/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000112.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, January 12, 2000, Vol. 4, No. 8 Headlines AMERICAN PAD & PAPER: Creditors File Involuntary Petition COMPLETE MANAGEMENT: Motion to Approve Settlement and Purchase CRIIMI MAE: Committee Substitutes Navigant for PENTA FILENE'S BASEMENT: Seeks To Extend Time To Assume/Reject Leases FOAMEX INTERNATIONAL: Genfina Owns 6.4% of Stock FRUIT OF THE LOOM: To Sell Some Assets IMPERIAL HOME: Reports Filing Chapter 11 Bankruptcy INNOVATIVE GAMING: Stock Exchange With Innovative Gaming KAMPEN & ASSOCIATES: Hearing For Approval of Disclosure Statement LATTICE SEMICONDUCTOR: $150 Million Pre-Tax Gain LOEWEN: Largest Company Filing Bankruptcy in 1999 MCA FINANCIAL: Creditors Cry Conflict of Interest METROTRANS CORPORATION: Order Approves Employ of Arthur Andersen MKR HOLDINGS: Stock Holders Report Ownership NEUROMEDICAL SYSTEMS: Order Approving Disclosure Statement NOVACARE: Stock Holders Report Ownership OXFORD HEALTH PLANS: Schneider Appointed as President, COO PENNCORP: Moody's Places Certain Credit Ratings at Caa3 PENNCORP: Reaches Agreements for Sale of Operating Companies PENNCORP: S&P Lowers Its Counterparty Credit Rating PRESLEY COMPANIES: To Change Name; Stock Ticker Symbol PRIMARY HEALTH: Fourth Amendment to DIP Credit Agreement RELIANCE GROUP: Moody's Ratings In Review For Possible Downgrade SABRATEK CORP: Claims Bar Date and Meeting of Creditors SINGER: Lenders Balk at Investment Banker's Hire Terms SIZZLER INTERNATIONAL: Metzger Appointed President and CEO TULTEX: Ends Manufacturing in Martinsville, Virginia WELLCARE MANAGEMENT GROUP: Appoints BDO Seidman As Auditors ******** AMERICAN PAD & PAPER: Creditors File Involuntary Petition --------------------------------------------------------- Creditors of Dallas-based American Pad & Paper Co. filed an involuntary chapter 11 case against the company in the District of Delaware, according to Reuters. Last month American Pad & Paper announced that it was in the process of negotiating with lenders and a committee of bondholders about defaults in interest payments. The company sells its products in the United States and Canada and its brands include Hammermill and Strathmore. Details of the filing are not yet available, but six affiliates were included in the filing. (ABI 11-Jan-00) COMPLETE MANAGEMENT: Motion to Approve Settlement and Purchase -------------------------------------------------------------- The debtor, Complete Management, Inc. seeks entry of an order resolving all disputes between the Purchaser Parties and the CMI parties, to sever all business relations between them. The CMI parties are the debtor, CMINJ, HCC, United, AMR, Brunswick Surgical Center, PC , Massapequa Medical Associates, PC, Steven, Kenneth S. Schwartz, MD, Lawrence and Dennis Shields. the purchaser parties are comprised of the purchaser, Chouake, Esther, Emergimed LLC, Cliffside Medical LLC, and ChouakeFLP. The agreements have three principle components. First, they resolve fully and finally all disputes and terminate all litigation between the Purchaser Parties and the CMI Parties. Second, the Agreements provide for the sale of the assets to the purchaser. The assets being sold are essentially all assets of the medical practice business located at the premises. The combined settlement amount and purchase price to be paid by the Purchaser is $2.3 million, subject to adjustments at closing. Third, the CMI parties and the Purchaser parties are severing all business relationships and terminating all contractual obligations between them. CRIIMI MAE: Committee Substitutes Navigant for PENTA ---------------------------------------------------- The Official Committee of unsecured creditors of Criimi Mae Management, Inc. applies to substitute the employment of Navigant Consulting, Inc. for PENTA Advisory Services, LLC as the Management's Committee's accountant and financial consultant. PENTA's business operations were purchased by the firm of Navigant Consulting, Inc. and PENTA is now known as Navigant Consulting Inc. FILENE'S BASEMENT: Seeks To Extend Time To Assume/Reject Leases --------------------------------------------------------------- After the conclusion of the Leasehold Auction, the debtors will ahve reduced the number of their store leases (from 59 stores) to 14 Filene's Basement stores, the original four Aisle 3 stores, and the four, new Aisle 3 stores that opened in October, 1999. The debtors are currently considering various options with respect to their business operations, including their Aisle 3 division. It is the debtor's current intention that the remaining stores will form the basis for a plan of reorganization. The debtors request that the court extend the time during which they may assume or reject unexpired nonresidential real property leases to the date through which the debtors have the exclusive right to solicit acceptances of a plan - June 30, 2000. FOAMEX INTERNATIONAL: Genfina Owns 6.4% of Stock ------------------------------------------------ Genfina S.A., located in Brussels, Belgium, beneficially owns 1,592,671 shares of the common stock of Foamex International Inc., exercising sole voting and dispositive power. The shares held represent 6.4% of the outstanding common stock of Foamex. FRUIT OF THE LOOM: To Sell Some Assets -------------------------------------- Fruit of the Loom bankruptcy attorney Mark Thomas of Katten Muchin Zavis, Chicago, told about 50 creditor attorneys and professionals at a meeting yesterday in Wilmington, Del., that the company plans to sell off some of its businesses, according to a newswire report. The company had planned to do this before filing chapter 11 on Dec. 29, but it did not have the liquidity to do so. Financial advisors from Lazard Freres & Co. LLC and Jay Alix & Associates attended the meeting as well, and said that it's "premature" to say which assets will be sold. An attorney representing HSBC Bank USA Corp. Trust, which holds $250 million in unsecured notes, asked whether the company would be able to shed its guaranty to repay a $65 million personal loan made to former Chairman William Farley in March while he was still CEO. Thomas said that a number of investors had a "keen interest" in this subject, but that the loan guaranty was unchanged and that he was not aware of whether Farley had sought to refinance the loan privately. Fruit of the Loom's Delaware attorney, Norman L. Pernick of Saul, Ewing, Remick & Saul LLP, said there will be a hearing on Jan. 20 before Bankruptcy Judge Peter Walsh on whether to grant final approval to Bank of America NA's $625 million debtor-in-possession financing. Last month he gave interim approval, allowing Fruit of the Loom to use $275 million of the package. Pernick also said that the company's financial schedules, listing in detail the assets, liabilities and all creditors, will be filed by March 1. Fruit of the Loom also announced yesterday that Sir Brian Wolfson has been named chairman to replace Farley, who left in August after the company warned of lower-than-expected earnings, Reuters reported. Wolfson is chairman of the executive committee of the board and has been a board member since 1992. (ABI 11-Jan-00) IMPERIAL HOME: Reports Filing Chapter 11 Bankruptcy --------------------------------------------------- The Imperial Home Decor Group Inc. and its U.S. affiliates filed voluntary petitions on January 5, 2000 for protection under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Along with the holding company, entities included in the filing are: The Imperial Home Decor Group (US) LLC; its vinyl film subsidiary, Vernon Plastics, Inc.; Imperial Home Decor Group Holdings LLC, the principal shareholder of the holding company; and two additional non-operating subsidiaries, WDP Investments, Inc. and Marketing Services, Inc. The company's Canadian operations, The Imperial Home Decor Group (Canada) ULC, and its operations in the United Kingdom, The Imperial Home Decor Group (UK) Ltd., were not included in the filing. The company said that it elected to seek court protection to develop and implement a financial reorganization. During the reorganization process, Imperial Home Decor Group (US) LLC, Vernon Plastics, and all other company units will continue to operate normally. "With more than 40% of the North American residential wallcoverings market, IHDG is the industry leader, and is a viable company with solid future prospects," said Scott R. Levin, IHDG's Chief Financial Officer and Acting Chief Executive Officer. "Our company is profitable on an operating basis before restructuring and integration costs, but company debt levels are too high and simply cannot be sustained. When the company was formed in March 1998, it took on debt levels that assumed continued sales volume in Russia and Eastern Europe. Those sales were not realized due to the dramatic and unexpected economic downturn that occurred in those markets shortly thereafter. While our business plan for 2000 is for improved sales and operating performance at all locations, sales in North America and local U.K. markets were lower than anticipated in 1998 and 1999. The end result is that while we have a profitable business, we have an unsustainable level of debt. Restructuring our debt under chapter 11 will remedy this situation and enable the company to build for the future." Imperial Home Decor Group also announced that the bankruptcy court granted immediate approval to borrow up to $25 million on its newly obtained, two-year Debtor-in-Possession (DIP) credit facility from The Chase Manhattan Bank for up-to-$75 million. A court hearing to approve the company's use of the balance of those funds is scheduled for Wednesday, February 2, 2000. Subject to certain terms and conditions, the DIP financing will be used for employee salaries and benefits, materials and services from vendors, customer promotional programs, ongoing operations and other working capital needs. "We believe our DIP financing will provide more than ample funds to cover the company's global financial needs throughout the reorganization period," said Levin. "Our customers should rest assured that it is business as usual and our employees should know that their paychecks and benefits remain fully in effect." Levin said the company expects to complete its previously announced North American Integration Plan to reduce costs, improve operations and increase profitability in the coming year. "To better serve customers, we repositioned our sales force on key national accounts, the dealer market, the designer/decorator and domestics businesses. We introduced new merchandising programs to major customers, developed numerous award-winning product designs, and increased licensing programs and distribution agreements with well-known brands such as Disney, Warner Bros., Nautica, Eddie Bauer, Thomas Kinkade, Alexander Julian, and Ralph Lauren," he explained. Levin also cited a variety of recently accomplished manufacturing initiatives: "In our Canadian operations, we enhanced management strength and made significant progress on improving factory cycle times. In Knoxville, Tennessee, we launched a new finishing process. We consolidated bookmaking into our Streator, Illinois facility. And new production planning rules throughout our factories are increasing customer service levels. Our employees made these valuable contributions a reality." Levin went on to say that, under a new managing director, IHDG's progress in the U.K. includes advancements on a restructuring plan to reduce costs and improve profitability, and strong efforts to position IHDG to regain market share. He also said that Vernon Plastics has had one of its best years ever with particularly good successes in pool liners, and has identified key profit improvement initiatives for the coming year. Levin concluded by saying that, in the coming year, the company will continue evaluating all of its production facilities on a worldwide basis to assess further opportunities to improve efficiencies or reduce costs. Finally, the company announced that The Imperial Home Decor Group Inc. board of directors has initiated a search for a replacement for its former president and chief executive, James P. Toohey, who has left the company to pursue other interests. Levin has assumed additional duties as acting chief executive officer. Imperial Home Decor Group is the world's largest designer, manufacturer and distributor of residential wallcoverings products. Headquartered in Cleveland, Ohio, Imperial Home Decor Group supplies home centers, national chains, mass merchants and home decorators. The company was created in 1988 through the merger of Imperial Wallcoverings and Borden Decorative Products. In 1998, Imperial Home Decor Group reported net sales of $416.7 million. INNOVATIVE GAMING: Stock Exchange With Innovative Gaming -------------------------------------------------------- Equitex, Inc. and Innovative Gaming Corporation of America jointly have executed a definitive agreement whereby Innovative Gaming will acquire Equitex's majority owned subsidiary, nMortgage, Inc., and its operating subsidiary, First Bankers Mortgage Services, Inc., in a tax free exchange of stock. Under the terms of the agreement, the stockholders of Innovative Gaming will retain 25% of the newly merged company on a post- merger basis. As part of the agreement, IGCA must divest its gaming assets. Discussions have been initiated with several gaming manufacturers with the goal of selling the gaming machine assets intact. "We are pleased to be moving forward with this transaction which we believe to be in the best interests of IGCA's shareholders in realizing maximum value for their holdings," stated Edward G. Stevenson, Chairman and Chief Executive Officer of IGCA. "As we have said before, we believe the growth potential offered by a business such as nMortgage will provide our shareholders a greater stock appreciation potential." Closing of the proposed transaction is subject to, among other things, due diligence, completion of certain additional documents, obtaining corporate and any necessary regulatory approvals, approval by the IGCA stockholders, and other customary pre-closing conditions. nMortgage, through its operating subsidiary First Bankers, is a national direct lender headquartered in Ft. Lauderdale, Florida. The company operates in 25 states and offers both retail and wholesale mortgage financing. First Bankers is an approved lender for FNMA, FHLMC, GNMA, FHA and VA. First Bankers recently announced the debut of its new online mortgage system, nMortgage, which now offers mortgage loans on line at website address www.nMortgage.com. nMortgage's Phase I system enables consumers to access mortgage loan rates and program, and to apply online for mortgage loans. nMortgage is currently testing its Phase II online mortgage system, which will enable customers to track the status of their loans online as well as offer interactive online customer service. Upon consummation of the transaction, IGCA would be renamed nMortgage. Innovative Gaming Corporation of America through its wholly-owned subsidiary, Innovative Gaming, Inc., develops, manufactures and distributes fast playing, high entertainment gaming machines. The company distributes its products both directly to the gaming market and through licensed distributors. Equitex, Inc. is a holding company that currently operates through its two wholly owned subsidiaries: nMortgage, Inc. of Ft. Lauderdale, Florida; and First TeleServices Corp. of Atlanta, Georgia. First TeleServices Corp. is a financial services marketing company marketing various financial products targeted to the sub-prime consumer. Equitex currently owns 7.5% of, and has executed a definitive agreement to merge with, First TeleBanc Corp., a single bank holding company, which owns net First National Bank; a 13 year-old nationally chartered bank based in Boca Raton, Florida. In connection with that acquisition, Equitex has applied to the Federal Reserve Bank of Atlanta for approval to become a bank holding company. First TeleBanc Corp. is not affiliated in any way with TeleBanc Financial Corporation. KAMPEN & ASSOCIATES: Hearing For Approval of Disclosure Statement ----------------------------------------------------------------- A hearing for the approval of the Disclosure Statement of Kampen & Associates, Inc. is set for Friday January 14, 2000 before Judge Samuel Steiner, US Bankruptcy Court, 1200 Sixth Avenue, Judges Courtroom, Seattle, WA 98101. LATTICE SEMICONDUCTOR: $150 Million Pre-Tax Gain ------------------------------------------------- Lattice Semiconductor Corporation will recognize a $150 million pre-tax ($92 million after-tax) gain in its Statement of Operations for the first calendar quarter of 2000. The gain represents appreciation of foundry investments made in two Taiwanese companies, United Integrated Circuits Corporation and Utek Corporation. United Integrated Circuits Corporation and Utek merged with United Microelectronics Corporation, a publicly traded Taiwanese company. As a result of this merger, Lattice now owns approximately 61 million shares of United Microelectronics Corporation common stock. Accounting rules require recognition of the gain, based on the difference between the cost of the foundry investments and the current quoted price of the United Microelectronics shares on the Taiwan Stock Exchange, as "Other Income" upon completion of the merger. Due to regulatory restrictions, the majority of the company's United Microelectronics shares may not be sold until July 2000. These regulatory restrictions will gradually expire between July 2000 and January 2004. As the regulatory restrictions expire and if the company liquidates its United Microelectronics shares, it is likely that the amount of any future realized gain will be different than the accounting gain reported in the first calendar quarter. "In order to secure process technology and foundry capacity, we have made regular investments in UICC and Utek since early 1996," stated Cyrus Y. Tsui, president and chief executive officer. "The accounting gain we report today is attributable to the management of UMC as well as our own sound investment decisions. Going forward, we do not expect this merger or the market valuation of our investment to change the fundamental business relationship between Lattice and UMC," Tsui concluded. Oregon-based Lattice Semiconductor Corporation designs, develops and markets the broadest range of high-performance ISP(TM) programmable logic devices (PLDs). Lattice introduced ISP devices to the industry in 1992. Lattice acquired Vantis, the Corporation that invented the PLD, in June 1999. With double the engineering and sales resources, the combined company will focus on developing and delivering innovative programmable products to a complementary customer base. Lattice/Vantis products are sold worldwide through an extensive network of independent sales representatives and distributors, primarily to OEM customers in the communication, computing, industrial and military end markets. LOEWEN: Largest Company Filing Bankruptcy in 1999 ------------------------------------------------- The ten largest companies filing for Chapter 11 in 1999 were as follows: Company Assets (in billions) Loewen Group Inc. $4.674 Iridium LLC $3.789 Harnischfeger Industries, Inc. $2.787 ICO Global Communications $2.567 Sun Healthcare Group, Inc. $2.468 FirstPlus Financial Group, Inc. $2.447 Semi-Tech Corporation $2.345 Fruit of the Loom, Inc. $2.289 TransAmerican Energy Corp. $2.131 Vencor, Inc. $1.718 (Assets are total assets reported in the company's latest annual report filed prior to the bankruptcy filing.) Loewen, based in Vancouver, is a funeral home and cemetery company with operations throughout much of the United States and Canada. It grew very rapidly, financing much of that growth with debt. The company failed to achieve expected operating efficiencies and was unable to service its debt. Loewen filed for Chapter 11 protection in the U.S. Bankruptcy Court in Wilmington, Delaware on June 1. Iridium, headquartered in Washington D.C., attempted to launch a global telephone service based on a network of low-altitude satellites. Initial product sales were lower than expected, apparently because of a number of factors including high cost, bulky hardware and limits of the service. The company failed to meet sales hurdles required by its bank lenders, and it filed for bankruptcy in Delaware on August 13. (The case was subsequently transferred to the Southern District of New York.) Harnischfeger Industries produces heavy machinery, principally for the mining and paper industries. The Wisconsin based company was hurt by the slowdown in the Asian economies and by aggressive sales practices. It filed for Chapter 11 in Delaware on June 7. ICO Global, like Iridium, is attempting to launch a worldwide communication network based on satellites. Similar to the Iridium situation, ICO's debt load caught up with it before its service was fully operational. The company filed for Chapter 11 in Delaware on August 27. Number five, Sun Healthcare, and number ten, Vencor, are both large nursing home operators. Both used debt to expand shortly before changes in government reimbursement policies cut into their revenues. Vencor filed for bankruptcy on September 13, and Sun Healthcare followed on October 14, both in Delaware. FirstPlus Financial, number six on the list, is a sub-prime consumer finance company headquartered in Dallas. Like many sub- prime lenders, it was battered when its access to the financial markets dried up during the autumn of 1998, and it never fully recovered. FirstPlus filed for bankruptcy protection on March 5 in the Northern District of Texas. Semi-Tech, a Canadian-based producer of consumer products, owns 50 percent of the Singer Company, the sewing products company which has also filed for bankruptcy. Semi-Tech filed for Chapter 11 on September 7 in the Southern District of New York. Fruit of the Loom, a maker of underwear and other apparel, suffered from foreign competition, a heavy debt load and operational problems. After struggling for much of 1999 the company filed for Chapter 11 on December 29 in Delaware. TransAmerican is an energy company with operations in refining, exploration and production. It was hampered by construction delays at its Gulf Coast refinery as well as a high level of debt, and it was unable to recover from low energy prices at the beginning of 1999. TransAmerican filed for bankruptcy on April 20 in Delaware. George Putnam, III, president of New Generation Research, Inc. in Boston, which produces BankruptcyData.com, commented, "The sharp increase in the number of large public bankruptcies in 1999 is largely attributable to the tremendous issuance of new debt over the past few years. We expect the recent growth in bankruptcies to continue in 2000 even if the economy remains strong. If the economy softens, the number of large Chapter 11 filings could increase dramatically." MCA FINANCIAL: Creditors Cry Conflict of Interest ------------------------------------------------- Sigma Financial Corporation and Jerome S. Rydell, unsecured creditors of the debtors seeks to disqualify Honigman, Miller, Schwartz and Cohn as counsel for the Bank Group arising out of a conflict of interests. The creditors assert that the Honigman firm once represented the debtors, and as a result of being in possession of sensitive information about multiple parties to the case, the firm may have gained an advantage for the Bank Group by taking advantage of information regarding one or more other interested parties and/or the debtors. The sale to "HCDC", an entity affiliated with the City of Detroit appears to be beneficial to the Bank Group and not to the city. This motion is brought derivatively, for and on behalf of the debtors. METROTRANS CORPORATION: Order Approves Employ of Arthur Andersen ---------------------------------------------------------------- By order dated December 30, 1999, the US Bankruptcy Court for the Northern District of Georgia, Newnan Division entered an order approving employment of Arthur Andersen, LLP as the debtors' financial, business, and reorganization consultants. Previously, the court approved the employment of Lamberth, Bonapfel, Cifelli & Stokes, PA as counsel. MKR HOLDINGS: Stock Holders Report Ownership -------------------------------------------- Ralano Family Partners, Ltd., Bearzo L.C. and Louis M. Alpern beneficially own 1,459,800 shares of common stock in MKR Holdings, which amount represents 13.1% of the outstanding shares of common stock of the company. Ralano Family Partners exercises sole voting and dispositive powers over the stock, while Bearzo L.C. and Dr. Alpern exercise shared powers with Ralano. Ralano Family Partners, Ltd. is a Texas limited partnership with its principal office in El Paso, Texas. Its principal business is investment. The general partner of Ralano Family Partners, Ltd. is Bearzo, a Texas limited liability company. Bearzo's principal business also is investment, with its offices located in El Paso, Texas. Bearzo L.C.'s controlling stockholder is Louis M. Alpern, who also acts as executive officer and manager of Bearzo. Bearzo and Dr. Alpern disclaim beneficial ownership of the shares except to the extent of its or his pecuniary interest therein. Between May 4, 1999 and January 5, 2000, the Partnership acquired an aggregate of 200,000 shares for an aggregate purchase price (excluding commissions) of approximately $42,037.50. The source of funds for the purchase of such shares was the working capital of the Partnership. NEUROMEDICAL SYSTEMS: Order Approving Disclosure Statement ---------------------------------------------------------- On December 29, 1999, the Honorable Peter J. Walsh entered an order approving the Disclosure Statement with respect to the first amended plan of liquidation of Neuromedical Systems, Inc. A hearing to consider the confirmation of the debtor's first amended plan of liquidation will be held on January 31, 2000 at 2:30 PM. Summary of Distribution Under the Plan: Class 1 - Allowed Administrative Claims - $750,000 allowed - estimated distribution: $1 per dollar of allowed cliam Class 2 - Allowed Priority Claims - $4,990 allowed - estimated distribution: $1 per dollar of allowed claim. Class 3 - Allowed Secured Claims - Of $10.798 million asserted - none allowed - estimated distribution $1 per dollar of allowed claim or the property securing such claim Class 4 - Allowed Unsecured Convenience Claims - $80,418 asserted, $74,188 allowed - $.90 per dollar of allowed claim Class 5 - Allowed General Unsecured Claims - Of $193 million asserted - $11.197 million allowed - estimated distribution: $.77 per dollar of allowed claims ($.278 plus.1039 shares of TriPath Stock per dollar of Allowed claim) Class 6 - Equity Interests - 31,100,000 shares - No distribution NEXAR TECHNOLOGIES: Motion To Convert To Chapter 7 -------------------------------------------------- The US Trustee seeks an order converting the case Nexar Technologies Inc. to one under Chapter 7 of the bankruptcy code. The debtor is delinquent in filing reports, paying the IRS, paying quarterly fees to the US Trustee, and has failed to file a plan of reorganization in just over a year. NOVACARE: Stock Holders Report Ownership ---------------------------------------- LDN Stuyvie Partnership and Stuyvesant Pierrepont Comfort beneficially own 11,046,955 shares of the common stock of NovaCare Inc. The entities exercise sole voting and dispositive power over the stock which represents 17.4% of the outstanding common stock of the company. The Partnership acquired beneficial ownership of 2,586,500 shares of the securities from the Partnership's limited partners on September 15, 1999, in exchange for limited partnership interests of the Partnership. The Partnership acquired beneficial ownership of the remaining securities (8,460,455 shares) through open market purchases in the ordinary course of business with a portion ($3,938,626.97) of the proceeds of cash contributions to the Partnership by its partners. OXFORD HEALTH PLANS: Schneider Appointed as President, COO ---------------------------------------------------------- Oxford Health Plans, Inc., appointed Charles M. Schneider, age 54, as president and chief operating officer (COO) of the company, effective immediately. With this announcement, Dr. Norman C. Payson, chairman and chief executive officer (CEO), also detailed the restructuring of Oxford's senior management team. As COO, Schneider will oversee the day-to-day operations of the company, including health care delivery, sales, information systems, human resources, claims and services. Dr. Payson will continue his leadership in strategic matters and relationships, and will oversee the financial, legal and public policy activities at Oxford. "Oxford now is entering a new stage of leadership in the tri- state metropolitan market and the time is right for us to reorganize accordingly," Dr. Payson stated. "In my view, Chuck Schneider is the best operating manager in our industry today. Our company now is poised to fully benefit from his leadership, acumen and operating skills. "Moreover, Chuck and I spent many years working together as a seamless team. I could not be more enthusiastic," Dr. Payson continued. Prior to accepting the position with Oxford, Schneider was president and founder of The Concordant Group, LLC, a management consulting firm for managed care companies and other health care providers. He worked with Dr. Payson at HealthSource from 1990- 1997, becoming executive vice president and chief operating officer. Dr. Payson also announced that Marvin P. Rich, Oxford's chief administrative officer (CAO) and Thomas A. Beauchamp, chief information officer (CIO), will be leaving Oxford to pursue other business opportunities. "Marv is a world-class turnaround expert and played a critical role in Oxford's recovery. Tom was important in the successful completion of our Y2K initiative," Dr. Payson commented. "Having completed their work here with distinction, we wish them every success in their next ventures." Arthur L. Gonzalez, age 48, will become senior vice president and CIO, effective immediately. He was been with Oxford for the last 18 months and was instrumental in the company's systems progress. In reflecting back on recent management changes, Dr. Payson also added, "Bill Sullivan (former president) and Jeff Boyd (former general counsel) provided us with excellent continuity from Oxford's earlier successes. And with Marv, they were critical to the successful turnaround. "Oxford now is in an outstanding position to move forward with a highly experienced, close-knit management team. We are ideally positioned to enhance our leadership position in the greater New York market," Dr. Payson concluded. Founded in 1984, Oxford Health Plans provides health plans to employers in New York, New Jersey and Connecticut, through its direct sales force and through independent insurance agents and brokers. Oxford's services include traditional health maintenance organizations, point-of-service plans, third-party administration of employer-funded benefit plans and Medicare+Choice plans. PENNCORP: Moody's Places Certain Credit Ratings at Caa3 ------------------------------------------------------- Approximately $380 Million of Securities Affected. New York, January 10, 2000 -- Moody's Investors Service placed the Caa3 subordinated debt rating of PennCorp Financial Group, Inc., (PennCorp), and the B2 insurance financial strength rating of Southwestern Life Insurance Company (Southwestern Life), PennCorp's wholly owned subsidiary, on review for possible upgrade. PennCorp's preferred stock rating was confirmed at "ca". The rating actions follow PennCorp's recent announcement of: 1) its signing of a definitive agreement with Reassurance America Life Insurance Company (Reassurance America), a U.S. subsidiary of Swiss Reinsurance Company of Zurich, Switzerland (rated Aaa for insurance financial strength), for the sale of Southwestern Life and another Dallas-based life insurance subsidiary for $260 million in cash; 2) its recent signing of a definitive agreement with a new acquisition company formed by Thoma Cressey Equity Partners for the sale of its Waco-based life insurance operations for $102 million in cash; 3) PennCorp's intention to use the proceeds from the two transactions to pay off all bank debt and subordinated debt; 4) the voluntary placement of PennCorp in Chapter 11 as a prerequisite for the Reassurance America transaction. Because both sales agreements permit PennCorp to consider alternative sale or recapitalization proposals, rating upgrades will be dependent upon the completion of both transactions according to the terms described, the rating agency added. Both transactions are additionally subject to various regulatory and other approvals, and are expected to close by the end of the first quarter. According to the rating agency, the review for the rating of Southwestern will focus on the position of Southwestern Life within Reassurance America and the Swiss Re group, the strategic plan for its future operations, as well as any parent company support. PennCorp Financial Group, Inc. is a Delaware-registered insurance holding company. At September 30, 1999, it reported GAAP assets of $3.4 billion and shareholders' equity of $287 million. Southwestern Life Insurance Company is a wholly owned life insurance subsidiary located in Dallas, Texas. At September 30, 1999, Southwestern Life reported statutory assets of $1.6 billion, and statutory surplus of $132 million. PENNCORP: Reaches Agreements for Sale of Operating Companies ------------------------------------------------------------ PennCorp Financial Group, Inc. (NYSE: PFG) announced today that it has entered into a definitive agreement for the sale of Southwestern Life Insurance Company and Security Life & Trust Insurance Company to Reassure America Life Insurance Company, an indirect U.S. subsidiary of Swiss Reinsurance Company of Zurich, Switzerland, for $260 million in cash, subject to certain adjustments. The sale agreement requires that the Company effectuate the sale through a voluntary Chapter 11 case, subject to bankruptcy court approval. The Chapter 11 case will only affect the holding company, PennCorp Financial Group, Inc., and certain non-insurance company affiliates. None of the insurance company subsidiaries will be included in the case. The Company, through its subsidiary American-Amicable Holdings Corp., has also entered into a definitive agreement for the sale of its Waco, Texas-based insurance operations to a new acquisition company formed by Thoma Cressey Equity Partners for $102 million in cash, subject to certain adjustments. The Waco-based operations include Pioneer Security Life Insurance Company, Occidental Life Insurance Company of North Carolina, American-Amicable Life Insurance Company of Texas and Pioneer American Insurance Company. Both sale agreements permit the Company to consider alternative sale or recapitalization proposals. In the event alternative offers are accepted, a transaction termination fee would be paid to Swiss Re and/or Thoma Cressey. The closing of each sale transaction is subject to customary conditions including regulatory approvals. In addition, the sale of the Waco-based companies is contingent upon the buyer's receipt of financing commitments. The gross proceeds from the sale transactions, estimated to total approximately $360 million, should provide full payment of PennCorp's approximately $165 million of bank debt, approximately $115 million of subordinated debt, and other unsecured claims. It is anticipated that any balance would be distributed to the Company's preferred stockholders, and no distribution would be made to the Company's common stockholders. Keith A. Maib, PennCorp President and Chief Executive Officer, said, "PennCorp intends to move forward with the sales of the insurance companies expeditiously in order to preserve their value. The sale transactions are targeted to close prior to the end of the first quarter." "During 1999, as a key component of its restructuring initiatives, PennCorp completed a series of divestitures as part of a program to reduce debt, decrease operating costs and seek solutions to strengthen its balance sheet," Mr. Maib said. "After careful evaluation, the board and management determined that a sale of the core insurance companies is in the best interests of the Company, including the policyholders of its insurance subsidiaries. This course of action will allow us to maximize the value of the enterprise and ensure the continuing operations of the core assets, and should provide full payment of all of the Company's obligations to its creditors." Mr. Maib also said, "The Company's senior management team has been communicating regularly with insurance regulators, who have assured policyholders that each of the insurance companies being sold has adequate capitalization and sufficient liquidity to meet their obligations to policyholders. The Company believes it will have adequate financial resources to fund operations during the restructuring period, and the Chapter 11 proceeding will have no material impact on the insurance subsidiaries and their policyholders. We will continue to provide our insurance products and serve our policyholders as before." Wasserstein Perella & Co., Inc. acted as financial advisor on the transactions. PennCorp Financial Group, Inc. is an insurance holding company. Through its subsidiaries, the Company underwrites and markets life insurance and accident and sickness insurance to the middle market throughout the United States. PENNCORP: S&P Lowers Its Counterparty Credit Rating --------------------------------------------------- Standard & Poor's lowered its counterparty credit rating on PennCorp Financial Group Inc. to double-'C' from triple-'C'-plus and lowered its subordinated debt rating on PennCorp to double- 'C' from triple-'C'-minus. At the same time, Standard & Poor's affirmed its single-'C' preferred stock rating on PennCorp. All ratings for PennCorp have been placed on CreditWatch with negative implications. Standard & Poor's placed its double-'B' insurer financial strength rating on Dallas-based Southwestern Life Insurance Co. on CreditWatch with positive implications. The rating actions on PennCorp reflect the company's announcement today that it intends to file for bankruptcy through Chapter 11 in order to effectuate the sale of certain insurance subsidiaries. Upon the actual filing of a Chapter 11 petition, all ratings will be lowered to 'D'. PennCorp has been troubled by a weak financial structure, including high debt leverage and liquidity strain, throughout 1999. Subject to filing the petition and bankruptcy court approval, PennCorp intends to sell various operating units, which could provide full payment of outstanding bank debt, subordinated debt, and other unsecured claims. Any balance would likely be distributed to preferred stockholders. The rating action on Southwestern Life reflects today's announcement by parent PennCorp Financial Group that it has reached a definitive sales agreement to sell Southwestern Life to Reassure America Life Insurance Co., a U.S. subsidiary of Swiss Reinsurance Co. of Zurich (Insurer financial strength rating triple-'A'). Southwestern Life maintains a good business franchise complemented by strong operating performance and capital. As of Sept. 30, 1999, the company's total adjusted capital was $149 million and net income totaled $15.3 million for the first nine months of 1999. The insurer's rating was lowered in 1998 and 1999, due primarily to the increasingly constrained financial flexibility caused by the liquidity strain at PennCorp., Standard & Poor's said. RATINGS LOWERED, CREDITWATCH NEGATIVE PennCorp Financial Group Inc. TO FROM Counterparty credit rtg CC CCC+ Subordinated debt rtg CC CCC- RATINGS AFFIRMED, CREDITWATCH NEGATIVE PennCorp Financial Group Inc. Preferred stock rtg C RATINGS PLACED ON CREDITWATCH POSITIVE Southwestern Life Insurance Co. Counterparty credit rtg BB Financial strength rtg BB PRESLEY COMPANIES: To Change Name; Stock Ticker Symbol ------------------------------------------------------ The Presley Companies was to change its name to William Lyon Homes effective after the close of business on Friday, December 31, 1999. The company was also to change its stock ticker symbol from PDC to WLS effective Monday, January 3, 2000. The company's common stock will continue to trade on the New York Stock Exchange. "In November of this year, the company acquired substantially all of the real estate and related assets of William Lyon Homes, Inc." stated Wade Cable, president of the company. "We believe that this name change will allow the company to take advantage of the strong reputation of the William Lyon name and to reflect the significant transactions that we have effected in the past year." The company is one of the oldest and largest homebuilders in the Southwest with development communities in California, Arizona, New Mexico and Nevada. Its corporate headquarters are located in Newport Beach, California. PRIMARY HEALTH: Fourth Amendment to DIP Credit Agreement -------------------------------------------------------- Pursuant to the Credit Agreement, approved in April of 1999, the Lenders agreed to lend up to $23.294 million to the debtors. The terms of the Fourth Amendment to the Credit Agreement, subject to certain conditions, the Lenders may increase the amount of the Commitment up to $50 million. Any borrowing by the debtors above $40 million is in the discretion of the lenders and there is provided an increase in the Carve-Out by $2 million for the professionals retained in the Chapter 11 case. The debtors' need for an increase in the Commitment of approximately $10 million reflects the debtors' additional cash requirements for the management and operation of their businesses and reorganization efforts through the Termination Date. RELIANCE GROUP: Moody's Ratings In Review For Possible Downgrade ----------------------------------------------------------------- Unicover Settlement an Important Consideration in Review New York, January 10, 2000 -- Moody's Investors Service said today that the credit ratings of Reliance Group Holdings, Inc. and its operating subsidiaries remain under review for possible downgrade. Recently, Reliance announced that it had reached a settlement with various insurance and reinsurance companies to resolve issues surrounding its involvement in workers' compensation business managed by Unicover Managers, Inc. Moody's placed the ratings of Reliance (senior debt at Ba1 and subordinated debt at Ba2) under review for possible downgrade in November, 1999. In addition, the insurance financial strength ratings of Reliance Insurance Company, Reliance National Insurance Company, as well as certain other members of the Reliance Insurance Group were also placed under review for possible downgrade (present rating of Baa2). As a result of the settlements, Reliance Group expects to take an after-tax charge of approximately $100 million in its fourth quarter financial statements. Reliance's role in the Unicover program was primarily one of a fronting carrier. That is, Reliance assumed risk on workers' compensation policies from primary companies and ceded the majority of the premiums and losses to its reinsurers (or, retrocessionaires). In order to comply with statutory guidelines Reliance took a modest amount of underwriting risk in these transactions. The announcement of this settlement brings certainty to one of the areas of risk that Moody's had cited in its review for possible downgrade. With the anticipated fourth quarter charge, Reliance has largely removed the issues surrounding a sizable volume of uncertain reinsurance recoverables as related to Unicover business. Moody's noted, however, that this charge represents a sizable premium to pay in order to bring some measure of closure to its involvement with Unicover business. The potential costs of not bringing a measure of certainty to its exposure were, Moody's added, likewise substantial. Moody's expects to conclude its review of Reliance in a timely fashion. Areas that will be evaluated include Reliance's operations, where Moody's will consider the prospect for improving core earnings over the near term, and also the extent to which the group's business opportunities could be constrained by wavering confidence of policyholders and other key constituencies. Financially, Moody's will evaluate the company's many capital raising plans. These include the IPO of the Surety and internet-based Workers' Compensation businesses, as well as other strategic alternatives. Moody's judgment about the prospects for concluding -- and the potential efficacy of -- these options, will be a key focus of the review. All of the alternatives, Moody's noted, will be viewed with an eye toward the significant amount of debt maturing in the Spring and Fall of 2000. Reliance Group Holdings, Inc. is a New York-based publicly traded holding company for several property/casualty insurance subsidiaries. Through the nine months ending September 30, 1999 Reliance reported revenue of $2.4 billion and a net loss of $187.5 million. Consolidated debt was $717 million and shareholder's equity stood at $981 million. SABRATEK CORP: Claims Bar Date and Meeting of Creditors ------------------------------------------------------- In the case of Sabratek Corporation and its affiliates, a meeting of creditors will take place on February 11, 2000 at 1:00 PM. The last date to file proofs of claim is March 10, 2000 at 4:00 PM EST. SINGER: Lenders Balk at Investment Banker's Hire Terms ------------------------------------------------------ Singer Co.'s (SEW) lenders have objected to the proposed terms governing the company's retention of investment banking firm Blackstone Group LP, charging they are "unacceptable, overbroad and financially onerous." The bank group, led by Bank of Nova Scotia, also asserted in the Jan. 6 objection that Blackstone's services overlap those of restructuring adviser Arthur Andersen LLP, which was hired in September. The Daily Bankruptcy Review and ABI Copyright c January 11, 2000. SIZZLER INTERNATIONAL: Metzger Appointed President and CEO ---------------------------------------------------------- Sizzler International, Inc. has appointed Thomas E. Metzger as President and Chief Executive Officer of the company's flagship Sizzler USA unit. Commenting on his decision to join Sizzler, Mr. Metzger said, "For many years, Sizzler has been a household name throughout the country. The opportunity to participate in the return of the Sizzler brand to a quality grill concept is very exciting. As we move forward, we will implement a number of operating efficiencies and business development strategies to further grow the concept." "When we began this search, we established some very stringent criteria that a successful candidate would have to meet to become President of Sizzler USA", said Charles Boppell, President and CEO of Sizzler USA's parent company Sizzler International. "The most important factor in selecting Tom was his track record of building strong management teams. Tom also has demonstrated success in developing and implementing new menu items and associated operational procedures. This was important since it is the heart of Sizzler's turnaround strategy." Metzger has over 15 years in the restaurant industry, progressing rapidly through key management and executive positions. He started his career at Wendy's International, where he rose from an entry-level position to Vice-President of Franchise Operations. At Cinnabon, he served as Director of Operations and later was a Partner and COO of a Cinnabon franchise organization. Metzger later served as Executive Vice-President and COO of the largest Boston Market franchisee. In 1995, Metzger was appointed President and CEO of Kenny Rogers Roasters International. Most recently Metzger was the Founder, President, and CEO of Wrapsters, Inc, an Atlanta based quick service restaurant concept. Metzger holds a Masters of Science degree from LaSalle University in Hotel-Restaurant, and undergraduate degrees in Hotel- Restaurant and in Marketing from LaSalle University and Owens College, respectively. Sizzler International, Inc. operates, franchises or joint ventures 347 Sizzler restaurants worldwide, in addition to the 101 KFC restaurants in Queensland, Australia. Sizzler USA is the wholly-owned operating subsidiary of Sizzler International, which owns and operates or franchises 266 Sizzler restaurants in the United States. TULTEX: Ends Manufacturing in Martinsville, Virginia ---------------------------------------------------- Tultex Corporation (NYSE: TTX) announced that it had permanently ended production at its Martinsville, Virginia, plant. This action resulted in the elimination of approximately 285 manufacturing positions, effective immediately. In addition, approximately 160 administrative support and distribution positions related to local manufacturing and to the operations of the Company will be eliminated over the next several weeks. The Company's decision is in addition to previously announced cutbacks in connection with the Chapter 11 bankruptcy filing on December 3, 1999. O. Randolph Rollins, President and Chief Executive Officer, said: "Sadly, we have ended our long history of production in Martinsville. But these steps were essential in view of limited cash availability under our loan agreements, which will not sustain the build-up of fleece necessary to meet fleece customer delivery schedules. It is far better to preserve cash and let our customers know now so they can plan accordingly." Following these actions, Tultex's remaining businesses will be its distributors, California Shirt Sales and T-Shirt City, and its Discus Athletic business. When the changes announced today are fully implemented, Tultex will employ approximately 700 persons, which includes approximately 350 persons at its Martinsville distribution center. As previously announced, this facility will close and the related positions will be eliminated by mid-March. The Company also announced that on January 5, 2000, the United States Bankruptcy Court for the Western District of Virginia in Lynchburg approved the Company's request for the use of a $150 million debtor-in-possession financing provided by a bank group led by Bank of America. The Court granted Tultex Corporation's request for the financing to permit it to pay necessary operating expenses and continue its business operations. Founded in 1937, Tultex has been a leading manufacturer, marketer and distributor of activewear and licensed sports apparel. WELLCARE MANAGEMENT GROUP: Appoints BDO Seidman As Auditors ----------------------------------------------------------- The WellCare Management Group, Inc., parent company of WellCare of New York, Inc. and WellCare of Connecticut, Inc., has appointed BDO Seidman, LLP as its new auditors. Kiran C. Patel, M.D., Chairman, President and Chief Executive Officer of WellCare, commented, "WellCare is extremely pleased with its decision to retain BDO Seidman as its auditors. We look forward to a long-term relationship and using BDO's experience and support in assisting with the growth of the company." WellCare's service area extends from New York City to the southern Adirondacks, west into the Mohawk River Valley and Southern Tier counties, and east into Connecticut. ********* Please be advised that the news item following the "TRANSTEXAS GAS: Jack Stanley's Empire" headline appearing in the December 20, 1999, edition of the TCR, was reprinted without permission of Platt's Oilgram News, or its owner, The McGraw-Hill Companies. You should disregard the news item. Additionally, any further distribution of that news item is strictly prohibited without the express written permission of the The McGraw-Hill Companies. 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