/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/980105.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, January 5, 1998, Vol. 2, No. 2 Headlines ALLIANCE ENTERTAINMENT: Hearing to Employ Coopers & Lybrand ANCHOR RESOLUTION: Stipulation With Owens-Brockway Glass CHATCOM: The Asian Bug Takes a Bite EXCALIBUR FINANCIAL: Bank Objects to Wolff Ardis FLAGSTAR: Hardee's Slows Switch to Carl's Jr. in Southeast GUY F. ATKINSON: Interim Procedures Agreement KIA MOTOR: To Open 11 Ohio Dealerships KIWI AIR LINES: President Plans Visit for Loan Discussion LEVITZ FURNITURE: Looking to Hire Real Estate Consultants MOUNTAIN AIR: Got a Tailwind from Judge Matheson MONTGOMERY WARD: Counsel's Disclosure OLD AMERICA STORES: Asset Purchase Agreement ONEITA INDUSTRIES: Expecting to File Chapter 11 PETRIE RETAIL: To Sell Clothing Chain POCKET COMMUNICATIONS: Extension for Acceptance of Plan? POCKET COMMUNICATIONS: Response to NatTel's Emergency Motion Q-ENTERTAINMENT: Conversion to Chapter 7 R & D TRUCKING: 48-State Trucking Firm Closes SA TELECOMMUNICATIONS: Committee Objects to Break-Up Fee STRAWBERRIES: Rejection of Executory Contracts TAL WIRELESS: Motion to Sell Assets THAILAND AIR FORCE: Trading Chickens for Fighter Jets WEINER'S: Overstated Its Earnings WESTERN PACIFIC: Court Ok's Hiring Bader, Villanueva DLS CAPITAL: Bond prices for the Week of January 2 --------- ALLIANCE ENTERTAINMENT: Hearing to Employ Coopers & Lybrand ----------------------------------------------------------- On January 6, 1998 the debtors will seek an order authorizing the debtors, Alliance Entertaiment Corp. et al., to employ Coopers & Lybrand, LLP as tax accountants and auditors. ANCHOR RESOLUTION: Stipulation With Owens-Brockway Glass -------------------------------------------------------- Anchor Resolution Corp. and Anchor Recycling Corporation and Owens-Brockway Glass Container Inc. entered into a Stipulation. Originally, Owens-Brockway and certain of its affiliates filed five proofs of claim in Old Anchor's case. The parties have agreed that Old Anchor would pay to Owens- Brockway $2,000,000. Each of the Owens pre-petition claims shall be allowed Class 9 general unsecured claims for purposes of distribution under the plan and for all other purposes of the debtors' cases in the amount set forth in the Stipulation. CHATCOM: The Asian Bug Takes a Bite ----------------------------------- The Los Angeles Daily News reported on December 30, 1997 that the Asian bug has bitten ChatCom Inc., hard. On Monday, officials with the Chatsworth-based maker of file servers said in a prepared statement that a Singapore distributor is delinquent on a multimillion-dollar bill, the distributor doesn't have $1 million it planned to invest in ChatCom stock and that ChatCom "does not have sufficient working capital to meet all of its current obligations." In addition, ChatCom couldn't get an additional $600,000 from preferred stockholders because it didn't satisfy certain unspecified conditions. The company stock touched its 52-week low of 5/32 during trading on Monday, but recovered to close at 9/32 on volume of 233,800 shares, almost four times its 30-day average volume. Macon Holdings PTE Ltd., ChatCom's Singaporean distributor, blamed turmoil in Asia's economies and currencies when it failed to make its minimum $400,000 payment for products received. According to ChatCom's press release, Macon has given back $500,000 worth of equipment to ChatCom and an additional $2 million in equipment will be returned in the near future. While ChatCom expects to resell the returned goods, its revenues will show a "material reduction," and inventory levels will rise. Macon owes ChatCom $2.7 million in accounts receivable, of which $2.2 million is delinquent by more than 90 days. The Singaporean distributor also was expected to buy 666,666 shares of ChatCom's common stock for $1 million. ChatCom said it is working on getting additional financing and restructuring a "significant" portion of its trade debt with creditors. A shareholder already agreed to lend it $500,000 by year end. ChatCom made $2.4 million in revenues for the second quarter ended Sept. 30, up from $2.2 million a year ago. Net loss was $1.7 million (17 cents a share) vs. a loss of $1.2 million (14 cents) in 1996. For the first two quarters, revenues rose 40 percent to $6.9 million from 1996. Net loss was $2.27 million (23 cents) vs. a $2.5 million loss (31 cents). EXCALIBUR FINANCIAL: Bank Objects to Wolff Ardis PC --------------------------------------------------- Credit Suisse First Boston Mortgage Capital LLC ("the bank") has objected to the application of Excalibur Financial Services LP, PBC Servicing Corporation and Rapid Acceptance Corporation, debtors, requesting authorization to hire Wolff Ardis, PC as attorneys for the debtors. The bank believes that the court should deny the application because there has been no demonstrated legitimate benefit that would accrue to the debtors' estates fi the proposed state court litigation is commenced. According to the bank, there are virtually no parties in interest to these cases other than the debtors and the bank. The bank claims that this case represents an attempt to manipulate the Chapter 11 process to capitalize the expansion by Excalibur into the enormously risky business of investing in distressed real estate loans. To carry out this plan, Excalibur is attempting to deny the bank the right to sell or collect on retail automobile finance contracts that the bank purchased from Excalibur's prior business, and convert the bank's short-term investment in the Contracts into a long-term loan to Excalibur in its new role as a high-risk real estate investor. According to the bank, Excalibur continues to woe more than $35 million of repurchase obligations. The bank belieepves that Excalibur wants to coerce a loan of the bank's capital by obtaining a determination that the contracts are not owned by the bank, but rather are collateral for a secured loan by the bank to Excalibur, and that Excalibur wants a cramdown Chapter 11 plan over the bank's objection whereby the bank's matured one year and shorter "secured loans" are stretched for 5 to 7 years - longer than the life of the underlying contracts. The bank intends to fight Excalibur's "scheme" by obtaining a determination that the transactions under the Repurchase Agreement are purchases and sales. FLAGSTAR: Hardee's Slows Switch to Carl's Jr. in Southeast ---------------------------------------------------------- The Morning Star of Wilmington, North Carolina reported on January 1, 1998 that the new owners of Hardee's have delayed changing the name in the Southeast, where the restaurant has a strong customer base and where most of the chain's outlets are owned by franchisees. "We've shifted our focus," CKE spokesman Suzi Brown said of the company's earlier intent to convert Hardee's in Charleston, S.C. "We will convert at some point, but we have re-evaluated our focus and have decided that more of a contiguous expansion in the Midwest would make sense." Six months ago, California-based CKE Restaurants Inc. purchased Hardee's Food Systems Inc. for $327 million. When the purchase was announced, CKE said it planned to change Hardee's outlets into Carl's Jr. restaurants and incorporate a dual-brand menu, dropping all Hardee's items except its popular breakfast foods. CKE already has hung Carl's Jr. signs on 74 Hardee's restaurants in Peoria, Ill., and Oklahoma City. In Oklahoma City, where CKE converted 47 company-owned restaurants, November sales increased 19.6 percent over the same month last year, company officials said. CKE has not done any test-marketing of Carl's Jr. hamburgers in the Southeast, and franchisees want the company to go slowly. "We're cautious," said Bill Boddie, a partner in Rocky Mount-based Boddie Noell Enterprises Inc., the second- largest Hardee's franchisee, with 340 units. Hardee's franchisees banded in October, forming the first Independent Hardee's Franchisee Association, to protect their interests and build consensus. Meanwhile, CKE is buying more Hardee's restaurants. In the Southeast, CKE has its eye on the 550 Hardee's units owned by Flagstar Cos. The Spartanburg, S.C., company, the largest Hardee's franchisee, will emerge from bankruptcy next month. GUY F. ATKINSON: Interim Procedures Agreement -------------------------------------------- Guy F. Atkinson Company of California, Guy F. Atkinson Company and Guy F. Atkinson Holdings, Ltd., debtors, are seeking authority to enter into interim procedures agreement with The Clark Construction Group, Inc. A hearing is scheduled for January 9, 1998. The debtors are also asking the court to extend until March 31, 1998, the exclusive period in which the debtors can file a plan, provided that if the debtors fail to file a plan by January 30, 1998, or if the debtors file a plan which is not approved by one of its major creditor groups, the disapproving creditor could file its own plan. The debtors request that the court enter an order authorizing the collateral agreements, side letters and other understandings which are referred to in the Interim Procedures Agreement. By January 23, 1998, the debtors expect to have reached agreement with Clark and the Bonding companies on the detailed items referred to in the Interim Procedures Agreement. By January 23, the debtors expect that the major creditor groups will have agreed on the Financing Term Sheets and the essential features of a plan of reorganization based on the Clark Term Sheet. January 23 is also the date for hearing the debtors' motion for continued DIP financing and use of cash collateral for three months until the plan is confirmed. Clark would be engaged as an independent contractor to provide construction management services to the debtors. The agreement would terminate after one year, or upon confirmation of a plan of reorganization. "The going concern value of Atkinson is now a melting ice cube. The Bonding Companies have run out of patience and have now found a general contractor capable of taking over the debtors' bonded projects - with or without the cooperation of the debtors. The debtors are losing key personnel to competitors and the Banks' cash collateral alone is not sufficient to fund approximately $6 million needed for joint venture capital calls." KIA MOTOR: To Open 11 Ohio Dealerships -------------------------------------- Ohio dealerships will help pull the company out of its financial difficulties. The Kia Motor Corp., battered in recent months by slow sales and an uncertain national economy, is opening six dealerships in the Cleveland area and five others around the state this week. It is the second Korean auto maker to announce plans to enter the Cleveland market. On Dec. 19, Daewoo Motor Corp. said it will open a factory-direct store this summer in Cleveland. Kia is concentrating on the Midwest and other American markets because of slipping sales in South Korea and the weakness of the South Korean currency. In October, the South Korean government announced it was placing Kia under court receivership, assuming majority ownership through a state-controlled bank and installing a temporary new management team. Kia has more than 320 dealerships in 32 states. Ohio fits Kia's strategy of entering the U.S. market region by region, spokesman Geno Effler said. It already has dealerships in the West, the Southeast and along the East Coast. KIWI AIR LINES: President Plans Visit for Loan Discussion --------------------------------------------------------- The Buffalo News reported on December 31, 1997 that Kiwi International Air Lines president and chief executive officer Jerry Murphy will visit Niagara County in the first 10 days of January to discuss new terms for a county loan to the airline, Industrial Development Agency Executive Director John R. Simon said Tuesday. If all goes well, "we're hoping they could be in the air (to and from Niagara Falls International Airport) by March," Simon said. Murphy will suggest three possible meeting dates, Simon said, "and it'll be up to Gerry Meal to get the legislators together." Legislator Gerald E. Meal, R-Royalton, is chairman-designate of the County Legislature, effective Thursday. Simon said Meal would select three legislators from each party to meet with Murphy and IDA staff members. The main topic of discussion will be the guarantees or collateral to be demanded by the county for repayment of a $550,000 loan. Kiwi sought the loan to help pay costs connected with starting passenger airline service to Niagara Falls. The Legislature approved the loan in August but required a personal guarantee of repayment from a Kiwi executive or investor. Simon said Murphy agreed at the time that Dr. Charles C. Edwards, the Baltimore physician who is Kiwi's chairman, would make the guarantee. However, it turned out that Edwards had taken on too many other financial burdens in the process of bringing the airline out of Bankruptcy Court since last summer. Attention eventually shifted to Joseph Logan, president of Wasatch International, a company with a large investment in Kiwi. Apparently reluctant to guarantee the loan directly, Logan offered to put up $1.1 million worth of stocks he personally owns as collateral equal to twice the value of the loan. However, IDA officials were disappointed with the caliber of the stocks offered, with Legislator Robert R. Villani, R-Town of Niagara, an IDA board member, saying they were "not blue-chip." Any change away from a personal guarantee by a Kiwi executive would be subject to approval by the Legislature, since that was written specifically into its August resolution. Simon said the earliest that such a change could be approved, assuming that agreement is reached during the early January negotiating session, is the Jan. 20 meeting of the full Legislature. If that does occur, Simon said, a special meeting of the IDA board would be called to convey the actual loan, and Kiwi could be flying to Niagara Falls by March. Simon said the January meeting with Murphy will not touch on advance ticket sales or on the airline's request for in- kind marketing services. "They're not part of this discussion," Simon said. Ticket sales to local companies have been virtually non-existent, but Kiwi spokesman Robert B. Kulat said the airline has been talking with tour operators about package deals involving Niagara Falls excursions. He declined further comment on any matters pertaining to Niagara Falls air service. Simon said that "we don't know what discussions they may have had with tour operators. . . . We do know that local businesses are not enthusiastic about putting money in escrow (for tickets) without knowing schedules." The Niagara Falls Area Chamber of Commerce spearheaded an effort to sell books of 10 one-way fares from Niagara Falls to Newark, N.J., for $1,010 each. LEVITZ FURNITURE: Looking to Hire Real Estate Consultants --------------------------------------------------------- The debtors, Levitz Furniture Incorporated, et al., seek Judge Farnan's authority to employ Retail Consulting Services, Inc., as real estate consultants to the debtors. The debtors seek the services of the real estate consultants to provide services, among others, relating to the renegotiation of the debtors' various leaseholds. The debtors are lessees on approximately 80 potential going- forward stores. The ultimate determination as to whether the debtors will assume or reject the leases will depend, in part, upon whether they are able to obtain rent concessions or lease modifications. The debtors will pa a retainer of $35,000, and Retail Consulting will receive fees generally based on the savings Retail Consulting generates. MOUNTAIN AIR: Got a Tailwind from Judge Matheson ------------------------------------------------ As reported in the Denver Post on January 1, 1998, Mountain Air Express, a commuter airline based in Colorado Springs, got a much needed tailwind on Wednesday from U.S. Bankruptcy Court Judge Charles Matheson in Denver. Matheson's ruling, in effect, allows the airline to continue operating its fleet of four Dornier 328 turboprop airplanes. The judge also ruled that MAX, as the airline is called, hasn't lost the right to exercise an agreement to buy eight additional Dornier aircraft in the future. "The ruling is better than the alternative," said MAX President Tom McClain. Had Matheson not ruled in MAX's favor, the small airline could have wound up without a fleet. "We intend to grow our fleet to 12 aircraft by 2000," McClain said after the hearing, which resolved disputes that arose when MAX filed for Chapter 11 bankruptcy protection from creditors Nov. 6. MAX operates from a hub at Denver International Airport's A concourse. It flies to Colorado Springs, Kansas City, Tulsa, Oklahoma City and Aspen. Delays in receiving ticket revenues last fall left the company unable to pay its bills. The airline is majority-owned by Western Pacific Airlines, which filed for bankruptcy protection in October. As MAX's revenues began drying up last summer, the airline defaulted on rent payments owed to Dornier Aviation, owner of MAX's four turboprop planes. MAX made good on those payments only to default on a payment due in November. Dornier then notified the airline that the lease covering the planes had been broken and it demanded the return of the planes. The amount due Dornier was estimated at $721,000. Shortly after the demand was issued, MAX filed for bankruptcy protection. Attorneys for Dornier argued in court that as the lease had been invalidated before MAX filed its bankruptcy petition, the airline shouldn't be allowed to assume the lease in the future, even if MAX pays the overdue rent. Dornier also argued that MAX broke terms of a separate agreement - under which MAX eventually would buy eight or more Dornier aircraft - and that the airline shouldn't be allowed to exercise that agreement either. Matheson, however, said both agreements were still in effect when MAX declared bankruptcy. If MAX pays the overdue $721,000 by Jan. 5 and if it meets other requirements of the U.S. Bankruptcy Code, the airline may seek permission to assume the lease agreement, Matheson said. McClain said that could happen in March. Although the judge said MAX retains the right to seek court permission to assume the purchase agreement, he also said Dornier doesn't have to provide financing for the purchase of the planes. That means MAX will have to get financing elsewhere if it hopes to keep growing. "We feel pretty comfortable that acquiring those aircraft and getting them financed ourselves ... is a very do-able situation," McClain said. Susan Martineau, an attorney for Dornier, said the company is "comfortable with the judge's decision overall." MONTGOMERY WARD: Counsel's Disclosure ------------------------------------- Luskin, Stern & Eisler LLP disclosed that it is counsel to four Agent Banks, the First National Bank of Chicago, The Bank of Nova Scotia, New York Agency, The Bank of New York, and Bank of America, for a bank group consisting of the 31 banks and other institutional lenders. The Bank Group currently holds unsecured claims against Montgomery Ward Holding Corp., et al. in the amount of approximately $1.2 billion arising under certain short-term and long-term credit agreements, dated as of September 15, 1994, as amended. OLD AMERICA STORES: Asset Purchase Agreement -------------------------------------------- Old America Stores, Inc., Old America Wholesale, Inc., and Old America Store, Inc. as debtors seek court authority to enter into an asset purchase agreement for the sale of the debtors' retail business operations and related non-cash assets, or alternatively, an agency agreement to conduct store closing sales at all locations, and authorizing an auction and approving bidding procedures, including bid protections and a break-up fee. The debtors have agreed to enter into an asset purchase agreement with Robert E. Kirkland and/or his designee/assignee. Kirkland will at its election either assume the debtors' obligations to Bank Boston under the term loan and revolver or pay Bank Boston a sum sufficient to satisfy the debtors' obligations under the term loan and revolver not to exceed $11,660,000 and provide for the refinancing, repayment or other financial accommodation with respect to any amounts due tot National Bank of Canada. Kirkland will also assume subject to certain limitations, the debtors' outstanding post-petition trade payables and non-trade payables. Any competing offer must be in an amount that is not less than $750,000 higher than the Kirkland purchase price, with successive offers being made in additional increments of not less than $50,000. A break-up fee of $500,000 is proposed. ONEITA INDUSTRIES: Expecting to File Chapter 11 ----------------------------------------------- Oneita Industries said Wednesday it expects to file for Chapter 11 bankruptcy protection, following losses in the fourth quarter and fiscal 1997. The maker of sportswear and baby clothes reported a loss of $24.7 million, or $2.70 a share, for the fourth quarter ended Sept. 27, compared with a year-earlier loss of $19.7 million, or $2.56, as a result of continued low prices in the T-shirt market. Sales fell to $33 million from $34.7 million. For the full year, the company had a loss of $40.7 million, or $4.44 a share, compared with a fiscal 1996 loss of $53.7 million, or $7.58. Sales fell to $135 million from $168.35 million. PETRIE RETAIL: To Sell Clothing Chain -------------------------------------- Petrie Retail Inc. said it plans to sell its 420-store G&G/Rave chain by June 30 as part of its Chapter 11 bankruptcy proceedings. CIBC Oppenheimer will help Petrie find a buyer for the chain, which sells junior clothing. Petrie sought bankruptcy protection in October, 1995. POCKET COMMUNICATIONS: Extension for Acceptance of Plan? -------------------------------------------------------- On January 6, 1998 the court will hear the debtors' motion for an order further extending the debtors' exclusive right to obtain acceptances. POCKET COMMUNICATIONS: Response to NatTel's Emergency Motion ------------------------------------------------------------ Pocket Communications, Inc. and DCR PCS, Inc. made a preliminary response to the emergency motion of National Telecom for partial relief from the Automatic Stay. The debtors claim that the "Emergency Motion is nothing more than a further unwarranted attempt by NatTel to disrupt these proceedings and harass the debtors." Pocket states that NatTel is incorrect when it advises the court that the debtors have no equity in the licenses for the benefit of the estates. The debtors state that when they exercise their election under the FCC restructuring options, they will be able to create millions of dollars of equity in the licenses for the benefit of the estates. They also state that NatTel is equally incorrect when it states that there is no possible reorganization in this case, since, curiously, NatTel itself proposes to present its own reorganization plan. Finally, as to NatTel's claim that cause exists for relief from the stay so that it can elevate its status to that of secured creditor, the debtor states that such assertion is both factually and legally without merit. Therefore, the debtor requests that the motion of NatTel be denied. Q-ENTERTAINMENT: Conversion to Chapter 7 ---------------------------------------- On December 29, 1997 the cases listed have all been converted to a case under Chapter 7 of the United States Bankruptcy Code: Q-Entertainment Inc., f/k/a Q-Zar, Inc., Q-Networks, Inc. f/k/a Q-Zar West, Inc., Q-West LLC, Q-Zar USA, INC., f/k/a MWBC, Inc., Q-Zar Franchising, Inc. and Terrier Holdings, Inc. Scott Seidel has been appointed Chapter 7 trustee in the cases. Any party objecting to the conversion has twelve days from December 29, 1997 to logde their objection with the Court. R & D TRUCKING: 48-State Trucking Firm Closes --------------------------------------------- The Commercial Appeal of Memphis, Tennessee reported on January 1, 1998 that R & D Trucking closed when it was unable to satisfy its creditors in bankruptcy court on Wednesday and laid off nearly 230 employees nationwide. The long-haul carrier, which operated in 48 states, including Mississippi, had 178 non-union drivers and 50 support employees, most of whom worked at its Florence headquarters and a facility in Courtland. Assistant personnel director Bobbie Sue Curtis said R & D had been unable to work out an agreement with creditors since filing for reorganization under bankruptcy laws in June. "They're still going to make an attempt to reorganize, but at this point the best thing to do is just shut down," she said. "We are trying to help our drivers and employees find work elsewhere." Financial data on the privately owned company was not immediately available from the bankruptcy court office in Decatur. The company sought protection from several hundred creditors. A memo distributed to employees blamed financial conditions and the Chapter 11 bankruptcy for the decision to close. The letter advised workers to contact the state unemployment office in Sheffield for benefits. Workers will not receive severance pay or compensation for remaining vacation time. The drivers earned between 25 cents and 30 cents per mile, and office personnel had a base pay of $6 an hour. SA TELECOMMUNICATIONS: Committee Objects to Break-Up Fee -------------------------------------------------------- The Official Committeee of Unsecured Creditors of SA Telecommunications, Inc., filed an objection to the breakup fee and overbid provisions and an overadvance facility under the post-petition lending facility. According to the Committee, the debtors believe that the sole viable alternative available to the debtors is the immediate sale of the debtors' assets. The Committee believes that further due diligence is necessary to determine whether alternatives to this strategy are available. The Committee believes that a $750,000 overbid is excessive, and that Equalnet should not receive the $500,000 break-up fee if a reorganization of the debtors without a sale is accomplished. At this stage of the case, the Committee believes it is premature for the court to determine whether a sale of the assets of the debtor should be permitted, or whether a reorganization of the debtors, or other alternatives be allowed to be pursued to produce a greater recovery for creditors. STRAWBERRIES: Rejection of Executory Contracts ---------------------------------------------- Milford Resolution, Inc. f/k/a Strawberries Inc., and Strawberries Holding Inc., debtors are seeking court approval to reject certain executory contracts and to fix the last date for filing proofs of claim for any alleged damages arising form or relating to the debtors' rejection of such executory contracts. The debtors are still party to at least 56 non-real estate related executory contracts after the sale to Record Town of substantially all of Strawberries' assets. The debtors have determined that rejection of the executory contracts is in the best interests of their creditors and estates. The debtors request that this court fix a date thirty days after service of a notice of entry of the rejection order as the date on or by which proofs of rejection claims must be filed. The debtors expect to file their joint liquidating plan of reorganization in early 1998. TAL WIRELESS: Motion to Sell Assets ----------------------------------- Tal Wireless Networks, Inc., debtor has filed a motion to sell assets. The debtor is a publicly traded company that merged with American Phoenix Group, Inc. in November, 1996. In July, 1997 the debtor shut down its operations. As a result of the shut down of the debtor's operations, the debtor still has in its possession miscellaneous parts and inventory. The debtor entered into an agreement with Wireless Networks, inc. to sell these assets. The consideration is $4,000. and $25 per unit for the first 1,000 units which incorporates any of the assets purchased from the debtor. The debtor also grants to Wireless Networks, Inc. any of the intellectual property rights it has in the Wirelss Router. THAILAND AIR FORCE: Trading Chickens for Fighter Jets ----------------------------------------------------- The Financial Times reports that the Thai Air Force owes Boeing $392 million for eight F/A-18 strike aircraft. Strapped for cash because tax revenues have fallen sharply, the Thai Government thought about backing out of the deal with Boeing, but the termination fee was $250 million. The Thai Government obtained extended payment terms for $300 million of the debt by negotiating a financing package with Boeing which matures in 2003. The $90 million balance will be paid through a counter-trade deal "whereby Boeing will take delivery of Thai commodities such as rubber, frozen chicken and canned fruit in lieu of cash," the FT reported. WEINER'S: Overstated Its Earnings --------------------------------- The Houston Chronicle reported on January 1, 1998 that Weiner's Stores announced this week that it overstated its third- quarter earnings. Weiner's said it actually earned $15.8 million during the quarter ended Oct. 25. Last month, Weiner's reported that it earned $31.7 million during the third quarter. Auditors found that the chain of clothing stores had inadvertently put $15.9 million of "fresh start adjustment" onto its books as income, said chief financial officer Ray Miller. A fresh start adjustment is an accounting technique that is used by companies to report their financial results after coming out of a bankruptcy reorganization and typically refers to the amount of debt that has been dismissed as a result of the bankruptcy. Weiner's, which owns 128 stores in Texas and Southwest Louisiana, emerged from Chapter 11 bankruptcy in August. It filed for bankruptcy in 1995 after facing several seasons of harsh competition from discounters and a lot of debt. While Weiner's is not a publicly traded company, it has issued stock to all of its debt holders in its Chapter 11 bankruptcy. The company used to have just two shareholders; now it has more than 500, Miller said. The revision that was announced this week will have no effect on the balance sheet or the operating results, Miller said. Weiner's would like to become a public company and hopes to trade on the stock market this spring. WESTERN PACIFIC: Court Ok's Hiring Bader, Villanueva ---------------------------------------------------- United States Bankruptcy Judge Sidney Brooks entered an order authorizing the employment of Bader, Villanueva & Feder, PC as special counsel to the debtor. DLS CAPITAL: Bond prices for the Week of January 2 -------------------------------------------------- The following are indicated prices for last week's selected issues: Alliance Entertainment 11 1/4 '05 4 - 6 (f) Amer Telecasting 0/14 1/2 '04 25 - 29 APS 11 7/8 '06 52 - 54 Bradlees 11 '02 5 - 6 (f) Bruno's 10 1/2 35 - 36 CAI Wireless 12 1/4 '02 26 - 28 Cityscape 12 3/4 '04 44 - 45 Echo Bay 11 '27 80 - 84 Flagstar 11 1/4 '04 38 - 40 (f) Harrah's Jazz 14 1/4 '01 30 - 32 (f) Hechinger 9.45 '12 73 - 75 Hill's 12 1/2 '03 79 - 80 Grand Union 12 '04 53 - 54 Levitz 9 5/8 '03 34 - 36 (f) Liggett 11 1'99 66 - 69 Marvel 0 '98 4 - 5 Mobilmedia 9 3/8 '07 8 - 11 (f) Mosler 11 '03 76 - 78 Royal Oak 11 '06 71 - 75 Speedy Muffler 10 7/8 '06 63 - 65 Stratosphere 14 1/4 '02 52 - 58 (f) Trump Castle 11 3/4 '03 92 1/2 - 93 1/2 Wickes 11 5/8 '03 93 - 94 Best wishes for a successful 1998. --------- 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 1998. 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 * * *