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/raid1/www/Hosts/bankrupt/TCR_Public/981015.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 15, 1998, Vol. 2, No. 202 Headlines AHERF: Seeks OK For $8M New Jersey Sale AHERF: Tenet's Plan Hits Obstacle ATLAS CORP: Reports Deposit Agreement and New Accountant B-FOUR INC: Case Summary & 20 Largest Unsecured Creditors BOSTON CHICKEN: Court Approves $42M Interim DIP BOSTON CHICKEN: Loans To Franchisees Caused Bankruptcy CR MINING: Case Summary & 20 Largest Unsecured Creditors CENTENNIAL COAL: Case Summary & 20 Largest Creditors CENTENNIAL RESOURCES: Case Summary & 20 Largest Creditors COGNERATION: Seeks To Enjoin NRG Energy DOW CORNING: Estimates Settlement Claims at $3.7 Billion FPA MEDICAL: Court Approves Joint Administration FOXMEYER: Trustee Seeks Authority to Settle With Amgen GREATE BAY: Posts $2M Of Net Income In August HARVARD INDUSTRIES: Posts $6M Net Loss For August KIA MOTORS: Ford's Bid Fading MAIDENFORM: Seeks Extension of Exclusivity MCGINNIS PARTNERS: Committee Appointed MONTGOMERY WARD: Seeks To Sell Realty and a Lease ONEITA INDUSTRIES: Seeks Employment Agreement With CEO PETRIE RETAIL: Accuses Committee of Ignoring Truth PHILIPPINE AIRLINES: Cathay Pacific Close To Deal PITTSBURGH PENGUINS: File Chapter 11 SOUTHERN PACIFIC: Ran Financial Tightrope ********* AHERF: Seeks OK For $8M New Jersey Sale --------------------------------------- ALLEGHENY HEALTH EDUCATION & RESEARCH FOUNDATION is asking the court to approve the sale of its New Jersey operations to Our Lady of Lourdes Healthcare Services Inc. for about $8.1 million in cash, forgiveness of a $1.5 million loan, and the assumption of all liabilities. The proposed sale includes the Rancocas Hospital in Willingboro, N.J., and all operations in New Jersey owned by Allegheny or related entities such as Diversified Health Group Inc., Zurbrugg Holding Co., and Concorde Clinical Research Inc., none of which are in Chapter 11. The parties anticipate a Nov. 10 closing. (Federal Filings Inc. 14-Oct-98) AHERF: Tenet's Plan Hits Obstacle --------------------------------- Tenet Healthcare Corp.'s plan to acquire eight Allegheny Health Education and Research Foundation (AHERF) hospitals for $345 million may be in jeopardy, The Wall Street Journal reported. Tenet had been counting on an academic partner, Drexel University, but the university's board rejected the company's invitation to provide management services to a medical school closely affiliated with the hospitals. The school and the hospitals are owned by AHERF. Tenet's winning bid in bankruptcy court last month was contingent on finding an academic partner to manage the school, which is to be reorganized into a non- profit organization. Drexel was not expected to participate financially, but reportedly trustees were concerned the arrangement might distract management from other projects. Tenet plans to begin discussions with other academic institutions that have expressed an interest, but this undoubtedly will delay the acquisition, which was scheduled to close on Oct. 21. (ABI 14-Oct-98) ATLAS CORP: Reports Deposit Agreement and New Accountant -------------------------------------------------------- Atlas Corporation reports to the SEC that on October 2, 1998, the Company executed a Deposit Agreement with Seven Peaks Mining, Inc. for the sale of its entire interest in Cornerstone Industrial Minerals Corporation. Also on October 2, Atlas filed a motion requesting approval of the Deposit Agreement with the Bankruptcy Court handling Atlas' Chapter 11 reorganization. Seven Peaks has agreed to make a cash tender offer for 100% of the outstanding Cornerstone shares at a price of C$0.12. Under the terms of the Deposit Agreement, Atlas has irrevocably agreed to deposit its 18,352, 991 shares of Cornerstone (61%) to the Seven Peaks Offer. This transaction has been arranged by Monarch Financial Corporation. The total purchase price being paid by Seven Peaks is $4 million. On October 2, 1998, Ernst & Young LLP resigned as auditors of Atlas Corporation. No report of Ernst & Young during the past two years contained an adverse opinion or a disclaimer of opinion or was qualified with respect to audit scope or accounting principles. EY's reports on the financial statements of Atlas Corporation for the last two years were modified with respect to the uncertainty of the Company's ability to continue as a going concern. (Copyright States News Service, all rights reserved States SEC-10/13/98) B-FOUR INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: B-Four, Inc. 200 West Main St. Suite 2200 Louisville, Kentucky 40202 Court: District of Delaware Filed: 10/13/98 Chapter: 11 Debtor's Counsel: Laura Davis Jones Young, Conaway, Stargatt & Taylor 11th Floor, Rodney Square North P.O. Box 391 Wilmington, Delaware 19899-0391 (302) 571-6600 Sidley & Austin 875 Third Avenue New York, NY 10022 (212)906-2000 Affiliated debtors: Centennial Coal, Inc., Centennial Resources, Inc. and CR Mining Company, 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Lincoln National Life Insurance Bond Debt $15,118,325 Lincoln National Income Fund, Inc. Bond Debt $542,087 Security Connecticut Life Ins. Co. Bond Debt $542,087 BOSTON CHICKEN: Court Approves $42M Interim DIP ----------------------------------------------- Boston Chicken Inc. has court approval to borrow up to $41.9 million on an interim basis pending a final hearing on the full $70 million debtor-in-possession financing facility from General Electric Capital Corp. and Bank of America. While the restaurant chain received a loan commitment from an unidentified third party, Boston Chicken said the DIP loan from its prepetition lenders is in its best interests "in order to avoid a contested, priming lien proceeding and to obtain an agreement for use of cash collateral without litigation concerning adequate protection and collateral values." A final hearing is set for Oct. 26. (Federal Filings Inc. 14- Oct-98) BOSTON CHICKEN: Loans To Franchisees Caused Bankruptcy ------------------------------------------------------ It was reported in the Telegram Gazette Worcester-on October 6, 1998 that Boston Chicken, one of the hottest investments of the early 1990s, fell on hard times during the last two years, as supermarkets and others began selling cheaper ready-to-eat roasted chickens. Weak sales and profits led to a cash crunch, forcing Boston Chicken to write off hundreds of millions of dollars in loans to franchisees who borrowed to expand the chain. A group led by General Electric Capital Corp. and Bank of America agreed to lend it $70 million in debtor-in-possession financing. "They just expanded too quickly, and the concept just got dull," said Neil Dorflinger, a director of DLS Capital Partners, who bet in the last six months that the stock would fall and owns some of the company's debt. "They won't liquidate, but they are going to have to shrink a lot." Boston Chicken and its Boston Market restaurants created a Wall Street sensation in 1993. Its initial public offering was priced at $20 per share and shot to nearly $50. The stock split 2-for-1 in 1994. The stock has since plummeted, closing as low as 50 cents on the Nasdaq Stock Market, down 25 cents. The company, which went public five years ago and saw its shares reach prices as high as $50, filed for protection because of about $283 million in debt that comes due Oct. 17. Between May 1992 and this year, Boston Chicken grew from 34 stores in the Northeast to 1,143 nationwide. Sales jumped from about $21 million in December 1991 to nearly $1.2 billion in 1996. Boston Chicken said 2,700 employees are being transferred to stores that will remain open. The company plans to leave 14 cities, where 500 hourly workers will be fired. It has 18,500 employees in total. The company closed all of its stores in Des Moines, Iowa; Louisville, Kentucky; and Nashville and Memphis, Tennessee, among others. CR MINING: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: CR Mining Company 200 West Main St. Suite 2200 Louisville, Kentucky 40202 Court: District of Delaware Filed: 10/13/98 Chapter: 11 Debtor's Counsel: Laura Davis Jones Young, Conaway, Stargatt & Taylor 11th Floor, Rodney Square North P.O. Box 391 Wilmington, Delaware 19899-0391 (302) 571-6600 Sidley & Austin 875 Third Avenue New York, NY 10022 (212)906-2000 Affiliated debtors: Centennial Resources, Inc., Centennial Coal Inc., B-Four, Inc. 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Lincoln National Life Insurance Bond Debt $15,118,325 Lincoln National Income Fund, Inc. Bond Debt $542,087 Security Connecticut Life Ins. Co. Bond Debt $542,087 Whayne Supply Trade Notes $441,413 Madisonville Tire & Retreading Trade Debt $54,854 Cumberland Surety Ins. Co. Trade Debt $34,855 Amoco Oil Company Trade Debt $28,187 Danco Engineering, Inc. Trade Debt $23,008 Vibra-Tech Trade Debt $14,854 West KY Steel Const. co. Trade Debt $13,553 Double A Services Trade Debt $13,157 Felty Corp. Trade Debt $11,904 Rudd equipment Company Trade Debt $11,571 Trueblood Oil Co., Inc. Trade Debt $8,805 Groves Construction Trade Debt $8,575 Henderson Union Electric Trade Debt $7,216 Boss Cementing Trade Debt $7,020 Gary T. Cecil Trade Debt $6,870 Hydraulic Exchange & Repair Trade Debt $6,590 Charolais Corporation Trade Debt $5,923 CENTENNIAL COAL: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------- Debtor: Centennial Coal, Inc. 200 West Main St. Suite 2200 Louisville, Kentucky 40202 Court: District of Delaware Filed: 10/13/98 Chapter: 11 Debtor's Counsel: Laura Davis Jones Young, Conaway, Stargatt & Taylor 11th Floor, Rodney Square North P.O. Box 391 Wilmington, Delaware 19899-0391 (302) 571-6600 Sidley & Austin 875 Third Avenue New York, NY 10022 (212)906-2000 Affiliated debtors: Centennial Resources, Inc., CR Mining Company, B-Four, Inc. 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Lincoln National Life Insurance Bond Debt $15,118,325 Lincoln National Income Fund, Inc. Bond Debt $542,087 Security Connecticut Life Ins. Co. Bond Debt $542,087 CENTENNIAL RESOURCES: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Centennial Resources, Inc. 200 West Main St. Suite 2200 Louisville, Kentucky 40202 Court: District of Delaware Filed: 10/13/98 Chapter: 11 Debtor's Counsel: Laura Davis Jones Young, Conaway, Stargatt & Taylor 11th Floor, Rodney Square North P.O. Box 391 Wilmington, Delaware 19899-0391 (302) 571-6600 Sidley & Austin 875 Third Avenue New York, NY 10022 (212)906-2000 Affiliated debtors: Centennial Coal, Inc., CR Mining Company, B-Four, Inc. 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Lincoln National Life Insurance Bond Debt $15,118,325 Whayne Supply Trade Notes $1,641,010 Dyna-Blast Trade Debt $920,662 Lincoln National Income Fund, Inc. Bond Debt $542,087 Security Connecticut Life Ins. Co. Bond Debt $542,087 Summit Coal Company, LLC Leasehold $414,000 Amoco Oil Co. Trade Debt $364,830 Kintex, Inc. Trade Debt $128,325 Charolais Corporation Trade Debt $118,692 Madisonville Tire & Retreading Trade Debt $112,643 Ohio County Sheriff Trade Debt $108,256 Clay's Trucking Inc. Trade Debt $86,175 Anker Energy Corporation Contract $84,000 Cummins Cumberalnd Trade Debt $81,598 Anchor Hydraulics Division Trade Debt $74,159 West KY Steel Const. Co. Trade Debt $69,436 Pennyrile Supply Trade Debt $63,545 Certex Superior, Inc. Trade Debt $62,776 Flanders Electric Trade Debt $54,639 Brandeis Machinery Trade Debt $53,872 Kentucky Utilities Utility $51,134 COGNERATION: Seeks To Enjoin NRG Energy --------------------------------------- Cogeneration Corporation of America (CogenAmerica) and Lawrence I. Littman, a member of the Independent Directors Committee, have filed a suit in bankruptcy court in New Jersey seeking a permanent injunction enjoining NRG Energy from violating CogenAmerica's bylaws, according to a newswire report. The lawsuit alleges that NRG has tried to circumvent the companys bylaws agreed to by NRG and approved by the bankruptcy court order in its proxy action aimed at removing CogenAmerica CEO Robert T. Sherman Jr. as a company director. The suit also states that "NRG, having agreed to pay the super-majority provisions for stockholder consent in lieu of a meeting, cannot simply declare that the provision violates Delaware law and is now no longer part of the negotiated deal ... Since the effective date of the NRG plan [which enabled O'Brien Environmental Energy Inc. to emerge from bankruptcy in 1996], NRG has consistently demonstrated a desire to take advantage of CogenAmerica and its public stockholders by unreasonably using its influence to cause the NRG-appointed directors to take actions detrimental to the best interests of CogenAmerica." Littman also was chairman of the Equity Security Holders Committee appointed by the court in the O'Brien Environmental Energy Inc. chapter 11 case. (ABI 14-Oct-98) DOW CORNING: Estimates Settlement Claims at $3.7 Billion -------------------------------------------------------- Dow Corning Corp. Chair and CEO Richard Hazelton said the total cost for settling breast implant claims will be about $3.7 billion, including $400-$500 million already spent on legal and research services, according to a newswire report. In July, the Michigan-based company agreed to pay $3.2 billion to settle claims from some 177,000 women who argue that their silicone gel breast implants caused health problems. Hazelton said he expects the company to file its reorganization plan by the end of the month and hopes to emerge from bankruptcy not later than the middle of next year. Dow Corning filed chapter 11 in May 1995. (ABI 14-Oct-98) FPA MEDICAL: Court Approves Joint Administration ------------------------------------------------ On October 2, 1998 the Bankruptcy Court for the District of Delaware entered an order directing joint administration of the following cases: Medical Management of California, Inc. Carolina Health Care Group, PC Arizona Managed Care Providers, Ltd. FPA Medical Foundation FPA Medical Group of Arizona , PC FPA Medical Group of Delaware, PA FPA Medical Group of Kansas, PA FPA/Gregory Medical Group of Nevada, Ltd. FPA Medical Group of New Jersey FPA Medical Group of Pennsylvania, A Medical Corporation Virginia Medical Associates, PC The cases have been consolidated for procedural purposes only and shall be administered jointly with the cases previously styled FPA Medical Management, Inc., et al. FOXMEYER: Trustee Seeks Authority to Settle With Amgen ------------------------------------------------------ Bart A. Brown, Jr. Chapter 7 trustee is seeking approval of a letter agreement with Amgen, Inc. compromising and settling chargeback, reclamation and unsecured claims. Pursuant to the agreement, Amgen will have an allowed unsecured claim in the amount of $6,362,147.In addition Amgen will have an allowed reclamation claim in the amount of $1,706,259. Oaktree Capital Management has been assigned all of the reclamation claim and the unsecured claim of Amgen. As part of the overall settlement Oaktree has agreed to reduce the Reclamation Claim to $1,705,259 and purchase the remaining $1,381,723 of the Remaining Claim from Amgen. The Trustee seeks entry of an order approving the agreement. Absent this settlement the Trustee and Amgen could become embroiled in additional litigation that would consume additional assets of the debtors' estates. The Trustee submits that the probability of success in a litigation has been duly accounted for in the agreement. GREATE BAY: Posts $2M Of Net Income In August --------------------------------------------- For August, Greate Bay Hotel & Casino Inc., which owns The Sands in Atlantic City, N.J., posted net income of more than $2 million on net revenues of about $22.6 million. Operating income for the month totaled nearly $2.6 million. The casino's forecast for August had projected net income and revenues of approximately $3.1 million and $25.4 million, respectively. (The Daily Bankruptcy Review and ABI Copyright c October 14, 1998) HARVARD INDUSTRIES: Posts $6M Net Loss For August ------------------------------------------------- Harvard Industries Inc. posted a $6 million net loss on sales of about $41.2 million for the month ended Aug. 23. The auto parts manufacturer's operating loss for the month was nearly $3.7 million. Reorganization costs totaled about $1.4 million. For the 11 months ended Aug. 23, Harvard's net loss was more than $31.7 million on sales of approximately $629.8 million. (The Daily Bankruptcy Review and ABI Copyright c October 14, 1998) KIA MOTORS: Ford's Bid Fading ----------------------------- According to a Reuter's Financial report on October 14, 1998, The Ford Motor Co bid for Korea's Kia Motors and Asia Motors seemed less likely to succeed after sources said on Wednesday the company had asked for the biggest debt write-off among competing bidders. Ford wanted 7.5 trillion to 8.0 trillion won ($5.6 billion to $6.0 billion) of debt reduction, analysts familiar with the bidding said. South Korea's three bidders -- Hyundai Motor, unlisted Daewoo Motor and Samsung Motors -- had asked for between 5.5 trillion won and seven trillion won of write-offs, they added. The four companies submitted their bids on Monday. The combined debt principal of Kia and Asia Motors is about 12 trillion won, but analysts said the figure could rise further upon more careful scrutiny of the books. "Ford's chances of winning the bidding looks near zero," said Lee Jung-ja, research head at HSBC Securities. "But Kia's creditors would not want the other bidders to take over Kia either." Officials at Kia and its main creditor, Korea Development Bank (KDB), slammed the analysts' comments as groundless, saying the winning bidder would be announced on October 19 as scheduled. The creditors have set several criteria for picking a winner, including technology transfer and the ability to bring in fresh capital, as well as share pricing and debt management. Ford and its affiliate Mazda Motor Corp of Japan already hold a 16.9 percent stake in Kia and have long provided technical assistance to the company. Ford vice chairman Wayne Booker told Reuters on Tuesday that Ford had bid for a 51 percent stake in Kia and would finance the acquisition with its cash reserves of $22 billion. The domestic daily Hankook Ilbo, quoting sources at the auction headquarters, said Daewoo Motor Co was seeking the least amount of debt cuts among the four candidates. Analysts said the differences between Ford and Daewoo's demand for debt write-offs could be as large as two trillion won. Samsung Motors, the newest entry into Korea's crowded car field and which had the most at stake in the Kia bid, would probably seek a strategic alliance with Ford to jointly run Kia and Asia Motors if it wins, analysts said. Samsung was believed to be seeking six to seven trillion won of debt cuts, analysts said. Hyundai's interest in Kia and Asia Motors stemmed in part from a desire to expand production capacity. "If Hyundai takes over Kia, its capacity will rise to over 2.5 million units. That will help a lot," said Ji Sung- chul, analyst at LG Economic Research Institute. Analysts said Hyundai was demanding a debt-cut marginally higher than that of Daewoo, putting itself up high in the candidate list. ($1 = 1339.30 won) MAIDENFORM: Seeks Extension of Exclusivity ------------------------------------------ Maidenform Worldwide, Inc., and its affiliates, as debtors, are seeking a court order to extend the exclusive periods within which the debtors may file a plan or plans of reorganization and solicit acceptances thereof. The debtors seek an order extending the period during which the debtors have the exclusive right to file a plan or plans of reorganization, from the current expiration of October 30, 1998 to and through March 1, 1999; and extending the period during which the debtors have the exclusive right to solicit acceptances to such plans, from the current expiration on December 30, 1998 to and through April 30, 1999. The debtor asserts that these cases are large and complex. The debtors devote substantial time to identifying those activities and locations that will play an ongoing role in an effective business rehabilitation. This process has involved a comprehensive analysis of the debtors' product, customers, suppliers, employees, and manufacturing and distribution processes. The debtors believe that ample reason exists for the debtors to receive the requested extensions of exclusivity. The debtors have formulated a business plan, and presented the plan to a lending group and are about to propose the plan to the Creditors' Committee. The debtors anticipate seeking a bar date and they expect that preliminary negotiations with all key constituents concerning the specific terms of the plan will soon commence. The debtors hope to emerge from Chapter 11 by mid-1999. Further, the debtors state that termination of the exclusive periods and the threat of multiple plans filed by other parties would be deleterious to the debtors at this juncture and could lead to adversarial situations that will undermine the success to date and harm the debtors' business. It could also serve as a signal to vendors and customers that there is a loss in confidence in the debtors and would have a negative effect on the debtors, to the detriment of the creditors. MCGINNIS PARTNERS: Committee Appointed -------------------------------------- The U.S. Trustee appoints the following eligible creditors of the McGinnis Partners Focus Fund, LP, McGinnis Global Fund, Ltd, and Russia Value Fund, LP to the Committee of Unsecured Creditors for each debtor: Bank of America, NT & SA 335 Madison Avenue New York, NY 10017 (212) 503-8353 Banque D'Escompte 13 Boulevard Haussman 75009 Paris, France (33-1) 48 24 85 44 Citibank, NA 599 Lexington Ave., 21st Floor New York, NY 10043 (212) 559-9595 Credit Suisse First Boston (Europe) Limited c/o Credit Suisse First Boston Corporation Eleven Madison Ave. New York, NY 10010-3629 (212) 325-0331 Lehman Brothers Commercial Corporation c/o Jeffrey L. Schwartz, Esq. Hahn & Hessen LLP 350 Fifth Avenue New York, NY 10118 (212) 526-3721 Merrill Lynch Capital Services World Financial Center 250 Vesey Street New York, NY 10281-1332 (212) 236-6289 MONTGOMERY WARD: Seeks To Sell Realty and a Lease ------------------------------------------------- The Montgomery Ward Bankruptcy News, Issue 34, published by Bankruptcy Creditors' Service reports that the Debtors are asking the Court for permission to sell, subject to higher and better offers: (1) a 1957 Lease with Kraus-Anderson Incorporated for a store located at the Southtown Shopping Center in Bloomington, Minnesota; (2) a parcel of real estate located at Rosedale Shopping Center in Roseville, Minnesota; and (3) a parcel of land in Midway Market Place in St. Paul, Minnesota; to assume and assign the relevant leases and sell the real estate to G.R. Herberger's, Inc., a subsidiary of Saks, Incorporated (formerly known as Proffits). The Debtors anticipate realizing approximately $15,000,000 from this transaction. To protect Proffits' interests in these transactions, the Debtors have agreed to pay break-up fees totaling $300,000 in the event Proffits' bids are topped by a third-party offeror. The Debtors make it clear that they will entertain bids on a property-by-property basis. ONEITA INDUSTRIES: Seeks Employment Agreement With CEO ------------------------------------------------------ Oneita Industries, Inc., debtor, is seeking authorization to enter into an employment agreement with C. Michael Billingsley, the debtor's current President and CEO. The term of the Agreement shall be for a period commencing immediately and ending on September 30, 2000. Billingsley will be paid an annual salary of $300,000 for the first year of the term, and $325,000 for the second year. In the event of a non-renewal of the agreement, Billingsley shall receive $325,000 and he could receive an additional bonus of up too $150,000 in the event a plan is confirmed on or before December 31, 1998. PETRIE RETAIL: Accuses Committee of Ignoring Truth -------------------------------------------------- Petrie Retail Inc's response to the creditors' committee's demand to comply with a potential purchaser's due diligence requests reduces the request to a collection of baseless and irresponsible attacks riddled with false accusations and innuendo. "The Committee has chosen either to ignore the true facts or failed to ascertain them as a result of its zealous attempt to cast aspersions on the confirmation process it negotiated and agreed to over eleven months ago. . . The Committee's vituperative discourse should not be a substitute for the true facts," the retailer shot back in an Oct. 9 response. The panel has accused Petrie of dragging its feet in providing competitor Rainbow Apparel Cos. with requested information. (Federal Filings Inc. 14- Oct-98) PHILIPPINE AIRLINES: Cathay Pacific Close To Deal ------------------------------------------------- Philippine president Joseph Estrada on Wednesday said Hong Kong-based Cathay Pacific Airways Ltd was close to wrapping up a deal to buy 40 percent of struggling Philippine Airlines (PAL). "The negotiations for Cathay to buy a 40 percent stake in PAL are almost over," Estrada said in a press statement released by the presidential palace in Manila. He said talks had ended with U.S.-based Northwest Airlines, which had also expressed interest in flag carrier PAL. "There are no more talks," Estrada said in the statement. Cathay declined to confirm that a deal was close, but reiterated its interest. "We have always been saying that we have a long-term interest in a Philippine-based operation. And so we are still looking into the various alternatives. But we haven't reached any decision yet," said Cathay Pacific Airways spokeswoman Quince Chong. "We are still in continued negotiation." Estrada, credited with persuading PAL's biggest labour union to accept a management offer that paved the way for the resumption of local flights early this month, said PAL chairman and majority shareholder Lucio Tan was discussing a debt restructuring plan with creditors. PAL owes about $2.0 billion to both local and foreign creditors. The 57-year old carrier, Asia's oldest airline, was forced to shut down operations on September 23 due to a protracted labour dispute and enormous financial losses. But the PAL union eventually agreed to a 10-year freeze on strikes and wage bargaining in return for a 20 percent equity interest in the airline. PAL resumed domestic operations on October 7 but recently deferred plans to resume international flights on October 15. Tan, according to President Estrada, is no longer interested in retaining his majority stake. Creditors and lessors, including the U.S. Export-Import Bank, have laid claim to the airline's planes. PAL owes about $400 million to the Eximbank, which has called for the lease termination of two Boeing 747-400s. Creditors have also sought clarification from the company and the Securities and Exchange Commission about a rehabilitation plan, which is now being drawn up. (Manila newsroom,Reuters:Financial-10/14/98) PITTSBURGH PENGUINS: File Chapter 11 ------------------------------------ The Pittsburgh Penguins filed chapter 11 yesterday for the second time, according to the Associated Press. The team, which first filed for chapter 11 protection in 1975, cited losses of $37.5 million over the last two seasons and the inability to negotiate a better lease agreement at the Civic Arena, which soon will be the oldest in the National Hockey League. NHL Commissioner Gary Bettman said that the organization is disappointed about the filing, but that the ownership has committed to adequately funding the team. The team is facing four major lawsuits, including those by former star Mario Lemieux, who claims the team has not paid him per the terms of a contract signed in 1992. When the team filed chapter 11 nearly 25 years ago, it could not pay $6.5 million in debt, including a half a million dollars owed in federal taxes. The Internal Revenue Service imposed a lien and seized the assets, prompting the filing. Later the team was sold. Former Los Angeles Kings owner Bruce McNall was forced to sell the Penguins in 1994 after he was in bankruptcy, and later went to prison. (ABI 14-Oct-98) SOUTHERN PACIFIC: Ran Financial Tightrope ----------------------------------------- The Albany Times Union reports on October 12, 1998 that according to analysts, Southern Pacific's story should serve as a warning to the industry, Southern Pacific The Oregonian newspaper, which tracked the failure of a company whose stock value went from $350 million to zero, says many in the high-risk mortgage industry see it as a dire warning. "This is not company-specific, it's industry-specific," said Robert W. Howard, who was ousted as Southern Pacific Funding's chief executive in late September. Until recently, the company's top executives lounged in 600- square-foot offices with leather floor tiles. Bonuses for two executives hit $1.3 million apiece last year while the company backed more than $2 billion in home mortgage loans. The company's spectacular flameout left more than 300 of its 540 employees jobless, and creditors scrambling to collect more than $1 billion in debt. The result likely will be tougher times for borrowers with weak credit histories and the housing industry in general. According to evidence cited by the Federal Deposit Insurance Corp., so-called "subprime" borrowers may have accounted for as much as 10 percent to 15 percent of the nearly $1 trillion worth of home mortgage loans made in 1996. These high-risk borrowers were the target group for Southern Pacific Funding and companies like it. **************** 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 Lexy Mueller, Editors. Copyright 1998. All rights reserved. ISSN 1520-9474. 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 * * *