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/raid1/www/Hosts/bankrupt/TCR_Public/981023.MBXT R O U B L E D C O M P A N Y R E P O R T E R Friday, October 22, 1998, Vol. 2, No. 208 Headlines AMERICAN TELECOM: Reorganization Plan Filed BROTHERS GOURMET: Notice Establishes Bar Dates BRUNO'S: Fixing of Bar Date CARIBBEAN CIGAR: Annual Meeting of Shareholders COLONIAL DOWNS: Considers Bankruptcy CONSUMER PORTFOLIO: Reports 1998 Third Quarter Results CONTEMPORARY INDUSTRIES: Seeks Special Counsel COVENTRY HEALTH: Files Annual Report With SEC CRIIMI MAE: Sues Three of Its Largest Creditors CRIIMI MAE: Wants Seized Bonds Back ERD WASTE: Seek To Hire Banking Investment Firm EA. SHOSHONE: Zero Assets; $1 Million Debt ERLY INDUSTRIES: Trustee Names Creditor Panel FORMAN PETROLEUM: Approves Engagement of CIBC Oppenheimer FORMAN PETROLEUM: Files Suit Against Financial Advisor HAYES CORPORATION: Reports Filing to SEC KIA MOTORS: Banks Expected To Ok Deal MARVEL ENTERTAINMENT: Files Stockholder Agreement With SEC PERK DEVELOPMENT: Committee Objects to Deloitte & Touche PITTSBURGH PENGUINS: Creditors Committee Appointed REGENCY HOMES: Four Creditors Take Back 300 Lots STAR NEWCO: Seeks DIP Financing STORM TECHNOLOGY: Files Chapter 11 SUN TV: Final Okay For Reduced $60M DIP Pact SUN TV: Money Situation Worsens ************* AMERICAN TELECOM: Reorganization Plan Filed ------------------------------------------- Phoenix International Industries Inc., West Palm Beach, Fla., announced yesterday that the reorganization plan for American Telecommunications Enterprises Inc. was filed in bankruptcy court in Utica, N.Y., according to a newswire report. The terms of the plan call for American Telecom to emerge from chapter 11 as a wholly owned subsidiary of Phoenix. (ABI 22-Oct-98) BROTHERS GOURMET: Notice Establishes Bar Dates ---------------------------------------------- On October 13, 1998, Brothers Gourmet Coffees, Inc. and its debtor affiliates filed a motion seeking to establish Bar Dates for filing proofs of claim. A hearing will be held on October 27, 1998. The debtors request that the court establish December 15, 1998 as the general bar date by which any entity holding a prepetition claim against one or more of the debtors must file a proof of claim. BRUNO'S: Fixing of Bar Date --------------------------- On October 13, 1998, the court entered an order establishing December 1, 1998 at 5:00 pm central time as the last date and time for the filing of proofs of claim against PWS Holding Corporation, Bruno's, Inc. and their ten affiliates. CARIBBEAN CIGAR: Annual Meeting of Shareholders ----------------------------------------------- The 1998 Annual Meeting of Shareholders of Caribbean Cigar Company, a Florida corporation will be held at in the Sun Sentinel Auditorium which is located at 200 East Las Olas Boulevard, Fort Lauderdale, Florida 33301, on November 9, 1998, at 10:30 am local time, for the purpose of considering and acting upon the following matters: (1) To elect directors to serve until the 1999 Annual Meeting of Shareholders and until their successors shall be elected and qualified; (2) To approve the possible issuance of in excess of 19.99% of the presently issued and outstanding Common Stock of the Company upon the conversion of the Company's Series A Convertible Preferred Stock; (3)To consider and act upon a proposal to amend the Company's Articles of Incorporation to increase the number of authorized shares of Common Stock from 1,250,000 to 25,000,000; (4)To approve Ahearn, Jasco + Company, P.A. as the Company's independent certified public accountants for the fiscal year ending March 31, 1999; and The board of directors of the Company has fixed the close business on September 15, 1998 as the record date for the determination of shareholders entitled to notice of, and to vote, at the Annual Meeting. As of the record date, there were 842,994 shares of the Company's common stock, par value $.001 per share, and 42,128 shares of the Company's Series A Convertible Preferred Stock, $.001 par value, issued and outstanding and entitled to vote at the Annual Meeting giving effect to the Company's 8 to 1 reverse stock split effective September 1, 1998. COLONIAL DOWNS: Considers Bankruptcy ------------------------------------ Colonial Downs Holding Inc., parent company of Virginia's first and only track since the Civil War, on Thursday said it may file for protection under U.S. bankruptcy laws. The company said it probably will post a loss of $4-6 million for the third quarter of 1998. Thursday afternoon the company's stock dropped 41 cents to 72 cents, near the year low of 69 cents. The company had traded as high as $7.25 per share within the year. The fledgling track, opened only two years ago, would face further trouble if the state's law compelling the track to increase its live racing season by 2002 from its current 72 to 150 days were not amended, Jeffery Jacobs, the company's chief operating officer, said in a statement. The track currently loses money on live thoroughbred racing operations, Herb Jones, the company's director of investment relations, told Reuters. The company had anticipated receipts from six offtrack betting sites would offset the live racing losses. So far, three of the four offtrack betting facilities up and running are making money, and one is breaking even, Jones said. Colonial Downs, which went public March 1997, had expected to take up to 10 years to build a fan base that would flock to the track, Jones said. Jacobs said the company may take up to 60 days to decide whether to file to reorganize under Chapter 11 bankruptcy protection laws. He said the company will not seek a referendum for additional offtrack facilities. CONSUMER PORTFOLIO: Reports 1998 Third Quarter Results ------------------------------------------------------- According to a business wire report, Consumer Portfolio Services, Inc. (Nasdaq: CPSS) Thursday announced financial results for its third quarter, ended September 30, 1998. For the third quarter, total revenues increased 76% to $37.4 million, compared with $21.3 million for the same period in the prior year. The Company's net earnings increased 29.5% to $6.2 million, or $.38 per share, on 16.9 million diluted shares outstanding, compared with $4.8 million, or $.30 per share, on 16.5 million diluted shares outstanding for the same period in the prior year. For the nine months ended September 30, 1998, total revenues increased 83.2% to $102.0 million, compared with $55.7 million for the same period in the prior year. Net earnings increased 33.1% to $17.8 million, or $1.08 per share on 16.7 million diluted shares, compared with $13.3 million, or $.85 per share on 15.9 million diluted shares for the same period in the prior year. Purchases of contracts from automobile dealers increased 74.5% in the third quarter to $303.0 million, compared with $173.6 million for the same period in 1997. Contracts sold during the third quarter in the form of asset-backed securities increased 60.2% to $240.3 million compared with $150.0 million for the same period in the prior year. The aggregate outstanding balance of contracts serviced by the Company at September 30, 1998, increased by 87.9% to $1,489.4 million, compared with $792.7 million at September 30, 1997. Balances of accounts past due over 30 days represented 4.7% of the servicing portfolio at September 30, 1998, compared with 6.1% at September 30, 1997. The annualized net charge off rate for the three month period ended September 30, 1998, was 6.5%, compared to 6.2% for the three month period ended September 30, 1997. The Company's non-discounted allowance for credit losses equaled $131.7 million, or 11.2% of the contracts sold that it serviced as of September 30, 1998. The on-balance sheet allowance for credit losses was $14.1 million, or 4.6% of contracts held for sale at September 30, 1998. Charles E. Bradley, Jr., President and Chief Executive Officer said, "The credit quality of our servicing portfolio continues to improve. Annualized net charge offs were 6.5%, approximately equal to second quarter 1998, and in line with our expectations. Delinquent accounts represented only 4.7% of the servicing portfolio, continuing a trend of lower delinquencies in 1998 compared to 1997. As of September 30, 1998, our inventory of repossessed vehicles declined to 1.9% of the servicing portfolio, compared to 2.2% for June 1998. COVENTRY HEALTH: Files Annual Report With SEC --------------------------------------------- Coventry Health Care Inc. filed a Form 11K Annual Report with the SEC for the fiscal year ended December 31, 1997. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950144-98- 011574.txt CRIIMI MAE: Sues Three of Its Largest Creditors ----------------------------------------------- Criimi Mae Inc., Rockville, Md., has sued affiliates of Morgan Stanley & Co., Merrill Lynch & Co. and Citigroup Inc., three of its largest creditors, alleging that they have "wrongfully seized" millions of the firm's cash and securities that were put up as collateral on loans, The Washington Post reported. The firm filed for chapter 11 protection two weeks ago and is now citing conflicts of interest by the big Wall Street firms that dominate the commercial mortgage finance market. According to industry analysts, the lawsuits could be the beginning of a legal battle that may determine the future of commercial real estate finance. Criimi Mae is the first firm in the business to ever file bankruptcy; thus there are no legal precedents. (ABI 22-Oct-98) CRIIMI MAE: Wants Seized Bonds Back ----------------------------------- According to an article on October 22, 1998 in the Washington Times Criimi Mae Inc. asked a bankruptcy court to order the return of bonds with a face value of $286.8 million that were seized by one of its creditors. The Rockville-based company, which filed for bankruptcy protection after the demand for its commercial mortgage- backed securities (CMBS) collapsed, asked the U.S. Bankruptcy Court in Greenbelt to compel Morgan Stanley Dean Witter & Co. to return the seized bonds. Criimi Mae said it holds an equity stake of $54.5 million in the bonds, which are commercial mortgage-backed securities assembled from a pool of commercial mortgages. Morgan Stanley, a securities firm, incorrectly valued the bonds at just $237,127 when it seized them, Criimi Mae charged. New York-based Morgan Stanley "is using the current temporary market turmoil to pay an absurdly low price for performing mortgage assets that are generating as much cash flow as they did three months ago," Criimi Mae Chairman William B. Dockser said in a written statement. Criimi Mae's suit "is without merit and we will defend ourselves vigorously," said Jeanmarie McFadden, a Morgan Stanley spokeswoman, who denied Criimi Mae's charges but refused to comment on specifics of the suit. It was the second time since Criimi filed for bankruptcy that the company has moved to fend off a creditor from taking its assets. Last week, it won a bankruptcy court order preventing Citicorp Securities Inc. from seizing similar assets. Criimi called Morgan Stanley's action a "willful violation of the automatic stay" imposed on creditors when the company filed for protection from creditors. What's more, Criimi Mae said yesterday, Morgan Stanley said in an Oct. 16 letter to Criimi that it might sell the seized assets. If sold now, the assets would fetch far less than they're worth because the CMBS market is depressed, Criimi said in the statement. That would harm both Criimi and the CMBS market overall, it said. For the past year, Criimi Mae has been the nation's most aggressive buyer of CMBS, a market that reached $47 billion by late August but has become inactive in the wake of the growing world economic crisis that began in Asia last year. Criimi Mae blames its bankruptcy on creditors who demanded extra collateral when recent global financial troubles slashed the value of its CMBS, which are backed by offices, hotels and shopping centers. However, Criimi officials say borrowers are continuing to repay their loans as much as before. "These are very strong assets that have been caught in a financial squeeze," said company spokesman Jim Pastore. The company is "stabilizing its current business, putting together the reorganization plan and continuing to negotiate with creditors and with potential sources of capital," he said. With two creditors trying to seize Criimi's assets, Mr. Pastore said the major question of how to value the CMBS assets has not been resolved. The CMBS market will survive in the long run no matter what happens to Criimi Mae, said an analyst who asked not to be identified. But Morgan Stanley may have a strong case for holding on to the assets, which didn't exist the last time Congress amended the bankruptcy code, he said. ERD WASTE: Seek To Hire Banking Investment Firm ------------------------------------------------ The debtors, ERD Waste Corp., et al., are in the process of finalizing a Chapter 11 plan of reorganization. A key component of the plan is the obtaining of additional working capital either in the form of a new equity infusion and/or a line of credit. The debtors wish to engage the banking investment firm of ITS, LLC to assist them in obtaining the additional working capital required to enable the debtors to emerge from Chapter 11. ITS has considerable experience in rendering consulting services to businesses with respect to capital raising and related matters. The debtors believe that ITS can provide substantial assistance to them in locating potential investors and or lenders to make available to the debtors the working capital required to complete the debtors' plan. The debtors would be responsible only for ITS' out-of-pocket expenses to a maximum of $14,000. The debtors request entry of an order authorizing them to reain ITS, LLC to render the consulting services as described in the letter agreement between the parties. EA. SHOSHONE: Zero Assets; $1 Million Debt ------------------------------------------ The taxpayer-supported East Shoshone Hospital District is nearly $1 million in debt, according to U.S. Bankruptcy Court documents. The district closed its Silver Valley Medical Center in September. Last week it filed for reorganization under Chapter 9 of the federal bankruptcy code. The taxing district's board of trustees voted Oct. 6 to file the petition after concluding that it is "impracticable" to negotiate with its creditors. The district's bankruptcy attorney is Ford Elsaesser. Board chairman Robin Stanley will not comment on the district's financial situation. In the court documents, the hospital district lists zero assets. Total liabilities are $944,636.The debts fall into three categories: Secured claims, $435,000. First Security Bank of Salt Lake City has a claim of $150,000. That amount is secured with the property taxes that the hospital district expects to collect in 1999. The Magnuson Trust, a claim of $150,000, is secured with the deed to the Wallace Clinic. Source Capital Leasing of Spokane, a claim of $125,000, is secured with the medical center's accounts receivable and equipment. Unsecured priority claims, $171,591. Creditors include 33 former employees who did not get paychecks for work done at the Silverton hospital between Aug. 30 and Sept. 12. The district also owes a total of $146,154 to the state and federal governments for unemployment and withholding taxes, and workers compensation. Unsecured nonpriority claims, $338,045. There are 121 such claims. Creditors range from garbage collectors and medical laboratories to restaurants and a flower shop. They are located from Georgia to California.(Copyright 1998 Cowles Publishing Company Spokesman Review; 10/20/98) ERLY INDUSTRIES: Trustee Names Creditor Panel ---------------------------------------------- The U.S. Trustee has appointed an official committee of Erly Industries Inc.'s unsecured creditors: Epman Dwyer Singer & Wohrle, Culver City, Calif.; Seneca Foods Foundation, Pittsford, N.Y.; Kasco Media Services Inc., c/o Platzer Swergold Karlin et al., New York, N.Y.; ChaseMellon Shareholder Services LLC, Ridgefield Park, N.J.; Sandburg Financial Corp., c/o Marshack Shulman & Hodges, Irvine, Calif. (The Daily Bankruptcy Review and ABI Copyright c October 22, 1998) FORMAN PETROLEUM: Approves Engagement of CIBC Oppenheimer --------------------------------------------------------- On October 16, 1998, the Board of Directors of Forman Petroleum Corporation (the "Company") approved the engagement by the Company of CIBC Oppenheimer Corp. ("Oppenheimer") as the Company's exclusive financial advisor in connection with the possible financial recapitalization of the Company (the "Recapitalization"). At the present time, the Company is not a party to any definitive agreement or letter of intent with respect to any transaction in connection with the Recapitalization. In connection with the Oppenheimer engagement, however, the Company expects to review and conduct investigations from time to time with respect to such transactions. It is the Company's policy, absent unusual circumstances, not to comment publicly on discussions concerning proposals that may be considered or transactions that may be pending with respect to the Recapitalization. The Company also intends, absent unusual circumstances, to refrain from making any further announcements or reports with respect to the Recapitalization unless and until a definitive agreement has been executed by the Company with respect to a transaction in connection with the Recapitalization. There can be no assurance that the Company will consummate any transactions in connection with the Recapitalization. Forman Petroleum Corporation is headquartered at 650 Poydras Street, Suite 2200, New Orleans, Louisiana. FORMAN PETROLEUM: Files Suit Against Financial Advisor ------------------------------------------------------ On October 16, 1998, Forman Petroleum Corporation filed a Complaint against Jefferies & Company, Inc. in the United States District Court in and for the Eastern District of Louisiana. Forman's complaint arises out of conduct of Jefferies acting as exclusive financial advisor to and placement agent for Forman in connection with the recapitalization of Forman through offerings of debt and equity securities, and Jefferies' unauthorized conduct following the recapitalization. By advising Forman to recapitalize through a certain proposed offering, Forman alleges that Jefferies caused Forman to enter into an ill-advised offering of high yield debt and equity securities. As a result of the ill-advised offerings, Forman's financial obligations increased from $45 million to $80 million and additional financing options were foreclosed by the security interests provided as collateral for the notes. After the paymentof trade payables and after offering fees and expenses, the offering generated only $500,000 of working capital available for its exploration and development activities -- the generation of which was a primary reason for pursuing the offering in the first place. At the same time, Jefferies demanded and was paid $5.5 million in fees for the transaction. In addition, the issuance of the preferred stock required that Forman convert from "S-Corporation" status to "C-Corporation" status, thereby depriving Forman of the substantial tax benefits associated with its them existing $10 million net operating loss carry forward. But for the acts of Jefferies with regard to its financial advice to Forman on the proposed restructuring, Forman would be in a far better financial position today. HAYES CORPORATION: Reports Filing to SEC ---------------------------------------- Hayes Corporation reports to the SEC that on October 9, 1998, the Hayes Corporation and its affiliates filed a petition in the U.S. Bankruptcy Court for the District of Delaware (Case No. 98-2278 (MFW)) for relief under Chapter 11 of the U.S. Bankruptcy Code due to its inability to pay its debts on a current basis. KIA MOTORS: Banks Expected To Ok Deal ------------------------------------- Creditor banks are expected to approve Hyundai Motors Co.'s takeover of bankrupt Kia Motors Corp., a top government official said Thursday. The comment by Chairman Lee Hun- jai of the Financial Supervisory Commission appeared to be a tacit government endorsement of Hyundai's bid to acquire Kia. Hyundai was named the winning bidder for Kia in an auction Monday, but its offer still must be approved by Kia's creditor banks, most of which are controlled by the government. Hyundai bid was chosen over those of Ford Motor Co. of the United States and two domestic competitors, Daewoo Motors Co. and Samsung Motors Inc. There has been speculation that the banks might reject Hyundai's bid, which included a demand that they write off $7.3 billion of Kia's $8.4 billion debt. Lee said Hyundai's takeover of Kia would spur a reorganization of South Korea's shaky auto industry, plagued by over-supply problems. With a combined capacity of 3.5 million vehicles a year, South Korea is the world's fifth largest car producer. MARVEL ENTERTAINMENT: Files Stockholder Agreement With SEC ---------------------------------------------------------- In a Schedule 13D filed with the SEC, Marvel Enterprises Inc. reports that the Chase Manhattan Corporation, and The Chase Manhattan Bank are the beneficial owners of 33,002,326 shares of common stock representing 71% of the classs. A certain stockholders' agreement dated October 1, 1998 by and among AVI ARAD, VARIOUS DICKSTEIN ENTITIES AND INDIVIDUALS, ISAAC PERLMUTTER, ISAAC PERLMUTTER T.A., THE LAURA & ISAAC PERLMUTTER FOUNDATION INC., OBJECT TRADING CORP., ZIB INC., VARIOUS SECURED LENDERS, and TOY BIZ, INC. is included in the filing. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000898822-98- 000970.txt PERK DEVELOPMENT: Committee Objects to Deloitte & Touche -------------------------------------------------------- The Official Joint Committee of Unsecured Creditors objects to the application by the debtors for approval of employment of Deloitte & Touche as independent auditors. The Committee complains that there was no engagement letter that the debtors were to supply to the court and the Committee. "The Committee is disappointed, frustrated, and distressed by the manner in which the debtors have dealt with the appointment of auditors. The Committee is especially concerned because it believes that the debtors' actions with repsect to the appointment of auditors demonstrate and underscore a pervasive, cavalier and laissez faire attitude that appears to infect the overall cases." The Committee also complains that the October 7 engagement letter appears to be for the sole benefit of Travel Ports and to provide no benefit to the estate whatsoever. PITTSBURGH PENGUINS: Creditors Committee Appointed -------------------------------------------------- Mario Lemieux and Civic Arena landlord SMG Pittsburgh were appointed to lead a creditors' committee in the Pittsburgh Penguins chapter 11 case; Lemieux is the largest creditor, owed $28.7 million, according to the team, the Associated Press reported. Others on the committee include Fox Sports Pittsburgh, former Penguins' employee William Craig, the law firm of Cohen and Grisby, architects with John R. Kosko Associates, and Carriage Limousines, which shuttled players. Also yesterday Bankruptcy Judge Bernard Markovitz ruled that attorneys for Pittsburgh, Allegheny County and SMG Pittsburgh could continue gathering evidence in their lawsuit against team owner Roger Marino. They allege that he has continued efforts to move the team to another city. Judge Markovitz said he would decide within 30 days whether the lawsuit could go forward in Allegheny County Common Pleas Court, were it was filed. Judge Markovitz also scheduled a hearing for Tuesday at the National Hockey League's request on granting an extension of a grace period. Under the NHL's constitution, it has 10 days to decide whether to take over a franchise that files for bankruptcy protection. The 10-day period lapses today, but the league wants the extension to keep its options open. (ABI 22-Oct-98) REGENCY HOMES: Four Creditors Take Back 300 Lots ------------------------------------------------ A bankruptcy judge has allowed four major creditors to take back approximately 300 building lots in Maryland and Virginia from the Chapter 7 liquidation of Regency Homes Inc. and its affiliates, a move that gets homebuyers a step closer to a resolution in one of the largest homebuilder debacles ever in Maryland. Judge S. Martin Teel Jr. signed off on a motion of sale Friday from Zvi Guttman, trustee for the estate, that allows Provident Bank of Maryland, Sterling, Va.-based Bank United, First Union National Bank and Ohio Savings Bank of Cleveland to take back their lots in exchange for $21 million in secured claims against the estate. However, Bankers Trust Co. of New York, which has more than $20 million in secured and unsecured debt with Regency, has yet to come to any agreement, according to Guttman, who added that negotiations would continue. Bankers Trust holds rights to 90 to 100 "spec" homes that are nearly complete. The four banks also included in their agreement $550,000 to go toward satisfying administrative expenses as well as employee, trade and consumer claims against Regency. The deal with the four banks also effectively kills a proposal made in August by Washington Homes Inc. of Landover to purchase the assets of Regency for $25.5 million. Guttman said the banks balked at the Washington Homes proposal for not being more lucrative, saying their portion of the purchase would total $16 million, but the principal value was $21 million. Guttman expects to close the agreement with the four banks next week and at "that point each bank will have to have a story of what they are going to do" in terms of dealing with buyers who may have contracts to build homes. Guttman said his office has a list of which banks own which lots. Christopher Spendley, chief financial officer for Washington Homes, said that his company -- despite not acquiring all the assets -- remains in negotiation with several of banks. Provident issued a statement saying the court order "allows us to take control of our collateral. We are talking to various third parties about the disposition of that collateral." Regency, once the largest private homebuilder in Maryland, filed for bankruptcy in July after an agreement for Atlanta-based Beazer Homes USA to buy the company for $41 million fell through after creditor objections. In a release of creditor schedules Monday, Guttman said the company showed a total of $46.5 million in secured claims, $1.6 million in priority claims (employee payroll and consumer deposits) and another $14.8 million in unsecured claims. The largest unsecured claim was by Bankers Trust at $7 million, according to Guttman. Also waiting for a resolution is Thomas P. Raimondi, associate deputy commissioner for the Maryland Insurance Administration. Raimondi said his office has "a couple of hundred" claims from Regency depositors against a $500,000 surety bond that was taken out by the company last spring. "We hopefully are going to make distribution once this is all resolved," he said. (BaltimoreSun-10/21/98) STAR NEWCO: Seeks DIP Financing ------------------------------- The debtor, Star Newco, Inc. is seeking authorization to obtain secured post-petition financing. The motion will be heard on October 30, 1998 at 9:30 am at the U.S. Bankruptcy Court, 824 Market Street, Wilmington, Delaware. The debtor seeks authority to obtain the DIP Financing under the terms set fort in the post-petition loan agreement. The maximum amount of the facility is $8 million subject to the terms of the loan. The monthly term loan amortization is $50,000 per month payable at the end of the month. The ability of the debtor to finance its operations, and the availability of sufficient working capital and liquidity through the occurrence of new indebtedness for borrowed money is essential to the debtor's ability to continue to operate in the short term. In the absence of such financing, the continued operation of the debtor's business would not be possible and serious and irreparable harm to the debtor and its estate would occur. In particular the debtor states that it will have difficulty in dealing with its customers and suppliers without the availability of the DIP financing. STORM TECHNOLOGY: Files Chapter 11 ---------------------------------- Storm Technology Inc., Mountain View, Calif., has filed for chapter 11 protection in the Northern District of California, according to a newswire report. President and CEO L. William Krause said that the filing is in the best interest of Storm's customers, employees and creditors, and that it provides the best opportunity to restore financial stability. (ABI 22-Oct-98) SUN TV: Final Okay For Reduced $60M DIP Pact -------------------------------------------- The court has given final approval to Sun Television & Appliances Inc.'s $60 million debtor-in-possession credit agreement with BankBoston Retail Finance Inc. as agent, reduced from the initial $75 million proposal. The DIP agreement matures on the earlier of Sept. 15, 2000, notice of a default, and confirmation of a reorganization plan. Meanwhile, the consumer electronics chain said vendors are responding unfavorably to its Chapter 11 filing. "Currently the company is receiving little or no vendor support or trade credit, and some vendors have chosen not to sell product to the company post-petition." (The Daily Bankruptcy Review and ABI Copyright c 22-Oct-98) SUN TV: Money Situation Worsens ------------------------------- According to the Columbus Dispatch on October 21, 1998, Sun Television & Appliances has suffered its biggest three- month loss ever and is warning investors to expect the worst, say documents filed Monday with the Securities and Exchange Commission. The ailing electronics retailer reported a loss of $63.5 million for the quarter ended Aug. 29, the largest quarterly loss in the company's 49-year history. Sun has lost more than $153 million in the past 2 1/2 years. The 59-store chain filed for Chapter 11 bankruptcy protection Sept. 16 and got court approval a day later to close 29 stores. The stores - in metropolitan Cleveland, Cincinnati, Pittsburgh and Buffalo, and in smaller cities in Kentucky, Pennsylvania, Tennessee and Virginia - were turned over to a liquidator last week. Going-out- of- business sales are expected to be complete before year-end. Thirty other stores - including eight in central Ohio - are to remain open for business. Bankruptcy-court officials are expected to decide soon whether another Sun store will open this fall at Easton. Officials weren't available for comment yesterday, but their statements in SEC filings don't sugarcoat Sun's condition. "It is extremely unlikely that holders of the company's common stock will receive or retain any property under a plan of reorganization or otherwise," officials wrote. Sun's stock has traded at less than $1 since the bankruptcy filing. Yesterday, Sun's stock closed at 17 cents. A little more than five years ago, it was $27 a share. Sun filed for bankruptcy after poor sales led the chain to default on loan payments due in August, giving vendors the jitters. In the SEC filing, officials said some vendors are refusing to sell merchandise to Sun. Others have required cash payment when merchandise is delivered rather than deferring payment until it is sold, the customary retail practice. "For a stand-alone reorganization plan to be viable, vendor support and trade credit are critical," Sun said in the filing. "Currently, the company is receiving little or no vendor support or trade credit, and some vendors have chosen not to sell product to the company." Meanwhile, Sun's credit crunch is making it difficult to stock shelves. The company's line of credit with Banc Boston was reduced last week to $60 million from $100 million before the bankruptcy filing. Sun Chairman Carter Pate and President Dennis May said unexpectedly poor sales in July and August and thin profit margins combined to force the bankruptcy petition. In the securities filing, officials said sales at stores open longer than a year declined 9.3 percent. Those declines come in addition to declines in 1997 and 1996, largely as a result of competition from national chains including Best Buy and Circuit City. Pate's strategy was to open stores in smaller towns to avoid the national competitors, but that hasn't worked. Some of the stores to close this fall have been open less than six months. In the securities filing, officials said the chain experienced "slower-than- expected sales growth from the new rural-market stores." Sun's latest quarter includes a charge of $47.4 million for store inventory and real estate related to the planned store closings. May said last month that Sun is open to selling all or part of the remaining company, but no one has offered to buy it since late 1996. In the past six months, Sun has lost more than $74 million, or $4.27 per share, on sales of $231.2 million. In addition to the local stores, Sun intends to operate 22 stores in smaller cities in Ohio, Indiana, West Virginia, Virginia and Pennsylvania. ********* 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. 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