/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990823.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 23, 1999, Vol. 3, No. 162 Headlines ACME METALS: First Half Of 1999 Shows Increased Net Losses BELDEN & BLAKE: Sale Of Subsidiary Expected In Third Quarter BORDEN CHEMICALS & PLASTICS: Revenue Decrease -Net Loss Increases BRAZOS SPORTSWEAR: Repays Balance Owed to DIP Lenders BRUNO'S: Haskell and Snow Commence Class Action Suit CHASTAIN CAPITAL: Constable Firms Holding Over 5% Of Shares CONTINENTAL RESOURCES: Sales Higher/Quarter Sees Net Income CORAM RESOURCE: Apria Healthcare Announces Involuntary Bankruptcy CORAM RESOURCE: Statement Regarding Involuntary Petition DAI-ICHI KANGYO: Merger Of 3 Banks Announced DAILEY: Plan Confirmed By Court; Acquisition Moves Ahead EATON'S: Files For Bankruptcy FUJI BANK: Merger Of 3 Banks Announced GOLDEN BOOK: Awaits Approval Of Plan - Losses Continue HAYES: Xircom Blocked in Attempt to Obtain License HOMELAND HOLDING: Soros & Satellite Funds Hold 13% Of Stock INDUSTRIAL BANK OF JAPAN: Merger Of 3 Banks Announced IRIDIUM: Ebay Online Removes Customer's Offer To Auction Shares IRIDIUM: Rejected Proposal Contained Inaccurate Data LACLEDE STEEL: Operating In Difficult Market LONG JOHN SILVER: Court Approves Financial Plan NEXTWAVE: DIP Lender Endorses and Supports Plan MARKER INTERNATIONAL: Affiliates File Chapter 11 MARVEL ENTERPRISES: October Acquisitions Boost Sales/Losses Shown ONEITA INDUSTRIES: Judge Orders Sale PEOPLES CHOICE TV: Sprint Merger Pending PINNACLE MICRO: Without Immediate Funding Bankruptcy Looms PROTEAM.COM: Announces Voluntary Chapter 11 Filing STEEL HEDDLE: 2nd Quarter Sales Rise - Net Losses Continue THREE D DEPARTMENTS: Universal Capital to Manage Liquidation WASTE SYSTEMS: Over 1/3 Common Stock Held By DDJ & Affiliates WICKES: Showing Increased Sales And Income For 1999 WILSHIRE FINANICAL: Announces Suspension of CEO and President ********** ACME METALS: First Half Of 1999 Shows Increased Net Losses ---------------------------------------------------------- Since filing for Chapter 11 bankruptcy protection on September 28, 1998 Acme Metals has been operating as a debtor-in- possession. Consolidated net sales of Acme Metals Inc. of $125.3 million for the second quarter of 1999 were essentially flat with the same period in the prior year when net sales were $124.3 million. An increase in total tons shipped was offset by lower selling prices in the second quarter of 1999. The company recorded a loss of $11.3 million in the second quarter of 1999 versus a loss of $8.6 million recorded in the second quarter of the prior year. Consolidated net sales of $228.3 million for the first half of 1999 were $41.0 million lower than the same period in the prior year when net sales were $269.3 million, reflecting lower net sales in the first quarter. Lower selling prices, partially offset by increased shipments, were the primary reasons for the decrease in sales according to Acme Metals. The company recorded a loss of $29.1 million in the first half of 1999 versus a loss of $10.3 million recorded in the first half of the prior year. Acme currently intends to present a plan of reorganization to the Bankruptcy Court to reorganize the company's businesses and to restructure the company's balance sheet. The Board of Directors strives to maximize the enterprise value, and a plan of reorganization could, among other things, result in material dilution or elimination of the equity of existing shareholders of the company as a result of the issuance of equity to creditors or new investors. BELDEN & BLAKE: Sale Of Subsidiary Expected In Third Quarter ------------------------------------------------------------ Belden & Blake Corporation's total revenues decreased $4.5 million (12%) in the second quarter of 1999 compared to the second quarter of 1998. Actual revenue figures were $34.2 million for second quarter 1999 as compared to $38.7 million in the comparable period of 1998. Net loss decreased $3.3 million from a net loss of $8.2 million in the second quarter of 1998 to a net loss of $4.9 million in the second quarter of 1999. Total revenues decreased $8.9 million (11%), to $69.6 million, in the first six months of 1999 compared to the first six months of 1998 when total revenues were $78.5 million. Net loss decreased $5.5 million (38%) from a net loss of $14.5 million in the first six months of 1998 to a net loss of $9.0 million in the first six months of 1999. In April 1999, the company and its wholly-owned subsidiary, The Canton Oil & Gas Company, entered into a stock sales agreement with an oilfield supply company for the sale of Target Oilfield Pipe and Supply Company, a wholly-owned subsidiary of Canton Oil & Gas Co. The buyer will purchase all of the issued and outstanding shares of capital stock of Target Oilfield Pipe & Supply from Canton Oil & Gas. The company currently expects to close this transaction in the third quarter of 1999. BORDEN CHEMICALS & PLASTICS: Revenue Decrease -Net Loss Increases ----------------------------------------------------------------- Total revenues during the second quarter of 1999 for Borden Chemical & Plastics Limited Partnership decreased $19.1 million, or 13%, to $127.2 million from $146.3 million in the second quarter of 1998. According to the company the decrease was the result of a $6.7 million decrease in PVC Polymers Products revenues, a $4.3 million decrease in Methanol and Derivatives revenues and a $8.1 million decrease in Nitrogen Products revenues. Net loss for the second quarter of 1999 was $8.7 million compared to $7.7 million loss for the second quarter of 1998. The primary reasons given by Borden Chemicals for the $1.0 million increased loss from prior year was the results of modest raw material costs decline, not being able to offset a 10% decrease in selling prices. Total revenues for the first six months of 1999 decreased $57.2 million, or 19%, to $242.6 million from $299.8 million in the first six months of 1998. This decrease was the result of declines in selling prices and volumes in all three product groups. Net loss was $14.3 million for the first six months of 1999 compared to a net loss of $16.0 million for the first six months of 1998. BRAZOS SPORTSWEAR: Repays Balance Owed to DIP Lenders ----------------------------------------------------- Brazos Sportswear, Inc. (OTC Bulletin Board: BRZS) announced today that on August 12, 1999 the Company retired the outstanding balance remaining under the Company's debtor-in-possession (DIP) financing facility. Fleet Capital Corporation, as agent, and Bank Boston, as participant, provided the $62.5 million facility. Clayton Chambers, interim chief executive officer, also commented on the status of the Company's efforts to dispose of its business units through procedures under Section 363 of the U.S. Bankruptcy Code. "The Company has substantially completed the sale of its assets including the sale of three of its operating units. The Morning Sun, Inc. subsidiary was sold to two private investment funds advised by Three Cities Research, Inc. on June 28, 1999. The Red Oak Sportswear division, a manufacturer of screen-printed sportswear, was acquired by Red Oak Acquisition, Inc. on June 4, 1999. G.C. Sportswear LLC acquired the Gulf Coast Sportswear division, a wholesale distributor of blank sportswear, on May 21, 1999." In addition to the aforementioned business unit sales, the remaining operations have either been sold in bulk asset sales or are in the process of being liquidated. All operations have ceased. The Company will continue to liquidate its few remaining assets, collect outstanding receivables, pay post-petition administrative claims and wind up the affairs of the estate over the next few months. "We believe that the sale of the operating units has generated maximum recovery for the estate, including secured creditors, and minimized the impact on our employees," said Clayton Chambers. "While we were able to pay the DIP lenders in full, the Company expects that payments to pre-petition unsecured creditors will be nominal, if any, and that all common and preferred stock will be canceled." Brazos Sportswear, Inc. and its subsidiaries filed Chapter 11 petitions in the U.S. Bankruptcy court for the District of Delaware in Wilmington on January 21, 1999. BRUNO'S: Haskell and Snow Commence Class Action Suit ---------------------------------------------------- Wyatt R. Haskell and James S. Snow, Jr., individually and on behalf of a class of similarly situated holders of the Debtors' 10-1/2% Senior Subordinated Notes commenced a class action lawsuit in the Circuit Court for the Tenth Judicial Circuit of Alabama against Kohlberg, Kravis, Roberts & Co., L.P., various KKR affiliates, Henry R. Kravis, George R. Roberts, other individuals affiliated with KKR, Ronald G. Bruno, William J. Bolton, other Bruno's Directors and Officers, Chase Manhattan Bank, Murray Devine & Co., and other entities. Haskell steps through the 1995 Leveraged Racapitalization Transaction, in which Bruno's used: $475,000,000 borrowed from Chemical Bank under the Term Loan; 10,000,000 drawn under the $125,000,000 Chemical Revolver; 400,000,000 from the sale of the 10-1/2% Senior Subordinated Notes; 250,000,000 as an equity investment from KKR; and 20,000,000 of the Company's cash on hand -------------- $1,155,000,000 to pay out: $880,100,000 to buy-back its stock at $12.50 per share; 100,000,000 to redeem the 6.62% Series A Senior Notes; 100,000,000 to redeem the 7.09% Series B Senior Notes; 15,000,000 to KKR for advisory fees; 2,351,990 to Robinson-Humphrey for its fees and expenses; 10,226,058 to BT Securities for underwriting to 10.5% Notes; 14,370,616 to Chemical for arranging the Term Loan; and 4,882,558 to Wachovia Bank for terminating a swap agreement -------------- $1,126,931,222 The 1995 Leveraged Recapitalization Transaction turned Bruno's balance sheet, reflecting $422,478,000 in shareholder equity a month earlier, upsidedown to reflect a $281,343,000 shareholder deficit immediately thereafter. The 1995 Leveraged Recapitalization Transaction, Haskell concludes, rendered Bruno's insolvent, stripped Bruno's of assets sufficient for it to meet its debts and obligations as they matured and replaced 7% debt with 10.5% (and higher) debt. The Recapitalization operated as a fraud on Bruno's existing and future creditors, Haskell charges. Each Defendant, by its participation in the Leveraged Recapitalization, Haskell alleges, was reckless and knew or should have known the outcome would be financial failure. KKR dominated and controlled Bruno's and orchestrated the events that transpired. KKR's affiliates are jointly and severally liable for KKR's misdeeds pursuant to Sections 10-8-51 through 10-8-56 of the Code of Alabama. Mr. Bruno received over $70,000,000 on account of his stock holdings at the time. The officers and directors breached their fiduciary duties. Chemical was a reckless lender. Murray Devine rendered a junk solvency opinion. The Leveraged Recapitalization imposed such a heavy debt obligation on Bruno's that it could not meet its debt service requirements and could no survive as a business entity, Haskell asserts, and responsibility lands with these Defendants. Haskell complains that the Leveraged Recapitalization did not give Bruno's reasonably equivalent value for the money and assets it gave up, violative of the Alabama Fraudulent Transfer Act, Sections 8-9A-1, et seq., of the Code of Alabama. Haskell asks the Alabama Court to certify an estimated 1,700 noteholders as a class pursuant to Rule 23 of the Alabama Rules of Civil Procedure, and enter judgment for (i) compensatory damages, to be adduced in a jury trial, suffered by noteholders against the Defendants, (ii) punitive damages resulting from the Director Defendants' willful and reckless breaches of their fiduciary duties, and (iii) imposition of a constructive trust on all monies received by the Defendants. (Bruno's Bankruptcy News Issue 25; Bankruptcy Creditors' Services Inc.) CHASTAIN CAPITAL: Constable Firms Holding Over 5% Of Shares ----------------------------------------------------------- Chastain Capital Corporation reports 8.38% of the outstanding shares of its common stock is beneficially owned by John Constable d/b/a Constable Asset Management, Ltd. Mr. Constable has shared voting and dispositive power over 616,000 shares of common stock while Constable Partners, L.P. holds shared voting and dispositive power over 496,000 shares, representing 6.75% of the total outstanding shares of the company. CONTINENTAL RESOURCES: Sales Higher/Quarter Sees Net Income ----------------------------------------------------------- For the three months ended June 30, 1999 net income for Continental Resources Inc. was $2.0 million, an increase in net income of $7.2 million from the loss of $5.2 million for the comparable period in 1998. This increase in net income is due primarily to higher oil and gas prices, improved margin on oil marketing activities and reduced operating expenses. The revenues for the period were $55.3 million. For comparison the three months ending in June 1998 showed revenues of $20.0 million but losses of the $5.2 million mentioned. In the six months ended June 30, 1999 the company experienced a net loss of $1.0 million against revenues of $160.3 million. In the same six month period of 1998 net loss was $3.5 million on revenues of $44.1 million. The company's wholly owned subsidiaries, Continental Gas, Inc. and Continental Crude Co., have guaranteed the Senior Subordinated Notes and the Credit Facility. In February 1999, the company borrowed $4.6 million against its revolving credit facility. Subsequent to June 30, 1999 the company has made payments of $1.6 million to reduce the borrowings against its Credit Facility. The current borrowing base of the Credit Facility is $25 million until October 1, 1999 when the next redetermination is expected to take place. CORAM RESOURCE: Apria Healthcare Announces Involuntary Bankruptcy ----------------------------------------------------------------- Apria Healthcare Group Inc. (NYSE: AHG) announced that two of its wholly owned subsidiaries have joined with other unsecured creditors to file an involuntary bankruptcy petition against Coram Resource Network, Inc., a subsidiary of Coram Healthcare Corporation. The involuntary petition was filed in the United States Bankruptcy Court in Delaware. The Apria subsidiaries, Apria Healthcare, Inc. and Apria Healthcare of New York State, Inc., had previously commenced a state court lawsuit against Coram Healthcare Corporation and its subsidiaries, Coram Resource Network, Inc. and Coram Independent Practice Association, Inc. That lawsuit was filed in Superior Court in Orange County, California in order to collect approximately $1.4 million in unpaid past due invoices. The total amount of unpaid past due invoices being sued for is expected to climb to approximately $2.1 million as additional unpaid invoices age and become past due. The Apria subsidiaries originally contracted in 1998 with Coram Resource Network to provide home medical services to patients referred to Coram by Aetna U. S. Healthcare under a Coram/Aetna agreement that is now the subject of litigation between those parties. After providing the required services to Coram's patients and otherwise fulfilling their obligations to Coram Resource Network, Apria and other subcontracted providers were advised by the Coram entities that, apparently as a result of Coram's dispute with Aetna U.S. Healthcare, the Coram entities would not be paying for the services for which they had contracted. Apria and the other Coram creditors filed the involuntary bankruptcy petition only after discussions with the Coram entities and commencement of the collection litigation failed to produce any progress toward obtaining payment. Philip L. Carter, Chief Executive Officer, stated, "This action was taken only after exhausting all possible means to collect what is contractually due to Apria." Mr. Carter added that Apria intends to maintain its conservative approach to the expensing of doubtful accounts receivable and have all of the $2.1 million, or 4 cents per share, reserved at the end of the third quarter. Apria provides respiratory therapy, home infusion and home medical equipment through 320 branches serving patients in 50 states. With over $900 million in annual revenues, it is the nation's leading homecare company. CORAM RESOURCE: Statement Regarding Involuntary Petition -------------------------------------------------------- A small group of providers with claims amounting to approximately $ 2.1 million filed on Aug. 19, 1999 an Involuntary Chapter 11 Bankruptcy Petition against Coram Resource Network Inc., a subsidiary of Coram Healthcare Corp (NYSE:CRH). The filing is not against Coram Healthcare, the parent company, or any of Coram Healthcare's other subsidiaries. The group of providers, which includes Apria Healthcare Inc., a Coram competitor, rendered services pursuant to contracts with Coram Resource Network Inc. Coram Healthcare has also learned that Apria and one of its affiliates filed suit on Aug. 16, 1999 in California State Court regarding their specific provider claims that allegedly total approximately $ 2 million. The services were rendered as part of a network in connection with a Master Agreement between Coram Healthcare and Aetna U.S. Healthcare for the management of Aetna's home healthcare services in eight states in the Northeast and Mid-Atlantic. Coram Healthcare has filed a lawsuit against Aetna, alleging claims for fraud, negligent misrepresentation, breach of contract, and rescission related to the Master Agreement which Coram terminated effective June 30, 1999. In its lawsuit against Aetna, Coram is seeking damages in excess of $ 50 million, including damages related to these provider claims. Coram Healthcare and Coram Resource Network Inc. are disappointed by the Petition because Coram Resource Network Inc. was working toward reconciling the amounts due to providers so as to pay the providers amounts properly due. The steps Coram Resource Network Inc. has taken have included attempting to get Aetna to pay various claims since Aetna has previously drawn on $ 14.5 million worth of letters of credit earmarked to pay the providers. Coram Resource Network Inc. will analyze the filings, raise any applicable defenses, pursue all available grounds for dismissal of the involuntary petition, and assert any applicable claims against the petitioning providers and any counterclaims against applicable parties at the appropriate time. Denver-based Coram is a leading provider of high quality home infusion therapy operating from 90 locations in 44 states and Ontario, Canada. Through its Resource Network division, the company manages networks of home healthcare providers on behalf of managed care plans and other payers. Coram's Prescription Services Division provides pharmacy benefit management services as well as mail order prescription drugs for chronically ill patients. The Clinical Research and Medical Informatics Division provides home care and product development services to pharmaceutical, biotechnology and medical device companies sponsoring clinical trials. DAI-ICHI KANGYO: Merger Of 3 Banks Announced ----------------------------------------------------- In a surprise, blockbuster deal that signifies Japan's efforts to restructure its ailing economy, three major Japanese banks said Friday that they will merge to create the world's largest financial group. The three banks -- none household names outside of Japan -- are coming together because they faced uncertain futures alone, trapped between the forces of Japan's debilitating recession and intensified competition from globe-spanning American and European financial institutions. The merger will change the international financial landscape, leapfrogging the combined banks -- the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank -- over competitors, including Germany's Deutsche Bank, which is now ranked No. 1 worldwide in asset size. No. 2 is UBS of Switzerland, followed by Citigroup of the U.S. Skepticism swirls around the meaning of the bank deal because analysts have been burned before by predicting that Japan was ready to embark on a new path, only to see it retreat. Bank officials on Friday portrayed the deal in a way that would be very familiar for American or European bank mergers. Combining forces, they said, could improve their efficiency and profitability, and they predicted they would be one of the world's top five financial houses, with interests in consumer and corporate banking and securities. They said they could cut $1 billion in costs by eliminating redundant business operations and eliminating 6,000 jobs over five years. And perhaps symbolically, in a list of five basic principles they will follow, they mentioned "maximize shareholder value" ahead of "offer attractive job opportunities to employees." The banks also indicated that they made the decision to merge. They were not led by the government, which is the way the old system worked. But in some ways, the deal sounded very typically Japanese. The banks indicated it would take several years to combine operations under a holding company, and they did not identify which bank would be the surviving entity. They also preferred to use the word "consolidate" rather than "merge," though clearly their plans call for a merger. The most important issue may be that none of the banks is healthy, and it is questionable whether they would have survived to get to this point in any country but Japan. Over the past four years, the three banks have lost more than $20 billion. The strongest argument supporting Japan's deregulatory momentum is that while the bank deal came as a surprise, it didn't come out of the blue. The government has been working on financial deregulation since 1996 when it accepted the idea that Japanese banks could only improve themselves by facing stiffer international competition in the Tokyo market. Under "Big Bang" deregulation, for example, foreign players gained greater access to the Japanese market, and banks could sell mutual funds. Then came Japan's financial crisis, in which banks were finally caught holding massive loads of bad loans they hadn't wanted to acknowledge because they believed Japan's weak economy would eventually improve. When it didn't, they were forced to deal with $1 trillion of bad loans. Earlier this year, the government finalized a bailout of the banking sector, doling out billions of dollars to 15 banks -- including all three of the merging banks -- in exchange for promises that the banks would get their houses in order. The merger is clearly a result of the bailout. Overall, the banking industry has undergone a quiet revolution in the past two years, since a major regional bank in Northern Japan went bankrupt. In the past year, the government seized two big insolvent banks, while several smaller trust banks have arranged mergers or alliances. The Financial Supervisory Agency, Japan's newly created financial watchdog agency, has predicted that the number of major banks would decline dramatically. With Friday's merger announcement, the number of major banks operating independent of any alliance has declined from 20 to nine. DAILEY: Plan Confirmed By Court; Acquisition Moves Ahead -------------------------------------------------------- Weatherford International, Inc. (NYSE: WFT) today announced that Dailey's (OTC Bulletin Board: DALY) pre- negotiated plan of reorganization has been confirmed by the United States Bankruptcy Court for the District of Delaware. The confirmation of the plan, which had been overwhelmingly supported by the holders of Dailey's 9 1/2% Senior Notes due 2008, clears the way for the acquisition of Dailey by Weatherford. The transaction is expected to close August 31, 1999. Dailey International is a leading provider of specialty drilling equipment and services to the oil and gas industry and designs, manufactures and rents proprietary downhole tools for oil and gas drilling and workover applications worldwide. Houston-based Weatherford International, Inc. is one of the largest global providers of engineered products and services to the drilling and production sectors of the oil and gas industry. EATON'S: Files For Bankruptcy ----------------------------- Canada's oldest department store chain, T. Eaton Co., said late Friday it filed under federal bankruptcy laws for 30 days to allow it to create a proposal for creditors and added that it would start liquidating its inventory early next week. Eaton's said in a news release that it filed notice that it plans to make a proposal to creditors under the bankruptcy and insolvency act. The retailer, which has been in dire straits for months, said in the late Friday press release that the notice would give it 30 days to give a proposal to its creditors "during which time it intends to pursue discussions with parties who have expressed interest in purchasing its assets or shares." Earlier in the day, the retailer's stock was halted and it issued a statement denying media reports that it was in talks on selling assets to Cincinnati-based Federated Department Stores Inc. It also said it was closing its nine Quebec stores. FUJI BANK: Merger Of 3 Banks Announced -------------------------------------- In a surprise, blockbuster deal that signifies Japan's efforts to restructure its ailing economy, three major Japanese banks said Friday that they will merge to create the world's largest financial group. The three banks -- none household names outside of Japan -- are coming together because they faced uncertain futures alone, trapped between the forces of Japan's debilitating recession and intensified competition from globe-spanning American and European financial institutions. The merger will change the international financial landscape, leapfrogging the combined banks -- the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank -- over competitors, including Germany's Deutsche Bank, which is now ranked No. 1 worldwide in asset size. No. 2 is UBS of Switzerland, followed by Citigroup of the U.S. Skepticism swirls around the meaning of the bank deal because analysts have been burned before by predicting that Japan was ready to embark on a new path, only to see it retreat. Bank officials on Friday portrayed the deal in a way that would be very familiar for American or European bank mergers. Combining forces, they said, could improve their efficiency and profitability, and they predicted they would be one of the world's top five financial houses, with interests in consumer and corporate banking and securities. They said they could cut $1 billion in costs by eliminating redundant business operations and eliminating 6,000 jobs over five years. And perhaps symbolically, in a list of five basic principles they will follow, they mentioned "maximize shareholder value" ahead of "offer attractive job opportunities to employees." The banks also indicated that they made the decision to merge. They were not led by the government, which is the way the old system worked. But in some ways, the deal sounded very typically Japanese. The banks indicated it would take several years to combine operations under a holding company, and they did not identify which bank would be the surviving entity. They also preferred to use the word "consolidate" rather than "merge," though clearly their plans call for a merger. The most important issue may be that none of the banks is healthy, and it is questionable whether they would have survived to get to this point in any country but Japan. Over the past four years, the three banks have lost more than $20 billion. The strongest argument supporting Japan's deregulatory momentum is that while the bank deal came as a surprise, it didn't come out of the blue. The government has been working on financial deregulation since 1996 when it accepted the idea that Japanese banks could only improve themselves by facing stiffer international competition in the Tokyo market. Under "Big Bang" deregulation, for example, foreign players gained greater access to the Japanese market, and banks could sell mutual funds. Then came Japan's financial crisis, in which banks were finally caught holding massive loads of bad loans they hadn't wanted to acknowledge because they believed Japan's weak economy would eventually improve. When it didn't, they were forced to deal with $1 trillion of bad loans. Earlier this year, the government finalized a bailout of the banking sector, doling out billions of dollars to 15 banks -- including all three of the merging banks -- in exchange for promises that the banks would get their houses in order. The merger is clearly a result of the bailout. Overall, the banking industry has undergone a quiet revolution in the past two years, since a major regional bank in Northern Japan went bankrupt. In the past year, the government seized two big insolvent banks, while several smaller trust banks have arranged mergers or alliances. The Financial Supervisory Agency, Japan's newly created financial watchdog agency, has predicted that the number of major banks would decline dramatically. With Friday's merger announcement, the number of major banks operating independent of any alliance has declined from 20 to nine. GOLDEN BOOK: Awaits Approval Of Plan - Losses Continue ------------------------------------------------------ Second quarter 1999 figures for the quarter ending June 26, 1999 show Golden Books Family Entertainment Inc. to have experienced a net loss of $8,600. The net revenue in the same quarter was $31,855. In the comparison second quarter of 1998 net losses were $30,875 on net revenues of $43,145. The company, operating as a debtor-in-possession, had net losses for the first half of 1999 of $19,754 on net revenues of $66,624. The first half of 1998 net losses were $51,672 on net revenues of $89,679. As a result of the February 26, 1999, bankruptcy filing, the holders of the company's preferred securities, at their option, can demand acceleration of the $109.8 million due under the preferred securities agreement. Golden Books does not have sufficient resources to repay this obligation. The company has not been informed of any acceleration of payment. Additionally, as a result of the bankruptcy filing, the company stopped recording interest expense related to the preferred securities effective February 26, 1999 and at June 26, 1999 the preferred securities have been classified as a liability subject to compromise under the terms of the Joint Plan of Reorganization which the company has filed with the Bankruptcy Court (which is subject to approval). Under that Plan the preferred securities will be converted into 50% of the company's new common stock to be issued post recapitalization, prior to dilution. Golden Books' common stock was delisted from the NASDAQ National Market on February 17, 1999 for failure to meet continued listing standards. The company's common stock is currently being quoted on the OTC bulletin board. HAYES: Xircom Blocked in Attempt to Obtain License -------------------------------------------------- The Delaware bankruptcy court presiding over the bankruptcy of Hayes Corporation ruled that a patent license granted to Hayes by 3Com's predecessor, Megahertz, for rights to practice 3Com's patented XJACK(R) technology is not assumable, assignable or otherwise transferable to Xircom. Xircom, a competitor of 3Com, bid $ 4 million for the license to use 3Com's XJACK technology and related assets. Xircom's bid for the XJACK pop-out connector license was the largest single bid in the Hayes bankruptcy auction, which resulted in slightly more than $ 11 million in total asset bids. The XJACK connector is a patented 3Com design that has become the industry standard for the PC Card modem and Ethernet options used in most notebook PCs. It eliminates the need to carry extra connecting cables, or "dongles" as they are known in the PC industry. Built with the same high-strength industrial plastic used in fighter plane cockpit covers, the connector works much like a ball point pen by clicking in or clicking out of the side of the notebook to a reveal a sturdy RJ-11 phone or RJ-45 Ethernet connector. Over six million 3Com Megahertz PC Cards have shipped with XJACK connectors since 1993. HOMELAND HOLDING: Soros & Satellite Funds Hold 13% Of Stock ----------------------------------------------------------- Soros Fund Management LLC, George Soros and Stanley F. Druckenmiller each beneficially own 640,541, or 13.05%, of the outstanding shares of common stock of Homeland Holding Corporation. Satellite Asset Management, L.P. and Satellite Fund Management LLC each are deemed to beneficially own the same number of shares but hold sole voting and dispositive power over the shares. Mark Sonnino, Lief D. Rosenblatt and Gabriel Nechamkin each beneficially own the 640,541 shares but have shared voting and dispositive power over the shares. The statement filed with the SEC constitutes an initial filing with respect to Satellite LP, Mr. Sonnino and Mr. Nechamkin. Additionally, the shares relate to those held for the account of Quantum Partners LDC, a Cayman Islands exempted limited duration company. SFM LLC, a Delaware limited liability company, serves as principal investment manager to Quantum Partners and has been granted investment discretion over portfolio investments, including the shares held for the account of Quantum Partners. SFM LLC, on behalf of Quantum Partners, has granted investment discretion over certain investments, including the shares, to Satellite LP, pursuant to an investment management contract between Quantum Partners and Satellite LP. Satellite LLC is the general partner of Satellite LP. None of SFM LLC, Mr. Soros and Mr. Druckenmiller currently exercises voting or dispositive power over the shares held for the account of Quantum Partners. Mr. Soros is the Chairman of SFM LLC. Mr. Druckenmiller is the Lead Portfolio Manager and a member of the Management Committee of SFM LLC. Mr. Sonnino, Mr. Rosenblatt and Mr. Nechamkin are managing members of Satellite LLC. INDUSTRIAL BANK OF JAPAN: Merger Of 3 Banks Announced ----------------------------------------------------- In a surprise, blockbuster deal that signifies Japan's efforts to restructure its ailing economy, three major Japanese banks said Friday that they will merge to create the world's largest financial group. The three banks -- none household names outside of Japan -- are coming together because they faced uncertain futures alone, trapped between the forces of Japan's debilitating recession and intensified competition from globe-spanning American and European financial institutions. The merger will change the international financial landscape, leapfrogging the combined banks -- the Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank -- over competitors, including Germany's Deutsche Bank, which is now ranked No. 1 worldwide in asset size. No. 2 is UBS of Switzerland, followed by Citigroup of the U.S. Skepticism swirls around the meaning of the bank deal because analysts have been burned before by predicting that Japan was ready to embark on a new path, only to see it retreat. Bank officials on Friday portrayed the deal in a way that would be very familiar for American or European bank mergers. Combining forces, they said, could improve their efficiency and profitability, and they predicted they would be one of the world's top five financial houses, with interests in consumer and corporate banking and securities. They said they could cut $1 billion in costs by eliminating redundant business operations and eliminating 6,000 jobs over five years. And perhaps symbolically, in a list of five basic principles they will follow, they mentioned "maximize shareholder value" ahead of "offer attractive job opportunities to employees." The banks also indicated that they made the decision to merge. They were not led by the government, which is the way the old system worked. But in some ways, the deal sounded very typically Japanese. The banks indicated it would take several years to combine operations under a holding company, and they did not identify which bank would be the surviving entity. They also preferred to use the word "consolidate" rather than "merge," though clearly their plans call for a merger. The most important issue may be that none of the banks is healthy, and it is questionable whether they would have survived to get to this point in any country but Japan. Over the past four years, the three banks have lost more than $20 billion. The strongest argument supporting Japan's deregulatory momentum is that while the bank deal came as a surprise, it didn't come out of the blue. The government has been working on financial deregulation since 1996 when it accepted the idea that Japanese banks could only improve themselves by facing stiffer international competition in the Tokyo market. Under "Big Bang" deregulation, for example, foreign players gained greater access to the Japanese market, and banks could sell mutual funds. Then came Japan's financial crisis, in which banks were finally caught holding massive loads of bad loans they hadn't wanted to acknowledge because they believed Japan's weak economy would eventually improve. When it didn't, they were forced to deal with $1 trillion of bad loans. Earlier this year, the government finalized a bailout of the banking sector, doling out billions of dollars to 15 banks -- including all three of the merging banks -- in exchange for promises that the banks would get their houses in order. The merger is clearly a result of the bailout. Overall, the banking industry has undergone a quiet revolution in the past two years, since a major regional bank in Northern Japan went bankrupt. In the past year, the government seized two big insolvent banks, while several smaller trust banks have arranged mergers or alliances. The Financial Supervisory Agency, Japan's newly created financial watchdog agency, has predicted that the number of major banks would decline dramatically. With Friday's merger announcement, the number of major banks operating independent of any alliance has declined from 20 to nine. IRIDIUM: Ebay Online Removes Customer's Offer To Auction Shares --------------------------------------------------------------- Auction house eBay Inc. removed a customer's offer to auction shares in satellite telephone company Iridium LLC, saying it was against company policy to sell stocks on its site. Trading in shares of Iridium, which allows customers to make phone calls from anywhere in the world via a system of 66 satellites, has been halted on Nasdaq since last Friday, when Iridium filed for Chapter 11 bankruptcy protection. A shareholder had offered to sell a stock certificate for 1,300 Iridium shares through eBay, with an asking price of at least $6,500. That would value the shares at $5 each. The stock last traded on Nasdaq last Friday at 3-1/16. The listing, which several legal experts and stock traders said was the first such offering they had heard of, sparked debate about whether it was legal to offer stock certificates online while exchange trading in the shares was halted. A spokesman for San Jose, Calif.-based eBay said the company does not allow customers to sell stock on its site because of possible legal and regulatory issues. "There are a number of complex sets of regulations that can apply to stock sales," Kevin Pursglove said in a telephone interview. "Because of the complexity, we just decided that we would not allow the sale of stock on our site." Pursglove said the ban on stock sales has been in place for several months. The Iridium shares found their way onto the site because eBay does not pre-screen items listed for auction, but relies on other customers to patrol the site and ensure the offerings meet its requirements, he said. Trading in Iridium shares was halted last Friday after the company filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. Iridium has struggled to sign up subscribers to its pricey service and has fallen well short of its revenue targets. IRIDIUM: Rejected Proposal Contained Inaccurate Data ---------------------------------------------------- Iridium LLC revealed the basis of its pre-bankruptcy negotiations with its creditors, and the satellite telephone operator says that certain projections provided to its bondholders during those negotiations now contain inaccurate information. Iridium made the disclosures in a Form 8-K filed with the Securities and Exchange Commission, which, according to widespread reports, contained its latest restructuring proposal. The offer made late last week, if approved by creditor constituencies, would have given bondholders a third of the company's equity and holders of an additional $500 million in debt obligations another 12 percent of the equity. Nevertheless, Iridium said its bondholders did not agree to the proposal. (The Daily Bankruptcy Review and ABI Copyright c August 20, 1999) LACLEDE STEEL: Operating In Difficult Market -------------------------------------------- On November 30, 1998, as a result of a decline in Laclede Steel Company's results of operations during the nine months ended September 30, 1998 reflecting, among other factors the deterioration in steel demand and selling prices since the end of 1997, the company and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The company is in possession of its properties and assets and continues to operate with its existing directors and officers as debtors-in-possession. Laclede intends to present a plan of reorganization to the Bankruptcy Court to reorganize the company's businesses and to restructure the its obligations. The exclusive filing time period has been extended by the Bankruptcy Court until September 30, 1999. Net sales decreased by $20.5 million in the quarter ended June 30, 1999 to $56,354, compared to the same period of the prior year when net sales were $76,840. This reflects a 23.1% decrease in steel shipments, as well as a 5.9% decrease in average sales prices for steel products. The company says sales efforts in the quarter ended June 30, 1999 continued to be hampered by the overall weak demand for steel products. and that shipments of wire products were adversely affected by the shutdown of the company's Memphis Wire Mill in July 1998. The company experienced a net loss in the quarter ended June 30, 1999 of $1,627 as compared to the net loss of $65,468 suffered in the same quarter of 1998. Net sales decreased by $56.7 million in the nine months ended June 30, 1999 to $184,363 when compared to the same period of the prior year when net sales were $241,068. Net losses in the same nine month period ended June 30, 1999, were $3,466, in the nine month period of 1998 net losses were $7,178. LONG JOHN SILVER: Court Approves Financial Plan ----------------------------------------------- Long John Silver's announced that the U.S. Bankruptcy Court for the District of Delaware has approved its plan of reorganization paving the way for closing on the sale of the company to A&W Restaurants Inc. on Sept. 1. According to John M. Cranor, chairman and chief executive officer for the seafood chain, "Our emergence from Chapter 11 marks a major milestone in the company's history. In addition, our merger with A&W is a testament to the strength of the brand. Approval of our plan allows us to restructure our balance sheet and escape the burden of the large debt we've been carrying since the 1989 leveraged buyout. "Several refinancing efforts since the LBO were well-intentioned but half- step measures that failed to free up cash flow for operations and capital improvements. As of today, Long John Silver's has a fresh start and access to sufficient capital to grow the business in the years ahead," Cranor said. Long John Silver's faced many serious financial challenges since 1989. The company was acquired by senior management and a group of New York investment firms for more than $600 million. In March of this year, Long John Silver's board entered an agreement to merge with A&W Restaurants as part of its reorganization plan. Under the terms of the plan both companies will become wholly- owned subsidiaries of a new holding company -- Yorkshire Global Restaurants. Long John Silver's will maintain its support center in Lexington. A&W Restaurants will continue to operate from its headquarters in Farmington Hills, Mich. Long John Silver's is the nation's largest quick service seafood restaurant chain with more than 1,200 restaurants in 37 states. The company's two top executives -- John M. Cranor III, chairman and chief executive officer, and Nana Mensah, president and chief operating officer, will resign as part of the merger agreement and might start a restaurant business of their own, Cranor said. NEXTWAVE: DIP Lender Endorses and Supports Plan ----------------------------------------------- BFD Holdings, Ltd., the general partner of the super majority participant in NextWave Telecom Inc.'s Debtor In Possession loan, today announced that it has reaffirmed its continuing support for, and endorsement of, NextWave's First Amended Plan of Reorganization and urges NextWave's creditors and equity holders to vote in favor of that Plan. BFD noted that last week U.S. Bankruptcy Court Judge Hardin has issued a Temporary Restraining Order subject to further consideration at a subsequent hearing restraining Nextel Communications, Inc. (Nasdaq: NXTL) from further attempts to interfere with NextWave's reorganization efforts absent further order of the Bankruptcy Court. In response to these events, an official of BFD stated, "The current plan, as proposed by NextWave, is not only fair and reasonable to all parties affected, it is the only confirmable plan that has been presented to the Bankruptcy Court, under which NextWave can get out of bankruptcy." BFD has read Nextel's recent 8K related to their FCC/DOJ understanding. The Nextel 8K annexes the deal term sheet as its first exhibit. Investors are also urged to read the second exhibit to the 8K , which is the cover letter to the FCC/DOJ deal. That cover letter plainly states that this agreement is merely FCC staffers agreeing to recommend that the FCC accept the term sheet agreement. Therefore earlier statements from Nextel alluding to having "reached agreement with the US Department of Justice and the FCC, and received their endorsement of Nextel's contemplated plan," were premature and, in BFD's view, perhaps somewhat misleading. It is clear from all of the documents that the FCC has not granted Nextel any of the licenses in question, nor has it even formally agreed to the basic terms of the deal. Moreover, to those familiar with FCC rules and regulations, it is rather obvious that such a deal, if actually approved by the FCC, would likely require significant further FCC waivers, through a very extensive and lengthy rule making process. Those waivers would include a waiver of the applicable designated entity and unjust enrichment rules for the Entrepreneur's Block. BFD is concerned that the purpose of the FCC/DOJ/Nextel agreements may merely be to stall or derail the debtor's Plan of Reorganization. The C Block Spectrum covered by these rules was intended to create competition for the incumbent wireless providers and to give small entrepreneurial businesses the chance to enter the wireless business. NextWave is uniquely suited to do this, as it plans to be a "carrier's carrier" or wholesaler of airtime. This will allow many resellers to enter the wireless business without having to invest billions of dollars into network equipment and licenses, creating competition and reducing prices. BFD believes that if the FCC were to approve the current "term sheet" deal with incumbent carrier Nextel it would appear to eviscerate Congress's intended purpose of C Block Spectrum use. Furthermore, if the FCC is interested in changing the use purposes of this spectrum, the agency would likely require congressional approval before agreeing to transfer C Block licenses to Nextel. While it does not appear that the FCC and the DOJ have entered into serious settlement discussions with NextWave, the FCC staff's expression of its inclination to settle the case through an agreement with Nextel seems to signal a willingness to settle the case. BFD is encouraged that such efforts will commit the FCC to putting the C Block Spectrum into public use, rather than just continuing the litigation. However, BFD is disheartened that FCC staffers would seek to settle the NextWave litigation through Nextel, rather than settle with NextWave, which is now fully financed and poised to initiate immediate buildout of the most advanced wireless network to serve the United States. BFD remains hopeful that the FCC commissioners and the DOJ will work with NextWave to settle their differences. MARKER INTERNATIONAL: Affiliates File Chapter 11 ------------------------------------------------ Salt Lake City's Marker International, a manufacturer of ski bindings and snowboards, and two of its affiliates filed chapter 11 yesterday in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, according to Reuters. Marker, a holding company that operates through two affiliates, DNR North America Inc. and DNR USA Inc., listed assets of $6.3 million and liabilities of $78.2 million. In March, Marker said it agreed to be acquired by CT Sports Holding AG of Switzerland, and the July 31 purchase agreement that was made provided for the sale to be effected through a pre-negotiated chapter 11 that was to commence by today. Marker's chief executive, Peter Weaver, said that the company had successfully restructured all of its major credit agreements and that it hoped to emerge from chapter 11 in 30-50 days. (ABI 20-Aug-99) MARVEL ENTERPRISES: October Acquisitions Boost Sales/Losses Shown ---------------------------------------------------------------- Marvel Enterprises Inc.'s net sales increased 26% to approximately $61.5 million for the three months ended June 30, 1999 from approximately $48.7 million in the corresponding 1998 period. The increase was said to be due primarily to the inclusion of approximately $7.1 million in sales from the Licensing division and approximately $10.8 million in sales from the Publishing division in the 1999 period. The Licensing and Publishing divisions were acquired on October 1, 1998 and were not included in the company's financial results for the 1998 period. Toy Biz sales decreased by approximately $5.1 million from the 1998 period to the 1999 period primarily due to shipment of product related to the Godzilla feature film in the 1998 period that did not recur in the 1999 period, and a decline in the sales of Marvel-related product, offset by sales of World Championship Wrestling action figures, a product line that was introduced in 1999. Notwithstanding the higher net sales in the June 1999 quarter net loss was $9,070. In the comparable 1998 period net income was $2,106. The company's net sales increased 50% to approximately $136.8 million for the six months ended June 30, 1999 from approximately $91.3 million in the corresponding 1998 period. The increase in that period was due primarily to the inclusion of approximately $22.4 million in sales from the Licensing division and approximately $21.2 million in sales from the Publishing division in the 1999 period. Net loss experienced in the six months ended June 30, 1999 was $11,997 as opposed to net income of $3,182 in the same period in 1998. ONEITA INDUSTRIES: Judge Orders Sale ------------------------------------ As reported by The Post and Courier, Charleston, S.C. on August 19, 1999, a bankruptcy judge has ordered that a trustee take control of Oneita Industries and sell what's left of the once thriving T-shirt and baby clothes maker to settle debts. The ruling signals the latest -- and one of the final -- chapters for the North Charleston-based textile company, which disclosed this spring that it planned to wind down operations and close or dispose of its plants and equipment after 125 years in business. The liquidation had proceeded via Chapter 11 of the U.S. Bankruptcy Code, where the company could retain some oversight of its business. Late Friday, the case was converted to a Chapter 7, where a trustee manages the sale of properties. The move came over the objections of major creditor Foothill Capital, according to bankruptcy court filings in Delaware where Oneita is incorporated. Michael B. Joseph, a Wilmington, Del., attorney who specializes in bankruptcy law, was named interim trustee this week. U.S. Bankruptcy Judge Mary F. Walrath is presiding judge. Oneita, which employed 2,100 people as recently as this winter, had been reduced to a skeletal crew. It has closed all its operations, including its North Charleston headquarters, which once had 120 workers; its Andrews sewing mill employing 100 people; and larger plants in Alabama and in Jamaica. The company in April sold its Juarez, Mexico, sewing plant to South Carolina Tees Inc., headquartered in Columbia. It also disposed of unsold T-shirts at its Atlanta warehouse and held a court-ordered sale of equipment in July. Once the nation's fourth largest T-shirt maker, Oneita rolled up $135 million in losses in its last three years as an apparel glut, lower-priced imports and competition dried up sales and compressed profit margins. The downward cycle came on the heels of Oneita investing more than $10 million in a state-of-the-art plant in Fayette, Ala. In 1996, the company cut dozens of middle management jobs and last year closed a mill in Kinston, N.C., but could not stop the slide. In early 1998, Oneita filed for protection from creditors, disclosing plans to restructure $70 million in debts. Creditors originally backed the reorganization but eventually balked as the company said it was unable to meet certain financial conditions of the debt refinancing. Oneita stock, which trades on the Nasdaq Bulletin Board under the symbol ONTAQ, closed Wednesday unchanged at 3 cents a share. PEOPLES CHOICE TV: Sprint Merger Pending ---------------------------------------- Revenues for Peoples Choice TV Corporation decreased $1.6 million, or 23%, from the three month period ended June 30, 1998 to 1999 and $3.0 million, or 22%, for the six month period ended June 30, 1999. Revenues for the 1999 three month period were $5,395,408; for the 1998 period, $7,019,170. Revenues of the 1999 six month period were $10,994,225; for the six month 1998 period, $14,017,848. For the three and six month periods ended June 30, 1999, the company incurred net losses of approximately $18.6 million and $39.0 million compared to $20.7 million and $39.0 million for the comparable 1998 periods. These net losses are principally attributable to the significant expenses incurred in connection with the development of the company's business. The company expects to continue to incur net losses while it develops and expands its wireless communications systems. On July 7, 1999, at a special meeting of Peoples Choice TV's stockholders, the company's common and preferred stockholders approved a merger agreement to merge the company with Sprint Corporation. Consummation of the merger remains subject to customary closing conditions, including receipt of approval from the Federal Communications Commission. As part of the merger, Sprint will acquire all of the frequency licenses and leases the company holds. If the merger has not closed by December 31, 1999, the merger agreement may be terminated by Sprint or the company unless the terminating party has defaulted under the agreement. The company cautions that there can be no assurance this merger will be completed. PINNACLE MICRO: Without Immediate Funding Bankruptcy Looms ---------------------------------------------------------- As recently as two weeks ago Pinnacle Micro Inc. quoted continuing adverse operating results as having caused the company to incur significant losses and experience severe cash constraints. Sales have continually declined in light of significant competition, price pressures and the uncertainty on the part of potential customers over the financial condition of the company. The company has been unable to raise alternative sources of funding to fund operating losses. The company has warned that absent an immediate infusion of capital or significantly increased sales the company will seek protection under the Federal bankruptcy laws. Sales have continued to show substantial losses, with quarterly sales significantly below historical levels and those levels required for profitability, and the company's liabilities have significantly exceeded its assets. The company's liquidity position continues to be severely constrained. As a result, the company is unable to pay its trade debt on a timely basis. Pinnacle Micro has sought and been unable to obtain a forbearance agreement with its creditors. The company advises that in the event it is unable to obtain some sort of agreement with the secured and/or unsecured creditors and immediate funding, it will be unable to operate as a going concern and indicates, once again, that it will seek protection under the Federal bankruptcy laws. Net sales were $1,788,000 and $4,006,000 for the thirteen weeks ended March 28, 1998 and March 27, 1999, respectively, representing a year to year decrease of 55%. The decrease in sales is primarily attributable to decreased unit sales as a result of increased competition, the company's inability to acquire products for sale because of the company's lack of financial resources and the discontinuance of certain of the company's legacy products. Virtually all of the company's vendors will only sell to the company on a prepay basis. The first quarter of 1999 was adversely affected by significant declines in the prices of disk drives, continued uncertainty among customers created by the news of the company's operational and financial difficulties, and the company's inability to purchase product because of its financial condition. Net losses for the first quarter of 1999 were $752,000 as compared to net losses in the same quarter of 1998 of $938,000. PROTEAM.COM: Announces Voluntary Chapter 11 Filing -------------------------------------------------- Genesis Direct, Inc., doing business as PROTEAM.com, (Nasdaq:PRTM) stated today that it has filed a voluntary petition to reorganize under Chapter 11 of the United States Bankruptcy Code. Under Chapter 11, PROTEAM.com will continue to operate its business under court protection from creditors while it formulates a reorganization plan. The petition was filed in the U.S. Bankruptcy Court of Newark, New Jersey. The Company determined that seeking Chapter 11 protection was appropriate in order to continue the operation of its core business. PROTEAM.com has obtained debtor-in-possession (DIP) financing to fund its ongoing operations. Harry Usher, recently appointed by the Board as Chief Executive Officer of PROTEAM, stated, "While the decision to file for Chapter 11 was difficult to make, it clearly represented the most viable option as we pursue a restructuring plan for our Company. Our core sports business is strong, and PROTEAM continues to be the leader in innovative thinking as proven by its groundbreaking ability to combine television, print, radio and Internet marketing and sales strategies. Due to these factors, we expect to emerge from this process the continued leading e-tailer in the fan-based sports market." PROTEAM.com is a leading e-tailer specializing in the marketing and sales of sports and sports related products to both fans and participants. The Company offers products directly to consumers through several targeted websites and complementary catalogs, television and radio advertising and other electronic broadcast and print media. STEEL HEDDLE: 2nd Quarter Sales Rise - Net Losses Continue ---------------------------------------------------------- Steel Heddle Group, Inc. is a Delaware corporation incorporated in 1998. Steel Heddle Group is a holding company whose wholly- owned subsidiary Steel Heddle Mfg. Co., a Pennsylvania corporation, manufactures products and loom accessories used by textile weaving mills and processes metal products from its wire rolling facilities for use in the electronics, solar power and automotive industries, among others. The company's manufacturing plants are located in the southern United States, Mexico, and Belgium. The company sells to foreign and domestic companies. Net sales increased $85 to $17,611 for the three months ended June 26, 1999 compared to the three months ended June 27, 1998, however, the company incurred a net loss of $2,144, 12.2% of net sales, for the three months ended June 26, 1999 compared to the net loss of $109, 0.6% of net sales, for the three months ended June 27, 1998. Net sales decreased $652 for the six months ended June 26, 1999 compared to the six months ended June 27, 1998. The company incurred a net loss of $4,549, 12.6% of net sales, for the six months ended June 26, 1999 compared to net income of $2,392, 6.5% of net sales, for the six months ended June 27, 1998. THREE D DEPARTMENTS: Universal Capital to Manage Liquidation ------------------------------------------------------------ Universal Capital Group announced that it was the highest bidder at the U.S. Bankruptcy Court auction to manage the inventory liquidation for thirteen Three D Departments retail outlets, including six stores in Arizona; three stores in California; and four stores in Connecticut. Universal Capital Group was one of five companies to submit bids to handle the inventory liquidation for the closing outlets. Universal provided the highest bid and was appointed sole liquidator by the U.S. Bankruptcy Court for the Central District of California - Santa Ana Division for the 13 outlets. Universal began the liquidation sales on August 18, 1999 and is still readying the stores for the large crowds expected. The sale will continue until all inventory, which is valued at $14 million, is sold. The Three D outlets participating in the inventory liquidation include: Connecticut ----------- 532 Bushy Hill Rd. Simsbury (Farmington Valley Mall) 1293 Silas Deana Hwy. Wethersfield 425 Post Rd. Westport 665 Boston Post Rd. E Old Saybrook California ---------- 22025 Hawthorne Blvd. Torrance 16315 Culver Dr. No. 180 Irvine 27815 Santa Margarita Pkwy. Mission Viejo Arizona ------- 8999 E. Indian Bend Rd. Scottsdale 8939 E. Indian Bend Rd. Scottsdale 12805 North Tatum Blvd. Phoenix 1919 E. Camelback Rd. No. 128 Phoenix (Camelback Colonnade Mall) 8154 W. Bell Rd. Glendale 1345 S. Alma School Rd. Mesa WASTE SYSTEMS: Over 1/3 Common Stock Held By DDJ & Affiliates ------------------------------------------------------------- DDJ Capital Management, LLC, together with B III Capital Parners, L.P. and DDJ Capital III, LLC beneficially own 38.8% of the outstanding shares of common stock of Waste Systems International Inc. On July 30, 1999, the Fund purchased 571,429 shares at a price of $7.00 per share through a private placement by Waste Systems. Presently, then, the Fund beneficially owns, and DDJ III and DDJ beneficially own as general partner and investment manager, respectively, of the Fund, 8,019,955 shares (assuming conversion of all of its notes and exercise of all its warrants). David J. Breazzano and Judy K. Mencher, each a principal of DDJ, serve on the Board of Directors of Waste Systems and have been granted stock options pursuant to the company's 1995 Stock Option Plan for Non-employee Directors. As of the date of stock filing report, Mr. Breazzano may be deemed to beneficially own 7,000 shares of common stock as a result of ownership of stock options exercisable within 60 days. Also as of the date of that filing, Ms. Mencher may be deemed to beneficially own 6,685 shares of common stock as a result of ownership of stock options exercisable within 60 days. WICKES: Showing Increased Sales And Income For 1999 --------------------------------------------------- Wickes Inc. has made two acquisitions during 1999, both component facilities, for a total cost of $7.2 million. In January the company acquired the assets of a wall panel manufacturer located in Cookeville, Tennessee and at the end of March Wickes acquired the assets of Porter Building Products, a manufacturer of trusses and wall panels, located in Bear, Delaware. On July 8,1999, the company entered into a First Amendment to its Credit Agreement with its bank lenders. Under this amendment, the definition of unused availability contained in the company's revolving line of credit agreement was modified. Formerly, "unused availability" was defined as the lesser of $160 million or the borrowing base, less the total of outstanding loans and credits. As modified, "unused availability" means the borrowing base less the total of outstanding loans and credits. As a result, the maximum borrowing under the revolving credit agreement of $160 million can now be fully utilized by Wickes. Under the former definition the maximum was limited to $145 million. Wickes' net income for the three months ended June 26, 1999 was $3.6 million compared with a net income of $2.8 million for the three months ended June 27, 1998. The increase in net income for the three-month period is said to be primarily the result of increased sales and gross profit, and other operating income. The positive impact of these changes was partially offset by increases in selling, general and administrative, interest and depreciation expenses. Net sales for the periods above,i.e., the three months ended June 26, 1999, were $288.8 million, 21.8% above the 1998 same period net sales of $237.1 million. Net income for the first six months of 1999 was $311,000 compared with a loss of $4.0 million for the first six months of 1998. Net sales for the same periods were $479.9 million in 1999, $405.9 million in 1998. WILSHIRE FINANICAL: Announces Suspension of CEO and President ------------------------------------------------------------- Wilshire Financial Services Group Inc. (Nasdaq:WFSG), announced the suspension of its Chief Executive Officer, Andrew Wiederhorn and its President, Lawrence Mendelsohn from their duties as employees of the company. The company has recently emerged from bankruptcy; its plan of reorganization became effective on June 10, 1999. As part of the restructuring of the company approved by the Bankruptcy Court, several new independent directors were appointed to the company's Board, constituting, in the aggregate, a majority of the new Board. After evaluating the existing management of the company, the Board today resolved that it would be in the best interests of the company to suspend Messrs. Wiederhorn and Mendelsohn from their duties as employees of the company for approximately two weeks. During the next two weeks, the Board will have the opportunity to consider significant issues relating to the leadership and strategic direction of the company, including whether the interests of the company would be best served by the appointment of new management. In the interim, the Board has contracted the services of a consultant to advise the Board on the day-to-day affairs of the company. ********** 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, 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 * * *