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/raid1/www/Hosts/bankrupt/TCR_Public/990402.MBXT R O U B L E D C O M P A N Y R E P O R T E R Friday, April 2, 1999, Vol. 3, No. 64 Headlines AHERF: Creditors to Receive Less Than Expected AMERICAN RESOURCES: Announces Year-End Results FAVORITE BRANDS: Case Summary & 20 Largest Creditors HOMEPLACE: Files Reorganization Plan INTERNATIONAL WIRELESS: Plan Confirmed Over Objections IRIDIUM: Stock Prices Fall Due to Investors' Concerns KCS ENERGY: Reports Fourth Quarter and Full-Year Results KENNY ROGERS: Nathan's Completes Acquisition KIWI: Court Orders Federal Trustee To Take Helm LOEWEN: May Seek Bankruptcy Protection MED-CHEM: CML Agrees to Acquire Laboratory Assets MEDPARTNERS: Not in Default of Indentures MJ DESIGNS: Michaels Announces Acquisition of 16 Stores MOBILEMEDIA: TSR Wireless Makes Proposal ORANGE COUNTY: Court Allows Suit Against Merrill Lynch PARAGON TRADE: Notification of Late Filing REFAC TECHNOLOGY: Annual Meeting of Shareholders ROYAL OAK: Court Gives Two-Week Reprieve SMARTALK: AT&T buys Smartalk SOFTECH: Announces Q3 Fiscal 1999 Results THE PENN TRAFFIC COMPANY: Releases Fourth Quarter Results WILSHIRE: Announces Fourth Quarter and Year-End Results ZENITH: Reports $275 Million Loss in 1998 ********* AHERF: Creditors to Receive Less Than Expected ---------------------------------------------- Creditors in the Allegheny Health Education and Research Foundation (AHERF) bankruptcy will receive less than anyone had expected from the sale of eight Philadelphia hospitals, The Pittsburgh Post Gazette reported. An attorney representing AHERF's trustee said at a hearing yesterday that net proceeds amount to about $44.4 million, compared to the selling price of $345 million. At one time, attorneys for creditors had estimated that the net proceeds might be as high as $100 million, but the trustee's attorney said various expenses diminished the proceeds. The largest single expense was $50 million that creditors turned over to Drexel University so that it would manage the Philadelphia medical schools that were part of the AHERF bankruptcy. Creditors are still expected to get money other than that from the hospital sales proceeds. (ABI 01- Apr-99) AMERICAN RESOURCES: Announces Year-End Results ---------------------------------------------- American Resources Offshore, Inc. (ARO) (Nasdaq:GASS) announced results of operations for its fiscal year ended December 31, 1998. Financial highlights were as follows: ARO-owned production revenues increased 37% to $26.7 million as compared with $19.5 million for 1997. The increase was primarily attributable to wells acquired and drilled on acreage acquired from TECO Oil & Gas, Inc. ("TECO") during 1998. Gross revenues for 1998 decreased 5% to $36.1 million from the $38 million reported for 1997. Operating loss for the year was ($41.2 million) after having been ($322,000) for 1997; and net loss for 1998 was ($46.2 million) as compared with ($1.85 million) for 1997. As of December 31, 1998, ARO had current liabilities in excess of current assets (excluding the current portion of long-term debt) of approximately $6.3 million, was not in compliance with its primary credit facility and bridge loans with DNB Energy Assets, Inc., of approximately $48 million and $15.7 million, respectively, and was in default under its $18.5 million loan with TECO. This situation is primarily the result of: i) the lack of available outside funding to complete the scheduled refinancing of the interim loans and capital expenditures associated with the acquisition and development of properties from TECO; ii) the marked decline in oil and gas prices; iii) the more than 60% decline in ARO's two largest producing wells; and iv) trade payables incurred in association with the capital requirements for the development of additional wells. ARO's management has taken steps in an attempt to remedy its deficiencies, including, but not limited to, the reduction of administrative expenses and settlement of trade creditors for amounts less than face value; and ARO's officers and directors are diligently pursuing additional measures, including the sale of its Appalachian properties and alternatives for debt restructuring. FAVORITE BRANDS: Case Summary & 20 Largest Creditors ---------------------------------------------------- Debtor: Favorite Brands International Holding Corp. 2121 Waukegon Road Bannockburn, IL 60015 Type of business: Confections Company. Court: District of Delaware Case No.: 99-726 Filed: 03/30/99 Chapter: 11 Debtor's Counsel: David S. Kurtz Skadden, Arps, Slate, Meagher & Flom 333 W. Wacker Dr. Suite 2100 Chicago, Il 60606 Gregg M. Galardi Skadden, Arps, Slate, Meagher & Flom One Rodney Square Wilmington, Delaware 19801 Total Assets: $805,000,000 Total Liabilities: $699,000,000 No. of shares of common stock 1,000 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Oaktree Senior Note 35,000,000 Chase Securities Sr. Subordinated Note 31,500,000 Alliance Capital Management Senior Note 29,500,000 Capital Research Senior Note 21,000,000 NY Life Insurance Co. Sr Subordinated Note 20,000,000 Northwestern Mutual Life Senior Note 15,000,000 Northwestern Mutual Life Ins. Co. Sr. Subordinated Note 15,000,000 Prudential Mutual Funds Sr. Note 12,500,000 Oppenheimer Funds, Inc. Sr. Note 12,000,000 Metropolitan Life Private Placement Unit Sr. Subordinated Note 12,000,000 Equitable Life Assurance Society of the U.S. Sr. Sub Note 12,000,000 Southwest Securities Partners LP Sr Subordinated Note 10,500,000 Oak Hill Securities Fund LP Sr Subordinated Note 10,000,000 Delaware Investments Sr Note 10,000,000 Great American Life Insurance Co. Senior Subordinated Note 10,000,000 CIGNA Senior Note 8,000,000 TCW Leveraged Income Trust LP Senior Subordinated Note 7,500,000 Eaton Vance Management Senior Note 7,000,000 Merrill Lynch Assset Management Senior Note 7,000,000 Teachers Insurance Annuity Association Senior Note 7,000,000 HOMEPLACE: Files Reorganization Plan ------------------------------------ HomePlace Stores, Inc. announced that it filed its Joint Plan of Reorganization and Disclosure Statement with the Bankruptcy Court today, representing a key step toward its successful emergence from Chapter 11. The hearing on the adequacy of the Company's disclosure statement has been set for April 28, 1999. On March 17, 1999, HomePlace and Waccamaw Corporation announced an agreement under which the two chains will merge under the HomePlace. The merger agreement, which is supported by HomePlace's unsecured creditors' committee and the boards of directors of both companies, is subject to the approval of the Bankruptcy Court and will be submitted to a vote of HomePlace's creditors and equity holders. Upon approval of the Plan by the Court, the merger is expected to be completed by early June. "Since filing to reorganize under Chapter 11 in January 1998, the Company has dramatically increased merchandise productivity, increased operating efficiencies and significantly reduced overhead, all while generating substantial increases in EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring)," Mr. Pollock said." The Plan filed with the Court is premised upon the merger of Waccamaw and HomePlace, and the conversion of the existing prepetition unsecured claims against HomePlace into common stock of the new combined post-merger company. Under the terms of the Plan, Waccamaw's shareholder will initially receive 40 percent of the new common stock in the combined company. The Plan also provides a liquidity feature for holders of unsecured claims who elect to receive a cash distribution equal to 50 percent of their unsecured claims in lieu of their share of new common stock in the combined company, the liquidity for which is being provided by the additional purchase by Waccamaw's shareholder of 16.2 percent of the new common stock outstanding on the effective date for $25 million. As a result of the merger and the additional purchase of new common stock, Waccamaw's shareholder will own 56.2 percent of the stock of the combined company, with the balance of the new common stock remaining with the HomePlace estates. INTERNATIONAL WIRELESS: Plan Confirmed Over Objections ------------------------------------------------------ International Wireless Communications Inc.'s second amended joint plan of reorganization has been confirmed by the court, overcoming objections filed by the informal committee of minority shareholders and other minority shareholders, the Loeb Partners. The court ruled that the plan was confirmable despite the objections, which included charges that the plan involved a sale of assets at substantially less than their value and improperly released Vanguard Cellular Systems Inc. (VCELA) from liability. (The Daily Bankruptcy Review and ABI Copyright c April 1, 1999) IRIDIUM: Stock Prices Fall Due to Investors' Concerns ------------------------------------------------------ The Arizona Republic reports on March 31, 1999 that shares of Iridium LLC, which runs the first global satellite telephone network, fell as much as 19 percent Tuesday on investor concern that sales will miss forecasts and that the company could default on its bank debt. Washington-based Iridium fell 33/16, to 16 3/4 after slipping to an all-time low of 16 1/8 earlier in the day. The stock has fallen 74 percent in the past year, and its bonds have lost about half their value. The company, backed by a group led by Motorola Inc., went public at $20 in June 1997 and more than tripled within a year, boosted by the promise of offering phone service anywhere. Now, Iridium is plagued by problems: Its phones are in short supply, and it lacks a trained sales force. On Monday, Chief Financial Officer Roy Grant quit and Iridium's banks gave it 60 days to meet sale goals or risk a default on an $800 million credit line. Iridium's phones may be hard to sell even with a strong sales force. The brick-sized objects cost about $3,000, almost 10 times as much as standard cellular phones the size of a cigarette pack. The charges also are high, at $3 to $7 a minute. Iridium also is likely to run into strong competition. Globalstar is building a $3.3 billion system with the backing of Loral Space & Communications Ltd., which is expected to be running by September. The phone will cost $800 to $1,100 to buy, and 65 cents to $1.50 a minute to use. Also, London-based ICO Global Communications Ltd. is working on a $4.6 billion system scheduled to begin service in August 2000. The phone will cost $700 and the per-minute charges run from 50 cents to $3 a minute. Both Globalstar and ICO will offer phones that are smaller than Iridium's. KCS ENERGY: Reports Fourth Quarter and Full-Year Results -------------------------------------------------------- KCS Energy, Inc. (NYSE: KCS) announced financial and operating results for the fourth quarter and year ended December 31, 1998 Commenting on the Company's performance during the year, KCS Energy President and Chief Executive Officer James W. Christmas said, "Although total oil and gas production during 1998 increased 11% to 60.5 billion cubic feet equivalent (Bcfe) compared to 54.6 Bcfe in 1997, the combination of very low prevailing prices for natural gas and crude oil and disappointing performance in the Rocky Mountain Region resulted in KCS incurring significant losses." Net loss for the year ended December 31, 1998 was $296.5 million, or $10.08 per share, compared to a loss of $92.1 million, or $3.19 per share, in 1997. Ceiling test writedowns in 1998 were $268.5 million pretax ($174.5 million after tax) compared to $165.1 million pretax ($107.3 million after tax) in 1997. Earnings before interest, income taxes, depreciation, depletion and amortization (EBITDA) and cash flow from operations decreased to $83.7 million and $53.1 million, respectively, as significantly lower average realized commodity prices and higher interest costs more than offset the benefits of the 11% increase in production. As a result of the non-cash writedowns, the Company had negative stockholders' equity of $154.2 million as of December 31, 1998, and has violated certain covenants in its revolving credit agreements. While the default continues, the Company cannot borrow under the credit facilities. The lenders have not declared the principal balance due and payable, but have the right to do so at any time. The Company has requested a waiver of the defaults from the banks. However, there can be no assurance that a waiver will be granted or for what period of time. As a result, the Company's independent auditors have issued a modified report indicating there is substantial doubt with respect to the Company's ability to continue as a going concern. KENNY ROGERS: Nathan's Completes Acquisition -------------------------------------------- Nathan's Famous Inc. has completed the acquisition of all of Roasters Corp. and Roasters Franchise Corp.'s intellectual property rights, including trademarks, recipes and franchise agreements. As a result, the "Kenny Rogers Roasters" franchise system emerged from bankruptcy. Nathan's says it purchased the assets for $1.25 million according to the terms of a Plan of Reorganization which was approved during the Roasters Corp. proceedings in the U.S. Bankruptcy Court. Nathan's will own, operate and intends to further develop Kenny Rogers Roasters in the U.S. and internationally under the management of NF Roasters Corp., a wholly-owned subsidiary of Nathan's Famous. KIWI: Court Orders Federal Trustee To Take Helm ----------------------------------------------- A bankruptcy judge on Thursday ordered a federal trustee to take the helm of grounded Kiwi International Air Lines to assess if the tiny carrier should be liquidated or allowed to fight to fly again. Kiwi, awash in debt and without planes to fly or permission to fly passengers, consented, telling U.S. Bankruptcy Judge Rosemary Gambardella its efforts to reverse last month's emergency revocation of its license to fly have failed. Gambardella said the trustee must examine if it is worthwhile to keep the company alive until mid-April, when Kiwi can appeal the revocation by the Federal Aviation Administration to the National Transportation Safety Board. Some 500 workers could lose their jobs if the trustee, who was not immediately named, persuades the judge to pull the plug before the hearing. They represent less than half the 1,200-person workforce which owned a controlling share of Kiwi at its peak in the mid-'90s, when the Newark-based airline had 15 leased jets. The employees lost their ownership stake when a Baltimore surgeon rescued Kiwi from its first bankruptcy in July 1997, but the airline continued on a downward spiral, shedding workers, routes and planes. The FAA on March 24 stunned Kiwi by immediately revoking the license to fly, asserting the carrier was unable to fly its six-city schedule safely. The action came a day after the U.S. Department of Transportation threatened to revoke Kiwi's certificate in two weeks, charging that the airline did not have adequate managers or financing. That day, Kiwi filed for bankruptcy protection, offering a rescue plan based on a $3 million sale to Pan Am Airways. But shortly after Kiwi lost its flight certificate, Pan Am quit the deal. LOEWEN: May Seek Bankruptcy Protection -------------------------------------- Loewen Group Inc., Burnaby, British Columbia, is considering seeking bankruptcy protection in Canada or the United States, after reporting a record quarterly loss of $606.8 million for the fourth quarter and an announcement that its standing as a going concern is questionable, The Wall Street Journal reported. The funeral services concern also said it took a $302 million loss on its recent $193 million sale of certain U.S. funeral homes and cemeteries. The company is cutting its 14-person board of directors in half to streamline the decision- making process. Prior to the announcement, Standard & Poor's lowered the company's credit rating on about $1.8 billion of the company's debt, citing concerns about liquidity, poor operating performance and limited progress in selling its assets. (ABI 01-Apr-99) MED-CHEM: CML Agrees to Acquire Laboratory Assets ------------------------------------------------- The Canada Newswire reports on March 31, 1999 that Canadian Medical Laboratories Limited (TSE:CLC), a leading edge healthcare company, announced that through a recently incorporated, wholly-owned subsidiary it has agreed to purchase from PricewaterhouseCoopers Inc. substantially all of the laboratory assets of Med-Chem Health Care Limited and its subsidiary and related companies for a purchase price of approximately $105,000,000. CML will finance the total purchase price through a banking syndicate led by Canadian Imperial Bank of Commerce which has provided a committed offer to finance. The agreement to purchase the laboratory assets of Med-Chem is subject to court approval and regulatory approvals, including the Ministry of Health. Subject to the satisfaction of these conditions, the transaction is scheduled to close on April 15, 1999. CML expects that the acquisition of the Med-Chem assets would immediately add over $80 million to CML's annual revenue elevating CML to a one-third share of the Ontario laboratory testing market with consolidated revenues in excess of $150 million. The purchased assets include all of the licenses held by Med-Chem under the Laboratory and Specimen Collection Centre Licensing Act, all of the specimen collection centres and ECG clinics leased or occupied by Med-Chem (other than those excluded by the Purchaser at its option), subject to and including its "Corporate Cap" ($69,865,000 in 1997 - 1998). Specifically excluded from the purchase is the main laboratory of Med-Chem located at 8150 Sheppard Avenue East, Toronto. PricewaterhouseCoopers Inc. was appointed by the Ontario Court (General Division) as receiver of Med-Chem on February 1, 1999, and at the same time was appointed trustee in bankruptcy of Med-Chem Health Care Limited. MEDPARTNERS: Not in Default of Indentures ----------------------------------------- According to a PR Newswire report on March 31, 1999, MedPartners, Inc. (NYSE: MDM) responded to a report aired on CNBC about the Company. After consulting with its legal advisors, it is MedPartners' position that the Company is not in default of indentures pertaining to the Company's 7-3/8 percent Senior Notes due 2006, its 6-7/8 percent Senior Subordinated Notes due 2000, or its Threshold Appreciation Price Securities ("TAPS") as a result of the bankruptcy filing by the conservator appointed by the California Department of Corporations of one of the Company's subsidiaries, MedPartners Provider Network, Inc. ("the Plan"). MedPartners further stated that it has taken the position that the actions taken by the Department of Corporations are unwarranted and has brought suit in both the US Bankruptcy Court and the California State Superior Court challenging the Department's actions. MedPartners believes that it is inappropriate for anyone to make assumptions regarding any impact of the Department's actions when litigation challenging the validity of such actions has not yet been resolved. Mac Crawford, Chairman and CEO of MedPartners, said: "We are optimistic that we will be able to resolve our dispute with the Department of Corporations in a manner that will allow MedPartners to continue the orderly transition of its California PPM operations." MJ DESIGNS: Michaels Announces Acquisition of 16 Stores ------------------------------------------------------- Michaels Stores, Inc. (Nasdaq: MIKE) announced that its bid to acquire 16 leases for stores operated by MJDesigns, Inc., currently in Chapter 11 proceedings, was approved by the bankruptcy court on March 30, 1999. The Company closed on the acquisition today. Michael Rouleau, President and Chief Executive Officer, said, "We are very excited about this opportunity. These stores are predominantly located in Maryland and Virginia. This acquisition will quickly make us the dominant arts and crafts retailer in the area, including the very important Baltimore/Washington D.C. market. In one transaction we have attained what could have taken years to accomplish." Rouleau added, "We expect that these stores will re-open as Michaels stores this summer, and that at least some of them will be in addition to our current plan of sixty-two new Michaels stores. We anticipate that the incremental expense associated with opening these stores will have a slightly negative impact on this year's earnings." Michaels owns and operates 511 Michaels stores in 47 states, Canada, and Puerto Rico, and 79 Aaron Brothers stores, located primarily on the West Coast. MOBILEMEDIA: TSR Wireless Makes Proposal ---------------------------------------- TSR Wireless LLC confirmed that, at the invitation of certain creditors in the MobileMedia Corporation bankruptcy proceedings, it has submitted a proposal to acquire MobileMedia. TSR's proposal would combine TSR and MobileMedia, each a national paging carrier, into a new corporation owned by the current owners of TSR, including TSR's management, affiliates of TA Associates, Inc., Spectrum Equity Investors, and Telephone & Data Systems, Inc., and by unsecured creditors of MobileMedia. TSR is being advised in the transaction by Jefferies & Company, Inc. TSR has received favorable indications from Banc One Capital Markets, Inc. (formerly known as First Chicago Capital Markets, Inc.) and The First National Bank of Chicago, a BANK ONE company, with respect to a senior bank financing and from nationally recognized investment banking firms with respect to the senior and subordinated debt financings in connection with the proposed acquisition. TSR's proposal has been submitted pursuant to bankruptcy proceedings authorizing the submission of an alternative to the current plan. TSR's proposal is contingent upon, among other things, satisfactory completion of due diligence, receipt of its financing commitments, approvals of governmental authorities, acceptance by creditors of MobileMedia, and approval of the Bankruptcy Court. TSR Wireless LLC ("TSR Wireless"), founded in 1974, is a privately owned paging company. The company has about 250 retail locations nationwide under the TSR Wireless name. ORANGE COUNTY: Court Allows Suit Against Merrill Lynch ------------------------------------------------------ The state Supreme Court on Wednesday allowed 14 public agencies in an Orange County investment pool to sue Merrill Lynch & Co., the brokerage they accuse of helping to bankrupt the county in 1994. The court unanimously denied review of a lower-court ruling reinstating the suit by government agencies from around the state who turned down the county's offer to share in its settlement. The suit seeks nearly $80 million in damages, interest and legal fees. The suit accuses Merrill Lynch, the nation's largest brokerage, of taking part in former Orange County Treasurer Robert Citron's violations of his duties to taxpayers and investors. Citron's failed bets on interest rates led to $1.64 billion in losses for the county's investment pool, a savings bank for schools, cities and water and sewer districts. The losses forced the county to seek federal bankruptcy protection in December 1994. Citron pleaded guilty to falsifying records and violating state securities laws and served eight months in a prison work-release program. Merrill Lynch agreed last year to pay the county $437.1 million to settle a suit accusing the firm of giving bad advice that contributed to the financial collapse. The company later agreed to pay $2 million to settle Securities and Exchange Commission accusations that it was negligent in warning investors about the risk of buying the county bonds it underwrote. The county and nearly 200 members of the investment pool who agreed to take part in its suit have shared $781 million in settlements so far, including the money from Merrill Lynch. The agencies that declined were paid $24.5 million for dropping their suit against the county. Their suit against Merrill Lynch was dismissed in 1997 by Contra Costa County Superior Court Judge Walter Rogers, who ruled that only the county could sue on behalf of pool members. The 1st District Court of Appeal disagreed last December, ruling that pool members could try to prove the broker violated an independent legal duty to them. The agencies say Merrill Lynch fraudulently induced them to invest about $200 million. In seeking state Supreme Court review, Ronald L. Olson, a lawyer for Merrill Lynch, said the appellate ruling allowing a separate suit by members of a trust fund would open the door to multiple suits in the same case, with potentially conflicting results. PARAGON TRADE: Notification of Late Filing ------------------------------------------ Paragon Trade Brands Inc. notified the SEC of a late filing of its form 10K. Due to the conversion of its operating and accounting systems beginning in November 1998, the closing of the company's books for the fiscal year ended December 27, 1998 has been delayed, which has resulted in the company's inability to complete its financial statements in time to file the Report on Form 10-K on March 29, 1999. REFAC TECHNOLOGY: Annual Meeting of Shareholders ------------------------------------------------ REFAC TECHNOLOGY DEVELOPMENT CORPORATION announces that its annual meeting of Stockholders will be held at the Board of Governors' Room of the American Stock Exchange, 86 Trinity Place, New York, New York, on Monday, May 10, 1999, at 10:00 A.M., New York City time, for the following purposes: 1. To elect directors of the Corporation; 2. To approve an amendment to the Restated and Amended Certificate of Incorporation to change the Corporation's name to "REFAC." ROYAL OAK: Court Gives Two-Week Reprieve ---------------------------------------- An Ontario Court judge Thursday granted Royal Oak Mines Inc. two weeks to come up with a restructuring plan that satisfies the court and its creditors. Kirkland, Washington-based gold mining company Royal Oak has teetered on the edge of bankruptcy for the past several months as low gold prices, cost overruns at its rich Kemess mine in British Columbia and debt exceeding $320 million dragged down its cash flow. The court has given Royal Oak several extensions since it first granted the company protection from creditors on Feb. 15. But Judge James Farley made it clear Thursday that this was Royal Oak's last chance to come up with an acceptable plan and that if it is not successful it will be put into receivership. The Toronto Stock Exchange said Thursday it would remove Royal Oak from its benchmark TSE 300 Composite Index on April 16 because it is too thinly traded. That's the same date the company must return to court. Royal Oak will continue to trade on the TSE but the demotion from the TSE 300 Composite is another blow following its delisting from New York's American Stock Exchange two months ago. Royal Oak shares closed down C$0.02 at C$0.12 in high volume on Thursday after touching a 52-week low of C$0.09. It's highest level was set December 5, 1996, at C$5.25. Royal Oak owes C$185 million to Trilon Financial Corp., its major backer. Trilon's motion to push the company into immediate receivership Thursday was dismissed by the court. ($1=$1.50 Canadian) Royal Oak Mines Inc. has received notice from James H. Wood, Chief Financial Officer, of his resignation for personal reasons. Mr. Wood will terminate his employment with the Company on May 15, 1999. SMARTALK: AT&T buys Smartalk ---------------------------- AT&T says it has completed the bankruptcy-court approved purchase of substantially all of the assets of SmarTalk TeleServices, Inc. for approximately $145 million. AT&T says that nearly all of SmarTalk's approximately 170 employees will be offered employment. SmarTalk, a leading provider of prepaid cards and prepaid wireless services, has distribution agreements with the U.S. Postal Service and leading mass merchandisers, as well as retailers and supermarkets. Separately, AT&T also announced it has completed the sale of its Language Line Services over-the-phone interpretation business to an affiliate of Providence Equity Partners Inc. SOFTECH: Announces Q3 Fiscal 1999 Results ----------------------------------------- SofTech, Inc. (Nasdaq:SOFT) announced results for the third quarter ended February 28, 1999. Revenue was approximately $8.9 million as compared to $5.2 million for the same period in fiscal 1998, an increase of about 71%. Operating income for the third quarter of fiscal 1999 was $921,000 as compared to $384,000 for the same period in fiscal 1998, an increase of 140%. Net income for the third quarter of fiscal 1999 was $550,000, or $.07 per share. Net income for the third quarter of fiscal 1998 was $373,000, or $.06 per share. EBITDA (earnings before interest, taxes, depreciation and amortization) for the current quarter was approximately $1,795,000 as compared to $768,000 for the same period in fiscal 1998. EBITDA for the nine months ended February 28, 1999 was $2,357,000 as compared to $1,997,000 for the same period in fiscal 1998. "I am happy to report a solid quarter of performance following the problems we experienced in Q2," said Mark Sweetland, President and CEO of SofTech. The Company's Credit Agreement with its Bank included a financial covenant that required EBIT (earnings before interest and taxes) of $1, 250,000 for the current quarter. The actual performance for the quarter was approximately $300,000 lower than required and therefore the Company is in default on its Credit Agreement. SofTech has made all principal and interest payments on this debt on a timely basis and expects to continue to do so. The Company is in discussions with the Bank to negotiate a standstill agreement while this debt is refinanced. In that regard, the Company signed a proposal from an alternative lending source and is working to replace its current lender. The Company is optimistic that this new banking relationship can be in place prior to the end of its fiscal year (May 31). THE PENN TRAFFIC COMPANY: Releases Fourth Quarter Results ---------------------------------------------------------- The Penn Traffic Company (OTC:PNFT) announced that revenues for the fourth quarter ended January 30, 1999 were approximately $690.5 million compared to $750.6 million a year ago, a decrease of 8.0 percent. Revenues for the 52- week period ended January 30, 1999 were approximately $2.828 billion, a decrease of 6.0 percent from the 52-week period ended January 31, 1998. Same store sales decreased 3.8 percent in the fourth quarter. Cash flow (EBITDA) for the fourth quarter was $25.2 million, compared to $42.5 million in the prior year, a decrease of 40.8 percent. EBITDA for the 52-week period ended January 30, 1999 ("Fiscal 1999") was $99.5 million compared to $165.3 million in the prior year, a decrease of 39.8 percent. The Company reported a net loss for the fourth quarter (before consideration of the unusual items described below) of $22.4 million, or $2.11 per share, compared to a net loss of $11.2 million or $1.06 per share in the prior year. Net loss for the 52-week period ended January 30, 1999 (before consideration of unusual items) was approximately $103.9 million or $9.83 per share, compared to a net loss of $48.8 million or $4.61 per share in the prior year. The company is seeking to implement a pre-negotiated financial restructuring with the holders of its senior and subordinated notes. The restructuring will result in the substantial deleveraging of the Company by canceling its existing $1.13 billion of senior and subordinated notes and (i) distributing $100 million of new senior notes and 19,000,000 shares of new common stock to the holders of the existing senior notes and (ii) distributing 1,000,000 shares of new common stock and 6-year warrants to purchase 1,000,000 shares of new common stock having an exercise price of $18.30 per share to the holders of the existing senior subordinated notes. In addition, the restructuring provides that each 100 shares of the Company's existing common stock outstanding immediately prior to the restructuring will be converted into one share of new common stock for a total of approximately 110,000 shares of additional new common stock. The Company expects that its store rationalization program will lead to the sale of approximately 18 stores in Ohio and eastern Pennsylvania (17 of which have been sold to date) and the closing of an additional 38 unprofitable stores (30 of which have been closed to date). The Company estimates that the sale of these 18 stores will ultimately generate net proceeds of approximately $40 million. WILSHIRE: Announces Fourth Quarter and Year-End Results ------------------------------------------------------- Wilshire Real Estate Investment Trust Inc. (Nasdaq:WREI) a hybrid REIT specializing in diversified real estate investments, today reported a net loss of $10.5 million or $0.92 per share, for its fourth quarter ended December 31, 1998. The loss was primarily due to adverse market conditions, which resulted in write-downs of $5.3 million to securities and $8.8 million of provision for loan losses during the quarter. Excluding these items and excluding gains on sales of certain other securities and loans, net income for the quarter would have been $2.3 million, or $0.20 per share. For the year ended December 31, 1998 the company reported a net loss of $56.4 million, or $4.94 per share. The loss was primarily attributable to a total of $54.8 million of market valuation adjustments and $11.8 million of provisions for loan losses. Excluding these significant items and gains on the sale of certain other loans and securities totaling $2.3 million, net income for the year would have been $8.0 million or $0.70 per share. Following negotiations with an unofficial committee of holders of WFSG's 13% and 13% Series B Notes due 2004 ("the Notes"), WFSG agreed to a restructuring plan, which calls for the Notes to be converted to new common stock of WFSG. The plan, in the form of a prepackaged Chapter 11 bankruptcy filing, was subsequently approved by a vote of the note holders. The confirmation hearing is scheduled for April 12, 1999. ZENITH: Reports $275 Million Loss in 1998 ----------------------------------------- Zenith Electronics Corp. reported a 1998 year end loss of $275.5 million and said its bondholders have agreed to a financial restructuring plan. Zenith said the bondholders informed the company that they own or control over 50 percent of Zenith's outstanding 6- 1/4 percent convertible subordinated debentures due 2011. Zenith also said its largest stockholder and creditor, LG Electronics Inc., has advised the company that it has received necessary Korean regulatory approvals to provide Zenith with additional financing and to convert debt to equity as part of Zenith's planned reorganization. Zenith said it would include the terms of the bondholder agreement in documents currently being reviewed by the U.S. Securities and Exchange Commission (SEC). After the documents are reviewed, Zenith said it will begin to solicit bondholder votes for approval of a prepackaged plan of reorganization under Chapter 11. The agreement provides that bondholders will receive $50 million of new 8.19 percent debentures maturing in November 2009, after Zenith is reorganized. The company will not make principal and interest payments due on April 1, 1999, under the existing debentures. Under an agreement with Zenith, LG Electronics has agreed to exchange $200 million of its claims for 100 percent of the equity of the reorganized Zenith. In another development, Zenith said secured on March 31 a commitment from Citicorp North America Inc. for $150 million DIP financing to cover the period during the restructuring. It also secured a new three-year, $150 million credit facility to cover the period following completion of the company's restructuring. Zenith reported a 1998 net loss of $275.5 million, or $4.08 per share, compared with a 1997 net loss of $299.4 million, or $4.49 per share. Results for 1998 include $202.3 million of restructuring charges, and 1997 results include $63.7 million of asset impairment charges. Total sales were $985 million in 1998 and $1.173 billion in 1997, reflecting planned sales reductions in lower-margin color televisions and changes in VCR distribution. ********* 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. 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