/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/971209.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, December 9, 1997, Vol. 1, No. 75 Headlines BARNEY'S, INC.: DFS Group Expected to Top Dickson Bid BRADLEES, INC.: Thomas Smith Hired as New Senior VP, Stores BRADLEES, INC.: New BankBoston-Led DIP Facility Lined-Up CAJUN ELECTRIC: Judge Orders Briefs Pared Down CAJUN ELECTRIC: Enron Forges Multi-Constituency Agreement CONDERE CORPORATION: Sid Richardson Opposes Amended Plan CONDERE CORPORATION: Competitive Plan Proponent Emerges EAGLE INDUSTRIES: October Operating Results HALLA GROUP: South Korea Conglomerate Bankrupt JAY JACOBS: Recapitalization Completed LEVITZ FURNITURE: Proposed Sale of John M. Smythe Unit MANHATTAN BAGEL: Cash Collateral Use through 01/16/98 MARVEL ENTERTAINMENT: Committee Urges Examiner Appointment MIDCON OFFSHORE: Assets Sold for $31.3 Million to Basin NEW SEABURY: Cash Collateral Use through 11/30/97 PARTIES ON FIFTH: Bar Date Set for December 29, 1997 RDM SPORTS: Selling RDM Sports and Fitness Assets WESTERN PACIFIC: Boullioun Appeals Smith Financing Pact Meetings, Conferences and Seminars --------- BARNEY'S, INC.: DFS Group Expected to Top Dickson Bid ----------------------------------------------------- Myron E. Ullman, III, CEO for DFS Group Ltd., told select newspapers Saturday that DFS would be "a good partner" for Barney's. DFS is expected to interject a bid into Barney's chapter 11 cases before January 20, 1998, topping Dickson Concept's current $322 million bid. If a competitive bid is accepted by Barney's, upsetting Dickson's bid, Dickson will be entitled to an $8 million break-up fee. Mr. Ullman worked closely with Thomas Shull, Barney's new CEO, during the R.H. Macy chapter 11 cases. BRADLEES, INC.: Thomas Smith Hired as New Senior VP, Stores ----------------------------------------------------------- Bradlees, Inc. announced the appointment of Thomas N. Smith to the position of Senior Vice President, Stores. Mr. Smith, with more than 17 years of store operations experience with Wal-Mart, Home Depot and Fry's Electronics, will report to Peter Thorner, Chairman and CEO. Prior to joining Bradlees, Mr. Smith was Director of Operations & Merchandising for Fry's Electronics, helping lay the operational and merchandising foundation supporting Fry's 40% annual growth rate through acquisitions and the opening of new stores. "Tom Smith is an outstanding addition to our senior management team. He brings to Bradlees an extensive retail industry operations background and will play a key role in our ongoing effort to inculcate a true sense of customer service and efficient operations as we strengthen and reposition Bradlees for the future," Mr. Thorner commented. BRADLEES, INC.: New BankBoston-led DIP Facility Lined-Up -------------------------------------------------------- Bradlees, Inc., tells the New York Bankruptcy Court they successfully negotiated a New DIP Financing Facility led by BankBoston, N.A. and BankBoston Retail Finance, Inc., which is superior to their existing DIP Facility with Chase Manhattan Bank. The New DIP Facility, the Debtors explain, provides for DIP Financing by BankBoston to Bradlees Stores, Inc., which, upon the satisfaction of certain conditions, is convertible by replacement into Exit Financing. As previously reported, Bradlees sought out a new DIP Lenders in order to increase availability to 65% of Eligible Inventory on which borrowing is based. The Debtors indicate that they want the New DIP Facility to be in place before January 2, 1997, and preferably before Christmas, to facilitate placing orders for the spring selling season. Under the DIP Agreement, BankBoston will provide Stores with a revolving line of credit permitting borrowings, and the issuance of letters of credit, in a total principal (or face) amount of up to $250 million in the aggregate, which will enable the Debtors to: (i) retire the debt outstanding under the Existing Facility with Chase and (ii) finance ongoing, necessary operating expenses. The Debtors believe that the New DIP Facility will enable Bradlees to keep its stores well-stocked and also give assurance to vendors that Bradlees has the ability to timely pay for orders of new merchandise. The new DIP Agreement will provide the Debtors with greater availability (by virtue of higher advance rates), and hence, liquidity, for lesser fees, and for a longer term, than is currently provided under the Existing Facility, and has the added virtue of being accompanied by a commitment (upon the satisfaction of certain conditions) for Exit Financing. The Debtors advise the Court that they solicited several prospective lenders, including BankBoston, to provide financing on terms more favorable than is currently available under the Existing Facility. In addition, the Debtors requested that prospective debtor-in-possession lenders commit to provide an exit facility. In evaluating four bids submitted by the Prospective lenders, the Debtors explain they were guided by three principal considerations: (i) increasing their availability and liquidity, (ii) lowering financing costs, and (iii) obtaining reasonable financial covenants. On balance, the Debtors say, BankBoston's bid was most favorable since it provided the greatest availability, at competitive costs, and with acceptable financial covenants. The Debtors consequently accepted BankBoston's bid. CAJUN ELECTRIC: Judge Orders Briefs Pared Down ---------------------------------------------- Frustrated with the flood of papers (and professional fees) relating to the competing bids for Cajun Ejectric's business, U.S. District Judge Frank Polozola chastised a courtroom full of lawyers at a recent hearing and ordered that the parties pare down their briefs. Judge Polozola compared the lawyers' conduct to the dozens of lawyers who swarmed over Bogalusa after a chemical spill there in 1995, saying, "It's just a little more dignified here, maybe, but equally disgusting." Judge Polozola pointed to a desk with five boxes of records submitted to him for an upcoming hearing, and said that lawyers were churning out briefs without concern for whether the the Court could make sense of them. "I have never seen such an unreasonable amount of material submitted to a judge," Polozola said. "It's got to stop." CAJUN ELECTRIC: Enron Forges Multi-Constituency Agreement --------------------------------------------------------- Enron Capital & Trade Resources Corp. (ECT), a subsidiary of Enron Corp. (NYSE: ENE), announced yesterday that it has reached a conditional agreement with the largest secured creditor of Cajun Electric Power Cooperative (Cajun), the Rural Utilities Service (RUS), an agency of the U.S. Department of Agriculture. ECT and the RUS have agreed on the purchase price to be paid by ECT for Cajun's generation assets in the event that the joint reorganization plan of ECT and the Official Committee of Unsecured Creditors of Cajun is confirmed by the bankruptcy court. "This agreement with the RUS and the new rate plan demonstrate the flexibility of the Enron plan, which we hope will lead to settlement of [Cajun's] costly bankruptcy," said Kenneth D. Rice, chairman and CEO of ECT-North America. "Enron is able to deliver superior value to Cajun's creditors while at the same time offering Louisiana consumers the lowest possible rates." Enron is one of three active bidders for Cajun Electric. Each bidder has filed a competing plan of reorganization. CONDERE CORPORATION: Sid Richardson Opposes Amended Plan -------------------------------------------------------- Sid Richardson Carbon Company criticizes the Debtor's First Amended Plan and complains that the Debtor's First Amended Disclosure Statement provides no better disclosure than the previous disclosure document. The Amended Plan, Richardson complains, provides creditors with less than they would receive in a liquidation. The Plan, Richardson charges, amounts to management's attempt to deceive creditors and smacks of bad faith, especially in light of the proposed issuance of non-voting securities in contravention of 11 U.S.C. Sec. 1123(a)(6). Additionally, the Plan's creation of three separate classes of convenience claims is nothing more than an improper attempt to gerrymander voting. Richardson implores the Bankruptcy Court to halt management's charade by refusing to approve the First Amended Disclosure Statement and, thus, derailing the confirmation process. CONDERE CORPORATION: Competitive Plan Proponent Emerges ------------------------------------------------------- The Official Committee of Unsecured Creditors of Condere Corporation has requested that the Bankruptcy Court approve a $150,000 payment by the Debtor to Pensler Capital Corporation as reimbursement for costs Pensler may incur in formulating a firm purchase offer for the assets of Condere and the preparation of a plan of reorganization to implement that purchase. The Committee indicates that Pensler has provided the Committee with a conditional term sheet and, from what the Committee sees, it likes Pensler's offer. Fleet Capital Corporation, the Debtor's secured lender, says that it would like to see Pensler's conditional term sheet, but whether or not Fleet gets a copy, the payment requested by the Committee pursuant to 11 U.S.C. Sec. 503(b)(3) is misplaced. Pensler is not a "creditor" of the Debtor's estate, nor has Pensler yet made any "substantial contribution" to the Debtor's case. A promise of future action is insufficient, Fleet argues, to permit payment at this time. Fleet questions, even if Pensler were to take future action whether that action would, in fact, constitute a contribution to the Debtor's case or merely reflect Pensler's furtherance of its own interests. The Committee's Motion, Fleet argues, is premature at best. EAGLE INDUSTRIES: October Operating Results ------------------------------------------- Eagle Industries, Inc., reports in its Monthly Operating Report for the period ending October 25, 1997, a net loss of $85,727 on gross receipts of $745,501. Year-to-date, Eagle has posted a $7,781 net loss on gross receipts of $10,231,843. HALLA GROUP: South Korea Conglomerate Bankrupt ---------------------------------------------- Halla Group, South Korea's 12th-largest conglomerate and best known for its shipbuilding and auto parts manufacturing, was declared bankrupt Saturday after defaulting on $220 million in debts. Halla is the sixth among the country's top 30 conglomerates to topple this year. "Halla could obtain no more funds because banks refused to provide new loans and began calling in the loans they had already provided," Park Sung-suk, vice chairman of Halla Group, told the Associated Press. Halla reportedly planned to file for court receivership for its flagship Halla Engineering and Heavy Industries Co., South Korea's third-largest shipyard. Three other main subsidiaries, Mando Machinery Corp., South Korea's largest auto-parts manufacturer, and Halla Cement Manufacturing Corp. and Halla Engineering Construction Corp., will seek court mediation, allowing those three entities to discuss rescheduling debt payments with creditors. Halla's 11 other affiliates will be liquidated, according to reports published by the AP and AFP. In total, the conglomerate is estimated to owe $6.4 billion, or 20 times the total value of its equity, according to Associated Press reports. Debts began accumulating when Halla began building a multibillion-dollar shipyard on the southwest coast in 1992. Its troubles came to a head when Southeast Asian financial turmoil hit South Korea, sending interest rates higher and making already debt-ridden South Korean banks reluctant to lend. This month, saying it was badly strapped for cash, Halla announced it would lay off half of its 6,000 workers. Hyundai, the nation's largest conglomerate in terms of assets and the second largest in terms of sales, according to AP reports, provided an unspecified amount of funds to keep Halla afloat in the past months. Halla's chairman is the younger brother of Chung Ju-yung, founder of Hyundai. But on Saturday, Hyundai said it will no longer try to bail out Halla. Analysts speculate that Halla Group just one in a series of major bankruptcies expected under the strict rules implemented by the International Monetary Fund in connection with its $60 billion bailout package for South Korea. JAY JACOBS: Recapitalization Completed -------------------------------------- Jay Jacobs, Inc. (BB:JAYJ) announced that it closed the financing transaction led by Cahill, Warnock & Company, LLC and its affiliates, for a recapitalization of the company. he investment group including Cahill, T. Rowe Price Recovery Fund II, L.P., and Michael D. Sullivan, former CEO of Merry- Go-Round Enterprises, Inc., has provided equity financing in the amount of $ 7,100,000. The recapitalization of the company provides for the following elements: * Issuance of $4,600,000 of Series A Preferred Stock and $2,500,000 of Series B Preferred Stock, which will rank senior to all classes of Preferred and Common Stock of Jay Jacobs, Inc. The Series B Preferred Stock is convertible into Common Stock representing 86.25% of the Common Stock outstanding following conversion of the Series B Preferred Stock. * The payment of $1,500,000 in cash and the issuance of $1,000,000 of the company's common stock as payments in full for the approximately $2,500,000 owed to pre- bankruptcy creditors. The bankruptcy court approved this modification to the company's plan of reorganization on December 1, 1997. The new Board of Directors will include: * Rex Steffey, CEO and President of Jay Jacobs; * William L. Lawrence Jr., Executive VP & CFO; * Ed Cahill, principal of Cahill; * Kim Golden, Managing Director of T. Rowe Price Recovery Fund II, L.P.; and * Michael D. Sullivan. "We are very pleased to have these investors as equity partners in the company," said Rex Steffey, President and CEO. "This transaction dramatically improves the balance sheet and puts us on solid footing for new store expansion and increased working capital for existing operations." LEVITZ FURNITURE: Proposed Sale of John M. Smythe Unit ------------------------------------------------------ Levitz Furniture Corporation tells the Delaware bankruptcy court that Heilig-Meyers Company has offered to pay $35 million in cash (and assume certain liabilities) for substantially all of the assets of John M. Smythe Company. The Debtors relate that the sale of the Smythe Assets is consistent with their plan to maximize the value of these estates by identifying and selling particular stores and regions that are underperforming. To be certain that the Debtors are obtaining the highest and best price for the Smythe Assets, the Debtors and Heilig- Meyers have agreed to submit Heilig-Meyers' offer to a competitive bidding process. The Debtors propose that the Court authorize their counsel to conduct an Auction on January 5, 1998 at Skadden Arps' New York offices. To participate in the Auction, the Debtors request that Potential Bidders be required to deliver their competitive bids (accompanied by audited financial statements demonstrating financial capability to complete the sale) by December 30, 1997, together with a refundable $2 million Bid Deposit. The Debtors further request that the Court (a) require a minimum overbid of $800,000 from any competitive bidder, (b) approve minimum bidding increments of $100,000 at the Auction, and (c) authorize the payment of a $350,000 Break-Up Fee in the event Heilig-Meyer's offer is upset. MANHATTAN BAGEL: Cash Collateral Use through 01/16/98 ----------------------------------------------------- With First Union's consent, Judge Gindin granted Manhattan Bagel Company, Inc., continued authority to use First Union's cash collateral, securing approximately $7 million of pre-petition borrowings, through January 16, 1998, at a hearing yesterday afternoon. The parties agreed to cut-off investigation of documentation-related issues concerning the validity, extent and priority of First Union's pre-petition claims. Issues related to the Committee's ability to investigate lender liability or other causes of action will be revisited at a hearing scheduled for December 16, 1997. MARVEL ENTERTAINMENT: Committee Urges Examiner Appointment ---------------------------------------------------------- The appointment of a trustee in a chapter 11 cases is an extraordinary remedy, the Official Committee of Unsecured Creditors of the Marvel Group says, and is not supported in these cases by clear and convincing evidence, the Committee says in opposition to the pending motion for appointment of a trustee. While Ichan and Perelman battle in District Court over control of Marvel's fate, the last thing the business needs, the Committee indicates, is a wholesale replacement of management. As an alternative to a trustee, the Committee suggests that the Court appoint an examiner to investigate the merits of the Trustee Motion and the District Court Litigation and report back to the Court within 30 to 60 days. These cases "call[] out for the appointment of an independent person with no ecomonic stake in the case[s] to conduct an investigation of certain significant matters and report back to the Court," the Committee argues. These cases have reached an impasse between Ichan's interests and the interests of Perelman, the Banks and Toy Biz; they need an independent person to protect other parties-in-interest, and an examiner would fill that role. MIDCON OFFSHORE: Assets Sold for $31.3 Million to Basin ------------------------------------------------------- Basin Exploration, Inc. (Nasdaq: BSNX) announced that it completed the closing of the previously announced acquisition of assets from the chapter 11 bankruptcy trustee for Midcon Offshore, Inc. Basin Exploration was the high bidder for Midcon's assets, paying $31.3 million. NEW SEABURY: Cash Collateral Use through 11/30/97 ------------------------------------------------- New Seabury Company Limited Partnership asks the Court to approve a Fifth Stipulation for continued use of Textron Financial Corporation's pre-petition cash collateral, securing approximately $8.4 million of pre-petition borrowings, through November 30, 1997. New Seabury is a limited partnership which owns and operates a 2,000 acre planned resort community on Nantucket Sound in Mashpee, Massachusetts. PARTIES ON FIFTH: Bar Date Set for December 29, 1997 ---------------------------------------------------- The Trustee overseeing the liquidation of Parties on Fifth, Inc., Bankruptcy Case No. 95 B 41106 (JHG), has published notice that all proofs of claim against the Debtor's estate must be filed on or before December 29, 1997. Contact David M. Pollack, Esq., at 212-736-3636. RDM SPORTS: Selling RDM Sports and Fitness Assets ------------------------------------------------- RDM Sports has asked the Bankruptcy Court for authority to sell substantially all of the assets of its Canadian operation, RDM Sports and Leisure Inc., to Maurice Pincoffs Company Inc. for $1.7 million. RDM believes this sale to be an "integral part of the Debtors' liquidation of non- essential assets and is a result of the Debtors' efforts to realize the maximum possible value for such assets." WESTERN PACIFIC: Boullioun Appeals Smith Financing Pact ------------------------------------------------------- Boullioun Aircraft Holding Co., a lessor of three 737 jets to WestPac, filed notice of its intention to appeal Judge Brooks' order approving the DIP Financing package underwritten by Smith Management. Boullioun asserts that Smith's lending terms are improper because they give Smith the right to direct WestPac to assign aircraft leases to other parties under certain circumstances. Boullioun says that its consent must be obtained if an aircraft lease is to be assigned by a third- party and the Smith pact deprives Boullioun of that important right. Meetings, Conferences and Seminars ---------------------------------- DECEMBER 10-11, 1997 INSTITUTE FOR INVESTMENT RESEARCH Investment Opportunities in Workouts & Turnarounds Downtown Conference Center, New York, New York Contact 1-212-661-3500 December 11-13, 1997 AMERICAN LAW INSTITUTE--AMERICAN BAR ASSOCIATION 9th Annual Advanced Court of Study, The Emerged and Emerging New Uniform Commerical Code Sheraton New York Hotel, New York, New York Contact 1-800-CLE-NEWS, ext. 1630 December 15-16, 1997 PRACTISING LAW INSTITUTE Basics of Bankruptcy and Reorganization PLI Conference Center, New York, New York Contact 1-800-260-4PLI or http://www.pli.edu January 29-February 1, 1998 COMMERCIAL LAW LEAGUE OF AMERICA 37th Southern District Annual Meeting Plaza San Antonio, San Antonio, Texas Contact 1-972-285-0391 February 5-7, 1998 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800 February 19-22, 1998 COMMERICAL LAW LEAGUE OF AMERICA Annual Western District Meeting Universal City Hilton Hotel Los Angeles, California Contact 1-310-470-8487 February 22-25, 1998 NORTON INSTITUTES ON BANKRUPTCY LAW 12th Annual Norton Bankruptcy Litigation Institute I Olympia Park Hotel, Park City, Utah Contact 1-770-535-7722 March 19-20, 1998 TURNAROUND MANAGEMENT ASSOCIATION Spring Leadership Meeting Hotel del Coronado, San Diego, California Contact 1-312-857-7734 March 20, 1998 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza Hotel, Los Angeles, California Contact: 1-703-739-0800 March 26-29, 1998 NORTON INSTITUTES ON BANKRUPTCY LAW 10th Annual Norton Bankruptcy Litigation Institute II Flamingo Hilton, Las Vegas, Nevada Contact 1-770-535-7722 April 30-May 3, 1998 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 May 22-25, 1998 COMMERICAL LAW LEAGUE OF AMERICA 50th New England District Annual Meeting Ocean Edge Resort & Golf Club, Cape Cod, Massachusetts Contact 1-617-720-1355 June 8-9, 1998 TURNAROUND MANAGEMENT ASSOCIATION Advanced Education Workshop & Legislative Conference Radisson Plaza, Charlotte, North Carolina Contact 1-312-857-7734 June 11-14, 1998 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 July 2-5, 1998 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact 1-770-535-7722 July 16-19, 1998 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Sea Crest Resort, Falmouth, Massachusetts Contact: 1-703-739-0800 August 6-9-1998 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Daufuskie Island Club & Resort, Hilton Head, South Carolina Contact: 1-703-739-0800 September 9-13, 1998 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Annual Convention Sheraton El Conquistador, Tuscon, Arizona Contact: 1-803-252-5646 September 17-20, 1998 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference The Inn at Loretta, Santa Fe, New Mexico Contact: 1-703-739-0800 October 16-20, 1998 TURNAROUND MANAGEMENT ASSOCIATION 1998 Annual Conference The Westin Hotel, Chicago, Illinois Contact 1-312-857-7734 December 3-5, 1998 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin La Paloma, Tucson, Arizona Contact: 1-703-739-0800 The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. --------- A list of meetings, conferences and seminars 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 * * *