TCR_Public/990125.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, January 25, 1999, Vol. 3, No. 16


AMERICA WEST: The Bidding War
BRAZOS SPORTSWEAR: Obtains Commitment for $62.5 Million
BRUNO'S INC: Seeks To Sell 73 Acres in Birmingham
BRUNO'S INC: Trimming Five Georgia Stores
CALDOR: Caldor to Wind Down Business

COMMERCIAL FINANCIAL: Bank Objects To Protective Order
COMMERCIAL FINANCIAL: Seeks Agreements With Employees
COUNTY SEAT: Files For Reorganization
CPM ASSOCIATES: To File Plan of Reorganization

CROWN BOOKS: More Time To Assume/Reject Leases
DEGEORGE FINANCIAL: Seeks Financing    
DOMINION BRIDGE: Granted New Extension
DOW CORNING: Attorneys Seek More
EAGLE CAPITAL: Final Order For Use of Cash Collateral

EAGLE PICHER: Announces 1998 Financial Results
FOLGER ADAM: Case Closed By Final Decree
FRONTIER AIRLINES: Stock Soars To Record High of $7
LOT$OFF: Announces Plans to Sell Retail Assets                  
MIDCON OFFSHORE: LDNG Seeks Hearing For Expert Witnesses

MOLTEN METAL: Chapter 11 Trustee Seeks To Reject Contract
NEXAR: Reaches Asset-Sale Agreement
NU-KOTE: Committee Authorized To Hire Firm
PARAGON TRADE: Agreement In Principle With Procter & Gamble
PAYLESS CASHWAYS: Preliminary Discussions With New Lenders

PITTSBURGH PENGUINS: Marino Accused Of Improper Claim
PRIMESTAR: Hughes Confirms $1.82 Billion Acquisition
RINCON ISLAND: Seeks More Time For Gas and Oil Leases
SERVICE MERCHANDISE: $750 Million Secured Credit Facility
SGL CARBON: Committee Seeks Dismissal of Case

SHOKUSAN JUTAKU: Asks Banks To Forgive Loan Claims
SMARTALK: Being Sold To AT&T For $192.5 M - Cash
SUN TV: Seeks Approval of Reconciliation Procedure
TMCI ELECTRONICS: Complaint Filed Against Subsidiary
USN COMMUNICATIONS: Possible Bankruptcy Filing
VALU FOOD: Set To Exit Chapter 11 This Spring


AMERICA WEST: The Bidding War
America West Airlines, a low-fare carrier that has become
the third-largest airline on the West Coast, could
be at the center of a bidding war between three of the
nation's top five airlines.

A day after No. 1 carrier United Airlines said it was
interested in acquiring America West, a source told Reuters
on Thursday that Delta, the nation's no. 3 airline, also
was interested in a linkup and had held talks with
America West.

Continental Airlines, meanwhile, said it would assert its
rights as owners of a minority stake in America West with
the right of first refusal on any shares of America West
offered for sale by Texas Pacific Group.  Continental and
Texas Pacific Group, an investment group led by financier  
David Bonderman, purchased separate positions in America
West in 1994 as America West emerged from bankruptcy
reorganization.  With its purchase, Continental acquired
the right of first refusal in any tender offer of America
West shares by Texas Pacific Group, giving Continental
priority over another suitor seeking to buy America West
shares from Texas Pacific Group.

Shares of America West surged 3-11/16 to 23 as Wall Street
analysts estimated that a deal to acquire America West
could be valued at more than $1 billion.  "America West
would have to go for more than its recent (stock price)
high, which is $31. It could be a $1.4 billion acquisition,
if you set a price like $35 a share," said Donaldson Lufkin
& Jenrette analyst Jim Higgins.

BRAZOS SPORTSWEAR: Obtains Commitment for $62.5 Million
Brazos Sportswear, Inc. (OTC Bulletin Board: BRZS)
announced on January 21, 1999 that the Company and its
subsidiaries filed voluntary petitions under Chapter 11 of
the Bankruptcy Code with the U.S. Bankruptcy Court for the
District of Delaware.  Concurrently, Brazos announced that
it has received commitments for up to $62.5 million in
DIP financing from its existing bank group, led by
Fleet Capital Corporation as agent, which Brazos believes
will be adequate to fund the Company's operations during
the reorganization period.

Gilbert C. Osnos, interim president and chief executive
officer of Brazos, emphasized that daily operations of the
Company's manufacturing facilities, distribution centers
and offices will continue as usual, and employees will  
continue to be paid as they always have.  "Vendors will be
paid in the ordinary course for goods and services
purchased after the filing date," Mr. Osnos said.

"Over the past few months, the Company has made a number of
tough decisions, including the planned closure of our
Cincinnati licensed product manufacturing facility and the
disposal of excess inventory. While the Company has made  
progress in its turnaround efforts, management and the
board of directors have determined that Brazos must take
immediate steps to reorganize its operations, and at the
same time restructure its debt obligations to create a
capital structure that will ensure that sufficient
resources are available to fund the Company's operations.

"After reviewing the various alternatives available, we
concluded that utilizing the Chapter 11 process to complete
our financial restructuring is in the best interests of the
Company and its various constituents," Mr. Osnos said.  
"This action will allow the Company to achieve
its restructuring  objectives in an orderly, timely

He said BT Alex. Brown Incorporated, retained by Brazos
Sportswear in November 1998, continues as the Company's
financial advisor during the restructuring

Richard Redden, a principal of OSNOS & Company, has been
named executive vice president and acting chief operating
officer of Brazos.  Brazos Sportswear, Inc., designs,
produces and markets moderately priced sportswear.  
Headquartered in Cincinnati, Ohio, it operates
manufacturing, distribution and sales facilities in 12

BRUNO'S INC: Seeks To Sell 73 Acres in Birmingham
PWS Holding Corporation and Bruno's Inc. et al., debtors,
seek authorization to sell 73.57 acres of undeveloped real
property located in Birmingham, Alabama.  This parcel
represents the excess land remaining after construction of
the debtors' corporate headquarters and a warehouse related
to the debtors' operations in 1986. Brookmont Realty has
agreed to pay $50,000 as a deposit and $2,892,800 at
closing for the parcel.  Both the buyer's and seller's
brokers are each entitled to $73,570 as a brokerage fee.

A hearing will be held on January 28, 1999 before The
Honorable Sue L. Robinson of the United States District
Court for the District of Delaware at 844 King Street, 6th
Floor, Wilmington, Delaware 19801.

BRUNO'S INC: Trimming Five Georgia Stores
The Atlanta Journal/Constitution reports on January 21,
1999 that Bruno's Inc. is closing or selling 14 stores in
Alabama, Georgia and Florida in an effort to improve its
financial footing as it reorganizes in federal  
bankruptcy court.

The company said Wednesday six stores in Alabama, five in
Georgia and three in Florida will be closed if a buyer is
not found in about three weeks.

About 338 full-time employees and 411 part-time employees
are affected. All affected management personnel will be
considered for positions at other Bruno's locations,
officials said.

After the 14 stores are divested, Bruno's will own 149
stores in Alabama, Mississippi, Florida and Georgia. The
Birmingham-based chain filed for Chapter 11 bankruptcy
protection in February 1998.

Georgia stores that will be sold, or closed if a buyer
can't be found, are: FoodMax on West Ward Street, Douglas;
FoodMax stores on Milgen Road and Sidney-Simons Boulevard,
Columbus; and FoodMax stores on Napier Square and Northside  
Drive, Macon.

CALDOR: Caldor to Wind Down Business
The Caldor Corporation today announced that its Board of
Directors has determined it will proceed with an orderly
wind-down of the Company's business, subject to  
Bankruptcy Court approval.

Caldor and its Board, over an extended period of time,
explored a wide range of alternatives for maximizing value
for the Company's constituencies, including most recently
through the Court-ordered mediation process. While Caldor
made  progress, ultimately, its performance did not enable
it to overcome the vigorous opposition from certain of its
pre-petition secured creditors, which made impossible the
development of a viable and confirmable plan of  
reorganization. Thus, the Company was left with no
alternative but an orderly wind-down and liquidation of its
business, including the closure of all 145 of its stores.

The Company plans to dispose of its inventory through
Going-Out-Of-Business sales which are expected to begin
within several weeks and to be completed by mid-May. The
Company expects to retain many of its store-based
Associates through this process. In addition, the Company
will seek a Court order to proceed with the sale of its
real estate. The Company is continuing to work  
with BankBoston and its bank group.

Warren D. Feldberg, Chairman and Chief Executive officer,
said, "It is with great sadness and disappointment that we
announce the decision to close down Caldor's business. Our
20,000 Associates have worked extremely hard in an  
effort to reposition and strengthen the Company. We
accomplished a great deal over the course of the last
several years. However, given the nature of our  
capital structure and the shortfall to our performance
goals, the Board had no alternative but to conclude that
this was the most appropriate course of action
under these circumstances. I'd like to thank all of our
Associates for their hard work and commitment, and, as
well, our vendors and lending group, led by BankBoston
Retail Finance, for their strong support during this
difficult process."

The Caldor Corporation, with annual sales of approximately
$2.5 billion and approximately 20,000 Associates, currently
operates 145 stores in nine East Coast states. The Company
filed for Chapter 11 on September 18, 1995.

COMMERCIAL FINANCIAL: Bank Objects To Protective Order
NationsBank, NA, a creditor of Commercial Financial
Services, Inc. supplements its objection tot he motion of
Commercial Financial Services Inc. for entry of a
protective order.

The debtors filed a motion for entry of a protective order
requesting that the court enter a blanket protective order
governing any information disclosed by or on behalf of the
debtors and unilaterally designated by them as

NationsBank objects to the restriction of the disclosure of
services report prepared by PricewaterhouseCoopers LLP, and
states that at a minimum, the report should be disclosed to
all holders of asset-backed securities.  The bank also
states that if there should be a protective order, it
should be far narrower in scope than the debtors' proposed
protective order and the interim order.

The bank proposes an alternative protective order that does
not contain the global release language requested by the
debtors, as such a release is not appropriate.

The Daily Bankruptcy Review reports on January 22, 1999
that the court issued both a protective order and an order
compelling Commercial Financial Services Inc. to produce
the scope of services report prepared by   
PricewaterhouseCoopers LLC ("PWC"). However, members of the
official creditors' and asset-backed securities' committees
who elect to get the report must comply with certain
conditions, including a prohibition on selling or assigning
any claims against CFS or its affiliates or trading CFS
related  securities, including notes or asset-backed bonds,
as CFS had requested, according to the order. (ABI 22-Jan-

COMMERCIAL FINANCIAL: Seeks Agreements With Employees
Commercial Financial Services, Inc. ("CFS") requests that
the court enter an order authorizing CFS to enter into
certain letter agreements regarding certain executory
contracts between CFS and certain key management employees
to assume certain pre-petition indemnification agreements
between CFS and certain managers, to approve
indemnification agreement s with the balance of the
managers, and to submit in camera a list of employees whose
annual base salaries exceed $75,000.

Certain of the managers will take significant salary
reductions.  The managers will agree not to draw on the
cash collateralized letters of credit which support their
management retention agreements until certain dates
specified in the letter agreements.  In return for the
agreement CFS and the Official Committees will not pursue
any alleged claims or disputes relating to the retention
agreements, and in the case of Mr. Colberg, will release
him from any bankruptcy causes of action with respect to
his management retention agreement.  CFS states that the
letter agreements are in the best interests of the estate
and its creditors and that they will provide substantial
cost savings to CFS and as a result of the salary

COUNTY SEAT: Files For Reorganization
County Seat Stores, Inc. announced that it and CSS Trade
Names, Inc. a wholly-owned subsidiary, filed voluntary  
petitions for reorganization under Chapter 11 of the United
States Bankruptcy  Code.  The filings, which were made in
the United States Bankruptcy Court for the Southern
District of New York, will enable the company to conduct
business  as usual under protection of the Court
while it develops a plan to reduce and  reorganize its debt
and strengthen its financial position.

County Seat also announced that it has obtained a $70
million debtor-in-possession financing commitment,
including a $50 million sub-limit for letters  
of credit, from BankBoston Retail Finance Inc. The company
has also received an additional $5 million debtor-in-
possession financing commitment from BackBay Capital
Funding, LLC.  Upon court approval, these financings will
enable the  company to meet future inventory needs and
fulfill obligations associated with  operating its
business, including payroll and the prompt payment for  
merchandise received subsequent to the filing.

"The decision to file was a difficult one," said Brett
Forman, Chief Operating Officer of County Seat Stores.  "We
believe that, notwithstanding the severe liquidity problems
that we have encountered over the past few months, County  
Seat's business and future prospects remain fundamentally

He continued, "We are confident that, with the liquidity
provided by the $75 million of DIP financing facilities and
the breathing room that court protection under Chapter 11
will afford, County Seat will ultimately emerge from
Chapter 11 a stronger company."

The company has been unable to overcome severe liquidity
problems relating, in large part, to an approximate 12%
decline in same-stores sales for the 1998 third-quarter.  
The company encountered significant disruptions in the flow
of merchandise as a result of problems with the
installation and integration of a new management
information system (MIS) and the relocation of the
company's distribution center from Minnesota to Baltimore.

To insure that stores had fall and winter merchandise on a
timely basis, the company was forced to stop shipping
spring and summer merchandise earlier than planned, to
significantly discount merchandise to make room in the
stores for fall and winter merchandise, and to ship fall
and winter merchandise earlier than planned.  The financial
results for the company's third quarter created  
defaults and limited availability under the company's
working capital facility.  While the company attempted to
alleviate liquidity problems by raising funds through a
private offering of new debt and or equity securities
during the latter part of 1998, the required amount of new
funds could not be obtained.

"We believe that we have identified and substantially
rectified the problems associated with our management
information system and the relocation of our  
distribution center," Forman said.  "Additionally, in
October 1998, we instituted a new merchandising strategy
based on a maximum price point of $14.99 for most of the
company's merchandise. We have already seen positive  
results from these steps.  Comparable sales for the months
of October through December 1998 increased by 7.4%."

County Seat operates 418 stores in 41 states in the
eastern, midwestern and southern regions of the United
States.  The company reported in its Form 10-Q for the
quarter ended  October 31, 1998, that Levi Strauss & Co.
had terminated its license pursuant to which the company
operated its Levi Outlet stores and the company
had  entered into a non-binding letter of intent to sell
the assets associated with  those stores to a third party.  
While that third party has recently expressed the intention
of not going forward at this time, negotiations are
continuing.   If a definitive agreement can be reached, the
company intends to seek expedited Bankruptcy Court approval
of that sale.  If an agreement cannot be reached, the  
company intends to proceed on an expedited
basis to dispose of its Levi's  Outlet stores.

CPM ASSOCIATES: To File Plan of Reorganization
On January 21, 1999 Interactive Multimedia Network, Inc.,
(OTC BB:IMNI) announced that a Chapter 11
petition  has been filed by CPM Associates, Inc. (CPM) a
New Hampshire corporation, of  which IMNI has acquired an
80% interest.

This filing was necessitated by a breakdown of negotiations
with the lead lender to CPM. CPM has filed a Lender
Liability lawsuit against the bank in the New Hampshire
court system in an effort to recover the extensive losses
and  damages that CPM has suffered from the misconduct of
the bank.

By virtue of this filing and soon to be submitted plan of
reorganization, CPM will be given the opportunity to
potentially re-establish normalized relationships with the
many vendors and clients that are a vital part of CPM's  
future. William J. Poleatewich, Jr., President of CPM,
looks at the reorganization as a necessary pro-active step
in over coming CPM's ill-fated previous bank relationship
and the first step in potentially finalizing a relationship
with a large regional bank, which is interested in possibly
becoming the lead lender for a reorganized CPM.

CPM's intent is to move through its reorganization as
quickly as the process will allow. Several of the larger
creditors have expressed favorable responses to preliminary
discussions on moving forward with ongoing relationships
with CPM and view the recent acquisition of an 80% interest
by IMNI as positive.

The current clients of CPM have responded in a manner that
leads CPM's management to believe that, as long as the
clients' jobs are not adversely affected by the proposed
plan of reorganization then these clients will not oppose
this plan of action.

IMNI intends to aid CPM in every permissible manner to move
CPM through this period and on to a profitable future.  
Safe Harbor Disclosure

CROWN BOOKS: More Time To Assume/Reject Leases
On January 11, 1999, the court entered an order enlarging
and extending the debtors' time to elect to assume, assume
and assign or reject the leases of the debtor, through and
including April 12, 1999.  The court excepted two leases at
Sheffield, Chicago, Illinois and Rolling Hills Estates, Los
Angeles County, California.  With respect to those two
locations, the time is extended to and including such time
as an order on the objections filed by American National
Bank as Trustee and Federal Realty Investment Trust is
entered by the court.

DEGEORGE FINANCIAL: Seeks Financing    
DeGeorge Financial Corporation (DEGE) announced on January
21, 1999 that, due to a dispute with its principal  
source of working capital, Residential Funding Corporation,
a unit of General Motors Acceptance Corporation ("RFC"), it
has been forced to seek an alternate source of financing.
Severe liquidity problems brought on by the cutoff of  
funding from RFC have forced the Company to close or scale
down facilities in Boca Raton, Heathrow, Jupiter and
Sarasota, Florida; Carlsbad, California and Minnetonka,
Minnesota. As a result of these operational cutbacks, the
Company has reduced its work force by approximately 225

The Company has also been informed by Peter R. DeGeorge,
its Chairman of the Board and Chief Executive Officer, that
he is withdrawing his proposal to take the Company private
as a result of the Company's financing problems.

RFC has suspended its purchasing of construction loans
under the Construction Loan Purchase and Servicing
Agreement between RFC and DeGeorge Financial Corporation.
RFC has also told the Company that it does not presently
intend to renew the Construction Loan Purchase and
Servicing Agreement, which expires on June 1, 1999. The
Company approached its funding limit of $300 million with
RFC in December of 1998. Negotiations concerning an
increase in the funding  commitment or an interim
arrangement have broken down. RFC has refused to permit
additional borrowing up to the credit limit as paydowns
occur. On January 15, 1999, RFC sued the Company and its
principal subsidiaries in Minnesota state court seeking
injunctive relief and more than $88 million in damages.

RFC has also taken steps to provide servicing to
approximately 2,100 of the Company's customers whose
contracts RFC purchased pursuant to the funding  
arrangement. The Company is cooperating in this effort so
as to minimize the impact to the customers of any
transition in servicing.

Peter R. DeGeorge commented, "We are dismayed that
Residential Funding continues to pursue a course of action
which we believe harms our customers and RFC as well. Since
this agreement is our principal source of working capital,  
their action has created a liquidity problem for us. We are
currently pursuing other options for financing our business
and funding the continued servicing of our customers. In
the interim we intend to cooperate fully with RFC so as to  
minimize the disruption to our customers. We believe that
their lawsuit is without merit. Because of this immediate
financing problem, my pending proposal to take the Company
private is being withdrawn."

DeGeorge Financial Corporation provides access to home
ownership for people who lack a sufficient down payment or
sufficient income to support the purchase of
the home they desire through conventional mortgage
programs. Through its packaging of financial services and
customer support, the Company enables its  
customers to reduce the cost of home construction by
eliminating the general contractor, the intent of which is
to create an equity position that serves as  
the down payment for permanent financing upon the
conclusion of the home construction process.

DOMINION BRIDGE: Granted New Extension
Dominion Bridge Corporation and its subsidiaries (Cedar
Group of Canada and Davie Industries Inc.) were
granted  a new delay, until February 10, 1999, to file
their Proposal to their respective creditors, pursuant to
notices of intention filed on August 11, 1998, under the
Bankruptcy and Insolvency Act.

DOW CORNING: Attorneys Seek More
Attorneys representing non-American women in  
the Dow Corning Corp. bankruptcy case are raising questions
about fairness in  the payment plan for breast implant

The attorneys representing South Korean and Brazilian women
are among those in U.S. Bankruptcy Court in Bay City this
week seeking to amend a proposed $3.2 billion payment
schedule included in Dow Corning's $4.5 billion
reorganization  plan.

Other attorneys arguing for amendments before Judge Arthur
Spector include those representing the children of American
women who were allegedly harmed because they nursed after
their mothers got breast implants.

Dow Corning claims there's no proof that its implants and
child health problems are connected. It also disputes
claims that non-ruptured implants harm women,  
but wants to settle the controversy with a settlement.

The company, the world's largest manufacturer of silicone
gel breast implants before they were taken off the market
in 1992, is arguing against changing the reorganization
plan hammered out last year with its major creditors and  
attorneys for most women with implant claims.

Dow Corning lead attorney Barbara Houser told Spector the
plan is essentially cast in stone.

The proposed settlement would provide $12,000 to $300,000
for each of the estimated 179,000 eligible women worldwide.

U.S. women would receive more than others.

Payments for Brazilian, South Korean and South African
women would be about one-third the U.S. payout. Attorneys
say their overseas clients deserve at least 60 percent of
what U.S. women would get.  Copyright 1999 by United Press

EAGLE CAPITAL: Final Order For Use of Cash Collateral
The court entered an order on December 15, 1998 authorizing
the debtor, Eagle Capital Mortgage, Ltd. to use the cash
collateral of Heller Financial, Inc., Bank One Texas, NA,
and Bank United, a federal savings bank, to pay certain
expenses.  The debtor received authority to use Lenders'
Cash Collateral in the amount of $1.8 million through
December 31, 1998 and approved the proposed terms of
adequate protection for the lenders' interest on
unspecified terms; and approved authority to surcharge the
lenders' collateral.  The lenders assert secured claims
against the debtor in excess of $60 million.  The debtor is
authorized to spend $1,237,686 for items provided in the
budget for December 1998 through February 1999.

As adequate protection of the lenders' interest in the pre-
petition collateral and cash collateral, each lender is
granted automatically perfected first priority replacement
liens and security interests in and upon all of the
unencumbered properties and assets of the debtor, real or
personal, and those assets described in each particular
lenders' own prepetition loan documents.

EAGLE PICHER: Announces 1998 Financial Results
Eagle-Picher Holdings, Inc., the parent company of Eagle-
Picher Industries, Inc., announced that sales for the year
ended November 30, 1998 were $851.8 million compared to
$906.1 million for the year ended November 30, 1997.  
Earnings before interest expense, income taxes,
depreciation and amortization, certain one-time management
compensation expenses and other non-cash charges ("EBITDA")
were $114.4 million compared to $104.1 million in the prior
year. EBITDA is used as a means of comparison, rather than
operating income, because the results of operations are not
comparable due to the accounting effects of the  
acquisition of the Company by Granaria Holdings B.V. on
February 24, 1998 (the "Acquisition").  The Company
accounted for the Acquisition using the purchase  
method of accounting which requires that assets and
liabilities are restated at fair value and the excess of
the purchase price over the fair value of the net
assets is recognized as goodwill. Therefore, the
depreciation and amortization included in the determination
of operating income is not comparable for the  
periods before and after the Acquisition. In addition, the
Company has divested itself of several divisions ("Divested
Divisions") since emerging from bankruptcy on November 29,
1996.   Sales for the years ended November 30,
1998  and 1997 were $826.1 million and $794.8 million,
respectively, or an increase  of 4%, after excluding the
Divested Divisions.  EBITDA, excluding that of  Divested
Divisions, increased from $99.9 million in 1997 to $114.1
million in  1998, or 14%.

The Company completed the sale of its Trim Division in
December 1998 for $14.5 million.  This transaction did not
have a material impact on earnings.

FOLGER ADAM: Case Closed By Final Decree
The debtors, Folger Adam Company, the William Bayley
Company and Stewart-Decatur Security Systems, Inc.,
debtors, seeking a final decree closing the Chapter 11
cases, the court ordered that the cases are closed as of
December 30, 1998.

FRONTIER AIRLINES: Stock Soars To Record High of $7
The Rocky Mountain News reports on January 20, 1999 that    
Frontier Airlines, (FRNT: Nasdaq) $7, up 63 cents.

Frontier Airlines' stock shot to a record high Tuesday as
the Denver-based carrier made an early escape from debt
used to defeat a low-fare rival.

The stock closed at $7 a share on the Nasdaq exchange.
Frontier's steady climb from a 52-week low a year ago
represents a 250 percent return for investors over the past

With the early payoff of a $5 million loan from Greenwich,
Conn.- based  Wexford Management LLC, Frontier is
essentially debt-free, said Frontier Airlines President Sam

Arthur H. Amron, 42, Wexford's representative on Frontier's
board of directors, resigned after the loan was paid off.
Amron will not be replaced,  Addoms said.  Wexford came
through with the loan in December 1997 when Frontier was  
maneuvering to either buy rival Western Pacific Airlines
out of Bankruptcy Court or compete with the Colorado
Springs-based carrier that operated on  Frontier's
Concourse A at Denver International Airport.
(Rocky Mountain News - 01/20/99)

LOT$OFF: Announces Plans to Sell Retail Assets                  
San Antonio-based LOT$OFF Corporation (OTC BB:LOTS), which
has been aggressively pursuing the merger or sale of all or
a part of the Company's retail subsidiaries, announced
today that it plans to sell its retail assets.

Conversations with a variety of third parties are ongoing,
and the Company expects sales to take place within 90 days,
with the initial sales, in-store inventories, beginning in
the retail subsidiaries' stores early next week. The  
Company currently intends to solicit bids with respect to
the retail subsidiaries' remaining assets. Interested
parties should contact CEO Charles "Hop" Fuhrmann.

With this strategic decision having been taken, the
subsidiaries are no longer buying product for resale, and
buying, receiving and distribution personnel have been let
go. As a result of this decision, corporate office,
distribution and field management staffing has been reduced
from 38 to 18 people.

While management believed that borrowings available under
its revolving credit facility, available trade credit,
anticipated proceeds from outstanding litigation, its
operating cash flow and its cash on hand would be adequate
to finance its operations through fiscal 1999 (January 29),
on Jan. 11, 1999, the Company learned that funds
anticipated from litigation being pursued in Switzerland
would not be immediately forthcoming, which resulted in the
necessity for additional external financing and/or the
restructuring of its existing financing, including new
capital for its retail subsidiaries, the traditionally slow
period for retail sales being immediately ahead.

MIDCON OFFSHORE: LDNG Seeks Hearing For Expert Witnesses
Louis Dreyfus Natural Gas Corp. ("LDNG")requests a hearing
on Sheila Macdonald, Trustee's, application to employ H.J.
Gruy & Associates, Inc. and on her application to employ
Mann, Frankrfort, Stein & Lipp, PC.

LDNG requests that the court set a hearing on these
applications since it states that the Trustee need not
retain an engineer when two have been retained already in
this case, and the Trustee need not retain an accounting
firm when she already ahs retained two other accounting
firms.  LDNG also questions the effect of the proposed
guaranteed payment arrangements on the disinterestedness of
the proposed professionals and professionals previously

MOLTEN METAL: Chapter 11 Trustee Seeks To Reject Contract
Stephen S. Gray, Chapter 11 Trustee of Molten Metal
Technology, Inc., and its affiliated debtors requests the
court to enter an order authorizing the Trustee to reject a
certain executory contract for a Procurement/materials
Management Agreement between the debtor and Cameron &
Barkley company.  Based upon the consummation of the sale
of the Wet-Waste assets and Q-CEP assets, the Trustee no
longer requires the services of CamBar as provided for in
the Agreement.

NEXAR: Reaches Asset-Sale Agreement
The Worcester Telegram & Gazette reports on January 22,
1999 Nexar Technologies Inc. has reached an asset-sale
agreement with its chief creditor, Nexar lawyer
Anthony A. Froio said yesterday.

However, Froio said it's conceivable another purchaser for
Nexar's assets could materialize before the sale goes to
U.S. Bankruptcy Court* Judge James F. Queenan for approval.

Under the sales agreement, Nexar would sell its trademark,
trade name and patented PC design for $300,000 to publicly
held ATEC Group Inc., a Long Island-based computer systems
integrator and provider of information technology  
products with about $200 million in annual revenues.

Froio said ATEC also has the option to buy Nexar inventory
valued between $400,000 and $500,000. That would make the
whole deal worth as much as $800,000, about the same amount
that Nexar owes ATEC, according to the lawyer.

Nexar filed for bankruptcy protection against its creditors
Dec. 17, reporting liabilities of $5.4 million and assets
of $4.3 million, including some $3 million in accounts
receivable owed Nexar by its customers. The company, whose
president and chief executive officer is Worcester native
Albert J. Agbay, went public in April 1997 at $9 a share.
The stock has been delisted from the Nasdaq Stock Market
and is currently quoted at 3.5 cents per share.

Since falling into financial difficulty, Nexar has closed
its California manufacturing plant, slashed staffing levels
and cut management salaries. Most recently Nexar was buying
its own computers from ATEC, which contracted with a  
Canadian company to manufacture Nexar's product.

Nexar also has a licensing agreement with ATEC under which
ATEC uses Nexar's trade name in return for royalties. For
the last several months Nexar has been operating under a
borrowing arrangement with ATEC.

Under bankruptcy law, Froio said any party protesting the
Nexar-ATEC deal has until Feb. 12 to register objections.
Other potential purchasers besides ATEC also have until
that date to make their offers for Nexar's assets.

Meanwhile, Judge Queenan has scheduled a hearing for Feb.
16 at which time he will rule on Nexar's motion asking the
court to approve its assets-sale deal to ATEC.

Froio said while Nexar has received numerous inquiries over
the last several weeks, so far only ATEC has come forward
with a firm purchase offer. But now that a deadline has
been set for other potential purchasers, Froio said
he would not be surprised to see other offers materialize.

If a sale does take place, Froio said the proceeds would go
first to pay off ATEC, which is Nexar's only secured
lender. Any remaining money would go to pay some 175
unsecured creditors who are owed about $4.7 million. Money
still owed Nexar's creditors after that would have to come
from the company's  remaining assets, namely the $3 million
in accounts receivable owed to Nexar by  its customers.
(Telegram Gazette Worcester - 01/22/99)

NU-KOTE: Committee Authorized To Hire Firm
The Committee of Unsecured Creditors of Nu-Kote
International Inc. is authorized to employ the law firm of
Greenebaum Doll & McDonald PLLC under a general retainer.

PARAGON TRADE: Agreement In Principle With Procter & Gamble
Paragon Trade Brands, Inc. (NYSE: PTB) announced that it
has reached an agreement in principle with The Procter  
& Gamble Company with respect to all patent disputes
between the two companies.   The agreement provides the
basis for resolution of all of P&G's claims in Paragon's
chapter 11 case, including all outstanding issues
surrounding the December 30, 1997 patent judgment issued
against Paragon by the Delaware District Court, as well as
providing patent licenses to cover future sales
by  Paragon of its diaper and training pant products.  In
connection with the agreement, documents are being jointly
filed today by Paragon and P&G with the Federal Circuit
Court of Appeals and the Delaware District Court
requesting a  stay of Paragon's appeal of the Delaware
judgment and a stay of P&G's  subsequent contempt motion,
pending approval of the settlement by the Bankruptcy Court.  
According to Paragon, the agreement with P&G is a critical
component in resolving the outstanding claims against the
Company and moving forward with a plan to emerge from
chapter 11.  The agreement remains subject to final
documentation and Bankruptcy Court approval.  Paragon
reported that it is working diligently with P&G to finalize
the documentation in order to be in
a position to file shortly a motion in the Bankruptcy Court
seeking approval of  the settlement.  The parties have
agreed that, upon approval of the settlement by the
Bankruptcy Court becoming final, Paragon will
withdraw with prejudice  its appeal and P&G will withdraw
with prejudice its contempt motion.

As previously reported, the Delaware District Court issued
its judgment on December 30, 1997 finding that P&G's two
patents related to the "inner leg gather" feature of a
diaper were valid and infringed by Paragon's Ultra  
diapers.  Damages in the amount of approximately $178.4
million and an injunction were entered against Paragon in
the Delaware Court.  As a result of  the P&G judgment,
Paragon filed for relief under chapter 11 of the
Bankruptcy  Code on January 6, 1998.

Paragon further reported that it continues to pursue
settlement of the claims asserted by Kimberly-Clark
Corporation in Paragon's chapter 11 case and  
believes that considerable progress is being made.

PAYLESS CASHWAYS: Preliminary Discussions With New Lenders
Payless Cashways, Inc. (OTC Bulletin Board: PCSH), the
Kansas City-based building materials and finishing  
products retailer, announced today that it is in
preliminary discussions with new, as well as existing
lenders regarding restructuring a major portion of
its  1997 Credit Agreement. No final decision has been
made. Payless continues to improve its operating results,
and additional lending opportunities that are beneficial to
the Company have become available.

In December 1997, the Company emerged from bankruptcy with
$424 million of long- term debt and highly restrictive
covenants.  During 1998, the Company reduced that debt by
approximately $86 million, primarily through the sale of
real  estate.  Long-term debt at November 28, 1998, the
Company's fiscal year end, was $336.5 million.

Millard E. Barron, President and Chief Executive Officer,
commented,  "Performance at Payless Cashways, Inc.
continues to improve.  Our year-end results and three
consecutive profitable quarters demonstrate that our
strategy is on target.  Payless Cashways is more attractive
to investment now, and that makes it possible for us to
pursue new financing alternatives given the current  
favorable market conditions."

PITTSBURGH PENGUINS: Marino Accused Of Improper Claim
The Pittsburgh Post-Gazette reports on January 21, 1999
that  creditors in the Penguins'  bankruptcy yesterday
accused team co-owner  Roger Marino of improperly claiming
that the team owes him $37 million.

They also asked for an investigation of payments by the
team to the owners in the year leading up to the

Joel M. Walker, a lawyer representing the team's unsecured
creditors, said Marino, who paid a reported $40 million for
half of the franchise in April 1997, was buying a share of
the team, not making a loan.

Unsecured creditors food vendors, service firms and
players, including retired superstar Mario Lemieux -  are
objecting to Marino being listed among  creditors in
documents the team filed in U.S. Bankruptcy Court.

Walker said for Marino to classify his purchase money as a
loan improperly gives him higher priority in recovering
money in the bankruptcy proceedings.

In bankruptcy cases, secured creditors such as banks are
first in line for repayment, followed by the unsecured
creditors. Owners come last.

In a court filing, Walker called the reported loans a
"wrongful attempt" by Marino "to manufacture  claims
against" Pittsburgh Hockey Associates, the  ownership
partnership for the team.

The team's attorney, Robert G. Sable, said he had not seen
the filing and could not comment.

Also yesterday, creditors asked U.S. Bankruptcy Judge
Bernard Markovitz to let them investigate payments made by
the team to the owners in the 12 months before the team
filed for bankruptcy. Sable said he had not
seen that filing,  either.

Walker said in the filing that financial statements showed
co- owner Howard Baldwin got $500,000 prior to the
bankruptcy filing. He said Marino and Semamor Enterprises,
owned by Morris Belzberg, another Penguins co-owner, also
got payments from a November 1997 refinancing. Walker would
not say how much Belzberg's company received.

In a related matter, on Tuesday, Marino and the Penguins
dropped their efforts to renew discussions with officials
in other cities interested in wooing the Penguins.

The Public Auditorium Authority and SMG, the Civic Arena
landlord, obtained a court order barring any such talks
after learning that Marino and other team officials had
visited or had contacts with officials about a possible

The Penguins agreed in 1997 to remain at the Civic Arena at
least through the 2007 season in exchange for $12.9 million
in publicly funded improvements to the facility.

A hearing had been scheduled for tomorrow on the Penguins'  
bid to dissolve the court order.  The Penguins denied any
intention to move the team. Sable said the team now intends
to negotiate with SMG rather than trying to  
force the issue in court.

Daniel Shapira, the attorney for SMG, said he thought the
team dropped the matter after reading the objections by SMG
and the auditorium authority, a city- county agency that
owns the Civic Arena.  They argued that if the Penguins
resumed talks with other cities, ticket sales would plummet
and the team's financial recovery efforts would be  

The auditorium authority and SMG noted an attendance
falloff that followed the city's threats to lock the team
out of the arena for nonpayment of amusement taxes last
fall. In a petition filed in November, the team said it  
lost $200,000 in ticket sales when City Councilman Jim
Ferlo proposed locking the arena. The team subsequently
reached agreement with the city to pay the taxes, but is
awaiting Markovitz's approval.

PRIMESTAR: Hughes Confirms $1.82 Billion Acquisition
Satellite Today reports on January 22, 1999 that Primestar
Inc. [TSATA] stock was in a freefall today on news that it
is being acquired by Hughes Electronics Corp. [GMH] for
$1.82 billion. Primestar's 2.3 million subscribers, its
medium-power business, and related Tempo high-power
satellite assets will be transferred to Hughes' DBS
subsidiary DirecTv Inc. in two separate transactions.

The deal immediately caused panic among Primestar
investors, who today were dumping shares because the
purchase price barely covers the company's debt.  At
our deadline shares were trading at $1.19, down more than
50 percent on yesterday's closing price of $2.56.  Nearly
27 million Primestar shares had been traded, compared to an
average daily trade of 1 million shares.

A Primestar takeover has been imminent since MCI WorldCom
[WCOM] and News Corp. [NWS] reneged on a deal to sell
Primestar their high- power DBS assets (ST, 10/15).  That
effectively knocked the last nail in Primestar's coffin,
and, as  we first reported in Satellite Today (ST, 10/16),
immediately made DirecTv the merger favorite.  MCI WorldCom
and News Corp.'s decision to sell their high-power slots to
EchoStar Communications Corp. [DISH] in a $1.1 billion
share swap (ST, 11/30) only served to propel rumors of a
coming DirecTv deal.

Hughes will part with approximately $1.32 billion in the
form of $1.1 billion in cash and about 4.871 million Hughes
shares to get Primestar's medium-power DBS business.  
Hughes also will pay $500 million cash for Primestar's
Tempo high-power satellite assets.  Those transactions will
provide DirecTv with 11 high-power DBS frequencies on the
Tempo satellite at 119 degrees W; a second Tempo satellite,
which already is built and could be launched or used as a
back- up satellite; and increased revenues immediately from
more than 2.3 million existing Primestar customers.

Unfortunately for holders of the TSATA stock, Hughes will
not assume any of Primestar's debt.  "Shareholders should
drop the stock like a hot rock ... there is going to be a
fire sale and you never make money at a fire sale," said
Marc Crossman, vice president of J.P. Morgan. "There is no
equity value in  TSATA any more.  Primestar has about $1.8
billion in debt all-in, so the company is going bankrupt
after this."

"Hughes is buying the satellites for $500 million and the
debt related to those satellites, that TCI Satellite
Entertainment has, is $575 million, so [Hughes  
is] getting a discounted debt," he explained. Expect
disgruntled investors to file lawsuits in relation to the
deal during the coming weeks.

The resulting combination of DirecTv, Primestar and U.S.
Satellite Broadcasting Corp. [USSB] (USSB) which last month
agreed a $1.3 billion merger with Hughes  
(ST, 12/14), will strengthen DirecTv's position as the DBS
industry leader and effectively turn the U.S. marketplace
into a two horse race.

Assuming all the Primestar and USSB subscribers agree to
stick with DirecTv, the Hughes unit should have more than 7
million U.S. subscribers.  EchoStar with 2 million
subscribers (see story below), is likely to rev up its  
advertising and marketing machines though, especially where
Primestar subscribers are involved. Copyright Phillips
Publishing, Inc.

RINCON ISLAND: Seeks More Time For Gas and Oil Leases
While the debtor, Rincon Island Limited Partnership does
not believe that its oil and gas interest and the operating
agreements fall with the scope of Section 365(d)(4) of the
Bankruptcy Code, out of caution, the debtor seeks an
extension through and including the confirmation of a plan
of reorganization in which to assume, assume and assign, or
reject the oil and gas interests, the operating agreements
and any other unexpired nonresidential real property leases
under which the debtor may be a lessee.  The debtor states
that these interests are the primary assets of the estate,
that the debtor is current on its postpetition obligations
under the interests and the operating agreements and that
the debtor is diligently evaluating the interests and the
requested extension is for a reasonable time.

SERVICE MERCHANDISE: $750 Million Secured Credit Facility
Service Merchandise Company, Inc. (NYSE: SME) announced on
January 22, 1999 that it has obtained a 30-month, $750
million secured credit facility from Citibank and
BankBoston Retail Finance.  The asset-based facility
consists of a $150 million term loan and a $600  
million revolving line, subject to a borrowing base
limitation and other customary limitations and conditions
contained in such facilities. The new financing facility
will be used primarily to replace the Company's existing  
bank facility.

The new financing facility is the first step in an out-of-
court restructuring designed to stabilize the Company as a
plan is developed to address the  Company's financial and
operational challenges. The credit agreement requires the
Company to present an operating plan within the next 120

Service Merchandise is a national retailer of fine jewelry,
gift and home products. The Brentwood, Tenn.-based Company
employs approximately 25,000 associates and operates 347
stores in 34 states.

SGL CARBON: Committee Seeks Dismissal of Case
The Official Committee of Unsecured Creditors filed a
motion for an order dismissing the Chapter 11 petition of
SGL Carbon Corporation.  A hearing on the motion will be
held in the District Court before the Honorable Joseph J.
Farnan on February 17, 1999.

SHOKUSAN JUTAKU: Asks Banks To Forgive Loan Claims
Shokusan Jutaku Sogo Co. said Friday it has asked  
creditor financial institutions to forgive their claims on
loans totaling 65  billion yen.

The request is part of a management rehabilitation plan,
the major home builder said.

Sanwa Bank announced the same day it will give up its claim
on 59.7 billion yen in loans to Shokusan.

Shokusan also plans to raise 3.3 billion yen through
allotment of new shares to Secom Co. and two other firms.

Announcing the rehabilitation plan at a press conference,
Kyoichi Nane, president of Shokusan Jutaku Sogo, said his
company has been hit hard by plunging orders since a steep
fall in its stock price late last year.

Nane said he will step down at the end of June to take
responsibility for the company's trouble.

The rationalization plan also includes a workforce cut of
670 by the end of March, retreat from the real estate
business and sale of assets worth 100 billion yen.

Faced with falling demand for homes, Shokusan registered
pretax losses for the seventh consecutive year through
fiscal 1997 which ended in March 1998. It had  
interest-bearing debts totaling 87.3 billion yen at the end
of fiscal 1997. (Kyodo News - 01/22/99)

SMARTALK: Being Sold To AT&T For $192.5 M - Cash
SmarTalk Tele-Services Inc., a prepaid phone-card company,  
is being sold to AT&T for $192.5 million in cash.

The announcement came as SmarTalk sought protection under
federal bankruptcy laws.

The deal includes $10 million to keep the company operating
until the sale is closed, probably in late March, said AT&T
spokeswoman Eileen Connolly.

SmarTalk and 19 affiliates filed for Chapter 11 protection
in U.S. Bankruptcy Court in Wilmington, Del., listing
assets of $406.3 million and debts of $226.9 million,
including $150 million in subordinated debt.

The deal with AT&T requires approval by the bankruptcy
court and regulatory agencies.
SmarTalk TeleServices Inc.'s Chapter 11 petition, filed
Tuesday, lists assets and liabilities of $406 million and
$227 million, respectively. Noting the existence of over
1,000 creditors, the Dublin, Ohio-based prepaid calling
card provider estimated that there will be funds available
for distribution to unsecured creditors. The respective
boards of directors have approved the transaction and the
companies expect the sale to close prior to the conclusion
of the bankruptcy case in the first quarter of 1999.  AT&T
also agreed to provide SmarTalk with debtor-in-possession
financing. (The Daily Bankruptcy Review and ABI c January
22, 1999)

SUN TV: Seeks Approval of Reconciliation Procedure
Sun TV And Appliances Inc. and its corporate parent Sun
Television and Appliances, Inc., seek approval of the
debtors' procedure for reconciling reclamation claims.  Sun
TV has received demands from approximately 40 vendors
asserting a right of reclamation.  The reclamation claims
request that Sun TV either return or provide full payment
for inventory identified in the claims.  The invoice cost
of the goods covered by the Reclamation claims exceeds
$11.8 million.  The Reclamation Schedule calculates the
amount of allowed reclamation claims to be approximately
$4.618 million.  Sun TV will provide a list of reclamation
claims to holders.  The holders will then have thirty days
to dispute the treatment of the claim.  Sun TV will have 30
days after receipt of any dispute to resolve the claim.  If
the holder is not satisfied, the holder may request
judicial resolution of a disputed claim.

TMCI ELECTRONICS: Complaint Filed Against Subsidiary
TMCI Electronics, Inc., ("TMCI") (Nasdaq: TMEI), announced
that it was notified yesterday that a complaint has been
filed by three creditors against Enterprise Industries,
Inc., a wholly owned subsidiary, to place it into a Chapter
7 proceeding under the Bankruptcy*  Code.

TMCI Electronics, Inc. located in San Jose, California, is
a contract manufacturer of custom designed fabricated
products, a manufacturer of cable and harness, a provider
of value-added turnkey assembly services, a manufacturer of
metal stamping products, and an electronic part
distributor, which are sold to original equipment
manufacturers (OEMs) of computers, telecommunications,
semiconductor testing, medical testing equipment, and other
related markets.  The common stock of the Company is listed
on the NASDAQ Small Cap Market under the symbol TMEI.

USN COMMUNICATIONS: Possible Bankruptcy Filing
As previously reported, on November 18, 1998, the Company
issued and sold to Merrill Lynch Global Allocation Fund,
Inc.  ("MLGAF") a $10.0 million principal amount 17%  
Senior Secured Note due January 15, 1999. Pursuant to a
First Amendment to Note Purchase Agreement, dated as of
January 20, 1999, by and between the Company and MLGAF, the
17% Note was cancelled in exchange for a replacement $10.0  
million principal amount 17% Senior Secured Note due
February 15, 1999, and MLGAF paid to the Company $2.5
million in exchange for a new $2.5 million principal amount
17% Senior Secured Note due February 15, 1999. "The Company  
has substantial current and ongoing cash needs with respect
to both its operations and the maturity of the New 17%
Notes on February 15, 1999.

While the Company has generally been meeting new
obligations incurred by the Company since November 1998 in
the ordinary course of business from working capital
infusions and cash flow, the Company's recent cash position
has resulted in the Company's deferral of payment of
certain of its past obligations.  The absence of additional
capital infusions in the very near term will result in the
Company's inability to meet its current and future
obligations as they become due, prevent the Company from
making payment arrangements with respect to, or  
otherwise servicing, any material amount of its past-due
obligations, raise substantial doubt about the Company's
ability to continue as a going concern  and may require the
Company to seek protection under applicable bankruptcy  
laws." (States SEC; 01/22/99)

VALU FOOD: Set To Exit Chapter 11 This Spring
The Baltimore Sun reports on January 22, 1999
that Independent grocer Valu Food is poised to emerge from
Chapter 11 bankruptcy by spring and later in the year plans
to start remodeling stores and looking  for new sites, the
chain's president said yesterday.

Louis Denrich, in comments to the 265-member
Baltimore/Washington Grocery Manufacturers Representatives
Inc., sought to reassure many of his suppliers of
the chain's viability.

The locally owned chain is the sixth-largest in the
Baltimore region with 10 supermarkets. It filed for Chapter
11 protection in November, with an estimated  $3.5 million
owed to its 20 largest creditors.

The bankruptcy has allowed the chain to get out of leases
and close seven under-performing stores -- four
supermarkets and three specialty grocery
outlets -- with minimum liability, Denrich said.

"Many have written off Valu Food and say we will not make
it," Denrich said. "Valu Food will survive. It is a matter
of when we emerge, not if." He predicted that by spring,
the struggling company would be transformed into a  
strong and profitable enterprise.

Once out of bankruptcy, he plans to seek new financing,
possibly by taking his company public.

That would enable the chain to upgrade some stores -- at
costs that could range from $100,000 to $2 million a store
-- and begin looking at expanding in the area, Denrich
said. The chain has stores in Baltimore City and in
Baltimore, Howard, Cecil, Anne Arundel and Harford

Denrich blamed the financial problems -- and declining or
flat sales -- on consolidation as well as on unprecedented
new competition in the grocery industry.

This spring, the company expects to start evaluating which
stores are candidates for remodeling or expansion. This
year or early next year, the chain plans to upgrade decor
and equipment and institute a loyalty marketing program
to reward regular shoppers. New stores would likely open in


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