas said, "We are pleased to be associated with Stellex Electronics and its outstanding technology team. Through our other investments, we have developed a great appreciation of Stellex and its capabilities. It is our goal to work with the management and other members of the Stellex team to assist them in increasing the company's growth in sales and profits over the coming years." Christopher Bernhardt, Chairman and Chief Executive Officer stated, "All of us at Stellex are excited about the prospect of a partnership with Veritas and its portfolio companies. Veritas has developed an outstanding reputation with its defense and commercial customers of providing quality products on time and on budget. Our employees will benefit from the stability Veritas will provide them and the new opportunities for professional growth and development." SUNBEAM CORP: Says Negotiations With Lenders Continue ----------------------------------------------------- Sunbeam Corp., the Boca Raton, Fl. maker of small consumer appliances, said that it will delay filing its quarterly report with the Securities and Exchange Commission as it continues negotiating financial arrangements with its lenders. Sunbeam is working on a deal to gain additional liquidity and to have certain of its covenants waived through the end of this year. In fact, Sunbeam's problems are serious enough that two of its lending banks, Bank of America Corp. and First Union Corp., in separate filings with the SEC complained that their $1.7 billion loan to Sunbeam had become nonperforming. Separately, Sunbeam reported a third quarter loss of $84.1 million, significantly higher than had been expected. Its sales for the period dropped 22%--to $466 million. (New Generation Research, Inc., 17-Nov-00) TELEQUEST: Bombay-based Essar Group Acquires Assets --------------------------------------------------- Essar Group announced that a newly-formed company, e-TeleQuest Incorporated, has acquired substantially all of the assets of Telequestion, Inc. Telequestion, Inc., which had been operating under Chapter 11 since June, is a national provider of inbound, outbound and e-commerce customer contact services. Commenting on the transaction, Madhu S. Vuppuluri, Executive Director of Essar Group, stated, "We are very pleased to enter the teleservices industry with the acquisition of a business that has a long history of providing superior contact services to nationally recognized clients. We feel confident that the integration of e-TeleQuest into the Essar fold will strengthen the existing business and provide an opportunity to expand its reach globally." Tim Kreatschman, e-TeleQuest's Chief Financial Officer and acting Chief Executive Officer remarked, "Essar Group's acquisition adds a service capability to our existing business which was heretofore unattainable. We are pleased to join the Essar group of companies and look forward to increasing our level of service to existing clients and expanding our scope of services beyond the United States' borders." TeleQuest recently emerged to national prominence through its role in this year's presidential election. The company routinely provides contact services on a bi-partisan basis to various political campaigns on both a local and national level. This year's campaign was unique in the sense that it received a last minute project to contact selected voters in the Palm Beach, Florida area. Clayton Reeves, the company's Chief Operations Officer stated, "We were really surprised to learn that one of the many political programs we completed for our clients this year has had such a major impact on the election. Our company is bi- partisan with respect to the clients it serves, and we were pleased to have had the opportunity to serve both the Democratic and Republican parties this election year." Essar Group is a multinational diversified holding company based out of Bombay, India with over $4 billion in assets deployed in the oil & gas refining, power generation, shipping, steel and telecommunications industries. The Telequestion acquisition represents Essar's first investment in the U.S. market. TITAN MOTORCYCLE: Celeste Trust Reports 9.9% Equity Stake --------------------------------------------------------- Celeste Trust Reg. of Balzers, Liechtenstein, beneficially owns 9.9% of the common stock of Titan Motorcycle Company of America Inc. The percentage held is represented by 2,713,687 shares of common stock, over which Celeste Trust holds sole voting and dispositive powers. VENCOR, INC: Stipulates to Relief from Stay for Insured Claim ------------------------------------------------------------- The Debtors consent to and have obtained Judge Walrath's stamp of approval of an agreement and stipulation with Anna M. Hoffman to permit her to prosecute her pre-petition claim against Vencor, Inc. over alleged negligence. The Debtors have determined that there is an insurance policy issued in favor of Vencor defendant. The Debtors agree to a modification of the automatic stay solely to the extent necessary to permit the Plaintiff to collect any judgment in respect of any recovery of damages in the underlying action from any available insurance proceeds, and to continue to assert an unsecured prepetition claim in these bankruptcy proceedings, solely for the portion of such judgment that cannot be satisfied by available insurance proceeds, to the extent that Plaintiff has previously asserted such a claim in a timely and properly filed proof of claim. The parties also agree to mutual general release of claims over the matter.(Vencor Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) VISTA EYECARE: Asks for Exclusivity Extension through Apr. 16 ------------------------------------------------------------- Vista Eyecare, Inc., f/k/a National Vision Associates, Ltd., et al. seek an extension of the exclusive period within which the debtors can file a Chapter 11 plan, through and including February 15, 2001 and an extension of the exclusive period within which the debtors can solicit and obtain acceptances of any such plan through and including April 16, 2001. During the course of these "large and complex Chapter 11 cases," the debtors have concentrated on managing their business in the Chapter 11 environment. The debtors have focused on business and operational issues, including evaluation of individual store locations, which has thus far resulted in the rejection of approximately 90 non-residential real property leases, the termination of more than 100 leases primarily at Sam's Club locations; and the assumption and assignment of seven leases and the sale of property at the store locations to certain parties. The debtors retained McDonald Investments, Inc. as their investment banker, and the debtors have been working with McDonald to explore options for reorganization. The debtors' discussions with various potential purchasers are ongoing. The ultimate outcome of these discussions will guide the debtors in developing the framework for a plan of reorganization. The debtors are diligently exploring various options for reorganization; and failure to extend the exclusive periods at this juncture would undermine the debtors' ability to reorganize and reach a consensual resolution of the cases. Counsel for the debtors is the law firm Kilpatrick Stockton LLP. VYTRA HEALTH: S&P Assigns HMO CCCpi Financial Strength Rating ------------------------------------------------------------- Standard & Poor's has assigned its triple-'Cpi' financial strength rating to Vytra Health Plans, Long Island. The rating reflects the HMO's very weak risk-based capitalization and very weak earnings, offset by good liquidity. Vytra, headquartered in Melville, NY, is a not-for-profit HMO that is licensed in and operates within New York. Vytra began serving Long Island as ChoiceCare Long Island in January 1986. It services the counties of Nassau, Suffolk, and Queens. The company is controlled by Winthrop-University Hospital of Mineola, NY, and the HealthCare Plan of Buffalo. Major Rating Factors: -- Vytra's risk-based capitalization is very weak, as reflected by a Standard & Poor's capital adequacy ratio of 16.2% at year-end 1999. -- Operating performance was weak, with a net loss of $16.4 million in 1998. However, earnings rebounded to positive levels in 1999. -- Liquidity is good, with a Standard & Poor's liquidity ratio of 114.8% based on Vytra's year-end 1999 statutory financial statement. Enrollment growth is good, based on an average enrollment growth of 6% over the past three years. However, enrollment declined in 1999 by 24%. WHEELING-PITTSBURGH: Judge Bodoh Approves First Day Motions ----------------------------------------------------------- Federal Bankruptcy Court Judge William T. Bodoh approved first day motions presented by Wheeling-Pittsburgh Steel Corporation, including interim approval of the company's $290 million debtor- in-possession credit facility. An in-depth review of the roll-up style $290,000,000 DIP Financing Facility extended by Citibank, N.A., Citicorp U.S.A., Inc., The CIT Group/Business Credit, National City Commercial Finance, Foothill Capital Corporation, and Heller Business Credit and guaranteed in part by WPC's non- debtor parent company, WHX Corporation (NYSE:WHX) is included in the first edition of WHEELING-PITTSBURGH BANKRUPTCY NEWS. A free copy of that newsletter is posted at: http://www.bankrupt.com/wheeling.txt The bankruptcy court in Youngstown also approved orders allowing the company to continue to pay salaries, wages, pensions and other benefits to its employees and to honor pre-petition obligations to its customers. ********* 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, and Grace Samson, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. 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