Bankruptcy News For - April 30, 1996

  2. Six Years Later Moody's Still Has Reservations Over PFC Debt


            AUSTIN, Texas -- April 30, 1996 -- href="">Healthcare
        America, Inc. today announced that Bankruptcy Judge Larry E.
        confirmed the Company's plan of reorganization jointly proposed by
        the Company and its senior lenders.  

            Under the plan of reorganization, the Company's current
        shareholders will receive approximately 2% of the proceeds from any
        sale of assets or any issuance of stock by the reorganized company.
        The maximum aggregate amount payable to the current shareholders is
        $2.5 million.  The current shareholders will not have any other
        interest in the reorganized company.  Importantly, pursuant to the
        plan of reorganization, the reorganized company will not recognize
        any transfers of the Company's stock subsequent to April 29, 1996.
        In addition, the reorganized company will not recognize any
        transfers of interests in the contingent receivable.  

            Healthcare America is a healthcare management company that owns
        and operates acute care hospitals, long-term rehabilitation
        hospitals, psychiatric hospitals, community living programs, and a
        full array of partial hospital and outpatient services in Texas,
        Colorado, Florida, Oklahoma, Tennessee, and Virginia.  Through April
        29, 1996, Healthcare America was traded over-the-counter through the
        National Daily Quotation System "Pink Sheets"  published by the
        National Quotation Bureau, Inc.  

        CONTACT:  Healthcare America, Austin
                  Gregory J. Herring, 512/464-0200

Six Years Later Moody's Still Has Reservations Over
Investment Grade PFC Debt

            NEW YORK -- April 30, 1996 -- Six years have
        passed since the enactment of the Aviation System Capacity Act of
        1990, which contained provisions for passenger facility charges

            The PFC is a $1, 2 or 3 charge per passenger departure on
        airline tickets that an airport can charge passengers with Federal
        Aviation Administration (FAA) approval.  Proceeds from PFC's are to
        be used for FAA approved capital projects.  In June, 1992 Moody's
        stated that long-term standalone PFC-backed debt would probably not
        achieve an investment grade rating given the FAA's ability to
        terminate the airport's ability to collect PFC revenues.  Moody's
        position to date has not changed.  We continue to have strong
        reservations over the use of PFC's as sole security for long-term

            Our concerns are based on the fundamental credit weaknesses that
        we see in this revenue stream as security for long-term debt.  These
        concerns center on the termination provisions of the legislation and
        the FAA's use of termination as a management tool.  The FAA's
        ability to terminate the PFC revenue without bondholder recourse
        represents a serious impediment to the use of PFC's to secure long-
        term debt as was Congress' original intention in the authorizing

            The FAA and the Department of Transportation (DOT) have been
        party to ongoing discussions over these issues and have chosen to
        retain the termination provision rather than seeking a legislative
        or regulatory fix.  A reasonable inference is that adherence to the
        existing provisions provides for the use of termination provisions
        as a regulatory "hammer."  Moody's has not been asked to rate any
        upcoming PFC-secured debt issues.  This is a revisitation of Moody's
        general approach to debt secured solely by PFC revenues.  

            Assigning an investment grade rating to long-term PFC debt would
        entail evaluating the political risk and policy and legislative
        changes that would come with multiple future administrations and
        political agendas on the federal, state, and local levels as well as
        the unknown impact of future environmental issues and technological
        changes.  Airports impact all levels of society on a daily basis and
        tend often to be controversial.  Moody's feels that the political
        volatility surrounding these issues, combined with the federal and
        congressional history of impacting credits on the local level,
        warrants sufficient concern with respect to long-term debt secured
        solely by PFC revenues.  These concerns have not been mitigated by
        the relatively short track record-- four years -- of PFCs.  Nor do
        we gain comfort from the FAA staff's announced intention to work out
        a solution short of termination, since the best of intentions must
        ultimately conform to the law.  

            The possibility of attaining an investment grade rating on PFC-
        secured debt of short duration remains under consideration by
        Moody's.  Assuming no change in the status quo, it may be possible
        on a case by case basis to assess the political landscape and other
        potential problems that could cause the FAA to terminate the PFC
        over a limited time horizon.  Nevertheless, with respect to long-
        term PFC-backed debt,the following key credit issues remain:

            This comment outlines the nature of the discussions that we have
        had to date regarding PFCs, our concerns, and Moody's policy going

        Termination--The Best Intentions Must Ultimately Conform With the Law

            FAA staff has said on numerous occasions that it is neither
        their intention nor desire ever to reach a point where an airport's
        PFC authorization would be terminated.  It is reasonable to assume,
        however, that they will act in accordance with the law, regulations,
        and Congressional intent.  The Final Rules and Regulations, as
        printed in the Federal Register of May 29, 1991, clearly state FAA
        intent regarding bondholder risk and PFC termination:

            "The rule has not adopted the recommendation that a public
        agency be permitted to continue to receive PFC revenue in violation
        of this regulation if it has pledged the PFC revenue to bond
        payments.  The FAA believes that it is inappropriate for the
        passenger, rather than the bond holder, to incur the risk for the
        bond.  Moreover, the public agency's choice of a method for
        financing a project cannot be a basis limiting the agency's duty to
        carry out the requirements of the statute."  

            When the enabling legislation was written, the termination
        provision was included to provide the FAA with a "hammer"  should
        airports use PFCs in a manner that was in violation of the law.
        However, it is this control mechanism that runs counter to the
        interests of the bondholders, who are dependent on the PFC revenue
        stream for the repayment of debt.  

            Barring any changes in the legislation/regulations, the only
        alternative is to have the airport promise to do everything in its
        power- in effect covenanting against the unknown- to accommodate the
        FAA so that the FAA will not terminate this revenue stream.  The
        concern with this argument is that one has to feel comfortable with
        evaluating airport management's and the FAA's ability to deal with
        local and national politics.  The airports would basically covenant
        to do anything and everything to maintain their PFC revenue stream
        standing with the FAA; things that may be totally unforeseen at
        present given the number of years the bonds will be outstanding.
        While airport management has some control over airport operations,
        they may not have control over the political forces of a city
        council or local airport authority whose wishes they may have to
        ultimately obey.  An example of this can be seen in Los Angeles
        where the Mayor has reversed historical practice by continuing to
        pressure the airport and ports to explore new methods for
        calculating the amount of funds it is owed for reimbursable

            The argument also assumes that the FAA and Congress will be
        sensitive to and understand the impact of their actions on
        bondholders in particular and the municipal debt market in general.

        HUD Section 8 Housing Assistance Payments Contracts a Possible Model

            From a bondholder's point of view, one of the fundamental
        weaknesses in the use of PFC revenues as the sole security for debt
        is the lack of any contractual agreement between the airport and the
        party that controls the flow of the revenues- the FAA.  This lack of
        formal understanding, taken together with the comments regarding
        bondholder risk that were published in the Federal Register,
        underlies Moody's concerns over this revenue stream.  A possible
        analogy with respect to dependence on a stream of revenues provided
        by the Federal government to help meet debt service obligations is
        provided by housing bonds backed by Section 8 assistance.  Under the
        Section 8 program, the federal government entered into long-term
        contracts to subsidize the rents of low and very low-income tenants
        who live in qualified housing.  

            Moody's comfort with this revenue stream rests in the Section 8
        Housing Assistance Payment (HAP) contract with the federal
        government.  Recently a number of proposals that may affect the
        Section 8 program have been put forth by HUD and by various members
        of Congress.  The adoption of some of these proposals may
        significantly alter HUD's delivery of the Section 8 payments which
        may affect the security and rating of the bonds backed by these
        subsidy contracts.  However, it should be noted that HUD has
        affirmed that Section 8 contracts will not be abrogated.  Moody's is
        closely monitoring these development and their impact on the
        programs.  While pledged revenues of Section 8 backed debt include
        both the Section 8 payments and project rental receipts, the rental
        portion is usually a minor amount and Moody's evaluation of these
        bonds rests primarily on the pledge of the Section 8 HAP contract
        which ensures the availability of the long-term Section 8 funds.  

            Furthermore, virtually all Section 8 bonds rated by Moody's have
        had long-term HAP contracts with the federal government that were
        coterminous with the life of the bonds.  The benefit of the HAP
        contract from a bondholder perspective is that the federal
        government has entered into a long term contract to pay rent
        subsidies, thereby ensuring a predictable, long term revenue stream.
        In addition, the HAP contracts are assigned to the trustee as part
        of the trust estate for the benefit of the bondholder providing an
        added level of bondholder protection.  

            A carefully crafted contract that defines the termination
        process and events would provide additional bondholder security.
        While a contract between the FAA and the airport would not eliminate
        the FAA's ability to terminate PFCs, it would at least name the
        potential universe of termination events and allow a better
        assessment of the risks.  

        Are PFCs Held In Trust By the Airlines For the Airport?  

            There are currently some credit issues concerning the status of
        PFCs collected and held by airlines which have filed for bankruptcy
        protection.  These concerns were raised in the MarkAir bankruptcy
        proceedings, where creditors are alleging that the pre-petition PFCs
        are part of the debtor's estate.  This issue is complicated because
        airlines are allowed by the enabling legislation to commingle PFCs
        with other funds of the airlines.  To evaluate PFC-backed debt
        without taking into consideration the credit standing of the
        collecting airlines, it would be necessary to become comfortable
        with these bankruptcy issues through adequate legal opinions and
        through tightly drafted and enforced collection and remittance
        procedures.  Evaluating Standalone PFC Debt in the Context of Other

            To date most of the PFC issues that have come to market have
        carried an additional pledge of general airport revenues.  If an
        airport with outstanding rated general airport revenue bond (GARB)
        debt or commercial paper (CP) issued standalone PFC debt, Moody's
        would review the impact of PFC debt on the debt, financial,
        operational and capital profile of the airport.  Moody's would
        evaluate the impact of PFC debt on overall debt levels of the
        facility.  Any comments from the airlines regarding the imposition
        of PFCs would be evaluated as to its potential affect on future
        airline operations at the airport.  Legal documents, particularly
        covenants to PFC bondholders will be carefully reviewed as to
        potential impact on future airport operations and outstanding debt
        rated by Moody's.  

            Lastly, Moody's would consider the possible credit implications
        for outstanding GARB debt and other debt of the airport's owner such
        as general obligation and lease debt, should the PFCs be terminated
        and airport management and/or the airport's owner choose to service
        the outstanding PFC debt through other airport or municipal funds
        recognizing that they have no legal obligation to do so.  This would
        be done on a case-by-case basis.  

        Repeal Termination Provisions in Legislation

            The cleanest solution would be a legislative change that would
        protect the bondholder by eliminating the risk of termination.
        Repealing the termination provision would provide significant credit
        strength to long-term debt secured solely by PFCs.  

        Deferral of Termination Until PFC Bondholders are Satisfied

            This informal proposal, that was circulated last year would have
        the FAA defer its right to terminate PFCs until any outstanding
        bondholders were repaid.  This solution would have significant
        strength if it were adopted in the form of legislative, or at the
        very least, regulatory change.  The process for changing federal
        regulation is involved and lengthy which gives some comfort that
        would not be amended to meet political pressures.  

        Short-Term Standalone-PFC Debt

            Moody's will consider the possibility of placing an investment
        grade rating on short to medium term standalone PFC debt to be
        evaluated on a case-by-case basis.  The analytical construct will
        include the general airport characteristics including the type of
        airport, airline diversity, local air service market, and history of
        air service.  In addition we would focus on a specifics related to
        the PFC including the PFC collection history, airline response to
        PFC, list of additional PFC approved projects, structure of the
        issue, and use and amount of projected excess PFC revenues.  

        CONTACT: Adam J. Whiteman
                 Vice President/Manager
                 Charles E. Emrich
                 Assistant Vice President


            BAY SAINT LOUIS, Miss., April 30, 1996 - Casino Magic
        Corp. (Nasdaq: CMAG) today announced it has received Riverboat
        Gaming Enforcement Division of the Louisiana State Police approval
        for the acquisition of Crescent City Capital Development Corp.
        ("Crescent City"),  a wholly owned subsidiary of Capital Gaming
        International, Inc.
(OTC: GDFI), which holds a Louisiana gaming
        license.  Crescent City received Bankruptcy Court approval to
        transfer ownership to Casino Magic as a part of Crescent City's
        Amended Plan of Reorganization yesterday April 29, 1996.  On March
        26, 1996, Casino Magic received Louisiana Riverboat Gaming
        Commission approval for the transfer of ownership of Crescent City,
        and the relocation of its gaming license to Bossier City, Louisiana.

            This transaction is valued at $56.5 million, of which, $15
        million is payable in cash and the remaining balance in debt,
        including up to $6.5 million in gaming equipment liability.

            Casino Magic, through a wholly owned subsidiary, intends to
        operate a new casino in Bossier City, Louisiana.  Casino Magic owns
        20 acres of land in Bossier City on the Red River with immediate
        access from Interstate 20, a major artery between the Dallas-Ft.
        Worth area and Bossier City.  Casino Magic's pre-local option
        referendum construction plan includes 30,000-square-feet of floating
        dockside casino space which will have approximately 1,000 slots and
        60 table games.  The plan also includes 1,500 parking spaces
        together with an entertainment and food and beverage pavilion.  Post-
        local option referendum plans include the construction of a 60,000-
        square-foot entertainment facility and a 400-room convention hotel.
        Opening is anticipated during 1996.

            Casino Magic's President and Chief Executive Officer, Ed Ernst,
        commented, "We are extremely excited about our ability to enter a
        consistently growing gaming market.  This new addition to Casino
        Magic will provide diversity to the Magic brand and create new
        opportunities for our shareholders and employees."

            Jay S. Osman, Casino Magic's chief financial officer, said,
        "This license was approved for approximately four years and ten
        months. Assuming the continued growth and success of this market, we
        expect the addition of the Bossier City project to significantly add
        to our liquidity and cash flow while generating high return on our

            Casino Magic Corp., a Minnesota corporation with principal
        offices in Bay Saint Louis, Miss., operates gaming casinos in Bay
        Saint Louis and Biloxi, Miss.; Deadwood, S.D.; Neuquen City and San
        Martin de los Andes, Argentina; and Porto Carras and Xanthi, Greece.

        CONTACT:  Jay S. Osman, Chief Financial Officer, 601-466-8010 or