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/raid1/www/Hosts/bankrupt/TCR_Public/971205.MBXT R O U B L E D C O M P A N Y R E P O R T E R Friday, December 5, 1997, Vol. 1, No. 73 Headlines COOPER MANUFACTURING: Reorganization Plan Confirmed CRAIG CONSUMER: Court OK's Rejection of Mirando's Contract ERNST HOME: Burnham Pacific Acquires 12 Leases EQUITEX: 3rd Quarter Decrease Due to RDM Sports Group FOXMEYER: Trustee Seeks Time for Leases FRETTER: Court Approves Sale of Real Property GAMETEK: Files for Chapter 11 Protection LEVITZ FURNITURE: Seeks Extension for Exclusivity LOUISE'S TRATTORIA: Seeks to Assume and Cure Leases MICRON SEPARATIONS: Settlement of 12-Year Patent Dispute MOLTEN METAL: A Company Under Investigation OLD AMERICA STORES: Seeks to Retain Investment Banker WESTERN PACIFIC: Receives Court Approval for Financing WESTMORELAND COAL: Trustees of Fund Seek District Court WILLIS LEASE: Record 3rd Quarter Revenues and Profits Bond Pricing for Week of December 1, 1997 COOPER MANUFACTURING: Reorganization Plan Confirmed --------------------------------------------------- Cabec Energy Corporation announced that the US Bankruptcy Court for the Southern District of Texas, Houston Division, approved an order confirming the plan of reorganization of its Cooper Manufacturing subsidiary. The plan provides for the sale of substantially all the assets of Cooper to Tulsa Industries, Inc. and will be fully funded by an investor group assembled by Cabec and Trent Latshaw, President of Tulsa Industries, Inc. Cabec will retain a 3 percent royalty on gross sales and a fifteen percent non dilutable ownership interest in the reorganized company, subject to payment provisions outlined in the plan. The purchase price of approximately $2 million will be equity and used to fund the plan. Additional capital will be provided to fuel growth. Commenting on the decision, Ralph Curton Jr., Chairman and CEO of Cabec Energy said, "We are all pleased with the resolution of Cooper's reorganization. This plan was approved by all eligible classes of creditors who voted to reject a competing plan. CRAIG CONSUMER: Court OK's Rejection of Mirando's Contract ----------------------------------------------------------- The Court has entered an order approving and authorizing the motion of the debtor, Craig Consumer Electronics, Inc., rejecting its employment agreement with Anthony Mirando. Any claim arising as a result of or in connection with the rejection is deemed to have arisen immediately before the petition date and shall be allowed or disallowed pursuant to 11 USC Section 502. ERNST HOME: Burnham Pacific Acquires 12 Leases ---------------------------------------------- Burnham Pacific Properties, Inc., a California-based equity real estate investment trust (REIT) announced that it signed an agreement with The Alamo Group to acquire the leasehold interests in 12 former Ernst Home Improvement Stores in three Western states for approximately $20.2 million. The leaseholds, which include more than 480,000 square feet of leaseable space, are among those occupied by the 84-store Ernst chain that declared Chapter 11 bankruptcy in 1997 and later was acquired through bankruptcy proceedings by Alamo. Burnham will acquire the leaseholds at each location with a sublease in place and the subtenant paying rent. Prior to being assigned to Burnham, all leasehold improvements will be completed by the subtenant or The Alamo Group. "Not only will these leaseholds generate attractive immediate returns to Burnham, "stated David Martin, President and Chief Executive Officer of Burnham Pacific, "they may position Burnham to acquire the retail shopping centers in which Ernst leaseholds are located." EQUITEX: 3rd Quarter Decrease Due to RDM Sports Group ----------------------------------------------------- Equitex, Inc. said that its unaudited financial results for the quarter and nine months ended September 30, 1997 were disappointing due to the bankruptcy filing of RDM Sports Group. The company's total assets at quarter's end were $5.9 million as compared to $10.5 million at December 31, 1996. Net asset value at September 30, 1997 was $3.5 million compared to $7.3 million at December 31, 1996. "We were certainly surprised and extremely disappointed by the bankruptcy filing of RDM Sports Group," commented Henry Fong, President of Equitex, Inc. "As the cornerstone of our portfolio, we have worked very hard over the past ten years to create and maintain value for our investment in RDM. We are investigating our options and will vigorously pursue all avenues available to preserve as much of our RDM investment as possible. Equitex announced that it signed a non-binding letter of intent for the acquisition by a newly-formed investee company of a company in the sporting goods industry. FOXMEYER: Trustee Seeks Time for Leases --------------------------------------- The permanenet Chapter 7 Trustee in the Foxmeyer Corporation et al. case, Bart A. Brown is seeking an extension of time to assume or reject executory contracts and unexpired leases. The Trustee seeks an order further extending the time to assume or reject unexpired leases and executory contracts 91 days, until March 2, 1998. The Trustee submits that a final determination has not been made that each and every prepetition lease and contract has been disposed of, which determination requires further action by the Trustee and McKesson by way of final due diligence to ensure that all leases and contracts have been properly disposed of. The Trustee expects that this final review can be completed prior to the expiration of the current extension and out of an abundance of caution seeks the proposed extension. FRETTER: Court Approves Sale of Real Property --------------------------------------------- The Court authorized the sale of certain real property located in Westland, Michigan by Fretter, Inc. to RSJ, Inc. pursuant to its bid to purchase the property, which provides for a purchase without contingencies at a purchase price of $1,575,000. In the event the transaction between the debtor and RSJ fails to close for any reason, the debtor is automatically authorized without any further order of the court to consummate a transaction with Middlebelt Landing Associates, LLC (Middlebelt) in the highest amount bid by Middlebelt at the hearing or any higher amount. The expiration of the Cash Collateral Order has been extended through and including December 31, 1997. GAMETEK: Files for Chapter 11 Protection ----------------------------------------- GameTek, Inc. (OTC: GAME) announced today that it has filed a petition for reorganization under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court Middle District of North Carolina. The software developer indicated that continuing heavy losses, development delays and disappointing sales combined to force the Company to seek the protection of bankruptcy court. Mr. Robert L. Underwood, the Company's recently appointed Chief Financial Officer, stated: "We are hopeful that this filing will provide us with the ability to work out suitable arrangements with our creditors, while preserving our existing development operations and the value of our intellectual properties." GameTek is a developer and publisher of Interactive entertainment software for the Nintendo Ultra 64, Sony PlayStation/PSX, Sega Saturn and PC CD ROM platforms. The Company maintains offices in California and North Carolina. LEVITZ FURNITURE: Seeks Extension for Exclusivity ------------------------------------------------- The debtors, Levitz Furniture Incorporated, et al., are seeking an order extending the exclusive periods during which they may file plans of reorganization and solicit acceptances of such plans. A hearing will be held on December 15, 1997 with respect to the motion. The debtors claim that although they have made significant progress towards rehabilitation during the relatively brief time that these cases have been pending, the debtors believe that they will need at least an additional 180 days to complete and preliminarily test a long-term business plan and to develop, negotiate and propose a plan of reorganization based on such a business plan. The debtors claim that their cases are large and complex, that they have satisfied their working capital needs with a $260 million DIP facility, and that they have closed unprofitable stores. They state that the extension of the exclusive periods will enable the debtors to formulate a long term business plan, it will facilitate reorganization, and will not prejudice any party in interest. The debtors request that the court enter an order extending the plan proposal period through and including July 2, 1998 and the solicitation period through and including August 31, 1998. LOUISE'S TRATTORIA: Seeks to Assume and Cure Leases --------------------------------------------------- A hearing will be held on December 16, 1997 to consider the motion of Louise's Trattoria, Inc., debtor, to assume and assign certain of its unexpired non-residential real property leases, to the successful bidder at the court auction hearing scheduled for December 11, 1997. The court has approved bidding procedures for the auction, at which time much of the debtor's assets will be sold to the bidder that offers the highest value of assets to the debtor's estate, subject to a minimum bid of $4 million. The debtor asserts that assuming and assigning the non- residential real property leases to the successful bidder is in the best interests of the debtor's estate and its creditors and is a necessary component to the consummation of the sale. The debtor alleges that pursuant to the auction order, all of the existing defaults under the leases will be cured as part of the assumption and assignment of the non- residential real property leases to the successful bidder; and that the successful bidder will provide adequate assurance of future performance of the leases. MICRON SEPARATIONS: Settlement of 12-Year Patent Dispute -------------------------------------------------------- Pall Corporation and Micron Separation, Inc.(MSI) announced that they have reached a settlement of their twelve year patent dispute. The settlement provides for MSI's payment to Pall of $13.5 million. In 1986 Pall sued MSI for infringement of Pall's patent on nylon membranes. The settlement resolves all litigation between Pall and MSI, as well as certain litigation between Pall and an MSI distributor. The settlement also provides that Pall agrees not to sue MSI for alleged infringement of Pall's nylon membrane patents. Osmonics, Inc. also announced its agreement to acquire the shares of MSI contingent upon approval of the Bankruptcy Court. The settlement provides that MSI will be acquired by Osmonics, and in connection with the acquisition, Pall will be paid $13.5 million. The $13.5 million payment is in addition to approximately $6 million previously paid by MSI to Pall during 1996. Pall and MSI/Osmonics anticipate that the acquisition will be consummated within the first three months of 1998. MOLTEN METAL: A Company Under Investigation ------------------------------------------- Molten Metal Technology, which filed for Chapter 11 bankruptcy protection in Boston has been under investigation to determine whether its $62,500 contribution to the Democratic Party helped it win a $33 million federal contract expansion. Molten Metal Technology converts hazardous waste into reusable byproducts. The company was the focus of a hearing last month by the House Commerce investigative subcommittee on the company's contract with the Energy Department. The subcommittee also investigated whether the company's paid lobbyist Peter S. Knight, a former aide to Vice President Al Gore and manager of the 1996 Clinton-Gore re- election campaign improperly used his political connections to help Molten Metal get the expanded contract. Knight testified before the committee that the Energy Department official who approved the revised contract did not know about the contributions. Energy Department officials said they felt no political pressure to expand Molten Metal's contract to develop a hazardous-waste cleanup process. The investigatory panel did not draw any conclusions. Company spokeswoman Michele Perry said the investigation affected the company's ability to secure $20 million in tax-exempt financing for a plant in Oak Ridge, Tenn. "The reason they gave us for not wanting to proceed was the negative publicity really kind of spooked them," Perry said. The company has laid off about 150 of its approximately 400 employees in Massachusetts, Tennessee and Texas. More layoffs are expected, although the company said it's unclear how many people will lose their jobs. Gore visited the company's Fall River plant in 1995, declaring Molten Metal a success story. In the five years before his visit, sales had jumped from $4.7 million to $14.4 million. OLD AMERICA STORES: Seeks to Retain Investment Banker ----------------------------------------------------- A hearing will be held on December 11, 1997 on the application of Old America Stores, Inc., et al. for entry of an order authorizing the employment of Price Waterhouse LLP, as Investment Banker. For its investment banking services, Price Waterhouse is to be compensated with a monthly fee of $25,000 and a sale transaction fee payable at closing equal to $500,000 or $300,000 if the sale transaction involves certain companies identified in the Engagement Letter. The professional at price Waterhouse who will be principally responsible for providing investment banking services to the debtors will be John J. McKenna. Price Waterhouse received a retainer totaling $100,000. Price Waterhouse will assist in analyzing the valuation of the debtors, developing a general marketing and negotiating strategy for a sale transaction, identifying and contacting potential buyers, preparing a descriptive memorandum about the debtors, assisting the debtors in negotiating a sale transaction and such other advisory services as are agreed to by the parties. WESTERN PACIFIC: Receives Court Approval for Financing ------------------------------------------------------ Despite the numerous objections filed in response to the debtor's motion for DIP Financing, Western Pacific announced that it received approval from the United States Bankruptcy Court for the District of Colorado in Denver for "debtor in possession" ("DIP") and reorganization financing. The financing will be provided by New York-based Smith Management Company ("SMC") and will provide an initial DIP loan of $10 million on December 4, 1997 which will be used to pay a portion of the airline's post- petition aircraft lease obligations and to provide general working capital. The airline is also scheduled to receive up to an additional $20 million of DIP financing beginning December 20, 1997 to be used as general working capital. Without the loan, the Colorado-based discount carrier would have missed more than $6 million in lease payments on airliners and collapsed, throwing more than 1,300 employees out of work. WestPac Chief Executive Officer Robert Peiser and other employees packed the courtroom for Wednesday's 11-hour session, culminated by Bankruptcy Court Judge Sidney Brooks' late evening ruling. Pursuant to the DIP financing agreement approved by the Court, SMC could provide a further $10 to $20 million of funding which would be used as an exit facility financing to assist the airline with its emergence from Chapter 11. "With the support of the Official Unsecured Creditors' Committee and approval from the Court, we have now cleared a significant hurdle in our reorganization process," said President and Chief Executive Officer Robert A. Peiser. "More importantly, all interested parties are now focused on a single goal which is the ultimate success of Western Pacific Airlines." Dennis O'Dea, chairman of the Official Unsecured Creditors' Committee, and international aviation expert, Wake Smith said, "The Committee unequivocally supports the SMC financing, primarily because we have a great deal of confidence that this transaction will result in a reorganized airline with great potential." The deal gives Smith the final say-so on all business decisions the airline makes, and four spots on the seven- seat board of directors if the company kicks in $20 million more. WESTMORELAND COAL: Trustees of Fund Seek District Court ------------------------------------------------------- The Trustees of the United Mine Workers of America Combined Benefit funds seek withdrawal of the reference of the CBF/s motion to require the debtors in these cases to pay as administrative expenses, statutory premiums arising under the Coal Industry Retireee Health Benefit Act of 1992. The Trustees claim that withdrawal of the reference is mandatory because, resolution of the motion will require substantial and material consideration of the Coal Act and ERISA. According to the Trustees, Westmoreland attempts to reshape the issues by arguing that they do not require substantial and material consideration of the Coal Act or other non-bankruptcy law. They say, "this is a caricature of the issues raised by the Motion." They also state that withdrawal of the reference should be granted because it would expedite the orderly resolution of critical issues in the case by permitting the District Court to review those issues while also reviewing the parallel issues decided by the Bankruptcy Court in the 1992 plan's adversary proceeding. They claim that this would conserve the debtors' and creditors' resources, expedite completion of Westmoreland's bankruptcy and reduce confusion and the possibility of inconsistent results. The Trustees claim that they are not forum shopping, as alleged by Westmoreland, nor are they attempting to "game" the bankruptcy process. WILLIS LEASE: Record 3rd Quarter Revenues and Profits ----------------------------------------------------- Willis Lease Finance Corporation reported record third quarter revenues and profits from its leaasing of spare replacement aircraft engines and aircraft parts packages, sale of spare parts and the selective acquisition and resale of aircraft engines. Willis reported total revenues of $14.4 million for the third quarter of 1997 compared to $7.3 million for the third quarter of 1996. Third quarter net income more than tripled to $1.5 million compared to $.4 million in the third quarter a year ago. Third quarter operating income rose 200% to $2.4 million from $.8 million in last year's third quarter. Willis has leased three engines with a net book value of $8.7 million to Western Pacific. Willis has security deposits and prepaid rents totalling 2.8 times the combined monthly lease rate for these engines. If Western Pacific did not cure its defaults yesterday with Willis Will could have immediatley repossessed the engines. Now with the DIP financing in place, curing the outstanding defaults should be satisfied. "At this time we do not anticipate that the Western Pacific bankruptcy will have a material adverse affect on our financial condition," a spokesman for Willis said. Bond Pricing for Week of December 1, 1997 ----------------------------------------- The following are prices for selected issues: Alliance Entertainment 11 1/4 '05 4 - 7 (f) Amer Telecasting 0/14 1/2 '04 31 - 34 APS 11 7/8 '06 62 - 65 Bradlees 11 '02 5 - 6 (f) Bruno's 10 1/2 '05 40 - 42 CAI Wireless 12 1/4 '02 28 - 31 Cityscape 12 3/4 '04 64 - 66 Echo Bay 11 '27 83 - 86 Flagstar 11 1/4 '04 44 - 45 (f) Harrah's Jazz 14 1/4 '01 31 - 33 (f) Hechinger 9.45 '12 75 -77 Hills 12 1/2 '03 78 - 79 Grand Union 12 '04 51 - 52 Levitz 9 5/8 '03 30 - 32 (f) Liggett 11 1/2 '99 66 - 69 Marvel 0 '98 5 - 6 Mobilemedia 9 3/8 '07 14 - 16 (f) Mosler 11 '03 75 - 77 Royal Oak 11 '06 78 - 80 Speedy Muffler 10 7/8 '06 62 - 64 Stratosphere 14 1/4 '02 60 - 65 Trump Castle 11 3/4 '03 92 - 93 Wickes 11 5/8 '03 94 1/2 - 95 1/2 Cityscape, Levitz, and Speedy Muffler are drifted in 3 to 5 points this week. Bruno's recovered 3 to 4 points after a drop of 15 the previous week. Continued heavy volume reported in Cityscape bonds. We've added 2 casualties in the gold mining sector, Echo Bay and Royal Oak. Echo Bay bonds are only 8 months old. ------------- The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. 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 is $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *