/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990831.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, August 31, 1999, Vol. 3, No. 168 Headlines APS: Disclosure Statement Hearing Held on August 27, 1999 APS: Summary of First Amended Joint Liquidating Plan AUTODEPOT: Declares Bankruptcy BELLEFLEUR: Enters Chapter 11 Bankruptcy Protection BOSTON CHICKEN: Seeks Compromise With Harry's Farmers Market BOSTON CHICKEN: Delay Reporting Second Quarter BRUNO'S: Strike Votes Taking Place For Union CAJUN ELECTRIC: Settlement Reached To End Bankruptcy CHASTAIN CAPITAL: HBK "Group" Holds 6.8% Of Common Stock COMMODORE APPLIED TECHNOLOGIES: Changes Auditing Firms CONTIFINANCIAL: Annual Meeting To Be Held In NYC On 9/14/99 EATON'S: Creditor Contests Receiver in Liquidation ERLY INDUSTRIES: Confirmation of Plan/Changing Auditors EQUITEX: $3.5 Million In Escrow Pending Availability Of EQUITEX INC: Changes Accountants To Gelfond Hochstadt Pangburn, EUROWEB INTERNATIONAL: Buys Czech Internet Provider HARVARD INDUSTRIES: Losses Mount Amid Concern For Future ICO GLOBAL: Case Summary & 20 Largest Unsecured Creditors ICO GLOBAL: Case Summary & 20 Largest Creditors ICO GLOBAL: Case Summary & 20 Largest Creditors ICO GLOBAL: Case Summary & 20 Largest Unsecured Creditors ICO GLOBAL: Files Voluntary Chapter 11 Petition LESLIE FAY: Chairman/CEO & "3 Cities" Agreement For Board Vote LEVITZ: Statement of Operations LIVENT INC: Completes Sale of Assets LOEHMANNS: Boyar Asset Managaement Reports Stock Sale MEDPARTNERS: Reports Increased Revenue, Losses Continue MOBILEMEDIA COMMUNICATIONS: Terminates Registration Of Notes NATIONSWAY TRANSPORT: Debtors' Reply to Motion to Convert NATIONSWAY TRANSPORT: Senior Lenders Oppose Motion to Convert NEUROMEDICAL SYSTEMS: Losses Of $500,000 In July PITTSBURGH PENGUINS: Lemieux Asks For Another Date PLANET HOLLYWOOD: Investor Group To Supply Necessary Funding SERVICE MERCHANDISE: Taps Peter J. Solomon Company Ltd. SHOLODGE: Massachusetts Financial Holding 1.2% In Shares SMARTALK TELESERVICES: AT&T Suggests $4.5 M Less On Their Note SPECTRAN: Lucent Extends Tender Offer For Spectran Stock SUNSTAR HEALTHCARE: Options For Possible Sale Of Securities TED PARKER: Court Approves Sale VERTEX COMPUTER: March Losses Reported ZENITH ELECTRONICS: LG Electronics To Own Reorganized Company Meetings, Conferences and Seminars ********** APS: Disclosure Statement Hearing Held on August 27, 1999 --------------------------------------------------------- John C. Longmire, Esq., representing the Debtors, submitted an Amended Disclosure Statement to Judge Walsh to reflect the changes made to the Plan after negotiating with the Committee. Mr. Longmire stepped the Court through the substance of those changes, stressing that the Debtors are convinced that the Plan represents the best possible result for parties-in- interest given the liquidation of the Debtors' estates -- especially in a case where secured lenders recover less than par. Two additional changes were made to the Plan and Disclosure Statement, Mr. Longmire explained, to accommodate informal comments submitted to the Debtors by the Securities and Exchange Commission and the Pension Benefit Guaranty Corporation. * The SEC asked that the Plan not only authorize the Debtors to dissolve the APS Holding after its wind-up but also direct that the dissolution is to occur. * The SEC asked that the Plan make it clear that all fees payable to the Indenture Trustee will be subject to a review for their reasonableness by the Bankruptcy Court. * The PBGC asked that the Disclosure Statement contain a paragraph explaining that the Debtors requested termination of their Pension Plans pursuant to 29 U.S.C. Sec. 1342(a) as of January 12, 1999, and that the PBGC was appointed as statutory trustee for the Pension Plans. Except for the informal comments from the SEC and the PBGC and the objections raised by the Committee in the course of its negotiations with the Debtors, Mr. Longmire reported with delight, the Debtors received no other opposition to their Disclosure Statement. The Debtors are confident, Mr. Longmire said, that the Disclosure Statement meets the adequate information standards set for in 11 U.S.C. Sec. 1125 and, accordingly, moved Judge Walsh for approval of the Debtors' Disclosure Statement. "The Disclosure Statement is approved," Judge Walsh ruled. Mr. Longmire advised Judge Walsh that the Debtors and Bankruptcy Services, LLC, as their claims and balloting agent, will be prepared to print and mail the disclosure statement within the next two weeks. Turning his attention to scheduling matters, Judge Walsh fixed October 5, 1999 as the deadline for parties to file any objections to confirmation; October 6, 1999 as the deadline for creditors to return their ballots indicating acceptance or rejection of the Amended Plan; and October 19, 1999 as the date for a Confirmation Hearing. (APS Bankruptcy News Issue 21; Bankruptcy Creditors' Service Inc.) APS: Summary of First Amended Joint Liquidating Plan ---------------------------------------------------- After engaging in negotiations with the Committee, the Debtors propose their First Amended Joint Consolidated Liquidating Plan of Reorganization. The material modifications are: (1) The deathtrap provision cutting-off any distribution to Class 4 Creditors in the event they vote to reject the Plan is stricken; (2) The creation of the Liquidation Trust is automatic and is no longer contingent on the acceptance of the Plan by Class 4 Creditors; (3) Released Parties include officers and directors in the Debtors' employ from and after the Petition Date (meaning no officer or director terminated pre-petition obtains a release); (4) Net recoveries by the Liquidation Trust on account of Class 4 Litigation Claims, to the extent they exceed 3% (rather than 2%) of the Aggregate Amount of Unsecured Claims, will be shared pro rata with the Tranche B Lenders rather than split 50/50; (5) Funding for the Liquidation Trust has been increased by $100,000 to $350,000; The economic projections put forth by the Debtors estimate that the Banks are "gifting" up to $9.8 million to Class 4 Creditors owed an estimated $200 million, which equates to a dividend of up to 4.9%. (APS Bankruptcy News Issue 21; Bankruptcy Creditors' Service Inc.) AUTODEPOT: Declares Bankruptcy ------------------------------ After failing to find a buyer, Auto Depot, a vehicle leasing company, has filed for bankruptcy, according to The Toronto Star. The company had hoped to reopen if it could find new investors, but no parties have come forward. AutoDepot listed assets of $32.4 million and liabilities of $36.5 million. Bankruptcy trustee Grant Thornton Ltd. has scheduled a Sept. 8 meeting of creditors to address claims. The major secured creditor is the Bank of Nova Scotia, which has a $32.3 million claim. AutoDepot abruptly closed operations in early July, and the Ontario Court of Justice then approved an order putting the company into receivership. (ABI 30-Aug-99) BELLEFLEUR: Enters Chapter 11 Bankruptcy Protection --------------------------------------------------- The San Diego Union-Tribune reports on August 28, 1999, that Carlsbad's swank Bellefleur Restaurant and Winery stumbled into Chapter 11 bankruptcy protection this week as owners take steps to reorganize the privately held company. Bellefleur-Carlsbad LLC sought protection from creditors Monday. The limited liability company lists assets of $757,000 and debts of $1.02 million. Located at the Carlsbad Company Stores outlet mall, the 75- employee restaurant remains open. Colin W. Wied, a San Diego lawyer handling the bankruptcy, plans to move forward quickly, filing a restructuring blueprint with the court in 100 days. Founded two years ago by a group of about 30 investors, the Bellefleur sits near the top rung of North County's fine-dining eateries. The 10,000-square- feet restaurant has gross revenue of $3.6 million annually, Wied said, and includes a micro-winery and wine bottling operation. John and Martha Culbertson, owners of the Fallbrook winery, were the principal investors and managers of the restaurant. They decided to leave the day-to-day management on July 1, although they remain as investors. Investors have been searching for new management. Meanwhile, the state Board of Equalization stepped in Aug. 17 because the Bellefleur owed back taxes. Under order from the board, the Bellefleur stopped accepting credit cards. The board then collected a portion of each day's cash and check receipts for back taxes, Wied said. Since the bankruptcy filing, the restaurant has returned to accepting credit cards. Culberston said the Bellefleur's problems stemmed from its location. Because it is tucked into the north corner of the massive mall property, shoppers must walk across a parking lot to reach the restaurant. "Our dinners were great, right on projections," Culbertson said. "Lunches never came up to our expectations because we weren't getting the traffic from the mall." Mall developers are expanding the center, adding 60,000 square feet for 15 to 20 shops. The expansion will bring mall shoppers right up to the Bellefleur's doorstep. When the new shops open Nov. 1, Culbertson thinks the Bellefleur's prospects will improve because of the additional foot traffic. To restructure the company, more capital is needed, Wied said. Existing investors and others have expressed interest in providing the necessary funding, he added. The restructuring also might lead to the closure of the micro-winery operation. "The big stone around its neck appears to be that winery," Wied said. BOSTON CHICKEN: Seeks Compromise With Harry's Farmers Market --------------------------------------------------------------- Prior to the Petition Date, Progressive Food Concepts, Inc., one of Boston Chicken's debtor-affiliates, entered into a series of transactions with Harry's Farmers Market, Inc., a public company which owns and operates supermarket mega-stores and convenience stores specializing in high-end perishable food products in the Atlanta, Georgia area. HFMI was to be the vehicle through which BCI, under prior management, was going to learn how to do "fresh stores" and which formed the basis of the Boston Market store conversions in Charlotte, North Carolina. The settlement contemplates a complete termination of the business relationship between HFMI and PFCI, releases of all claims being given by each party, and payment by HFMI to the Debtors of $4,000,000 in cash. Upon receipt of the Settlement Amount by PFCI: (a) HFMI would be deemed to have satisfied all outstanding obligations under the loan agreement and the promissory notes delivered in connection therewith and the loan agreement and notes would be terminated. (b) all warrants and options agreements for the purchase of HFMI capital stock which were issued to PFCI would be deemed terminated and PFCI would return to HFMI such documents as unexercised. (c) PFCI would either, at the option of HFMI, convey to HFMI its intellectual property related to HFMI or terminate its rights to use such intellectual property (including terminating the trust agreement relating to the intellectual property). (d) each of HFMI, Harry A. Blazer and PFCI would release the other parties from all claims and obligations including all of their obligations under the consulting agreements and HFMI's $2,888,995 claim against PFCI and PFCI's servicing obligations for the intellectual property. The Debtors are convinced that this settlement is in the best interest of its estates and their creditors. Moreover, the proposed settlement is based on the Debtors' sound business judgment after careful negotiation. Weighing the (1) probability of success in litigation; (2) difficulties in collecting; (3) complexity, expense, inconvenience and delay; and (4) paramount interests of creditors, Judge Case ruled that the compromise and settlement between the Debtors and Harry's should be approved pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. Further, Judge Case directed that the Settlement Proceeds shall be placed in escrow by the Debtors with any valid liens attaching thereto. H. Rey Stroube, Esq., representing the Debtors, noted that HFMI's offer is conditioned on its ability to obtain financing to borrow the $4,000,000 and its ability to obtain the consent of its senior lender for the transaction. HFMI has advised the Debtors that it has been diligently working to obtain this financing (and has engaged the services of an investment banker to assist in its efforts) and is highly confident that it will be able to obtain such financing within 30 days to permit a prompt closing. HFMI has further advised the Debtors that if such financing is obtained, getting the consent of its senior lender should not be an impediment to concluding the compromise and settlement. (Boston Chicken Bankruptcy News Issue 15; Bankruptcy Creditors' Service Inc.) BOSTON CHICKEN: Delay Reporting Second Quarter ---------------------------------------------- Boston Chicken has advised the Securities and Exchange Commission that the filing of its Annual Report on Form 10-K for the year ending December 27, 1998, and its quarterly reports on Form 10-Q for the quarters ending April 18, 1999 and July 11, 1999, will be delayed. As previously reported, PricewaterhouseCoopers, LLP, the Company's independent auditors, has advised the Company that, absent sufficient competent evidential matter to support both the appropriateness of certain accounting methods and principles and the reasonableness of certain assumptions used by prior management in reporting certain estimates, PWC would likely be unable to opine on the Company's fiscal 1998 financial statements. The Company believed that its 1997 year- end financial statements and possibly certain other prior period financial statements would be re-audited and restated. However, PWC subsequently advised the Company it will not opine on the Company's 1997 or other prior period financial statements. In addition, PWC has advised the Company that because it will not opine on the 1997 year-end balance sheet, it also will not opine on the Company's 1998 cash flow or income statements, and is still in the process of auditing the Company's fiscal 1998 year-end balance sheet. Management believes it could be materially misleading to issue quarterly financial information prior to the completion of the 1998 year-end balance sheet audit and, therefore, does not expect to file its Quarterly Report on Form 10-Q for the quarter ended July 11, 1999 on a timely basis. (Boston Chicken Bankruptcy News Issue 15; Bankruptcy Creditors' Service Inc.) BRUNO'S: Strike Votes Taking Place For Union -------------------------------------------- After last-minute talks did not result in a contract agreement between Bruno's, Inc. workers and management of the Birmingham- based grocery chain, some union workers will vote this week on whether to strike. More than 2,600 Bruno's workers represented by the United Food and Commercial Workers Union have been working at Bruno's and Food Fair stores under the terms of a contract that expired in February 1998. The sides have been unable to agree on details of a new contract, said George Seidenfaden, president of UFCW Local 1657. "The company has made an offer that is not acceptable," Seidenfaden said Friday. "Generally, we don't like the language, the wages or the conditions of the contract." Union workers have stayed on the job because the old contract was extended, Seidenfaden said. The company presented a new contract Friday and canceled the last extension, he said. "We think we can do better than what Bruno's is offering," he said. "Our members have worked hard for this company through its recent problems, and we don't think the company is trying to work with us now." Seidenfaden said he will talk with union members about the proposed contract this week at meetings. He refused to share details about the contract proposal. Union employees at the chain's FoodMax and Food World stores are under separate contracts and are not involved in the voting. Bruno's has more than 11,600 employees at 149 stores throughout the Southeast. CAJUN ELECTRIC: Settlement Reached To End Bankruptcy ---------------------------------------------------- Southwestern Electric Power Company, the Committee of Certain Members and Washington-St. Tammany Electric Cooperative have withdrawn their joint reorganization plan for Cajun Electric Power Cooperative as part of a settlement reached Aug. 26 to end Cajun's four- and-a-half-year-old bankruptcy. In the settlement, SWEPCO has avoided further litigation and obtained a partial recovery of its costs in the matter. The agreement came during a settlement conference ordered by the U.S. District Court in Baton Rouge, La. SWEPCO was one of two remaining bidders for Cajun's non-nuclear assets and the opportunity to sell wholesale power to Cajun's 11 member distribution cooperatives. "We certainly hoped for a different outcome when we set out four years ago to acquire Cajun's non-nuclear assets and provide substantial rate savings to the Cajun member cooperatives and their ratepayers," said Mike Smith, vice president of Central and South West Corp., SWEPCO's parent company. "However, as low bidder it was time for us to bow out and let the other parties close the transaction as quickly as possible so the rates to the co-ops could be lowered as soon as possible," he said. "The fact that we were allowed to recover $7.5 million of our costs, we believe, is an acknowledgment by the court and the other parties of the value SWEPCO brought to the process in lowering rates to the cooperatives and maintaining value for the Cajun estate," Smith said. "The $7.5 million is approximately half of the cost we expect to incur in the Cajun matter. As of June 30, we had incurred approximately $12.7 million," Smith said. "We understand that the cooperatives who supported our plan made a difficult decision in agreeing to the settlement, but one that was in the best financial interests of the cooperatives and their customers," Smith said. "The settlement avoids continued costly litigation for us and for the non- profit co-ops, who have fought so hard on behalf of their members." The Louisiana Public Service Commission also played a key role in the settlement, continuing its emphasis on lower rates and the return to ratepayers of $100 million to $200 million in Cajun's interest escrow funds "The settlement was important to the LPSC and the co-ops because it speeds up the return of the interest escrow funds to rural ratepayers across the state," Smith said. Under the settlement, the co-ops have a number of power supply options, including short-term transition agreements with the winning bidder or going immediately to the open market. "The relationship and mutual respect we have developed with those cooperatives over the four-plus years of this process means a great deal to us, and we certainly hope it continues in the future," Smith said. The Committee of Certain Members includes Beauregard Electric Cooperative, Inc., Dixie Electric Membership Corp., Jefferson Davis Electric Cooperative, Inc., Northeast Louisiana Power Cooperative, Inc., South Louisiana Electric Cooperative Association and Valley Electric Membership Corp. Washington-St. Tammany Electric Cooperative, Inc. (WST) was a co-proponent with SWEPCO and the Committee. Claiborne Electric Cooperative, Inc. which is not a member of the Committee, also supported the SWEPCO/Committee/WST plan. Southwestern Electric Power Co., based in Shreveport, La., is a subsidiary of Central and South West Corp. (NYSE: CSR), a Dallas-based public utility holding company. CHASTAIN CAPITAL: HBK "Group" Holds 6.8% Of Common Stock -------------------------------------------------------- HBK Investments L.P., has shared voting & dispositive power over 500,600 shares of common stock of Chastain Capital Corporation, representing 6.8% of the outstanding shares of common stock of the company. Power is exercised by its general partner, HBK Partners II L.P., whose general partner is HBK Management L.L.C. The shares, purchased by HBK Finance L.P., gives HBK Investments L.P. shared voting and dispositive power under an amended and restated management agreement. HBK Finance L.P., by virtue of beneficial ownership, gives power to exercise voting and dispositive action by its general partner, HBK Fund L.P., whose general partner is HBK Capital L.P., whose general partner is HBK Partners I L.P., whose general partner is HBK Management L.L.C. Power is shared with HBK Investments, L.P. pursuant to their amended and restated management agreement. COMMODORE APPLIED TECHNOLOGIES: Changes Auditing Firms ------------------------------------------------------ Commodore Applied Technologies Inc. terminated its former auditors, PricewaterhouseCoopers, LLC, on August 17, 1999. PricewaterhouseCoopers auditors report on the company's consolidated financial statements for the year ended December 31, 1998 contained an explanatory paragraph relating to the company continuing as a going concern due to its recurring losses from operations and net cash outflows from operations. Following action approved by Commodore's Board of Directors, the company retained Tanner & Co. as its auditors as of August 17, 1999. CONTIFINANCIAL: Annual Meeting To Be Held In NYC On 9/14/99 ----------------------------------------------------------- The annual meeting of the stockholders of ContiFinancial Corporation, a Delaware corporation, will be held in New York City at the RihgaRoyal Hotel, 54th Floor, 151 West 54th Street, September 14, 1999 at 9:00 a.m. to consider and vote on the following: To elect two directors to serve for the ensuing three years and until their successors are duly elected and qualified; to approve amendments to the company's 1995 Long-Term Stock Incentive Plan regarding maximum limits on individual grants thereunder; an increase in the number of shares which may be issued thereunder; to add a performance-based goal which will determine whether certain options to purchase the company's common stock become exercisable by the President and Chief Executive Officer. Additionally consideration and voting will be done on approval of an amendment to the company's Section 162(m) Performance Based Executive Bonus Plan to add certain performance-based goals under which compensation may be paid; and to ratify the appointment of Arthur Andersen LLP as independent accountants for the company for the fiscal year ending March 31, 2000. The Board of Directors has fixed the close of business on July 22, 1999 as the record date for determination of stockholders entitled to vote at the annual meeting. The full text of the proxy statement mailed to stockholders may be found at http://www.sec.gov/cgi-bin/srch-edgar?001005477-99-003966on the Internet, free of charge. EATON'S: Creditor Contests Receiver in Liquidation -------------------------------------------------- Cadillac Fairview Corp. Ltd., which owns or manages 19 properties anchored by T. Eaton Co., may object to the receiver appointed to liquidate Eaton's, according to The Toronto Star. In documents it filed last week, Cadillac Fairview said that conflict of interest is a concern because interim receiver Richter & Partners Inc. has previous relationships with apparel suppliers. It was expected that Cadillac Fairview would ask the court to terminate the 30-day period Eaton's has to file a proposal plan to sell off its core assets. Peter Sharpe, executive vice president of Cadillac, said "I do not believe Eaton's can realistically develop a viable proposal which would meet with the approval of all creditors, including Cadillac Fairview." Cadillac Fairview claims Eaton's owes more than $1 million back rent. (ABI 30-Aug- 99) ERLY INDUSTRIES: Confirmation of Plan/Changing Auditors ------------------------------------------------------- ERLY Industries, Inc. signed a letter of intent on August 13, 1999 with Kellstrom Broadcasting Inc. and Demaree Media, Inc. to acquire the assets and business of four radio stations in Hot Springs, Arkansas for a total purchase price of $4,750,000. ERLY intends to finance these acquisitions through a combination of debt and privately placed equity, although it currently has no binding commitments from third parties to provide such financing. The consummation of these acquisitions is contingent upon ERLY being able to obtain the financing. On August 9, 1999, the bankruptcy court in the joint bankruptcy matters of Watch-Edge International, Inc. and ERLY Industries, Inc. confirmed the Modified Debtors' and ERLY Creditors' Committee Joint Plan of Reorganization and related ERLY Industries, Inc.'s; Watch-Edge, Inc.'s; and ERLY Creditors Committes's Disclosure Statement as modified for the Joint Plan of Reorganization. The complete text of the Joint Plan Of Reorganization of ERLY Industries Inc. may be found, free of charge, at http://www.sec.gov/cgi-bin/srch-edgar?0000898430-99-003400 on the Internet. In the spring of 1999, ERLY's independent accountants, Deloitte & Touche LLP, resigned as ERLY's principal accountant for the audit of ERLY's financial statements. An audit for the fiscal year ended March 31, 1998 was not completed by Deloitte & Touche, neither was an audit performed for the latest fiscal year ending March 31, 1999. In the spring of this year, ERLY engaged Postelwaithe & Netterville, LLP as its principal accountant to audit its financial statements. Postelwaithe & Netterville is currently in the process of auditing ERLY's balance sheet at August 20, 1999. EQUITEX: $3.5 Million In Escrow Pending Availability Of Shares -------------------------------------------------------------- Equitex Inc. experienced a net loss of $701,752 on net revenues of $187,341 for the three months ended June 30, 1999. Net loss again exceeded net income in the six months ended June 30, 1999 where losses reached $1,141,245 and net revenues reported were $409,689. On January 4, 1999, Equitex, Inc. filed with the Securities and Exchange Commission to withdraw its election to be treated as a business development company and elected to be treated for a maximum period of one year as a "transient investment company" as that term is defined in the Investment Company Act of 1940. A business development company is a form of closed-end, non-diversified investment company under the Investment Company Act. Following the withdrawal, the company is no longer subject to the regulatory provisions of the Investment Company Act for business development companies, such as insurance, custody, composition of the board, affiliated transactions and compensation arrangements. In May 1999 gross proceeds of $3,500,000 were received into an independent escrow account for the benefit of the company in exchange for 3,500 shares of Series D convertible preferred stock, which the company is committed to issue. The Series D preferred stock contains the same rights as its Series A,B and C Preferred stock. Because the company does not have sufficient authorized common shares available for issuance, this transaction has not yet been completed. On May 13, 1999, Equitex announced the signing of a letter of intent with First Bankers Mortgage Services, Inc. of Ft. Lauderdale, Florida. The letter of intent calls for the acquisition by Equitex of all of the outstanding capital stock of First Bankers Mortgage Services, Inc. for a combination of Equitex common stock and a commitment of working capital to the ongoing entity. As of June 30, 1999, Equitex made loans totaling $2,750,000 to the mortgage firm which are secured by all of the issued and outstanding common stock of First Bankers Mortgage Services, Inc. From July 1, 1999, additional loans totaling $916,561 have been advanced. The companies have performed customary due diligence and are presently renegotiating certain terms of a definitive agreement executed in June 1999. First Bankers Mortgage Services, Inc. is one of the 70 largest mortgage lenders in the United States operating in 25 states and is the largest privately held mortgage lender in the state of Florida. The mortgage firm profitably originated in excess of $850 million in mortgage loans during 1998. EQUITEX INC: Changes Accountants To Gelfond Hochstadt Pangburn, -------------------------------------------------------------- Equitex, Inc. dismissed Davis & Co., CPA's, P.C. as its independent certified public accountant. Simultaneously with the dismissal of its former accountants, the company approved and engaged Gelfond Hochstadt Pangburn, P.C. to act as its independent certified public accountant as successor to Davis & Co., CPA's, P.C EUROWEB INTERNATIONAL: Buys Czech Internet Provider --------------------------------------------------- Euroweb International Corporation purchased from Mr. Richard Koza and his wife Lucie Kozova, all of the issued and outstanding stock of Luko Czech Net s.r.o., a Czech corporation providing Internet service primarily to businesses located in Prague and other major cities in the Czech Republic. For the shares the company paid $900,000 USD; 450,000 shares of its common stock; and additional shares of Euroweb's common stock to be issued to the couple when the shares are registered, calculated to ensure that at that point, the value of the shares in the transferors issued in accordance with his agreement amounts to USD $900,000, market value. HARVARD INDUSTRIES: Losses Mount Amid Concern For Future -------------------------------------------------------- Harvard Industries Inc. reports sales decreased $77,612 from $206,339 to $128,727 or 37.6% in the quarter ended March 31, 1999. Aggregate sales for the operations designated for sale, or wind down, decreased approximately $80,193 from $89,255 to $9,062 as the company's divestiture program as contemplated under its Plan of Reorganization nears completion. The net loss increased from $3,081 to $14,117 in the quarter cited. Due to the long gestation between the time that an OEM customer awards the company a contract to produce parts for a new platform and the time the company produces those parts (in almost all instances 2 to 4 years), and the considerable designing and planning obligations required of the successful bidder during this period of delay, OEMs were reluctant to award new business to Harvard Industries during the pendency of the company's Chapter 11 case. As a result, the awarded new business during the pendency of the Chapter 11 case was less than would be anticipated under normal conditions. This could have serious effects on the financial strength of the company in the next several years when the recently awarded platforms commence production. Such effects, if experienced, will occur over that extended future period; the company has not yet experienced such effects sufficiently to be able to furnish more specific estimates of the timing or amount to be experienced. ICO GLOBAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: ICO Global Communications Services Inc. 1101 Connecticut Avenue NW Suite 550 Washington, DC 20036 Court: District of Delaware Case: 99-2933 Filed: August 27, 1999 Debtor Attorney: Laura Davis Jones Young Conaway Stargatt & Taylor, LLP 11th Floor, Rodney Square North Wilmington, Delaware 19801 Affiliates of the debtor; ICO Global Communications (Holdings) Limited ICO Global Communications (Operations) Limited ICO Global communications Holdings B.V. Total Assets: $40,895,000 Total Liabilities: $18,348,000 Contingent Unliquidated Unsecured debt: $19,624,000 - 13 holders Common Stock: 500 shares; 1 holder Type of business: Together with its affiliates the petitioner is engaged in developing and commercializing global mobile communications services using a constellation of high performance satellites in medium earth orbit and a global ground telecommunications network. Creditors holding 20 largest unsecured claims: Bank of America 17,756 COMSTAT Mobile Communications 8,703 2 Confer Credit Corporation 5,679 Hogan & Hartson 3,051 MicroAge Computer Centres Inc 2,700 Automatic Data Processing 579 ICO GLOBAL: Case Summary & 20 Largest Creditors ----------------------------------------------- Debtor: ICO Global Communications (Holdings) Limited Clarendon House 2 Church Street - Hamiton HM11 Bermuda Case:99-2959 Total Assets: 2,566,655,000 Total Liabilities: 1,184,291,000 Contingent Unliquidated Unsecured debt: 1,184,291 - 17 holders Common Stock: 207,607,618 - 137 holders Creditors Holding 20 largest unsecured claims: The Bank of New York, as trustee Bonds 494,500,000 The Bank of New York, as trustee Bonds Euro 107,625,000 NEC Corporation 78,924,430 Hughes 99,079,342 KPN Telecom BV 353,361 Harris Research Centre 215,345 RGC Jenkins and Co 19,265 Venner, Shipley & Co. 13,007 Watson, Farley & Williams 3,103 Vinson & Elkins 1,564 ICO GLOBAL: Case Summary & 20 Largest Creditors ----------------------------------------------- Debtor: ICO Global Communications (operations) Limited The Huntlaw Building PO Box 1350 Grand Cayman, Cayman Islands Case: 99-2935 Total Assets: $2,329,852,000 Total Liabilities: $2,317,580,000 Contingent unliquidated unsecured debt: $2,367,193,000 - 6 holders Common stock: 1 share List of 20 largest unsecured creditors: Hughes Space & Communications International Inc. 99,079,342 CSC Computer Sciences Ltd 1,379,256 WAVECOM 300,000 Rohde & Schwartz UK Ltd 272,255 WAVECOM 179,240 Emirates Telecomms Corp. 47,393 ICO GLOBAL: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: ICO global Communications Holdings B.V. Drentestraat 20 1083 HK Amsterdam Total Assets: $706,998,000 Total Liabilities: $694,338,000 Contingent unliquidated unsecured debt: 694,756,000 - 31 holders Common stock: 40,000 shares - 1 holder List of Creditors holding unsecured claims: NEC Corporation 78,924,430 Entel Chile SA 2,047,458 Videsh Sanchar Nigam Ltd. 1,115,915 Cable & Wireless Communication 440,998 Deutsche Telekom 420,250 Telstra Corporation Ltd 245,781 Infonet UK Ltd 73,631 Telecommunications de Mexico 55,205 AMS Management Systems UK Ltd 35,848 Korea Telecom 145,862 Communications Systems Mgmt. Inc. 36,000 Bairds Communications PTY Ltd 16,263 Faculdades Catolicas 17,940 Patricio Reygadas 9,200 UGB-ICO Telecomunicacoes Ltda 13,276 EDS South Africa Pty Ltd 10,992 Perfect Relations Pvt Ltd 4,558 ICO GLOBAL: Files Voluntary Chapter 11 Petition ----------------------------------------------- ICO Global Communications (Holdings) Limited (Nasdaq:ICOGF) announced that it has filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Commenting on the filing, Chief Executive Officer Richard Greco said, "ICO was created to develop and operate a convenient, high-performance, and cost-effective global mobile telecommunications business, and we have made substantial investments to build that business. Additional financial resources will be required to complete our system and begin commercial operations, and we have made considerable progress toward accomplishing these goals. A number of our strategic investors have confirmed their continuing interest in providing the company with financial support." Chapter 11 petitions also were filed in U.S. Bankruptcy Court by three of ICO's direct or indirect wholly-owned subsidiaries: ICO Global Communications (Operations) Ltd., ICO Global Communications Holdings B.V., and ICO Global Communications Services Inc. The ICO holding company and one of its subsidiaries are incorporated in Bermuda and the Cayman Islands, respectively, neither of which has a legal equivalent to Chapter 11 in the U.S. To facilitate a successful reorganization and protect its assets in those jurisdictions, ICO voluntarily presented petitions in those countries, where appropriate local officials have been appointed who will work in conjunction with ICO to achieve the objectives of reorganization. Fifteen direct or indirect subsidiaries of ICO Global Communications (Holdings) Ltd., which are based in various countries in North and South America, Europe, and the Asia- Pacific region, are not filing for Chapter 11 protection. This includes the group's principal employer, ICO Services Ltd., which is based in the United Kingdom. The First Day Orders would include approval to pay normal employee salaries, wages, and benefits, as well as other basic business expenses, without interruption. ICO Global Communications was established in January 1995 as a private company to provide global mobile personal communications services by satellite, including digital voice, data, facsimile, high penetration notification, and messaging services. ICO Global Communications was listed on Nasdaq in July 1998. The New York Times reported on August 28, 1999 that the failure of Iridium made investors reluctant to pour more money into ICO, which plans a similar service using its $4.7 billion system beginning in the third quarter next year. The report stated that a failure by ICO could cause the Hughes Electronics Corporation, which is building ICO's 12 satellites, to take a charge against earnings of $500 million, according to regulatory filings by Hughes. Richard Dore, a spokesman, said today that it was too early to tell how the bankruptcy filing would affect Hughes, a subsidiary of the General Motors Corporation. Hughes owns 2.6 percent of ICO as part of an agreement to eventually buy 4 percent of the company's stock for $93.8 million. Shares of Hughes rose $1.1875 today, to $52.625, apparently because investors now think that Hughes, which had participated in attempts to rescue ICO, will not put any more money into the company. Globalstar also rose $1.1875, to $28.875, because the possible failure of ICO leaves it with one less competitor. Shares of ICO, which brought $12 at the company's initial public offering last summer, fell 62.5 cents, to $3.625, before trading was halted. ICO was created by Inmarsat, an international organization recently turned into a corporation, that provides satellite communications to ships. Many of the investors in ICO are Inmarsat's members, telephone companies worldwide. TRW is also a large investor, with 13.9 million shares, or 6.7 percent, according to an ICO prospectus. Although ICO had already asked for a delay in paying more than $40 million in interest due earlier this month, the bankruptcy filing surprised creditors. ICO has already raised $3 billion of the $4.7 billion it estimates it needs to begin service. But with Iridium's problems clouding the market, ICO recently failed to raise $500 million from a public rights offering despite extending the deadline twice. It then announced a tentative agreement to secure $600 million from strategic investors, which reportedly included Hughes, but that plan also fell apart. More recently, industry executives said, ICO was trying to raise a smaller amount, said to be $400 million. But that plan, which was to be voted on at an investor meeting in Paris on Saturday, has apparently failed, too. The ICO bankruptcy is the latest blow to the satellite industry, which has also suffered from rocket and satellite failures, national-security controversies and tighter export controls. But some segments of the market, particularly direct television broadcasting to home by Hughes's DirecTV and Echostar Communications, continue to do well. LESLIE FAY: Chairman/CEO & "3 Cities" Agreement For Board Vote -------------------------------------------------------------- John J. Pomerantz, Leslie Fay Company, Inc.'s Chairman and CEO holds shared voting and sole dispositive power over 242,598, shared voting power on 2,158,000, and zero shared dispositive power on Fay Leslie's common stock, which represents 38.3% of the outstanding shares of common stock of the company. In the aggregate, he beneficially owns 2,400,598 shares. Those shares include 242,598 shares (3.9% of the common stock), of which 232,598 are subject to presently exercisable stock options, that are directly owned by Mr. Pomerantz; 1,356,120 shares (22.5% of the outstanding shares of common stock) that are directly owned by Three Cities Offshore II C.V.; and 801,880 shares (13.3% of the outstanding shares of common stock) that are directly owned by Three Cities Fund II, L.P. Three Cities Fund II, L.P. is a Delaware limited partnership, formed to invest in securities to be selected by its investment committee. The Fund is based in New York City. Three Cities Offshore II C.V. is a Netherlands Antilles partnership, formed to invest in securities to be selected by its investment committee and conducts it business from its principal address in Curacao, Netherlands Antilles. Under a registration rights agreement between the Leslie Fay Company, Three Cities Fund II, L.P., and Three Cities Offshore II C.V., the company has agreed that, at annual meetings of stockholders of the company following its 1999 annual meeting of stockholders, the Three Cities Funds will have the right to designate a number of nominees to serve as directors constituting at least a percentage of the board equal to the percentage of outstanding shares of common stock then owned in the aggregate by the Three Cities Funds. The Three Cities Funds and Mr. Pomerantz have entered into a letter agreement dated July 26, 1999 in which they have agreed to vote in favor of each of the nominees for director listed in management's proxy for the company's 1999 annual meeting of stockholders and not to take any actions to change the size or composition of the board before the next annual meeting of stockholders of the company following the annual meeting scheduled for August 24, 1999, if at all. The Three Cities Funds and Mr. Pomerantz have also agreed that, for so long as he has the contractual right to designate at least one nominee to the board, the Three Cities Funds and he will agree on the identity of all nominees for director (other than any nominee of someone else who has a contractual right to designate such nominee) and the Three Cities Funds and Mr. Pomerantz will vote for their agreed-upon nominees and against any nominees competing against the agreed-upon nominees. If the Three Cities Funds and Mr. Pomerantz do not agree upon the identity of all of the nominees for director, then he has the right to designate at least 28% of the nominees to the board and the Three Cities Funds have the right to designate at least a percentage of the board equal to the percentage of outstanding shares of common stock then owned in the aggregate by the Three Cities Funds, who must be reasonably satisfactory to Mr. Pomerantz, and the Three Cities Funds and he will vote in favor of the other's nominees. LEVITZ: Statement of Operations ------------------------------- LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES reports for the six months ended June 30, 1999, a net loss of $6,489,000 on net sales of $119,988,000. LIVENT INC: Completes Sale of Assets ------------------------------------ Livent Inc. announced Friday that it has completed the previously announced sale of assets to SFX Entertainment Inc. for cash proceeds of about US$79 million, excluding cash balances purchased by SFX, and for deferred proceeds of about US$37 million, payable in five years, according to a newswire report. Livent and its subsidiaries filed for bankruptcy protection in the United States and Canada last November. The assets include the Ford Center for the Performing Arts in New York, the Pantages Theatre in Toronto and the Ford Center for the Performing Arts/Oriental Theater in Chicago. SFX also acquired Livent's right to current productions. (ABI 30-Aug-99) LOEHMANNS: Boyar Asset Management Reports Stock Sale ----------------------------------------------------- Of the outstanding shares of common stock of Loehmanns Inc., Boyar Asset Management, Inc. beneficially owns and holds shared voting & dispositive power on 171,500 shares representing 1.89% of the outstanding shares of common stock in the company. N.R.M.B., Inc. owns, and shares voting & dispositive power on 133,500 shares, or 1.47% of the outstanding shares. Mark A. Boyar has 3.87% of the outstanding shares of Loehmanns' common stock, represented in the 24,000 shares over which he holds sole voting & dispositive power, and 350,000 shares in which he shares voting & dispositive power. Boyar GP Holdings, Ltd. and Boyar Partners, L.P. each share voting and dispositive power on 21,000 shares, or 0.23% of the outstanding shares of common stock of the company. On July 30, 1999, Boyar Asset Management Inc. sold 169,200 shares of common stock of the company, which were held in client accounts, at a price per share of $0.25. All of the shares sold were effected in the over-the-counter market. As a result of the sale the management firm ceased being beneficial owners of 5% or more of the company's common stock, effective as of that date. MEDPARTNERS: Reports Increased Revenue, Losses Continue ------------------------------------------------------- MedPartners operates one of the largest independent prescription benefit management companies in the United States, with net revenue of approximately $1,581.3 million for the six months ended June 30, 1999. The Company manages PBM programs for clients throughout the United States, including corporations, insurance companies, unions, government employee groups and managed care organizations. During the first six months of 1999, the company dispensed approximately 5.9 million prescriptions through 3 mail service pharmacies and processed approximately 19.0 million prescriptions through a network of more than 50,000 retail and other pharmacies. For the six months ended June 30, 1999 and 1998, net revenue was $1,581.3 million and $1,259.7 million, respectively, representing an increase of $321.6 million (25.5%) from 1998 to 1999. These increases are primarily attributable, according to the company, to pharmaceutical price increases, the addition of new customers, additional services provided to existing customers and the sale of new products. While revenues increased losses continue, with a net loss in the first six months of 1999 of $176,780 as compared to the same period in 1998 when net losses were $48,344. MOBILEMEDIA COMMUNICATIONS: Terminates Registration Of Notes ------------------------------------------------------------ MobileMedia Communications Inc. has advised the Securities & Exchange Commission of its certification and termination of registration on its 10 1/2 Senior Subordinated Deferred Coupon Notes, Due 2003 and its 9 3/8 Senior Subordinated Notes, Due 2007. The company indicates there are now no holders of such classes of notes. NATIONSWAY TRANSPORT: Debtors' Reply to Motion to Convert --------------------------------------------------------- NW Transport Service, Inc. ("NW"), NationsWay Transport Service, Inc. ("NationsWay")and Salt Lake Transfer Company ("Salt Lake") (collectively herein "Debtors"), Debtors and Debtors-in- Possession, respond to the Motion to Convert, or in the Alternative, For Appointment of a Trustee" filed by the Official Committee of Unsecured Creditors and respectfully request that the Court deny the Motion to Convert because no cause exists for the extraordinary relief sought by the Committee. The debtors claim that the Committee's Motion to Convert is based almost entirely upon its odd, unrealistic and factually unsupportable vision of what a hypothetical Chapter 7 Trustee might have done had these cases been filed under Chapter 7. "Based upon this fevered vision, the Committee asserts that the Debtors have somehow breached their fiduciary duties to their estates. This assertion is, quite simply, absurd." The Committee asserts that the hypothetical trustee would not have entered into cash collateral stipulations with the Lenders, and thereby would have avoided encumbering the allegedly unencumbered assets of the estates. The Committee then suggests that these unencumbered assets would have been available for distribution to the pre-petition unsecured creditors of the estates. Of course, under the Committee's scenario, the Trustee would have had no cash with which to pay administrative costs other than, perhaps, the Norwest Funds if the trustee was successful against the Lenders and the Court determined that the Norwest Funds are not encumbered by the Lenders' liens. Instead of seeking to use cash collateral and engaging in an orderly liquidation, the Committee suggests that the Chapter 7 trustee "would have promptly determined that there was no possible value to any unsecured creditor from the liquidation of the Debtors' rolling stock and other equipment, accounts receivable, and certain real estate interests" and "would not have incurred any of the expenses that the Debtors have incurred in these cases. The trustee would have simply stipulated to termination of the automatic stay immediately, or if necessary abandoned the assets as burdensome to the estate . . .." The debtors claim that their orderly liquidation may produce sufficient value to allow creditors other than the Lenders to receive a distribution. Under the Committee's approach, all parties are harmed and nothing is salvaged. Under the Debtors' approach, the Debtors' customers received their freight, most personal and real property lessors either immediately received possession of their property or received post-petition rent for the Debtors' temporary use of the property, and some employees kept their jobs for, at least, a short period of time. Even though the Debtors' actions primarily benefit the secured lenders, there is no "joint enterprise" between the Debtors and the secured lenders. The Debtors have not filed this case, nor are they executing it, purely for the secured lender's benefit. In the Motion to Convert, the Committee wrongly accuses the Debtors of a "dereliction of duty" which is "directly causing continuing loss to or diminution of the estates." Contrary to the Committee's assertions in the Motion to Convert, the Debtors claim that they have been diligently attempting to minimize the administrative expenses of the estate, while providing the maximum return. Furthermore, the debtors allege that the cases cited by the Committee, allegedly in support of their assertions are, simply, inapposite. The Debtors claim that they have been diligently attempting to consolidate their headquarters onto one (1)floor to minimize post-petition administrative rent. Furthermore, the Debtors have paid the post-petition rent for their headquarters. With regard to the IBM main frame lease, the Debtors have successfully negotiated a reduced rent for their use of IBM computers with IBM. The rent being paid to IBM for the use of the computers is only that what is necessary for the Debtors to obtain optimal collection of the outstanding accounts receivable. As to the Committee's professionals, the Debtors filed a motion for authority to pay professional fees on a monthly basis pursuant to aspecific procedure. The Committee's professionals have elected not to follow that procedure. The debtors state that the Employee Retention Program is a necessary element in the Debtors' good faith attempts to maximize the value of the assets for the estates, and has not contributed to an inappropriate diminution in the value of the estates as the Committee asserts. The debtors go on to say that the Committee is unable to provide any evidence that a Chapter 11 trustee is necessary or appropriate. The Debtors have not participated in any fraudulent activities, nor have the Debtors grossly mismanaged the estate. In fact, more parties stand to gain as a direct result of the Debtors' activities. "Furthermore, although the Committee may, for some unknown reason, believe that the appointment of a trustee is in the best interests of some members of the Committee, it is not in the best interests of either the Committee's constituents or the secured lenders whose interests are given similar weight in a Chapter 11 setting. As a practical matter, neither is such an appointment in the interests of the priority claimants who stand to recover from the Debtors' activities. As such, appointment of a Chapter 11 trustee is not warranted in this case." NATIONSWAY TRANSPORT: Senior Lenders Oppose Motion to Convert ------------------------------------------------------------- Foothill Capital Corporation, as agent for itself and for Congress Financial Corporation (Southwest), Fremont Financial Corporation, FINOVA Capital Corporation, and Heller Financial, Inc. (collectively "Senior Lenders"), opposes the motion to convert the case to a Chapter 7 case, or in the alternative to appoint a Trustee. According to the lenders, the Committee asserts that Debtors are breaching their fiduciary duty to the Estates by assuming the role of a liquidating agent for the secured creditors. Behind this assertion is the Committee's contention that the Debtors owe their primary duty to unsecured creditors and no one else. Critical to the Motion is the Committee's conclusion that the sale or liquidation of assets by a debtor in a Chapter 11 case is somehow abhorrent. The Committee's next assertion, that a debtor in a Chapter 11 case is obligated to abandon assets which appear over encumbered, is incorrect and fails to recognize other benefits associated with a debtor's management of a Chapter 11 liquidation. To the extent a sale of a debtor's assets in a Chapter 11 case has the potential of resulting in a higher return than would be otherwise be achieved outside of Chapter 11, the increased reduction of the secured debt from that higher return equates to a benefit to junior secured and unsecured creditors alike. Based upon the same unfounded assumptions limiting a Chapter 11 debtor's ability to maximize the value of its estate and restricting its duties to only a particular class of creditors while abandoning other creditors, the Committee further asserts that fees incurred by Debtors' professionals are unnecessary. In reaching this conclusion, however, the Committee fails to recognize that potential benefits to be realized by the Estates from the role Debtors' professionals have played in the case. The lenders point out that a Chapter 11 case or plan which results in the liquidation of all of a debtor's assets is permissible under the Bankruptcy Code. At this stage of Debtors' cases, it is premature to definitively pronounce whether a Chapter 11 plan can or cannot be designed and confirmed. By its own admissions, the Committee has noted that potential avoidance actions have not been explored. Moreover, while preferable, a Chapter 11 plan is not necessary to effectuate a liquidation under Chapter 11. The Lenders conclude that Debtors' course of conduct remain steadfast and that the case at this juncture remain under Chapter 11, rather than to submit to the ill-conceived motion by the Committee, which is the only certain method of extinguishing any hope for recovery for unsecured creditors. NEUROMEDICAL SYSTEMS: Losses Of $500,000 In July ------------------------------------------------ Neuromedical Systems Inc. has reported a net loss in the month of July 1999 of $651,752. Financial statement filed with the Bankruptcy Court for the District of Delaware, the company showed net revenues of only $46,640. PITTSBURGH PENGUINS: Lemieux Asks For Another Date -------------------------------------------------- Attorneys for retired Pittsburgh Penguins star Mario Lemieux have asked a judge for a third delay in closing the sale of the team. Lemieux needs more time to finalize settlement agreements with investors, attorney Douglas Campbell said Monday. U.S. Bankruptcy Judge Bernard Markovitz scheduled a hearing on the extension request for Thursday. That's the deadline Markovitz had set for the closing after attorneys twice requested extensions in July. Lemieux's investors, who have placed $50 million in an escrow account to buy the team, won't release their money until the settlements are wrapped up, Campbell said. Campbell said the remaining issues should be resolved by next week. Lemieux still must work out a Civic Arena managerial contract for the team with Philadelphia-based landlord SMG Inc. The team filed for bankruptcy in October. William Daly, National Hockey League senior vice president of legal affairs, said the delays should not be cause for concern. He described the NHL's review of the sale as "substantially complete." PLANET HOLLYWOOD: Investor Group To Supply Necessary Funding ------------------------------------------------------------ On August 17, 1999, Planet Hollywood International, Inc. announced it had entered into an agreement in principle with a subcommittee representing holders of its Senior Subordinated Notes due 2005 and with an investor group organized by Robert Earl, the company's founder and Chief Executive Officer, to restructure the company's financial position. As part of the proposed agreement, the company's $250 million Senior Subordinated Notes due 2005 would be satisfied by issuing a combination of $47.5 million cash, $60 million of new Secured Payment-In-Kind Notes, and new common stock, which would give holders of the notes a 26.5% equity stake in the reorganized company. The investor group will invest $30 million to purchase a 70% equity stake in the reorganized company and will assist in obtaining a minimum $40 million bridge facility, which will be secured by substantially all of the company's assets and will receive 3.5% of the new common stock. The liens of the Payment-In-Kind Notes will be subordinate to the New Senior Secured Notes and up to $25 million for a working capital facility. The proposed agreement is conditioned upon acceptance by holders of not less than approximately $160 million of the notes. On August 18, 1999, the New York Stock Exchange issued a press release stating that it would apply to delist the company's common stock. SERVICE MERCHANDISE: Taps Peter J. Solomon Company Ltd. ------------------------------------------------------- To assist them in their reorganization plan efforts and advise them with respect to their immediate and long-term business prospects and the strategic alternatives that may be available to maximize their enterprise value, the Debtors sought and obtained Judge Paine's authority to retain the investment banking firm of Peter J. Solomon Company Limited as their financial advisor in these chapter 11 cases. Specifically, Peter J. Solomon will provide: (a) assistance in assessing the operating and financial strategies for the Debtors' businesses; (b) review and analysis of the Debtors' business plans and financial projections including but not limited to testing assumptions and comparing those assumptions to the historical trends of the Debtors and the Debtors' industry; (c) assistance with respect to the formulation and negotiation of a plan of reorganization; (d) providing a valuation of the Debtors in correction with a plan of reorganization; (e) in connection with advising the Debtors with respect to their intermediate and long-term business prospects and strategic alternatives that my be available to maximize the business enterprise value, advising the Debtors on the risks and benefits of considering a Transaction (as defined below); (f) advise and assist the Debtors in connection with a possible transaction (a "Transaction") or series of Transactions whereby an ownership interest in the Debtors, in their business or in all or any portion of their assets is transferred for consideration if the Debtors' debt is restructured; (g) review and analysis of any proposals received by the Debtors from third parties regarding a Transaction; (h) assistance and participation in negotiations with the Debtors and/or any other parties in interest regarding a Transaction; (i) assistance with the plan confirmation process, including the preparation of expert testimony relating to financial matters, if required; and (j) the rendition of such other financial advisory and investment banking services as may be agreed upon by PJSC and Service Merchandise with respect to the foregoing. PJSC will collect a $150,000 Advisory Fee for the month of August; $125,000 per month for the months of September 1999 through March 2000; and $100,000 per month thereafter until the earlier of confirmation of the plan or termination of the engagement. Upon substantial consummation of a plan of reorganization proposed by and prosecuted to confirmation, PJSC will receive a $3,750,000 Reorganization Fee. A Financing Fee equal to 1.0% of any senior secured debt (excluding a refinancing of the DIP Facility) the Firm arranges in connection with consummation of a plan; 3.5% for any senior or subordinated unsecured debt and 5.0% of any equity or hybrid capital raised by PJSC. In the event of a Transaction, the Debtors will pay a Transaction Fee equal to: Aggregate Consideration Transaction Fee Percentage ----------------------- --------------- ---------- $300,000,000 $3,000,000 1.00% 350,000,000 3,045,000 0.87% 400,000,000 3,120,000 0.78% 450,000,000 3,285,000 0.73% 500,000,000 3,500,000 0.70% 550,000,000 3,685,000 0.67% 600,000,000 3,840,000 0.64% 650,000,000 4,030,000 0.62% 700,000,000 4,200,000 0.60% 75% of the Monthly Advisory Fees paid to PJSC will be credited against any Reorganization Fee, Financing Fee, or Transaction Fee to which PJSC may be entitled. (Service Merchandise Bankruptcy News Issue 15; Bankruptcy Creditors' Service Inc.) SHOLODGE: Massachusetts Financial Holding 1.2% In Shares -------------------------------------------------------- Massachusetts Financial Services Company is the beneficial owner of 1.2% of the outstanding shares of common stock of Sholodge Inc., represented by 85,801 shares. That financial company has sole voting and dispositive power on the shares indicated. Of the 85,801 shares reported as being also held, 85,800 shares are also beneficially owned by MFS Series Trust II - MFS Emerging Growth Fund as well as Massachusetts Financial Services Company and 1 share is also beneficially owned by certain other non-reporting entities as well as Massachusetts Financial Services Company. SMARTALK TELESERVICES: AT&T Suggests $4.5 M Less On Their Note -------------------------------------------------------------- Smartalk Teleservices Inc., having filed Chapter 11 bankruptcy proceedings in January of this year has filed its monthly statement for the month of June 1999, with the Securities & Exchange Commission. The company, having sold and liquidated most assets, shows no revenue but consolidated losses, debtor and non-debtor subsidiaries reporting, of $1,277,393. AT&T Corp. purchased substantially all the assets of the company for the aggregate consideration of approximately $145 million consisting of approximately $96 million in cash and payment of approximately $9 million in indebtedness and transaction costs and a $40 million promissory note issued by AT&T in favor of Smartalk. The $40 million promissory note is subject to adjustment pending completion of the company's review of the closing statements and the purchase price adjustment statement as well as in the event of certain claims by AT&T. Although Smartalk and AT&T have not yet finalized the closing statements, AT&T has suggested that the principal amount of the note be reduced by $4,578,072 to $35,421,928. In connection with the sale of substantially all of the company's assets to AT&T, Smartalk recognized a loss on the impairment and anticipated liquidation values of certain assets that were excluded from the AT&T sale transaction. The liquidation of such assets has not yet occurred. SPECTRAN: Lucent Extends Tender Offer For Spectran Stock -------------------------------------------------------- Lucent Technologies has extended its tender offer for all outstanding shares of SpecTran Corporation's common stock for $9.00 per share until midnight Eastern time, Tuesday, August 31, 1999. Lucent said the offer was extended to give stockholders additional time to tender their shares. Lucent's tender offer had been scheduled to expire at midnight Eastern time, Tuesday, August 24, 1999. The depositary for the offer, The Bank of New York, has advised Lucent that approximately 3,393,505 shares or 48.2 percent of SpecTran's shares outstanding (41.3 percent of SpecTran's shares outstanding on a fully diluted basis) had been tendered as of 6:00 p.m. on August 24, 1999. Lucent Technologies designs, builds and delivers a wide range of public and private networks, communications systems and software, data networking systems, business telephone systems and microelectronics components. Bell Labs is the research and development arm for the company. SUNSTAR HEALTHCARE: Options For Possible Sale Of Securities ------------------------------------------------------------ SunStar Healthcare Inc. is engaged in providing managed healthcare services in the State of Florida by operating a health maintenance organization through SunStar Health Plan, Inc. As originally organized, the company also operated seven primary care medical centers through Brevard and First Health. On April 15, 1998, the company sold substantially all the assets of Brevard and First Health, completing its transformation from a "provider" of medical services through its primary care medical centers to a "payor" for medical services through its statewide HMO. The company has reported revenues, in the three months ended June 30, 1999, of $24,071,448 with net losses of $90,477. In the same three month period in 1998 reported revenues were $4,112,729 and net losses were $866,543. The company is currently reviewing its options for possible sale of additional equity securities as well as potential merger and partnering opportunities. The company is giving no assurances that it will be successful in raising additional capital or entering into a business alliance. Further, there can be no assurance, assuming the company successfully raises additional funds or enters into a business alliance, that the company will achieve profitability or that the funds will be sufficient to sustain the company's losses. If SunStar is unable to obtain adequate additional financing or enter into such business alliance, it may not be able to meet ongoing business operation needs. To the extent that the company's available cash resources are insufficient to allow it to engage in operations sufficient to generate meaningful revenues or achieve profitable operations, the inability to obtain additional financing will have a material adverse effect on the company. Additional equity financing may involve substantial dilution to the interests of the company's existing stockholders. TED PARKER: Court Approves Sale ------------------------------- Late last week the Bankruptcy Court for the District of Delaware approved the $90 million sale of the majority of Ted Parker Home Sales Inc. to Champion Enterprises, the largest mobile home manufacturer in the United States and the main supplier to Ted Parker, according to the Associated Press. Champion, Auburn Hills, Mich., will buy back all Champion inventory owned by Ted Parker Homes and its sister company, Carolina Home Sales Inc. Champion also will buy the leases of 37 Ted Parker Homes' 42 retail centers in the Carolinas and Mississippi, and the company may eventually buy the remaining leases. Ted Parker and Carolina Home Sales filed for chapter 11 protection on July 22. The sale is expected to be completed this week. (ABI 30-Aug-99) VERTEX COMPUTER: March Losses Reported -------------------------------------- Net sales of Vertex Computer Cable & Products Inc., for the quarter ended March 31, 1999, were approximately $1,858,000. Net sales include approximately $1,143,000 in revenues generated from Vertex after the merger with DataWorld. For comparison, Vertex's net sales for the three months ended March 31, 1998 were approximately $2,203,000.The decrease was a result of Vertex not having sufficient cash to procure necessary materials for product delivery. For the nine months ended March 31, 1999, Vertex's revenue was reported at $3,302,061 with a net loss for the period of $863,852. Current assets of the company at March 31, 1999 were approximately $2,924,000. However, the company had net working capital deficiency of approximately $449,428 at that date. The working capital at March 31, 1999 is not sufficient to meet the company's current liquidity needs. Under the Vertex Plan of Reorganization, the company is required to pay the unsecured creditors under a payment arrangement. Currently the company has not made any payment and is said to be working to extend or modify the payment terms. It is also exploring opportunities to further reduce operating costs and to obtain additional sources of working capital. There is no assurances that new management will be successful in further reducing operating costs or obtaining additional sources of working capital. Total borrowings outstanding were approximately $2,884,000 at March 31, 1999. ZENITH ELECTRONICS: LG Electronics To Own Reorganized Company ------------------------------------------------------------- Zenith Electronics Corporation filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court in Wilmington, Delaware, thus commencing its prepackaged plan of reorganization. The company reports this was done "with the overwhelming support of its creditors". The company indicates that with bondholder approval and financing in place, its filing represents one of the final steps in Zenith's restructuring. Jeffrey P. Gannon, Zenith president and Chief Executive Officer said, "We are gratified by the extremely strong support of our creditors in endorsing our plan to achieve financial stability and to rebuild Zenith. Our operational restructuring - transforming Zenith into a sales, marketing, and technology company - is proceeding on schedule." The company said that of the creditors who voted in its prepetition solicitation of consents, 97 percent of voting bondholders voted in favor of the plan of reorganization. Under the plan, current holders of the $103.5 million in principal amount of the 6-1/4 percent Convertible Subordinated Debentures will receive $50 million of new 8.19 percent senior debentures maturing in November 2009. As announced in April, Zenith has entered into a binding agreement with Citicorp North America Inc. to provide a $150 million debtor-in-possession financing facility to cover the period during the prepackaged court proceeding and a new three-year, $150 million credit facility to cover the period following the completion of the company's restructuring. Under the plan, Zenith states that trade creditors and vendors will not be impaired and will continue to be paid in the ordinary course of business. The company also expects to continue to pay employees' pre-petition and post-petition wages, salaries and benefits without interruption, and to fulfill obligations to customers throughout the reorganization. Additionally, under the plan, all outstanding common stock, including that for which LG Electronics paid $380 million, will be canceled, and no stockholders, including LGE, will receive any distribution for their shares. As part of the restructuring, the company's largest creditor, LGE, has agreed to exchange $200 million of its claims for 100 percent of the newly issued equity of the reorganized Zenith. In exchange for other claims, LGE will receive certain operating assets and LGE New Restructured Senior Notes. Following the restructuring, Zenith will be a wholly owned subsidiary of LGE. "After emerging from the reorganization, Zenith will have access to LGE's considerable research and manufacturing resources, enhancing Zenith's strength and ability to compete in the rapidly evolving television industry," Gannon said. Major elements of Zenith's operational restructuring - establishing new sourcing agreements with world-class manufacturers and de-emphasizing Zenith's own manufacturing - have been completed. Zenith has closed or sold all of its manufacturing operations except the Reynosa, Mexico, TV assembly plant, which will be transferred to LGE as part of the restructuring. John Koo, vice chairman and chief executive officer of LG Electronics, said, "LGE considers Zenith a very important part of our North American business strategy. While from a financial perspective, LGE's investment in Zenith has yielded disappointing results, we are committed to participating in this restructuring because we believe that a restructured, refocused Zenith can be an effective competitor in the North American television industry." Zenith, based in Glenview, Ill., is a long-time leader in electronic entertainment products. Zenith's largest stockholder is LGE, a global leader in consumer electronics with operations in 180 countries and annual sales of more than $9 billion. LGE, which owns 55 percent of the company's outstanding shares, acquired its majority interest in November 1995. Meetings, Conferences and Seminars ---------------------------------- August 4-7, 1999 AMERICAN BANRKUTPCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton, Amelia Island, Florida Contact: 1-703-739-0800 August 26-28, 1999 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUING PROFESSIONAL EDUCATION Real Estate Defaults, Workouts and Reorganizations San Francisco, California Contact: 1-800-CLE-NEWS August 29-September 1, 1999 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 1999 Convention Grove Park Inn, Asheville, North Carolina Contact: 1-803-252-5646 or info@nabt.com September 13-15, 1999 STATES' ASSOCIATION OF BANKRUPTCY ATTORNEYS 8th Annual States' Taxation & Bankruptcy Conference Hotel Santa Fe, Santa Fe, New Mexico Contact: 1-505-827-0728 September 16-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Southwest Bankruptcy Conference The Hotel Loretto, Santa Fe, New Mexico Contact: 1-703-739-0800 September 17, 1999 GEORGETOWN UNIVERSITY LAW CENTER & THE AMERICAN BANKRUPTCY INSTITUTE Bankruptcy '99: Views from the Bench Georgetown University Law Center, Washington, D.C. Contact: 1-202-662-9890 September 24-25, 1999 VIRGINIA CONTINUING LEGAL EDUCATION 14th Annual Mid-Atlantic Institute on Bankruptcy and Reorganization Practice Boar's Head Inn, Charlottesville, Virginia Contact: 1-800-979-8253 September 27-28, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Conference on Corporate Reorganizations Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com October 6-9, 1999 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES 73rd Annual Meeting San Francisco Marriott, San Francisco, California Contact: 1-803-957-6225 October 22-26, 1999 TURNAROUND MANAGEMENT ASSOCIATION 1999 Annual Conference The Fairmont--Atop Nob Hill, San Francisco, CA Contact: 1-312-822-9700 or ljfialkoff@turnaround.org November 17-20, 1999 AMERICAN BAR ASSOCIATION'S LATIN AMERICAN LAW SUBCOMMITTEE & THE ASSOCIATION OF COMMERCIAL BANKS OF THE DOMINICAN REPUBLIC Educational Exchange Case De Campo Resort, LaRomana, Dominican Republic Contact: 1-703-739-0800 November 29-30, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Distressed Investing '99 The Plaza Hotel, New York, New York Contact: 1-903-592-5169 or ram@ballistic.com December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 May 4-5, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com ********** 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 * * *