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/raid1/www/Hosts/bankrupt/TCR_Public/990330.MBXT R O U B L E D C O M P A N Y R E P O R T E R Tuesday, March 30, 1999, Vol. 3, No. 61 Headlines ACME METALS: Seeks Extension to Assume/Reject Leases AL TECH: Rescue Hinges On Paying For Cleanups ALLTEL CORP: Files Annual Report With SEC AMERICAN RICE: Class Action Filed Against Erly AMPACE: Objects to Attempt to Terminate Exclusivity BRANSON SIGNATURE: Disclosure Statement and Plan CALIFORNIA COASTAL: Annual Meeting of Stockholders CRIIMI MAE: Suspends Litigation DENBURY RESOURCES: Proxy Statement/Prospectus FACTORY CARD: Announces $50 Million in DIP Financing FWT INC: Not Satsfying Working Capital Requirements GEOGRAPHICS INC: 10Q For Period Ended December 31 GOLDEN BOOKS: Notification of Late Filing HARVARD INDUSTRIES: Dividend of Purchase Right Declared LIVENT: Class Action Filed MCA FINANCIAL: Matrix Bancorp Reports on Investigation MEDMAX: Files Chapter 11 and Seeks Buyer MERCURY FINANCE: Files Information With SEC NEUROMEDICAL: Files Chapter 11 NU-KOTE HOLDING: Motion To Extend Exclusivity Denied PICO PRODUCTS: Quarter Report For Period Ended January 31 SCHWEGMANN GIANT: Case Summary & 20 Largest Creditors STEELTECH: May File Bankruptcy If Debt Restructuring Fails TELEGROUP: Letter of Intent With Interoute Communications USTEL INC: Reports Filing Chapter 11 Petition to SEC WESTMORELAND COAL: Affiliate Completes Sale WILSHIRE FINANCIAL: Meeting of Creditors WORLDWIDE DIRECT: Committee Taps Cornwell Consulting WORLDWIDE DIRECT: Third Interim DIP Order Meetings, Conferences and Seminars ********* ACME METALS: Seeks Extension to Assume/Reject Leases ---------------------------------------------------- Acme Metals Incorporated, and its debtor affiliate seek a court order extending the time within which the debtors shall assume or reject unexpired leases of nonresidential real property. The debtors are lessees or sublessees with respect to approximately 25 unexpired leases of nonresidential real property. The leases are an integral part of the debtors' business as the premises subject to such leases include right-of-ways used in transporting goods and raw materials between facilities as well as leases for sales and business offices. The debtors state that give n the complexity of the cases and the burdensome and time-consuming task of evaluating the unexpired leases, and the importance of this project and the fact that the debtor' s immediate focus has been on stabilizing their businesses, the debtors seek this 120-day extension, to and including July 25, 1999. AL TECH: Rescue Hinges On Paying For Cleanups --------------------------------------------- The Buffalo News reports on March 25, 1999 that creditors are near an agreement on a financial package of grants and debt forgiveness to pull AL Tech Specialty Steel Corp. out of bankruptcy. But the deal is sticking on responsibility for a multimillion- dollar environmental cleanup at the company's Dunkirk and Watervliet sites, union sources said Wednesday. David A. Munro, assistant attorney general in the A.G.'s Environmental Protection unit stated that there must be sufficient money to clean soil of metal and chemicals that pose a hazard to water supplies. AL Tech signed a consent order in 1995 calling for investigation and cleanup of 22 solid waste management units and nine "areas of concern" at the 90-acre Dunkirk site. Atlas Steels Inc. of Mississauga, Ont., is bidding to acquire the Dunkirk operation with the backing of the United Steelworkers of America. Both the company and union are creditors of AL Tech. Spanish steel producer Tubacex SA is interested in operating a portion of the Watervliet plant, although the number of jobs would be sharply reduced, union sources said. The proposed new owner at Dunkirk, a partnership between Atlas and the Steelworkers, shouldn't be saddled with responsibility for past pollution, USW District Director Lou Thomas said. In addition to a reduced bill for the current cleanup, Atlas/USW seeks a waiver of responsibility for potential past contamination that is not yet evident. Tubacex, a $180 million company based in Madrid, holds 18 percent of the U.S. market for stainless steel pipes used in construction, according to company filings. ALLTEL CORP: Files Annual Report With SEC ----------------------------------------- ALLTEL Corporation is a customer-focused information technology company that provides wireline and wireless communications and information services. The Company owns subsidiaries that provide wireline, long-distance, network access and Internet services, wireless communications, paging service, information processing management services, and advanced application software. Telecommunications products are warehoused and sold by the Company's distribution subsidiary. A subsidiary also publishes telephone directories for affiliates and other independent telephone companies. The Company is incorporated in the state of Delaware. Revenues and sales increased $648.9 million or 14 percent in 1998, $305.7 million or 7 percent in 1997 and $341.0 million or 9 percent in 1996. Net income decreased $63.9 million or 11 percent in 1998, increased $238.1 million or 68 percent in 1997 and decreased $1.7 million or less than 1 percent in 1996. AMERICAN RICE: Class Action Filed Against Erly ---------------------------------------------- A class action complaint was commenced on February 18, 1999 in the United States District Court of the Southern District of Texas on behalf of all purchasers of Erly Industries Inc. common stock from November 14, 1996 to September 28, 1998, inclusive. The complaint alleges that, during the Class Period, certain of Erly's former officers and directors violated the Securities Exchange Act of 1934 by, among other things, intentionally and/or recklessly issuing material misrepresentations concerning (1) the financial condition of Erly, (2) the nature and extent of litigation against Erly, (3) the effect on Erly and its business of the termination of an agreement with a rice processor in Saudi Arabia and (4) related party transactions. Some of these claims are also asserted against Deloitte & Touche LLP, Erly's outside auditor. The Complaint further alleges that the price of Erly common stock was artificially inflated throughout the Class Period as a result of these misrepresentations, and that the individual Defendants used inside information to sell significant amounts of their own personal Erly holdings for significant proceeds. Plaintiffs seek to recover damages on behalf of all class members. Certain of the Defendants, listed as follows, are also directors, officers, and former officers of American Rice, Inc. ("ARI"). Douglas A. Murphy is a director and is chief executive officerof ARI. William H. Burgess is a director of ARI. William J. McFarland is a former senior vice- president of ARI. Deloitte & Touche LLP, Erly's outside auditor, is also ARI's outside auditor. AMPACE: Objects to Attempt to Terminate Exclusivity --------------------------------------------------- Ampace Corporation and Ampace Freightlines, Inc. object to the motion of the Official Committee of Unsecured Creditors for an order terminating exclusive periods and authorizing filing of a Chapter 11 plan. The debtors claim that the Committee's motion is a "leverage play" by a Committee who feels "shutout" of the bankruptcy process. The debtors state that there is no reason to encroach upon the exclusive periods granted to the debtors. The debtors state that their postpetition conduct is a textbook example of what a debtor can and should do during the first few months of a Chapter 11 filing. The debtors state that the Committee does not even allege that the debtors are grossly mismanaged, that they are using the exclusivity periods to force creditors to accept a patently unconfirmable plan, or the existence of acrimonious feuding between the debtors' principals. While the debtors say that they are disappointed that the sale to the potential purchaser did not happen, the debtors say that they can not be faulted for their efforts. The debtors claim that the Committee's suggestion that the debtors' professionals are controlling these bankruptcy cases is a joke; and that the debtors' management was in total control of the negotiations with the potential purchaser and the shut down of the Monroe facility. The debtors believe that the Committee felt shut out of the negotiations with the potential purchaser because the debtors did not share the term sheet with the Committee. The debtors say that while the Committee may feel insulted by the Debtors' actions, this is not a basis for terminating the Debtors' exclusive periods. BRANSON SIGNATURE: Disclosure Statement and Plan ------------------------------------------------ The debtors, Branson Signature Resorts, Inc. and Advanced Gaming Technology, Inc., submitted their First Amended Disclosure Statement in support of their joint plan of reorganization. The plan provides for the classification and treatment of claims as follows: Class 1 - The allowed secured claim of Sammy and Vashti Shrum. Impaired. As of the petition date the debtors estimate that the claim was approximately $1,604,000. The reorganized debtors will execute a new promissory note in favor of Shrum with an original principal balance equal to the amount of the allowed claim. Fully payable on the seventh anniversary of the Effective date. Class 2 - The allowed secured claim of SDA. Impaired. SDA has asserted a claim of approximately $1.7 million. The debtors believe that the claim is actually between $500,000 and $600,000. The reorganized debtors will execute a new promissory note in favor of SDA in the amount of $600,000. Class 3 - The allowed secured and unsecured claims of Dr. Kenneth Landow. Impaired. Total claims are approximately $675,000. Landow shall receive three shares of New AGT Common stock for each $1 dollar of his allowed claims. Class 4 - Allowed Secured and Unsecured claims of Scott - $144,000. Impaired. Scott shall receive Three shares of New AGT Common stock for each $1 dollar of his allowed claims. Class 5 - Allowed secured claims not included in any other class. Unimpaired. The debtor is not aware of any such claims. Class 6A - All allowed unsecured claims against AGT, not included in any other class. Impaired. The debtor estimates that the claims total $1,225,000. Each holder shall receive 1-88/100 shares of New AGT common stock for each $1 dollar of his or her allowed claim. Class 6B - All allowed unsecured claims against BSR - The debtors are not aware of any claims. Impaired. No distribution. Class 7 - All rights and allowed interests of any interest holder in AGT. Impaired. As of the Petition Date there were in excess of 115 million shares of common stock in AGT that were issued and outstanding held by approximately 371 holders. Class 8 - All allowed interests in BSR. Impaired. The reorganized debtor shall list and aggressively market the Branson property for immediate sale at or near its fair market value. The net proceeds shall be applied to the New Shrum Note and second, to the New SDA Note, and if there are any net proceeds remaining after payment of the New Shrum Note and the New SDA Note in full the debtor shall retain the funds and use them to support the operation of its business. The reorganized debtor shall authorize and issue 15 million shares of New AGT Common for distribution under the plan. CALIFORNIA COASTAL: Annual Meeting of Stockholders -------------------------------------------------- The annual meeting of stockholders of California Coastal Communities, Inc., a Delaware corporation will be held at the Mellon Bank Building, 8 Loockerman Street, Dover, Delaware, on May 18,1999, commencing at 9:00 a.m. local time, to consider and act upon the following: (1) To elect five directors of the Company, each for a term of one year. (2) To consider and vote upon two (2) amendments to the Company's Amended and Restated Certificate of Incorporation to effect a 1:100 reverse stock split which will cash out approximately 11,200 odd-lot stockholders who each hold either beneficially or of record less than 100 shares, and who, in the aggregate, hold approximately 235,300 shares (2%), immediately followed by a 100:1 forward stock split which is intended to preserve the current stock price per share on the Nasdaq National Market. (3) To consider and vote upon the ratification of the appointment of Deloitte & Touche LLP as independent auditors of the Company. CRIIMI MAE: Suspends Litigation ------------------------------- The National Mortgage News reports on March 22, 1999 that Rockville, MD-Criimi Mae Inc. has reached an agreement with Citicorp Securities Inc. under which pending litigation will be suspended for a four-month period and the parties will cooperate in the sale of two classes of investment- grade commercial mortgage-backed securities and $370 million of commercial mortgages. The litigation involves nearly $40 million of certain subordinated tranches of CMBS. If the sales of the mortgages and the two classes of Criimi Mae CMBS Corp. Commercial Mortgage Loan Trust Certificates, Series 1998-1 are successful, Criimi Mae said it will use its portion of the net proceeds to help fund its reorganization under Chapter 11 of the U.S. Bankruptcy Code. In cooperation with Criimi Mae, Salomon Smith Barney will sell the CMBS and Citicorp Real Estate Inc. will sell the commercial mortgages, which Criimi Mae had originally planned to securitize. Criimi Mae chairman William B. Dockser said the pact was the fourth such agreement with major creditors since December. The others involved Merrill Lynch Mortgage Capital Inc., German American Capital Corp., and Morgan Stanley & Co. International Ltd. Since the bankruptcy filing, Criimi Mae has suspended its loan origination, underwriting, and securitization businesses as well as its acquisition of CMBS. DENBURY RESOURCES: Proxy Statement/Prospectus --------------------------------------------- Denbury Resources Inc. is calling a special meeting of stockholders to vote on: - the move of the company's domicile from Canada to the United States as a Delaware corporation; - the sale of 18,552,876 of Denbury's common shares to an affiliate of the Texas Pacific Group, referred to as "TPG," our largest shareholder, for U.S. $100 million, or $5.39 per share; and - the increase in the number of common shares available for issuance under the company's employee stock purchase and stock option plans. The special meeting will be held on April 20, 1999 in Calgary, Alberta. FACTORY CARD: Announces $50 Million in DIP Financing ---------------------------------------------------- Factory Card Outlet Corp., Naperville, Ill., announced that it has obtained preliminary approval from the bankruptcy court for a new $50 million debtor-in-possession facility from Foothill Capital Corp. and Paragon Capital LLC, according to a newswire report. The company and its subsidiary, Factory Card Outlet of America Ltd., filed chapter 11 on March 23 in order to facilitate a reorganization to address operational and liquidity problems. (ABI 29-Mar-99) FWT INC: Not Satsfying Working Capital Requirements --------------------------------------------------- Currently, the Company is not generating sufficient funds from operations to satisfy working capital requirements. As of March 15, 1999,the Company had approximately $1.0 million in availability under the terms of the Revolving Credit Facility; provided, however, the Company would havehad no availability under the Revolving Credit Facility as of such date ifan affiliate of the Company had not provided a guaranty to the lenders thereunder. In addition, the Company is currently in default under certain covenants of the Revolving Credit Facility. As a result of these defaults, the lenders under the Revolving Credit Facility can elect to declare all amounts of principal and accrued interest outstanding under the Revolving Credit Facility immediately due and payable. Such lenders have not accelerated these outstanding amounts. In addition to the liquidity difficulties, the Company is experiencing administrative difficulties, including (i) the resignation of the Company's vice president of finance (who was the Company's last officer) and the Company's controller and (ii) the delay in performing certain essential corporate functions, such as timely preparation of financial statements. However, Leary, Masson & Associates continues to provide services based on the directions of the Company's Board of Directors and continues to assist the existing employees of the Company in managing the day-to-day operations. GEOGRAPHICS INC: 10Q For Period Ended December 31 ------------------------------------------------- Geographics, Inc. reports that for the three months ended December 31, 1998, sales decreased over $3 million to $5,310,126 compared to the same period one year ago. For the nine months ended December 31, 1998, sales decreased approximately $8 million to $16,693,816 compared to the nine month period ending December 31, 1997. The decrease is primarily due to the sale of the Core Business and the loss of Office Max. For the three months ended December 31, 1998, the company reports income of $355,621 compared to a loss of $504,593 for the same period one year ago. For the nine months ended December 31, 1998, the company reports income of $1,285,815 compared to a loss of $4,336,216 for the corresponding period of 1997. The Company entered into a short-term 4th forbearance agreement with its lender, effective November 30, 1998, pursuant to which the lender agreed to extend the expiration date of the revolving credit facility to April 1, 1999 to permit borrowings of up to $5.5 million. GOLDEN BOOKS: Notification of Late Filing ----------------------------------------- Golden Books Family Entertainment Inc. reports a late filing of its 10K with the SEC. The company states that it is currently working to file a plan of reorganization and a disclosure statement. The company's reduced staff is unable to meet the requirements of providing information to the Bankruptcy Court including the filing of the plan of reorganization and the related disclosure statement and at the same time complete the Form 10-K requirements. The company expects to file the Form 10-K no later than the fifteenth calendar day following the due date. HARVARD INDUSTRIES: Dividend of Purchase Right Declared ------------------------------------------------------- On March 24, 1999, the Board of Directors of Harvard Industries, Inc., a Delaware corporation declared a dividend of one preferred share purchase right on each outstanding share of the Company's common stock, par value $0.01 per share payable to stockholders of record on April 5, 1999. With certain exceptions, each Right, when exercisable, entitles the holder thereof to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.01 per share, of the Company at an exercise price of $30 per one one- hundredth of a Preferred Share, subject to adjustment. The terms of the Rights are set forth in a Rights Agreement between the Company and State Street Bank and Trust Company, a Massachusetts trust company, as Rights Agent. LIVENT: Class Action Filed -------------------------- Pomerantz Haudek Block Grossman & Gross LLP announced that it has filed a Complaint seeking class action status in the United States District Court for the Southern District of New York on behalf of purchasers of 9-3/8% Senior Unsecured Notes Due 2004 of during the period from October 10, 1997 through August 10, 1998. Named as defendants are Garth Drabinsky, Myron Gottlieb, Gordon Eckstein, Robert Topol, Maria Messina, H. Garfield Emerson, Martin Goldfarb, A. Alfred Taubman, CIBC Oppenheimer, and Deloitte & Touche Chartered Accountants. The Complaint charges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act of 1934, and Sections 11, 12(2) and 15 of the Securities Act of 1933, by, inter alia, misleading investors via the dissemination of materially false and misleading information to the investing public which overstated Livent's assets and earnings in the Company's financial statements for fiscal years 1996 and 1997, as well as the first quarter of 1998. Specifically, the Complaint alleges that during the Class Period, defendants misled Livent's financial condition to the public by, among other things (a) executing sales agreements between Livent and third parties that contained side agreements that required Livent to pay back amounts advanced by the other parties to the agreements, resulting in the overstatement of revenue and the understatement of the Company's liability; (b) transferring costs associated with particular theatrical shows to capitalized fixed asset accounts, resulting in the understatement of expenses; (c) transferring costs from a currently running show to another show that had either not yet opened or that had a longer amortization period, resulting in the understatement of expenses; and (d) removing from the Company's books and records expense and accounts payable entries, resulting in the understatement of expenses and liabilities. As a result of defendants' conduct, Livent reported inflated revenues and understated losses for fiscal year 1997 and the first quarter of 1998. For fiscal year 1997, Livent reported a pre-tax loss of $62.1 million when the Company's true loss was at least $83.6 million. Moreover, Livent overstated its pre-production costs and understated its production expenses, resulting in the overstatement of net income. For fiscal year 1997, Livent overstated its pre-production costs by approximately $23.9 million. On August 10, 1998, Livent issued a press release disclosing than an internal investigation had uncovered accounting irregularities that included improper revenue recognition and the failure to record or improper deferral and capitalization of expenses. As a result, the Company restated its financial statements for the years 1995, 1996, and 1997, as well as the first quarter of fiscal 1998. This restatement had a cumulative adverse effect on net income in excess of $98 million. Moreover, the Company suspended defendants Drabinsky and Gottlieb. MCA FINANCIAL: Matrix Bancorp Reports on Investigation ------------------------------------------------------- Matrix Bancorp Inc. announced that its investigation of the events surrounding the MCA Financial Corp. collapse has been substantially completed, according to a newswire report. As of Dec. 31, Matrix Financial had about $5 million in mortgage loans on its balance sheet that had been acquired from MCA. Its investigation revealed that certain of the loans may have been sold or pledged as collateral to various parties multiple times. The investigation also showed that several of the mortgage loans had servicing issues, such as an instance in which loans owned by Matrix Financial and serviced by MCA had previously been paid off, but for which MCA as servicer had not remitted the payoff proceeds. Matrix has determined that as a result of transaction undertaken by Matrix Financial and United Financial, another of Matrix Bancorp's subsidiaries, that a loss is probably and reasonably estimable. Subsequently, Matrix has recorded a loss of $2.3 million as of Dec. 31. (ABI 29-Mar-99) MEDMAX: Files Chapter 11 and Seeks Buyer ---------------------------------------- MedMax Inc. filed chapter 11 on Friday, two weeks after it posted going-out-of-business signs at its three remaining stores, The Detroit Free Press reported. The Southfield, Mich., health care superstore chain has about $3.7 million in secured debt with about 1,000 creditors, according to court documents. MedMax hopes to find a buyer for all or part of its business, which used to include 12 stores in three states. The two-and-a-half-year-old company has never made money as a wellness chain aimed at the aging population, and cash flow problems have escalated in recent month. (ABI 29-Mar-99) MERCURY FINANCE: Files Information With SEC ------------------------------------------- On July 15, 1998, MFN Financial Corporation f/k/aMercury Finance Company, a Delaware corporation, filed a voluntary petition for relief in connection with its plan of reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Illinois, which was assigned to the Honorable Erwin I. Katz, U.S.Bankruptcy Judge. On March 10, 1999, the Court entered an order confirming the Company's Second Amended Plan of Reorganization (the "Plan"). The effective date of the Plan was March 23, 1999. Under the Plan, the Company's senior lenders will receive new senior secured notes equal to 75 percent of the face value of their then current outstanding balance after the receipt of Excess Cash (as defined in the Plan) and their pro rata share of 9,500,000 shares of the initial equity of the reorganized company. The holders of subordinated notes will receive $22.5 million in new junior unsecured subordinated notes. The shareholders of the Company will receive their pro rata share of (i) 500,000 shares of the initial equity of the reorganized company and (ii) three series of warrants, each exercisable for 580,000 shares of the common stock of the reorganized company, with expiration dates of three, four and five years, respectively, from the effective date of the Plan. The exercise price of the Series A Warrants will be $15.34, the exercise price of the Series B Warrants will be $21.81 and the exercise price of the Series C Warrants will be $28.27. Pursuant to the Plan, the Company will transfer to a certain trust established under the Plan (the "Liquidating Trust"), on the Effective Date, (i)$5 million in cash, (ii) the Company's claims against KPMG Peat Marwick and (iii) $250,000 in cash for fees and costs to be incurred in connection with the Liquidating Trust. Holders of Securities Fraud Claims (as defined in the Plan) will receive a share of the beneficial interests in the Liquidating Trust in complete settlement, satisfaction and discharge of their claims. In accordance with the Plan, the Company will also pay (i) $13.35 million into funds established for the benefit of holders of certain indemnification claims against the Company on the Effective Date and (ii) upon verification, costs and expenses of officers, agents and employees who are no longer employed by the Company as of the first day immediately following the Effective Date (other than the claims of the estate of James A. Doyle and John N. Brincat in respect of which no obligations shall be assumed), to the extent such costs and expenses are incurred after the Effective Date in connection with their participation in an agency or government investigation, which costs and expenses are limited to $250,000 in the aggregate. The Company has also agreed to (i) pay John N. Brincat $100,000 and (ii) release Mr. Brincat from all claims the Company may have against him, in complete settlement, satisfaction and discharge of any claims Mr. Brincat may have against the Company, subject to the approval of the United States District Court for the Northern District of Illinois by a final non-appealable order. Under the Plan, the reorganized company will have 50,000,000 shares of Common Stock, par value $.01 per share, authorized, 10,000,000 shares of which are to be issued and outstanding. No shares are reserved for future issuances in respect of claims and interests filed and allowed under the Plan. NEUROMEDICAL: Files Chapter 11 ------------------------------ Citing losses of $36.6 million in 1997 from $13.8 million in 1994, Neuromedical Systems Inc. announced that it filed chapter 11 on Friday, with assets of $34.8 million and liabilities of $9.6 million, according to a newswire report. The company plans to sell its intellectual property rights to AutoCyte Inc. for $4 million in cash and 1.4 million shares. In January, the company retained Houlihan Lokey Howard & Zukin to help it identify strategic options. Neuromedical, based in Upper Saddle River, N.J., supplies cytology screening and anatomic pathology diagnostic equipment and services. AutoCyte, Burlington, N.C., makes an integrated automated sample preparation and image analysis system to support cytotechnologists and pathologists in cervical cancer screening. (ABI 29-Mar-99) NU-KOTE HOLDING: Motion To Extend Exclusivity Denied ---------------------------------------------------- The Honorable Keith M. Lundin entered an order on March 17, 1999 denying the motion to extend the debtors' exclusivity period to file and obtain acceptance of the plan of reorganization. PICO PRODUCTS: Quarter Report For Period Ended January 31 --------------------------------------------------------- Pico Products Inc., filed its Form 10Q with the SEC for the quarterly period ended January 31, 1999. For the three month period ended January 31, 1999 compared to the same period in 1998, sales decreased 19.8% from 6.46 million to 5.18 million. A return to profitability is contingent upon the Company obtaining adequate financing to purchase product inventory. The terms of the Company's senior debt facility were recently revised in connection with the sale of the Company's trap and filter manufacturing business. The Company had approximately $6,768,000 outstanding under the senior facility and the Company's borrowings exceeded its calculated borrowing base by $290,000 on January 31, 1999. At January 31, 1999, the Company was in violation of several of the financial covenants under its senior and subordinated debt, including covenants with respect to quarterly sales and earnings. SCHWEGMANN GIANT: Case Summary & 20 Largest Creditors ----------------------------------------------------- Debtor: SGSM Acquisition Company LLC 5300 Old Gentilly Road New Orleans, Louisiana Court: District of Delaware Case No.: 99-715 Filed: 03/23/99 Chapter: 11 Debtor's Counsel: Paul, Weiss, Rifkind, Wharton & Garrison Stephen J. Shimshak Andrew N. Rosenberg Loren F. Levine 1285 Avenue of the Americas New York, New York 10019-6064 (212) 373-3000 James L. Patton, Jr. S. David Peress Young, Conaway Stargatt & Taylor PO Box 391 Wilmington, Delaware 19899 (302) 571-6600 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Supervalu Inc. Trade debt $5.6 m Schwegmann National Bank & Trust Money Orders $3.9 m LA Coca Cola Bottling Trade debt $1,294,067 Brown's Velvet Dairy Trade debt $1,278,318 St. Rose Nursery Trade debt $535,961 Penner & Welsch Trade debt $417,990 Frito-Lay Trade debt $300,166 Jefferson Building Trade debt $256,510 Peter A. Mayer Trade debt $245,842 Barbe's Dairy, Co. Trade debt $211,650 Glazers/NOBA/CACTUS Trade debt $210,992 Pepsi-Cola/Seven-Up Beverage Trade debt $204,232 Times-Picayune Publishing co. Trade debt $197,017 Commercial Equipment Service Trade debt $191,635 Louisiana Pride Seafood, Inc Trade debt $159,557 Nabisco Biscuit Company Trade debt $157,127 Magnolia Liquor Co. Inc. Trade debt $141,041 Anderson-Gemco Gulf Coast NE Trade debt $136,578 Community Coffee Co. LLC Trade debt $134,123 BPE Inc. Trade debt $132,270 STEELTECH: May File Bankruptcy If Debt Restructuring Fails ---------------------------------------------------------- Steeltech Manufacturing Inc., a Milwaukee metal fabricating company, may seek bankruptcy protection if its creditors don't accept a complex debt restructuring plan offered by the company this week. The future of the firm and its 80 workers hangs on the outcome. Steeltech concedes its future, without the debt restructuring, looks "bleak," according to a copy of the plan. Steeltech, which at one time employed about 220 people, continues to lose money as it labors under nearly $30 million in debt. The restructuring proposal asks its secured creditors who are owed $22.2 million to accept a collective payment of about $7.3 million in cash. The plan also calls for all creditors to receive stock in a new, diversified holding company of which Steeltech would be a part. "Either we get this proposal accepted by our creditors, or we'll file a Chapter 7," said Hugh Nelson, Steeltech's vice president of marketing. "There's no way these people are going to get paid anything if we file that. Everybody would have to take a haircut." Without a reorganization, Steeltech is doomed, said company President Chuck Wallace. He said the company must generate new business beyond government contract work and eliminate its heavy debt load to survive. The proceeds from the sale of the stock, which would be traded on European exchanges, would be used as working capital and to pay Steeltech's senior secured creditors. Under the plan, a European investment bank would be paid up to 10% of the proceeds for overseeing the stock sale. Steeltech's current business of metal finishing and coating, automotive remanufactured components, tire manufacturing and tire wholesale distribution. Steeltech estimates the four divisions would generate about $145 million in annual sales. The Steeltech operation would contribute about $15 million. The creditors have until April 3 to consider the proposal. They want to know how Steeltech arrived at its proposed payments. Steeltech owes Super Steel $5.4 million but is proposing to pay the company $1.6 million in cash. Meanwhile, Steeltech owes the City of Milwaukee $5.9 million but wants to pay the city $4.1 million in cash. Steeltech owes the state Department of Commerce $1.8 million but wants to pay $300,000 in cash. Steeltech, founded in 1990, continues to lose money. Despite a $2 million contract it landed in June to assemble, fabricate and paint the steel panels and trusses for Miller Park's roof, the company posted an operating loss of $107,887 for 1998. (Milwaukee Sentinel Journal-03/26/99) TELEGROUP: Letter of Intent With Interoute Communications --------------------------------------------------------- Telegroup, Inc. announced that it had signed a Letter of Intent with Interoute Communications Group Limited based in London U.K in which Interoute proposes, subject to the satisfaction of certain conditions, including the completion of a full investigation of Telegroup and negotiation and execution of a sale and purchase agreement, to acquire substantially all of Telegroup's U.S. assets and all of the issued share capital of its European subsidiaries and certain other Telegroup subsidiaries. The transaction would be accomplished through a sale pursuant to Section 363(b) of the U.S. Bankruptcy Code. Both parties will make best efforts to complete a Sale and Purchase Agreement by April 28, 1999, and close the transaction by the end of May, subject to Bankruptcy Court approval. "The transaction with Interoute, if completed, would benefit Telegroup's customers, agents and employees," said Clifford Rees, Telegroup's Chief Executive Officer. "Interoute is a well-capitalized company with a strong management team. Interoute's extensive global network and multiple interconnect and direct operating agreements will expand Telegroup's product offering and lower its cost base in many key markets around the world." Interoute is an international telecommunications company focused on providing high quality, competitively priced international and domestic long distance telecommunications services to retail and wholesale customers around the globe. The company has approximately 1,000 employees. Interoute is 77% owned by the Sandoz Family Foundation. Telegroup provides national and international long distance telecommunications services, serving residential and small and medium-sized business customers in more than 200 countries worldwide. The company also provides value-added wholesale services to over 40 domestic and international telecommunications carriers. Telegroup operates a global, digital, facilities-based network, the Telegroup Intelligent Global Network (R), which consists of 25 Nortel DMS 250/300 and Excel LNX voice switches in 12 countries, 23 Nortel Passport ATM switches, 6 enhanced services platforms, 26,000 miles of owned and leased capacity on digital fiber-optic cable links, and leased parallel data transmission capacity. USTEL INC: Reports Filing Chapter 11 Petition to SEC ---------------------------------------------------- A Voluntary Petition for Bankruptcy under Chapter 11 of the United States Bankruptcy Code was filed by UStel, Inc. in the United States Bankruptcy Court, Western District of Washington on March 10, 1999. No reorganization plan has been filed to date. The Company is currently in negotiation with various parties interested in acquiring all or substantially all of the assets of the Company. The Company is working to finalize the terms for the sale of all or substantially all of its assets. Finally, the Company expects to execute a post-petition Loan and Security Agreement with Coast Business Credit and Goldman Sachs Credit Partners that will enable the Company to operate as a debtor in possession, leaving existing directors and officers in possession of the operations of the Company subject to the supervision and orders of the United States Bankruptcy Court, for at least the next ninety (90) days. WESTMORELAND COAL: Affiliate Completes Sale ------------------------------------------- Westmoreland Coal Company announced that its affiliate LG&E-Westmoreland has completed the sale of all of its remaining interest in its 79.6 MW natural gas fired cogeneration project in Rensselaer, New York, to Fulton Cogeneration Associates, L.P., an affiliate of The Coastal Corporation. The Partnership is 50% owned by Westmoreland Energy, Inc., a wholly-owned subsidiary of Westmoreland Coal Company, and 50% owned by LG&E Power, Inc. Closing of the transaction occurred simultaneously with yesterday's execution of the definitive purchase agreement. Westmoreland's projected share of the net proceeds is in excess of $33 million. WILSHIRE FINANCIAL: Meeting of Creditors ---------------------------------------- On March 3, 199, Wilshire Financial Services Group Inc., debtor, filed a petition for relief under Chapter 11. A meeting of creditors is scheduled for April 12, 1999 at 10:00 AM at the J. Caleb Boggs Federal Building, 844 King Street, Room 2313, Wilmington, Delaware 19801. A hearing to consider approval of the Disclosure Statement and confirmation of the plan has been scheduled for April 12, 1999 at 4:00 PM in the U.S. Bankruptcy Court, 824 Market Street, 6th Floor, Wilmington, Delaware 19801. The debtor will remain in possession of its property and will continue to operate its businesses unless a trustee is appointed. WORLDWIDE DIRECT: Committee Taps Cornwell Consulting ---------------------------------------------------- The Official Committee of Unsecured Creditors of Worldwide Direct, Inc. et al., debtors, seeks to employ Cornwell Consulting Services, Inc. as management consultants for the Committee. The Committee requests that Cornwell conduct the necessary operational review of the telecommunications portions of the debtors' businesses and operation. Cornwell agreed to perform the services on an estimated budget of $36,000. WORLDWIDE DIRECT: Third Interim DIP Order ----------------------------------------- On March 18, 1999, Judge Mary F. Walrath entered an order authorizing SmarTalk TeleServices, Inc., ("SMTK") debtor, to borrow pursuant to the Credit Agreement and the Affiliates may guaranty such borrowings, up to $10,000,000 which shall be used for the purpose of providing working capital for SMTK in accordance with the terms and conditions of the Credit Agreement. Meetings, Conferences and Seminars ---------------------------------- April 5-6, 1999 PRACTISING LAW INSTITUTE 21st Annual Current Developments in Bankruptcy and Reorganization Conference PLI Conference Center, New York, New York Contact: 1-800-260-4PLI or info@pli.edu April 15-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800 April 19-20, 1999 PRACTISING LAW INSTITUTE 21st Annual Current Developments in Bankruptcy and Reorganization Conference Grand Hyatt, San Francisco, California Contact: 1-800-260-4PLI or info@pli.edu April 22-23, 1999 AMERICAN LAW INSTITUTE -- AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUTING PROFESSIONAL EDUCATION Conference on Revised Article 9 of the Uniform Commercial Code Sheraton New York Hotel, New York, New York Contact: 1-800-CLE-NEWS April 22-25, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 69th Annual Chicago Conference Westin Hotel, Chicago, Illinois Contact: 1-312-781-2000 or clla@clla.org April 26-27, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales, Mergers & Acquisitions The Mark Hopkins, San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com April 28-30, 1999 INTERNATIONAL FEDERATION OF INSOLVENCY PROFESSIONALS INSOL Bermuda '99 Conference of the Americas Castle Harbour Marriott Resort Contact: INSOL@weil.com April 30-May 4, 1999 INTER-PACIFIC BAR ASSOCIATION Annual Meeting and conference, including a one-day program on cross-border insolvencies Shangi-La Hotel, Bangkok, Thailand Contact: 011-66-2-233-0055 May 28-31, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 51st Annual New England District Meeting Equinox Resort, Manchester Village, Vermont Contact: 1-413-734-6411 June 3-6, 1999 AMERICAN BANRKUTPCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 July 1-4, 1999 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 July 10-15, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 105th Annual Convention Chateau Mont Tremblant, Mont Tremblant, Quebec Contact: 1-312-781-2000 or clla@clla.org July 15-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Northeast Bankruptcy Conference Mount Washington Hotel & Resort Bretton Woods, New Hampshire Contact: 1-703-739-0800 August 4-7, 1999 AMERICAN BANRKUTPCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton, Amelia Island, Florida Contact: 1-703-739-0800 August 29-September 1, 1999 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 1999 Convention Grove Park Inn, Asheville, North Carolina Contact: 1-803-252-5646 or info@nabt.com September 16-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Southwest Bankruptcy Conference The Hotel Loretto, Santa Fe, New Mexico Contact: 1-703-739-0800 December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 ********* The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Bond pricing, appearing 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 1999. 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. 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