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/raid1/www/Hosts/bankrupt/TCR_Public/980206.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 6, 1998, Vol. 2, No. 26 Headlines APRIA HEALTHCARE: Investor Group Buying 26 Percent of Apria BRADLEES: Bid Procedures for Hempstead Property Okayed COLOR TILE: Exclusivity Extended to July 13 ELDER-BEERMAN: Stores Report Comparable Sales Up 14.0% EVANSVILLE BREWING: Deal for Beer Trademarks FRETTER: Seeks Extension of Exclusive Periods GRANT GEOPHYSICAL: S&P Rates Grant's Senior Notes 'B' GREATE BAY: Court approves Severance and Retention Policy INPHOMATION COMMUNICATION: Psychic Friends File Bankruptcy KEENE: Successor Company Earns $0.82 Per Share in 1997 KIWI AIR: Cuts Some Daily Flights from Atlanta LEVITZ: Seeks Time to Assume or Reject Leases MARVEL: LaSalle Objects to Toy Biz Disclosure Statement MOLTEN METAL: Asks to Sell Property and Hire Auctioneer MONTGOMERY WARD: Hearings on Owned and Leased Properties PARAGON TRADE: Liquidity Fund Approved PROCTOR & GAMBLE: Vietnam Unit Faces Bankruptcy SA TELECOMMUNICATIONS: WorldCom Objects to Sale THE WEATHERVANE: Files for Reorganization WESTERN PACIFIC: Bankrupt Airline to Shut Down DLS CAPITAL: Bond Pricing for Week of February 2, 1998 ******* APRIA HEALTHCARE: Investor Group Buying 26 Percent of Apria ----------------------------------------------------------- An investor group led by a turnaround specialist will try to revive struggling Apria Healthcare Group Inc. in a $242 million restructuring deal. Joseph Littlejohn & Levy and its partner in the deal, CIBC WG Argossy Merchant Fund 2, will acquire a 26 percent stake in Apria in return for financing $172.2 million of Apria's $242 million plan to buy back 33 percent of its own stock at $14 per share. BRADLEES: Bid Procedures for Hempstead Property Okayed ------------------------------------------------------- Federal Filings reports on February 4, 1998 that Bradlees and its New Horizons of Westbury Inc. subsidiary won approval of bidding procedures for the proposed sale of real estate in Hempstead, N.Y., for about $7.8 million. The court approved the bidding procedures proposed by Bradlees in a Jan. 23 motion, and authorized the payment of a $50,000 breakup fee to RM Westbury if a third party ultimately purchases the property. A hearing on the sale is set for Feb. 24. COLOR TILE: Exclusivity Extended to July 13 ------------------------------------------- Federal Filings reports on February 4, 1998 that the court extended Color Tile's exclusive periods to file a reorganization plan and solicit plan acceptances to July 13, 1998 and September 12, 1998 respectively. Color Tile sought the 180-day extension to allow the Creditors' Committee to continue its investigation into potential claims and causes of action against prepetition transferees and other third parties. ELDER-BEERMAN: Stores Report Comparable Sales Up 14.0% ------------------------------------------------------ The Elder-Beerman Stores Corp. announced February 5, 1998 its January sales results for the four-week period ended January 31. Comparable sales for the department stores for the month increased 14.0% from the prior year. Total department stores sales were $22.1 million, a 9.5% increase over the prior year. Elder-Beerman also reported that January sales from its Bee-Gee shoe division were 7.9% higher than the prior year on a comparable basis, and 6.5% higher on a total store basis. On a consolidated basis, Elder-Beerman reported a 13.6% comparable sales increase from the prior year. Total consolidated sales increased 9.3% to $23.7 million, compared to the prior year. Commenting on the full year, Frederick J. Mershad, Elder- Beerman's Chairman and Chief Executive Officer said, "Elder-Beerman's steadily improving sales were a key reason why the company was able to emerge from Chapter 11 bankruptcy protection on December 30, 1997." The results for January, 1998 represent the company's first post-bankruptcy reporting period. EVANSVILLE BREWING: Deal for Beer Trademarks -------------------------------------------- The Evansville Courier reported on January 30, 1998 that Attorneys for the Pittsburgh and Evansville brewing companies were scheduled to close the deal on the sale of beer trademarks. Pittsburgh Brewing Co. was awarded the brands -- including Sterling, Falls City and Wiedemann -- in U.S. Bankruptcy Court Jan. 14 on a bid of $850,000 and 4 cents per case of the brands over five years. Evansville Brewing President Stephen W. Cook said Thursday he expects the Pittsburgh company to begin brewing the brands immediately upon closing the deal, and to begin supplying beer to area wholesalers by late February. FRETTER: Seeks Extension of Exclusive Periods --------------------------------------------- On March 15, 1998, in the case of Fretter, Inc., et al. a hearing will be held with respect to the debtors' motion for an order further extending exclusive periods to file Chapter 11 plans and obtain acceptances thereof. The debtors jointly with the Creditors' Committee seek an extension of approximately 65 days, through and including April 9, 1998, and they seek an extension of the exclusive period to solicit acceptances to such a plan or plans of approximately 65 days, through and including June 5, 1998. The debtors claim that the extensions are justified for a number of reasons. The size and complexity of the cases make a further extension necessary. Also, the debtors state that they have made significant progress on numerous fronts since the cases were filed and since the court's most recent extension of the exclusive periods. The debtors have recently reached an agreement in principle with the Silo Entities to settle their claims against the debtors. The next stage of these cases will focus on selling the remaining real estate parcels and the finalization of a potential global settlement. Finally, the debtors assert that no risk of harm will come to the creditors by reason of either extension. GRANT GEOPHYSICAL: S&P Rates Grant's Senior Notes 'B' ---------------------------------------------------- Standard & Poor's today assigned its single-'B' senior unsecured rating to Grant Geophysical Inc.'s proposed $100 million senior notes due 2008. The notes are to be issued pursuant to Rule 144A and will have registration rights. Standard & Poor's also assigned its single-'B' corporate credit rating to the company. S&P reports the outlook is stable. Ratings for Grant Geophysical reflect a weak business position as the company is now re-establishing itself as a competitive provider of seismic data to the oil and gas industry. The company emerged from bankruptcy in September 1997 with new management and is now beginning to compete for new customers and contracts. The industry has consolidated around a small number of companies that in comparison to Grant have more crews, more recent technology, and stronger relationships with the exploration and production companies. However, a sizable backlog of orders should enable Grant to rebound in 1998. GREATE BAY: Court approves Severance and Retention Policy --------------------------------------------------------- On January 26, 1998 in the case Greate Bay Hotel and Casino, Inc. and affiliated companies, as debtors, the court authorized and approved a severance and retention policy for eligible senior executives. INPHOMATION COMMUNICATION: Psychic Friends File Bankruptcy ---------------------------------------------------------- Inphomation Communication Inc., which operates the Psychic Friends Network, filed for Chapter 11 bankruptcy protection Monday. The company, owned by Baltimore businessman Michael Lasky, listed liabilities of $26 million and assets of about $1.2 million. Chapter 11 of the federal bankruptcy code allows a company to postpone payment of its debts while it reorganizes its finances. Founded in 1990, Inphomation pioneered the use of "900" number phone lines and backed them with infomercials and a network of about 2,000 psychics. The Psychic Friends Network, which has used singer Dionne Warwick as the hostess on its 30-minute infomercials, was once the second- highest-grossing infomercial on TV, trailing only Jane Fonda's pitch for her fitness video. Inphomation had estimated revenue of $100 million to $125 million in the early 1990s. Steve Dworman, publisher of Infomercial Marketing Report in Los Angeles, estimated that Inphomation's revenue has plunged to between $25 million and $30 million in the last two years. Competition and management missteps combined to put the marketing company deep into the red, he said. KEENE: Successor Company Earns $0.82 Per Share in 1997 ------------------------------------------------------ Reinhold Industries, Inc. of Santa Fe Springs, California, today announced results for the fourth quarter and full year 1997. For the fourth quarter 1997, revenues were $4.1 million, down 3% from $4.2 million for the fourth quarter 1996. Net income for the fourth quarter 1997 was $0.5 million (11.4% of sales), or $0.24 per share, compared to $0.5 million for the fourth quarter 1996. For the full year 1997, revenues were $16.2 million, up 24% from $13.1 million for the full year 1996. Net income for the full year 1997 was $1.6 million (10% of sales), or $0.82 per share, compared to a net loss of $2.2 million for the full year 1996. 1996 included the results of the Keene Corporation for the first seven months. Reinhold is the successor company to the Keene Corporation which emerged from bankruptcy on July 31, 1996, the effective date of the plan of reorganization. Reinhold Industries, Inc. is a manufacturer of custom advanced composite components for the commercial aircraft seatback industry, the defense industry and other commercial industries. KIWI AIR: Cuts Some Daily Flights from Atlanta ----------------------------------------------- The Atlanta Journal/Constitution reported on February 3, 1998 that Kiwi International Air Lines, cut its Atlanta service to just two departures on most weekdays. Since the start of the year, Kiwi has eliminated daily flights to Chicago, Orlando and West Palm Beach and Tampa, a spokesman said. The carrier's two remaining daily flights go to Newark, N.J., where Kiwi is based, Tuesday through Friday. Saturday through Monday, Kiwi has only a single flight to Newark. Spokesman Rob Kulat said one reason for the cutback is that Kiwi's fleet has been cut from eight to five aircraft. Three planes had to be sent for routine major maintenance overhauls this winter, he said. Kulat could not say when, or if, Kiwi plans to restore the Atlanta service it has cut. Kiwi is now owned primarily by a Baltimore surgeon, Charles Edwards, who led a group that agreed to pull the carrier out of bankruptcy in a deal worth $16.5 million last year. The carrier does not report financial results but Kulat said management is seeking new sources of capital. LEVITZ: Seeks Time to Assume or Reject Leases --------------------------------------------- The debtors, Levitz Furniture Incorporated, et al. are seeking an order extending the time within which the debtors may assume or reject their unexpired leases of nonresidential real property. The debtors seek an additional 120 days to and including July 2, 1998, to either assume or reject such leases. The debtors state that their decision to assume or reject unexpired leases should await the formulation and implementation of a business plan. The debtors have not yet stabilized their retail operation, and both their sales performance and gross margin results were disappointing. The debtors do not expect a reorganization plan until the late spring or summer of 1998. This is a large and complicated lease and the unexpired leases are important assets of the debtors. The postpetiton rental payments are current. MARVEL: LaSalle Objects to Toy Biz Disclosure Statement ------------------------------------------------------- LaSalle National Bank, (LaSalle) as second successor Indenture Trustee objects to the approval by the court of the First Amended Disclosure Statement of Toy Biz, Inc. relating to the joint plan of reorganization proposed by the secured lenders and ToyBiz Inc. with respect to the Chapter 11 cases of Marvel Entertainment Group, Inc. and its affiliated companies. LaSalle believes that the Disclosure Statement fails to set forth sufficient information necessary to enable the holders of the Notes that are secured by the Pledged Shares to make an informed judgment as to whether to vote for the plan. Specifically, LaSalle believes that the claims referred to in the ongoing District Court Action and the ongoing Noteholder Litigation will disappear. There are also broad sweeping releases that the bank finds objectionable. LaSalle as Indenture Trustee on behalf of the Noteholders claims that it has the requisite standing to object to the Disclosure Statement. LaSalle states that the plan was not proposed in good faith, and that the Disclosure Statement fails to set forth claims of the debtors and others against the plan proponents. The bank also alleges that the Disclosure Statement fails to describe the Noteholder bankruptcy claims, possible challenges to the claims for secured claimants, and a preservation of rights under a tax sharing agreement. LaSalle states that a liquidation under Chapter 7 should be discussed, that there is an alternative plan that should be described in more detail, that case law against "death trap provisions" which are included in the plan should be disclosed and that the Disclosure Statement on its face is woefully inadequate. The bank further states that this plan represents an attempt on the plan proponents' part to wipe out the Noteholders after certain of the plan proponents have profited from the very dollars of the Noteholders, obtained releases for the plan proponents' conduct, and walked away with whatever value is left in the debtors. MOLTEN METAL: Asks to Sell Property and Hire Auctioneer ------------------------------------------------------- In the case of Molten Metal Technology, Inc., and its affiliated companies, as debtors, the sale motion for authority to sell excess personal property and the application to employ Continental Plants Corporations auctioneer/broker will be held on February 20, 1998 in the event that objections are filed on or before February 18, 1998. If no objection is filed, the court may rule on the sale motion and the application without a hearing. MONTGOMERY WARD: Hearings on Owned and Leased Properties -------------------------------------------------------- The Debtors are seeking to establish bid procedures and the approval of a termination fee in connection with the sale of nine owned properties and the proceeds from the assumption and rejection of 31 leased properties. The relief requested from the Court is meant to maximize the value of these properties to the estate. A buyer has agreed to pay the Debtors $13,000,000 in cash for the owned properties and the right to control and share in the profits from assumption and assignment of the leases. Under the terms of the agreement, if a third party is selected to purchase all of the properties, the Debtors are required to pay a $650,000 termination fee. The agreement is contingent on the Debtors obtaining a 60- day extension to assume or reject leases through May 4, 1998. The Debtors propose to hold an auction February 23, 1998 in their Chicago offices. A subsequent sale hearing has been requested for February 26, 1998. PARAGON TRADE: Liquidity Fund Approved -------------------------------------- The Fort Worth Star-Telegram reports on February 3, 1998 that Paragon Trade Brands has received approval from a federal bankruptcy court for a $75 million liquidity facility with Chase Manhattan Bank. Paragon, which is attempting to reorganize its finances under Chapter 11 of the federal bankruptcy law, will use the fund to supplement existing cash and operating cash flow. PROCTOR & GAMBLE: Vietnam Unit Faces Bankruptcy ----------------------------------------------- Agence France-Presse reports on February 4, 1998 that Proctor and Gamble Co.'s Vietnam unit will be forced into bankuptcy unless Hanoi allows the US consumer goods giant to increase its equity share, a company executive said Wednesday. "If we get no new money we will have to stop production. We are imminently facing insolvency unless we get more cash and very quickly," Alan Hed, managing director of Proctor and Gamble Vietnam, told AFP in Ho Chi Minh City. Last month, Proctor and Gamble Vietnam defaulted on a loan to Citibank because its local partner refused to contribute additional cash based on its proportional ownership. Since then, the company has been forced to default on more loans, Hed said. "This is the first time in the 90-year history of Proctor and Gamble that we have ever defaulted on a loan anywhere in the world," the official said. Hed made his remarks during a conference between foreign investors and Vietnamese Prime Minister Phan Van Khai. "This will send a clear message to other investors if we are forced into insolvency," Hed said. Proctor and Gamble has sought a foreign investment law which allows foreign investors to increase their equity share if they inject more cash into a joint venture. Proctor and Gamble was one of the first US companies to set up in Vietnam after the lifting of the economic embargo against Hanoi by President Bill Clinton in 1994. Its parent company, Proctor and Gamble Co., and its local partner Phuong Dong Company, under the state-owned Vietnam Chemicals Corp. of the Ministry of Industry, have been at loggerheads for months. Last year, Proctor and Gamble asked the Ministry of Planning and Investment for permission to either inject more capital into the joint venture, buy out its local partner's 30-percent stake, or in turn sell its stake to the local partner. The foreign partner cannot inject cash without the local partner's approval. Proctor and Gamble's licensed investment now stands at $36 million, and the company has said it would need to at least double that amount before the company could become profitable. Stiff competition from other consumer goods multinationals and inexpensive domestic brands, rampant smuggling and counterfeiting have undermined P and G's business here. Hed said the company had lost $35 million since it was created. "We defaulted on loans and we will continue to default," he said. He said he had delivered a solid proposal to Phan Van Khai to solve the joint venture's problems last month. However, he said he was not optimistic about the outcome. The board of management of Proctor and Gamble Vietnam will meet this weekend to discuss the company's fate. SA TELECOMMUNICATIONS: WorldCom Objects to Sale ----------------------------------------------- WorldCom,Inc, f/k/a LDDS Communications, Inc. and WorldCom Network Services, Inc., f/k/a WilTel, Inc., filed an objection to the debtors' motion for court approval of the sale of substantially all of the assets of the debtor, SA Telecommunications and its affiliated companies to EqualNet Corporation and EqualNet Holding Corp. WorldCom, a debtor of Addtel Communications Inc., one of the debtor companies, states that there is a conflict of interest among the creditor body of each estate. Furthermore WorldCom believes that Addtel has value independent of the other debtors. WorldCom states that because the sale motion does not separately identify the assets which are to be sold, and the consideration to be paid to each estate for such assets, it is impossible to discern whether the proposed sale is "fair and reasonable" and in the "best interest" of creditors. The sale motion does not adequately identify the "designated contracts" which are to be assumed or assigned. THE WEATHERVANE: Files for Reorganization ----------------------------------------- Paragon Capital announced today that it will provide The Weathervane with $5 million in financing to help it restructure and focus on its core business after filing for chapter 11 bankruptcy reorganization. The Weathervane, a privately held apparel retailer, operates 86 stores throughout the Northeast and mid- Atlantic, catering to teen and college-age women. The Weathervane will use this financing to help close stores and focus on its core business. "This is a positive step for The Weathervane at a critical time," said Andrew Moser, President and COO of Paragon Capital. "Retailers are discovering that this is the time to challenge the economic model of their business and determine what works and what doesn't. The Weathervane is doing this, and we believe the company has a viable long- term business strategy that will prove successful." "We value Paragon's retail expertise and knowledge of our industry," said Larry Davidson, President of The Weathervane. "Their responsiveness and flexibility were critical in helping us re-evaluate our strategy. Paragon's continued support of The Weathervane and willingness to provide maximum availability will undoubtedly improve our chances for a successful reorganization. WESTERN PACIFIC: Bankrupt Airline to Shut Down ---------------------------------------------- UPI reports on February 4, 1998 that financially-drained Western Pacific Airlines is shutting down, two months after a New York investment company came to the rescue with a huge bailout plan. Attorneys for the Colorado-based discount carrier told U.S. Bankruptcy Judge Sidney Brooks that they had reached a liquidation agreement with Smith Management Co. and were taking steps to cease operations. The shutdown throws nearly all of the carrier's 1,500 employees out of work, but Smith is expected to put up enough money to ensure that everyone is paid at least through today. Some creditors are expected to receive payments. The airline will officially be grounded when the last of WestPac's 18 Boeing 737 jets touches down in Denver, attorneys said, probably sometime early Thursday. Some WestPac flights were leaving Denver International Airport Wednesday afternoon. The jets will eventually be returned to various leasing companies, officials said. WestPac President and CEO Robert Peiser said, "We are deeply disappointed by today's announcement. We believe Western Pacific's turnaround was imminent as evidenced by our advanced bookings." On Dec. 3 Smith entered into a deal to put up as much as $50 million to keep Western Pacific planes flying, but this week decided to stop the flow of cash after giving WestPac $23 million. The deal includes a ticket arrangement with United Airlines. DLS CAPITAL: Bond Pricing for Week of February 2, 1998 ------------------------------------------------------ Following are indicated prices for selected issues: Amer Telecasting 0/14 1/2 '04 24 - 27 APS 11 7/8 '06 24 - 28 (f) Boston Chicken 7 3/4 '04 72 1/2 - 74 Bradlees 11 '02 5 1/2 - 7 (f) Brunos 10 1/2 '05 22 - 23 (f) CAI Wireless 12 1/4 '02 25 - 26 Cityscape 12 3/4 '04 45 - 48 Harrah's Jazz 14 1/4 '01 31 - 33 (f) Hechinger 9.45 '12 75 - 77 Hill's 12 1/2 '03 85 1/2 - 86 1/2 Grand Union 12 '04 47 1/2 - 48 1/2 Great Bay 10 7/8 '04 82 - 84 (f) Levitz 9 5/8 '03 38 - 42 (f) Liggett 11 1/2 '99 68 - 71 Marvel 0 '98 4 3/4 - 5 1/4 Mobilemedia 9 3/8 '07 13 - 15 (f) Mosler 11 '03 78 - 82 Penn Traffic 9 5/8 '05 54 - 55 Royal Oak 11 '06 70 - 72 Trump Castle 11 3/4 '03 96 - 97 Wickes 11 7/8 '03 96 - 97 The wireless cable sector was in across the board. APS bonds fell on a bankruptcy filing. Boston Chicken bonds were up almost 10 points this week. ----------- A listing of meetings, conferences and seminars appears each 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 Lexy Mueller, 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 * * *