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/raid1/www/Hosts/bankrupt/TCR_Public/971117.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 17, 1997, Vol. 1, No. 60 Headlines ABC INTERNATIONAL: Debtor Seeks Dismissal of Case AVATEX CORPORATION: Financial Deterioration Continues BRADLEES, INC.: New DIP Lender Around the Corner BUMBLE BEE: Plan of Reorganization Confirmed CRAIG CONSUMER: BT Commercial Halts DIP Financing CRAIG CONSUMER: Rejecting Ex-CEO's Employment Contract DOW CORNING: Disclosure Hearings Continue Today ELDER-BEERMAN: Judge Rejects Shareholder Request for Delay EVANSVILLE BREWERY: Re-Opening & Hoping for Quick Sale GROSSMAN'S, INC.: Ballots due December 3, 1997 HARRAH'S JAZZ: DIP Financing Sufficient Until End-of-Year HOOKUP COMMUNICATIONS: Files Canadian Notice of Intention KOO KOO ROO: Losses Mount Amid Increasing Revenues L. LURIA: Employee Retention & Severance Program Proposed LEVITZ FURNITURE: September 1997 Operating Results LEVITZ FURNITURE: CFO Employment Agreements LTV CORPORATION: Aerospace Trust Final Cash Distribution MANHATTAN BAGEL: Exploring Options, Including Chapter 11 MARVEL ENTERTAINMENT: Bankruptcy Court Reference Withdrawn MARVEL ENTERTAINMENT: Committee Questions White & Case Fees MARVEL ENTERTAINMENT: Potential Conflicts for Young Conaway METALLURG INC.: S&P Rates $100MM Senior Unsecured Notes 'B-' MIDCOM COMMUNICATIONS: Third Quarter Earnings NDI FOODS: Seeks Chapter 11 Protection NOVATEK INTERNATIONAL: Wood Gundy $8MM Suit Sails On OMNI MULTIMEDIA: Seeks Chapter 11 Protection PAYLESS CASHWAYS: K.C. Star Interview With CEO David Stanley PAYLESS CASHWAYS: Progress Report on Reclamation Claims PEGASUS GOLD: Third Quarter Loss & Bank Loan Default PRINS RECYCLING: KTI Sale Yields $13.6 Million WESTERN PACIFIC: Traffic Increases Following Filing WESTERN PACIFIC: Who's $10 Million Sits at Bank One? YAMAICHI SECURITIES: Rating Agency Downgrades ------- ABC INTERNATIONAL: Debtor Seeks Dismissal of Case ------------------------------------------------- ABC International Traders, Inc., asks the U.S. Bankruptcy Court for the Central District of California to enter an order dismissing its chapter 11 case filed on March 19, 1997. ABC explains to Judge Greenwald that it has consensually resolved the claims arising from a $5.6 million Texas State Court default judgment obtained by E. James Rausch and Leon Michanie, eliminating the problem that brought the company to the Bankruptcy Court. Additionally, the Debtor has re-negotiated the terms of its $13 million working capital facility with Congress Financial Corporation. The Debtor plans to pay all creditors 100% in cash or reinstate all obligations, according to their original terms, following dismissal of its chapter 11 case. Judge Greenwald will hold a hearing on ABC's motion on December 3, 1997, in Woodland Hills, California. As a protective measure, in the event that the Court does not approve the dismissal and forces the filing of a plan and disclosure statement to permit the Debtor to exit chapter 11, the Debtor asks for an extension of its exclusive period during which to file a plan of reorganization through December 10, 1997 and an extension of its exclusive period within which to solicit acceptances of such plan through February 11, 1998, both without prejudice to requests for further extensions and without prejudice to the right of the Committee to request termination of the Debtor's exclusive periods on 5-day's notice. AVATEX CORPORATION: Financial Deterioration Continues ----------------------------------------------------- Avatex Corporation posted a $7.9 million loss on revenues of $3.6 million for the quarter ending September 30, 1997. Avatex' balance sheet went further under water as liabilities exceed assets by $168.8 million at September 30, 1997. These figures reflect a $33.3 charge in connection with the previously reported settlement approved by Judge Balick with Bart Brown, Jr., the Trustee elected in FoxMeyer Corporation's chapter 7 cases. BRADLEES, INC.: New DIP Lender Around the Corner ------------------------------------------------ Faced with the expiration of its current DIP Financing Facility in early 1998 and a need for credit availability in excess of a 65% Borrowing Base to "provide liquidity levels during the 1998 fiscal year sufficient to satisfy the vendor community," Bradlees, Inc., has asked the U.S. Bankruptcy Court in Manhattan for approval to pay $300,000 in due diligence fees to one prospective DIP lender. BUMBLE BEE: Plan of Reorganization Confirmed -------------------------------------------- Bumble Bee Seafoods, Inc., and its three debtor affiliates obtained confirmation of their Plan of Reorganization from the United States Bankruptcy Court for the Southern District of California. As previously reported, the Plan provides for the sale of the bulk of the Debtors' operating assets to International Home Foods for aproximately $158.9 million, to be distributed to creditors according to their statutory priority. CRAIG CONSUMER: BT Commercial Halts DIP Financing ------------------------------------------------- BT Commercial Corporation has notified Craig Consumer Electronics, Inc., that it will no longer advance funds to the Debtor under the DIP Facility previously approved in the Debtor's chapter 11 case. As a result, Craig and BT have agreed to commence an orderly liquidation of the estate. CRAIG CONSUMER: Rejecting Ex-CEO's Employment Contract ------------------------------------------------------ Craig Consumer Electronics, Inc., seeks the Court's authority to reject its 1996 Employment Agreement with Richard I. Berger, the Debtors' Ex-CEO and Chairman. Berger was replaced by Richard Williamson in September 1997. The Berger Contract provided for $375,000 in annual salary payments plus a bonus equal to 10% of the Company's net income in excess of $2,000,000 per year, as well as other executive perquisites. Continued litigation over Mr. Berger's employment can be anticipated. Craig asserts that it terminated Mr. Berger's employment for cause; Mr. Berger claims that he has the right to terminate the contract because of Craig's failure to perform its contractual obligations. DOW CORNING: Disclosure Hearings Continue Today ----------------------------------------------- Court hearings before Bankruptcy Judge Arthur J. Spector and District Court Judge Denise Paige Hood on the adequacy of the information contained in Dow Corning Corporation's proposed amended disclosure statement will continue today in Bay City, Michigan. Judge Spector is expected to deliver preliminary rulings on the legal objections raised by the Tort Claimants--primarily focused on the propriety of linking a vote to accept or reject the plan with the treatment of a Tort Claimant's personal injury claim. Additionally, the parties will address proposed additions and modifications to the language contained in the proposed disclosure statement to resolve literally hundreds of factual objections interposed by scores of parties in interest. ELDER-BEERMAN: Judge Rejects Shareholder Request for Delay ---------------------------------------------------------- Elder-Beerman Stores Corp. shareholders William Weprin, Barbara Weprin and Leonard Peal have asked Judge Clark of the U.S. Bankruptcy Court in Dayton, Ohio to delay the confirmation hearing scheduled for December 15, 1997, until February 28, 1998. The Shareholders think that if market conditions and projections on Christmas sales are on target, Elder-Beerman's value could increase to $425 million. That would allow $50 million to $75 million of value to flow to the Shareholders rather than Elder-Beerman's creditors. Judge Clark rejected the Shareholders' arguments for any delay in scheduling the confirmation hearing on December 15, 1997. Judge Clark indicated, however, that he will permit the Beerman family to argue for a two-month delay in implementing the Plan at the confirmation hearing on December 15. Richard Cieri, Esq., of Jones, Day, Reavis & Pogue, counsel to Elder-Beerman, cautioned Judge Clark that the Debtors have pulled together the interests of hostile creditor groups and any delay on one front could begin to unwind agreements on other fronts. EVANSVILLE BREWERY: Re-Opening & Hoping for Quick Sale ------------------------------------------------------ Evansville Brewery Co. won approval from the U.S. Bankruptcy Court for the Southern District of Indiana at New Albany to recall 50-60% of its workforce, re-open for 45 days, and bottle 1.2 million remaining gallons of beer. The beer has been sitting since the brewery closed last month following its chapter 11 filing. 157-year-old EBS bottles beer under the Sterling, Gerst, Drummond Bros. and other labels, and hopes to use the bankruptcy case as a springboard for a sale of the Company. EBC was hopeful in mid-October that Chicago investment group Michigan Avenue Partners would buy the company and keep it operating. That deal fell apart when MAP was unable to raise the money needed. EBC argued in a hearing held this week that the 45-day plan would yield a better return than the options of (a) flushing the beer down the city sewers or (b) trucking it out to be boiled down and incinerated. National Bank of Canada, EBC's pre-petition lender owed $2.3 million, opposed the 45-day plan, asserting that the re-opening would only waste assets which should be used to pay bank debt. "If we would get fortunate and have a sale, everybody would be happy," Judge Basil Lorch said at the hearing. Opining that chapter 11 encourages taking risks when there is an upside potential, "I'm going to take that chance," Judge Lorch said. In its voluntary petition, filed October 1, 1997, EBC listed $8,187,000 in assets and $11,387,000 in liabilities. EBC estimates the value of the company at $3 million to $10 million, including the beer brand names, the brewery's building and land, equipment, cash and accounts receivable. Some sources say that no offers have been received to date for the purchase or restructuring of the business, but that EBC is hopeful one will surface within the next 45 days. Other reports claim that six to eight prospective buyers are engaged in on-going discussions, some more advanced than others. If no buyer is on-board by the end of the 45-day period, a liquidation will proceed. GROSSMAN'S, INC.: Ballots due December 3, 1997 ---------------------------------------------- Grossmans, Inc., and Jeld-Wen, Inc., have transmitted their Court-approved Disclosure Statement to creditors for voting as the Joint Plan nears confirmation. The Court has fixed December 3, 1997 as the Voting Deadline for creditors to return their ballots indicating acceptance or rejection of the Joint Plan. As previously reported, the Joint Plan proposes that Jeld- Wen will purchase a 50% stake in the company for $8.25 million. The Debtors and Jeld-Wen anticipate confirmation of the Joint Plan will be obtained at a hearing scheduled for December 8, 1997 before Judge Walsh in Delaware. HARRAH'S JAZZ: DIP Financing Sufficient Until End-of-Year --------------------------------------------------------- The United States Bankruptcy Court for the Eastern District of Louisiana at New Orleans has granted Harrah's Jazz Co.'s request to borrow $4 million of $9 million from Harrah's Entertainment, Inc., on an interim basis pending a final hearing on December 2, 1997. The Debtor has indicated that, even if final approval is not obtained, the $4 million approved last week will carry the company through the end of 1997. Harrah's Jazz is working quickly to pull together all of the pieces necessary to propose a plan of reorganization; Harrah's Entertainment is a key participant under that plan, having extended some $30 million in DIP Financing to date. HOOKUP COMMUNICATIONS: Files Canadian Notice of Intention --------------------------------------------------------- HookUp Communication Corporation has filed a Notice of Intention to File a Proposal under the Bankruptcy and Insolvency Act (Canada) in connection with a proposed reorganization of its business operations. The notice of intention permits HookUp a thirty day period in which to prepare and file a proposal outlining the company's restructuring plans. HookUp says that it is "not bankrupt and retains cash sufficient to continue operations," while, in the same breath, explaining that "this action has been taken to find a solution that treats all creditors in a fair and equitable manner." HookUp says that constructive discussions with creditors has been ongoing, and feels that a solution offering creditors value while permitting HookUp the opportunity to continue as a business is likely. On October 23, 1997, HookUp announced the sale of 13,000 subscribers to Netcom to raise cash. On November 5, 1997, HookUp and Interhop Network Services Inc. signed an agreement in which the franchise contracts of auracom Internet Services, HookUp's franchise division, would be transferred to Interhop in exchange for Interhop shares to pay debts. KOO KOO ROO: Losses Mount Amid Increasing Revenues -------------------------------------------------- Koo Koo Roo, Inc. (Nasdaq: KKRO) reported a loss of $9.8 million for the quarter ended September 30, 1997 on revenues of $21.9 million. The loss includes charges associated with store closings. Koo Koo Roo continued streamlined its corporate structure by eliminating 22 corporate jobs, consolidated Hamburger Hamlet's corporate office into the home office and outsourcing the company's construction department. Ken Berg, the company's Chairman and Chief Executive Officer, stated, "As previously announced, we have taken decisive action to reorganize the way we do business, which today is having an immediate and significant positive impact on results. We've proven we can achieve substantial top- line growth, and now we're going to prove we can take care of the bottom line, too." While most restaurant chains cheer as the end of the year approaches, Koo Koo Roo predicts that it "will generate a breakeven to positive cash flow from operations in the fourth quarter of 1997." "The Company continues to investigate strategies that may lead to the recapitalization, sale, spin-off or other restructuring of its interest in Color Me Mine and is engaged in substantive discussions regarding one such transaction, although no agreement has been reached to date," the company disclosed while announcing third quarter earnings. L. LURIA: Employee Retention & Severance Program Proposed --------------------------------------------------------- L. Luria & Son, Inc., working to wind-down its operations in an orderly manner, asks the U.S. Bankruptcy Court for the Southern District of Florida for permission to pay (a) $103,573 in retention bonuses to key employees who remain employed until the wind-down is completed and (b) $37,618 to employees whose employment is severed prior to completion of the wind-down. The Debtor believes these employee incentives are necessary to complete the wind-down in an orderly manner. The Debtor indicates that the Committee has consented to the proposed Program. LEVITZ FURNITURE: September 1997 Operating Results -------------------------------------------------- For the 26-day period ending September 30, 1997, Levitz Furniture Incorporated and its subsidiaries reports a $29.6 million loss on $49.8 million of sales. Year-to-date, ending September 30, 1997, Levitz reports a loss of $52.2 million on sales of $418.6 million. LEVITZ FURNITURE: CFO Employment Agreements ------------------------------------------- Subject to Court approval, Levitz has entered into two agreements relating to the resignation of the Company's CFO and the hiring of an Interim CFO. Patrick J. Nolan has signed-off on a severance agreement providing that his employment terminated as of October 31, 1997 and Mr. Nolan releases Levitz from all claims and causes of action. Mr. Nolan will assist Levitz in bringing in a new CFO and will continue to be compensated through April 30, 1999. Through EIG Management, Inc., Levitz has hired Elliot I. Green as its Interim CFO at a rate of $37,500 per month plus reimbursement of all reasonable out-of-pocket expenses. Mr. Green brings to Levitz prior experience from Edison Brothers, R.H. Macy & Co. and Child World. LTV CORPORATION: Aerospace Trust Final Cash Distribution -------------------------------------------------------- The Trustees of the Aerospace Creditors Liquidating Trust (PCX:ARO.TT) announced today that the Trust has set a record date of Dec. 15, 1997 for determining which holders will be entitled to receive the final cash distribution from the Trust. The amount of the final cash distribution is subject to the approval of the United States Bankruptcy Court for the Southern District of New York and will be announced by the Trust as soon as the Trust receives such approval. The Trustees of the Trust are requesting the Bankruptcy Court to approve a final distribution date of Dec. 29, 1997. Subject to certain conditions, suspension in trading of the Units of the Trust on the Pacific Exchange may occur prior to the final distribution. MANHATTAN BAGEL: Exploring Options, Including Chapter 11 -------------------------------------------------------- Manhattan Bagel Company, Inc. (Nasdaq:BGLS) disclosed that it is "exploring its alternatives, including securing additional funding to replace [existing bank debt], the sale of some or all of its assets, the sale of securities to a new investor, and the filing of a petition for protection under Chapter 11 of the Federal Bankruptcy Act." That disclosure was made by the Eatontown, New Jersey company as it announced losses for the quarter ended September 30, 1997 and projected losses for 1997's third quarter. In an effort to reverse operating losses, the company has retained turnaround consultant Sanford Nacht to conduct a total review of its operations and assist management in identifying areas in which savings could be achieved. Store closings, sales of franchised stores to their franchisees, and continued corporate downsizing is expected. Manhattan Bagel further announced that its primary lender had notified the company that it is in default of its credit agreement. The company is negotiating with the lender regarding the claimed default and other matters related to the credit facility. MARVEL ENTERTAINMENT: Bankruptcy Court Reference Withdrawn ---------------------------------------------------------- Granting the Debtors' Motion for a withdrawal of the reference of these cases from the bankruptcy court, District Court Judge Roderick McKelvie has directed that Marvel's entire bankruptcy case be moved from the U.S. Bankruptcy Court to the United States District Court for the District of Delaware for further proceedings. MARVEL ENTERTAINMENT: Committee Questions White & Case Fees ----------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Marvel Entertainment's chapter 11 cases questions the propriety of non-debtor third-party insiders paying legal fees to White & Case--the Debtors' special litigation counsel in the District Court Litigation--for representation of the Debtors' estates. The Committee observes that the Debtors' application to employ White & Case provides that W&C's fees will be paid by High River Limited Partnership and Westgate International, L.P., rather than by the Debtors. The Committee notes that bankruptcy courts have adopted different approaches in addressing this issue, with some courts adopting per se rules against such employment terms, some courts taking an analytical approach looking at the degree of potential conflict and harm, and other courts basing decisions on an equitable analysis. The Committee suggests, in the interest of fairness to all parties, that High River and Westgate make payments to the Debtors and that the Debtors then pay White & Case after the Court approves White & Case's fee applications. MARVEL ENTERTAINMENT: Potential Conflicts for Young Conaway ----------------------------------------------------------- The Wilmington-based law firm of Young, Conaway, Stargatt & Taylor has re-applied to serve as co-counsel to Marvel Entertainment Group, Inc., et al. James L. Patton, Esq., the partner in charge of the Marvel engagement explains to the Delaware Bankruptcy Court that certain unnamed parties have expressed concern about potential conflicts in light of Young Conaway's prior representations of Revlon, Inc., certain Perelman affiliates, Chase, Toy Biz and MAFCO, on the one hand, and current representation of Marvel on the other hand. Mr. Patton reminds the Court that Marvel -- now controlled by Carl Ichan -- has sued certain of Young Conaway's former clients and further alleges that the chapter 11 filings were part of a collusive effort by Perelman, Chase and others to the detriment of Marvel, its shareholders and creditors. Because of that allegation, and because Mr. Patton personally signed the Debtors' chapter 11 petitions, Mr. Patton declined to prosecute Marvel's latest District Court suit and advised Marvel to retain special counsel. Mr. Patton does not think it unlikely that he would be called as a fact witness in the District Court Litigation. Young Conaway indicates that it is re-applying to serve as Marvel's counsel to (a) again disclose all relationships which might appear to give rise to a conflict and (b) give all parties in interest the opportunity to voice any concerns before the Court. Young Conaway is certain, however, that it is disinterested within the meaning of Section 327 of the Bankruptcy Code and is qualified to continue serving as Marvel's co-counsel. METALLURG INC.: S&P Rates $100MM Senior Unsecured Notes 'B-' ------------------------------------------------------------ Standard & Poor's assigned its single-'B' corporate credit rating to Metallurg Inc., and its single-'B'-minus rating to the company's proposed $100 million senior unsecured notes due 2007. The ratings outlook is stable. The ratings reflect Metallurg's below-average business position as an international producer and marketer of metal alloys, used by manufacturers of steel, aluminum, superalloys, and other metal consuming industries, and its aggressive financial policy. Management has taken steps in recent years to improve the company's product mix and has had some success in reducing production costs from pre- bankruptcy levels. Currently, the company is benefiting from favorable market conditions in the aerospace and transportation sectors. Still, it serves highly cyclical markets and remains vulnerable to significant supply shocks. Pro forma for the proposed note offering, the company's total-debt to total-capital ratio will be high at 73%. This aggressive debt leverage measure is further exacerbated by the existence of substantial pension and environmental liabilities. Indeed, the environmental liabilities will require significant mandatory capital investments to address over the next few years. Furthermore, management's decision to pay a $20 million dividend to shareholders funded with proceeds from the proposed offering -- after only recently emerging from Chapter 11 bankruptcy protection -- underscores the company's aggressive financial policy. Going forward, operating margins should average 5.5%-6% (weighted down by low-margin merchant business), while EBITDA-to-interest coverage is expected to be only on the 3 times (x)-4x area absent any downturn in market conditions. MIDCOM COMMUNICATIONS: Third Quarter Earnings --------------------------------------------- MIDCOM Communications Inc. (NASDAQ:MCCIQ) reports a net loss of $23.6 million on net revenue of $24.9 million for the quarter ended Sept. 30, 1997. For the 9-month period ending September 30, 1997, the loss totals $69.5 million on revenues of $74 million. NDI FOODS: Seeks Chapter 11 Protection -------------------------------------- NDI Foods, Inc., the Syracuse, New York-based Denny's restaurant francishee, filed for protection from creditors under chapter 11 last week. NDI has been plagued by criticism stemming from alleged racial discrimination against Syracuse University students in April, 1997. The students say they were denied service while other customers were seated ahead of them and then were assaulted in the parking lot, and filed suit in New York. Flagstar Corporation and its subsidiary, Denny's, Inc., have apologized profusely to the Students. "It's hard to tell if [the chapter 11 filing] was deliberate but the net effect is that a week before they would be required to give us information, this blocks us from being able to get critical documents," Elizabeth OuYang, Esq., an attorney with the Asian American Legal Defense and Education Fund representing the Students told the Times Union. NOVATEK INTERNATIONAL: Wood Gundy $8MM Suit Sails On ---------------------------------------------------- Judge Schneider of the U.S. Bankruptcy Court in Baltimore have his blessing for Wood Gundy London Ltd., of London, to pursue its multimillion-dollar fraud lawsuit against two principal insiders behind Novatek International, the bankrupt Columbia-based company under federal investigation for stock fraud. Wood Gundy and other creditors in the lawsuit seek the return of $8 million paid out by Novatek. Novatek claimed that it had sales agreements with several parties in Latin America; the SEC questions the veracity of those claims. Wood Gundy accuses Novatek of violations of the SEC's regulations, fraud, filing false and misleading public documents, fraudulently transferring property of the company, wasting company assets, and breach of fiduciary duty. OMNI MULTIMEDIA: Seeks Chapter 11 Protection -------------------------------------------- OMNI MULTIMEDIA GROUP, INC. (AMEX: OMG) and its subsidiaries filed for Chapter 11 protection on November 14, 1997, before the U.S. Bankruptcy Court for the Western district of Massachusetts. * Omni Resources Corp., a software manufacturer and the largest subsidiary in the Omni group, listed assets of $6.6 million. Liabilities are $26.5 million, of which about $22 million is secured and $4.5 million is in unsecured debt to more than 300 creditors. * 4CDs Corp., which sells software via the Internet, reported assets of $300,000 and a secured debt of $4 million. Of its unsecured debt of $1.5 million, about $1.3 million is owed to Omni Resources Corp. * Mezzoman Productions Inc., a broker for CDs and cassettes, reported assets of $3,000 and liabilities of $2,500. * Campbell Products Corp., a printer of booklets and tray cards for CD packaging, reported assets of $105,000 and liabilities of $4.6 million, of which $4 million is secured and $650,000 unsecured. "The Company needs to restructure its balance sheet in order to attract the necessary capital required to achieve profitability," Omni said in making its announcement. Omni says that it intends to propose a restructuring plan promptly. PAYLESS CASHWAYS: K.C. Star Interview With CEO David Stanley ------------------------------------------------------------ David Stanley, CEO for Payless Cashways, Inc., granted an interview to Jennifer Fuller of the Kansas City Star. That interview appeared in yesterday's edition of the Kansas City Star. The full-text of the article is available at no charge via the Internet at: http://www.kcstar.com/news/stories/david16.htm Mr. Stanley relates (i) how the banks control the chapter 11 case, (ii) he is "real sorry" for the impact of the chapter 11 filing on creditors, suppliers and shareholders, (iii) that he would like to continue as CEO following emergence from chapter 11 in December, and (iv) he is hopeful that he, Susan Stanton and Stephen Lightstone will be nominated to the Board of Directors by creditors. The article discloses nothing relative to the results of creditor voting on the Debtor's Amended Plan. PAYLESS CASHWAYS: Progress Report on Reclamation Claims ------------------------------------------------------- Payless Cashways, Inc., reports that of 620 reclamation asserted by reclaiming sellers totaling $40,512,947, it has successfully resolved 587 reclamation claims totaling $26,491,753. The Debtor is left with 33 unresolved reclamation claims totaling $2,399,292, of which the Debtor agrees with $1,657,814. PEGASUS GOLD: Third Quarter Loss & Bank Loan Default ---------------------------------------------------- Pegasus Gold Inc. (Amex:PGU) announced it has recorded a $353.3 million write-down of the carrying value of its Mt. Todd Mine and is suspending mining operations. The mine will be placed on care and maintenance unless a detailed independent engineering review to be completed mid-December identifies substantial improvements in the mine's economics. "It no longer makes sense to operate Mt. Todd given the continued deterioration of the gold price and cost structure of this project," said Werner G. Nennecker, President and Chief Executive Officer. As a result of this write-down, the Company is in default of certain restrictive covenants under the terms of the $150 million Revolving Credit Facility. "Management has commenced discussions with its lenders under the facility and is working with financial advisors who specialize in restructuring to investigate alternatives available to the Company. We are implementing a cash conservation plan to mitigate lower gold prices, higher cash costs and meet operating needs. As part of that plan, the Company is considering curtailment of mining at certain operations, deferral of capital expenditures, further reductions in general and administrative costs, a scaled down exploration program and the monetization of all or a portion of the hedge portfolio," stated Nennecker. Absent adverse action by its creditors, the Company has sources of liquidity to continue planned operations through 1998. As of September 30, 1997, cash and cash equivalents totaled $15.9 million and other current assets amounted to $78.0 million. The market value of the Company's hedge portfolio is approximately $70 to $80 million. During the third quarter of 1997, the Company recorded a net loss of $432.8 million. PRINS RECYCLING: KTI Sale Yields $13.6 Million ---------------------------------------------- New Jersey-based KTI, Inc. (Nasdaq: KTIE) announced it completed the acquisition of recycling plants in Boston, Chicago and Newark. Purchased from a bankruptcy court sale, the plants are the former assets of Prins Recycling Corp. The acquisition was valued at $13.6 million. WESTERN PACIFIC: Traffic Increases Following Filing --------------------------------------------------- The Denver Post reports that October 1997 passenger traffic on Western Pacific Airlines--measured in revenue passenger miles--increased 22.6% over October 1996. During October 1997, WestPac filled only 51.3% of its available seats. WestPac filed for chapter 11 protection on October 5, 1997. WESTERN PACIFIC: Who's $10 Million Sits at Bank One? ---------------------------------------------------- A battle brews before Judge Sidney Brooks over who should get $10 million on deposit at Bank One. Western Pacific Airlines argues that it needs the money and the Court should grant it the use of the money. Moreover, WestPac says, the oil-rich Hunts and the Gaylord publishing family were represented by four board members and knew the risks they were taking when they made the loan. The Hunt and Gaylord families argue that the money is their collateral, securing a $12 million loan guarantee they executed in September 1997, and should be used to pay down the underlying debt. Moreover, having recently sold an airplane, the Debtor should have more than enough free cash to fund operations. WestPac answered one-third the question for Judge Brooks. Before the issue came before the Court, the Debtor drew nearly $3 million from the account for operating expenses. Judge Brooks has ruled that the remaining funds will stay in the account until further order from the Court. YAMAICHI SECURITIES: Rating Agency Downgrades --------------------------------------------- Standard & Poor's Corp. lowered its long-term rating on Yamaichi Securities Co. Ltd. and revised the outlook for the long-term rating to negative from stable. S&P said the downgrade reflected the firm's "demonstrated inability to counteract unfavorable market conditions, which will likely deteriorate further before bottoming out." Earlier this week, Moody's indicated that it was considering cutting the rating on Yamaichi's senior debt to junk bond status. Trading in Yamaichi's public equity securities drove the price per share from Y900 in 1996 to Y157 last week, closing at Y100 Friday. "We have no problems maintaining our liquidity," Yamaichi said as its shares slipped to a 24-year amid heavy selling Friday afternoon. While Government officials in Tokyo assert that Yamaichi -- one of Japan's big four brokers -- is "too important to fail," analysts predict a restructuring is imminent following losses of Y4.16 billion for the half-year ending September 30, 1997. -------- A listing of meetings, conferences and seminars appears every Tuesday. Bond pricing, appearing each Friday, is supplied by DLS Capital Partners, Dallas, Texas. 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 Christopher Beard at 301/951-6400. * * * End of Transmission * * *