/raid1/www/Hosts/bankrupt/TCR_Public/981221.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, December 21, 1998, Vol. 2, No. 247
Headlines
ADVANTICA RESTAURANT: Dividend Distribution Declared
AHERF: Hospitals Say Bills Of $44 Million Due
AHERF: Paychecks For 500 In Doubt
BMJ MEDICAL: Files For Chapter 11 Protection
BRUSH CREEK: To Acquire McLaughlin Engineering For $10M
CARLYLE INDUSTRIES: Subsidiary Acquires Streamline
CATALYST COMMUNICATIONS: Announces Chapter 11 Bankruptcy
CELLPRO: PricewaterhouseCoopers LLP Resigns as Auditors
CENTENNIAL CELLULAR: Registration Statement Effective
CML GROUP: Case Summary & 20 Largest Unsecured Creditors
CML GROUP: Files Chapter 11 Petition
COMMERCIAL FINANCIAL: Rebuild expert New president
COUNTY SEAT: Notification of Late Filing
FREEPORT MCMORAN: Board Reviewed Operating Plans
GEOTEK: To Delay License Sale Hearing Until January
HEALTHLINK: Pacificare To Sever Ties
HILLS STORES: Files Quarterly Report With SEC
HOSPITAL STAFFING: Mid-South Home Health Emerging Stronger
IONICA: Files For Bankruptcy In New York
LAMONTS APPAREL: Reports Slight Boost in Comparable Sales
LEADING EDGE: Says Removal of Board Unauthorized
LIVENT INC: Feds Plan Fraud Charges
LIVENT: Fires Five Finance Staffers
MEDAPHIS CORP: Completes Sale to NCO Group
MENLO ACQUISITION: Confirmed Plan Becomes Effective Nov. 10
MONTGOMERY WARD: To Use Pension Fund Overflow For Plan
NEWSOUTH REALTY: Assets To Be Sold At Auction
NEXAR TECHNOLOGIES: Files Chapter 11 Petition
NORDICTRACK: ICON Acquires Certain Assets
OWENS CORNING: Announces National Settlement Program
PACIFIC DIAGNOSTIC: Court Approves Plan
PARAGON TRADE: Exclusivity Extended
PHP HEALTHCARE: Notification of Late Filing
PHP HEALTHCARE: Weixel is Acting CFO
RIO GRANDE: Notification of Late Filing of Quarterly Report
SGL CARBON: First Day Orders Approved
SGL CARBON: Has A Commitment for $60 Million DIP Financing
SGL CARBON: U.S. Subsidiary Seeks Chapter 11 Protection
SPECTRUM INFORMATION: Raises Capital In Stock Exchange
WHITE ROSE: Announces Fiscal '98 Financial Results
*********
ADVANTICA RESTAURANT: Dividend Distribution Declared
----------------------------------------------------
On December 14, 1998, the Board of Directors of Advantica
Restaurant Group, Inc., declared a dividend distribution
of one preferred share purchase right for each outstanding
share of Common Stock, par value $0.01 per share, of the
Corporation. The dividend is payable to the stockholders of
record on December 30, 1998, and with respect to Common
Shares issued thereafter, until the Distribution Date and,
in certain circumstances, with respect to Common Shares
issued after the Distribution Date. Except as set forth
below, each Right, when it becomes exercisable, entitles
the registered holder to purchase from the Corporation one
one-thousandth of a share of Series A Junior Participating
Preferred Stock, $1.00 par value, of the Corporation at a
price of $42.50 per one-thousandth of a Preferred Share
subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement between the
Corporation and Continental Stock Transfer and Trust
Company, as Rights Agent, dated as of December 15, 1998.
AHERF: Hospitals Say Bills Of $44 Million Due
---------------------------------------------
The Allegheny Health, Education and Research Foundation's
hospitals in Western Pennsylvania say that AHERF has failed
to pay $44 million in important hospital bills since the
parent foundation filed for bankruptcy in July.
As a result, the hospitals are faced with the risk of
having to pay twice to avoid the possible loss of employees
and the discontinuation of critical products and services,
according to court papers made public yesterday.
The western hospitals - Allegheny General Hospital, Forbes
Health System, Canonsburg Hospital and Allegheny Valley
Hospital - say that AHERF should begin making payment on
the bills using retirement funds currently being held
in trust.
The trust covers about 150 AHERF executives and had a value
of approximately $12 million as of Oct. 31. AHERF has asked
U.S. Bankruptcy Court Judge M. Bruce McCullough to order
those funds returned from the bank.
In their court papers, the Western Pennsylvania hospitals
didn't object to the money being returned - but they did
object to what they believe is the AHERF's intent in
spending it. (Pittsburgh Post Gazette - 12/12/98)
AHERF: Paychecks For 500 In Doubt
---------------------------------
The Pittsburgh Post-Gazette reports on December 16, 1998
that paychecks due Friday to as many as 500 people who work
for the Allegheny Health, Education and Research
Foundation's Western Pennsylvania operations were in limbo
yesterday.
AHERF attorney Lee Powar told the federal bankruptcy court
overseeing the foundation's massive reorganization that
there is not enough money set aside "to meet payroll
starting tomorrow" for employees of two bankrupt
subsidiaries.
The people affected are technically still on the payrolls
of the Allegheny University of the Health Sciences and of
the Allegheny University Medical Practices.
Although the assets of AUHS were transferred to new
ownership and management last month as part of the sale of
AHERF's Philadelphia hospitals, some employees of the
foundation's Western operations are still on the payroll of
the bankrupt shell that remains here. And AUMP still
employs doctors and support staff that AHERF took over as
it acquired hundreds of physician practices in recent
years.
BMJ MEDICAL: Files For Chapter 11 Protection
--------------------------------------------
BMJ Medical Management, Inc. (Nasdaq: BONS) announced that
it and five of its subsidiaries filed for protection under
Chapter 11 of the United States Bankruptcy Code in
Wilmington, Delaware. The filing was necessitated by,
among other things, actions by two medical groups in
Florida affiliated with the Company that unjustifiably
withheld monies due the Company related to the collection
of the Company's accounts receivable. The Company has
filed a complaint and a motion for a temporary restraining
order as part of its efforts to recover these
funds, continue collection of accounts receivable and
compel compliance by affiliated medical groups with their
respective obligations under their Management Services
Agreements.
Over the course of the last several weeks, the Company has
discussed with various affiliated medical groups a
restructuring of certain of its obligations, and those of
the medical groups, under the respective Management
Services Agreements. To date, none of the Management
Services Agreements have been formally amended or
terminated. The Company intends to actively continue
these discussions.
The Company also announced that it has obtained post-
petition financing commitments from its prepetition senior
secured lenders in amounts necessary, from time-to-time, to
fund the Company's business operations under the terms of
the Management Services Agreements.
Prior to the petition date, four medical groups filed
lawsuits against the Company seeking damages and rescission
of their Management Services Agreements on account of
alleged breach of contract, fraud and securities fraud.
These lawsuits and all other prepetition actions against
the Company (including the debtor-subsidiaries) have been
stayed from proceeding pursuant to the provisions of the
Bankruptcy Code.
Separately, the Company announced that its Board of
Directors has elected Charles Sweet to serve as President
and Chief Executive Officer succeeding Donald J. Lothrop,
who will remain on the Board of Directors.
BMJ Medical Management, Inc. is a single specialty
Physician Practice Management Company focused on
musculoskeletal care consisting of orthopaedic
surgery, physiatry, rheumatology and podiatry as well as
ambulatory surgery centers, MRI diagnostic services and
physical and rehabilitative therapy.
BRUSH CREEK: To Acquire McLaughlin Engineering For $10M
-------------------------------------------------------
Financially strapped Brush Creek Mining and Development Co.
of Grass Valley will acquire McLaughlin Engineering and
Mining Inc. for $10 million cash, company officials said
Wednesday.
The deal for the Riverside County firm would be financed by
a line of credit backed by the equipment of U.S. Cement in
Las Vegas, which has also agreed to be acquired by Brush
Creek.
This differs from a plan announced just last week by the
Grass Valley firm, which originally proposed increasing
authorized shares of the company to raise money for the two
acquisitions.
A Brush Creek spokesman, Jim Webster, said the change
likely was made to avoid diluting the value of the
company's shares. "The fact that we do have (U.S. Cement)
to borrow against makes me think (Stockett) sees an actual
buy of McLaughlin as a better value for everyone
involved," he said.
Fred Perkins, president of McLaughlin, said the deal makes
sense for both sides. His firm conducts project engineering
and planning that is crucial to mining firms like Brush
Creek. "The thought is that rather than go to an outside
entity for services like ours, they would just buy out a
company that does it for a living," Perkins said. "We're
very excited about this. It's going to create a lot of new
jobs when we get the mines back on track."
The McLaughlin staff also will work on a 1.2 million ton-
capacity cement plant being planned in Las Vegas by U.S.
Cement. Wednesday's announcement is the latest of several
moves made recently by Brush Creek, which was on the verge
of insolvency when "white knight" Larry Stockett took over
as president in November.
The company laid off its entire work force in July and has
been embroiled in a dispute with its primary investor,
Volcanic Resources. In October, Sierra County seized the
company's bank accounts and mining equipment because of
unpaid taxes.
Last week, Stockett managed to keep the company's shares on
the Nasdaq Stock Market by announcing a 10-for-1 reverse
split of company shares, designed to boost share value over
the $1 minimum required by Nasdaq. He has scheduled a
special shareholder's meeting Dec. 23, when he will
present the reverse split for a vote and present settlement
proposals for a number of troublesome lawsuits in which the
company is involved. Brush Creek shares closed at 59 1/2
cents, up 31 1/4 cents. Sacramento Bee - 12/17/98
CARLYLE INDUSTRIES: Subsidiary Acquires Streamline
--------------------------------------------------
Carlyle Industries Inc. announced that its subsidiary,
Blumenthal Lansing Co. Inc., has acquired the business and
assets of Streamline Industries Inc., Garden City, N.Y.,
but the terms were not disclosed, according to a newswire
report. Streamline filed chapter 11 on Sept. 10; on Dec. 15
the court approved the sale to Blumenthal. Streamline
packages and distributes buttons, while Carlyle packages
and distributes a variety of buttons and craft products
through its subsidiaries.
CATALYST COMMUNICATIONS: Announces Chapter 11 Bankruptcy
--------------------------------------------------------
Catalyst Communications, Inc. of Sarasota, FL, (NASDAQ
Bulletin Board: CLYC), announced today it has filed for
protection from creditors under Chapter 11 of U.S.
Bankruptcy Code.
The company is optimistic it will successfully reorganize
itself over the next few months.
CELLPRO: PricewaterhouseCoopers LLP Resigns as Auditors
-------------------------------------------------------
On November 24, 1998, PricewaterhouseCoopers LLP resigned
as auditors for CellPro, Incorporated, a Delaware
corporation.
During the Company's two most recent fiscal years, and
through the date of this filing, there were no
disagreements with PricewaterhouseCoopers LLP on any matter
of accounting principles or practices, financial statement
disclosure, auditing scope or procedure or any other
reportable event which, if not resolved to the satisfaction
of PricewaterhouseCoopers LLP, would have caused them to
make reference to the matter in their report.
PricewaterhouseCoopers LLP's report on the Company's
financial statements for the fiscal year ended March 31,
1998, contained a qualification and explanatory paragraph
with respect to the Company's ability to continue as a
going concern. Except with respect to the qualification and
explanatory paragraph for the fiscal year ended March 31,
1998, the reports of PricewaterhouseCoopers LLP for the
fiscal years ended March 31, 1998 and March
31, 1997 did not contain an adverse opinion or disclaimer
of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
CENTENNIAL CELLULAR: Registration Statement Effective
-----------------------------------------------------
On December 8, 1998, Centennial Cellular Corp. (Nasdaq:
CYCL-news), a leading independent cellular provider, and
Welsh, Carson, Anderson & Stowe VIII, L.P. ("WCAS") and
certain of its affiliates jointly announced today that the
SEC declared effective the Company's Registration Statement
on Form S-4 with respect to the issuance of common stock of
the Company, as the surviving corporation in the proposed
merger between the Company and CCW Acquisition Corp. Upon
consummation of the Merger, such common stock of the
surviving corporation will be received by (i) current
holders of Class A Common Stock of the Company who
make an effective election to receive such shares, (ii) by
current holders of Class A Common Stock with respect to
which an election to receive common shares of the surviving
corporation has not been made who are required to receive
such shares due to proration or (iii) by current holders of
Class B Common Stock of the Company who are required to
receive such shares due to proration.
Pursuant to the Stockholder Agreement, dated as of July 2,
1998,between Century Communications Corp. ("Century") and
Acquisition, Century, the principal stockholder of the
Company, agreed to vote its shares of the Company
in favor of the Merger so long as the merger agreement
between the Company and Acquisition remains in effect. On
December 4, 1998, Century executed a written stockholder's
consent in lieu of meeting to approve the Merger. Because
Century controls, on a fully diluted basis, more than a
majority of the outstanding votes of the Company required
to approve the Merger, no further vote is necessary to
approve the Merger. However, completion of the Merger is
still subject to certain conditions, including the funding
of committed financing, which financing is no longer
subject to any material adverse change in relevant capital
markets. Information Statement/Prospectus materials will be
mailed on or about December 8, 1998 to stockholders of
record as of December 4, 1998. A holder of Class A Common
Stock electing to receive common shares of the surviving
corporation must make an election by 5:00 p.m., New York
City time, on January 6, 1999. The Company expects to close
the Merger in January 1999.
Any offering of securities in connection with the Merger
will be made only by means of a prospectus.
CML GROUP: Case Summary & 20 Largest Unsecured Creditors
-----------------------
Debtor: CML Group, Inc.
524 Main Street
Acton, Massachusetts 01720
Court: District of Delaware
Case No.: 98-2795 Filed: 12/17/98 Chapter: 11
Debtor's Counsel: James Patton
Young, Conaway Stargatt & Taylor
11th Floor
Rodney Square
Box 391
Wilmington, Delaware
(302)572-6600
Total Assets: $31,551,525
Total Liabilities: $78,429,422
No. of shares of common stock 62,214,099 - 2,000 holders
20 Largest Unsecured Creditors
Name Nature Amount
---- ------ ------
American Express Trade Claim 28,642
Boston Equiserve Trade Claim 9,671
Bowne of Boston Trade Claim 32,583
Business Wire Trade Claim 3,912
CDA Investment Trade Claim 6,345
Chase Manhattan Bank Debentures 41,593,000
Deloitte & Touche LLP Services Rendered 212,295
Depository Trust Company Trade Claim 2,700
Direct Report Corporation Trade Claim 5,779
Dunklee, George Retirement Benefits 1,680
Frontier Confertech Trade Claim 1,659
Kostelanetz & Fink Trade Claim 4,141
Lehman Brothers Trade Claim 174,009
Leighton, Charles Severance 160,000
Moore & Associates Trade Claim 5,340
New York Stock Exchange Trade Claim 41,522
Tod, G. Robert Severance 180,000
Todd & Weld Legal Services Rendered 2,781
Trabucco, Robert Severance 100,000
Zwiefel, Jeff Litigation 200,000
CML Group: Files Chapter 11 Petition
------------------------------------
CML Group, Acton, Mass., has filed for chapter 11
protection in the District of Delaware, but said its Smith
& Hawken subsidiary is not included in the filing,
according to a newswire report. CML is seeking court
approval to auction Smith & Hawken and distribute the
proceeds to CML stakeholders. CML's other unit,
NordicTrack, filed chapter 11 in November with plans to
wind down operations and sell its assets. (ABI 18-Dec-98)
COMMERCIAL FINANCIAL: Rebuild expert New president
--------------------------------------------------
The man picked to guide Commercial Financial Services Inc.
out of bankruptcy and into the arms of a buyer is a
veteran of such comebacks.
Along with its bankruptcy filing on Friday, CFS announced
the appointment of Fred C. Caruso as president. He has
assumed the day- to-day duties of running the company and
appeared in U.S. Bankruptcy Court on Tuesday to testify on
the need to continue paying employees their pre-filing
wages.
Caruso is vice president of Development Specialists Inc., a
Chicago-based business that works with distressed
companies. Since joining Development Specialists in 1982,
he has assumed management control for 10 companies, whose
operations ranged from metal fabrication to computer
software.
CFS said it filed a Chapter 11 bankruptcy as a means of
preserving value while attempting to lure a buyer. CFS, the
nation's largest buyer of bad credit card debt, has
reported interest from at least 15 companies, visits by
at least 10 of them and bids from several of them. The
company said it expected more bids in the next several
days.
Caruso's addition replaced the three-person office of the
president that had guided CFS since the resignation of
chairman, president and chief executive Bill Bartmann on
Oct. 27. Company founders and directors Bartmann, his wife,
Kathryn, and Jay Jones resigned to avoid the appearance of
a conflict of interest during an internal investigation of
business practices.
The company, the ninth-largest employer in Tulsa, said the
bankruptcy filing was unrelated to the internal
investigation. Results of the investigation are due any
day. The company started its investigation following
questions over its business practices in an anonymous
letter to bond rating agencies. Those agencies
lowered or pulled their ratings on CFS asset-backed bonds,
damming one of the company's revenue streams.
Since that time, CFS had attempted to operate business as
usual. For CFS, which employs about 3,900, that meant
continuing to work to get those people who ran into debt
troubles to make payments. While officers have commended
workers here and in Oklahoma City for their exemplary
effort in upping collections, limiting the company to that
one revenue stream eroded its cash position.
The bankruptcy filing became necessary when a major
creditor was granted a temporary restraining order against
CFS. The order jeopardized efforts to sell the company,
according to the source familiar with the matter.
(Tulsa World - 12/16/98)
COUNTY SEAT: Notification of Late Filing
----------------------------------------
County Seat Stores Inc. notified the SEC that it would not
be filing its quarterly report on time due to softness in
the retail environment affecting the Company and creating
liquidity issues. Management has devoted considerable time
and effort to these issues and as a result will require the
extension period to adequately present these and related
issues in the Company's quarterly report for the quarter
ended October 31, 1998.
Since the company operated as debtor-in-possession during
the corresponding period in the prior year, the results of
operations of the company in the current period are
not comparable and will show a significant change on a year
to year basis.
FREEPORT MCMORAN: Board Reviewed Operating Plans
------------------------------------------------
In a press release issued on December 9, 1998, the company,
Freeport-McMoRan Copper & Gold Inc. (FCX) announced that
its Board of Directors has reviewed the company's operating
plans for 1999 pursuant to FCX's previously announced
"Hunker Down & Go" program now that the fourth concentrator
expansion has been completed. These operating enhancements
are expected to generate significant cost savings in 1999
resulting from lower operating costs, capital expenditures,
exploration expenditures and general and administrative
expenses. In response to low copper and gold prices, the
Board also authorized elimination of the regular quarterly
cash dividend on its Class A (NYSE: FCX.A) and Class B
(NYSE:FCX) common stocks effective immediately resulting in
additional cash savings. These actions will enable FCX to
reduce its 1998 year-end debt by an estimated $250 million
during 1999 if commodity prices continue at current levels.
James R. Moffett, Chairman and Chief Executive Officer of
FCX, said, "The elimination of the common stock dividend
and the operating enhancements we are undertaking will
maintain FCX's financial flexibility in this low commodity
price environment. These actions will enable FCX to
continue to invest in its operations and its growth
opportunities while continuing to pursue its exploration
program with a focus on prospects that could lead to the
discovery of significant ore reserves. The FCX
Board will monitor future copper and gold prices and
reconsider the reinstatement of dividends on FCX's common
stocks as conditions warrant."
Mr. Moffett continued, "Since discovery of the Grasberg ore
deposit in 1988, FCX has expanded its operations to become
one ofthe world's largest and lowest cost copper and gold
producers. FCX expects sales volumes approximating 1.4
billion pounds of copper and 2.1 million ounces of gold in
1998 and 1999 with cash production costs in both years of
less than 15 cents per pound of copper, after gold credits
at the current gold price. This high volume-low cost
position provides FCX great operating and financial
flexibility even with low commodity prices and allows it to
capitalize on future opportunities. "FCX is engaged in
mineral exploration and development, mining and milling of
copper, gold, and silver in Irian Jaya, Indonesia, and the
smelting and refining of copper concentrates in Indonesia
and Spain.
GEOTEK: To Delay License Sale Hearing Until January
---------------------------------------------------
Geotek Communications Inc. will ask the court to delay
today's scheduled sale hearing for one month after
yesterday's auction failed to eke out a clear candidate for
the 900 MHz licenses on the block. "We have four bulk
bidders in the process, more than we had counted on," said
Wilbur Ross, senior managing director at Rothschild Inc.,
Geotek's financial advisor. "There is competition between
the sum of the individual bidders and bulk bidders, which
are at a much higher range than the sum of the individual
bids." However, more time is needed for the defunct
wireless network operator to work out the details of the
offers from prospective individual and bulk buyers, he
said, adding that the auction in mid-January should be the
last. The combined individual bids total about $54 million,
"significantly" less than the offers from bulk bidders,
said Ross. He declined to say what bulk bidders were
willing to pay at yesterday's auction, but noted that
offers for the licenses in the Chicago and New York
metropolitan markets were much lower than anticipated,
pushing the combined total down.(Federal Filings Inc. 18-
Dec-98)
HEALTHLINK: Pacificare To Sever Ties
------------------------------------
PacifiCare of Washington on Jan. 1 will sever its ties to
HealthLink, the medical insurance subcontractor that filed
forbankruptcy in October after millions of dollars in
losses.
PacifiCare President Chris Wing said the insurer had tried
to maintain a relationship with HealthLink in the wake of
the filing, but the arrangement had not worked out.
The company, a subsidiary of PacifiCare Health Systems
Inc., covers 3,200 commercial customers in Spokane, Pend
Oreille and Stevens counties. Its Medicare plan, Secure
Horizons, covers another 5,200. (Spokesman Review;
12/17/98)
HILLS STORES: Files Quarterly Report With SEC
---------------------------------------------
Hills Stores Company filed its quarterly report with the
SEC for the quarterly period ended October 31, 1998. The
Company has since mid-1998 experienced a substantial
erosion in sales and a resulting substantial erosion in
operating results and cash flow.
For the quarter, net sales and comparable store sales
decreased by 8.0% compared with the same period in 1997.
The Company generated weaker than average sales in nearly
every major merchandising category, led by larger declines
in sales of apparel, toys and electronics. Sales for
November declined by approximately 10%, and sales in the
first two weeks of December declined by approximately 13%.
Based on recent operating trends, the Company expects that
it will fail the rolling twelve months cash flow
maintenance covenant effective as of the end of
the current fiscal year on January 30, 1999, as required by
its secured credit facility. Such non-compliance, absent a
waiver by the secured lenders, would constitute an event of
default under the agreement.
If the Ames tender offer is not successful, and the
Company's recent operating trends continue, there is a
substantial prospect that the Company would be required to
seek protection under federal bankruptcy laws in the near
term.
HOSPITAL STAFFING: Mid-South Home Health Emerging Stronger
----------------------------------------------------------
Memphis-based Mid-South Home Health was hit by the
bankruptcy filing of its parent company this year, but is
emerging stronger and with expanded services, managers say.
Hospital Staffing Services Inc., owner of the local home
health care agency, filed Chapter 11, voluntary bankruptcy
protection, in March. The publicly traded company, based in
Fort Lauderdale, Fla., had critical cash flow shortfalls
caused by a dispute with Medicare. New management took
over; a reorganization plan is ready for court approval;
and HSS will emerge from bankruptcy as a private company,
chief operating officer Joe Williams said.
HSS's financial slide started when Medicare began
withholding payments for claims the company submitted in
1996 and 1997. Medicare took that action to recoup
overpayments the government health insurance agency said it
made during 1993 and 1994 to HSS's New England home care
unit. HSS chairman and chief executive officer Ronald Cass
resigned last February, joined by some other board members.
Ronald Lusk, a private investor and nursing home owner in
Dallas, was appointed chairman. Williams, formerly with a
home care management company in Knoxville, was hired as
COO. Williams said HSS reached an agreement with Medicare.
The company also sold its Travel Nurse subsidiary.
The reorganization plan, not yet approved, offers creditors
full repayment over five years, he said. HSS hopes to
emerge from bankruptcy by February. (Commercial Appeal
Memphis TN; 12/16/98)
IONICA: Files For Bankruptcy In New York
----------------------------------------
Britain's Ionica Plc filed a Chapter 11 petition in
Manhattan on Dec. 11. As a wireless startup in
the early 1990s, Ionica conducted a number of private
equity offerings, however, operational delays and other
problems slowed customer growth, negating a revolving
credit facility contingent on minimum customer targets that
would have permitted the telecommunications company to
continue its network build-out. In May, Ionica began the
search for a strategic investor but, by late October, the
lone potential investor involved in talks had withdrawn.
Two days later, the company filed for protection under
England's Insolvency Act "specifically to achieve the
purpose of a more advantageous realization of assets than
would be effected in a winding-up." On that date, the
English court appointed Neville Kahn and Christopher Hughes
of PricewaterhouseCoopers LLP and Gareth Howard Hughes from
Ernst & Young LLP as joint administrators. (The Daily
Bankruptcy Review and ABI Copyright c December 18, 1998.)
LAMONTS APPAREL: Reports Slight Boost in Comparable Sales
---------------------------------------------------------
Lamonts Apparel reported a slight boost in comparable store
sales for the third fiscal quarter, although the Kirkland-
based retailer ran at a net loss of $700,000, or 8 cents
per share, for the period ending Oct. 31. That marks a
shift from the second quarter of this year, when Lamonts
posted a profit of 1 cent per share, or $151,000, on sales
of $50.6 million. Sales in the third quarter increased to
$50.9 million. That's an improvement of 1.2 percent over
the third quarter of 1997, the company said yesterday. At
the same time last year, Lamonts reported sales of $50.3
million and a net loss of $2.1 million, or 12 cents per
share.
Lamonts, which operates 38 stores in Alaska, Idaho, Oregon,
Utah and Washington, emerged from bankruptcy in February.
In other local company earnings reports, golf apparel
marketer Cutter & Buck Inc. said sales in the second fiscal
quarter were up 50 percent from a year
ago while net income rose 43 percent.
The Seattle-based company reported a profit in the three-
month period ending Oct. 31 of $1.7 million, or 29 cents a
share, up from $1.2 million or 21 cents a share a year ago.
Sales were $26 million. (Seattle Post-Intelligencer;
12/16/98)
LEADING EDGE: Says Removal of Board Unauthorized
------------------------------------------------
Leading Edge Packaging Inc. stated that the actions
announced earlier today by the minority shareholder,
Chung Hwa Development Holdings Limited, Hong Kong, in
removal of current members of the Board of Directors are
unauthorized and of no effect. The Company deems Chung
Hwa's use the PR Newswire to make such an announcement
improper and detrimental to the interest of the Company and
its other shareholders. Mr. L.B. Saw, Chairman & CEO,
said, "The announcement by Chung Hwa is a desperate, self-
serving attempt to divert attention from its own financial
problems and insolvency in Hong Kong."
Leading Edge Packaging, Inc. manufactures, sells and
distributes in North America, Europe and Asia, packaging
products used primarily in the sale of luxury consumer
goods, which include metal and plastic based jewelry cases,
optical cases, pouches and bags, watch cases and gift
boxes. The Company has offices and a showroom in New York
City as well as office and warehouse facilities in New
Jersey.
LIVENT INC: Feds Plan Fraud Charges
-----------------------------------
Federal regulators are planning to file civil fraud charges
against Broadway theater producer Livent Inc., and
prosecutors are considering criminal charges against its
ousted founders, the company says.
Charges of securities and accounting fraud are to be
brought against the troubled Canadian company, known for
such shows as "Ragtime" and "Kiss of the Spider Woman,"
according to documents the company filed in **bankruptcy**
court. Some former employees also face civil charges, the
papers said. Meanwhile the U.S. attorney's office in
Manhattan is debating whether to file criminal charges
against founders Garth Drabinsky and Myron Gottlieb,
according to Gottlieb's attorney, Brian Greenspan of
Toronto.
Greenspan said he expects a decision from the U.S.
attorney's office within the next three weeks.
"I hope the U.S. attorney will review all the information
and will not indict," he said. "They've done nothing
wrong."
Livent's new management team, headed by former Walt Disney
Co. president Michael Ovitz, fired Drabinsky and Gottlieb
in November, accusing them of engaging in widespread fraud
that cost Livent and its shareholers $60 million.
The Toronto-based Livent owns or controls theaters in New
York, Chicago, Toronto and Vancouver. Its lavish Broadway
productions have won 18 Tony Awards.
LIVENT: Fires Five Finance Staffers
-----------------------------------
Livent Inc. has fired five mid-level finance staffers this
week under pressure from the Securities & Exchange
Commission (SEC), which is preparing to file anti-fraud
civil actions arising from an inquiry into Livent's
accounting irregularities, Variety reported. A filing
yesterday indicated that the SEC told Livent that it was
"no longer appropriate for five individuals who comprise
the major portion of [Livent's] finance and accounting
department to remain employed." Livent has alleged that its
co-founders, Garth Drabinsky and Myron Gottlieb, relied on
dubious accounting practices to hide losses of $100
million.
MEDAPHIS CORP: Completes Sale to NCO Group
------------------------------------------
On November 30, 1998, Medaphis completed the sale to
NCO Group, Inc. of all the issued and outstanding shares of
capital stock of Medaphis Services Corporation. The Sale
was consummated in accordance with the terms of that
certain Stock Purchase Agreement dated October 15, 1998,
between Registrant and NCO. The Sale represents the
disposition by the Registrant of its Hospital Services
division.
The consideration paid to the company in connection with
the Sale was $107.5 million in cash. The Sale Agreement
includes a purchase price adjustment based
on closing date tangible net worth and additional
considerations of up to $10.0 million payable, subject to
the achievement of various operational targets in
1999.
MSC, headquartered in Norcross, Georgia, provides business
management services, primarily to hospitals throughout the
United States, including: automated patient billing, past
due and delinquent accounts receivable collection and
patient eligibility programs.
MENLO ACQUISITION: Confirmed Plan Becomes Effective Nov. 10
-----------------------------------------------------------
Menlo Acquisition Corp. FBDA Focus Surgery, Inc. Of
Delaware Filed SEC form 8K stating that on February 9,
1996, the Registrant filed for protection under Chapter 11
of the federal bankruptcy laws in the United States
Bankruptcy Court, Northern District of California, Oakland
Division. On October 29, 1998 the Bankruptcy Court entered
its Order Confirming Debtor's Chapter 11 Plan which
confirmed Registrant's Second Amended Plan of
Reorganization. The confirmed Plan became effective on
November 10, 1998. (States SEC; 12/14/98)
MONTGOMERY WARD: To Use Pension Fund Overflow For Plan
------------------------------------------------------
Montgomery Ward & Co. Inc. is seeking approval to
restructure its overfunded pension plan and use the nearly
$300 million of excess proceeds to fund a long-awaited
reorganization plan. "Importantly, the relief requested
herein will in no way affect Montgomery Ward's current or
former employees' benefits under the existing Pension Plan.
These Obligations will be fully satisfied by the purchase
of annuities from an insurance company to provide the
benefits," the retailer contended in a Dec. 1 motion. As of
Nov. 27, the retirement plan had about $1.1 billion in
assets but only $811.6 million (present value) in benefit
liabilities, leaving an excess of approximately $288.4
million. To relieve the plan of its extra funding, the
company schemed to spin off the benefits of former
employees and retirees with vested benefits in the excess
assets from the current plan into a separate pension plan
and then terminate the spin-off program, with all of the
spin-off proceeds reverting back to plan sponsor Montgomery
Ward. (Federal Filings Inc. 18-Dec-98)
NEWSOUTH REALTY: Assets To Be Sold At Auction
---------------------------------------------
A notice was published in The Wall Street Journal on
December 18, 1998, stating that pursuant to an order of the
U.S. Bankruptcy Court, NewSouth Realty, Inc ("DIP") will
sell to the highest bidder for cash at absolute auction:
First Mortgage Receivable Accounts of New South realty,
Inc. and SpainSouth Realty, LLC. The Receivables include
approximately 350 purchase money notes and mortgages having
a present outstanding balance of approximately $13 million.
The mortgage receivables will be sold at public auction on
January 15, 1999 at 11:00 am in Courtroom #2, U.S.
Bankruptcy Court, Robert S. Vance Federal Building, 1800
5th Avenue North, Birmingham, Alabama 35203.
NEXAR TECHNOLOGIES: Files Chapter 11 Petition
---------------------------------------------
Nexar Technologies, Inc. announced that it has filed a
voluntary petition under Chapter 11 of the Bankruptcy Code
with the United States Bankruptcy Court in Worcester, Mass.
The Company has succeeded in negotiating a debtor in
possession financing agreement with ATEC Group, Inc. of
Hauppauge, NY to fund Nexar's operations under the
supervision of the Bankruptcy Court. The financing will
enable Nexar to, among other things, continue to provide
limited support and warranty service to its customers.
The Company also announced today that effective at the
close of business on December 16, 1998, its common stock
would no longer be listed on Nasdaq due to the failure of
the Company to meet continuing listing requirements.
NORDICTRACK: ICON Acquires Certain Assets
-----------------------------------------
ICON Health & Fitness Inc. has entered into an agreement to
acquire certain assets of NordicTrack, corporate
executives announced Thursday. NordicTrack is the
Minneapolis-based company famous for a home fitness machine
simulating cross-country skiing.
ICON Health & Fitness Inc. is the world's largest
manufacturer and marketer of home fitness equipment. The
company, which had net sales of $750 million (wholesale) in
FY '98 (ending May 31), is privately held and located in
Logan, Utah. According to the National Sporting Goods
Association (NSGA), the fitness industry had $2.9 billion
in retail sales for calendar year 1997.
In addition to NordicTrack, ICON's brands include
ProForm(R), HealthRider(R), Weider(R), IMAGE(R),
Jumpking(R) and Weslo(R). In February of this year, the
company signed a licensing deal with Reebok(R) to
manufacture home fitness equipment.
According to conditions of the $9.55 million purchase
agreement, ICON acquired NordicTrack's inventory,
trademarks and other intellectual property.
NordicTrack may receive additional payment of up to $3
million in royalties on sales of NordicTrack branded
products.
ICON has been the exclusive manufacturer of NordicTrack
treadmills since 1996 under a separate agreement and will
continue production at its Utah facilities. Treadmills have
accounted for a large percentage of NordicTrack retail
sales. ICON is not acquiring NordicTrack's debt.
Under terms of an earlier contract, ICON acquired the
leases of 20 NordicTrack retail stores nationwide.
HealthRider, an ICON brand with its own chain of
retail outlets, re-opened and is managing these stores,
which were closed when NordicTrack declared bankruptcy on
November 5, 1998.
ICON Health & Fitness Inc. is not assuming responsibility
for warranties on products previously sold by NordicTrack.
NordicTrack was a subsidiary of the Boston-based CML Group
Inc., a marketer of products that enhance healthy, active
lifestyles. Its products are sold under the trade names of
Smith & Hawken, NordicTrack and Nordic Advantage. ICON
Health & Fitness Inc. has 4,800 employees and 10
manufacturing facilities in the United States, Canada and
China.
OWENS CORNING: Announces National Settlement Program
----------------------------------------------------
Owens Corning (NYSE:OWC)announced on December 15, 1998
National Settlement Program (NSP) under which over 50
plaintiffs' law firms have agreed to resolve more than
176,000 asbestos cases against the company. The
program settles close to 90 percent of the company's
existing backlog and establishes procedures and fixed
payments for resolving future claims without litigation,
for a term of at least 10 years.
Under the NSP, Owens Corning, which stopped selling
asbestos-containing products in 1972, will make payments
for pending claims of approximately $1.2 billion, primarily
in 1999 and 2000. Payments will be made from the company's
available cash and credit resources, including its existing
bank lines. The company's bank lenders have endorsed the
plan. Under the NSP agreements, payments on future claims
would begin in 2001 and will be subject to an annual
aggregate cash flow cap.
Under the NSP agreements, Owens Corning will pay both
current and future claimants through an administrative
procedure according to compensation schedules that take
into account each claimant's type and severity of asbestos-
related disease, and the extent of exposure to Owens
Corning's former products. Payment on the future claims
will require medical evidence of impairment.
The agreements allow claimants to receive prompt payments
under the NSP. Settling claimants will also be entitled to
additional compensation if they develop a more severe
asbestos-related medical condition in the future. Payments
for pending and future claims will be managed by Integrex,
a wholly owned Owens Corning subsidiary, devoted to
efficient and timely claims processing.
Owens Corning also said the NSP agreements could settle
asbestos cases that are pending against the company's
subsidiary, Fibreboard Corporation. Those cases were
resolved as part of a 1993 global settlement with its
insurers and representatives of a class of future asbestos
plaintiffs. The U.S. Supreme Court reviewed that global
settlement earlier this month to decide whether the class
action meets legal requirements.
If the Supreme Court upholds the Fibreboard global
settlement, the liabilities will be resolved through
insurance funds by the terms of the global settlement.
If the Supreme Court strikes down this global settlement,
Fibreboard plaintiffs' claims, which are typically
identical to plaintiff filings against Owens Corning, will
also be paid under the terms of the NSP. A separate 1993
insurance settlement between Fibreboard and its insurers,
which received final court approval, will establish an
insurance fund of approximately $2.0 billion to be
administered by Owens Corning to resolve all remaining
Fibreboard asbestos claims. A Supreme Court decision is
expected during the second quarter of 1999.
PACIFIC DIAGNOSTIC: Court Approves Plan
---------------------------------------
Pacific Diagnostic Technologies, Inc. (OTC Bulletin Board:
PDTK), announced today that the United States
Bankruptcy Court for the Northern District of California,
Santa Rosa Division, has confirmed the Company's Plan of
Reorganization which, among other things, provides for the
acquisition of Quintek Electronics, Inc. by the company.
The Confirmed Plan of Reorganization includes a 1:25
reverse split of existing shares. Shareholders of record
on September 11, 1998 will receive four warrants for each
share of reverse-split stock that they held on September
11, 1998. In announcing the confirmation of the plan of
reorganization Dan Demers, President and CEO of Pacific
Diagnostic Technologies, Inc., said, "I believe the
acquisition by the Reorganized Debtor of Quintek
Electronics, Inc., with its advanced technology and strong
management, provides the ingredients for a successful
future." On the Effective Date (January 14, 1999), Pacific
Diagnostic Technologies, Inc.'s management will resign,
turning the operations over to Quintek management.
Management of both companies will work together during this
transition period to insure an orderly transition.
The reorganized company will focus on expanding Quintek's
existing operations, which include manufacturing and
distributing equipment, software, services and
media used for archiving digital information. In addition
to product sales, Quintek has set up service-oriented
subsidiaries and strategic relationships to
facilitate worldwide retrieval of digital data from the
Internet and long-term storage of this information in
secured archiving facilities.
The Quintek products and services are provided to insure
against loss of digital data in the event of on-site
catastrophic events (fire, flood, and earthquake),
technology obsolescence, year 2000 roll-over, computer
virus, computer failure, software or hardware
incompatibility and degradation of digital storage media.
With several years of development and strategic
positioning in place, Quintek is now preparing to initiate
a large-scale sales and marketing initiative during the
first quarter of 1999.
Quintek's corporate office is located in Camarillo, Calif.,
with manufacturing facilities in Idaho and Sweden, and
Sales & Marketing operations in Washington, D.C.
PARAGON TRADE: Exclusivity Extended
-----------------------------------
Inching slowly toward a settlement, Paragon Trade Brands,
Inc., the official creditors' committee, and patent
litigation adversaries Procter & Gamble Co. and
Kimberly-Clark Corp. agreed to extend the company's
exclusivity for 30 days with a rollover clause increasing
the potential extension by another 30 days. The court
extended the private label diaper maker's exclusive periods
to file a reorganization plan and solicit plan acceptances
to Jan. 19 and March 19, respectively. Like preceding
exclusivity stipulations, the agreement contains a clause
that would automatically extend exclusivity an additional
30 days if no objections are filed by Jan. 11. In a
November motion seeking an extension to Feb. 18, Paragon
revealed that the parties "continued to make considerable
progress" toward the resolution of pre- and postpetition
claims and were in the process of exchanging draft
documents. Paragon and its financial advisors have
completed a valuation and debt capacity analysis and
provided the information to Procter & Gamble and Kimberly-
Clark, as well as the committee, so that plan discussions
can commence. (Federal Filings Inc. 18-Dec-98)
PHP HEALTHCARE: Notification of Late Filing
--------------------------------------------
On November 19, 1998, PHP Healthcare Corporation and two of
its subsidiaries and affiliates filed for protection under
Chapter 11 of the United States Bankruptcy Code in the
United States District Court for the District of Delaware.
In recent months, many of the employees of the Registrant
historically responsible for the preparation of the
company's financial statements have left the company's
employ.
PHP HEALTHCARE: Weixel is Acting CFO
------------------------------------
PHP Healthcare Corporation Of Delaware filed SEC Form 8K
reporting that on November 19, 1998, PHP Healthcare
Corporation announced in a press release that PHP and
certain of its subsidiaries, including Pinnacle Health
Enterprises LLC, have filed voluntary petitions for
protection under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court in Delaware. In
a press release dated November 25, 1998, PHP Healthcare
Corporation announced that the Company's Board of Directors
has suspended temporarily Jack M.Mazur from his position as
the Company's President and Chief Executive Officer,
effective immediately, and has appointed Kenneth H.
Weixel, most recently the Company's Executive Vice
President for Healthcare Finance and Business Strategy and
Acting Chief Financial Officer, as the Company's Acting
President and Chief Executive Officer. The company
issued a press release on December 2, 1998 announced its
Board of Directors has voted to postpone indefinitely the
PHP shareholder meeting scheduled for December 17, 1998.
The Board of Directors may reschedule the shareholder
meeting once the status of PHP's bankruptcy case is more
clearly defined. (States SEC; 12/14/98)
RIO GRANDE: Notification of Late Filing of Quarterly Report
-----------------------------------------------------------
Rio Grande, Inc. notified the SEC that it is not able to
file its Quarterly Report on Form 10-QSB for the nine
months ended October 31, 1998 within the time period
prescribed for such report without unreasonable
effort or expense. The Company has been unable to
timely conclude its compilation and review of the
Quarterly Report in light of reduced management
resources and recent operational matters that have
required substantial management time and attention.
SGL CARBON: First Day Orders Approved
-------------------------------------
SGL CARBON Corporation (the Company) announced today that
the U.S. Bankruptcy Court for the District of Delaware has
approved a number of First Day Orders which will enable
the Company to continue normal business operations while it
seeks to resolve the commercially impracticable settlement
demands made by several plaintiffs in the ongoing civil
antitrust litigation against the Company. These rulings
follow the Company's filing of a voluntary petition under
Chapter 11 of the U.S. Bankruptcy Code on December 16,
1998.
The Court's orders gave interim approval to the $60 million
Debtor-In-Possession (DIP) financing the Company has
arranged with a group of lenders led by Citicorp USA,
Inc., as agent. According to the Court's ruling, SGL
CARBON Corporation has immediate access to up to $15
million under the $60 million DIP facility. A final
hearing on the DIP approval is scheduled for
January 8, 1999.
The Company also said it received the Court's approval to
continue, among other things: the payment of normal
employee salaries, wages and benefits without interruption;
the terms of all collective bargaining agreements
already in place; honoring existing customer-related
practices.
"The $60 million in additional financing from Citicorp
ensures that SGL CARBON Corporation can continue funding
its daily business operations while we work towards an
expeditious resolution of the civil antitrust claims," said
Wayne Burgess, President of SGL CARBON Corporation.
The company has retained the services of Shearman &
Sterling of New York and Young, Conaway, Stargatt & Taylor
of Wilmington, Delaware to act as bankruptcy counsel. SGL
CARBON Corporation's Chapter 11 case is being heard before
Honorable Chief Judge Joseph J. Farnan in the District of
Delaware (Case No. 98- 2779; ref: SGL CARBON Corporation.).
SGL CARBON: Has A Commitment for $60 Million DIP Financing
----------------------------------------------------------
SGL CARBON Corporation (the Company) announced today it had
filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code in the U.S. Bankruptcy Court for the
District of Delaware. The Company said the Chapter 11
filing is a result of the commercially impracticable
settlement demands made by several plaintiffs in the
ongoing civil antitrust litigation against the Company.
Subsidiaries of SGL CARBON Corporation, including CMS
Graphite, MGP, SGL Technic (California), SGL Technic
(Ohio), SGL CARBON Composites and Speer Canada did not file
initially for Chapter 11 protection. In addition, SGL
CARBON AG of Wiesbaden, Germany, the Company's parent, is
not filing for Chapter 11 protection. The Company said
that, although it believes the claims against it in the
antitrust litigation are without merit, it has explored
numerous settlement possibilities in order to limit the
costs, uncertainties and management distraction associated
with protracted litigation of this kind. Without admitting
any liability in such lawsuits, the Company has reached
settlements with several customers and continues to have
good faith negotiations with others.
However, a number of the plaintiffs continue to make
excessive and commercially impracticable demands, and SGL
CARBON Corporation believes the prospects of ever reaching
a commercially practicable settlement with them are remote.
After much consideration, the Company's management and
directors determined that the most appropriate course of
action to address the situation without harming the
Company's business was to voluntarily file for Chapter 11
protection.
"SGL CARBON Corporation is financially healthy," said Wayne
Burgess, SGL CARBON Corporation's President. "We believe
the demands of the plaintiffs in the civil antitrust
lawsuits, if fully met, could have a ruinous effect on our
business and we have sought Chapter 11 protection to
achieve an expeditious resolution of these claims."
SGL CARBON Corporation expects to operate in the normal
course of business during the Chapter 11 case and has
received a commitment, subject to court approval, for $60
million in DIP financing from a group of lenders led by
Citicorp USA, Inc. The financing will be used to fund
normal business operations.
In addition to the Chapter 11 petition, the Company filed
several motions designed to minimize disruption to its
normal business operations.
Together with its Chapter 11 filing, SGL CARBON Corporation
also filed a Plan of Reorganization. Under the terms of
the Plan, SGL CARBON Corporation's vendors and other
unsecured creditors will be paid the full amount of all
allowed unsecured claims. The Plan of Reorganization also
provides for what the Company believes are generous yet
commercially practicable terms of settlement for the
remaining plaintiffs in the antitrust litigation.
SGL Carbon, Corporation, headquartered in Charlotte, North
Carolina, is engaged in the business of manufacturing,
marketing and distributing carbon and graphite products,
principally graphite electrodes and specialty graphite
products. The Company has approximately 1,200 employees
located in Charlotte and Morganton, North Carolina; St.
Marys, Pennsylvania; Niagara Falls, New York; Ozark,
Arkansas; Hickman, Kentucky; Dallas and Irving, Texas and
Hillsboro, Oregon. Subsidiaries of the Company employ
approximately 700 people, principally in Gardena and
Valencia, California. SGL CARBON Corporation is a wholly-
owned subsidiary of SGL CARBON AG (NYSE: SGG) based in
Wiesbaden, Germany.
SGL CARBON: U.S. Subsidiary Seeks Chapter 11 Protection
-------------------------------------------------------
SGL CARBON Corporation (Charlotte/North Carolina), the U.S.
subsidiary of SGL CARBON AG (NYSE: SGG), yesterday filed a
voluntary Chapter 11 petition in federal court in the
State of Delaware, USA.
The company has taken this step in order to protect itself
against excessive demands made by plaintiffs in civil
antitrust litigation and in order to achieve an expeditious
resolution of the claims against it.
Neither SGL CARBON AG (Wiesbaden/Germany) nor any other
affiliate inside or outside the USA is involved in the
Chapter 11 filing.
The U.S. subsidiary of SGL CARBON AG continues to believe
the claims made against it in the antitrust litigation are
without merit. It has, nevertheless, explored numerous
settlement possibilities in order to limit the
costs, uncertainties and management distraction associated
with protracted litigation. Without admitting any
liability in such lawsuits, SGL CARBON Corporation has
reached settlements with many of its customers.
However, because certain plaintiffs continue to make
excessive and unreasonable demands, SGL CARBON Corporation
believes the prospects of ever reaching a commercially
practicable settlement with them are remote. After much
consideration, SGL CARBON Corporation determined that the
most appropriate course of action to address the situation
without harming its business was to voluntarily file for
Chapter 11 protection.
The decision to file for Chapter 11 protection is fully
supported by SGL CARBON AG, who considers the demands
against its U.S. subsidiary SGL CARBON Corporation to be
unjustified and hopes for an expeditious resolution of the
claims.
SPECTRUM INFORMATION: Raises Capital In Stock Exchange
------------------------------------------------------
Spectrum Information Technologies, Inc. (OTC Bulletin
Board: SITI) reported today that Powers & Co., a private
investment organization, has invested $600,000 in the
company. In exchange, Spectrum issued to Powers & Co.
3,000,000 shares of common stock and an option
pursuant to which Powers & Co. may purchase an additional
1,800,000 shares for an additional $270,000, or $0.15 per
share. Spectrum's stock closed at $0.125 per share on
Friday.
In connection with the investment, Spectrum elected
Lawrence M. Powers Chief Executive Officer and Chairman of
Spectrum's Board of Directors. Mr. Powers is the principal
of Powers & Co. and was Chairman and Chief Executive
Officer of Spartech Corporation (NYSE: SEH) from 1984 -
1992. In connection with the appointment of Mr. Powers, the
company's existing directors resigned from the Board in
favor of a new slate of directors consisting of Reese
Schonfeld and Jon M. Gerber. Spectrum's existing officers
also resigned.
Spectrum's departing Board issued the following statement,
"We are pleased that Powers & Co. has invested in Spectrum,
and appointed distinguished board members. We wish Larry
and his new team success going forward."
The new Board is also planning to appoint Robert Ingenito a
director, who will become an additional investor.
Earlier this year, Spectrum launched FastLane, an on-line
Web acceleration service, and, as previously announced, has
been attempting to raise capital to market the service. In
Spectrum's recently filed quarterly report on Form 10-Q
for the period ended September 30, 1998, Spectrum stated
that it intended to seek protection under Chapter 11 of the
U.S. Bankruptcy code if it did not locate capital.
WHITE ROSE: Announces Fiscal '98 Financial Results
--------------------------------------------------
White Rose Crafts and Nursery Sales Limited announced its
results for the year ended August 2, 1998 and for the first
quarter ended November 1, 1998.
For the 1998 fiscal year, White Rose had revenues of $210.5
million, up $4.9 million from the $205.6 million posted
during the year-earlier period. Despite record revenues,
lower margins resulted in the Company's third consecutive
year of operating losses.
The Company had a loss of $37.9 million or $3.89 per share
for the 1998 fiscal period, compared to a loss of $4.9
million or 35 cents per share for the year-earlier period.
Included in this loss were write downs of approximately
$13.0 million of goodwill and intellectual property, $12.0
million to reduce the value of inventory, $2.7 million in
respect of a deferred tax asset, and a provision for a
$3.3 million loss relating to share purchase loans to
former executives.
For the first quarter ended November 1, 1998, the Company's
revenue declined 4.3% to $38.4 million from $40.1 million
for the first quarter of fiscal 1997 due to a slowing of
consumer spending.
The Company incurred a loss of $5.1 million (31 cents a
share) in the first quarter of fiscal 1999, compared to a
loss of $5.0 million (30 cents a share) for the same period
the prior year. Given the seasonal nature of the
Company's business, the first quarter traditionally is a
loss. Total expenses were 3.7% below last year's period.
Subsequent to the end of the first quarter, on November 27,
1998, the White Rose banker sought and obtained an Order of
the Ontario Court of Justice (General Division), under the
Companies' Creditors Arrangement Act, granting it
protection from its creditors. The protection provided by
the Order is intended to allow the Company time to prepare
a plan of restructuring.
"The factors that contributed to White Rose's poor
financial performance in fiscal 1998 included above market
occupancy costs, excess and obsolete inventories,
inadequate information systems and competitive pressures on
selling prices," said William E. Aziz, Chairman and Chief
Executive Officer. "These factors, combined with high debt
levels, have left White Rose with limited capital to
reinvest in its operations and prevented the Company from
returning to profitability in fiscal 1998."
Mr. Aziz said, "The Company has appointed a new Board of
Directors effective November 22, 1998, has the interim
support of its primary lender and, most importantly, time
to develop the right plan to put itself back on course for
success. The Company intends to seek agreement from its
various stakeholders regarding its comprehensive
restructuring plan in early 1999." White Rose is a leading
crafts and nurseries retailer in Canada. The Company
operates 42 retail locations in Ontario and Quebec. It also
owns and operates two farms, located in Sandoon and
Wellington in Ontario.
**********
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-
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Debra Brennan and Lexy Mueller, Editors.
Copyright 1998. All rights reserved. ISSN 1520-9474.
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