/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/991110.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, November 10, 1999, Vol. 3, No. 218 Headlines ALLION HEALTHCARE: Outside Auditors Engaged ANKER COAL GROUP: Plans To Offer Secured Notes Exchange AXIOHM: Announces Chapter 11 Filing and Plan of Reorganization BONNEVILLE PACIFIC: Sells Bonneville Fuels For $23,581,000 BOSTON CHICKEN: US Trustee Appoints Committee BREED TECHNOLOGIES: Setting Bar Date CENTRAL EUROPEAN: Shareholders Meeting Set For December 14, 1999 CLARIDGE HOTEL: Announces Third Quarter Financial Results EDISON BROTHERS STORES: Files DIP Five-Week Financials FAMILY GOLF CENTERS: Lenders Expand Credit Facility FAVORITE BRANDS: Reports September 1999 Figures GREATER SOUTHEAST: Doctors Community Offers New $21 Million Bid HARNISCHFEGER: Applies To Employ PwC Securities HOMEMAKER INDUSTRIES: Reply To US Trustee's Objection to Loeb L3 COMMUNICATIONS: Iridian Principals Hold 10.8% Of Common Stock LESLIE FAY: Reports Third Quarter, Nine-Months Results LEVITZ: Committee's Application To Retain Akin Gump MARVEL ENTERPRISES: Perlmutter Increases Holding To 58.8% NATIONAL HEALTH: Files Plan of Reorganization PREMIER LASER: 5.3% Of Common Stock Held By Colette Cozean SANYO AUTOMOTIVE: Receives $12 Million DIP Line of Credit SKYTOP BREWSTER: National Oilwell Acquires Assets SKYVIEW: Under Chapter 11 Trustee Control After Failed Auction SMARTALK TELESERVICES: Announces Appointment Of New Auditor SUBMICRON: Akrion Completes Acquisition VENCOR: 14 States Seek to Vacate Order Prohibiting Setoffs ZENITH: Exiting Chapter 11 ********* ALLION HEALTHCARE: Outside Auditors Engaged ------------------------------------------- During the course of Allion Healthcare Inc.'s Chapter 11 proceeding, the company rejected its contract with its principal accountant, Deloitte & Touche LLP. The order of the Bankruptcy Court approving the company's bankruptcy plan stated, among other things, that given the state of the company's records and the acts and omissions of the company's former Chief Financial Officer and management group (which were publicly disclosed in a press release issued by Allion Healthcare Inc. on April 14, 1998), the company was unable to complete its financial statements for fiscal years 1997 and 1998, and no opinion was issued with respect to that period. In November 1998, the company engaged the services of Holtz Rubinstein & Company, LLP as an outside accounting firm, which engagement was approved by order of the Bankruptcy Court. Holtz Rubinstein has not, as yet, been approved as Allion's outside auditor, however, the company expects to have a shareholders' vote regarding this issue as soon as practical. ANKER COAL GROUP: Plans To Offer Secured Notes Exchange ------------------------------------------------------- Anker Coal Group, Inc. plans to conduct a public exchange offer of its 14.25% Series A Second Priority Senior Secured Notes due 2007 (PIK through April 1, 2000) for its outstanding 9.75% Senior notes due 2007. Currently, approximately $16.5 million of old notes are outstanding. In the public exchange offer, Anker plans to offer holders of old notes $743 principal amount of new secured notes for each $1,000 principal amount of old notes held. The public exchange offer will be conducted either as an exchange offer registered under the Securities Act of 1933 or pursuant to the exemption from Securities Act registration for exchanges with existing security holders. Anker intends to offer the public exchange as soon as possible. However, because of regulatory and other requirements, Anker cannot predict when the public exchange offer will be made. Anker recently completed a private exchange transaction in which Anker exchanged with a limited number of qualified holders $86.8 million principal amount of new secured notes for $108.5 million principal amount of old notes. Participating holders waived their right to receive the October 1, 1999 interest payment on the old notes and consented to amendments to the indenture for the old notes that, among other things, modified or eliminated various covenants. Participating holders also received warrants to purchase an aggregate of 20% of Anker's common stock at a nominal exercise price. As a result of the private exchange transaction, approximately $16.5 million of old notes remain outstanding. The securities issued in the private exchange transaction described above were not registered under the Securities Act of 1933 and may not be offered and sold in the United States absent registration or an applicable exemption from registration. With respect to the planned public exchange offer, if the public exchange offer is registered under the Securities Act of 1933, the offer will be made only by means of a prospectus to be filed with the Securities and Exchange Commission. Anker Coal Group, Inc. and its subsidiaries produce and sell coal used principally for electric generation and steel production in the eastern United States. AXIOHM: Announces Chapter 11 Filing and Plan of Reorganization -------------------------------------------------------------- Axiohm Transaction Solutions, Inc. (Nasdaq: AXHM) announced that it and its U.S. subsidiaries have initiated Chapter 11 proceedings in Delaware in order to implement a capital restructuring agreed to by representatives of Axiohm's primary creditor and shareholder constituencies. The Company has also filed its plan of reorganization that has the support of holders of at least two thirds of its approximately $ 63 million of bank debt, an ad hoc steering committee of holders of its 9 3/4% Senior Subordinated Notes, and over 50% of its current shareholders. As a result of this "pre-filing arrangement," Axiohm expects to emerge from Chapter 11 by the end of the First Quarter of 2000. Axiohm's foreign subsidiaries are not subject to the Chapter 11 case. A group of banks led by Lehman Brothers Commercial Paper Inc. have agreed to provide Axiohm with up to $20 million additional financing for working capital purposes. This financing facility--known as debtor-in-possession financing ("DIP")--will assure that Axiohm will have liquidity sufficient to fund operations throughout the Chapter 11 proceedings. The Company contemplates that the facility will be replaced by a permanent revolving financing facility upon its emergence from Chapter 11. Although there can be no assurances, Axiohm expects to arrange for such a replacement financing facility in the near future. Under the plan of reorganization, Axiohm's trade creditors will be paid in full. Axiohm has requested the Bankruptcy Court to allow it to pay its ongoing suppliers their pre-petition claims in the ordinary course. Accordingly, Axiohm's Chapter 11 filing should have no adverse impact on its valued suppliers and customers. The plan contemplates a permanent restructuring of Axiohm's pre- and post-petition bank debt, expected to total about $ 80 million (not all of which is expected to be drawn), and the conversion of all of its $ 120 million subordinated debt obligations to equity. Axiohm's existing Common Stock will be cancelled and existing shareholders will receive Contingent Value Rights ("CVRs") in the reorganized private company. The CVRs will entitle its holders to at least 2.5% of the equity value of the reorganized company upon an initial public offering, or sale or merger of the company "We are very pleased with the results of our restructuring negotiations with representatives of our banks, bondholders and shareholders," said Nicolas Dourassoff, President and Chief Executive Officer. With the elimination of $120 million of debt from our balance sheet and the additional bank financing that we have secured, Axiohm will have the financial flexibility to maximize its potential. Our management can now focus on expanding our existing base of loyal customers and continuing our strong position in our markets." In a "pre-arranged Chapter 11 filing," the pre-Chapter 11 negotiations and agreements enable a company to achieve Chapter 11 reorganization rapidly. As a result of agreements between Axiohm and its primary creditor groups, Axiohm will be able to avoid the expense, delay and uncertainty generally associated with a traditional Chapter 11 filing. "Consequently," continued Mr. Dourassoff, Axiohm can now turn its full attention to continuing to the efficient design and production of transaction products that create value for our customers. We are very grateful to our employees and business partners for their hard work and support that have made this capital restructuring possible." Axiohm Transaction Solutions, Inc., based in Blue Bell, Pennsylvania, is a leading designer and manufacturer of printers and ancillary products. The transaction printers employ thermal and impact technology and are used to print documents such as point of sale receipts, gaming tickets, and other transaction records. Axiohm also designs and manufactures thermal and impact printer mechanisms, magnetic-stripe and smart-card readers, and bar code printers. Axiohm sells to distributors, end users, OEMs, and VARs. Approximately 80% of Axiohm's sales are to OEMs; and about 40% of sales come from outside the US. BONNEVILLE PACIFIC: Sells Bonneville Fuels For $23,581,000 ---------------------------------------------------------- On October 29, 1999, Bonneville Pacific Corporation completed the sale of its wholly-owned subsidiary, Bonneville Fuels Corporation, to Carbon Energy Corporation, an affiliate of CEC Resources Corporation. Prior to the sale, the company conducted all of its oil and gas operations through Bonneville Fuels Corporation. The company no longer conducts oil or gas operations. The sale of Bonneville Fuels Corporation to Carbon Energy Corporation was completed in accord with the terms and conditions of the Stock Purchase Agreement dated August 11, 1999, entered into by the company and CEC Resources Corporation. The adjusted purchase price paid by CEC to the company for all of the shares of Bonneville Fuels Corporation was approximately $23,581,000, which was paid in cash. The purchase price was determined through negotiation between the company and CEC Resources Corporation. BOSTON CHICKEN: US Trustee Appoints Committee --------------------------------------------- Pursuant to 11 U.S.C. Secs. 1102(a) and 1102(b)(1), the following creditors, being among those holding the largest unsecured claims and who are willing to serve, are appointed to the Official Committee of Unsecured Creditors formed by the United States Trustee: Trendex Capital Mgmt. Attn: Neil Subin 998 S. Federal Highway, Suite 202 Boca Raton, FL 33432 (561) 750-4118 C. Richard Lehmann c/o Bond Investors Assoc. Inc. 6175 NW 153rd St., Suite 201 Miami Lakes, FL 33014 (305) 557-1832 Chase Manhattan Bank, as Indenture Trustee and Successor Indenture Trustee Attn: Frank Grippo, V.P. 450 W. 33rd Street, 15th Floor New York, NY 10001 (212) 946-3358 Pacholder Associates, Inc. Attn: Thomas M. Barnhart II, Sr. V.P. & Assoc. General Counsel 8044 Montgomery Road, Suite 382 Cincinnati, OH 45236 (513) 985-3200 Marine Midland Bank, as Successor Indenture Trustee Attn: Metin Caner 140 Broadway New York, NY 10005-1180 (212) 658-6564 Ocean Commercial Kitchen Repair Inc. Attn: Brian K. Mathews, Pres. 1834 Longwood Dr. Forked River, NJ 08731 (609) 971-1496 Accordingly, Loomis Sayles and Mr. Doppelt tendered their resignations and no additional appointments have been made. BREED TECHNOLOGIES: Setting Bar Date ------------------------------------ The debtor, BREED Technologies, Inc. requests that the court set a general bar date of March 18, 2000. CENTRAL EUROPEAN: Shareholders Meeting Set For December 14, 1999 ---------------------------------------------------------------- The annual general meeting of shareholders of Central European Media Enterprises Ltd., a Bermuda company, will be held at the offices of Conyers Dill & Pearman, Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, on December 14, 1999 at 10:00 A.M. Agenda items for the meeting include: 1. Election of seven directors to serve until the next annual general meeting of shareholders; 2. Consideration and action upon an amendment to the company's Bylaws to effect a one-for-eight reverse stock split of the company's Class A common stock, Class B common stock and preferred stock, and in connection with the reverse stock split, to increase the authorized share capital of the company; 3. Consideration and action upon an amendment to the company's Bylaws permitting the Board of Directors to (i) set the maximum number of directors to serve on the Board of Directors and (ii) fill vacancies on the Board of Directors; 4. To receive and adopt the financial statements of the company for the company's fiscal year ended December 31, 1998, together with the auditors' report thereon; and 5. To appoint Arthur Andersen & Co. as auditors for the company and to authorize the directors to approve their fee. The approval and adoption of each matter to be presented to the shareholders is independent of the approval and adoption of each other matter to be presented to the shareholders. Only shareholders of record at the close of business on October 29, 1999 are entitled to notice of and to vote at the meeting. CLARIDGE HOTEL: Announces Third Quarter Financial Results --------------------------------------------------------- The Claridge Hotel and Casino Corporation, which operates the Claridge Casino Hotel through its subsidiary, The Claridge at Park Place, Incorporated, today announced its third quarter 1999 financial results. For the third quarter of 1999, The Claridge Hotel and Casino Corporation reported net income of $2.5 million compared to a net loss of $2.0 million in the third quarter of 1998. The net income for the first nine months of 1999 was $974,000 compared to a $4.0 million loss for the first nine months of 1998. On August 16, 1999, The Claridge Hotel and Casino Corporation and The Claridge at Park Place, Incorporated filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in order to facilitate a financial restructuring. Therefore, beginning on August 16, 1999 the Corporation ceased to record interest expense related to its 11-3/4% First Mortgage Notes. Interest expense for the Notes, for the period August 16, 1999 to September 30, 1999, would have been $1,334,000. Earnings before interest, taxes, depreciation and amortization, when adjusted to eliminate the effect of Claridge's related limited partnership structure ("Adjusted EBITDA"), were $4.6 million for the quarter ended September 30, 1999, compared to $2.3 million for the third quarter in 1998. Adjusted EBITDA was $10.3 million for the first nine months of 1999 compared to $8.1 million for the same period in 1998. Net loss and Adjusted EBITDA for the first quarter of 1999 included the effect of the receipt of the settlement of Claridge's claim against the general contractor that built its self-parking garage. Casino revenue was $46.4 million in the third quarter of 1999, a 6.7% increase over Casino revenue in the same period in 1998. Total costs and expenses for the quarter declined $3.1 million, due mainly to a scheduled decrease in rent expense to the partnership and decreased interest expense due to the bankruptcy filing. Recently, analysts and the media have reported that the Claridge experienced a 22.8% casino revenue growth for the month of October, 1999. This growth rate was calculated using casino revenues determined on an accrual basis of accounting for October, 1999 compared to casino revenues prepared on a cash basis of accounting for October, 1998. Cash basis casino revenues were reported to the New Jersey Casino Control Commission, as required, in October 1998. Management believes that it would be more informative to compare casino revenues determined on an accrual basis for both months. Such a comparison provides a 9.9% casino revenue growth rate for the Claridge for October, 1999 over October, 1998. The Claridge Casino Hotel opened in July, 1981 and has 59,000 square feet of casino gaming space. The Claridge Hotel and Casino Corporation is a closely-held public corporation and is the issuer of $85 million of 11-3/4% First Mortgage Notes which are publicly traded on the New York Stock Exchange under the symbol CLAR02. EDISON BROTHERS STORES: Files DIP Five-Week Financials ------------------------------------------------------ Reporting on the period August 29, 1999 through October 2, 1999, Edison Brothers Stores Inc., operating as debtor-in-possession, indicate net revenue of $227.0 for the period, with net loss of $156.4. FAMILY GOLF CENTERS: Lenders Expand Credit Facility --------------------------------------------------- Family Golf Centers, Inc. reports that the lenders under the company's $100 million Credit Facility have agreed to restructure and expand the facility to $130 million. The $130 million credit facility will replace the company's previous $100 million credit facility. The proceeds will be used to finance construction projects and for working capital purposes, including the payment of interest under the Subordinated Convertible Notes, which the company intended to pay on October 22, 1999. The new facility provides for varying interest rates between prime + 1 1/2% and prime + 3%, is secured by substantially all of the company's assets and requires certain scheduled principal payments through its maturity date on December 31, 2002. As part of the restructuring, the company was required to issue to the lenders warrants for up to 10% of the company's outstanding common stock on a fully diluted basis, at an exercise price of $0.50 per share, subject to the company's right to cancel up to 50% of such warrants under certain circumstances. The company also announced that it has reached agreement with Bank of America on the terms for restructuring $6.1 million in indebtedness due it. Bank of America granted the company an extension through November 5, 1999 during which time the company expected to complete loan documentation. In addition, the company announced an Office of the Chairman has been established in order to oversee the restructuring of the company's operations. The Office of the Chairman is comprised of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Restructuring Officer. Stephen Cooper, Managing Principal at Zolfo Cooper, L.L.C., has been named Chief Restructuring Officer for Family Golf Centers and Philip Gund, Principal at Zolfo Cooper, L.L.C. will serve as interim Chief Financial Officer until such time as a permanent Chief Financial Officer is appointed. In connection with the restructuring of its operations, the company anticipates closing or selling certain of its facilities and evaluating its remaining operations. The company will recognize impairment losses and other related charges in the amount of $40- $60 million for the period ending September 30, 1999. Family Golf Centers continues to explore other strategies and is considering the disposition of non-golf operations. Such dispositions may result in the company incurring further losses. Dominic Chang, Chairman and C.E.O. of Family Golf Centers stated, "We are extremely pleased with the expansion of our credit facility. The revised credit facility will provide additional working capital and will enable the company to return its focus to improving business operations. We have taken immediate steps in reducing payroll and other operating expenses and continue to explore additional measures to return the company to profita bility." Family Golf operates golf centers throughout North America. The company's golf centers provide a wide variety of practice and play opportunities, including facilities for driving, chipping, putting, pitching and sand play and typically offer full-line pro shops, golf lessons and other amenities such as miniature golf and snack bars. The company also operates complementary sports and family entertainment facilities, including ice rinks and Family Sports Supercenters. Currently, the company owns, operates, manages or has under construction 121 golf centers and 25 ice and family entertainment facilities in 25 states and three Canadian provinces. FAVORITE BRANDS: Reports September 1999 Figures ----------------------------------------------- Operating as debtor-in-possession Favorite Brands International Inc. has released its financial statement for the month of September 1999. Net revenue was reported to be $71,655 with resulting net income of $4,160. GREATER SOUTHEAST: Doctors Community Offers New $21 Million Bid --------------------------------------------------------------- Yesterday Arizona-based Doctors Community Healthcare Corp. submitted a new bid of $21 million for Greater Southeast Community Hospital in Washington, according to The Washington Post. Creditors, however, say the proposal has numerous loopholes. Doctors Community backed out of an earlier proposal last week one hour before the sale was to be announced in bankruptcy court. Bankruptcy Judge S. Martin Teel Jr. set another hearing for Wednesday morning and authorized an additional $340,000 in operating funds to be released to the hospital by creditors who control the facility's receipts. At a hearing yesterday, the creditors, who have a $70 million claim, asked Judge Teel to liquidate the hospital immediately and said the Doctors Community offer is a "shell game." Attorney Sam Alberts (Akin, Gump, Strause, Hauer & Feld LLP, Washington), who represents the hospital's unsecured creditors, said this agreement...should not be accepted by the courts. This agreement will cause more harm than good. "He predicted that the purchase would drive the hospital out of business before the year ends and leave creditors with even less money than they would have if the hospital is liquidated now. An attorney for a financing subsidiary of Daiwa Bank of Japan, owed about $12 million, said there are "serious flaws" in the deal, including protection for Doctors Community that really make the transaction worth $17.5 million, not $21 million. (ABI 09-Nov-99) HARNISCHFEGER: Applies To Employ PwC Securities ----------------------------------------------- In a letter agreement dated October 19, 1999, the Debtors request PricewaterhouseCoopers Securities, LLC, to perform additional services than were originally contemplated. Specifically, the Debtors ask PwCS to become intimately involved in the identification of potential purchasers of Beloit's assets; the preparation of informational memoranda, presentations and a data room; assisting bidders with their due diligence; and negotiation of definitive agreements with prospective investors or purchasers. PwCS' fees will be based on a number of factors, including the complexity of the transaction(s), the actual services provided, the value added to any Transaction, and comparison with typical market compensation. The Debtors and PwCS envision fees ranging from $3,500,000 to $4,500,000. (Harnischfeger Bankruptcy News Issue 14; Bankruptcy Creditor's Service Inc.) HOMEMAKER INDUSTRIES: Reply To US Trustee's Objection to Loeb ------------------------------------------------------------- The debtor, Homemaker Industries, replies to the objection of the US Trustee for the Southern District of New York to the application to employ Loeb Partners Corporation as its investment bankers and financial advisors. The US Trustee objects to a set monthly fee of $25,000. The debtor argues that all fees will be substantiated by time spent. The US Trustee also objects to the 3% Success Fee, and the debtor responds that the Success Fee was part of an arm's length negotiation and is fair and reasonable. L 3 COMMUNICATIONS: Iridian Principals Hold 10.8% Of Common Stock ----------------------------------------------------------------- The following entities are holding common stock of L 3 Communications Holdings Inc.: CL Investors, Inc., 3,283,800 shares, representing 10.0% of the outstanding shares of common stock of the company. CL holds shared voting and dispositive power over the shares. Cole Partners LLC, 52,300 shares, or 0.2%, with shared powers. David L. Cohen, 3,546,700 shares, representing 10.8% of the outstanding shares and holding shared voting and dispositive powers. Harold J. Levy, 3,546,700 shares, or 10.8%, with shared powers. Iridian Asset Management LLC/CT, 3,283,800 shares, or 10.0%, also with shared powers. Iridian Partners Fund, L.P., 32,100 shares, or 0.1%, also with shared powers. Iridian Private Business Value Equity Fund, L.P., 20,200 shares, which represents less than 0.1% of the outstanding shares of common stock of the company but which also carries shared powers. LC Capital Management, LLC, 3,283,800 shares, with shared powers and representing 10.0% of the outstanding common stock shares. Iridian, LC Capital and Cole are Delaware limited iability companies. CL Investors is a Delaware corporation. Iridian Partners and Iridian Private Business are Delaware limited partnerships. David L. Cohen and Harold J. Levy are citizens of the United States. Iridian is an investment adviser and its principal business is managing a number of accounts containing securities over which Iridian has voting and dispositive power. Iridian is also the sole member of Cole. The principal business of LC Capital is serving as the controlling member of Iridian. The principal business of CL Investors is serving as the controlling member of LC Capital. The principal business of Cole is serving as the general partner of Iridian Partners and Iridian Private Business. The principal business of Iridian Partners and Iridian Private Business is investing in securities. Iridian serves as the investment adviser to Iridian Partners an Iridian Private Business. Cole, as the general partner of Iridian Partners and Iridian Private Business, and Iridian, as the sole member of Cole and investment adviser to Iridian Partners and Iridian Private Business, share voting and dispositive power over the investments of Iridian Partners and Iridian Private Business. Each of the Messrs. Cohen and Levy owns 50% of the common stock of CL Investors and, as his principal occupation, serves as a director of CL Investors, a manager and Principal of LC Capital and as a Principal and portfolio manager of Iridian. Each of Messrs. Cohen and Levy also serves as an employee of Arnhold & S. Bleichroeder Advisers, Inc., an investment adviser. LESLIE FAY: Reports Third Quarter, Nine-Months Results ------------------------------------------------------ The Leslie Fay Company, Inc. (Nasdaq: LFAY) reported a 20.2% increase in net sales to $58.6 million for its third quarter ended October 2, 1999, from $48.8 million for its third quarter ended October 2, 1998. Leslie Fay's net income for the third quarter of 1999 decreased to $3.1 million, or $0.56 per basic share and $0.52 per diluted share, from net income of $3.8 million, or $0.58 per basic share and $0.55 per diluted share, for the year-ago quarter. Excluding $366,000 in Other Expenses and $158,000 in stock based compensation expense in the third quarter of 1999 in connection with its August 25 merger with a Three Cities Research affiliate -- equal after taxes to $0.06 per basic and $0.06 per diluted share, income per basic share increased $0.04, or 6.9 %. Gross profit margin of 25.2% for the first quarter of 1999 compared with 24.9% for the year-ago quarter. Excluding the operations of Warren Apparel Group acquired on October 27, 1998, Leslie Fay's net sales for the second quarter of 1999 declined 8.6% to $44.6 million from $48.8 million for the year ago period, and the gross profit margin was 22.0%. "Our performance for the third quarter reflects lower than expected unit sales for our Leslie Fay labels, price reductions to clear out Leslie Fay Sportswear inventory, and expenses resulting from the merger," John J. Pomerantz, Leslie Fay's chairman and CEO, said in making the announcement. "But for one-time merger-related expenses, our per share earnings for the quarter would have been greater than a year ago. "Sales volume for Leslie Fay Dresses was lower than expected due to the receipt of confirmations too late to ship in the third quarter," Pomerantz added. "Sales results for Leslie Fay Sportswear reflect greater price reductions than last year. The market is responding positively to our efforts to update the look of our Leslie Fay Sportswear line, but we have further work to do to increase its appeal. Our new businesses, including the Warren Group acquisition and the launch of a Leslie Fay Evenings line, contributed substantially to our sales for the quarter. Warren Apparel Group continues to perform better than expected, and Leslie Fay Evenings is being well received. Although still early in the fourth quarter, we continue to expect that our sales results for the year will surpass those for 1998, based on our expectation that Leslie Fay Dresses will better last year's results and that Warren's results will substantially exceed those for last year, with annual sales greater than $40 million. "Our higher operating expenses reflect the addition of Warren and launch of Leslie Fay Evenings and also increased stock-based compensation as a result of the early vesting of middle management options due to the merger. Our increased interest expense and increased debt reflect greater borrowing to fund working capital for our new businesses and the completion in August of our cash exchange offer to shareholders. As a result of the exchange of cash for shares, the Company repurchased one million shares for $7 per share. The company expects to incur future quarterly interest charges of about $140,000 in connection with the merger. "Our trailing 12-month EBITDA through the third quarter of 1999 grew to $12.0 million, or 6.3% of trailing sales, from $10.4 million, or 7.0% of trailing sales, for the comparable pro forma 12-month, year-ago period-up 15.5%. The company's EBITDA for its third quarter of 1999, excluding merger related expenses, was $5.3 million, or $84,000 below that for the year-ago quarter. The company defines EBITDA as operating income before interest, taxes, depreciation, amortization, stock-based compensation, and amortization of excess revalued net assets over equity. Leslie Fay's results for the third quarter for 1999 and 1998 each include a $1.1 million offset to operating expenses, representing the amortized portion of the amount by which revalued net assets exceeded stockholder equity on June 4, 1997, the date the company emerged from bankruptcy. This positive, non cash offset to expenses amounted to $0.19 per diluted share for the 1999 period and to $0.17 per diluted share for the 1998 period. Leslie Fay's balance sheet at the end of its third quarter of 1999 included $18,163,000 in total debt, working capital of $37.4 million, and stockholders' equity of $39.8 million, up from year- end 1998 stockholders' equity of $36.4 million. Weighted average shares outstanding, assuming dilution, were 6.0 million for the third quarter of 1999 and 6.8 million for the year-ago quarter. Basic and diluted shares for the third quarter of 1998 have been adjusted to reflect a two-for-one stock split effective July 1, 1998. As previously announced, during the third quarter of 1998, Leslie Fay repurchased 817,100 shares, or about 12% of the total outstanding, pursuant to a previously announced share buyback plan. Reflecting the cash exchange transaction, as of October 2, 1999, there were 5,053,138 basic shares outstanding. For the first nine months of fiscal 1999, ended October 2, Leslie Fay's net sales increased 28.9% to $158.2 million from $122.7 million for the first nine months of fiscal 1998, which ended October 3. Gross profit margin of 26.1% for the first nine months of 1999 compared with 25.8% for the comparable nine months a year ago. Excluding the operations of Warren Apparel Group, Leslie Fay's net sales for the first nine months of 1999 increased 1.1% to $124.1 million from $122.7 million for the comparable year ago period, and the gross profit margin for the first nine months of was 24.1%. Leslie Fay's net income for the first nine months of 1999 increased to $8.4 million, or $1.42 per basic share and $1.36 per diluted share, from net income of $8.9 million, or $1.33 per basic share and $1.26 per diluted share, for the comparable nine months a year ago. Excluding $900,000 in Other Expenses and $158,000 in stock based compensation expense in connection with its completed merger agreement--equal after taxes to $0.12 per basic and $0.11 per diluted share, income per basic share was $1.54 and income per diluted share was $1.47. The company's EBITDA for its first nine months of 1999, exclusive of Other Expenses, which relate to the merger, grew 11.6% to $13.2 million from $11.8 million for the comparable year-ago period. The Leslie Fay Company, Inc. sells its career, evening and social occasion dresses and its sportswear through leading department and specialty stores nationwide. The company's moderate-priced brands include Leslie Fay--one of the best-known trademarks in women's apparel--Haberdashery by Leslie Fay, Joan Leslie and Reggio. Its "better" price brands include David Warren, Rimini by Shaw and HUE. The company has operated continuously as an apparel company since its founding in 1947. LEVITZ: Committee's Application To Retain Akin Gump --------------------------------------------------- Daniel H. Goldin, Esq., in a Supplemental Affidavit, discloses that Akin Gump currently represents and has represented Apollo Investment Fund Ltd., Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (U.K.) Partners III, L.P., and certain affiliates and other companies in which Apollo has a significant investment. Apollo, Mr. Goldin states, accounted for 2.22% of Akin Gump's 1998 revenues. Mr. Goldin assures the Court that its representation of Apollo is in matters wholly unrelated to Levitz. Moreover, Akin Gump has not counseled Apollo in connection with its secured claim against the Debtors or its motion for classification of its claim. Mr. Goldin notes that Akin Gump requested and received a written waiver from Apollo of any actual or potential conflict arising from its representation of the Committee. MARVEL ENTERPRISES: Perlmutter Increases Holding To 58.8% --------------------------------------------------------- Biobright Corporation, with 30,898,523 shares of stock of Marvel Enterprises Inc. exercises shared voting power over that number, and sole dispositive power over 259,750 such shares, representing 58.8% of the outstanding shares of stock of the company. Classic Heroes, Inc. holds and exercises the same number and powers as Biobright Corporation shown above. Isaac Perlmutter T.A. holds 9,582,977 shares with sole dispositive power and shares voting power with the two named entities above on the 30,898,523 shares, which represent the 58.8% of outstanding shares of stock of Marvel Enterprises Inc. mentioned. Isaac Perlmutter holds sole dispositive power over 14,324,202 shares while holding the same shared voting power over the 30,898,523 shares shown above. Isaac Perlmutter T.A., is a Florida trust, Biobright Corporation, a Delaware corporation whose sole stockholder is Mr. Perlmutter, and Classic Heroes, Inc., a Delaware corporation whose sole stockholder is Mr. Perlmutter. The Trust, Biobright and Classic Heroes obtained the funds to make their respective purchases on November 2, 1999 from capital contributions by Mr. Perlmutter. Mr. Perlmutter's personal funds were used to make the capital contributions. As a consequence, as of November 3, 1999, the above may be deemed to beneficially own, to the best of their knowledge, an aggregate of 30,898,523 shares of stock, representing approximately 58.8% of the outstanding shares of stock. They are the direct owners of an aggregate of 9,549,500 shares of common stock, or 28.5% of the outstanding shares of common stock; 4,595,479 shares of 8% preferred stock, or 25.1% of the outstanding shares of 8% preferred stock; and, on a converted basis, 14,324,202 shares of common stock, or 27.3% of the outstanding shares of common stock on a converted basis. Mr. Perlmutter may be deemed to possess the power to vote and dispose of the shares of 8% preferred stock owned by the Trust, Biobright and Classic Heroes. The Trust, Biobright and Classic Heroes have the power to vote and dispose of the shares of the 8% preferred stock they respectively own. On November 2, 1999, the Trust, Biobright and Classic Heroes purchased an aggregate of 814,704 shares of 8% preferred stock, in each case at a price of $6 3/8 per share, in a privately negotiated transaction as follows: Biobright Corporation 250,000 shares, Classic Heroes, Inc. 250,000 shares and the Trust 314,704 shares. The 814,704 shares of 8% preferred stock purchased by the Trust, Biobright and Classic Heroes on November 2, 1999 were purchased from Dickstein & Co., L.P., Dickstein International Limited and Elyssa Dickstein, each of whom is a signatory to the Stockholders' Agreement. Those shares, in the hands of the Trust, Biobright and Classic Heroes, will continue to be subject to the Stockholders' Agreement. In connection with the November 2, 1999 purchase of 814,704 shares of 8% preferred stock, the buyers and certain Dickstein entities entered into an agreement pursuant to which, among other things,effective upon the sale of the shares, each of the Dickstein entities signatory to the Letter Agreement and Mark Dickstein as Dickstein designator (i) waive their rights under the Stockholders' Agreement to have a Dickstein designee nominated and/or elected as a director of the company and (ii)relinquish all other rights under the Stockholders' Agreement. Under the Stockholders' Ageement, the Dickstein entities had the right to designate one individual to serve as a director of the company. The purchasers of the stock, as noted above, anticipate that Peter Cuneo, the company's President and Chief Executive Officer, will be appointed to fill the board seat previously held by a designee of the Dickstein entities. NATIONAL HEALTH: Files Plan of Reorganization --------------------------------------------- National Health & Safety Corporation (OTC Bulletin Board: NHLT) announced that it has filed a joint corporate Plan of Reorganization with a consortium of United Realty Group, L.P. and KJE I, Ltd. National Health will receive $2.9 million to develop new business lines and to expand existing opportunities if the Plan of Reorganization is approved by the U.S. Bankruptcy Court. Dr. R. Dennis Bowers, CEO of National Health, indicated that the company's reorganization plan, which was filed last Friday, expects to accomplish the following goals: 1. Elimination of National Health's debt of $2.5 million. 2. Reduction of corporate operating expenses by 90%. 3. Guaranteed revenue and royalties which will insure National Health's short-term profitability. 4. Expansion financing to develop the company's health insurance products, its medical technology division and other target acquisitions to allow for long-term growth and profitability. 5. Full compensation to National Health's creditors, paid in corporate stock. The joint filing comes only one month after the October 1 sale by National Health of its POWERx Division to MedSmart Healthcare Network, which is also an affiliate of the Dallas-based consortium. MedSmart expects to generate significant royalty payments to National Health on its POWERx sales. In addition, the POWERx product under MedSmart will receive expansion financing and a significant array of financial processing technology and internet resources required to bring the POWERx Network to the e-commerce marketplace. National Health filed for reorganization under Chapter 11 on July 1. Since that time the company has received approval from the Federal Bankruptcy Court to sell the POWERx division of the company, completed the sale of that division to MedSmart and filed a joint Plan of Reorganization. National Health is the founder of the POWERx Medical Benefits Network, a comprehensive national medical network of more than 750,000 hospitals, doctors, surgeons, endodontists, pharmacies and other healthcare providers. Through the POWERx network, consumers are able to purchase most healthcare products and services at discounts of up to 60 percent, whether or not the person is insured. "The filing of the plan places us exactly on schedule for achieving the total reorganization and financing of the company," said Bowers. He also noted that National Health has successfully reduced corporate expenses in October, 1999, by 85 percent compared to October, 1998, a reduction of $108,000 for the month. PREMIER LASER: 5.3% Of Common Stock Held By Colette Cozean ---------------------------------------------------------- Colette Cozean, Ph.D., beneficially owns 1,007,820 shares of common stock of Premier Laser Systems Inc. This represents 5.3% of the outstanding common stock of the company, and Dr. Cozean exercises sole power to vote or direct the vote of, and sole power to dispose of, or direct the disposition of the stock. The amount held includes an aggregate of 2,780 shares of common stock held as custodian for Dr. Cozean's two minor children. SANYO AUTOMOTIVE: Receives $12 Million DIP Line of Credit --------------------------------------------------------- Brake Headquarters USA, Inc. announced that its two subsidiaries operating under Chapter 11 of the U.S. bankruptcy laws, Sanyo Automotive Parts, Ltd. and ABS Brakes, Inc. (collectively, "Sanyo") had closed on a $ 12 million working capital line of credit with Foothill Capital Corporation. The Company's WAWD subsidiary which accounts for approximately $ 30 million of the Company's revenues and is not affected by the bankruptcy filings nor is it a party to the facility. Following the closing of this arrangement the Company believes that this Facility provides management with ample working capital to return Sanyo to a normal level of business operations which existed prior to its May 1999 bankruptcy filing, to assist Sanyo in dealing with its creditors and to emerge from bankruptcy. The Facility is secured by all of Sanyo's assets, including inventory and accounts receivables, and is expected by the Company to enable Sanyo to purchase sufficient inventory and restore full service to its customers. As part of this transaction, National Bank of Canada and Bank Leumi USA were substantially repaid and replaced as senior lenders, although each bank has retained a portion of the debt and liens on Sanyo's assets on a subordinated basis and agreed to discontinue their litigation against the Company. Founded in 1976, Brake Headquarters USA, Inc. is a wholesaler and distributor of automotive brake system products and other component parts for domestic and foreign cars and light trucks. SKYTOP BREWSTER: National Oilwell Acquires Assets ------------------------------------------------- National-Oilwell, Inc. (NYSE:NOI) announced that it has acquired the assets of Skytop Brewster Company out of bankruptcy in a cash transaction valued at approximately $ 2 million. Pete Miller, President of National Oilwell's Products and Technology Group, stated, "The acquisition of Skytop Brewster augments National Oilwell's existing line of well servicing and mobile land rigs and allows us to compete more effectively in the lower horsepower, mobile rig market. In particular, Skytop Brewster enjoys a large installed base of well servicing rigs in Indonesia and Saudi Arabia, which we expect to generate additional spare parts revenues." National Oilwell is a worldwide leader in the design, manufacture and sale of machinery, equipment and downhole tools used in oil and gas drilling and production, as well as in the distribution to the oil and gas industry of maintenance, repair and operating products. SKYVIEW: Under Chapter 11 Trustee Control After Failed Auction -------------------------------------------------------------- After failing to draw suitable bids for its assets, SkyView Media Group Inc.'s bankruptcy proceedings are now in the control of a chapter 11 trustee. The company's failed Oct. 15 auction drew bids from a few potential buyers, including Kelly Broadcasting and David Morrow on behalf of an entity called Power Capital, which were termed unsatisfactory. Specifically, none of the offers for the assets exceeded $18 million, which pales in comparison to the $125 million owed to the unsecured creditors alone. (The Daily Bankruptcy Review Copyright and ABI; November 9, 1999) SMARTALK TELESERVICES: Announces Appointment Of New Auditor ----------------------------------------------------------- Effective October 13, 1999, Smartalk Teleservices Inc. engaged Saltz Shamis & Goldfarb as the principal accountant to audit the company's financial statements. SUBMICRON: Akrion Completes Acquisition --------------------------------------- Akrion LLC completed the acquisition of substantially all of the assets of SubMicron Systems Corp. and its subsidiaries, paying more than $ 55 million for the assets and the assumption of SubMicron's trade payables. Akrion plans to employ substantially all of SubMicron's worldwide workforce. The transaction came on Friday, Oct. 15, soon after the U.S. Bankruptcy Court gave its approval to the deal. SubMicron Systems last month filed for Chapter 11 protection from creditors, after a two-year turnaround program by new management, and announced the deal with Akrion, a newly established venture, at the same time. Akrion is backed by Sunrise Capital Partners, L.P., an affiliate of Houlihan Lokey Howard & Zukin; along with SubMicron's secured lenders, Equinox Investment Partners and Celerity Partners; and members of SubMicron's senior management. At its inception, Akrion has in excess of $ 11 million in cash on hand and total debts of less than $ 1 million. "With the assumption of pre-petition and post-petition trade payables, Akrion anticipates enjoying the continued beneficial relationships with SubMicron's previous suppliers and the prompt return to normal payment terms with them," Akrion stated. Akrion has earmarked more than $ 8 million in funds for investment in several accelerated product development programs, increased staffing and a new technology center in Singapore. David J. Ferran, the chairman and chief executive officer of Akrion - who held the same posts with SubMicron Systems - said in a statement, "The employees of Akrion and I are quite pleased with the outcome of this difficult process. We have all worked extremely hard over the past two-and-a-half years to improve the quality and reliability of our products and to shorten both delivery and installation times. Our focus on continuously improving customer satisfaction has really paid off. "The major semiconductor device manufacturers that have done business with us recently have been delighted with the progress that we've made. The biggest obstacle to our taking a much larger share of the market has been the financial condition of the company. Now, as Akrion, that obstacle has been removed, paving the way for us to expand both our market share and our customer base. Moving forward, we will invest our new financial resources wisely and with an absolute commitment to our number one corporate objective, which will remain 'to significantly improve customer satisfaction.'" VENCOR: 14 States Seek to Vacate Order Prohibiting Setoffs ---------------------------------------------------------- The Medicaid agencies of the States of Alabama, Connecticut, Idaho, Illinois, Louisiana, Maine, Missouri, Montana, New Hampshire, New Mexico, Rhode Island, Tennessee, Utah and Virginia, move the Court for entry of an order vacating Judge Walsh's First Day Order prohibiting Payors from exercising their setoff, withholding and recoupment rights to the extent that order purports to apply to them. The States assert their sovereign immunity rights under the Eleventh Amendment to the United States Constitution, which prevents them from being sued without their consent in Federal courts. The States make it clear that they do not consent, will not consent, and have not taken any action that would constitute a waiver of their sovereign immunity. As legal authority for their position, the States direct Judge Walrath's attention to the Hoffman v. Connecticut, 492 U.S. 96 (1989); Seminole Tribe v. Florida, 517 U.S. 44 (1996); In re Sacred Heart Hospital of Norristown, 133 F.3d 237 (3d Cir. 1998); In re Estate of Fernandez, 123 F.3d 241 (5th Cir. 1997); In re Creative Goldsmiths, Inc., 119 F.3d 1140 (4th Cir. 1997); and Florida Prepaid v. College Savings Bank, 119 S.Ct. 2199 (1999). Anticipating the argument that the filing of this Motion constitutes the States' consent to a waiver of their sovereign immunity, the States make it clear that they are entering a special appearance only to protest the exercise of jurisdiction by the Bankruptcy Court, consistent with the teaching articulated in In re Chen, 227 B.R. 614, 623 (Bankr. D. N.J. 1998) (citing Clark v. Barnard, 108 U.S. 436, 448 (1883)). Charles A. Miller, Esq., and Caroline M. Brown, Esq., of Covington & Burling in Washington, D.C., serve as lead counsel to the 14 States. (VENCOR Bankruptcy News Issue 6; Bankruptcy Creditor's Service Inc.) ZENITH: Exiting Chapter 11 -------------------------- Zenith Electronics Corporation's (OTC Bulletin Board: ZETHQ) financial restructuring has been approved by a federal court, setting the stage for the company to emerge quickly from Chapter 11. In its ruling, the U.S. Bankruptcy Court in Wilmington, Del., approved Zenith's prepackaged reorganization plan, under which the company will become a wholly owned subsidiary of LG Electronics Inc. (LGE). "This marks the beginning of a new era for Zenith. With a focused business plan, streamlined operations and access to LGE's considerable research and manufacturing resources, Zenith is better positioned to capitalize on our brand, distribution and technology strengths," said Jeffrey P. Gannon, president and chief executive officer. He said Zenith will emerge "with a healthier balance sheet and more financial flexibility to participate fully in the transition to digital television and HDTV." Zenith has a commitment for a new, three-year $150 million credit agreement with a group of banks led by Citicorp North America Inc., the same lenders that provided $150 million of debtor-in-possession financing for the past two months. John Koo, vice chairman and CEO of LG Electronics, said, "We are very pleased that the court has confirmed Zenith's restructuring. We look forward to Zenith emerging from Chapter 11 as part of LGE, building on the strength of the powerful Zenith brand name and further strengthening LGE's presence in North America." Zenith filed its Prepackaged Plan of Reorganization with the overwhelming support of its creditors on Aug. 23. The plan approved by the court calls for Zenith bondholders (current holders of the $103.5 million in principal amount of the 6-1/4 percent Convertible Subordinated Debentures) to receive $50 million of new 8.19 percent senior debentures maturing in November 2009. Under the court-approved plan, all outstanding common stock, including that for which LGE paid $366 million, will be canceled and no stockholders will receive any distribution for their shares. As Zenith's largest creditor, however, 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 approximately $125 million in LGE New Restructured Senior Notes as part of Zenith's restructuring. Zenith, based in Glenview, Ill., is a long-time leader in electronic entertainment products. LGE, a global leader in consumer electronics with operations in 180 countries and annual sales of more than $9 billion, has been Zenith's majority stockholder since November 1995. ********* 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. 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