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/raid1/www/Hosts/bankrupt/TCR_Public/990401.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, April 1, 1999, Vol. 3, No. 63 Headlines ACME METALS: Dura Objects To Rejection of Contract AMERICAN HOME PATIENT: Files Notification of Late Filing AMERITRUCK: Volvo Seeks Relief From Stay AMPACE CORP: Seeks Extension of Exclusive Periods CELLPRO INC: Amended Plan of Reorganization COHO ENERGY: Financial Results CROWLEY MILNER: Seeks Employee Retention Program CROWN BOOKS: Seeks To Extend Exclusivity FASTCOMM: Emerges From Chapter 11 FAVORITE BRANDS: Files Chapter 11 Petition FINE HOST: Taps Ernst & Young GREATE BAY: Reports Fourth Quarter and Year-End Results LONG JOHN: Seeks To Extend Time to Assume/Reject Leases LONG JOHN: Seeks Authority To Sell 14 Locations LTCB: Unit Files For Bankruptcy With 510 Bil. Yen MOBILE ENERGY: Order Authorizes Financial Advisor MOLTEN METAL: Trustee Seeks Liquidation Agreement NATIONAL ENERGY: Reports 4th Quarter and Year End Results NEUROMEDICAL: Agrees To Sell Assets To AutoCyte PARTY CITY: May Be In Default of Listing Requirements PERITUS: $2 Million Loss May Affect Ability To Continue PICO HOLDINGS: Reports net Loss of $7.2 Million PITTSBURGH PENGUINS: Ordered To Stay Put PONDEROSA FIBRES: State Dept. of Revenue Objects To Plan RECYCLING INDUSTRIES: Announces NASDAQ Delisting RECYCLING INDUSTRIES: Committee Taps Attorneys SERVICE MERCHANDISE: Owes $1.3 Billion TAL WIRELESS: Plans To Liquidate THE PENN TRAFFIC: Lease Assignments and Assumptions WESTBRIDGE CAPITAL: Emerges From Chapter 11 YES! ENTERTAINMENT: Memorandum Of Law of Infinity Investors BOND PRICING: For Week of March 29, 1999 ********* ACME METALS: Dura Objects To Rejection of Contract -------------------------------------------------- Dura Operating Corp. objects to the motion of Acme Metals Incorporated and its debtor affiliates for an order approving the rejection of an executory contract with Dura Operating Corporation. On March 9, 1998, Dura purchased a subsidiary business of Acme for a base purchase price of $18 million. Dura states that the agreement is not executory and therefore cannot be rejected. Dura states that continuing obligations do exist under the agreement, but these obligations are de minimis. They are ancillary to the prime purpose of the SPA which was to effectuate the sale of Universal. This prime purpose, according to Dura was accomplished long ago. AMERICAN HOME PATIENT: Files Notification of Late Filing ---------------------------------------------------------- American HomePatient, Inc. (Nasdaq:AHOM) announced it has filed with the Securities and Exchange Commission, under Rule 12b-25, a notification of late filing for its Form 10-K for the year-ended December 31, 1998. American HomePatient will file its Form 10-K with the Securities and Exchange Commission on or before April 15, 1999. The company's notification stated it was unable to file the Form 10-K for the year-ended December 31, 1998, because the company is negotiating with its lenders to potentially amend the bank credit facility to remedy its covenant default status and modify certain financial and other covenants going forward. The company is currently in default of several financial covenants under its bank credit facility. Because these negotiations are not completed, the Company is unable to finalize the classification of its debt and complete other portions of the company's financial statements. "American HomePatient believes that it is in the best interests of the company, its shareholders and employees to continue discussions with our bank group to resolve our differing issues," stated Joseph F. Furlong, III, president and chief executive officer. "It is our hope to quickly and satisfactorily resolve our outstanding issues with the bank group." The company also noted in the Rule 12b-25 notification that it intends to record an accrued severance expense charge and, as required by SFAS 121, a non- recurring pre-tax accounting charge for goodwill during the fourth quarter of 1998. American HomePatient has over 300 home health care centers in 38 states. Its product and service offerings include respiratory services, infusion therapy, parenteral and enteral nutrition and medical equipment for patients in the home. American HomePatient's common stock is traded on the Nasdaq stock market under the symbol AHOM. AMERITRUCK: Volvo Seeks Relief From Stay ---------------------------------------- Volvo Commercial Finance LLC The Americas ("Volvo") is seeking relief from the automatic stay, or in the alternative, adequate protection. Volvo is both a lessor to and a secured creditor of the debtors, Ameritruck Distribution Corporation, et al. Volvo is the owner and holds the title to 374 leased vehicles. They are currently leased under short term leases. Volvo states that the debtors failed to timely pay the Tarrant County taxes due on January 31, 1999. Volvo is also a properly perfected secured creditor of the debtor. As of the Petition Date, Volvo was owed almost $30 million under the terminated leases and certain agreements. Upon Volvo's information, the debtors continue to use a remaining 433 secured vehicles in their business. The value of the secured vehicles is less than the amount of Volvo's claim against the debtors. Furthermore, while it is not clear from the debtors' proposed plan whether the debtors have a realistic chance of reorganizing, to the extent the debtors believe that a certain number of vehicles are necessary to an effective reorganization, the debtors have no equity in such secured vehicles, have refused to continue making adequate protection payments on the vehicles and have failed to maintain and possibly failed to pay taxes on the secured vehicles and have failed to enable Volvo to inspect the vehicles. Therefore, Volvo requests that the court terminate or modify the automatic stay so that Volvo may exercise its rights and remedies with respect to the secured vehicles. AMPACE CORP: Seeks Extension of Exclusive Periods ------------------------------------------------- Ampace Corporation and Ampace Freightlines, Inc., debtors, seek an order extending the exclusive periods during which they may file plans of reorganization and solicit acceptances of such plans. A hearing on the motion is set for April 13, 1999. The debtors claim that they have significantly downsized their operations, restructured existing debt and attempted to improve profitability. The debtors say that they have attempted to maintain an open and complete dialogue with the Committee. Because the debtors' post-petition efforts were focused primarily, first, on the sale of their assets to a potential purchaser (the deal did not close) and on the closing of the Monroe facility, the debtors have not had sufficient time to formulate plans of reorganization. The debtors currently intend to market their Calhoun Facility operation for sale as a going concern, while at the same time, exploring the possibility of stand alone plans which will permit the debtors to reorganize around their Calhoun Facility operation. The extension of the exclusive filing and solicitation periods through and including August 12, 1999 and October 11, 1999 respectively, is necessary to permit the debtors to make an accurate and informed decision on appropriate plans of reorganization and to afford time to negotiate the plans with their creditors. CELLPRO INC: Amended Plan of Reorganization ------------------------------------------- CellPro, Incorporated, a Delaware corporation, proposes its amended plan of reorganization for the resolution of the debtor's outstanding creditor claims and equity interests. Class 1 - Secured Claims - Impaired. Transfer property securing the claim to the holder or Pay in cash in full on the Distribution Date. Class 2 - Other Priority Claims - Impaired. Paid in cash in full. Class 3 - Insured Claims - Unimpaired. Class 4 - Unsecured Claims Class 4A - Patent Plaintiffs - Unimpaired. Allowed claim $7,933,793. Class 4B - Other Unsecured Claims - Impaired. Allowed claims paid in full with 4.242% interest. Class 5 - Securities Claims Class 5A - Securities Class Action - Not impaired. Class 5B - Florida Securities Action - Not impaired. Class 5C Opt Out Claims - Impaired. Holders will receive 4% of claims. Provided aggregate distribution does not exceed $100,000. Class 6 - Common Stock - Impaired. Pro rata distribution of available cash. Class 7 - Other Interests - Impaired. Cancelled. COHO ENERGY: Financial Results ------------------------------ Coho Energy, Inc. (Nasdaq:COHO) announced today year end financial results reporting year end proved oil and gas reserves of 111.1 million barrels of oil equivalent and a net loss of $203.3 million. The prolonged and dramatic decline in crude oil prices during 1998 had a significant negative impact on the financial and operating results, specifically on cash flow from operations, earnings, debt levels and proved reserve values. Coho's proved reserves at December 31, 1998, were 100 million barrels of oil and 66.3 billion cubic feet of natural gas or 111.1 million barrels of oil equivalent ("BOE"). In taking account of the year's production of 6.4 million barrels of oil equivalent and the sale in December 1998 of the Company's Monroe, La. gas field the proved reserves increased 13.5 million BOE or 14% over the year end 1997 volumes. Low year end prices for crude oil had a significant impact on the year end reserve value. The low year end crude oil price negatively impacted the financial results for the year. For the year ended December 31, 1998, the Company reported a loss of $203.3 million ($7.94 per share) as compared with earnings of $6.3 million ($0.29 per share) in 1997. Crude oil prices during the fourth quarter prompted the Company to shut in approximately 700 barrels of oil per day and to intentionally not repair wells which required minor workovers. In February and March 1999 the Company made several announcements including, the non-completion of an equity issue to the Hicks, Muse, Tate & Furst partnership, the redetermination of the Company's credit facility borrowing base and, as a result of the redetermination, the creation of an over advance and the receipt of a default notice from the Company's lenders for failure to make payment on the first of five installments due on the over advance. The year-end financial statements reflect each of these announcements, including the recording of all of the Company's long term debt as a current liability. The Company is currently working to put into place a comprehensive plan to restructure its financial obligations. The alternatives being pursued include, but are not limited to, the conversion of a portion or all of the $150 million senior notes to equity, the raising of additional equity and/or refinancing the Company's revolving bank credit facility. There can be no assurances that the Company will be successful in resolving its liquidity problems through the alternatives set forth above in and out of court restructuring and may seek court protection while it is pursuing other financing and/or reorganization alternatives. CROWLEY MILNER: Seeks Employee Retention Program ------------------------------------------------ The debtor, Crowley, Milner and Company and its wholly owned subsidiary, Steinbach Stores, Inc. seek approval of an employee retention program and payment of severance obligations to certain employees terminated post-petition. The retention program provides that approximately 35 Central Office Employees will receive $166,710. Also, 11 key employees will receive approximately $10,000 as a retention bonus. (One of the eleven will receive $20,000 and the President and Senior Vice President will each receive a retention bonus of approximately $40,000). The debtor is requesting that 16 Central Office employees who have been terminated receive severance payments of $18,921. CROWN BOOKS: Seeks To Extend Exclusivity ---------------------------------------- Crown Books Corporation and its debtor affiliates seek to extend exclusive periods in which to file a plan of reorganization and solicit acceptances thereto. Extending the debtors' exclusive periods for an additional 60 days, to and including June 30, 1999 for filing a plan, and August 30, 1999, for soliciting acceptances to the plan, will, according to the debtors, enable the debtors, the Creditors' Committee and their other creditor constituencies to continue to explore and develop various restructuring alternatives with maximum creditor support. The debtors have shared their strategic business plan with the committee, and they believe that the additional time will permit further dialogue to enhance the prospects for a consensual plan of reorganization. An extension of the exclusive periods will provide time for the debtors to continue to analyze and review claims filed by the Bar Date, and to assess the impact of such claims on the debtors' plan alternatives. The debtors also believe that their success in the fourth quarter demonstrates a renewed customer confidence in their stores. FASTCOMM: Emerges From Chapter 11 --------------------------------- FastComm Communications Corp. (OTC BB: FSCX) reported that its Plan of Reorganization has been approved by the Bankruptcy Court and, effective with the court's final order, it will emerge from Chapter 11. The Company filed for protection under Chapter 11 on June 2, 1998 because of litigation with a former employee. All litigation with this former employee has since been settled. The Company's plan of reorganization provides for cash and debenture payments equal to 100% of each allowed claim. Since the plan provides for payment in full to all general unsecured creditors, the positions of the shareholders are preserved. "Despite the fact that this process has been exceptionally draining on both the Company's cash flow and management time, it has been gratifying to have employees at all levels of the Company support our reorganization," said Peter Madsen, President and CEO of FastComm. "I am extremely pleased to have this behind us so that we can now focus on business and on improving shareholder value." As previously disclosed, the Company believes that the Chapter 11 filing negatively impacted its selling efforts. With the settlement and the confirmation of the Plan of Reorganization by the Court today, the Company plans to begin announcing contract wins shortly. "Skepticism by customers over perceived solvency issues are common when there is a bankruptcy tagged to your Company name," Madsen stated. "In fact, certain large companies have policies that preclude doing business with companies in Chapter 11." FAVORITE BRANDS: Files Chapter 11 Petition ------------------------------------------ Confectionary maker Favorite Brands International Inc., its parent and two affiliates filed for Chapter 11 protection on Tuesday in U.S. Bankruptcy Court. The Bannockburn, Ill.-based company listed assets of $805 million and debts of $699 million. The parent, Favorite Brands International Holding Corp., and affiliates, Sather Trucking Corp. and Trolli Inc., also sought the protection from creditors. In court papers, the company described itself as fourth largest U.S. confectionary maker, with operations in Illinois, Iowa, Nevada, Minnesota, Tennessee, California, Indiana, Oklahoma, Pennsylvania, Texas, and Louisiana. The 20 largest unsecured creditors listed individual claims ranging from $7 million to $35 million in senior notes and senior subordinated notes. The largest debts were $35 million to Oaktree Financial of Los Angeles and $31.5 million to Chase Securities of New York. The company also announced that it had secured a commitment for an additional $100 million in financing from a group of banks led by Chase Manhattan Bank. The new debtor-in- possession (DIP) financing, which is subject to court approval, is expected to provide sufficient liquidity for the company to operate throughout the Chapter 11 process. The company has made significant progress in recent months in restructuring its operations, including hiring a new senior management team, consolidating operations and closing inefficient plants, launching new products and securing several important licensing agreements. The new management team is led by Richard R. Harshman, Chief Executive Officer, one of the best known executives in the candy business, and Steven F. Kaplan, an experienced turnaround specialist. Favorite Brands International was formed in 1995 to purchase Kraft's marshmallow and caramel businesses. The company subsequently acquired several other branded and private label confectionery businesses to form what is today the fourth largest confectioner in the country. The company's products include Jet-Puffed(R) Marshmallows, Farley's(R) Fruit Snacks and Fruit Rolls, Trolli(R) Gummies, Farley's(R) General Line Candy, Sather's(R) Packaged Candy and Snacks, a variety of seasonal confections and Favorite Brands Ingredients. FINE HOST: Taps Ernst & Young ----------------------------- The debtor, Fine Host Corporation, seeks a court order authorizing the retention of Ernst & Young LLP as special financial advisor to the debtor for the limited purposes of assisting the debtor in an effort to obtain exit financing in connection with confirmation and consummation of the plan, and providing the debtor with assistance in connection with the fulfillment of the debtor's "fresh start" financial reporting obligations. GREATE BAY: Reports Fourth Quarter and Year-End Results ------------------------------------------------------- Greate Bay Casino Corporation (OTC Bulletin Board: GEAAQ) today reported a net loss of $825,000 or $.016 per share, for the fourth quarter of 1998 compared to a net loss of $12.8 million, or $2.47 a share, for the fourth quarter of 1997. For the year 1998, the Company reported net income of $24.5 million, or $4.72 per share, compared to a net loss of $20.6 million, or $3.96 per share, for 1997. Net revenues for the fourth quarter of 1998 amounted to $2.8 million compared to pro forma net revenues of $2.1 million for the fourth quarter of 1997. Consolidated net revenues for the year 1998 totaled $9.0 million, compared to pro forma net revenues of $10.1 million for 1997. Net income reported for 1998 includes a gain of $27.5 million resulting from the elimination of the Company's investment in its primary subsidiary, Greate Bay Hotel and Casino, Inc. (GBHC), which owns the Sands(R) Hotel & Casino in Atlantic City, New Jersey. GBHC filed for relief under Chapter 11 of the United States Bankruptcy Code in January 1998. As a result of an agreement entered into with GBHC on June 27, 1998 and approved by the Bankruptcy Court on July 7, 1998, the Company no longer controls the management and operation of the Sands and does not expect to have any ownership or operating control of GBHC after GBHC's reorganization under Chapter 11. Consequently, Greate Bay's investment in GBHC together with certain amounts due from GBHC were revalued to a zero basis on July 1, 1998 resulting in the $27.5 million gain. Subsequent to June 30, 1998, GBCC has accounted for its investment in GBHC under the cost method of accounting. The GBHC bankruptcy filing created a **default** and acceleration of the 11 5/8%, $85 million Senior Notes issued by the Company's wholly-owned subsidiary, PRT Funding Corp. ("PRT"). As previously announced, Greate Bay's wholly-owned subsidiary, Pratt Casino Corporation ("PCC"), guarantor of the Senior Notes, has reached an agreement in principle with noteholders for a restructuring of the Senior Notes. The successful completion of the restructuring is subject to the execution of definitive documents, the approval of gaming regulatory authorities and the consummation of a pre-negotiated plan of reorganization by PCC and PRT. After completion of the PCC/PRT restructuring the Company's remaining operations will consist primarily of Advanced Casino Systems Corporation, a computer software company which licenses casino information technology systems to the Sands and Hollywood Casino Corporation as well as to other non-affiliated casino companies. LONG JOHN: Seeks Authority To Sell 14 Locations -------------------------------------------------------- The debtors, Long John Silver's Restaurants, Inc. seek authority to sell 14 nonresidential real properties in accordance with bidding procedures approved by the court. Competing bids must provide for at least a 7 1/2% increase of such initial offer. The debtors state that there are compelling reasons and sound business justifications for the court to authorize the sale of the properties. They were marketed by commercial real estate brokers, and represent property no longer needed by the debtors for their operations. The locations of the real property are: Sacramento, California Elk Grove, California Atlanta, Georgia Augusta, Georgia Lilburn, Georgia Waycross, Georgia Woodstock, Georgia Rolling Meadows, Illinois Mt. Clemons, Michigan Youngstown, Ohio El Centro, California National City, California San Diego, California Hallandale, Florida LONG JOHN: Seeks To Extend Time to Assume/Reject Leases ------------------------------------------------------- The debtors, Long John Silver's Restaurants Inc., et al. seek an order extending the time within which the Debtors must assume or reject unexpired leases of nonresidential real property. The Debtors are lessees under approximately 408 nonresidential real property leases, which the Debtors have not moved to assume or reject. By this motion, the debtors seek the entry of an order extending the time within which they must assume or reject the leases for 130 days, through and including August 6, 1999. The debtors have entered into a Stock Purchase agreement that provides the foundation for a plan of reorganization. The Agreement authorizes the purchaser to designate up to 50 leases for rejection at least 30 days prior to commencement of the hearing to consider plan confirmation. Since the Stock Purchase Agreement is conditioned upon confirmation of a plan by August 31, 1999, the latest possible date for the purchaser to designate leases to be rejected is August 1, 1999. LTCB: Unit Files For Bankruptcy With 510 Bil. Yen ------------------------------------------------- The Kyodo News reports on March 31, 1999 that NED, a nonbank financial unit of the now state-controlled Long- Term Credit Bank of Japan, filed Wednesday for liquidation under court protection from creditors with debts of some 510 billion yen. NED, one of LTCB's three nonbank financial affiliates, operates two business divisions -- a loan division and a venture capital division for investment in unlisted shares. In the process of liquidation, NED will sell its venture capital division to Yasuda Fire and Marine Insurance Co. and Yasuda Mutual Life Insurance Co., NED officials said. The liquidation should not affect LTCB's balance sheet as it already accounted for possible bad loans to NED in the first half of the fiscal year ending Sept. 30, 1998. Mitsubishi Trust and Banking Corp. said in a statement the liquidation of NED will not affect its earnings as it has set aside reserves against its 30 billion yen in loans to NED. NED was set up in 1972 with the aim of extending loans to venture businesses and has been faced with mountains of bad loans it extended to real estate companies in collaboration with LTCB during the booming bubble economy of the late 1980s. LTCB has been under state control since last October, when the government recognized it as a failed bank with huge bad loans. MOBILE ENERGY: Order Authorizes Financial Advisor ------------------------------------------------- On March 22, 1999, Judge William S. Shulman entered an order authorizing the employment of Forcap International Inc. as the Financial Advisor of Mobile Energy Services Company LLC and Mobile Energy Services Holdings, Inc., debtors. MOLTEN METAL: Trustee Seeks Liquidation Agreement ------------------------------------------------- Stephen S. Gray, Chapter 11 Trustee of Molten Metal Technology, Inc. and its debtor affiliates seeks authority to sell the debtors' assets located in Bay City, Texas under the terms and conditions set forth in a certain Liquidation Services Agreement. The Trustee will receive the first $900,000 of gross sales proceeds from the Bay City Assets which payment is guaranteed by National Industrial services Incorporated ("NISI"). Thereafter, the next $120,000 of gross sale proceeds shall be paid to NISI as reimbursement for expenses and promotional services. After payment of $900,000 to the estates and the expense payment, and until the balance of the sale proceeds aggregate $3 million, the gross proceeds will be divided 85% to the estates and 15% to NISI. Thereafter, the remaining gross sale proceeds shall be divided equally between the two. NATIONAL ENERGY: Reports 4th Quarter and Year End Results --------------------------------------------------------- National Energy Group, Inc. (OTC Bulletin Board: NEGXQ) today announces results for the fourth quarter and twelve months ended December 31, 1998. The Company's oil and gas production totaled 4.6 Bcfe for the fourth quarter of 1998, a decline of 12% compared to 5.2 Bcfe for the fourth quarter of 1997. Crude oil production during the fourth quarter of 1998 increased 3.8% to 332 Mbls compared to 320 Mbls for the same period in 1997. Natural gas production decreased 21% during the three months ended December 31, 1998 to 2.6 Bcf compared to 3.3 Bcf in 1997. NEG's cash flow used in operations before changes in working capital for the three months ended December 31, 1998 decreased to $160,000 from $2.8 million from the same period in 1997. Cash flow per share for the three month period ended December 31, 1998 was $.00 per share as compared to ($.05) per share for the same period in 1997. The decrease was principally the result of the decline in oil and gas revenues. Revenues for the three months ended December 31, 1998 were $8.8 million, down 41% from $14.8 million in 1997, due principally to the sharp decline in crude oil prices in 1998 and the decline in total production. The average price received by the Company for crude oil for the three months ended December 31, 1998 was $11.13 per barrel, a 38% decline from the average price of $17.85 per barrel received for the comparable period in 1997. The average price received for natural gas of $1.97 per mcf for the three months ended December 31, 1998 was 28% less than the average price of $2.75 per mcf received in the fourth quarter of 1997. The decline in average prices reduced fourth quarter 1998 revenues by approximately $4.2 million compared to the fourth quarter of 1997, while the decline in production during the fourth quarter 1998 reduced revenues by an additional $4.6 million. The Company reported a net loss for the three months ended December 31, 1998 of $62.9 million, or $1.56 per share compared with a net loss of $36.5 million, or $.97 per share for 1997. The loss for 1998 and 1997 includes noncash write-downs of the Company's oil and natural gas properties of $58.5 million and $37.5 million net of tax in accordance with the full cost method of accounting, resulting primarily from the decline in commodity prices and reserve revisions. The results for the fourth quarter 1998 also include a non-recurring charge of approximately $1 million for severance and related costs resulting from the Company's restructuring of its management team and cost associated with its Chapter 11 bankruptcy filing. Excluding these items, the Company would have reported a net loss of $3.5 million ($.09 per share) for the fourth quarter of 1998 compared with net income of $1 million ($.03 per share) for 1997. Revenues for the twelve months ended December 31, 1998 totaled $38.4 million, down 27% from $52.4 million in 1997, due to the sharp decline in commodity prices and the decrease in total production. The average price received by the Company for crude oil for the twelve months ended December 31, 1998 was $12.66 per barrel, a 34% decline from the average price of $19.17 per barrel received for the comparable period in 1997. The average price received for natural gas of $2.02 per mcf for the twelve months ended December 31, 1998 was 15% less than the average price of $2.37 per mcf received in 1997. The decline in average prices reduced 1998 revenues by approximately $12.0 million compared to 1997. The Company reported a net loss for the twelve months ended December 31, 1998 of $164.5 million, or $4.08 per share, compared with a net loss of $34.3 million or $.94 per share for 1997. At December 31, 1998, the Company was in violation of certain covenants under its credit facility and as a result has classified the associated borrowings as a current liability. In addition, due to the non-payment of interest due December 2, 1998, the Company's Senior Notes were in default at December 31, 1998, and have also been classified as a current liability. On December 4, 1998 the Company's 10 3/4% Senior Note bondholders filed an Involuntary Petition for an Order for Relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division, due to non-payment of interest due December 2, 1998, after expiration of a 30-day grace period. On December 23, 1998, the Company filed in the Bankruptcy Court, an Answer to and Motion to Dismiss the pending Involuntary Petition. The Company's Motion affirmed that it (i) was meeting its obligations and generally paying its debts as they became due, unless such debts were the basis of a bona fide dispute and (ii) had arranged with the lender under its credit facility to borrow additional funds sufficient to pay the interest due on the 10 3/4% Senior Notes, conditioned upon the Court's dismissal of the Involuntary Petition. However, on February 8, 1999, the Bankruptcy Court denied the Company's Motion to Dismiss the Involuntary Petition. An Order for Relief was entered by the Bankruptcy Court on February 11, 1999. The Order for Relief places the Company under the protection of the Court and precludes payment of the interest on the Senior Notes at this time. The Company shall act as debtor-in-possession and will continue to operate its business and manage its properties in the ordinary course of business during its Chapter 11 proceeding. The Company anticipates proposing a Plan of Reorganization within 120 days of February 11, 1999 or at such time as may be extended by the Court. As of December 4, 1998, the Company discontinued the accrual of interest related to unsecured liabilities subject to compromise. National Energy Group, Inc. is a Dallas, Texas based independent oil and gas exploration and production company. The Company's principal properties are located onshore in Texas, Louisiana, Oklahoma, and offshore Gulf of Mexico. NEUROMEDICAL: Agrees To Sell Assets To AutoCyte ----------------------------------------------- On March 26, 1999, Neuromedical Systems, Inc. voluntarily filed for protection under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. The Company is now operating as debtor in possession subject to the supervision of the orders of the Bankruptcy Court. In connection with its Chapter 11 filing, the Company let go the majority of its U.S. workforce and the Company has agreed to sell its intellectual property and related assets to AutoCyte, Inc., for $4,000,000 in cash and 1.4 million shares of AutoCyte common stock. The Company's sale of assets is subject to certain conditions, including the approval of the Bankruptcy Court. (States SEC-03/30/99) PARTY CITY: May Be In Default of Listing Requirements ----------------------------------------------------- Party City Corporation (Nasdaq: PCTY) announced that it will be unable to file its Annual Report on Form 10-K with the SEC on a timely basis due to previously announced difficulties in completing its 1998 audit. The Report is due on March 31, 1999. The Company is working diligently with its auditors to complete the audit as soon as possible. As a result of the failure to file the form 10-K by March 31, the Company will be in default of Nasdaq's continued listing requirements. The Company has been advised by Nasdaq that as of April 5, the Company's trading symbol will be changed to PCTYE to reflect that the stock is trading pursuant to an exception to the Nasdaq listing requirements. Upon the filing of the Form 10-K and demonstration by the Company of compliance with all of Nasdaq's listing standards, the "E" will be removed. The Company also announced that it has entered into a waiver and amendment agreement with the lenders under its existing $60 million secured credit facility pursuant to which the lenders have agreed to waive existing defaults, including financial covenant defaults, and to permit the Company to continue borrowing under the facility. The waiver will continue in effect until May 1, 1999, subject to compliance by the Company with certain reporting and other covenants. The Company expects to discuss with its lenders waivers beyond May 1 once it has more definitive information about the 1998 audit. In the event the Company is unable to extend the waiver beyond May 1, the lenders will be entitled to exercise certain remedies after May 1, including acceleration of repayment. Party City Corporation is a specialty retailer of party supplies through its national network of discount super stores. PERITUS: $2 Million Loss May Affect Ability To Continue -------------------------------------------------------- Peritus Software Services announced that it was expecting to post a loss of $2 million-$2.5 million for the current quarter and that its ability to continue operations was in jeopardy. The Billerica company said in a press release that it would be forced to significantly reduce its work force in the next several weeks, with the exception of those employees needed to fulfill current obligations. As of the end of last month, Peritus employed 453 full-time workers, according to a filing with the Securities and Exchange Commission. Peritus, which provides Y2K solutions, announced layoffs twice last year amid sagging demand for its software and services. The company posted a loss of $26.7 million last year, including charges for restructuring. PICO HOLDINGS: Reports Net Loss of $7.2 Million ----------------------------------------------- Pico Holdings, Inc. (Nasdaq: PICO) and consolidated subsidiaries reported a net loss of $7.2 million, or $1.20 per share, for 1998, compared with net income of $19.5 million, of $3.09 per share, during 1997. The 1998 net loss included income from discontinued operations of $1.1 million, or $0.18 per share, compared to $0.4 million, or $0.07 per share, in 1997. Per share amounts are expressed as basic earnings or loss per share. The 1998 net loss included $3.3 million in net realized investment losses, including a realized gain of $1.1 million from discontinued operations. Net income in 1997 included net realized gains on investments of $21.4 million before taxes. For the 1998 fourth quarter, the Company recorded an $8 million net loss, compared to a $2.2 million loss during the same 1997 period. This equates to losses of $1.30 and $0.36 per share for the fourth quarters of 1998 and 1997, respectively. The 1998 fourth quarter included the $5 million Physicians' reserve strengthening and $3 million in GEC write-downs, after minority interests and before taxes. The 1997 fourth quarter included a pre-tax write-down of $4 million, after minority interests. Shares outstanding and per share calculations for prior years have been adjusted to reflect the December 16, 1998 1-for-5 reverse stock split following the PICO/GEC combination. Prior year amounts also reflect the November 20, 1996 reverse merger between Physicians and the Citation Insurance Group, now PICO. PITTSBURGH PENGUINS: Ordered To Stay Put ---------------------------------------- Judge Bernard Markovitz ordered the National Hockey League (NHL) Pittsburgh Penguins to honor their current lease and stay at the Civic Arena, the oldest arena in the league, through the year 2007. The Judge also put an order in place preventing team officials from moving the Pens out of Pittsburgh. Markovitz issued a permanent injunction that would stop Penguins co-owner Roger Marino, or any new owners, from moving the team to another city. Even retired superstar Mario Lemieux, the team s biggest creditor, raised the prospect of moving the team in court documents filed with the Judge. Lemieux is among those who want to take over the franchise. The Pens owe him $31.4 million in deferred compensation. Markovitz also said he had doubts that Marino ever had the intent to honor an agreement that said the team would stay at the arena until 2007, while the arena would undergo up to $13 million in public improvements. (Interactive Sports- 03/30/99) PONDEROSA FIBRES: State Dept. of Revenue Objects To Plan -------------------------------------------------------- The State of Washington Department of Revenue objects to confirmation of the debtor's proposed First Amended Plan. Revenue objects because the plan does not provide for priority tax claims to be paid within 6 years from the date the tax became due. Revenue holds a contingent priority tax claim for approximately $3.1 million in the case. Ponderosa is in the distressed area tax deferral program and seeks to defer, and eventually have waived a certain portion of use tax for which it would otherwise be liable. Ponderosa could have a use tax obligation of approximately $3.1 million. Revenue objects to confirmation because the plan fails to address the fact that the debtor's ability to avoid payment of $3.1 million in priority use tax hinges on the acceptance or rejection of the executory contract it has with Revenue pertaining to the distressed area tax deferral program. No indication of acceptance or rejection has been made and no treatment of the claims has been proposed in the plan. RECYCLING INDUSTRIES: Announces NASDAQ Delisting ------------------------------------------------ Recycling Industries, Inc., a metals recycler that processes ferrous and non-ferrous metals, today announced that during the Company's Chapter 11 reorganization process, it is unable at this time to demonstrate compliance with Nasdaq's continued listing requirements. Therefore, its common stock has been delisted from the Nasdaq National Market System. RECYCLING INDUSTRIES: Committee Taps Attorneys ---------------------------------------------- The Official Committee of Unsecured Creditors of Recycling Industries, Inc. and the affiliated debtors seek entry of an order authorizing the Committee to retain the law firm of Kramer Levin Naftalis & Frankel LLP as its lead counsel in the case. The United states Trustee appointed the following members of the Committee on March 9, 1999: CS First Boston (Committee Chair) Sunamerica Investments Corp. Bank of Montreal Dames & Moore Commercial metals Co. SERVICE MERCHANDISE: Owes $1.3 Billion -------------------------------------- Service Merchandise Co. owes $1.3 billion to more than 1,000 creditors, according to the company's Chapter 11 bankruptcy reorganization filing submitted this weekend. The retailer said a few weeks ago it would file for bankruptcy but needed time to arrange for financing during the reorganization. The company signed an agreement for $750 million last week. As part of the turnaround effort, more than 100 stores are being closed, including five in Pittsburgh. TAL WIRELESS: Plans To Liquidate -------------------------------- On October 6, 1997, TAL Wireless Networks, Inc. of Delaware filed a voluntary petition for protection under Chapter 11 of the Federal Bankruptcy Laws in the United States Bankruptcy Court, Northern District of California, San Jose Division pursuant to which the company's existing directors will continue in possession but subject to the supervision and orders of the Bankruptcy Court. The Company plans to liquidate assets and review the claims of its various creditors. It is unclear at this time whether there will be any funds available for distribution to shareholders. Once this information has been determined, the Company may file a Plan of Reorganization with the Bankruptcy Court." (States SEC; 03/30/99) THE PENN TRAFFIC: Lease Assignments and Assumptions ---------------------------------------------------- The Penn Traffic Company, et al., seeks to assume a lease assignment agreement and the related disposition of certain assets. The debtors seek court authorization to assume that certain lease agreement in respect of Penn Traffic's Bi-Lo Foods store located at the Pittston Plaza in Pittston, Pa. As consideration for its being able to assign the Pittston lease, Penn Traffic has agreed to purchase certain equipment that it presently leases from Boeing Capital Corporation for approximately $1.3 million and to sell to Acadia the related assets for an aggregate purchase price of $150,000. The premises are currently vacant and not required by the debtors in connection with their operations. The debtors seek to assume the lease termination agreement covering the premises located on the Green Ridge Plaza Premises in Scranton, Pennsylvania. As consideration for its being able to terminate the lease, the debtors agreed to sell certain assets to its Landlord, Acadia Realty Limited Partnership for an aggregate purchase price of $100,000. The debtors also seek to assume an unexpired lease covering the premises located at 1234 Abbott Road in Lackawanna, New York. Pursuant to the terms of a lease amendment, Penn Traffic will be entitled to a rent reduction of up to $81,000 per year. The debtors seek to terminate a certain lease agreement covering the premises located at 101-109 Sixth Avenue in Huntington, West Virginia. By entering into a sublease termination agreement, the debtors are seeking to expand the Big Bear Store adjacent to the terminated premises and located at 115 Sixth Avenue. Penn Traffic's expansion of the Store is important to its operations and the debtors believe that its planned expansion will result in improved store and sale profits. In addition, Penn Traffic believes that a new, larger store will strengthen its competitive position in the Huntington market. The debtors seek authority to assume a certain prepetition lease agreement with respect to the Granville Square Shopping Center store in Columbus Ohio. A hearing will be held on April 5, 1999 to consider the motion. The debtors' assumption of the lease is in the debtors' best judgment. The location will serve as the site for the debtors' new Big Bear supermarket of 54,600 square feet replacing a smaller supermarket located in the same shopping center. WESTBRIDGE CAPITAL: Emerges From Chapter 11 ------------------------------------------- Westbridge Capital Corp. has successfully emerged from the Chapter 11 reorganization proceedings which began in September 1998. All conditions to consummation of the Company's First Amended Plan of Reorganization, which was confirmed by the Bankruptcy Court on December 17, 1998, have been satisfied. The effective date of the Plan is March 24, 1999, and required closing activities are now complete. Stock in the new Company is expected to continue to trade on the OTC Bulletin Board until such time as the Company can secure a listing on a formal exchange. The Company is seeking alternative trading forums for the new Common Stock that will be distributed to holders of certain claims against and equity interests in the Company. In connection with the emergence from Chapter 11, the Company has changed its corporate name from Westbridge Capital Corp. to Ascent Assurance, Inc. (States SEC- 03/30/99) YES! ENTERTAINMENT: Memorandum Of Law of Infinity Investors ----------------------------------------------------------- Infinity Investors Limited, a creditor and party in interest in the chapter 11 case of YES! Entertainment Corporation, submits a memorandum of law in opposition to the Motion for Abstention, Stay of Adversary Proceeding, and Limited Relief from Stay filed by Machina, Inc. Infinity states that this motion by Machina is designed to frustrate and impede the orderly administration of the debtor's chapter 11 case. Machina is a disgruntled unsecured creditor of the debtor - the recipient of a prepetition arbitration award against the debtor for unpaid royalties of approximately $2 million. Infinity states that Machina seeks to elevate its award over every other claim and interest in the case. According to Machina the award gives Machina sole ownership of all of the debtor's assets. Infinity states that the purpose of the Adversary Proceeding is to put that claim to rest. Second, Machina argues that award may not be interpreted in bankruptcy court because only a California state court or an arbitration panel may undertake that task. However, it was Machina who first raised the award and the issues framed by the adversary proceeding before this court. Infinity states that neither mandatory nor permissive abstention over the adversary proceeding applies in this case. Finally Machina also seeks a stay of the adversary proceeding or relief from the automatic stay to pursue litigation in California over the award. However, Infinity states that a decisions on the adversary proceeding is critical tot he continued viability of the debtor's chapter 11 case. Without a finding by this court that the debtor owns the assets which secured the DIP financing, neither Infinity nor any other DIP lender will be willing to loan cash to fund the debtor's estates. Infinity requests that the court deny Machina's motion in its entirety. BOND PRICING: For Week of March 29, 1999 ---------------------------------------- By DLS Capital Partners, Inc. Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 11 - 13 (f) Amer Pad & Paper 13 '05 61 - 63 Amresco 9 7/8 '04 74 - 77 Asia Pulp & Paper 11 3/4 '05 72 - 74 Boston Chicken 7 3/4 '05 5 - 6 (f) Brunos 10 1/2 '05 22 - 23 (f) Cityscape 12 3/4 '04 12 - 14 (f) E & S Holdings 10 3/8 '06 32 - 35 Globalstar 11 1/4 '04 62 - 64 Geneva Steel 11 1/8 '01 21 - 23 Hechinger 9.45 '12 20 - 25 Iridium 14 '05 46 - 50 Loewen 7.20 '03 53 - 55 Penn Traffic 8 5/8 '03 47 - 50 Planet Hollywood 12 '05 26 - 28 (f) Service Merchandise 9 '04 25 - 26 (f) Sunbeam 0 '18 10 - 11 Trism 10 3/4 '00 48 - 50 Trump Castle 11 3/4 '05 80 - 82 Zenith 6 1/4 '11 28 - 30 (f) ********* 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. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *