/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/981230.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, December 30, 1998, Vol. 2, No. 253 Headlines ADVANCED GAMING: Files Joint Plan of Reorganization AID AUTO: Investigation Reveals Financial Misstatements AIRSTAR TECHNOLOGIES: New Bankruptcy Counsel Brought Aboard AUGMENT SYSTEMS: Trims Operations - Explores Alternatives BEST PRODUCTS: Final Distributions Yield 96% Recovery BIOGEN, INC: Reaches Accords in Litigation BRADLEE'S: Quarterly Report For Period Ended October 31 BRUNO'S, INC: March 15 Exclusivity Extension Requested BRUNO'S, INC: 365(d)(4) Extension Requested to June 30 CALCOMP: Considering The Alternatives Including Chapter 11 COMMERCIAL FINANCIAL: Undertakes Significant Cost Reduction COUNTY SEAT: Requests 90 More Days to File Claim Objections DESIGNS INC: Mails Letter And Revocation of Materials EAGLE CAPITAL: 365(d)(4) Extension Requested to March 15 ELDER-BEERMAN: Ex-Chairman & CEO Wants Ruling on Firing FLORIDA INDUSTRIES: Files for Chapter 11 Protection FOAMEX INTERNATIONAL: Reports Stock Ownership HEARTLAND WIRELESS: Equity Bid to Terminate Exclusivity INTERACTIVE NETWORK: Files Plan of Reorganization INTERNATIONAL WIRELESS: To Extend Berenson Minella Employ ITHACA INDUSTRIES: Reports Quarter Results To SEC LEASING SOLUTIONS: Handshake Moratorium on Debt Payments LIVENT (U.S.): Rejecting Ragtime Show Equipment Lease LYNX GOLF: Requests Extension of Solicitation Period MEMOREX TELEX: Leasing Solutions Defaults on Agreement MOBILEMEDIA CORP: Issues Response to New Generation NATIONAL ENERGY: Motion to Dismiss Involuntary Petition NEXAR TECHNOLOGIES: Anticipates Insolvency & Delisting ONE STOP: Cellexis Objects to Disclosure of Relationships PEAK INTERNATIONAL: Hires DLJ to Evaluate Buyer's Proposals PHP HEALTHCARE: Seeks Approval Of $12M DIP Pact RAND ENERGY: Meeting of Creditors Set for January 7, 1999 RAND ENERGY: Committee Objects to New CEO's Employment RAND ENERGY: April 7, 1999 Bar Date Established ROSE AUTO: Obtains DIP Loan to Fund Confirmation Process SANTA FE GAMING: Reports Increase In Revenues and Cash Flow STANLEY JAMES: Maryland Developer Files Chapter 11 Petition WET SEAL: Files Quarterly Results ********* ADVANCED GAMING: Files Joint Plan of Reorganization --------------------------------------------------- Advanced Gaming Technology, Inc. (OTC BB:AGTI) and Branson Signature Resorts, Inc., filed their Joint Plan of Reorganization dated December 22, 1998, with the U.S. Bankruptcy Court for the District of Nevada. The Plan contemplates distributing 2/3 of one new share of common stock to each holder of $1 in general unsecured claims against AGT. Holders of equity interests in AGT take nothing under the plan, nor do holders of unsecured claims against BSR. The Bankruptcy Court will consider the adequacy of the information set forth in the Debtors' Disclosure Statement filed in support of the plan at a January 26, 1999, hearing in Las Vegas. The company currently produces and markets patented and proprietary electronic bingo systems. The reorganized entity expects to diversify product offerings by providing technology to the gaming industry through new product development and consulting services. In a press release announcing the filing of the Joint Plan, AGT related that it has made significant cost reductions in implementing a new operating strategy, including the closing of the Vancouver, British Columbia office, clarifying that all operations are now consolidated in Las Vegas. AID AUTO: Investigation Reveals Financial Misstatements ------------------------------------------------------- Aid Auto Stores, Inc., discloses that its ongoing investigation of its prior financial statements reveals overstatements to its financial position as of December 31, 1997 in addition to the previously announced overstatement by possibly more than $4.9 million of inventory. The Company's auditors, Grant Thornton LLP, withdrew their audit report dated April 15, 1998 with respect to the Company's consolidated balance sheets as of December 31, 1997 and 1996 and the related consolidated statements of operations, stockholders' equity and cash flows for the years ended December 31, 1997, 1996 and 1995. In addition, the Company voluntarily disclosed the investigation into its financial statements to the United States Attorneys Office which in turn contacted the Securities and Exchange Commission. Aid Auto has received a notice of default under its secured loan agreement with Foothill Capital Corp. Foothill is currently owed approximately $7.9 million under its loan agreement. Foothill has agreed to a forbearance through the end of business on the date of this release of any action under the credit facility in order to give Aid Auto the opportunity to arrange for an infusion of working capital or the sale of the Company or its assets. The Company is currently engaged in discussions with several parties as to a possible transaction. Foothill has orally indicated to the Company that the Company may continue such discussions and that it may grant an extension with respect to its forbearance. Unless such extension is actually granted by Foothill, or if such efforts to consummate a transaction are not successful in the near future, Aid Auto may be required under the forbearance agreement to take action to liquidate its assets, including, possibly, a filing under the Bankruptcy Code. The forbearance agreement with Foothill also provides that Kahn Consulting, Inc. is appointed to act as the Company's Chief Restructuring Officer and irrevocably authorizes and directs Kahn to assume management responsibilities. AIRSTAR TECHNOLOGIES: New Bankruptcy Counsel Brought Aboard ----------------------------------------------------------- Airstar Technologies, Inc., tells the Bankruptcy Court in Riverside, California, that it has retained M. Jonathan Hayes, Esq., of Encono, California, as counsel to replace Douglas Neistat, Esq., of Angel & Neistat. The Debtor does not state its reason for this substitution. The Debtor advises that it has delivered a $10,000 retainer to Mr. Hayes to be drawn upon court approval of a fee application. AUGMENT SYSTEMS: Trims Operations - Explores Alternatives --------------------------------------------------------- Augment Systems, Inc. (OTC Bulletin Board:AUGS) yesterday announced that due to the unavailability of capital the Company has substantially scaled back business operations and has retained Gollon Capital Advisors to explore merger and acquisition opportunities and/or an orderly liquidation. As part of this plan, the Company is liquidating inventory and may seek bankruptcy protection if and when appropriate. Headquartered in Westford, MA, Augment Systems, Inc. is a self-proclaimed pioneer in the design, manufacture, marketing and support of high performance data access and storage solutions for open, heterogeneous computing systems environments. The Company's Fibre Channel Storage Area Networking systems addressed the increasing demand for the rapid transfer and efficient storage of large image and text files. BEST PRODUCTS: Final Distributions Yield 96% Recovery ----------------------------------------------------- Best Products Company mailed-out checks to its unsecured creditors, paying them about 96-cents for every dollar they were owed. The Richmond-based retailer shut down two years ago after its second chapter 11 filing. Initial estimates suggested that creditors might receive only 65-70 cents on the dollar from the Best II liquidation; the company derived more cash from asset sales than originally anticipated. BIOGEN, INC.: Reaches Accords in Litigation ------------------------------------------- Biogen, Inc. (Nasdaq: BGEN) yesterday announced it has resolved several outstanding commercial disputes. (A) In November, the Company received a distribution of funds as part of settlement of the claims of all remaining creditors in the bankruptcy of Bioferon Biochemische Substanzen GmbH & Co., a former joint venture between Biogen and Rentschler Arzneimittlel GmbH & Co., of Laupheim, Germany. The settlement agreement which was approved by the German bankruptcy referee also resolves the six court cases to which Bioferon was a party. (B) On December 28, 1998, Biogen settled its dispute with ASTA Medica of Frankfurt, Germany relating to a terminated 1989 agreement among Biogen, ASTA and Bioferon under which ASTA had obtained a license to certain intellectual property rights related to recombinant beta interferon for a number of European countries. Under the terms of the settlement agreement, ASTA dismissed its lawsuit against Biogen in the U.S. District Court in Massachusetts and released Biogen from all claims related to the 1989 agreement. As part of the settlement, Biogen paid an undisclosed amount to ASTA. The amount paid to ASTA will be offset in part by the amount received in the Bioferon bankruptcy. The net impact to Biogen of the two events will not be material. (C) Biogen also announced today that the plaintiffs have agreed to dismiss Biogen as a defendant in a class action suit filed against CVS and a number of pharmaceutical companies for alleged violations of privacy rights in connection with certain marketing practices. The agreement does not involve payments on the part of any party, and is subject to approval by U.S. District Court Judge Patti Saris. Biogen's Chairman and Chief Executive Officer, James L. Vincent stated, "I am pleased that these matters will no longer be distractions, and that we can continue to focus on bringing new breakthrough products to the market." BRADLEE'S: Quarterly Report For Period Ended October 31 ------------------------------------------------------- For the quarter ended October 31, 1998, Bradlee's Inc. reports to the SEC a net loss of $7.2 million on total sales of $323.1 million. This compares to net income of $.4 million on total sales of $342.3 million for the same period last year. For the thirty nine weeks ended October 31, 1998 the company reports a net loss of $34.6 million on total sales of $939.2 million. BRUNO'S, INC: March 15 Exclusivity Extension Requested ------------------------------------------------------- Bruno's, Inc., and its debtor-affiliates tell District Judge Robinson in Wilmington that they have completed their real estate rationalization program, "right sized" the company, recovered from a warehouse explosion a hurricane and other disasters, implemented and deployed programs to remedy a host of operational problems, and have delivered a long-term business plan to their Lenders and their Creditors' Committee. Accordingly, these cases have moved after 11 months into the plan negotiation stage. To allow the Debtors time to meet with the Committee, meaningfully negotiate the terms of a plan and reduce that agreement to a formal proposal, the Debtors ask that their exclusive period during which to file a plan of reorganization be extended, without prejudice to further extensions, through March 15, 1999. The Debtors additionally request that their exclusive period during which to solicit acceptances of such plan be extended through May 14, 1999. The Debtors note that they and their Committee have been exploring and discussing a wide range of strategic alternatives that will underpin the ultimate plan. BRUNO'S, INC: 365(d)(4) Extension Requested to June 30 ------------------------------------------------------ Bruno's, Inc., tells the Court that it has, to date, decided to assume, assume and assign or reject 92 of its 211 unexpired leases of nonresidential real property since the commencement of its chapter 11 cases. As the Company negotiates with its creditors' committee concerning the form and content of a plan of reorganization, Bruno's will make further decisions about the disposition of its property leases. The Debtors note that the operating stores include a number of marginal performers. Accordingly, pursuant to 11 U.S.C. Sec. 365(d)(4), Bruno's asks Judge Robinson to extend the deadline by which its must decide whether to assume or reject leases to the earlier of (i) confirmation of a plan and (ii) June 30, 1999. CALCOMP: Considering The Alternatives-Including Chapter 11 ---------------------------------------------------------- CalComp Technology Inc. (Nasdaq:CLCP) Tuesday said it has been notified by Lockheed Martin Corp. (NYSE:LMT), the company's majority shareholder, that it will not increase CalComp's existing credit capacity beyond the currently available $43 million to fund its continuing operations. CalComp also said that since it expects to reach its credit limit during January 1999, and does not anticipate it will be able to obtain additional funding from other sources, the company will be required to consider strategic alternatives, including the sale of some or all of its operations, an orderly shut-down of its operations, and should neither of these options be successfully realized, the possible filing for protection under Chapter 11 of the Bankruptcy Code. John C. Batterton, CalComp's president and chief executive officer, said the company has also been notified by Lockheed Martin that it will consider providing additional funding over approximately a six-month period to assist CalComp in a non-bankruptcy related shut-down of operations. He said such assistance might allow CalComp to sell its proprietary CrystalJet printing technology and liquidate other non-core related businesses in an orderly manner. CalComp has notified Lockheed Martin of its acceptance of Lockheed Martin's proposal to fund such a shut-down of operations in accordance with a plan expected to be approved by both CalComp and Lockheed Martin in early January. Batterton noted that even though no assurances can be given that an agreement with Lockheed Martin for additional funding necessary for the orderly shut-down will be reached, the company is optimistic that such an agreement will be arranged by early January. The company believes that an orderly shut-down of its operations will likely lead to its liquidation and dissolution. Distributions, if any, to common shareholders will be based on proceeds received from the anticipated sale of assets and operations, offset by amounts owed to creditors. "We appreciate Lockheed Martin's long-term support of CalComp, but understand that our organization is not considered strategic to their primary business," said Batterton. "CalComp's immediate and priority focus, therefore, will be to effect the required actions that will be in the best interests of our shareholders, creditors, customers and employees." Batterton added that the company expects to cease shipments of its recently developed CrystalJet-based line of printers until current issues are resolved. CalComp Technology is a leading developer and manufacturer of computer graphics peripherals and supplies, for personal, business and professional applications. As an industry leader in piezo inkjet technology, CalComp develops image marking systems and components that support advanced digital printing applications. Corporate offices are located in Anaheim. COMMERCIAL FINANCIAL: Undertakes Significant Cost Reduction ---------------------------------------------------------- This week's edition of the Credit Risk Management Report reports that Tulsa, Okla.-based Commercial Financial Services followed up the recent news of its Chapter 11 bankruptcy with the announcement it will be laying off approximately 1,800 employees as part of a permanent downsizing. The report also relates CFS' further cost-cutting measures in letter to employees dated Dec. 18.: * Former president Bill Bartmann, who is acting as a consultant to the company, will take a salary reduction. * Key members of the senior management will take cuts in pay. * CFS' corporate airplane will be put up for sale; * Catered lunches for senior management will be discontinued. * New Oklahoma City employees will be trained in Oklahoma City. * Floor space at the company's Tulsa facility will be trimmed; and * The company will work to cut back on purchasing expenditures. "I want each of you to know how much I deeply regret having to make and implement these decisions so close to the holiday season. But my experience tells me that this course is absolutely the best one for companies in situations like CFS. It is vitally important to act decisively and quickly so that we can get this company back on track as soon as possible," Fred Caruso, vice president of Development Specialists, told CFS employees. Caruso was appointed president of the company after former CFS President Bill Bartmann stepped down from that position Oct. 26. COUNTY SEAT: Requests 90 More Days to File Claim Objections ----------------------------------------------------------- County Seat Stores, Inc., has until December 31, 1998, to file objections to claims asserted by creditors against its estate. Although the Debtor believes it has filed objections to all disputed claims, it asks the Delaware bankruptcy court for a 90 day extension of the deadline as a prophylactic measure. The Debtor notes that over 4,000 claims were filed against the estate--many after the bar date and many erroneously delivered to the clerk's office rather than to Logan & Company. DESIGNS INC: Mails Letter And Revocation of Materials ----------------------------------------------------- Designs, Inc. (NASDAQ:DESI), operator of outlet and specialty retail apparel stores, announced that it is mailing the following letter along with its revocation of consent solicitation materials to its stockholders. DEAR FELLOW STOCKHOLDER: You may recently have received consent solicitation material from a dissident stockholder called Jewelcor Management, Inc., a corporation controlled by a Florida investor named Seymour H. Holtzman. Mr. Holtzman is seeking your consent to remove, without cause, five of the six members of your Board of Directors and to replace them with his own nominees. We are writing you today to provide some information which we believe will be important to you. Your Board has formed a special committee of independent outside directors and retained the investment banking firm of Shields & Company, Inc. for the purpose of evaluating and recommending alternatives for maximizing stockholder value in the near term, including a possible sale of the Company. Among other things, representatives of Shields & Company, Inc. are in contact with parties who have already expressed an interest in the Company, and they have targeted and will be contacting other who they believe to be potentially interested in acquiring the Company. DON'T LET JEWELCOR DEPRIVE YOU OF THE VALUE OF YOUR INVESTMENT. The Special Committee has considered the Holtzman Group's proposals and believes that your Board and current management are in the best position to increase stockholder value for the following reasons: --Changing your Board will lead to disruption in the operations of the Company - at a time when your Board needs to lessen disruption to preserve stockholder value. --A change in control of your Board, as contemplated by Mr. Holtzman, would be an event of default and cause the Company's $10 million outstanding revolving credit with BankBoston Retail Finance, Inc. to become due and payable at BankBoston's option. In the past, Jewelcor, Inc., a company run by Holtzman, filed for bankruptcy, and The First National Bank of Boston, an affiliate of BankBoston Retail Finance, was owed about $100 million by Jewelcor at the time of the bankruptcy. --In light of BankBoston's past experience with Jewelcor, Inc., we believe that if the Holtzman Group obtains control of your Board, BankBoston would seek to accelerate payment of the Company's loan, which would have an adverse effect on the Company's working capital. --Levi Strauss & Co. is a very significant relationship, but continuation of that relationship is not guaranteed if there were a transfer of control of the Company. Your Board believes that the Levi Strauss & Co. relationship will be very important to any purchaser of the Company and that it is in the best position to manage that relationship. --The Holtzman Group expects Stanley Berger to preserve the Levi Strauss & Co. relationship. It has been years, in our view, since Mr. Berger has played any meaningful role in the Company's relationship with Levi Strauss & Co. You can reject Jewelcor and its efforts to take control of your Company. Simply be sure not to sign Jewelcor's WHITE consent card. If you have already signed a WHITE consent card, you can easily revoke that consent by signing, dating and mailing the enclosed BLUE consent revocation card immediately. You can act today to protect your investment in the Company. Whether or not you have previously signed Jewelcor's WHITE consent card, please sign and date the enclosed BLUE Consent Revocation Card and return it in the enclosed postage-paid envelope. The Holtzmans are trying to stampede you and your fellow stockholders into acting immediately, so it is important that you send in the BLUE Consent Revocation Card today! Thank you for your continued trust and support, Sincerely, JAMES G. GRONINGER Chairman of the Special Committee EAGLE CAPITAL: 365(d)(4) Extension Requested to March 15 -------------------------------------------------------- Without articulating any business reasons, Eagle Capital Mortgage, Ltd., requests that the Dallas bankruptcy court extend its deadline within which to decide whether to assume or reject its nonresidential real property leases through March 15, 1999, without prejudice to further extensions. The Debtor notes that all of its nonresidential property leases have been rejected except for the lease of its corporate headquarters. ELDER-BEERMAN: Ex-Chairman & CEO Wants Ruling on Firing ------------------------------------------------------- Milton E. Hartley, former chairman and chief executive of Elder-Beerman Stores Corp., asks the U.S. Bankruptcy Court in Dayton, Ohio, to grant his motion for summary judgment and hold that Elder-Beerman's board violated his employment contract by not giving him a hearing before his dismissal. Hartley, represented by David C. Greer, Esq., asks Judge William A. Clark to award him $2.4 million in unpaid salary, bonus and retirement compensation, plus damages. Elder-Beerman Stores Corp. officially emerged from two turbulent years of bankruptcy this past year. FLORIDA INDUSTRIES: Files for Chapter 11 Protection --------------------------------------------------- Florida Industries Investment Corp., located at 4802 Distribution Court No. 7 in Orlando, Florida, recently filed for protection under chapter 11. The Florida Sentinel reports that the FIIC's petition discloses $4,321,000 in assets versus $443,725 in debts. FIIC's largest unsecured creditors, according to the Sentinel, are George Cox of Orlando, owed $15,000; Riggs & Associates of Winter Park, owed $125,000; and J. Hill of Vero Beach, owed $10,000. FOAMEX INTERNATIONAL: Reports Stock Ownership --------------------------------------------- In an amended schedule 13D filed with the SEC, Trace International Holdings, Inc. reports an aggregate ownership of 11,525,000 shares of common stock (46.1% of the class)of Foamex International Inc. Trace Foam Sub, Inc. reports an aggregate ownership of 7,000,247 shares (28.0% of the class) In connection with the acquisition of Great Western, Trace Holdings entered into a put option agreement with John Rallis, a former President of Foamex International and the former owner of Great Western Foam Products Corporation. Pursuant to the Put Option, Mr. Rallis has the right and option to sell to Trace Holdings 308,813 shares of Common Stock for approximately $7.5 million, or $24.29 per share, at any time during the period commencing May 6, 1998, which expiration date was initially extended to November 6, 1998. On November 6, 1998, Mr. Rallis exercised the Put Option, which Trace Holdings was unable to satisfy; subsequently, Mr. Rallis agreed to rescind the exercise of the Put Option in exchange for the extension of the expiration date of the Put Option to March 31, 1999. It is anticipated that in connection with the consummation of the Merger, Trace Holdings will pay to Mr. Rallis the difference between the amount payable to Mr. Rallis upon exercise of the Put Option and the Merger Consideration with respect to the underlying shares of Common Stock. HEARTLAND WIRELESS: Equity Bid to Terminate Exclusivity ----------------------------------------------------------- The Unofficial Ad Hoc Equity Security Holders' Committee moves the bankruptcy court in Delaware for an order terminating Heartland Wireless Communications, Inc.'s exclusive period during which to propose a plan of reorganization. "The Debtor's expedited [road to confirmation of their prepackaged plan] severely undercuts the ability of the Debtor's equity security holders to meaningfully participate in the bankruptcy process," the Committee complains. The Debtor, the Committee charges, is using plan exclusivity "as a tactical device to put pressure on (the equity security holders) to yield to a plan they consider unsatisfactory." The Committee tells the Court that it wants to propose a competing plan, premised on a higher valuation, that will convert all of the Debtor's indebtedness into equity and preserve value for shareholders. INTERACTIVE NETWORK: Files Plan of Reorganization ------------------------------------------------- As previously reported, Interactive Network, Inc., filed a plan of reorganization in its pending Chapter 11 bankruptcy proceeding that provides for payment to all the Company's creditors in full on their allowed claims, retention by shareholders of their shares in the Company, the conversion by the Company's principal secured creditors/investors (TCI, NBC, Motorola and Sprint) of approximately $39,000,000 in secured debt into approximately 7,800,000 shares of the Company's common stock, at a conversion price of $5 per share, and the release by those secured creditors of their liens on the Company's assets, including its patent portfolio. The Company expects its Chapter 11 plan to be confirmed in February 1999, shortly after which the Company will receive $10,000,000 in cash pursuant to a Settlement Agreement entered into in July 1998 with its secured creditors/investors who hold the Company's secured debt that is being converted into common stock. Interactive Network delivered a copy of its Plan and the Comprehensive Settlement Agreement forming a cornerstone of that Plan to the SEC under cover of Form 8-K last week. Full-text copies of the Debtor's Plan and the Settlement Agreement are available at no charge at http://www.sec.gov/Archives/edgar/data/879482/0000929624- 98- 002092.txt via the Internet. INTERNATIONAL WIRELESS: To Extend Berenson Minella Employ ----------------------------------------------------------- International Wireless, Communications Holdings Inc. and its affiliated debtors seeks authority to extend their retain Berenson Minella & Company as their special financial advisor through January 31, 1999 at the rate of $100,000 per month. ITHACA INDUSTRIES: Reports Quarter Results To SEC ------------------------------------------------- Net sales increased from $63.2 million for the thirteen weeks ended November 1, 1997 to $78.2 million for the thirteen weeks ended October 31, 1998.Included in this year's sales is $14.6 million for Glendale Hosiery which was acquired on March 24, 1998. Partially offsetting this increase was a decrease of$3.5 million in other hosiery related business due to product changes at one of the division's major customers and the lowering of in-store inventory levels by certain customers. The Company's underwear division's sales during this period were $3.9 million higher than the same period last year. The gross profit margin for the third quarter of fiscal 1999 decreased to 14.5% from 15.2% in the comparable period last year. This decrease resulted primarily from start-up costs for new programs and costs associated with consolidating the Company's two hosiery divisions. Net sales increased from $182.9 million for the thirty-nine weeks ended November 1, 1997 to $205.9 million for the thirty-nine weeks ended October 31,1998. Operating income decreased to $7.4 million for year-to-date fiscal 1999 from $7.7 million for the comparable period last year. LEASING SOLUTIONS: Handshake Moratorium on Debt Payments -------------------------------------------------------- Leasing Solutions, Inc. (NYSE:LSI), and Memorex Telex Corporation entered into and obtained Judge Walsh's approval of a compromise and settlement agreement under which LSI agreed to pay Memorex $2,154,000. LSI paid $1,000,000 of the settlement amount but now advise Memorex that because: (1) LSI is in the middle of its own restructuring, and (2) LSI is "in a moratorium" and would violate a "handshake" agreement with its lenders if it were to pay the remaining settlement amount, LSI will not be remitting the remaining $1,154,000 to Memorex. LIVENT (U.S.): Rejecting Ragtime Show Equipment Lease ----------------------------------------------------- Livent (U.S.), Inc., has determined that it should reject an unexpired 1995 lease with Westsun Show Systems (U.S.), Inc., and Charter Financial for light and audio equipment used in connection with the Debtor's production of the Ragtime show. The lease calls for monthly payments of $97,644 and a $427,000 balloon payment on April 1, 1999. Because Ragtime will end its tour in Boston this month, the Debtor has no further need for the equipment. LYNX GOLF: Requests Extension of Solicitation Period ---------------------------------------------------- Lynx Golf, Inc., asks Judge Bowie for an extension of its exclusive period during which to solicit acceptances of its plan of reorganization filed on November 23, 1998 through the later of (i) May 1, 1999 and (ii) the date set for confirmation of Lynx' Plan. Lynx affirmatively states its belief that its plan has reasonable prospects for successful confirmation and consummation. MEMOREX TELEX: Leasing Solutions Defaults on Agreement ------------------------------------------------------ Leasing Solutions, Inc. (NYSE:LSI), and Memorex Telex Corporation entered into and obtained Judge Walsh's approval of a compromise and settlement agreement under which LSI agreed to pay Memorex $2,154,000. LSI paid $1,000,000 of the settlement amount but now advises Memorex that because: (1) LSI is in the middle of its own restructuring, and (2) LSI is "in a moratorium" and would violate a "handshake" agreement with its lenders if it were to pay the remaining settlement amount, LSI will not be remitting the remaining $1,154,000 to Memorex. Memorex has turned to Judge Walsh for entry of an order directing LSI to make immediate payment of the remaining $1,154,000 and imposing sanctions on LSI for failure to honor the Settlement Agreement by requiring LSI to pay Memorex' legal costs of bringing this motion. MOBILEMEDIA CORP: Issues Response to New Generation --------------------------------------------------- MobileMedia Corp. issued the following statement in response to New Generation's opposition to the Company's Plan premised on a merger with Arch Communications: MobileMedia Corp. believes that the Plan of Reorganization filed by the company with the U.S. Bankruptcy Court on Dec. 2, 1998, providing for the merger with Arch Communications Group Inc. represents the best available outcome for all of MobileMedia's creditors, including its unsecured creditors. The company reached this conclusion after months of evaluating various restructuring alternatives with the participation of its advisers and the advisers to its secured and unsecured creditors. MobileMedia's Plan of Reorganization provides for a merger of MobileMedia and Arch Communications in which MobileMedia's unsecured creditors will receive shares of Arch common stock and the company's secured creditors will receive payment for their claims in cash. The Official Committee of Unsecured Creditors has agreed to support MobileMedia's Plan of Reorganization. Unsecured creditors, including members of the Official Committee of Unsecured Creditors, holding approximately $230 million in unsecured claims, or approximately 50 percent of the estimated total unsecured claims, have agreed to vote for the plan. New Generation Advisers has represented that it holds approximately $11.5 million of MobileMedia bonds, or less than 2.5 percent of the company's total unsecured claims. As noted in the Disclosure Statement filed by MobileMedia with the Bankruptcy Court on Dec. 3, 1998, and approved by the court on Dec. 11, 1998, ". . . the Debtors and the (Unsecured Creditors) Committee, assisted by their professionals, attempted over a period over one year in duration to formulate a plan of reorganization that maximized the value of these estates. Moreover, the Committee invited holders of Class 6 (unsecured) Claims such as New Generation to participate in this process. New Generation has never brought any alternative transaction to the attention of the Debtors or the Committee nor has it offered to participate in the financing of any transaction." NATIONAL ENERGY: Motion to Dismiss Involuntary Petition ------------------------------------------------------- National Energy Group, Inc. (OTC Bulletin Board: NEGXQ) announced that it filed in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, an Answer to and Motion to Dismiss the pending Involuntary Petition filed earlier this month by certain of the Company's 10-3/4% Senior Notes Bondholders. The Company's Motion affirms that it: (i) is meeting its obligations and generally paying its debts as they become due, unless such debts are the basis of a bona fide dispute and (ii) has arranged with the lender under its Restated Loan Agreement to borrow additional funds sufficient to pay current amounts owing in respect of accrued interest on the 10-3/4% Senior Notes in the approximate amount of $9 million, conditioned upon the Court's dismissal of the Involuntary Petition. As previously reported (TCR 10-Dec-1998), the Involuntary Petition was filed by Oppenheimer High Income Fund, TCW Shared Opportunity Fund II L.P., Shared Opportunity Fund IIB LLC, TCW Shared Opportunity Fund III L.P., TCW Leveraged Income Trust L.P., Lutheran Brotherhood High Yield Fund, LB Series Fund Inc., High Yield Portfolio, Salomon Brothers Asset Management, and Alliance High Yield Fund Inc. The Company also announced, effective December 22, 1998, the Company's Restated Loan Agreement, as amended, with Bank One, Texas N.A. and Credit Lyonnais, New York Branch, et al., has been assigned to Arnos, Inc., an affiliated subsidiary of the Company's Series D Preferred stockholder, and of which a director of the Company is its Chief Financial Officer. Upon purchase and assignment of the Restated Loan Agreement, Arnos, Inc. advised the Company that it would make available additional Advances as provided in the Restated Loan Agreement in an amount sufficient to pay the outstanding accrued interest owing to the Company's 10-3/4% Senior Notes bondholders; provided the Court dismisses the Involuntary Petition filed against the Company upon payment of the outstanding interest. The Company further announced that it successfully completed and tested its Landess No. 33-3 well in the North Edith Field in Woods County, Oklahoma. The Landess No. 33- 3 flow tested at 1,800 mcf of gas per day and 0 barrels of water, with a flowing tubing pressure of 500 psi on a 24/64" choke. The well was completed from perforations 5781' to 5802' and 5811' to 5814' in the Chester Reservoir, which was the Company's primary target. The well is expected to be produced at approximately 1, 400 mcfd. NEGXQ operates and owns a 54.6% working interest in the Landess No. 33-3. National Energy Group, Inc. is a Dallas, Texas based independent oil and gas exploration and production company, headquartered in Dallas, Texas, with operations primarily in Louisiana, Texas, and Oklahoma. NEXAR TECHNOLOGIES: Anticipates Insolvency & Delisting ------------------------------------------------------ Nexar Technologies, Inc. announced that due to the company's inability to obtain new financing and concern among its creditors, Nexar anticipates that it will soon commence insolvency proceedings. In addition, Nexar anticipates its common stock will be de-listed from The Nasdaq Stock Market as early as Friday, December 11, 1998 due to the company's failure to satisfy Nasdaq listing requirements. Upon de-listing from Nasdaq, the company's stock may continue to be traded over-the-counter until any such insolvency proceedings are resolved, although the company warned that it could not ensure that such trading would occur or continue. ONE STOP: Cellexis Objects to Disclosure of Relationships ----------------------------------------------------------- Cellexis International, Inc., objects to the adequacy of the information contained in the disclosure statement presented by One Stop Wireless of America, Inc., in support of the proposed plan of reorganization for its and its two debtor-affiliates. Cellexis focuses the Court's attention on the lack of disclosure concerning the relationships of David Chadwick, PhoneXchange and the Debtors. The Plan proposes to abandon assets to these entities for no consideration and the insider nature of the relationships are inadequately described, Cellexis asserts. PEAK INTERNATIONAL: Hires DLJ to Evaluate Buyer's Proposals ----------------------------------------------------------- Peak International Limited, which has principal offices in Austin, Texas, and Hong Kong, has hired the investment firm Donaldson, Lufkin & Jenrette to help it consider potential buyers. On Nov. 18, Peak said a company had expressed interest in pursuing an acquisition of the Company. Peak did not identify the suitor. At the same time, Chief Executive Richard Brooks left the company. PHP HEALTHCARE: Seeks Approval Of $12M DIP Pact ----------------------------------------------- Reston, Va.-based PHP Healthcare Corp. is seeking court approval of a $12 million debtor-in-possession financing agreement with NationsBank N.A. The medical management company said it would need $6 million over the next few weeks to cover disbursements, including payments to employees and suppliers, lease payments and miscellaneous operating expenses, as well as the reimbursement of fees and expenses related to the proposed DIP financing. "In particular, even with the use of the Lender's cash collateral, the Debtor is currently unable to fund adequately its operations. Without immediate access to the DIP Financing, the Debtor will be unable to pay its vendors or its employees, or to pay other essential ordinary court business expenses, all to the severe detriment of the business." Accordingly, the credit agreement provides a $12 million commitment, with up to $6 million available through the entry of a final order. (ABI & Federal Filings, Inc. 29-Dec-1998) RAND ENERGY: Meeting of Creditors Set for January 7, 1999 --------------------------------------------------------- The United States Trustee in Dallas will convene a meeting of creditors, pursuant to 11 U.S.C. Sec. 341, of Rand Energy Company, at 2:00 p.m. on January 7, 1999, in Dallas. RAND ENERGY: Committee Objects to New CEO's Employment ------------------------------------------------------ As previously reported (TCR 15-Dec-1998), Rand Energy Company fired Jeff Rand and hired James R. Latimer, III, as Presient and CEO. The Committee says that a $30,000 monthly salary for Mr. Latimer is too high. The Committee suggests that the Debtor can employ a CEO with superior relevant experience and qualifications who will work full time for $12,000 per month or less. Further, it appears to the Committee that Mr. Latimer would duplicate many services already being provided by professionals retained in chapter 11 proceedings. Additionally, to the extent that the Committee has had contact with Mr. Latimer, the Committee is convinced that he has not effectively managed the Debtor since his hiring. RAND ENERGY: April 7, 1999 Bar Date Established ----------------------------------------------- The United States Bankruptcy Clerk in Dallas has notified creditors that April 7, 1999, is the deadline for filing proofs of claim against Rand Energy Company a/k/a Rand Paulton Energy Company a/k/a Rand Paulson Oil Company, Inc. ROSE AUTO: Obtains DIP Loan to Fund Confirmation Process -------------------------------------------------------- Rose Auto Stores-Florida, Inc., has obtained a $10,000 90- day loan from Halter Financial Group, Inc., at a 9% interest rate, to fund the costs of mailing its plan to creditors for voting, tabulating ballots and prosecuting its plan to confirmation. The Note provides that it will be repaid, in full, in cash, pursuant to the terms of the plan, if the plan is confirmed. In the event confirmation fails, Halter agrees that $7,500 will be paid as a super- priority administrative claim and $2,500 will be subordinated to the claims of Rose's general unsecured creditors. SANTA FE GAMING: Reports Increase In Revenues and Cash Flow ----------------------------------------------------------- Santa Fe Gaming Corporation (Amex: SGM), a diversified gaming company headquartered in Las Vegas, announced the results for the quarter and fiscal year ended September 30, 1998. For the year ended September 30, 1998, the Company reported net revenues of $112.8 million, a $7.8 million increase over revenues in fiscal 1997. The increase is primarily the result of improved operating results at the Santa Fe Hotel which increased revenues by $8.8 million or 14.0% to $71.5 million in fiscal 1998. Earnings before interest, taxes, depreciation, amortization, rents and corporate charges for the 1998 fiscal year increased to $27.1 million, a $3.9 million increase over cash flow in fiscal 1997. The increase is primarily the result of improved operating results at the Santa Fe Hotel, which increased cash flow from operations by $5.7 million, or 38.7%, to $20.6 million in fiscal 1998. Operating income for fiscal 1998 was $7.8 million versus operating income of $5.1 million in fiscal 1997, excluding a $44.0 million impairment loss recorded in the fourth quarter of fiscal 1998 to adjust the carrying value of the Company's fixed and intangible assets at the Pioneer in Laughlin, Nevada. The Company determined an impairment loss had occurred due to a change in regulatory policy by the State of California with regard to gaming operations by Native Americans. The Company reported a net loss of $63.9 million or $10.31 per common share compared to a net loss of $13.1 million or $2.12 per common share in fiscal 1997. The increase in loss in fiscal 1998 is due primarily to the impairment loss referred to above and the fact that the Company did not record a tax benefit in fiscal 1998. In connection with the audit of the Company's financial statements, the Company's independent auditors report expresses an unqualified opinion and includes an explanatory paragraph relating to Santa Fe Gaming Corporation's ability to continue as a going concern. The auditors' report indicates that the Company's inability to meet the repayment terms of the 13 1/2% First Mortgage Bonds ("13 1/2 Notes"), its net losses and its stockholders' deficiency raise substantial doubt about its ability to continue as a going concern. The audited financial statements do not include any adjustments that might result from the outcome of such uncertainty. As previously announced, the Company's subsidiary, Pioneer Finance Corp. ("PFC"), did not pay at the December 1, 1998 maturity $60 million of 13 1/2% Notes which are guaranteed by the Company. In November 1998, PFC received and accepted consents from holders of approximately 75%, or $45.8 million principal amount, of the outstanding 13 1/2% Notes pursuant to the Offering Circular and Consent Solicitation dated October 23, 1998, as amended (the "Consent Solicitation"), in which (i) PFC agreed, among other things, to file for relief under Chapter 11 of the United States Bankruptcy Code and to seek confirmation a plan of reorganization that provides for issuance of new notes in satisfaction of the 13 1/2% Notes pursuant to the terms set forth in the Consent Solicitation, and (ii) the consenting holders agreed (a) to forbear until December 2000 from exercising rights or remedies arising as a result of the failure by PFC to pay principal and interest on the 13 1/2% Notes at the December 1, 1998 maturity date, or the failure by Pioneer Hotel Inc. to pay principal and interest on the inter-company mirror note from Pioneer Hotel Inc. to PFC at the December 1, 1998 maturity date and (b) to vote to accept a plan of reorganization in a Chapter 11 bankruptcy case that provides for treatment of the 13/% Notes substantially as described in the Consent Solicitation. No assurance can be given that the plan of reorganization PFC intends to submit for confirmation will be confirmed. As also previously announced, the Company has been advised by the American Stock Exchange that it no longer meets the continued listing requirements for its common and preferred stock. As a result, no assurance can be given that the common and preferred stock will continue to be listed on the American Stock Exchange. Selected financial data, including operating results for the Santa Fe and the Pioneer are included in the Company's Annual Report on Form 10-K, filed today with the Securities and Exchange Commission. STANLEY JAMES: Maryland Developer Files Chapter 11 Petition ----------------------------------------------------------- Stanley James Development Corp. located at 5558 Muddy Creek Road in West River, Maryland filed for protection under Chapter 11 in Baltimore. James King serves as the Debtor's president. The Debtor indicates in its Voluntary Petition that assets and liabilities exceed $1 million. WET SEAL: Files Quarterly Results --------------------------------- Sales in the third quarter of fiscal 1998 were $121,622,000 compared to sales in the third quarter of fiscal 1997 of $104,435,000, an increase of $17,187,000 or 16.5%. The dollar increase in sales was primarily due to the net increase of 49 stores; 424 stores at the end of the third quarter of fiscal 1998 compared to 375 stores at the end of the third quarter of fiscal 1997. The increase was also due to the catalog sales associated with the fourth and fifth catalog mailings in the third quarter of fiscal 1998. To a lesser extent the increase in sales was due to a 0.1% increase in comparable store sales. Net income was $5,418,000 in the third quarter of fiscal 1998 compared to $5,479,000 in the third quarter of fiscal 1997. As a percentage of sales, net income was 4.5% in the third quarter of fiscal 1998 compared to 5.2% in the third quarter of fiscal 1997. Sales in the 39 weeks ended October 31, 1998 were $339,503,000 compared to sales in the 39 weeks ended November 1, 1997 of $294,252,000, an increase of $45,251,000 or 15.4%. Net income was $13,785,000 in the third quarter year to date of fiscal 1998 compared to $12,411,000 in the third quarter year to date of fiscal 1997. ********* A listing of Meetings, Conferences and Seminars appears in each Tuesday's edition of the TCR. Bond pricing, appearing in each Friday edition of the TCR, is provided by DLS Capital Partners, Dallas, Texas. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co- published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan and Lexy Mueller, Editors. Copyright 1998. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *