/raid1/www/Hosts/bankrupt/TCR_Public/981118.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, November 18, 1998, Vol. 2, No. 226
Headlines
ADVENTURE ELECTRONICS: Files for Bankruptcy Protection
AL TECH: Letter of Intent to Acquire Expires
ALLIS CHALMERS: Reports Third Quarter Results
BOSTON SCIENTIFIC: Securities Fraud Case Filed
CALDERONE BROTHERS: PricewaterhouseCoopers Named Receiver
CERION TECHNOLOGIES: Reports Third Quarter Results
CHANDLER INSURANCE: Reports Lower Third Quarter Income
CITYSCAPE: Reaches Settlement With Elliott/Westgate
COLONIAL DOWNS: Reports 1998 Third Quarter Results
CONTIFINANCIAL: Cutting 12 Percent of Workforce
CRIIMI MAE: Hearing on Wasserstein Perella Set
HARVARD INDUSTRIES: Seeks To Change Exit Facility
HOSPITAL STAFFING: Disclosure Statement Filing Date
JOTAN: Southland Container Subsidiary Provides Big Losses
MARTIN COLOR-FI: Files Chapter 11
MONTGOMERY WARD: Losses Narrow in Third Quarter
MRS TECHNOLOGY: Reports Nasdaq Listing Determination
OMEGA ENVIRONMENTAL: Hearing Set For Sale of Assets
PACIFIC SAFETY: Former President and Accountant Indicted
PHILIP SERVICES: Icahn Threatens Insolvency Proceedings
POCKET COMMUNICATIONS: Court Ends Injunction
SCOOP INC: InfiniCom AB to Acquire Majority Interest
SCORES: Owners Sentenced To Jail
WORLDCORP: To File Pre-packaged Chapter 11
*********
ADVENTURE ELECTRONICS: Files for Bankruptcy Protection
------------------------------------------------------
Adventure Electronics Inc., Anjou, Quebec, announced that
its board of directors has approved that it file an
assignment in bankruptcy pursuant to the Bankruptcy and
Insolvency Act, primarily because of the loss of the
financial support of the company's principal creditors,
according to a newswire report. Early this year the company
put a restructuring into place but the withdrawal of
support by the creditors makes the restructuring
impossible. Caron Belanger of Ernst & Young will be the
appointed trustee. (ABI 17-Nov-98)
AL TECH: Letter of Intent to Acquire Expires
--------------------------------------------
Universal Stainless & Alloy Products Inc. announced today
that its letter of intent to acquire the assets of AL Tech
Specialty Steel Corp. has expired; AL Tech, based
in Dunkirk, N.Y., is operating under chapter 11 protection,
according to a newswire report. Universal Stainless
President and CEO Mac McAninch said the proposed alliance
would "generate significant synergies. Our due diligence
identified certain issues that would require the company to
assume future liabilities in excess of the amount that
we were prepared to accept." He also said that although the
letter of intent has expired, his company would consider
completing the transaction under the right circumstances.
(ABI 17-Nov-98)
ALLIS CHALMERS: Reports Third Quarter Results
---------------------------------------------
Allis-Chalmers Corporation (OTC Bulletin Board: ACLM) today
reported net income of $680,000, or $.68 per common share,
in the third quarter of 1998 compared with a net loss of
$658,000, or $.66 per common share, in the same quarter of
1997.
The income in 1998 included other income of $825,000
resulting from the settlement reached with the Internal
Revenue Service in the amount of $75,000 for a tax
liability previously recorded in the amount of $900,000.
The 1997 third quarter loss included a non-cash expense of
$465, 000 for pension expense on the unfunded liability
associated with the Allis-Chalmers Consolidated
Pension Plan. There was no pension expense in the third
quarter of 1998.
However, the Company continues to experience significant
corporate expenses due to its position as a publicly held
company and in its search for appropriate acquisition
candidates.
Sales by Houston Dynamic Service, Inc., the Company's
machinery repair and service operation, in the third
quarter of 1998 were $943,000 compared with $813,000 in the
1997 period.
In 1994, the Company's independent pension actuaries
changed the assumptions for mortality and administrative
expenses used to determine the liabilities of the Allis-
Chalmers Consolidated Pension Plan. Primarily as a result
of the changes in mortality assumptions to reflect
decreased mortality rates of the Company's retirees, the
Consolidated plan was underfunded on a present value basis.
In the first quarter of 1996, the company made a cash
contribution to the Consolidated Plan in the amount of
$205,000. The Company did not, however, have the financial
resources to make the other required payments to the
Consolidated Plan during 1996 and 1997. Given the inability
of the Company to fund such obligations with its limited
financial resources, in February 1997, Allis-Chalmers
applied to the Pension Benefit Guaranty Corporation (PBGC)
for a "distress" termination of the Consolidated Plan under
section 4041 (c) of the Employee Retirement Income Security
Act of 1974, as amended (ERISA). The PBGC approved the
distress termination application in September 1997 and
agreed to a plan termination date of April 14, 1997. The
PBGC became trustee of the terminated Consolidated Plan on
September 30, 1997.
Upon termination of the Consolidated Plan, Allis-Chalmers
and its subsidiaries incurred a liability to the PBGC for
an amount equal to the Consolidated Plan's unfunded benefit
liabilities. Allis-Chalmers and its subsidiaries also have
liability to the PBGC, as trustee of the terminated
Consolidated Plan, for the outstanding balance of the
Consolidated Plan's accumulated funding deficiencies. The
PBGC has estimated that the unfunded benefit liabilities
and the accumulated funding deficiencies (together, the
PBGC Liability) total approximately $67.9 million.
In September 1997, Allis-Chalmers and the PBGC entered into
an agreement in principle for the settlement of the PBGC
Liability (the PBGC Agreement). The PBGC Agreement calls
for the PBGC to release Allis-Chalmers and its subsidiaries
from the PBGC Liability in return for that number of shares
of Allis-Chalmers' common stock that represents 35% of the
total number of shares issued and outstanding on a fully-
diluted basis.
The PBGC Agreement is subject to negotiation of definitive
documentation and to satisfactory resolution of Allis-
Chalmers tax obligations with respect to the
Consolidated Plan under section 4971 of the Internal
Revenue Code of 1986, as amended (Code). Section 4971 (a)
of the code imposes, for each taxable year, a
first-tier tax of 10 percent on the amount of the
accumulated funding deficiency under a plan like the
Consolidated Plan. Section 4971(b) of the Code
imposes an additional, second-tier tax equal to 100 percent
of such accumulated funding deficiency if the deficiency
is not "corrected" within a specified period. Viability
for the taxes imposed under section 4971 extends,
jointly and severally, to Allis-Chalmers and to its
commonly-controlled subsidiary corporations.
Prior to its termination, the consolidated Plan had an
accumulated funding deficiency in the taxable years 1995,
1996, and 1997. Those deficiencies resulted in first-tier
taxes under Code section 4971(a) of approximately
$900,000.
On March 2, 1998, Allis-Chalmers sent the Internal Revenue
Service (IRS) a formal Offer in Compromise of the Company's
tax liability. On July 16, 1998, the parties reached a
settlement agreement in principle in the amount of $75,000.
Following final IRS approval, payment of this amount was
made on August 11, 1998. In the meantime, discussions
regarding definitive documentation continue with the PBGC
on certain issues contained in a proposed Shareholder
Agreement between the Company and the PBGC. The Company is
encouraged by the progress made in these discussions.
However, if a satisfactory agreement cannot be negotiated
with the PBGC, Allis-Chalmers will evaluate other
alternatives, including a bankruptcy filing.
BOSTON SCIENTIFIC: Securities Fraud Case Filed
----------------------------------------------
Boston Scientific Corporation and two of its most senior
officers engaged in securities fraud, according to a class
action filed November 16, 1998, in the United States
District Court for the District of Massachusetts by the law
firm of Berger & Montague, P.C.
The case is filed on behalf of all persons who purchased
Boston Scientific common stock between January 15, 1998 and
November 3, 1998. The Complaint alleges that defendants
issued false and misleading statements during the Class
Period about its previously reported revenues and assets.
Specifically, the complaint alleges that the Company
improperly recorded $40-50 million in revenues in the first
nine months of fiscal 1998 due to accounting rregularities
at its Japanese subsidiary. In addition, the Complaint
alleges that there is an additional $40 million of net
unrealizable assets on Boston Scientific's balance sheet
also due to similarly improper sales recorded in prior
periods.
Plaintiff alleges that defendants' misleading positive
statements about the Company's financial results
artificially inflated the price of Boston Scientific common
stock. When news of Boston Scientific's improper
accounting practices was reported on November 3, 1998, the
Company's stock fell $5.875 per share or 11% before trading
in the stock was halted. When trading resumed on November
4, 1998, the stock opened at $40-1/4, down another $6-1/8.
The total percentage drop was 23%. Plaintiffs seek to
recover damages suffered by Class members and are
represented by the law firm of Berger & Montague, P.C.
CALDERONE BROTHERS: PricewaterhouseCoopers Named Receiver
---------------------------------------------------------
PricewaterhouseCoopers Inc. has been appointed by the court
as receiver for Calderone Brothers Inc., operators of 12
Calderone shoe stores in Toronto, London and Montreal,
according to a newswire report. Calderone, which is now
bankrupt, has been in the shoe business since 1947.
PricewaterhouseCoopers has received approval to convey the
tradenames and store leases to the Aldo Group and approval
to liquidate Century Services Inc. (ABI 17-Nov-98)
CERION TECHNOLOGIES: Reports Third Quarter Results
--------------------------------------------------
Cerion Technologies Inc. (Nasdaq:CEON), a manufacturer of
precision-machined aluminum disk substrates, today
reported that net sales for the third quarter ended October
2, 1998 were $3.2 million compared with $6.7 million in the
third quarter of 1997. Cerion reported a net loss of $2.8
million, or $(.40) per share, for the third quarter
of 1998, compared to net income of $45,000, or $0.01 per
share basic and diluted, for the same quarter of 1997.
For the nine-month period ended October 2, 1998, net sales
were $9.4 million compared to net sales of $22.1 million in
the same period of 1997. The net loss for the first nine
months of 1998 was $11.2 million, or a loss of $(1.58) per
share, compared to net income of $120,000, or $0.02 per
share basic and diluted.
The Company announced on September 15, 1998 that it intends
to cease operations on or about November 15, 1998. The
Company had announced on August 13, 1998 that it was
actively seeking a buyer for its business and it reported
that those efforts had not been successful to date. The
Company's Board of Directors has concluded that continued
operations beyond November 15, 1998 would not be
in the best interest of Cerion's shareholders. It is the
present intention of Cerion to seek approval from its
shareholders for an orderly liquidation of the Company's
assets.
Headquartered in Champaign, Illinois, Cerion Technologies
Inc. has manufactured precision-machined aluminum disk
substrates which are the metallic platforms of magnetic
thin-film disks used in the hard drives of desktop
computers, network servers, add-on storage devices and
storage upgrades.
CHANDLER INSURANCE: Reports Lower Third Quarter Income
------------------------------------------------------
GRAND CAYMAN, Cayman Islands (JR) -- Chandler Insurance,
the parent of subsidiary companies based in Oklahoma, on
Thursday reported a drop in net income for the third
quarter. Net income for the quarter totaled $605,000, or 9
cents per share, down from $1.04 million, or 16 cents per
share, for the third quarter of 1998.
"Our marketplace is highly competitive, yet Chandler posted
increases in gross premiums earned for both the third
quarter and nine-month periods just as we did in the
previous quarter -- again notable achievements," said Brent
LaGere, chairman and CEO.
Net income for the first nine months of 1998 was $2.6
million, or 41 cents per share, compared with a net loss of
$8.7 million, or $1.30 per share, in the first nine months
of 1997. The change in net income for the nine-month period
was primarily attributable to a reduction in significant
and unusual litigation costs and related expenses from the
year ago period, plus the recapture of previously
expensed litigation costs. Net income excluding net
litigation expenses was $833,000, or 13 cents per share in
the third quarter of 1998, versus net income excluding net
litigation expenses of $1.39 million, or 21 cents per share
in the year-ago quarter.
Through its U.S.-based subsidiary, National American
Insurance, Chandler underwrites various lines of property
and casualty insurance including surety performance bonds
and workers compensation in Oklahoma and surrounding
states, principally Texas.
Net premiums earned decreased $4.4 million, or 29 percent,
in the third quarter from the prior year and decreased
$10.4 million, or 25 percent for the nine months ended
Sept. 30.
While the company's litigation expenses related to CenTra
Inc. have generally decreased since the first quarter of
1997, continued or renewed actions by CenTra or its
affiliates could cause Chandler to incur significant
litigation related expenses in future periods, the company
said. On April 21, 1998, U.S. District Court in Oklahoma,
ordered all parties to pay their own costs and attorney's
fees in the case, thus denying CenTra's request of
approximately $4.7 million for those expenses.
CenTra did not appeal this decision within the time
permitted by applicable law, Chandler said. Accordingly,
Chandler reduced the previous first quarter 1997 net charge
for CenTra litigation matters by $3.77 million during the
second quarter of 1998. In subsequent papers filed with
the appellate court, CenTra asserts as error the court's
denial of attorney fees. (Journal Record - 11/06/98)
CITYSCAPE: Reaches Settlement With Elliott/Westgate
---------------------------------------------------
Cityscape Financial Corp. reached a settlement with
preferred shareholders Elliott Associates L.P. and Westgate
International L.P. Thursday regarding the consumer finance
company's prepackaged plan of reorganization. The plan
confirmation hearing has been adjourned until Nov. 19 to
give the parties time to document the settlement. The
equity holders had opposed the proposed plan, which left
them out-of-the-money. (Federal Filings Inc. 17-Nov-98)
COLONIAL DOWNS: Reports 1998 Third Quarter Results
--------------------------------------------------
Colonial Downs Holdings, Inc. (Nasdaq NMS: CDWN) which
through its subsidiaries holds the only licenses
to own and operate a pari-mutuel horseracing course and
satellite racing centers in Virginia, today reported
results of operations for the third quarter ended
September 30, 1998. The Company reported a net loss for the
third quarter of 1998 of $1,541,000 or $.21 per share
compared to earnings of $80,000 or $.01 per share for the
same period in 1997. Total revenue in the third quarter of
1998 was $7, 747,000 compared to $7,153,000 in the third
quarter of 1997 an increase of 8.3%. For the nine months
ended September 30, 1998, the Company reported a net loss
of $4,420,000, or $.61 per share compared with earnings of
$982,000 or $.16 per share for the same period in 1997.
Revenues for the first nine months of 1998 were
$22,287,000, up 27% from $17,614,000 in 1997.
For the nine month period, all of the Racing Centers except
Brunswick operated profitably. Earnings from the Richmond
and Chesapeake Racing Centers increased by approximately
$495,000 compared to the same period of the prior year. In
addition, 1998 profitability was negatively affected by the
harness and thoroughbred meet results and track operating
expenses in comparison to 1997.
Jeffrey P. Jacobs, Chairman, President and Chief Executive
Officer of the Company said, "Over the next 45 days we will
announce a reorganization plan that will place Colonial
Downs on the road to profitability. This plan may or may
not include a bankruptcy filing. We are keeping all of our
options open..."
In November 1998, the Company entered into an agreement
with the Virginia Horsemen's Benevolent and Protective
Association that will allow it to borrow up to $500,000
from the thoroughbred purse account. The loan is due on
August 31, 1999.
CONTIFINANCIAL: Cutting 12 Percent of Workforce
-----------------------------------------------
Home equity lender ContiFinancial Corp. said
Monday it is cutting 446 jobs, or 12 percent of its
workforce, as part of an effort to weather adverse capital
market conditions.
The company, which is 77 percent-owned by Continental Grain
Co., said most of the positions relate to wholesale
residential mortgage origination and funding.
In addition to the job cuts, ContiFinancial plans to reduce
the volume of loans its sells through securitization to
about $1 billion a quarter, while increasing the frequency
of these transactions in order to limit exposure to
market volatility. The company said consumer demand for its
products remains "very strong."
Widening interest rate spreads between U.S. Treasury bonds
and other fixed- income securities, however, forced the
company to write off $165.1 million in the second quarter,
resulting in a $114.3 million net loss, or $2.48 a diluted
share. The loss compares with net income of $34.8 million,
or 73 cents a share, in the same period in 1997.
"Clearly, the company's financial performance in the second
quarter was extremely disappointing," President and Chief
Executive James Moore said in statement. "However, at a
time when the collapse of liquidity in our industry caused
a number of our competitors to file for bankruptcy
protection, we are pleased that we have been able to come
through this crisis and are confident about the future."
CRIIMI MAE: Hearing on Wasserstein Perella Set
----------------------------------------------
Upon the motion of the debtors, CRIIMI MAE, Inc., et al.,
to employ Kenneth A. Buckfire and Wasserstein Perella & Co.
as financial advisors, a hearing will be held on November
23, 1998 at 3:00 p.m. in Courtroom 3-C United States
Courthouse, 6500 Cherrywood Lane, Greenbelt, Maryland.
HARVARD INDUSTRIES: Seeks To Change Exit Facility
-------------------------------------------------
Harvard Industries Inc. is seeking court authorization to
make "significant changes" in the structure of the exit
credit facility to be provided by Lehman Brothers Inc.,
including reducing the total facility from $165 million to
$140 million. "Due to the upheavals in the world financial
markets since July 31, 1998, Lehman notified the Debtors
that the terms of the Lehman Commitment would require
substantial modification to complete the syndication of the
Post-Confirmation Credit Facility," according to Harvard.
Fearing that an unsuccessful syndication of the exit
facility would result in Lehman exercising a provision in
its July 31 commitment letter that allows the lender to
terminate the commitment after certain negative financial
market events, Harvard said it negotiated modifications to
the commitment letter with Lehman. (Federal Filings Inc.
17-Nov-98)
HOSPITAL STAFFING: Disclosure Statement Filing Date
---------------------------------------------------
The debtor, Capital Factors, Inc., the secured creditor and
the Official Committee of Unsecured Creditors have filed a
motion for a second extension of time to file the first
amended Disclosure Statement and Plan of Reorganization.
The court orders the debtors to file and serve the first
Amended Disclosure Statement on or before November 20,
1998. A hearing to consider approval of the Disclosure
statement shall be held on December 11, 1998, at the US
Bankruptcy Court, 299 E. Broward Blvd., Courtroom 308, Fort
Lauderdale, Florida.
JOTAN: Southland Container Subsidiary Provides Big Losses
---------------------------------------------------------
The Florida Times-Union reports on November 11, 1998 that
Jotan Inc., a Jacksonville-based distributor of packaging
and shipping supplies, filed for Chapter 11 bankruptcy
protection because of mounting losses at a subsidiary it
acquired last year.
Jotan intends to sell or liquidate the subsidiary,
Southland Container Packaging Corp., which distributes
supplies to the moving and storage and perishable goods
industries. The company would then continue to operate its
Jotan division, which distributes supplies to industrial
customers, as its primary business. Jotan said that
business is profitable.
"We made several efforts to sell the Southland moving and
storage business and assets outside bankruptcy but each
time the negotiations broke down, in part, over the buyer's
concerns about getting clear title," said Jotan President
and Chief Executive Officer Raleigh C. Minor. He said
bankruptcy will erase those concerns.
Jotan filed a plan of reorganization in which it would
cancel its current common stock and issue 70 percent of its
new common stock to its secured creditors. Unsecured
creditors would get the remaining 30 percent of
the stock. That plan could be altered during negotiations
with creditors but if it is confirmed by the bankruptcy
court, existing shareholders would be wiped out. The
company has about 125 shareholders holding 21 million
shares of common stock.
Gardner Davis, a Jacksonville attorney representing Jotan
said the proposed plan wipes out Jotan's debts and makes
the creditors owners of the company. Jotan was formed in
1993 and went public in 1994. The stock traded between $4
and $6 a share for the first year but fell after that and
has been trading below $1 a share for the past year. It has
been trading for only pennies a share in recent weeks.
Jotan currently has about 200 employees at 18 locations
throughout the country. By selling or liquidating
Southland, it expects to cut that in half to 100 employees
at nine locations. The company employs about 30 people in
Jacksonville. Minor said some of those jobs could be
affected by the reorganization, but he could not say how
many. The company grew out of Atlantic Bag and Paper Co.,
a 60-year-old Jacksonville business, and was formed to
offer just-intime delivery of packaging and shipping
supplies to businesses. The name Jotan stands for "just on
time as needed."
The company grew significantly in March 1997 by acquiring
Southland but the deal also caused big losses. After
earning a modest profit of $173,658 in 1996, Jotan had a
net loss of $38.5 million in 1997, due in large part to the
write- off of $33 million in goodwill on its balance sheet
from the Southland deal. Minor, a self-described
turnaround consultant and crisis manager, was brought in to
run the company in January and attempted a restructuring
plan, but it was unsuccessful.
Jotan continued to lose money this year, reporting a net
loss of $3.2 million on sales of $33.2 million in the first
six months this year. The company said continued losses
from Southland have used up its available funding.
The Jotan division "is doing well. It's carrying more than
its own weight," said Minor. But he would not give specific
figures for the division. The company's Chapter 11 filing
in U.S. Bankruptcy Court for the Middle District of Florida
in Jacksonville lists $25 million in assets and $54 million
in debt. The largest secured creditor is Banque Paribas,
which is owed $25.3 million. The largest unsecured
creditors are paper companies, led by Weyerhauser Co.,
which is owed $1.1 million. Minor said he hopes to get
through the Chapter 11 process in 90 to 120
days.
MARTIN COLOR-FI: Files Chapter 11
---------------------------------
Martin Color-Fi Inc., Edgefield, S.C., and its
subsidiaries, Buchanan Industries Inc. and Star Fibers
Inc., have filed for chapter 11 protection in the District
of South Carolina, The Wall Street Journal reported. Martin
Color-Fi makes polyester fibers and pellets from
recycled plastic materials. The company said the filings
are designed to facilitate the sale of certain assets.
Martin reported a loss of 5.4 million for the second
quarter ended June 28.
MONTGOMERY WARD: Losses Narrow in Third Quarter
-----------------------------------------------
The Chicago Sun Times reports on November 14, 1998 that
Montgomery Ward Holding Corp. said its fiscal third-quarter
loss narrowed 25 percent as the retailer spent less on
restructuring its business and cut costs. The retailer's
loss narrowed to $462 million in the quarter ended Oct.
3 from $615 million last year. The results included pretax
reorganization costs of $21 million in the most recent
quarter and $582 million a year earlier, according to a
regulatory filing. The results were not audited. The
company has focused on attracting more female shoppers.
MRS TECHNOLOGY: Reports Nasdaq Listing Determination
----------------------------------------------------
MRS Technology, Inc., (MRSIQ) today reported that the
Company had been notified of the determination made by the
Nasdaq Listing Qualifications Panel on the Company's
request for continued listing on the Nasdaq National
Market. In a letter received on November 12, the Company
was notified that its securities would be delisted from The
Nasdaq Stock Market, effective with the close of business
on November 11. Trading of the Company's securities on the
Pink Sheets occurred on November 12 and 13. The Pink Sheets
are operated by the National Quotation Bureau, LLC.
On August 13, 1998, the Company reported that it had been
notified by Nasdaq of their intent to delist the Company's
securities as a result of the Company's filing under
Chapter 11 and failing to meet some of the continued
listing requirements. The Company requested a hearing to
review this decision, an action which stayed the delisting
action. The hearing was held on October 8. The Company
learned the outcome on Thursday, November 12. Further
review of this decision may occur, but such a review would
not stay the delisting action.
The Company took steps in September to enable trading of
the Company's securities on the OTC Bulletin Board (OTCBB)
as quickly as possible after any delisting, in the event
that should occur. The OTCBB is a regulated quotation
service that displays real-time quotes, last-sale prices,
and volume information in over-the-counter (OTC) equity
securities. One or more of the market makers in the
Company's securities has filed with the OTCBB to begin
trading of the Company's securities on the OTCBB. The
Company will make a further announcement when it receives
notice of its eligibility for the OTCBB.
MRS Technology, Inc. is a leading supplier of advanced
systems needed for production of electronic products
manufactured with large area microlithographic processes.
Based in North Andover, Massachusetts, MRS Technology
markets and sells its products worldwide. The Company's
Common Stock is traded on the Pink Sheets; its trading
symbol is MRSIQ.
OMEGA ENVIRONMENTAL: Hearing Set For Sale of Assets
---------------------------------------------------
Omega Environmental, Inc., debtor, is seeking an order
authorizing the sale of substantially all of the assets of
its Petroleum Services Division operations in Houston and
Cibolo, Texas to Alliance Maintenance and Services, Inc.
The hearing date is December 4, 1998 at 11:00 a.m. in Room
407, Park Place Building, 1200 Sixth Avenue,
Seattle,Washington. The purchase price is $300,000.
PACIFIC SAFETY: Former President and Accountant Indicted
--------------------------------------------------------
The Las Vegas Review-Journal reported on November 5, 1998
that the former president of Pacific Safety Industries and
the now- defunct company's accountant were indicted
Wednesday in a bankruptcy fraud case.
Garry Soubry, former president of the Las Vegas-based
company, and accountant Judy Banks each face federal
charges of conspiracy, concealment of assets in
contemplation of bankruptcy and money laundering.
Soubry also faces charges of obstruction of justice and
making false statements under penalty of perjury.
Pacific Safety Industries was incorporated in Nevada in
September 1983. It manufactured photo-luminescent paint and
sold it to the Department of Defense.
According to the indictment, Soubry and Banks began
participating in a conspiracy in January 1993 to conceal
the company's property. In November 1993, Soubry filed for
bankruptcy in Nevada on behalf of Pacific Safety.
PEGASUS GOLD: Projected Income Under Scrutiny
---------------------------------------------
Pegasus Gold's income projections into the next century
came under scrutiny Monday as hearings continued in U.S.
Bankruptcy Court on its proposed reorganization plan.
Susan Boswell, an attorney for 1st National Bank of
Chicago, questioned Pegasus President and Chief Executive
Officer Werner Nennecker about his estimate that the
reconstituted company would be worth $65 million.
And she asked the company's chief financial officer,
Michelle G. Viau, about anticipated revenues through the
year 2002 based on gold prices climbing to $325 an ounce
next year and $350 an ounce in the first three years of the
next century. With gold prices currently hovering around
$292 an ounce, Boswell noted that would leave Pegasus about
$750,000 short of its forecast earnings for the last three
months of this year alone.
"Yes, that's right," Viau replied. She said the company
was anticipating a gradual improvement in gold prices with
production costs dropping to $225-$230 an ounce from this
year's average of $255 an ounce.
Ongoing dismal gold prices pushed the company to the brink
of bankruptcy last year. Insurmountable equipment problems
with the mill at its Mount Todd property in Australia
pushed it past it and Pegasus filed for Chapter 11
protection in January. It lost $512.8 million in 1997.
Pegasus, based in Spokane, Wash., wants to form a new
company consisting of its three profitable mines - Montana
Tunnels and Diamond Hill in Montana and Florida Canyon in
Nevada - and Pegasus Gold International.
Fourteen other subsidiaries - mostly unprofitable mines -
would be liquidated. Nennecker said on Monday that the two
Montana mines have about two years' worth of production
left and Florida Canyon has four on the basis of current
gold reserve estimates. (Las Vegas Review Journal-10/27/98)
PHILIP SERVICES: Icahn Threatens Insolvency Proceedings
-------------------------------------------------------
U.S. financier Carl Icahn threatened troubled
Canadian waste handler Philip Services Corp. with
insolvency proceedings unless it agreed to transfer
ownership of its business to lenders, a filing
with the U.S. Securities and Exchange Commission Monday
said.
Icahn, in a letter dated November 13, gave Philips a
deadline of "the close of business on Tuesday" or face
proceedings, according to the SEC document.
Icahn and his High River Limited Partnership held a 14.07
percent stake, or 18,455,200 common shares of the company,
according to a filing with the SEC on August 21.
The letter, addressed to Philip Services Chief Executive
Jack McGregor, was also signed by fellow shareholder Dennis
Ascher of Foothill Partners III LP.
"Because we are extremely concerned about the erosion of
value at our expense, we see no alternative but to utilize
insolvency proceedings to protect our interests," Icahn and
Ascher wrote.
"We are, however, prepared to forbear exercising any of the
legal and statutory rights available to us if you agree to
work with us immediately to formulate a prepackaged plan to
transfer the ownership and control of the business to the
lenders," the letter continued.
Philip, based in Hamilton, Ontario, is reeling under heavy
debt and facing a cash crunch. It told lenders on November
13 that it would have to stop making interest payments.
Philip has more than US$1 billion in debt. The company
posted third-quarter net losses of US$645.4 million, or
$4.92 a share, including special charges of $536.3 million.
Excluding charges, Philip lost $24.7 million, or $0.19 a
share, versus a year-ago profit of $19.5 million or $0.21.
Philip's litany of woe began early this year after it
revealed that rogue copper trading forced it to restate
results from 1995-1997. It then uncovered more heavy losses
for 1997, setting off a chain of shareholder lawsuits and
debt problems. Philip has been in talks with debtholders
for months but was forced to take a stand because of a
summer downturn in metal markets, McGregor said last
week.
"We've ... announced to our lenders that we will not be
paying interest to them from the 13th of November onward,"
McGregor told analysts on a conference call on that date.
Asked by one analyst if this decision pushed the firm
closer to insolvency, McGregor said no, since discussions
with lenders were still positive.
Icahn and Ascher mentioned in their letter a tentative plan
by Philip that would give substantially all of its equity
to its lenders in return for a release from its financial
obligations. "We can see no reason for delaying the
development of such a plan," the shareholders said. "Any
delays will erode value for all stakeholders, increase the
likelihood of job losses and economic losses and will serve
no benefit whatsoever. We will not support any long term
forbearance arrangements."
POCKET COMMUNICATIONS: Court Ends Injunction
--------------------------------------------
In a major victory for the Federal Communications
Commission Friday, the U.S. Bankruptcy Court in Baltimore
terminated the preliminary injunction blocking the agency
from transferring or canceling 28 of Pocket Communications
Inc.'s C-Block licenses. The court ruled that there is no
basis to "hold hostage" the licenses while the FCC and
Pocket's lenders litigate whether reorganization plan talks
between them were in good faith. The court last month
asserted jurisdiction over the 28 licenses that Pocket
elected to return to the agency under its
prepayment option and entered a preliminary injunction
preventing the FCC from transferring or selling the
licenses until Nov. 16. (Federal Filings Inc. 17-Nov-98)
SCOOP INC: InfiniCom AB to Acquire Majority Interest
----------------------------------------------------
InfiniCom AB (publ) (SBI-Stockholm: INFI B), a rapidly
growing Scandinavian producer of Internet-based electronic
commerce, software and consulting services, and Scoop, Inc.
(NASDAQ OTC BB: SCPI), formerly a provider of publishing
and information services and currently the subject of a
chapter 11 bankruptcy case, today announce that the two
companies have signed a letter of intent pursuant to which
a plan of reorganization will be prepared and submitted to
creditors and shareholders of Scoop.
Subject to bankruptcy court approval of the plan, under the
plan InfiniCom will receive approximately eleven newly
issued shares of Scoop common stock for each share of Scoop
stock currently outstanding in consideration for the sale
by InfiniCom to Scoop of its "24STORE" business. The
transaction is expected to close in the second quarter of
1999.
InfiniCom's 24STORE business represents approximately 93%
of the company's operations and contains a rapidly
expanding electronic commerce infrastructure
that operates for the purpose of establishing electronic
marketplaces supporting commerce on the Internet. 24STORE
has registered more than 300 domain names in the "24"
family, providing electronic commerce services in
geographic areas including Sweden, Norway, Finland and
Great Britain. InfiniCom recently completed the acquisition
of LapLand (UK) Ltd., Great Britain's leading reseller of
notebook computers, as an addition to 24STORE's "24IT"
business segment. InfiniCom's gross revenues for fiscal
1997 and the nine-month period ending September 30, 1998
were $5.45 million and $47.67, respectively, and net losses
for the same periods were $1.2 million and $4.01 million,
respectively. Revenue and net loss figures for the nine-
month period ending September 30, 1998 include the LapLand
acquisition.
Scoop's Media Services unit sold custom-designed reprints
and framed wall displays of published articles from
newspapers, magazines and on-line publications and the
company's Information Services division was developing a
web-accessible personalized news service designed to meet
the needs of business professionals. Scoop filed a
voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code on July 31, 1998. AS part of
the company's reorganization in bankruptcy, the company has
liquidated its Media Services and Information Services
divisions.
SCORES: Owners Sentenced To Jail
--------------------------------
The owners of Scores, the bankrupt Manhattan topless club,
have been sentenced to 25 years in prison for their parts
in a Florida fraud case. According to the Daily News,
Michael Blutrich and Lyle Pfeffer learned their fates
Friday after they were convicted in Orlando of
racketeering, racketeering conspiracy and other charges.
They were involved in the $440 million failure of a Florida
insurance company that had 26,000 elderly policyholders.
Blutrich and Pfeffer's names might sound familiar to New
Yorkers. That's because the men have agreed to testify
against John "Junior"' Gotti at his racketeering trial next
year. Gotti is accused of pocketing tens of thousands of
dollars through loan-sharking, gambling and shaking down
Scores, which filed for bankruptcy last month.
WORLDCORP: To File Pre-packaged Chapter 11
------------------------------------------
WorldCorp Inc., the majority owner of World Airways, plans
to file a pre-packaged chapter 11 case, according to The
Wall Street Journal. The company, based in Herndon, Va.,
has reached an agreement with its major creditors on the
"principal financial terms" of a complex financial
restructuring plan. WorldCorp defaulted on the interest
payment due on the existing debentures in May but said that
debenture holders will receive certain warrants that would
allow them to acquire a 49 percent fully diluted
interest in WorldCorp. and a 100 percent interest in its
Acquisition affiliate. Under the plan, holders of the $65
million of 7 percent convertible subordinated debentures
due 2004 would exchange the debentures, along with $5
million accrued but unpaid interest, for $70 million of new
WorldCorp. 7 percent senior payment-in-kind notes, due
2006. WorldCorp did not state when it would file the pre-
pack chapter 11. (ABI 17-Nov-98)
***********
The Meetings, Conferences and Seminars column appears in
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Troubled Company Reporter is a daily newsletter, co-
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Debra Brennan and Lexy Mueller, Editors.
Copyright 1998. All rights reserved. ISSN 1520-9474.
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