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/raid1/www/Hosts/bankrupt/TCR_Public/990601.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, June 1, 1999, Vol. 3, No. 104 Headlines AAFG: Vizzielo Rejoins as President- Vows Reorganization Soon AAMES FINANCIAL: Cary Thompson, From CEO To Vice-Chairman AHSA STEEL: Suspends Payments and Stock Listing ALLIANCE ENTERTAINMENT: Hearing Set For Amendment To DIP ALTA GOLD CO: Debtor-in-Possession Under Chapter 11 Bankruptcy ASCENT ASSURANCE: Announces Common Stock Trading on the OTC CELLPRO INC: Order Confirming Plan CITYSCAPE FINANCIAL: Downsizing & Cutbacks In Wake of Bankruptcy CONTINENTAL RESOURCES: Last Year A First Qtr. Gain, This Year A Loss EDISON BROS: To Sell Puerto Rico Footwear Operations FPA MEDICAL: Confirms Plan of Reorganization Through Transaction FPA MEDICAL: Humana Acquires Operations of 50 FPA Medical Centers GDE: Creditors Snub Goldman Proposal GENEVA STEEL: Creditors' Committee Supports Exclusivity Extension GOLDEN BOOKS: Order Approves Disclosure Statement IMS: Trustee Files Controversial Settlement Agreement IRIDIUM: Seeks Restructuring Rather Than Bankruptcy JPE INC: ASC Holdings Announces Acquisition of JPE Inc. JUDGE GROUP: Wants Out From Under Unprofitable IMS LIVENT(U.S.)INC: Creditors' Meeting Adjourned LOGAN GENERAL: Expected To Pay Debts MEDPARTNERS: Announces Extension of Interim Settlement Agreement MEDPARTNERS: To Contest Suit Filed By 'Taps' Holders MONTGOMERY WARD: Extension of DIP Through March 2000 PARAGON TRADE: KC's Findings in P&G Settlement PENN TRAFFIC: Bi-Lo's Parent Says it Will Invest $100 Million RANKIN AUTOMOTIVE: Announces Year End Earnings SERVICE MERCHANDISE: Court Approves Employee Retention Plan SERVICE MERCHANDISE: Statements of Operations TALK AMERICA: Allowed to Bring Consultant To Bankruptcy Hearing TELEGROUP: PRIMUS to Acquire Business and Assets of Telegroup THE COSMETIC CENTER: Closes On $50 Million Credit Facility UNITED COMPANIES: Shareholders Committee Wants Financial Info WILLCOX & GIBBS: Bankruptcy Filing On 4/20/99 Slows Reporting WSR CORP: Seeks Extension To Assume/Reject Leases ********* AAFG: Vizzielo Rejoins as President- Vows Reorganization Soon -------------------------------------------------------------- All American Food Group, Inc. (OTC Bulletin Board: AAFGQ) announced today that Michael Vizziello has returned to the Company as President and member of the Board of Directors. He joins Tom Lisker, who remains on the Board, and Andrew Thorburn, who remains as Chairman. Vizziello's immediate responsibility is to present to the court the Company's reorganization plan, which should take place within the next 30-45 days. He will also accelerate the completion of the launch of thegourmetpage.com, the Company's gourmet food website. In addition to addressing the design, functionality, and promotion of the site, he will utilize his contacts in the food industry to add a wide range of additional gourmet products. Under his direction, the Company will also be developing non- traditional food distribution methodologies and actively seeking acquisitions. The Company's hearing in bankruptcy court, which includes the motion for the issuance of additional shares to help refinance its reorganization, has been rescheduled for June 7. No further delays are anticipated. AAMES FINANCIAL: Cary Thompson, From CEO To Vice-Chairman --------------------------------------------------------- On May 12, 1999, Aames Financial Corporation announced that as a part of a leadership transition plan approved by its board of directors, chief executive Cary Thompson had been appointed vice chairman and director Mani A. Sadeghi had been named interim Chief Executive Officer of the company. Mr. Sadeghi is assuming the duties of chief executive during an interim period while a special committee of the board completes a search for a new chief executive of Aames. Aames Financial Corporation is a leading home equity lender, and currently operates 80 retail Aames Home Loan offices serving 32 states, including the District of Columbia. Its broker division operates 44 branches serving 46 states, including the District of Columbia. Retail Direct operates 21 offices serving 14 states. AHSA STEEL: Suspends Payments and Stock Listing ------------------------------------------------ InfoLatina reports on May 27, 1999 that Altos Hornos de Mexico (AHMSA), the largest steel group in the country, obtained legal suspension of payments yesterday, following the chapter 11 move by Grupo Acerero del Norte, the main shareholder in AHMSA earlier this week. With the announcement the trading of AHMSA stock was suspended on New York and Mexican exchanges. ALLIANCE ENTERTAINMENT: Hearing Set For Amendment To DIP -------------------------------------------------------- A hearing to consider the motion of Concord Records, Inc. seeking an order authorizing an amendment to Concord's DIP facility will be held on June 2, 1999 at 10:00 AM. ALTA GOLD CO: Debtor-in-Possession Under Chapter 11 Bankruptcy --------------------------------------------------------------- On April 14, 1999, Alta Gold Co. filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in order to facilitate the reorganization of its business and the restructuring of its long-term debt and other liabilities. The petition was filed in the United States Bankruptcy Court for the District of Nevada. On the filing date, the Bankruptcy Court assumed jurisdiction over the assets of the company. The company is acting as debtor-in-possession on behalf of its bankruptcy estate, and is authorized as such to operate its business subject to Bankruptcy Court supervision. The credit facility under which the company has been accessing capital contains certain financial covenants including a requirement for minimum net worth, minimum current ratio, maximum leverage ratio, minimum EBITDA to interest expense, minimum EBITDA to interest expense and principal and maximum allowable capital expenditures. As of March 31, 1999, Alta Gold was not in compliance with the minimum current ratio or the maximum leverage ratio. In addition, the company's Chapter 11 petition on April 14, 1999, triggered an event of default under all of the company's indebtedness. As of last week, none of the company's creditors had accelerated the maturities of any of the outstanding indebtedness. In the first quarter of 1999, the company had $6,672,000 in revenue from the sale of 19,700 ounces of gold at an average price of $339/oz, as compared to $3,624,000 in revenue in the first quarter of 1998 from the sale of 10,800 ounces of gold at an average price of $336/oz. Net loss experienced in the first quarter of 1999 was $30,000. In 1998, first quarter, the company had a gain of $366,000. As of March 31, 1999, the company's working capital had deteriorated by $1,452,000, from a working capital deficit of $1,573,000 as of December 31, 1998, to a working capital deficit of $3,025,000 as of March 31,1999. For this reason, as well as others, the company filed the voluntary petition of bankruptcy under Chapter 11. The pending Chapter 11 proceedings may affect the company's ability to maintain its present arrangements with suppliers that are vital to the company's continued operations. The Chapter 11 petition may also affect the company's ability to successfully negotiate future arrangements with suppliers. No assurance can be given that suppliers of goods and services vital to the company's mining operation will continue to provide such goods and services to the company as a result of the company's voluntary petition for relief under the bankruptcy laws. The refusal of any irreplaceable key supplier of such goods or services could force the company to cease operations at any one or both of its operating mines, and would have a material adverse effect on the financial condition and results of operations of the company. Alta Gold's emergence from Chapter 11 is dependent upon submittal and approval of a plan of reorganization. Unless it receives an extension, the Company has the exclusive right until August 12, 1999 to file its plan of reorganization with the Bankruptcy Court. No assurance can be given that the company's plan of reorganization will be approved, or if approved that it will be successful. ASCENT ASSURANCE: Announces Common Stock Trading on the OTC ----------------------------------------------------------- Ascent Assurance, Inc. (OTC Bulletin Board: AASR) announced that initially two securities firms have been approved by the NASD to trade its common stock on the OTC Bulletin Board under the ticker symbol "AASR" beginning today. The Company expects that additional market makers will be approved in the near future, which should expand the market and increase liquidity for the Company's common stock. As previously announced, Ascent Assurance, Inc. emerged from Chapter 11 bankruptcy proceedings on March 24, 1999 and adopted fresh start accounting effective March 31, 1999. With 6,500,000 common shares outstanding at March 31, 1999, the Company's basic book value per common share was $4.17 and diluted book value per common share was $3.94. The Company underwrites, through its insurance subsidiaries, and markets, through a controlled general agency, individual medical expense and supplemental health insurance products. CELLPRO INC: Order Confirming Plan ---------------------------------- On May 21, 1999, the United States Bankruptcy Court for the Western District of Washington entered an order confirming the plan of reorganization of CellPro Inc. CITYSCAPE FINANCIAL: Downsizing & Cutbacks In Wake of Bankruptcy ---------------------------------------------------------------- Cityscape Financial Corp. is a consumer finance company which, through its wholly-owned subsidiary Cityscape Corp., in the business of selling and servicing mortgage loans secured primarily by one-to- four family residences. CSC is licensed or registered to do business in 42 states and the District of Columbia. Until the company suspended indefinitely such business in November 1998, it also had been in the business of originating and purchasing mortgage loans. The majority of the company's loans were made to owners of single family residences who use the loan proceeds for such purposes as debt consolidation and financing of home improvements and educational expenditures, among others. Cityscape is currently operating under the protection of chapter 11 of title 11 of the United States Code. On November 17, 1998, Cityscape decided to suspend indefinitely all of its loan origination and purchase activities. The company notified its brokers that it had ceased funding mortgage loans, other than loans that were in its origination pipeline for which it had issued commitments. The company's decision was due to its determination, following discussions with potential lenders regarding post-organization loan warehouse financing, that adequate sources of such financing were not available. With no adequate sources of such financing, Cityscape determined that it was unable to continue to originate and purchase mortgage loans. On or about December 18, 1998, the company funded the last of the mortgage loans for which it had issued commitments as of November 17, 1998. Cityscape, operating as Debtor-in-Possession since October 6, 1998, has filed an amended plan or reorganization with the Court. If confirmed the amended plan would provide that: (i) administrative claims, priority tax claims, bank claims, other secured claims and priority claims will be paid in full; (ii) holders of notes would receive in exchange for all of their claims, in the aggregate 92.48% of the new common stock of the reorganized company (or 97.91% if the holders of the Convertible Debentures vote to reject the plan); (iii) holders of the Convertible Debentures would receive in exchange for all of their claims, in the aggregate, 5.43% of the new common stock of the reorganized company (or 0% if the holders of the Convertible Debentures vote to reject the plan); (iv) holders of general unsecured claims would receive 2.09% of the new common stock of the reorganized company; and (v) existing Common Stock, Preferred Stock and warrants of the company would be extinguished and holders thereof would receive no distributions under the amended plan. The Bankruptcy Court has scheduled a hearing to consider confirmation of the amended plan for June 9, 1999. There can be no assurance: (i) as to when, if ever, the company's loan origination and purchase activities will resume; (ii) that the terms of the amended plan will not change; (iii) that the Bankruptcy Court will confirm the amended plan on June 9, 1999, if at all; or (iv) that such plan will be consummated (even if it is confirmed). During 1998, the company significantly downsized its operations due to negative operating results, liquidity constraints and, the reorganization proceedings and indefinite suspension of its loan origination and purchase activities. In the US, the Company closed its branch operations in Georgia, Illinois, Virginia, California and New York and significantly reduced its number of employees, including servicing and corporate employees. As of May 5, 1999, the company's workforce totaled 47 employees, all of whom were full-time employees. The first quarter of 1999 saw a net income for the company of $3,350,946 on revenues of $9,266,001. During the same quarter of 1998 the company experienced a net loss of $51,182,399 on negative gross income of ($7,190,799). CONTINENTAL RESOURCES: Last Year A First Qtr. Gain, This Year A Loss -------------------------------------------------------------------- Continental Resources has reported first quarter 1999 revenues at $105,031. The same period in 1998 saw revenues of $24,189. However, revenues, excluding crude oil marketing, have decreased $9.3 million, or 38%, to $14.9 million during the three months ended March 31, 1999 from $24.2 million during the comparable period in 1998. The company indicates the decrease is attributable to lower oil prices and lower oil and gas production. For the three months ended March 31, 1999 net income was a loss of $3.0 million, a decrease in net income of $4.7 million, or 276%, from $1.7 million of income for the comparable period in 1998. There was no material change in the company's revenues from Oil and Gas Service Operations between the quarter ended March 31, 1999 and the quarter ended March 31, 1998. EDISON BROS: To Sell Puerto Rico Footwear Operations ----------------------------------------------------- Edison Brothers Stores, which filed for Chapter 11 bankruptcy protection on March 9, announced today that it has signed an agreement to sell its footwear operations in Puerto Rico to Novus, Inc. for $7.2 million. The planned sale of the Puerto Rico stores means that Edison has now reached agreements to sell most of its retail operations and liquidate its remaining chains. The agreement with Novus involves the sale of 17 Bakers and nine Wild Pair locations in Puerto Rico, as well as the inventory in those stores. Novus currently operates 32 footwear stores in Puerto Rico, including 11 under the Novus name and the rest under eight different divisions. Subject to bankruptcy court approval, Edison expects the sale to Novus will be finalized in June. Edison has also filed for court approval to retain Keen Realty Consultants Inc. to coordinate the sale of lease rights that Edison holds on approximately 500 retail locations that the company does not expect to sell to buyers of its chains. The leases include stores in all of Edison's chains, but the majority of the locations involved are currently occupied by Riggings and Wild Pair stores, both of which are now liquidating. The bankruptcy court has approved the sale of Edison's Repp Ltd. big and tall menswear stores and Repp-by-Mail catalog division to J. Baker, and is expected to rule in June on agreements for the sale of most of its Bakers, 5-7-9, JW/Jeans West and Coda chains to various buyers. Gruppo Levey handled the Repp sale, while Houlihan Lokey Howard and Zukin managed the sales of the other chains. Edison Brothers Stores Inc. operates Bakers and Wild Pair footwear stores; 5-7-9 junior apparel stores; Riggings, JW, Coda and Repp Ltd. Big & Tall menswear stores; and Repp By Mail men's catalog. The company has nearly 1,500 stores in the United States, Canada, Puerto Rico and the Virgin Islands. FPA MEDICAL: Confirms Plan of Reorganization Through Transaction ---------------------------------------------------------------- FPA Medical Management, Inc. (OTC Bulletin Board: FPAMQ) said today that its Modified Second Amended Joint Plan of Reorganization was confirmed by the U.S. Bankruptcy Court for the District of Delaware following four days of hearings that concluded on May 26, 1999. The Plan, which provides for the sale of substantially all of the Company's operations in transactions valued at approximately $108.2 million, garnered the support of FPA's major creditor constituencies, including the debtor-in- possession (DIP) and prepetition lenders, the Debtors' Official Committee of Unsecured Creditors and the Company's major payors, Humana, Prudential and Pacificare. Consummation of the Plan is expected to occur in June 1999. The Company's Plan of Reorganization includes and affects FPA and 98 of its affiliated debtor entities. Two of the Debtors' affiliates, Gotham Mid-Town Management, Inc. and Virginia Medical Associates, P.C., were excluded from the Plan of Reorganization and continue as Chapter 11 debtors-in-possession pending further order of the Bankruptcy Court. Under the Company's Plan of Reorganization, the operations of Sterling Healthcare Group, Inc., a wholly-owned FPA subsidiary, will be acquired by a newly formed subsidiary of Coastal Physician Group, Inc. (OTC Bulletin Board: ERDR). Sterling provides emergency medicine practice management services to approximately 124 hospitals primarily located in the southeastern United States. Humana Inc., which is currently the Company's largest payor, will purchase FPA's clinical operations in Kansas City, San Antonio and the State of Florida. These operations consist of 50 clinics serving approximately 130,000 members. Humana acquires the management of approximately 60,000 global risk lives at 39 clinics located throughout the state of Florida, 54,000 lives in 7 Kansas City clinics, and 11,000 lives in San Antonio's 4 clinics. FPA's clinical operations in Charlotte, North Carolina and Atlanta will be acquired by Stoneybrook Capital, an entity owned by Steven M. Scott, M.D., Chairman and Chief Executive Officer of Coastal. Approximately 75,000 members are served through Meridian Medical Group clinics in Atlanta and Carolina Health Care Group clinics in Charlotte. "We believe the reorganization transaction provides the best possible resolution for all of FPA's constituencies, consistent with our obligation to maximize creditors' recoveries," said Dr. Stephen J. Dresnick, Chairman and Chief Executive of FPA. "It further provides for the preservation of the Sterling and clinical operations, the continuation of services to our patients, and the opportunity for our providers and employees to continue with the new buyers." In yesterday's ruling, the Court authorized the Debtors, Humana and Stoneybrook to close the sale of the managed care businesses on June 1, 1999, prior to the consummation of the Plan of Reorganization. As part of the agreement reached yesterday, administrative costs incurred on and after June 1, 1999 are the responsibility of the purchasers. In addition to the sales transactions, the Plan provides for the establishment and funding of a Creditors Trust for the benefit of unsecured creditors. Under the terms of the Plan, certain assets and claims of the FPA debtors have been assigned to the Creditors Trust. The Trust is administered by the Trustee and three-member Advisory Board selected by the Unsecured Creditors Committee. B.N. Bahadur of BBK & Associates located in Southfield, Michigan has been appointed as Trustee of the Creditors Trust. On the Effective Date, 98 of FPA's subsidiaries and affiliates will be merged into Reorganized FPA which will be owned by the repetition lenders who will receive 100% of the new common stock to be issued under the Plan of Reorganization. Assets remaining after the sales to Coastal, Stoneybrook and Humana, and after distributions to the Creditors Trust, will remain in Reorganized FPA, which will be operated by James A. Lebovitz, FPA's current Executive Vice President and General Counsel, who has been named Plan Administrator under the Plan of Reorganization. The Company's DIP lenders will be paid in full and the prepetition lenders will receive a $4,000,000 initial distribution on the Effective Date. In addition to the initial distribution, the prepetition lenders will receive supplemental funds collected by the FPA Plan Administrator after payment of allowed administrative expenses of the reorganization. FPA Medical Management, Inc. and various of its affiliates and subsidiaries filed petitions under Chapter 11 in the Bankruptcy Court in Wilmington on July 19, 1998 and various dates thereafter through August 7, 1998. FPA Medical Management, Inc. is a national physician practice management organization that organizes and manages primary care physician networks to contract with HMOs and other prepaid insurance plans to provide physician and related health care services and provides contract management support services to hospital emergency departments. FPA MEDICAL: Humana Acquires Operations of 50 FPA Medical Centers ----------------------------------------------------------------- Humana Inc. (NYSE: HUM) has reached an agreement with FPA Medical Management Inc., its lenders and a federal bankruptcy court under which Humana will acquire the operations of 50 medical centers from FPA for $13.5 million. The agreement is effective June 1. The medical centers serve approximately 121,000 Humana members in Kansas City, San Antonio, South Florida, Orlando, Tampa and Jacksonville. Humana members will be able to continue seeing the same medical center physicians and should experience no disruption in continuity of care as a result of the agreement. Humana described the action as a necessary transitional step because of FPA's current financial circumstances. Humana is evaluating the financial impact of the transaction including the possibility of transferring responsibility for some or all of the centers to different provider groups. "Humana's members are best served at this time by Humana stepping in to assume responsibility for the centers," said Gregory H. Wolf, Humana's president and chief executive officer. "Our priority is maintaining continuity of high quality, cost effective health care for our members." Humana Inc., headquartered in Louisville, Ky., is one of the nation's largest publicly traded managed health care companies with approximately 6.1 million medical members located primarily in 15 states and Puerto Rico. Humana offers coordinated health care through a variety of plans -- health maintenance organizations, preferred provider organizations, point-of-service plans and administrative services products -- to employer groups, government- sponsored plans and individuals. GDE: Creditors Snub Goldman Proposal ------------------------------------ South China Morning Post reports on May 28, 1999 that the financial creditors steering committee of Guangdong Enterprises (Holdings) (GDE) is considering submitting a counter- proposal to bail out the insolvent Hong Kong investment arm of the Guangdong provincial government. The committee agreed at a meeting yesterday it could accept neither the proposal nor any haircut - a cut in the loan principal repayment. The meeting was held two days after the announcement of a bailout plan, prepared by Guangdong government's financial adviser Goldman Sachs. The package provided for the restructuring of liabilities worth about US$5.59 billion of GDE and its 40 per cent-owned Guangdong Investment group through a mix of new notes, preference shares, bonds and rights shares. Some estimates put the effective haircut at between 27 and 41 per cent under the proposal, while the nominal value of the debts remains unchanged. Sources said the committee mainly discussed matters of principle and had not gone into details of the proposal at the meeting. Due to disagreement over the pain-sharing concept behind the proposal, the committee considered it was not time to discuss the proposal or ways to fine-tune it. The committee felt creditor banks would be forced into a straitjacket if they looked merely at the proposal and not beyond. The committee has already sent a letter to all creditor banks to solicit opinions on the bailout plan. A GDE source said it would be a waste of time for creditor banks to put forward a different framework for negotiation. The equal pain- sharing concept and the framework of the rescue package would not change, he said. Nor would there be more assets to be injected into the GDE group. Shares in GDE's listed food arm Guangnan (Holdings) extended their sharp fall for the second straight day yesterday. They tumbled 25.92 per cent to 40 HK cents a share on concern about its debt-servicing ability and growth prospects. Guangnan yesterday announced a net loss of HK$3.47 billion for last year after a $3.52 billion exceptional charge, mainly for bad and doubtful debts. The result compared with a $301.83 million net profit for Guangnan in the previous year. Loss per share was $4.31, against a previous earnings per share of 41 cents. No dividend will be paid. GENEVA STEEL: Creditors' Committee Supports Exclusivity Extension ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Geneva Steel Company filed a statement supporting the debtor's motion for an order extending exclusivity. The Committee states that the debtor is seeking the cooperation of its creditors with respect to a plan, that cause exists to extend the exclusivity periods because this is a large and complex case. More important, the Committee asserts that an extension of exclusivity is necessary to keep the parties' attention focused on the structural business problems which contributed to Geneva's bankruptcy. The member s of the Committee hold approximately $15 million in mature unsecured claims and $250 million in contingent unsecured claims against the debtor. The Committee is interested in Geneva's long term viability and pursuing that interest protects the best interests of the debtor's estate and unsecured creditors. The Committee also points out that the economic factors which precipitated this case were ultimately attributable to world events beyond Geneva's control. "The stagnation of certain foreign economies takes the blame for a cataclysimic collaptse of domestic steel prices." Although the Committee is quick to point out that it was more than bad market conditions, not all steel producers went bankrupt and that the debtors also suffers from structural business problems which the Committee believes can be solved. Because it believes in Geneva's turnaround, the Committee supports a modest extension of exclusivity. GOLDEN BOOKS: Order Approves Disclosure Statement ------------------------------------------------- On May 13, 1999, the US Bankruptcy Court for the Southern District of New York entered an order approving the amended disclosure statement of Golden Books Family Entertainment, Inc., et al., authorizing solicitation of votes, establishing a confirmation hearing date of July 13, 1999, establishing notice requirements regarding the confirmation hearing, and related relief. The confirmation hearing will take place at 2:00 PM on July 13, 1999 before the Honorable Tina L. Brozman, Chief US Bankruptcy Judge, at the US Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, NY. IMS: Trustee Files Controversial Settlement Agreement ---------------------------------------------------- ILDF, Inc. announced that the Federal Bankruptcy Court appointed Trustee Mr. Randolph Osherow has filed a Settlement Agreement with the Court to approve the sale of IMS (OTC Bulletin Board: IMESQ) Patent #5,574,927 to TechSearch, LLC for consideration that will redirect all future royalties and rights of the Patent and revenue to a creditor of the IMS Estate and abandon future rights to the Patent for any other creditors and shareholders. The Patent is the subject of an ongoing $500 million patent infringement suit filed against Intel Corporation (Nasdaq: INTC). According to the Settlement Agreement, IPIQ, Inc. (a creditor of the IMS Estate) will be granted compensation over and above its claim amount. The Agreement was negotiated with IPIQ to the prejudice of all other creditors and the Estate of IMS. Mr. Randolph Osherow will be paid immediately upon the Effective Date of the Agreement the sum of $7, 000.00. Mr. Osherow commented that the Patent was "definitely transferred during the preference period just weeks prior to its filing" (IMS Chapter 11). When asked if his office was seeking to assert jurisdiction and have the Patent brought back to the IMS Estate Mr. Osherow replied, "no." When asked why his office had not sought an avoidance action and preference claims on behalf of the IMS Estate, Mr. Osherow responded by stating that "it is something to look at. We haven't decided yet." He further stated that when he got this case there was no money in the Company's bank accounts for him to be paid and that he was already out of pocket approximately $5,000. In addition to the IMS Patent, Mr. Osherow confirmed that there existed a large sum of money due back to the Estate and that it could well be in excess of $1 million. Mr. Osherow reasoned that it would take too much time for him to collect the money for the Estate in light of the amount of debt owed to IPIQ. He further stated that even though the IPIQ claim of $3 million could be overstated by $1 million, he wasn't interested in correcting the amount of the claim or seeking to recoup an additional $1 million due to the Estate from preference payments made prior to the bankruptcy filing. In documents filed with the Court*, Mr. Osherow stated that the Company (IMS) did not receive fair compensation for the transfer, "Shortly before IMS' *bankruptcy, TechSearch bought a Patent from IMS for less than reasonably equivalent value." Other documents on file with the Court state that the IMS Patent was transferred fraudulently without board and shareholder approval. The transfer took place between Mr. Lee Hovel, the then President of IMS, and his longtime friend and former colleague Mr. Anthony Brown of TechSearch, LLC. According to the Settlement Agreement, IPIQ stated that the purchase of the Patent by TechSearch may be a voidable transfer under 11 U.S.C. -- 548. Ms. Valery Scott, a Director of ILDF, commented that Mr. Osherow's stated reason for failing to take any action and uphold the office of Trustee, with regard to the Patent of IMS and collection of all monies due to the Estate, is not acceptable, "The shareholders and creditors of IMS have been appalled at this attitude for good reason. Mr. Osherow's office never asked the Court to order the Patent or the money back to the Estate. The Judge has the authority to do so. These are basic transactions and do not require lengthy, costly litigation. The determination of the Patent transfer during the preference period and monies due has been established by the Trustee. His unwillingness to act on it is remarkable. To negotiate a deal that redirects all future rights and revenue from the Patent of IMS to one creditor and compensates the Trustee is clearly unfair to all other creditors and shareholders of IMS." "Perhaps we need to look more closely at the method of payment for court appointed Trustees. This type of incentive for payment of services can undermine the obligation and duties of the Office," Scott added. The shareholders and certain creditors of IMS have established ILDF, Inc. and maintained a web site at ildf.com for the past ten months in order to publicize the legal procedures, motions, and testimony connected to this case. The IMS Legal Defense Fund, Inc. (ILDF) was formed and is operated in support of the goal of fair and just treatment of the shareholders and creditors of IMS, Inc. Extensive information about the IMS Bankruptcy and the subsequent Patent infringement case may be found at http://www.ildf.com. IRIDIUM: Seeks Restructuring Rather Than Bankruptcy --------------------------------------------------- Iridium LLC, a satellite telecommunications company, said yesterday that its goal is a restructuring, rather than bankruptcy, and that it continues active negotiations with creditors and vendors, Reuters reported. Two weeks ago the company hired a firm to advise it on restructuring its debt and reducing its financing costs, and CFO Leo Mondale said that "We believe our strategic partners will support us as we work to readjust our capital structure." Iridium had 10,294 customers at the end of the first quarter, but management is not happy with the rate of customer growth; management does believe, however, that it has identified the problems. Mondale said the technical problems with phone handsets made by Kyocera Corp. have been mostly resolved, and large-scale production of the phones is expected to begin soon. He also said problems with the Motorola- produced phones have been resolved and those phones are now available widely. (ABI 28-May-99) JPE INC: ASC Holdings Announces Acquisition of JPE Inc. ------------------------------------------------------- ASC Holdings LLC, and Kojaian Holdings, LLC have acquired controlling interest in JPE, Inc. (OTC BULLETIN BOARD: JPEI), a Tier I supplier of automotive exterior trim packages and aftermarket heavy truck parts. ASC Holdings and Kojaian Holdings each acquired 47.5% of JPE Inc. In addition, the former lenders of JPE, Inc. acquired less than 1% of JPE, Inc., which remains a public company, with the balance of the ownership publicly traded. The former lenders of JPE, Inc. and the shareholders of JPE, Inc. (other than ASC Holdings and Kojaian Holdings) as of June 11, 1999 will have the right to acquire (in the aggregate) approximately an additional 15% of JPE, Inc. JPE will do business as ASCET, which stands for ASC Exterior Technologies. David Treadwell, President of ASC Holdings, will serve as Chairman of ASCET; and Mr. Treadwell, Heinz Prechter, Mike Kojaian and C. Michael Kojaian will serve as the Board of Directors. Richard Chrysler continues to serve as President and CEO of ASCET. ASC Holdings LLC is affiliated with ASC Incorporated, a long time supplier of specialty vehicles and open-air systems to the global automotive market. ASC Incorporated is also affiliated with Trim Systems, Inc., a market leader of heavy truck interior trim. ASCET consists of three operating subsidiaries: Plastic Trim, Inc. (PTI) and Starboard Industries, Inc., both exterior trim suppliers which have emerged from bankruptcy as a result of the ASC Holdings and Kojaian Holdings investment; and Dayton Parts Incorporated, an aftermarket supplier of heavy truck suspension and brake systems. "ASC Incorporated has built a reputation for providing creative, cost effective solutions for specialty vehicles," stated David Treadwell. "We are pleased with the outlook for ASCET and the opportunity to become the market leader in exterior systems. We see potential synergy between ASC Incorporated and ASCET in both the OEM markets with PTI and Starboard, and the heavy truck market with Dayton Parts. ASCET's strategy is to become a premier supplier of exterior systems focusing on technology leadership. It is our plan for Dayton Parts to expand to supply a full line of suspension and braking systems to the North American heavy truck aftermarket." ASCET, with its PTI, Starboard and Dayton Parts subsidiaries, is projected to have sales of $160,000,000 in 1999. PTI is located in Beaver Creek, Ohio; Starboard in East Tawas, Mich. and Dayton Parts in Harrisburg, Pa. Combined they employ approximately 950 people. Treadwell complimented the JPE employees for continuing to produce high-quality products in the face of the company's past financial difficulties. "We see an excellent opportunity for growth with the strong financial base we now have in place." ASC Incorporated is a global specialty vehicle and products manufacturer with four operating activities: Creative Services provides automotive design, engineering and prototype services; Specialty Vehicles supplies the automotive industry with manufacturing expertise, development and production of specialty vehicles; Engineered Systems manufactures and distributes open-air systems (convertible tops, sunroofs) and composites (removable hardtops, molded products) for OEM applications; Aftermarket Products engineers and develops top quality vehicle accessories for the aftermarket. Headquartered in Southgate, ASC maintains operations throughout the U.S., Canada, and in Germany, Japan and Korea. JUDGE GROUP: Wants Out From Under Unprofitable IMS -------------------------------------------------- The Judge Group, Inc. (formerly Judge, Inc.), a Pennsylvania corporation founded in 1970, provides information technology and engineering professionals to its clients on both a temporary basis (through its "Contract Placement" business) and a permanent basis (through its "Permanent Placement" business) as well as IT training (through its "IT Training" business) on a range of software and network applications to corporate, governmental and individual clients. The company also provides computer network and document management system integration, implementation, maintenance and training (through its "Information Management Solutions" business). At March 31, 1999, the company, headquartered in Bala Cynwyd, Pennsylvania, operated 21 regional offices in sixteen states in the United States. A substantial portion of the company's revenues are derived from customers located in the Mid-Atlantic corridor of the United States. Consolidated net revenues increased to a total of $31,577,621 (a gain of 25.9%, or approximately $6.5 million), for the three months ended March 31, 1999 compared to the prior year period. Revenue for the IT Staffing business increased 35.8%, or approximately $7.5 million, for the three months ended March 31, 1999 compared to the prior year period. Of such increase approximately $5.3 million, or 77% of the increased revenues, was attributable to offices open over one year. In particular the company's offices in Bala Cynwyd, Pennsylvania, Edison, New Jersey, and Alexandria, Virginia contributed the greatest increases in revenues. Also contributing to the revenue increase was approximately $1.7 million in revenue from companies acquired during 1998 and from offices opened less than one year. The increased revenues in the offices open over one year were largely due to increased marketing efforts in those markets. Judge Group's IMS segment reported revenues decreased 25.7%, or approximately $1 million, for the period ended March 31, 1999 over the same period in 1998. This decrease was said to be primarily a result of management's decision in late 1998 to discontinue new sales in the Network Services division of IMS due to the low margins achieved on that business. In the period ended March 31, 1998 the Network Services division generated revenues of approximately $2 million, or approximately 50% of the IMS segment's revenues in that period. The company continues to emphasize higher margin imaging and systems integration business to replace those revenues. Judge Group used approximately $1.6 million cash in operations during the quarter ended March 31, 1999 compared to cash generated from operations of approximately $6.2 million for the three months ended March 31, 1998. The company says this result is attributable to several factors, including a decrease in net income of approximately $943,000, from a profit of approximately $363,000 in the three months ended March 31, 1998 to a loss of approximately $580,000 in the three months ended March 31, 1999, an increase in accounts receivable due to increased revenues, and the redemption of short-term investments in 1998. The company's Information Management Solutions business has had net operating losses since its commencement in 1988, experienced a loss from operations of approximately $1.4 million for the three month period ended March 31, 1999, and at March 31, 1999 had an accumulated deficit of approximately $8.7 million. The losses have resulted from high marketing, general and administrative costs associated with developing the company's imaging and document management infrastructure and capabilities, combined with historically low profit margins related to the hardware component of the networking business and a slower emergence of the imaging and document management market than had been anticipated by management. Specifically, the costs associated with building this division's imaging and document management capabilities have included the hiring of sales and technical personnel and costs associated with the acquisition and integration of three imaging and document management companies. The company says it is currently focusing on separating this business from its operations. If the company is not successful in separating the Information Management Solutions business before the end of 1999, or on the terms and conditions satisfactory to the company, there may be additional adverse effects on the company's cash flow, results of operations, or financial condition. LIVENT(U.S.)INC: Creditors' Meeting Adjourned ---------------------------------------------- The meeting pursuant to section 341 of title 11 of the US Code, held on May 5, 1999,at 3:00 PM at the Office of the United States Trustee, 80 Broad Street, Second Floor, New York, NY has been adjourned to October 20, 1999at 3:00 PM, a the same location. LOGAN GENERAL: Expected To Pay Debts ------------------------------------ Charleston Daily Mail reports on May 26, 1999 that Logan General Hospital likely will be able to pay its debts in full when it emerges from bankruptcy, a lawyer for one of its creditors says. Logan General Hospital filed for Chapter 11 bankruptcy last year after missing installments on a $31.5 million bond held by the Bank of New York. The hospital took on the debt in 1995 for construction projects at the 132-bed, acute-care hospital. During an April 29 hearing, Charleston lawyer Ellen Cappellanti indicated that all claims against the hospital would likely be paid in full if the hospital is sold. Cappellanti represents the Bank of New York, which still holds the bonds. Cappellanti said the hospital's bankruptcy plan is to sell the facility, which she said would produce a "bouquet of cash of $25 million to $30 million to cure all their debts." At least one hospital chain has offered more than $75 million for Logan General. Meanwhile, a federal judge wants a California concern to explain how it bought $400,000 in creditors' claims. U.S. Bankruptcy Judge Ron Pearson has ordered Debt Acquisition Company of America IV L.P. of San Diego to appear during a hearing Thursday to provide details of how it has bought up some 98 claims against Logan General Hospital. "We have some creditors who have been used and abused. They say they have been lied to," Pearson said in the April 29 hearing, a transcript of which was obtained by The Associated Press. "We have some creditors who are selling claims, probably with a lot less information about what their claim is worth than those of you who have been attending hearings and looking at the financial projections," Pearson said. MEDPARTNERS: Announces Extension of Interim Settlement Agreement ---------------------------------------------------------------- MedPartners Inc. (NYSE: MDM) said that the California Department of Corporations yesterday sought and received an order from the Superior Court of the State of California extending the time period for the finalization and completion of an anticipated definitive settlement agreement regarding MedPartners' California physician management operations. This order extends the provisions of the agreement announced on May 11, 1999 until Thursday, June 3, 1999. Mac Crawford, Chairman and CEO of MedPartners, said, "Our discussions continue to progress and we believe that the extension provides us with sufficient time to complete the definitive settlement agreement." On May 11, 1999, MedPartners and the State of California reached an interim agreement to begin implementation of the principal terms of the previously announced proposed settlement agreement regarding MedPartners' California physician management operations. Pending completion of and final approval by the US Bankruptcy Court of a definitive settlement, the interim agreement allows MedPartners to proceed with its transition plan for the orderly and timely disposition of the existing operations of MedPartners Provider Network Inc. (MPN) and MedPartners' California physician practice management assets. MEDPARTNERS: To Contest Suit Filed By 'Taps' Holders ---------------------------------------------------- MedPartners Inc. (NYSE: MDM) said today that a lawsuit was filed late yesterday in Supreme Court of the State of New York on behalf of six entities purporting to be holders of the Company's Threshold Appreciation Price Securities ("TAPS"). The lawsuit claims that a so- called "termination event" had occurred as a result of certain actions in California involving MedPartners Provider Network, Inc. ("MPN"), one of the Company's subsidiaries. It is MedPartners' position, based on the advice of counsel, that no such "termination event" has occurred and that the suit has no merit. Edward L. Hardin, Jr., Executive Vice President and General Counsel of MedPartners, said: "The suit hinges on whether a 'termination event' occurred when the California Department of Corporations, acting without court approval, issued an order appointing a conservator for MPN and the conservator subsequently filed a petition on behalf of that subsidiary under Chapter 11 of the US Bankruptcy Code. We believe those actions in no way constitute the 'termination event' contemplated by the TAPS." Mr. Hardin added, "The Company intends to aggressively pursue all available rights and remedies as a result of the filing of this litigation, which is a transparent attempt by certain TAPS holders to achieve a windfall at the expense of the common shareholders" Frederick W. Kanner, a partner at Dewey Ballantine LLP, counsel to MedPartners said, "We intend to defend the Company's position vigorously and we expect to prevail." MedPartners said that a detailed description of the TAPS can be found in the Company's filings with the Securities and Exchange Commission. MONTGOMERY WARD: Extension of DIP Through March 2000 ---------------------------------------------------- To provide continued financing for the Debtors' on-going working capital needs through the Effective Date of the Plan, GE Capital has agreed to an extension of the DIP Facility through March 31, 2000. The Debtors tell Judge Walsh that it will be impossible to consummate the Plan before the July 7, 1999, expiration of the DIP Facility. Accordingly, an extension of the DIP Facility is necessary to carry the Debtors through the Effective Date of the Plan. As a result of significant asset sales during these chapter 11 cases, the Debtors' availability under the DIP Facility is approximately $750 million at this time. In consideration of GECC's agreement to extend the maturity date, the Debtors will pay a $2,000,000 (20 basis points of the face amount of the DIP Financing Facility) Extension Fee to GECC. (Montgomery Ward Bankruptcy News Issue 41; Bankruptcy Creditors' Service) PARAGON TRADE: KC's Findings in P&G Settlement ---------------------------------------------- Kimberly-Clark Corporation ("K-C") submitted the following findings of fact and conclusions of law with respect to the motion of Paragon Trade Brands Inc. for approval of the settlement with The Procter & Gamble Corporation. Kimberly-Clark states that "A significant part of the debtor's justification for the P&G Settlement was that it would provide the debtor with a "clear path to market." That objective will not be achieved unless a settlement with K-C is approved as well." Kimberly-Clark states further, "Because the justification for approval of the P&G Settlement depends on the debtor obtaining a "clear path to market," and because that "clear path to market" will not be provided unless a settlement with K-C is also approved, a ruling on the P&G Settlement is deferred until such time as the court considers and approves the proposed settlement with K-C." PENN TRAFFIC: Bi-Lo's Parent Says it Will Invest $100 Million ------------------------------------------------------------- The company that owns and operates Bi-Lo stores in western Pennsylvania has taken a major step towards financial stability. The Penn Traffic Company, which employs approximately 2,600 people in 43 Bi-Lo supermarkets and other western Pennsylvania facilities, today announced that the U.S. Bankruptcy Court of Delaware confirmed its pre- negotiated financial restructuring. "We can now focus on investing in and growing our business," said Gary D. Hirsch, Chairman of The Penn Traffic Company. "Much of this investment will be earmarked for Bi-Lo, which has a long history of satisfying the food and grocery needs of western Pennsylvania consumers" "Everyone at Bi-Lo and Penn Traffic is dedicated to serving our customers and bringing more customers into our supermarkets," said Joseph V. Fisher, President and Chief Executive Officer of Penn Traffic. "We intend to strengthen our already strong bonds with the community, while we provide our customers with the high quality food, grocery and other products they want and need." Penn Traffic expects its Plan of Reorganization, which the court approved today, to take effect in approximately two weeks. The restructuring will cancel Penn Traffic's existing $1.13 billion of senior and subordinated notes and (i) distribute $100 million of new senior notes and 19,000,000 shares of new common stock to the holders of existing senior notes and (ii) distribute 1,000,000 shares of new common stock and six-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, each 100 shares of Penn Traffic's common stock outstanding immediately prior to the restructuring will be converted into one share of new common stock for a total of approximately 107,000 shares of additional new common stock. "Our new capital structure will enable us to launch an aggressive store and infrastructure capital program. We expect over the next 18 months to make capital expenditures of approximately $100 million for new, enlarged and remodeled stores, as well as for other investments. With our reduced debt burden, we expect to be able to implement this program while maintaining substantial flexibility and liquidity," said Mr. Hirsch. Penn Traffic filed a petition of relief under Chapter 11 of the Bankruptcy Code on March 1, 1999, seeking to implement a financial restructuring that it had pre-negotiated with the holders of its senior and subordinated notes. The Company entered Chapter 11 because that was the easiest and simplest way to implement its pre- negotiated financial restructuring. The Penn Traffic Company operates 214 supermarkets in Pennsylvania, upstate New York, Ohio and West Virginia under the "Big Bear," "Big Bear Plus," "Bi-Lo Foods," "P&C Foods," and "Quality Markets trade names. Penn Traffic, which is headquartered in Syracuse New, York, also operates wholesale food distribution businesses serving 95 licensed franchises and 81 independent operators. RANKIN AUTOMOTIVE: Announces Year End Earnings ---------------------------------------------- The fiscal year ended February 25, 1999 will without a doubt prove to be a landmark year, the quantum leap for Rankin Automotive Group, Inc. (Nasdaq: RAVE) ("Company"). The Company made dramatic progress under the most trying of circumstances. Faced with the crisis of having no major auto parts supplier for our stores, the Company boldly pushed forward on two fronts by purchasing its major supplier, APS, Inc.'s distribution center in Monroe, Louisiana in October of 1998. In addition, negotiations continued that lead to the tripling of the size of the Company as announced on March 1, 1999 through the recently completed acquisitions of US. Parts Corporation, Allied Distributing Company, and Automotive and Industrial Supply, Inc. Our sales for fiscal year ended February 25, 1999 were $40.1 million, versus $38.7 million for the same period last year, but on a proforma basis, our combined annual sales would now be in excess of $140.0 million. The pressure on the Company's supply chain associated with the bankruptcy of the APS system and the subsequent purchase and ramp up of the Monroe Distribution Center late in the year had an adverse affect on the Company's 1999 operations. The Company recognized a loss of $693,000 or ($.15) per share for the year versus $789,000 loss or ($.17)per share last year. On a proforma basis, the Company's earnings would have been $.37 per share after taxes on 1999 sales based upon the historical performance of the combined companies. The proforma earnings exclude a $1.2 million loss carryforward available to minimize income taxes in future years, and any benefits resulting from synergies to be enjoyed by the new larger Company. Acquisition financing was provided through a $45 million credit facility with Heller Financial. Rankin sells automotive parts, products and accessories to commercial and retail customers in Texas, Louisiana, Mississippi, Alabama, and Arkansas through its six distribution centers, 67 stores and three machine shops. SERVICE MERCHANDISE: Court Approves Employee Retention Plan ----------------------------------------------------------- The Employee Retention Program is "critically important to us," said Sam Cusano, chief executive officer, after the Court hearing. The plan affects about 900 of the Debtors' employees, including hundreds of store managers, jewelry managers and assistant managers, as well as about two dozen upper-level managers, key employees and executives. It also provides money for use as needed to retain certain employees. For Service Merchandise employees, the retention program alleviates apprehension and uncertainty and allows them to focus on the business, Cusano said. "It gives them financial security in the process," he said. Maximum cost for the 18-month program is about $18.8 million for "stay" bonuses and about $5 million for performance-based incentives, the Debtors said. (Service Merchandise Bankruptcy News Issue 6; Bankruptcy Creditors' Service) SERVICE MERCHANDISE: Statements of Operations --------------------------------------------- Service Merchandise Company, Inc. and subsidiaries Consolidated Statements of Operations: For the 1st Quarter Ended April 4, 1999 (IN THOUSANDS) Net sales: 510,509 Costs and Expenses: 413,708 Gross margin after cost of merchandise sold and buying and occupancy expenses:96,801 Selling, general and administrative expenses: 167,290 Net loss before extraordinary item:(160,487) Net loss $(168,338) (Service Merchandise Bankruptcy News Issue 6; Bankruptcy Creditors' Service) TALK AMERICA: Allowed to Bring Consultant To Bankruptcy Hearing ----------------------------------------------------------------- Portland Press Herald reports on May 27, 1999 that a U.S. Bankruptcy Court judge on Wednesday approved Talk America Inc.'s request to hire a financial consultant as the company begins working out a plan to reorganize itself and pay off its debts. Talk America owes money to more than 16,000 creditors, a number believed to be unprecedented in the history of bankruptcy court in Maine. More than 14,000 of the creditors are Talk America's customers -- individuals from across the country due refunds for Talk America products they returned. The hearing Wednesday before Judge James A. Goodman was the first proceeding in which attorneys for Talk America and some of its creditors met face to face. From the hearing and court papers that have been filed, a picture is emerging of a company riddled with debt, unable to pay even some of its basic bills like rent and insurance. With more than 1,000 commercial creditors claiming they are owed $11.2 million and individual creditors claiming an additional $1.7 million, the proceedings are sure to be complex. Talk America claims assets of $9 million. With the approval of the court, Talk America plans to hire a financial expert from Cloudhawk Management Consultants in Portland. He will receive up to $185 an hour. Talk America was founded in 1991 by Robert Graham as a one-man, one- desk, one-phone operation in a small office on Exchange Street. By 1996, the company had grown to 750 employees and had sales in excess of $100 million. The company specializes in selling products through television, radio, print ads, direct mail and telemarketing. Its products include books and tapes on topics such as how to increase your math or reading proficiency or how to hit a golf ball "as straight as you can point." Its biggest seller by far, though, is a nutritional supplement called Protein Power, which the company claims can help people lose weight, reduce cholesterol and even eliminate acid indigestion. The four largest creditors, all from out of state, are owed more than $300,000 each. They include companies that develop products for Talk America and then split the proceeds when the company sells them. Other large creditors are television stations, publishing companies and the FedEx and United Parcel Service delivery companies. TELEGROUP: PRIMUS to Acquire Business and Assets of Telegroup -------------------------------------------------------------- PRIMUS Telecommunications Group, Incorporated (Nasdaq: PRTL), a facilities-based global telecommunications company, announced today that it has agreed to acquire substantially all of the retail assets and business of Telegroup, Inc. for approximately $72 million in cash and debt securities. PRIMUS expects that the acquisition will result in approximately $150 million of sustainable retail revenues annually and that the transaction will be accretive to gross margin and EBITDA. The addition of Telegroup's 350,000 retail customers brings PRIMUS's customer base to over 1 million. PRIMUS will purchase Telegroup's retail customer base and related assets in the United States, Japan and Hong Kong, and the stock of Telegroup's European subsidiaries whose operations are exclusively retail. PRIMUS will acquire substantially all of Telegroup's global network, including switches in New York, London, Germany, France, The Netherlands, Switzerland, Italy, Tokyo and Hong Kong, calling card platforms in the U.S. and Europe, Telegroup's Web-based order-entry and provisioning systems for agents, and global network management center. The sale was authorized by the United States Bankruptcy Court for the District of New Jersey, which has had jurisdiction over the Telegroup bankruptcy proceeding since it filed for protection under Chapter 11 of the U.S. Bankruptcy Code earlier this year. The sale, which is subject to review under the Hart-Scott-Rodino procedures, as well as certain state and federal regulatory proceedings, will be made free and clear of liens and encumbrances, except those executory contracts which PRIMUS elects to assume. The purchase price is subject to adjustments based on a review by PRIMUS's auditors of Telegroup's revenue and the net working capital of the purchased European subsidiaries. PRIMUS and Telegroup expect within the next several weeks to sign a definitive agreement with an effective date as of June 1, 1999. PRIMUS has the right to pay the purchase price all in cash or in equal amounts of cash and notes. "The acquisition of Telegroup's retail business dramatically expands PRIMUS's retail customer and revenue base and accelerates our entry into key markets --particularly in Europe," said K. Paul Singh, Chairman and Chief Executive Officer of PRIMUS. "Through this transaction, we will acquire additional scale for our operations in the United Kingdom and Germany and, with the purchase of Telegroup's switches and other network assets, we are now able in one quick step to build our network footprint throughout Europe." "We project that the sustainable retail revenues from this transaction will approximate $150 million per year, half of which are from Europe," commented Neil Hazard, Executive Vice President and Chief Financial Officer of PRIMUS. "In evaluating this opportunity, we were very impressed by the ability of Telegroup's new management team, which was appointed after the bankruptcy filing, to maintain the retail business under adverse circumstances," Singh stated. "This also reflects the loyalty of Telegroup's highly productive agent network." "We expect retail customer and agent retention and revenue growth to continue because PRIMUS's more extensive global network and expanded product portfolio, including Internet and data products, will provide a lower cost platform and enhanced services. For example, PRIMUS has just announced the acquisition of an Internet Service Provider in Germany. We, and our agents, are excited by the opportunities this presents for cross-selling and bundling Internet access, IP Voice and IP Fax products to our expanded list of voice customers." PRIMUS Telecommunications Group, Incorporated is a global facilities-based telecommunications company providing domestic and international long-distance voice, data, Internet, private network and value-added services. THE COSMETIC CENTER: Closes On $50 Million Credit Facility ----------------------------------------------------------- The Cosmetic Center, Inc. today announced that it has received final bankruptcy court approval for, and closed on, a $50 million debtor- in-possession (DIP) financing facility from BankBoston Retail Finance Inc. and Congress Financial Corporation. This financing is expected to provide funding for all post-petition trade and employee obligations, as well as the Company's ongoing operating needs during the restructuring process. "We are pleased to have reached this important milestone in the reorganization process," said Kevin Regan, Chief Executive Officer of Cosmetic Center. "Now that we have closed on our DIP facility, we will be able to move forward with our strategic plans to revitalize the Company." Mr. Regan continued, "BankBoston Retail Finance and Congress Financial demonstrated excellent responsiveness in structuring this new facility. Their ability to act quickly and professionally, combined with their understanding of our business objectives, has been extremely helpful." Based in Columbia, Maryland, Cosmetic Center is a specialty retailer of name brand and private label fragrances, cosmetics, professional hair-care, health and beauty products. Following the previously announced closing of 116 underperforming stores and corporate downsizing, the Company will operate 31 Cosmetic Center(c) stores primarily in Maryland and Virginia and 93 Prestige Fragrances & Cosmetics outlet stores in 27 states. UNITED COMPANIES: Shareholders Committee Wants Financial Info ------------------------------------------------------------- A newly appointed shareholders committee in the bankruptcy of United Companies Financial Corp. is set to ask the company to release financial information. The company's annual financial report for 1998 is nearly a month past due, and shareholders have repeatedly complained that the company was selling subsidiaries and taking other steps without making public its financial status. Nicola Biase, who runs an Italian investment company that lost about $26 million on paper when the company's stock plummeted, said he and other committee members will demand the information in a letter to the company soon. Despite the company's inability to produce its annual report, company officials must be using some financial numbers to run the company, he said. "They have to know if they can meet payroll next week, and they know how much money they have in the bank," Biase said Tuesday. Deborah Hicks Midanek, the company's chief executive officer who has clashed with Biase and other dissident shareholders over the bankruptcy, said the request would have to be reviewed by lawyers. United Companies, which made home equity loans to borrowers considered high- risk, filed for bankruptcy protection from its creditors March 1 after warning it would default on debts totaling $1.2 billion. A dissident shareholders alliance - which formed through an Internet message board - has opposed Midanek's decisions in the bankruptcy, particularly her move to sell the company's chain of retail loan offices. On Monday, the U.S. Department of Justice notified members of the Internet-based alliance that they were among seven members named to serve on the shareholders committee in the bankruptcy. The stock has bounced from one market to another. After the company declared bankruptcy, trading of the stock was halted on the New York Stock Exchange. It then moved to the Electronic Bulletin Board run by the National Association of Securities Dealers, but trading was halted there, too. Now the stock is traded on the "pink sheets," a daily publication of stock prices published by the National Quotation Bureau in New York City. (Advocate Baton Rouge - 05/27/99) WILLCOX & GIBBS: Bankruptcy Filing On 4/20/99 Slows Reporting ------------------------------------------------------------- Willcox & Gibbs Inc. filed under Chapter 11 of the Bankruptcy Code on April 20, 1999. It has not yet filed its Annual Report with the SEC for 1998 due to the involvement of management in matters relating to the bankruptcy filing. The company says it expects to file such report soon and will file the first quarter of 1999 report as promptly as possible thereafter. Willcox and Gibbs states it expects a net loss of approximately $6 million for the first quarter of 1999, due principally to lower sales and to expenses relating to the restructuring of the company's capitalization. WSR CORP: Seeks Extension To Assume/Reject Leases -------------------------------------------------- The debtors, WSR Corporation et al seek an extension of time within which to assume or reject unexpired leases of nonresidential real property. A hearing to consider the motion will be held on June 2, 1999 at 2:30 PM. The debtors are currently parties to more than 90 leases and subleases. The debtors assert that they continue to evaluate every aspect of their business and the profitability of each of their stores. However, the debtors need additional time to determine and analyze the full impact of these initiatives on each store's profitability. Where the debtors have been able to determine that a certain store or market is unprofitable, the debtors have rejected the leases. The debtors seek an order extending the period in which they must assume or reject the unexpired leases until September 6, 1999. The debtors say that they have made progress in these cases, that comparative store sales have increased for eight months since the new management team has instituted new initiatives. The debtors have made leasehold improvements at certain of their stores, and the debtors have retained Retail Consulting services Inc. as real estate consultants. The debtors have completed a three-year business plan. Granting the request for this extension will provide the debtors with the time and flexibility they need to coordinate the assumption or disposition of their leases with the process of formulating and implementing a business strategy that will serve as a foundation for a confirmable plan. ********* 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, Yvonne L. Metzler 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 * * *