/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/970916.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, September 16, 1997, Vol. 1, No. 17 In This Issue COLOR TILE: Sale of Intellectual Property CONTINENTAL SEATTLE: Loan on Seattle Tower Sold DAUPHIN TECHNOLOGY: Plans to Acquire CADserv Corp. EATON’S: Restructuring Plan’s Effect on Landlords FLORIDA SUNSHINE: Seeks Extension to File GUY F. ATKINSON: Final DIP Financing Determined JINRO COORS: Coors Brewing Provides Financing MERISEL: Debt Holders Sue for Breach of Agreement MONTGOMERY WARD: Will Reward Key Workers Who Stay PAYLESS CASHWAYS: Credit Card Company Agreements PAYLESS CASHWAYS: Disclosure Statement Hearing Set PAYLESS CASHWAYS: Proofs of Claim Date SKEENA CELLULOSE: Prince Rupert Mill May Stay Open ----- COLOR TILE: Sale of Intellectual Property ----------------------------------------- Color Tile, Inc., intends to transfer, and assign to Distribution Services L.L.C. all its intellectual property assets free and clear of liens for $1 million in cash. The assets include its names, marks, and logos and all artwork; merchandising signs; pro motional material designs; lists of suppliers, customers, and products; cost and sales history; and training material. Excluded are franchise agreements, marks incorporating “Mrs. Kays” and “Dial-A-Decorator,” and any of the forgoing used in the operation of American Blind and Wallpaper Factory. CONTINENTAL SEATTLE: Loan on Seattle Tower Sold ----------------------------------------------- Continental Seattle Partners Limited Partnership purchased a 42-story tower known as the Bank of California Center with a loan from Bank of Tokyo in 1987. The building has been enmeshed in bankruptcy proceedings for four years since Continental Seattle s ought Chapter 11 protection. A partnership formed by Walton Street Capital of Chicago, Walton Seattle Partners L.P., has purchased the $60 million loan from Bank of Tokyo and Sakura Bank for an undisclosed amount. According to the Puget Sound Business Journal, the purchase suggests Walton Street is positioning itself to become the owner of the 511,000-square-foot tower. Walton Street principal Jeffrey Quicksilver said "It's subject to reorganization, so we'll have to sit back and wait and see what the liquidating agent does." If the Norman Co., the building's court-appointed liquidating agent, has not sold the building b y June 30, 1998, the court will sell it at auction that day, according to the reorganization plan submitted by Bank of Tokyo and approved two years ago by U.S. Bankruptcy Court Judge Samuel Steiner DAUPHIN TECHNOLOGY: Plans to Acquire CADserv Corp. -------------------------------------------------- Dauphin Technology, Inc., announced plans to acquire CADserv Corporation, an engineering and manufacturing services firm located in Schaumburg, Illinois, Owned by Dauphin's CEO Andrew Kandalepas. CADserv, a multimillion dollar operation, contributed fina ncial support to Kandalepas as he devised the plan that enabled Dauphin to vanquish over 50 million dollars of debt and emerge from Chapter 11. Dauphin intends to acquire all issued and outstanding shares of CADserv for a price determined by a third-party independent valuation company. The transaction will be structured to include cash, notes, and/or convertible notes. Upon conclusion of due di ligence and the signing of definitive agreements, CADserv will become Dauphin's second wholly-owned subsidiary. Kandalepas said, "The acquisition of CADserv will make a tremendous contribution to Dauphin's overall commitment to become a technology holding company whose subsidiaries interact synergistically. If I focus on the big picture, Dauphin's success is more important to me than my individual success with the company I created and nurtured." EATON’S: Restructuring Plan’s Effect on Landlords -------------------------------------------------- Eaton's restructuring plan was given the go-ahead last week although Cambridge shopping centres and Cavendish Shopping Centre in Montreal had argued to recoup thousands of dollars in costs associated with losing Eaton's stores as tenants. Ontario Court J ustice Lloyd Houlden ruled there was no reason to amend the plan that will begin paying banks, landlords, suppliers and other creditors the $419 million they are owed starting October 30. Aside from approving the plan, Houlden extended Eaton's bankruptcy protection from creditors until payments to them of a mixture of cash and interest-bearing notes begin October 30. An unusual extension was also given until June 30 to protect landlords whose malls are losing Eaton's stores as anchor tenants. This order will block smaller chains from exercising their right to vacate stores if Eaton's does. Eaton's lawyer Lyndon Barnes also said he's expecting unhappy landlords to seek leave from the courts to appeal the plan's approval. FLORIDA SUNSHINE: Seeks Extension to File ----------------------------------------- Florida Sunshine Rehab Limited Partnership seeks an extension to file its schedules and statements of financial affairs. An order granting an extension to September 12, 1997, was granted, however the company says it is short-staffed and still in the proce ss of reviewing and compiling information for its numerous facilities that is necessary to prepare the schedules. It requests an additional 10 days, through and including September 22, 1997, preparatory to the section 341 meeting set for September 29. GUY F. ATKINSON: Final DIP Financing Determined ----------------------------------------------- Guy F. Atkinson company of California, has prepared a two-week budget with Coopers & Lybrand that demonstrates a need to borrow $17.135 million from bonding companies approved in the DIP Financing Agreement on August 25, 1997. The loan will cover expenditures expected on bonded projects and about 91 percent of the general and administrative expenses of the debtor. A 12-week budget for the period through October 31, notes approximately $50 million owed on prepetition vendors and subcontractor debt on bonde d projects -- those projects covered by surety bonds from Fidelity and Deposit Company in Maryland and the American Insurance Group of Companies. JINRO COORS: Coors Brewing Provides Financing --------------------------------------------- Jinro Coors Brewing Co. of Korea will be bailed out through its joint venture with Coors Brewing Co. of the United States, according to a Jinro spokesman. According to The Korea Herald, a delegation from Coors Brewing will be arriving in Korea this month to meet with creditors and work out bailout measures for Jinro Coors, which barely escaped insolvency by paying off some promissory notes. Jinro Coors is part of the Jinro Group that went bankrupt last week. Creditors are expected to cooperate in salvaging the flagship company Jinro Ltd. and Jinro Coors. The American brewery giant is reportedly considering recapitalizing Jinro Coors Brewing, its first overseas joint venture operation in which it has a 33 percent stake, with approximately $200 million in foreign loans by the end of the year to help normali ze operations. Jinro Coors will introduce self-help measures such as changing equity through the additional issue of shares. MERISEL: Debt Holders Sue for Breach of Agreement ------------------------------------------------ Merisel, Inc., debt holders have filed a lawsuit seeking more than $100 million, alleging the company breached its financial restructuring agreement to give debt holders an 80 percent stake in the computer wholesaler company, according to The Wall Street Journal. The suit was filed in Delaware Chancery court by holders of Merisel’s 12.5% notes. At the center of the dispute is an agreement still awaiting shareholder approval under which the debt holders would exchange their notes for about 120.3 million new shares of common stock in a move to keep Merisel out of bankruptcy. A July offer by New York Investment firm Stonington Partners, which offered to acquire a 70 percent stake in the company for $152 million, was rejected by bond holders. A twice-postponed shareholder vote on the debt restructuring plan is now expected to take place in mid-October. MONTGOMERY WARD: Will Reward Key Workers Who Stay ------------------------------------------------- Montgomery Ward Holding Co. says it hopes to persuade key managers and salespeople to stay with the company through its bankruptcy reorganization by offering them hefty bonuses and bigger severance packages. A spokeswoman confirmed that a plan was filed with the federal bankruptcy court that calls for rewarding key employees with bonuses as high as 75 percent of their annual salaries if they stay with the company through December 1998. Montgomery Ward will lose nearly 30 percent of its executives and 98 percent of its sales staff by the end of the year if the current pace of attrition keeps up, the company said in the filing. If all managers stayed, it would cost Montgomery Ward about $17.6 million. PAYLESS CASHWAYS: Credit Card Company Agreements ------------------------------------------------ Payless Cashways, Inc., wants to assume its merchant services agreements with Discover Card Services, Inc., according to Bankruptcy Creditor’s Service. The agreement permits customers to use their Discover Cards to purchase merchandise in the company's r etail stores and allows the company to use the Discover Card and NOVUS logos in their promotional materials. According to the company, for the year ending June 31, 1997, customers purchased over $66 million using their Discover Cards, netting the company over $62 million after fees. Payless believes that acceptance of the Discover Card is integral to its busine ss and that it would be competitively disadvantaged if it were to stop accepting the card. Payless has three separate agreements with American Express Travel Related Services Co., Inc., which provide employees with travel related services, allow designated employees to pay for reimbursable personal business expenses, and let customers use the A merican Express card to purchase merchandise. Payless would also like to assume the American Express agreements, as it feels they are beneficial. PAYLESS CASHWAYS: Disclosure Statement Hearing Set -------------------------------------------------- Payless Cashways, Inc., will have a hearing before Judge Federman on October 9, 1997, to consider the adequacy of the information in the Debtor's First Amended Disclosure Statement dated September 5, 1997. PAYLESS CASHWAYS: Proofs of Claim Date ---------------------------------------- The last day to file proofs of claim or interest is October 14, 1997, in the Western District of Missouri, Western Division, Bankruptcy Court. SKEENA CELLULOSE: Prince Rupert Mill May Stay Open -------------------------------------------------- Skeena Cellulose and government, bank, and union representatives may work out a restructuring plan to prevent the permanent closure of the financially troubled Prince Rupert pulp and paper operation in northern British Columbia, according to The Vancouver Sun. The mill's annual payroll represents 40 percent of the local economy. More than 3,000 mill workers, plus hundreds more employed in related industries, have been out of work since June 27, when the company ran out of operating money. The Toronto Dominion Bank and Royal Bank have said they will close the mill for good, unless an acceptable restructuring plan can be reached in the next few days. Premier Glen Clark said the banks, which are owed $482 million, must absorb at least $300 million as a loss before the province chips in money to the restructuring plan. The province has promised to contribute $85 million, as a commercial loan over three years, as part of the restructuring plan. Clark said a deal could be reached by early next week. 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., Princeton, NJ, and Beard Group, Inc., Washington DC. Debra Brennan and Rebecca A. Porter, Editors. Copyright 1997. All rights reserved. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christophe r Beard at 301/951-6400. * * * End of Transmission * * *