/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990915.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, September 15, 1999, Vol. 3, No. 178 Headlines ADVOCAT INC: Change In Accounting Principle/Revenues Decrease AHERF: Pennsylvania Seeks to Recover $78.5 Million AMPACE CORP: Committee Objects To Disclosure Statement BMJ MEDICAL: Seeks To Extend DIP Financing CENTRAL EUROPEAN: Czech Subsidiary Suspends Operations CHATCOM: Lists $2.2 Million in Liabilities FAMILY GOLF CENTERS: No Stock Held By ICM Asset Management, Inc. FEDCO: Applies To Retain Deloitte & Touche GALEY & LORD: Citigroup Holds 44.42% Of Company's Common Stock GENEVA STEEL: Recalls 200 Employees HECHINGER: Illinois Store Fetches $12 Million at Auction IMTECH: Likely to File for Bankruptcy Protection INOTEK TECHNOLOGIES: Annual Meeting To Be Held Next Month JUMBOSPORTS: Seeks Authority To Sell Real Property LIVENT: Seeks Extension of Exclusivity PACIFIC INTERNATIONAL: Signs Agreement to Secure $1 Million PLANET HOLLYWOOD: Group Poised To Invest $30 Million RENAISSANCE COSMETICS: Response to Houbigant SHOE CORP: Seeks Agreement Regarding Sale of Inventory STUART ENTERTAINMENT: Committee Objects To HQ Lease TOROTEL: Fiscal Year-End Financial Information Filed US ONCOLOGY: Incurs Net Loss In Second Quarter 1999 VENCOR: Background and Description of Debtor XITEC: Emerges from Chapter 11 ********** ADVOCAT INC: Change In Accounting Principle/Revenues Decrease ------------------------------------------------------------ Advocat Inc. (together with its subsidiaries) is a leading provider of long-term care services to the elderly. The company operates nursing homes and assisted living facilities in 12 Southeastern states and three Canadian provinces. As of June 30, 1999, the company operated 122 facilities consisting of 65 nursing homes with 7,307 licensed beds and 57 assisted living facilities with 5,295 units. The company owns seven nursing homes, leases 36 others, and manages 22 nursing homes. It also owns 17 assisted living facilities, leases 27 others, and manages 13 assisted living facilities. It holds a minority equity interest in six of these managed assisted living facilities. The company operates 51 nursing homes and 36 assisted living facilities in the United States and 14 nursing homes and 21 assisted living facilities in Canada. The company's facilities provide a range of health care services to their patients and residents. In addition to the nursing and social services usually provided in the long-term care facilities, the company offers a variety of comprehensive rehabilitative, nutritional, respiratory and other specialized ancillary services. Advocat Inc. operates facilities in Alabama, Arkansas, Florida, Georgia, Kentucky, North Carolina, Ohio, South Carolina, Tennessee, Texas, Virginia, West Virginia and the Canadian provinces of Ontario, British Columbia, and Alberta. Net revenues of the company decreased to $45.3 million in 1999 from $52.7 million in 1998, a decrease of $7.4 million, or 14.1%. Net income was $97,000 in 1999 as compared with a net loss of $(337,000) in 1998, an increase of $434,000. Net revenues decreased to $92.0 million in 1999 from $104.2 million in 1998, a decrease of $12.2 million, or 11.7%. The net loss after the cumulative effect of a change in accounting principle was $(21,000) in 1999 as compared with net income of $18,000 in 1998, a decrease of $39,000. AHERF: Pennsylvania Seeks to Recover $78.5 Million -------------------------------------------------- The state of Pennsylvania is seeking to recover $78.5 million that it said was improperly taken from charitable endowments at the medical school and hospitals previously run by the Allegheny Health, Education and Research Foundation (AHERF), which filed for bankruptcy protection more than a year ago, The Pittsburgh Post-Gazette reported. According to state Attorney General Mike Fisher, AHERF took about $70.3 million from endowments at its Philadelphia hospitals used to finance activities at the Philadelphia campus of its medical school, Allegheny University of the Health Sciences. The balance, he said, came either from endowments that belonged to Allegheny University of the Health Sciences' Western campus or its main clinical venue, Allegheny General Hospital. Fisher said any such transfer of charitable money is improper without Orphans' Court approval. (ABI 14-Sept- 99) AMPACE CORP: Committee Objects To Disclosure Statement ------------------------------------------------------ The Official Committee of Unsecured Creditors of Ampace Corporation and Ampace Freightlines, Inc. objects to the Amended Disclosure Statement with respect to the amended joint plan of reorganization of the debtors and moves for an order scheduling a hearing on the adequacy of the disclosure statement relating to the Committee's proposed liquidating plan setting a solicitation and confirmation schedule with respect to the plan. The Committee states that it should be permitted to solicit acceptances to its plan. The Committee asserts that the debtors' plan is unconfirmable as a matter of law, that it violates the absolute priority rule and does not meet the best interests of creditors test. The Committee asserts that the Disclosure Statement should not be approved because it does not contain adequate information, there is no disclosure concerning the debtors' assessment of their reorganization value, the debtors' liquidation analysis is incomplete, no disclosure of preference recoveries is provided, and no disclosure of administrative expenses is provided. BMJ MEDICAL: Seeks To Extend DIP Financing ------------------------------------------ BMJ Medical Management, Inc. seeks an extension of the post- petition DIP Financing under which the debtors currently operate their businesses and manage their properties. The debtors seek an extension of the DIP financing to January 31, 2000 in order to allow the completion of the plan process. The Joint Plan of Reorganization was filed on August 12, 1999. CENTRAL EUROPEAN: Czech Subsidiary Suspends Operations ------------------------------------------------------ Central European Media Enterprises Ltd. announces its 99%-owned Czech subsidiary, Ceska nezavisla televizni spolecnost, spol. sr.o. has suspended technical and production operations in Prague until such time as it is again able to operate a national television service. As a result, CNTS today dismissed over 215 employees. The action is taken as a result of the pre-emption of CNTS's transmissions of Nova TV by CET 21, spol. sr.o., which began on August 5, 1999 to broadcast a substitute signal for Nova TV from a site other than the CNTS studios. The pre-emption continues to date. While CNTS and CME have repeatedly requested the Czech Media Council to intervene as a result of breaches of the Czech laws, CET 21's legal obligations and the destabilization of the Czech media market caused by CET 21's actions, the Media Council has thus far failed to act. Fred Klinkhammer, President and Chief Executive Officer of CME, said "We believe that there are many people in the Czech Republic who, if I may quote the President of the Czech Republic, 'want to hear that decency and courage make sense, that something must be risked in the struggle against dirty tricks.' While we fully expect that the international arbitration proceedings and Czech courts will ultimately uphold the legitimate damage claims of CNTS, CME and Ronald Lauder, only the Media Council has the power to timely restore the operating business of CNTS and the jobs of these people who trusted in the fairness and the rule of law. They are not alone, forgotten or written off. We will recall them if and when conditions permit." The failure to recommence CNTS's operations will have a material adverse effect on the company's results of operations and its financial position. CNTS's net revenues were $48,496,000 for the six months ended June 30, 1999 and $108,826,000 for 1998, comprising 57% of the company's consolidated net revenues for the six months ended June 30, 1999 and 60% of the company's consolidated net revenues for 1998. Nova TV's EBITDA was $18,654,000 for the six months ended June 30, 1999 and $54,887,000 for 1998, while the company's overall consolidated EBITDA was $13,142,000 for the six months ended June 30, 1999 and $44,796,000 for 1998. If CNTS does not recommence broadcasting operations, the company will likely be forced to write-down all or a portion of the $42,439,000 carrying value of goodwill associated with the CNTS operations as of June 30, 1999 and programming rights in the amount of $15,892,000 at June 30, 1999. Dividends totaling $19,505,000 in 1998 and $7,972,000 in 1997 were paid by CNTS to the company, comprising all dividends paid to the company from its television operations during these periods. A material reduction or elimination of CNTS's dividend payments to the company in 1999 and future years could, absent other sources of cash, result in the company having inadequate cash resources to meet its operating, capital and debt service requirements by no later than June 30, 2000. CHATCOM: Lists $2.2 Million in Liabilities ------------------------------------------- The Daily News of Los Angeles reports on September 11, 1999, that Chatcom Inc. is seeking a new beginning. ChatCom, the long- struggling producer of network servers, said Friday that it has filed for bankruptcy protection and furloughed its entire staff of seven employees. The Chatsworth-based company, which had warned in March that it was facing bankruptcy due to a cash crunch, made the Chapter 11 filing this week in federal bankruptcy court in Woodland Hills. The filing listed $ 2.2 million in liabilities. James P. Roche, who became chief executive officer in July after agreeing to provide up to $ 600,000 in financing, said he was forced to seek bankruptcy protection because of recent efforts by senior secured lender ALCO Financial Services to place the company into receivership. Roche said ChatCom owes ALCO about $ 66,000, down from the $ 282,000 it owed in July. Roche also said the filing should enable ChatCom to start reorganizing its finances and rehire the furloughed employees next week. ChatCom's staff was cut from 50 to 21 earlier this year and it moved to smaller offices. It recently announced it had developed a signature verification system called ChatLok that would protect individual computer users within a system. FAMILY GOLF CENTERS: No Stock Held By ICM Asset Management, Inc. ---------------------------------------------------------------- The investment advisor firm, ICM Asset Management, Inc., reports that it no longer holds shares of common stock in the Family Golf Centers Inc. FEDCO: Applies To Retain Deloitte & Touche ------------------------------------------ FEDCO has applied to retain the accounting firm of Deloitte & Touche LLP as its tax accountants and employee benefits consultants, effective as of the date of this application. The tax accounting and employee benefits consulting services that Deloitte will render include: Preparation of the debtor's consolidated federal tax return for the years ended January 31, 1999 and preparation of the federal and state corporation income tax returns for the debtor for the period ended January 31, 2000 or shorter period if all assets are distributed before that time, and other tax compliance and consulting services Contingent fee tax and tax consulting services relating to the debtor's sales/use tax refund claim on the understatement of taxable bad debts and the sales' use tax audit for the period of October 5, 1997 to the close out of operations Plan termination and associated employee benefit consulting services in connection with the debtor's retirement benefit plans and Consulting with the debtor's management and counsel in connection with other business matters relating to the debtor's activities on such matters as may from time to time arise. Deloitte will apply to the court for compensation at its then- current hourly rate. Deloitte ahs requested that it be compensated in the amount of 30% of any tax refund and interest thereon received by the debtor. GALEY & LORD: Citigroup Holds 44.42% Of Company's Common Stock -------------------------------------------------------------- As of the close of business on September 7, 1999, Citicorp Venture Capital Ltd. beneficially owns 5,284,202 shares of common stock of Galey & Lord Inc. This represents approximately 44.39% of the outstanding shares of such class, of which it has shared voting power and dispositive power. Citibank and Citicorp, exclusively through their holding company structures, also both beneficially own the same 5,284,202 shares of common stock, representing approximately 44.39% of the outstanding shares of such class as to which each has shared voting and dispositive powers. Citigroup, through its direct and indirect subsidiaries beneficially owns 5,286,835 shares of common stock representing approximately 44.42% of the outstanding shares of such class as to which it has shared voting and dispositive powers. On August 6, 1999, Citicorp Venture Capital Ltd. acquired 7,700 shares of common stock for an average price of $3.9875 per share in the public market. On August 12, 1999, Citicorp Ventue Capital Ltd acquired, additionally, 4,700 shares of common stock for an average price of $4.42021 per share in the public market. On August 13, 1999, Citicorp Venture Capital Ltd., once again, acquired 3,500 shares of common stock for an average price of $4.50 per share in the public market. On August 16, 1999, it acquired 2,400 shares of common stock for an average price of $4.50 per share in the public market, and on August 17, 1999, it acquired 11,500 additional shares of common stock for an average price of $4.2946 per share in the public market. On August 18, 1999, Citicorp Venture Capital Ltd. acquired 4,400 shares of common stock for an average price of $4.25 per share in the public market, and again on August 19, 1999, it acquired 35,000 shares of common stock for an average price of $4.15518 per share in the public market. On August 23, 1999, it once more acquired 5,200 shares of common stock for an average price of $4.08654 per share in the public market. On August 24, 1999, Citicorp Venture Capital Ltd. acquired 11,000 shares of common stock for an average price of $4.125 per share in the public market. On August 26, 1999, it acquired 3,000 shares of common stock for an average price of $4.125 per share in the public market. On August 27, 1999, it acquired 5,000 shares of common stock for an average price of $4.0625 per share in the public market. On August 30, 1999, it acquired 3,200 shares of common stock for an average price of $4.096 per share in the public market. On September 1, 1999, Citicorp Venture Capital Ltd. acquired 4,300 shares of common stock for an average price of $4.0625 per share in the public market. On September 2, 1999, it acquired 3,100 shares of common stock for an average price of $4.0625 per share in the public market. On September 3, 1999, CVC acquired 3,500 shares of common stock for an average price of $4.10714 per share in the public market. And lastly, on September 7, 1999, CVC acquired 30,000 shares of common stock for an average price of $4.021 per share in the public market. GENEVA STEEL: Recalls 200 Employees ----------------------------------- The Deseret News (Salt Lake City, UT) reports on September 10, 1999 that Geneva Steel, which laid off nearly 575 employees last year amid huge financial losses, has recalled 200 of those employees because of an improving domestic steel market. The returning workers are needed, among other reasons, to help staff the company's blast furnace operations. Geneva reverted to using one blast furnace as part of its cutbacks last year but will resume using a second blast furnace Sunday to allow increased steel production at its plant. "Basically, all indications and arrows are pointing up and not down," said Joe Cannon, Geneva's chief executive officer. With U.S. steel companies devastated by a flood of cheaper foreign steel, Geneva's steel shipments dropped by more than 60 percent and the company began initiating its layoffs last September. Geneva then filed for Chapter 11 bankruptcy protection in February. Yet the dark fortunes of Geneva and other U.S. steel companies have brightened in recent months, thanks to intervention from the U.S. government. Domestic steel companies have won several key trade cases, and the U.S. Department of Commerce has imposed higher tariffs and quotas to limit foreign steel imports. With those changes, Geneva has now recalled all but 130 of the 575 employees it was forced to lay off. Reaction from United Steelworkers of America Local No. 2701, whose members work at Geneva, was predictably appreciative. The timing of Geneva's recalls -- despite encouraging signs lately for the domestic steel market -- is somewhat surprising because the company announced only last month that it had lost $121 million for the nine-month period preceding June 30, 1999. At its peak, Geneva has shipped more than 200,000 tons of steel a month, according to Cannon. At its lowest point in February, Geneva shipped a mere 44,000 tons of steel. Cannon said laid-off Geneva employees are eligible to receive $225 a week in unemployment compensation from the state. More tenured laid-off workers were provided health and life insurance coverage by Geneva for up to six months. With financial assistance from the Department of Energy and other partners, Geneva officials want to build a $1 billion, state-of- the-art ironmaking facility by 2003. The lofty plan is still in its preliminary stages and Geneva is expected to apply for government-backed loans as part of their revival efforts. For the past five weeks, steel orders at Geneva have climbed to more than 30,000 tons a week, but Cannon still has a cautious outlook. HECHINGER: Illinois Store Fetches $12 Million at Auction -------------------------------------------------------- Costco Wholesale Corp. outbid Wal-Mart Real Estate Business Trust at a Sept. 2 auction of a Hechinger Co. store located in Niles, Ill., after it raised its initial bid of $8.4 million to $12.1 million. Hechinger began contacting major retailers potentially interested in the Niles store after announcing on Feb. 10 that it would close the store, as well as 33 other stores located in and around the Chicago and Cleveland areas, the home improvement retailer noted in an Aug. 5 motion. (The Daily Bankruptcy Review and ABI September 14, 1999). IMTECH: Likely to File for Bankruptcy Protection ------------------------------------------------ Information Management Technologies Corporation (OTC Bulletin Board: IMTKA) ("Imtech"), whose Class A Common Stock trades under the symbol IMTKA on Nasdaq's OTC Bulletin Board, today announced that it has ceased operations at its two printing facilities in New York City and is highly likely to file for bankruptcy in the immediate future. Imtech does not expect that a bankruptcy filing will result in any value for shareholders. Imtech's Board of Directors has authorized the bankruptcy filing, in light of Imtech's financial losses, liquidity constraints and operating difficulties in recent years, particularly since the acquisition of the Skillcraft Group in July, 1998. At June 30, 1999, Imtech's assets were $10.1 million, its liabilities totaled $18.0 million, the stockholders' deficiency was $7.9 million, and current liabilities exceeded current assets by $6.9 million. Imtech had been in discussions with several printing companies since April to sell the Company. On August 6, 1999 the Company signed an exclusive letter of intent with a printing company to purchase the Company's customer list and certain assets and assume certain liabilities. The letter of intent called for a signing of a definitive agreement by September 15th, with a transaction subject to shareholder approval. These discussions broke down on September 10th, when the purchaser and the Company's senior salesperson, Jeffrey Craugh, could not come to an agreement on a continuing relationship. INOTEK TECHNOLOGIES: Annual Meeting To Be Held Next Month --------------------------------------------------------- Stockholders of INOTEK Technologies Corp. have been given notice of and invited to attend in person or by proxy the annual meeting of stockholders of the company to be held at the offices of the company, 11212 Indian Trail, Dallas, Texas on Monday, October 18, 1999 at 10:00 a.m. for the following purposes: To elect five directors for a one year term and transact any other business which properly arises. The Board of Directors has fixed the close of business on August 27, 1999 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. JUMBOSPORTS: Seeks Authority To Sell Real Property -------------------------------------------------------------- The debtor, JumboSports Inc. seeks court authority to sell real property located at 11249 Pines Boulevard, in the city of Pembroke Pines, Florida to City Furniture Inc. The total purchase price for the real property is $5.9 million. LIVENT: Seeks Extension of Exclusivity -------------------------------------- The debtor, Livent (US) Inc., et al. seeks a court order further extending the debtors' exclusive periods in which to file a plan or plans of reorganization and solicit acceptances for approximately 120 days. If approved, the exclusive period during which each debtor may file a plan of reorganization shall be extended through January 31, 2000, and the exclusive period during which each debtor may solicit acceptances of such plan of reorganization shall be extended through April 2, 2000. Notwithstanding the completion of the sale, the debtors have been left with exceedingly complex issues involving cross-border allocation of proceeds, substantive consolidation and equitable subordination. The facts and circumstances of the cases demonstrate that the requested extensions are both appropriate and necessary to afford the debtors sufficient time to negotiate distributions to creditors and parties in interest and coordinate the terms of any proposed plan of reorganization in the US and a distribution to creditors in Canada. The debtors point to their success to date, including the sale of the company, the DIP financing, investigations of the pre- petition activities, CCAA proceeding; negotiation of cross-border insolvency protocol, establishing a deadline for creditors to file proofs of claim, and the debtors' efforts to formulate a plan of reorganization. PACIFIC INTERNATIONAL: Signs Agreement to Secure $1 Million ----------------------------------------------------------- Pacific International Enterprises Inc. (OTC BB:PCIE) (OTC BB:PCIEQ) and its "The France Group" Division in Goldendale, Wash., is a 300,000 unit capacity, state of the art, board sports manufacturing operation, which includes the in-house brands Twenty Four Seven Snowboards (www.247snow.com), Wake Tech Wakeboards, Rift Snowboards and Microski. 24/7 Snowboards racing program is acclaimed worldwide, with Olympic Gold Medalist, Ross Rebagliati signed to an exclusive snowboard promotional contract through the 2002 Olympics. PCIE announced that it has reached a conditional preliminary agreement with a lender and is proceeding to finalize the documents securing a $ 1 million line of credit based on account receivable financing and advances against letters of credit. Anthony D. Broughton, CFO of PCIE, stated, "PCIE is working with a post-petition DIP lender to provide the funding necessary for its reorganization. PCIE and the lender are in the process of finalizing the documentation and PCIE's attorneys, Lobel, Opera & Friedman LLP (www.lobelopera.com), anticipate filing a motion to obtain the necessary approval from the Bankruptcy Court within the next several days. PCIE is confident that the Bankruptcy Court will approve the financing." Binks Graval, Chairman & CEO of PCIE, stated, "This is the first step in our reorganization plan to restructure our finances and has been made feasible due to our Chapter 11 status. The additional steps that we will be taking shortly will strengthen the company and provide a more secure base for future earnings." The France Group, a Division of Pacific International Enterprises Inc., develops and manufactures sports related products for rapidly growing markets, including snowboarding, wakeboarding, mini-skiing and skateboarding. The France Group brand names are a leader in their category by providing superior levels of performance and quality. PLANET HOLLYWOOD: Group Poised To Invest $30 Million ---------------------------------------------------- As of August 30, 1999, Leisure Ventures Pte Ltd.owned 12,050,335 shares of Planet Hollywood International's Class A common stock, representing approximately 12.0% of such class. The Class A common stock owned by Leisure may be deemed to be beneficially owned by Mr. Ong Beng Seng, the largest shareholder of Leisure and a director of the company. Leisure Ventures Pte Ltd., is a corporation organized under the laws of Singapore whose principal business is that of an investment holding company. On August 24, 1999, Planet Hollywood announced that it had received notice of approval by holders of at least $160 million in principal of its Senior Subordinated Notes due 2005 of a proposal for a plan of reorganization of the company in a case to be filed voluntarily by Planet Hollywood for relief under chapter 11 of Title 11 U.S.C. As part of the proposal, and following confirmation of the plan by the bankruptcy court, an investor group would invest a total of $30 million to acquire approximately 7 million of the 10 million shares of the new company common stock to be issued upon approval of the plan. This investor group would include: (i) Kingdom Planet Hollywood, Ltd., a company organized under the laws of the Cayman Islands which is understood to own approximately 17% of the company's Class A common stock; (ii) Leisure; and (iii) the New Planet Trust, a trust which has been established for the sole benefit of the children of Mr. Robert Earl. The Trust is understood to presently own none of the company's Class A common stock. The New Money Investors expect to provide an aggregate of up to 10% of the then outstanding new common stock to third parties in exchange for their support of the company and its owned and franchised restaurants. The plan would give the New Money Investors control over the company through their ownership of approximately 60% to 70% of the new common stock. In connection with the proposal, certain escrow arrangements must be in place in order for the noteholders and the company to be committed to pursue the plan, and it is understood that negotiations with the noteholders (and the committee that is informally representing the noteholders) are underway on the terms of that escrow arrangement. Pending an agreement on the terms of the escrow arrangement, and in order to maintain the effectiveness of the proposal, the New Money Investors have deposited a total of $5 million in escrow to be applied towards their purchase of new common stock in keeping with the proposal, if the terms of the escrow arrangement can be finalized. The New Money Investors signed an escrow agreement, dated August 26, 1999, governing the escrow deposit. If no agreement with respect to this escrow arrangement is reached with the informal noteholders' committee, the escrow deposit can be returned to the New Money Investors and the New Money Investors would not have any agreement, understanding or arrangement with respect to any further investment in Planet Hollywood. The proposal provides for the company to file the plan by September 30, 1999, with the objective that the contemplated transactions be completed by December 21, 1999. As part of the plan (i) the noteholders would receive $47.5 million in cash, $60 million in new, secured payment-in-kind notes to be issued by the company, and 2.65 million shares of new common stock; (ii) the company would work with the informal noteholders' committee and use its best efforts to settle claims of unsecured creditors (other than a convenience class of general unsecured claims in allowed amounts not exceeding a predetermined threshold agreed by the informal noteholders' committee) and, to the extent not settled, the claimants would recover a dollar value on their claims not less than the value of the per dollar distributions allowed the noteholders; (iii) the convenience creditors would be paid in full; and (iv) the holders of existing equity securities of the company would receive 200,000 three-year warrants with a strike price set to be "in-the-money" to the extent unsecured creditors receive full recovery on their claims. In connection with the plan, the company would intend to register the new common stock and have it traded on a national securities exchange or the NASDAQ National Market System. All currently existing equity securities shall be deemed canceled upon approval of the plan by the bankruptcy court. The proposal also contemplates that the company will: (i) obtain a minimum $40 million bridge financing through the issuance of senior secured promissory notes (subordinate only to the working capital facility); (ii) obtain a post-bankruptcy working capital facility for up to $25 million, secured by receivables and inventory; and (iii) present the noteholders a post-bankruptcy business plan for the company, reasonably acceptable to the informal noteholders' committee; and (iv) use its best efforts to reduce operating overhead wherever practicable. As part of the plan, the company's Board of Directors would have 7 members, 2 of whom would be appointed by the noteholders and 5 appointed by the New Money Investors. Supermajority approval would be required for any insider transactions or "Major Transactions". Robert Earl would be Chief Executive Officer, and selection of certain other officers would be subject to the reasonable approval of the informal noteholders' committee and supermajority approval of the Board of Directors. RENAISSANCE COSMETICS: Response to Houbigant -------------------------------------------- The debtor, Renaissance Cosmetics, Inc. responds in opposition to a motion of Houbigant, Inc. to compel compliance with stipulations and court orders regarding the debtor's sale of substantially all of their assets. The debtor states that the principal deal was the payment to Houbigant, out of the first proceeds received formt he sale, cash in the amount of $1.25 million in consideration of which, Hobuigant would consent to the sale. The parties have met these terms. The debtor was alos9 obliged to provide certain information to Houbigant regarding the location of certain molds and plates and certain historical data. The debtors claim that they are working on providing the information, and that they are hampered by DPC Acquisition Corp, the purchaser of the debtors' assets and in addition, the debtors allege that they have very limited resources. SHOE CORP: Seeks Agreement Regarding Sale of Inventory ------------------------------------------------------ Shoe Corporation of America, Inc. and SCOA License, Inc., debtors, seek an order approving SCOA's agreement with a liquidation group formed by Gordon Brothers Retail Partners, LLC, Ozer Group, LLC and Hilco Great American Group regarding the sale of inventory of SCOA and the sale of certain consigned inventory, the sale of certain fixed assets by SCOA to American Retail Group and the compromise and settlement of claims between SCOA and ARG, Uptons, Inc. The Liquidation Group will receive a License Fee ranging form 7.5% of net sales to 6.5% of net sales. SCOA will receive a sales commission based upon a percentage of the retail price for any consigned Stride Rite inventory sold at Uptons Shoe Departments. The Commission will range from 20% to 15%. ARG will pay to SCOA the sum of $1,441,624; Of that sum, $1.126 million is attributable to ARG's purchase of the Uptons Fixed Asets, and will be paid by SCOA to its lenders. In part, the Uptons Termination Agreement represents a compromise of claims between the debtors and ARG and Uptons. Part of the consideration to be received by the debtors and their estates under the agreement is the payment of nearly $325,000 by ARG to SCOA as settlement of SCOA's potential claims relating to the License Agreement, including claims arising from ARG's and Uptons' decision to discontinue the operation of the Uptons' store locations. STUART ENTERTAINMENT: Committee Objects To HQ Lease --------------------------------------------------- The Committee objects to the provisions whereby the debtor agrees that in the event of a default under the lease the lessor will not be subject to Section 362 of the Bankruptcy Code and that the lessor may proceed directly to state law rights and remedies, and that the lessor may immediately draw on the letter of credit and apply the security deposit. The Committee states that the automatic stay provisions of Section 362 apply in this case to any action which may be taken by the lessor upon default of the Lease. The Committee also objects to the security deposit provisions which appear to require the debtor to deliver as security a letter of credit in the amount of $30,000 which is in addition to the "Reduction Fee" which the Lessor is to obtain from the prior tenant of the premises in the amount of $117,464. AS a result it appears that the lessor will retain a security deposit in the total amount of $147,464. Such security deposit is unreasonable in light of the fact that the monthly rent ranges from $18,877 to $21,897 throughout the term of the lease. The Committee also objects to the ability of the Lessor to relocate the space to be occupied by the debtor. And it objects to the language with regard to assignment and sublease. The Committee believes that the lessors' discretion in permitting any assignment or sublease should be reasonable. And the Committee objects to the language in the waiver of claims section of the lease, where any claim against the lessor is waived, even as a result of the lessor's own negligence. TOROTEL: Fiscal Year-End Financial Information Filed ---------------------------------------------------- Torotel, Inc. conducts business through one wholly-owned subsidiary, Torotel Products, Inc., as a result of the sale of substantially all of the assets of OPT Industries, Inc., a wholly-owned subsidiary, whose name was recently changed to East Coast Holdings, Inc. Torotel Products specializes in the custom design and manufacture of a wide variety of precision magnetic components, consisting of transformers, inductors, reactors, chokes and toroidal coils. These components modify and control electrical voltages and currents in electronic devices. Torotel Products sells these magnetic components to original equipment manufacturers, who use them in products such as aircraft navigational equipment, digital control devices, voice and data secure communications, medical equipment, telephone and avionics equipment, and conventional missile guidance systems. In the company's fiscal year ended April 30, 1999 revenues were $4,553,000 with net loss incurred of $2,398,000. In the 1998 fiscal year revenues were $6,059,000 with net loss of $1,523,000. US ONCOLOGY: Incurs Net Loss In Second Quarter 1999 --------------------------------------------------- US Oncology, Inc. is a cancer management company which provides comprehensive management services under long-term agreements to its affiliated oncology practices, including operational and clinical research services and data management, and furnishes personnel, facilities, supplies and equipment. These affiliated practices provide a broad range of medical services to cancer patients, integrating the specialties of medical and gynecological oncology, hematology, radiation oncology, diagnostic radiology and stem cell transplantation. Substantially all of the company's revenue consists of management fees and includes all medical practice operating costs for which the company is contractually responsible. Revenue increased from $392.4 million in the first six months of 1998 to $515.6 million in 1999, an increase of $123.2 million, or 31.4% and from $204.7 million in the second quarter of 1998 to $266.4 million in the second quarter of 1999, an increase of $61.7 million or 30.1%. Net income decreased from $29.1 million in the first six months of 1998 to $15.3 million in the first six months of 1999, a decrease of $13.8 million or 47.4% and decreased from $15.5 million for the second quarter of 1998 to a loss of $1.2 million for the second quarter of 1999. VENCOR: Background and Description of Debtor -------------------------------------------- Louisville, Kentucky-based Vencor, Inc., with nearly $2 billion in assets and liabilities, is the largest healthcare provider to have sought protection from creditors and relief under chapter 11 to date. VENCOR, INC. One Vencor Place 680 South Fourth Street Louisville, KY 40202-2412 Phone: 502-596-7300 Fax: 502-596-7499 http://www.vencor.com Vencor, Inc. (f/k/a Vencor Healthcare, Inc.) is one of the largest providers of long-term healthcare services in the United States. At June 30, 1999, the Company operated 293 nursing centers (38,387 licensed beds), 56 long-term acute care hospitals (4,935 licensed beds), and its Vencare ancillary services business which provided respiratory and rehabilitation therapies, medical services and pharmacy management services (under thousands of contracts) to both Company-operated and non- affiliated nursing centers. Vencor currently operates in 46 states. Healthcare services provided through the Vencor network include long-term hospital care, nursing care, contract respiratory therapy services, post- operative care, in-patient and out-patient rehabilitation therapy, specialized care for Alzheimer's disease and pharmacy services. Vencor employs approximately 42,600 full-time and 15,300 part- time and per diem employees. Vencor is a party to 30 collective bargaining agreements covering 3,300 unionized employees. The Company's headquarters staff, located at One Vencor Place, occupies a 287,000 square foot building located in Louisville, Kentucky. THE SPIN-OFF TRANSACTION In January 1998, the Board of Directors of Ventas (formerly known as Vencor, Inc.) authorized its management to proceed with a plan to separate Ventas into two publicly-held corporations: * Vencor, Inc., to operate the hospital, nursing center and ancillary services businesses and * Ventas, Inc., to own substantially all of the real property of Ventas and to lease the real property to a new operating company. In anticipation of the Spin-Off, Vencor was incorporated on March 27, 1998 to be the new operating company. On April 30, 1998, Ventas completed the spin-off of its healthcare operations from its real estate holdings through the distribution of Vencor common stock on a one-for-one basis to Ventas shareholders of record as of April 27, 1998. The Distribution was completed on May 1, 1998. In connection with the Spin-Off, Vencor manages and operates the real property which it leases from Ventas pursuant to four master lease agreements. OPERATING DIVISIONS In November 1998, Vencor organized its operations into three operational divisions coinciding with its primary lines of business: (a) Hospitals, (b) Nursing Centers, and (c) Ancillary Services under the Vencare nameplate. A. Hospital Division Vencor hospitals primarily provide long-term acute care to medically complex, chronically ill patients. For the year ending December 31, 1998, selected hospital operating data reflected: Revenues.......................................... $919,847,000 Operating income.................................. $259,874,000 Hospitals in operation at end of period........... 57 Number of licensed beds at end of period.......... 4,979 Patient days...................................... 947,488 Average daily census.............................. 2,596 Occupancy ........................................ 54% In 1998, Medicare patients account for 68% of Patient Days at Vencor facilities; Medicaid, 13%; and Private Insurance Plans, 19%. Medicare payments accounted for 59% of Vencor's $919.8 million in 1998 Hospital Revenues; Medicaid, 10%; and Private Insurance Plans, 31%. At year-end, Vencor hospitals were located in 45 geographic markets in 23 states, experiencing intense competition for patients covered by high-profit-margin non-government reimbursement sources. B. Nursing Center Division Vencor provides long-term care and subacute medical and rehabilitation services in 291 nursing centers containing 38,362 licensed beds located in 31 states. At December 31, 1998, Vencor owned five nursing centers, leased 273 nursing centers from third parties and managed 13 nursing centers, providing physical, occupational and speech rehabilitation services. The majority of patients in rehabilitation programs stay for eight weeks or less. Patients in rehabilitation programs generally provide higher revenues than other nursing center patients because they require a higher level of ancillary services. In addition, management believes that Vencor is a leading provider of care for patients with Alzheimer's disease. For the year ending December 31, 1998, Selected Nursing Center Operating Data reflected: Revenues..................................... $1,621,662,000 Operating income............................. $ 245,569,000 Number of nursing centers operating.......... 291 Number of licensed beds at end of period..... 38,362 Patient days................................. 11,939,266 Average daily census......................... 32,710 Occupancy.................................... 87% In 1998, Medicare patients account for 13% of Patient Days at Vencor Nursing Home facilities; Medicaid, 65%; and Private Insurance Plans, 22%. Medicare payments accounted for 29% of Vencor's $1.6 billion in 1998 Nursing Home Revenues; Medicaid, 45%; and Private Insurance Plans, 26%. At year-end, Vencor Nurshing Homes were located in 45 geographic markets in 23 states, experiencing intense competition for patients covered by non-government reimbursement sources. C. Ancillary Services Division Through its Vencare ancillary services division, Vencor has expanded the scope of its cardiopulmonary care provided in its hospitals by providing rehabilitation therapy and respiratory care services and supplies to nursing and subacute care centers. In November 1996, Vencor consolidated its pharmacy operations under its ancillary services division. In the third quarter of 1998, Vencor sold or closed its hospice and homecare businesses. In addition, the rehabilitation, respiratory and other healthcare services previously provided by TheraTx have been integrated into the ancillary services division. For the year ended December 31, 1998, revenues from the ancillary services division totaled approximately $582.7 million which represented 18.7% of Vencor's total revenues. MASTER LEASE AGREEMENTS As part of the January, 1998 Spin-Off Transactions, Vencor and Ventas entered into four Master Lease Agreements for substantially all of the real property, buildings and other improvements used by Vencor. Ventas, a REIT, owns the real estate; Vencor manages and operates the properties. The Leased Properties are divided into four groups, and each group of properties is subject to a separate Master Lease Agreement. The Master Lease Agreements have 10 to 15 year Base Terms, provide for up to three 5-year renewal terms, require annual lease payments of approximately $222 million (subject to 2% annual escalations). Use of the properties is restricted to providing healthcare services. The Master Lease Agreements provide that Vencor may not assign, sublease or otherwise transfer any Lease or any portion of a Leased Property as a whole (or in substantial part), including upon a Change of Control event, without Ventas' consent, which may not be unreasonably withheld if the proposed assignee is a creditworthy entity with sufficient financial stability to satisfy its obligations under the Lease, has not less than four years experience in operating health care facilities, has a favorable business and operational reputation and character and agrees to comply with the use restrictions in the Master Lease Agreements. Vencor may sublease up to 20% of each Leased Property for restaurants, gift shops and other stores or services customarily found in hospitals or nursing centers without the consent of Ventas, subject, however, to there being no material alteration in the character of the Leased Property or in the nature of the business conducted on such Leased Property. Additionally, the Master Lease Agreements provide that if Ventas receives a bona fide offer from a third party to purchase any Leased Property during the first three years of the Base Term and Ventas wishes to accept the offer, then, prior to entering into a contract of sale with the third party, Ventas must first offer Vencor the right to purchase the Leased Property on substantially the same terms and conditions as are contained in the third party offer. (VENCOR Bankruptcy News Issue 1; Bankruptcy Creditors' Service Inc.) XITEC: Emerges from Chapter 11 ------------------------------ XiTec, Inc. announced that the reorganization plan which the company had filed on July 21, 1999 was confirmed by the United States Bankruptcy Court. "The reorganization plan, as approved by an overwhelming majority of the creditors, will significantly improve the balance sheet of XiTec with approximately $ 3 million in debt converting to equity and provide the funding for us to capitalize on our technological strengths and start the process of profitably growing the business," said Michael J. Sullivan, XiTec's President and Chief Executive Officer. "The cooperation and efforts of many people had to come together in reaching this meaningful milestone in the Chapter 11 process and I am particularly grateful for the broad based support from among our creditors with 98% of the debt held by those who voted approving the plan." "We are extremely pleased with the high level of XiTec's technological expertise, the caliber of its management and skilled personnel and its focus on selected market niches," stated Christopher G. Miller, spokesman for the investor group. "We are excited about the long-term prospects of the company." A major element of the reorganization plan will be the investment of $ 900,000 at closing by a private group of accredited investors and up to an additional $600,000 invested, at the option of the investor group, during a six month period was confirmed retained their respective shares. The equity interest of these shareholders, however, will be diluted by the issuance of new shares in accordance with the plan. XiTec designs, develops, and distributes mini C-Arm fluoroscopic imaging systems and components with medical, veterinary and industrial applications. ********** 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 * * *