/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000119.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 19, 2000, Vol. 4, No. 13 Headlines ABRAXAS PETROLEUM: Investment Firm Reports Stock Ownership BRUNO'S: Order Confirms Joint Plan of Reorganization CENTENNIAL CELLULAR: DCR Revises Outlook To Negative DEVLIEG-BULLARD: Order Grants Extension of Exclusivity EAGLE GEOPHYSICAL: Seeks Authority To Enter Severance Agreement ENTEX INFORMATION SYSTEMS: Amendment To Working Capital Credit EVANS INC: Meeting of Creditors EVANS INC: Last Date For Filing Claims FITZGERALDS GAMING: Griffiths Reports Stock Ownership FITZGERALDS GAMING: Turk Sells Stock FOAMEX INTERNATIONAL: Societe Generale de Belgique Divests FRUIT OF THE LOOM: Applies to Employ Lazard Freres GOLDEN OCEAN: Files Chapter 11 HECHINGER: Seeks Five More Months to File Liquidating Plan HOUSING RETAILER: GE Investment Replies To Objection INCOMNET: Extension of Exclusivity IRIDIUM: Incurs $114 Million in Operating Losses During November JUST FOR FEET: Seeks Authority To Reject 8 Leases JUST FOR FEET: Renewed Motion Authorizing Employee Benefits KCS ENERGY: Fiduciary Trust Owns Stock LA ROCHE INDUSTRIES: May Be Able to Avoid Bankruptcy MARINER POST-ACUTE: Nursing Home Chain Seeks Bankruptcy MICHAEL PETROLEUM: Order Resets Hearing To Extend Deadline MICHAEL PETROLEUM: Meeting of Creditors Set NEXTWAVE: Judge Orders FCC To Show Cause NUMBER NINE VISUAL: Committee Taps Brown, Rudnick PAGE AMERICA GROUP: Court Confirms Prepackaged Liquidating Plan PARAGON TRADE: Court Confirms Plan PRIMARY HEALTH: Court Approves Amendment to DIP ROBERDS: To File for Bankruptcy Protection THERMOGENESIS: Completes Offering of Stock UNITED STATIONERS: Farallon Partnerships Invest in Common Shares UNIVERSAL EXPRESS: Reports Revenues and Losses VENCOR: Franklin Mutual Advisers No Longer Holds Stock ******** ABRAXAS PETROLEUM: Investment Firm Reports Stock Ownership ---------------------------------------------------------- The investment adviser firm of Halcyon/Alan B. Slifka Management Company LLC report ownership of 2,957,549, or 13.04%, of the outstanding common stock of Abraxas Petroleum Corporation with sole voting and dispositive power over the shares. Alan B. Slifka and Company, Limited hold the same shares and powers while Alan B. Slifka owns 3,466,809 shares with sole voting and dispositive powers, representing 15.28% of the outstanding common stock of Abraxas. The advisees of Halcyon/Alan B. Slifka Management Company LLC have a right to receive distributions on the proceeds of sale of the shares. All securities reported are owned by the advisees, and each of the above mentioned entities disclaims beneficial ownership of such securities. BRUNO'S: Order Confirms Joint Plan of Reorganization ---------------------------------------------------- An order confirming the second amended joint plan of reorganization under Chapter 11 was signed by the Honorable Sue L. Robinson, on December 30, 1999 and entered and filed in the office of the Clerk of the US Bankruptcy Court, District of Delaware on January 4, 2000. SUN HEALTHCARE: Castel Moves For New or Expanded Committee ---------------------------------------------------------- The Creditors' Committee objects to Mr. Castel's motion, arguing that multiple committees would lead to a slippery slope. Every creditor would argue that his interests are unique and that there must be a separate committee for him. As a real-life example, the Committee notes that it has been "advised that a motion is currently being prepared on behalf of tort claimants seeking the appointment of a tort claimants' committee." The Committee also disputes Mr. Castel's argument that at least two committees are necessary: one for creditors of profitable Debtors and another for creditors of less profitable Debtors. Mr. Castel is a creditor of the Debtors' rehabilitation and therapy services line of business. This business is run primarily through SunDance and its eleven direct and indirect subsidiaries. Mr. Castel argues in his Motion that the rehabilitation and therapy business has been historically profitable. He further argues that a committee composed largely of creditors of 'unprofitable debtors' could not represent him or other creditors of 'profitable debtors.' In rebuttal, the Committee contends that Mr. Castel "ignores the writing on the wall." They contend that the Debtors' rehabilitation and therapy business is no longer profitable. SunDance has been and will continue to be severely impacted by Medicare's four-year phase in of a prospective payment system for Medicare reimbursement. SunDance was forced to take reserves against its accounts receivable, and SunDance's net revenues declined over 66% for the nine months ended September 30, 1999. Net revenues for rehabilitation and respiratory services declined 65.1% for the same period, the most dramatic decrease in revenues from any of the Debtors' lines of business. In addition, while SunDance had a traditional net operating margin of 24%, the operating margin for rehabilitation and therapy services was a mere 4.4% for the nine months ended September 30, 1999. As of September 30, 1999, 75% of SunDance's accounts receivable were over 120 days old. The Debtors took a $42.5 million write-down of the value of the SunDance business in 1999. The Committee also opposes Mr. Castel's request that he be appointed to the current Committee if new committees are not formed. They argue that it is impossible for every unsecured creditor to be on the Creditors' Committee in a large bankruptcy case. They point-out that in the Sun bankruptcy there are thousands of unsecured creditors holding claims over $2 billion, and the current Committee members hold over $1 billion of this amount. By contrast, the Committee argues that Mr. Castel's $5.5 million claim is relatively small. (Sun Healthcare Bankruptcy News Issue 9; Bankruptcy Creditor's Service Inc.) CENTENNIAL CELLULAR: DCR Revises Outlook To Negative ---------------------------------------------------- Duff & Phelps Credit Rating Co. (DCR) has revised the Rating Outlook on Centennial Cellular Operating Co. LLC's (CCOC) debt ratings from Stable to Negative following the recent announcements of two separate transactions. CCOC's senior secured credit facility is rated 'BB-' (Double-B-Minus) and CCOC's senior subordinated notes are rated 'B' (Single- B). CCOC's parent company, Centennial Cellular Corp., has announced that it has signed a letter of intent to acquire cable assets from Pegasus Communications Corp. in certain markets on the west end of Puerto Rico for $170 million in cash. The systems serve 55,000 subscribers, pass over 170,000 homes and have 125 route miles of fiber. No definitive agreement has been reached yet. Centennial is not expected to assume any debt from Pegasus in this transaction, though the entire $170 million is likely to be debt financed. Centennial has also acquired a 70 percent interest in All-America Radio and Cables for $25 million. All America has a 30 MHz PCS and license in the Dominican Republic covering 8.9 million POPs as well as a LMDS license. The remaining assets in All America consist of its long-distance business and undersea cable assets. Although the cable transaction would add a modest amount of additional leverage to CCOC on an incremental basis, the Dominican Republic PCS (and LMDS) investments will require a good deal of capital to build new networks. The PCS licenses alone more than double CCOC's potential wireless market in the Caribbean. DCR will perform a comprehensive review of CCOC's Caribbean market expansion program with a focus on funding sources, vertical service plans in Puerto Rico, the Dominican Republic wireless strategy and future potential external investments. DCR's Rating Outlook assumes that CCOC will use debt to fund substantially all of its external funding needs for these investments. DCR notes that CCOC's tremendous growth in cash flow from existing businesses offsets some of the negative credit impact of these investments CCOC is the intermediate holding company of Centennial Cellular Corp. CRC is the mainland U.S. cellular operating subsidiary of CCOC that had 363,300 subscribers in markets covering 5.5 million managed pops at November 30, 1999. CRC also holds 1.2 million minority interest pops. CPR is the PCS, fixed wireless and competitive local exchange operating subsidiary of CCOC with 161,800 subscribers and a PCS license that covers 3.8 million pops in Puerto Rico and the U.S. Virgin Islands. DEVLIEG-BULLARD: Order Grants Extension of Exclusivity ------------------------------------------------------ Judge Marilyn Shea-Stonum entered an order on January 10, 2000, granting the debtors an extension up to and including March 31, 2000 the exclusive right to file a plan of reorganization and granting the debtor up to and including May 31, 2000 the exclusive right to obtain acceptance of its plan of reorganization. EAGLE GEOPHYSICAL: Seeks Authority To Enter Severance Agreement --------------------------------------------------------------- The debtors, Eagle Geophysical, Inc., et al. seek entry of an order authorizing the debtors to enter into a severance agreement with David H. Saindon and authorizing the debtors to enter a restated employment agreement with Richard W. McNairy. McNairy is CFO and Vice President, and Saindon reports directly to McNairy. Under the agreements, both will receive a monthly severance payment equal to 1/12 of the e employee's annual salary for four months and continuation of insurance for four months and a lump- sum payment of any accrued but untaken vacation pay attributable to the year in which the termination of employment occurs based on an entitlement to three weeks paid vacation. Under the Severance Agreement, Saindon is also entitled to a $5,000 lump- sum retention bonus payable on the date of his termination. ENTEX INFORMATION SYSTEMS: Amendment To Credit Line --------------------------------------------------- On December 21, 1999, ENTEX Information Services, Inc. executed an amendment to its working capital line of credit with IBM Credit Corporation to extend to March 31, 2000 its existing overadvance from its previously scheduled termination date of December 21, 1999. The overadvance permits the company to borrow up to $20 million in excess of what would otherwise have been allowed under the collateral formula in the IBM Working Capital Line of Credit. IBMCC also agreed to modifications of the financial covenants in the IBM Working Capital Line of Credit requested by the company. Simultaneously with execution of the amendment of the IBM Working Capital Line of Credit, the company's principal stockholder, Mr. Dort A. Cameron III, guaranteed up to $20 million of the company's obligations to IBMCC, and purchased from IBMCC an outstanding option to purchase from Mr. Cameron 1,851,850 shares of the company's common stock. Mr. Cameron initially granted this option to IBMCC in 1993. The purchase price for the option was $3 million in cash, payable not later than March 31, 2000, and an additional amount equal to the excess, if any, of 1,851,850 multiplied by the highest per- share price of the company's common stock obtained by Mr. Cameron or any of his affiliates during the period ending one year after the execution of the option purchase agreement over the initial $3 million amount. The additional amount, if any, is payable upon the consummation of any subsequent transaction in which more than 50% of the company's common stock is sold. If no such sale occurs within the one-year period, the original option will be reinstated with the aggregate exercise price increased by $3 million. These transactions provide ENTEX with continued access to $20 million in liquidity under the IBM Working Capital Line of Credit that otherwise would have been unavailable and will enable the company to support its ongoing business and to fund its debt service obligations in the near term. The continued availability of these working capital resources will also provide additional time for the company to complete the repositioning of its business to one providing services only. EVANS INC: Meeting of Creditors ------------------------------- A meeting of creditors is set in the case of Evans, Inc., Evans- Rosendorf of Maryland , Inc. and Koslow's Inc. for January 31, 2000, at 1:00 PM at the Office of the US Trustee, 80 Broad Street, Second Floor, New York, NY 10004-1408. Attorney for the debtors is Michael P. Richman, David M. Hillman, 1675 Broadway, New York, NY 10019. EVANS INC: Last Date For Filing Claims -------------------------------------- All claims or interests of creditors, equity security holders must be filed on or before February 11, 2000 at Evans, Inc. c/o UN Bankruptcy Court for the Southern District of New York, PO Box 218, Bowling Green Station, New York, NY 10006. FITZGERALDS GAMING: Griffiths Reports Stock Ownership ----------------------------------------------------- Philip D. Griffith beneficially owns 3,519,105 shares of common stock in Fitzgeralds Gaming Corporation over which he exercises sole voting and dispositive power. The number of shares owned represents 63.9% of the outstanding common stock of the company. On December 31, 1999 in a private transaction, Mr. Griffith acquired 842,568 shares of the common stock at a purchase price of $.01 per share and used his personal funds to acquire the 842,568 shares of common stock. The aggregate amount now held by Mr. Griffith is 3,519,105 shares of common stock representing the approximately 63.9% of the company's common stock outstanding. Included in such amount are 100,000 currently exercisable options for shares of the company's common stock. Mr. Griffith's stock is held by The Philip D. Griffith Gaming Trust, of which Mr. Griffith is the sole trustee. FITZGERALDS GAMING: Turk Sells Stock ------------------------------------ On December 31, 1999, Mr. Jerome H. Turk sold all of the shares of Fitzgeralds Gaming Corporation's common stock held by him and, accordingly, as of December 31, 1999, Mr. Turk beneficially owned no shares of that company's common stock. FOAMEX INTERNATIONAL: Societe Generale de Belgique Divests ---------------------------------------------------------- Societe Generale de Belgique, whose principal offices are in Brussels, Belgium, has divested itself of all common stock it once held in Foamex International Inc. FRUIT OF THE LOOM: Applies to Employ Lazard Freres -------------------------------------------------- The Debtors ask the Court for permission to employ Lazard Freres & Co., LLC, as their financial advisor and investment banker in these chapter 11 cases. Lazard will provide the Debtors with a wide range of financial advisory and potential underwriting services under the terms of an Engagement Letter dated December 27, 1999, including: (a) review and analysis of the Debtors' businesses, operations, and financial projections; (b) evaluating the Debtors' debt capacity in light of their projected cash flows; (c) assisting in determining an appropriate capital structure for the Debtors; (d) determining a range of values for the Debtors on a going concern basis; (e) advising the Debtors on tactics and strategies for negotiating with the holders of the existing debt obligations; (f) rendering financial advice to the Debtors and participating in meetings or negotiations in connection with any restructuring, modifications or refinancing of the Debtors' existing debt obligations; (g) advising the Debtors on the timing, nature and terms of new securities, other consideration or other inducements offered; (h) advising and assisting the Debtors in evaluating potential capital markets transactions, including public or private debt or equity offerings by the Debtors, and, on behalf of the Debtors, evaluating and contacting potential sources of capital as the Debtors may designate, and assist the Debtors in negotiating related financing transactions; (i) assisting the Company in preparing documentation required in connection with the Restructuring of the Existing Debt Obligations; (j) assisting the Debtors in identifying any evaluating candidates for a potential business combination, and advise, negotiate and aid in consummation of such transactions; (k) advising and attending meetings of the Debtors, their Board of Directors and their Committees; (l) providing testimony, as necessary, in any proceeding before the Court; and (m) providing the Debtors with other appropriate general restructuring advice. Lazard agrees to provide its services to the Debtors in exchange for: (A) a flat $150,000 monthly fee; (B) a cash fee equal to 0.5% of the Existing Debt Obligations upon completion of a restructuring; (C) a cash fee relating to any Business Combination based on the Aggregate Consideration received by the Debtors: Aggregate Consideration Incremental Fee ----------------------- --------------- $0 to $25,000,000 2.00% $25,000,000 to $50,000,000 1.50% $50,000,000 to $100,000,000 1.20% $100,000,000 to $200,000,000 1.00% $200,000,000 to $300,000,000 0.95% $300,000,000 to $400,000,000 0.90% $400,000,000 to $500,000,000 0.85% $500,000,000 to $600,000,000 0.80% $600,000,000 to $700,000,000 0.75% $700,000,000 to $800,000,000 0.70% $800,000,000 to $900,000,000 0.65% Over $900,000,000 0.60% but not applicable to: (1) disposition of the Proplayer division; (2) ordinary course asset dispositions and (3) [unspecified] planned facility or equipment asset sales; and (D) Financing Fees, payable in cash, as a percentage of total gross proceeds: Funds Raised Percentage Fee ------------ -------------- Senior Secured 1.75% Senior Unsecured 2.75% Subordinated 3.75% Convertible Debt 3.75% Convertible Preferred 4.75% Common Stock 5.75% The Debtors will indemnify Lazard for all claims, except those arising from Lazard's bad faith or gross negligence. The Debtors agree that any action against Lazard will be brought in New York and the Debtors agree to waive all rights to a jury trial. Barry W. Ridings, a Managing Director for Lazard leading the Fruit of the Loom engagement, assures the Court that Lazard is disinterested within the meaning of 11 U.S.C. Sec. 101(14), notwithstanding Lazard's many relationship unrelated to Fruit of the Loom's cases in financial and legal circles. (Fruit of the Loom Bankruptcy News Issue 3; Bankruptcy Creditor's Service Inc.) GOLDEN OCEAN: Files Chapter 11 ------------------------------ Golden Ocean Group Ltd. and two affiliates filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware. The petition lists assets and liabilities of $881 million and $880 million, respectively. The case number is 00- 0009, and the company is represented by Laurie Selber Silverstein at (302) 984-6000. The company's business focuses on several aspects of ocean transport, particularly dry bulk carriers and crude oil tankers. HECHINGER: Seeks Five More Months to File Liquidating Plan --------------------------------------------------------- Hechinger Co. (X.HGR) has asked the bankruptcy court for a five- month extension of its exclusive period to sponsor a liquidating plan of reorganization. The hardware retailer is asking the court to further its exclusive periods to file a reorganization plan and solicit favorable votes to June 2 and Aug. 2, respectively. On Oct. 19, the bankruptcy extended Hechinger's exclusive periods to Jan. 11 and March 9. "The Debtors have just finished conducting an auction for the fee and lease properties relating to both the 89 store and the 117 store closing," Hechinger stated in its Dec. 29 motion. The company says it is now in the late stages of disposing of the furniture, fixtures and equipment and other assets relating to its remaining 117 stores. (The Daily Bankruptcy Review and ABI January 18, 2000) HOUSING RETAILER: GE Investment Replies To Objection ---------------------------------------------------- GE Investment Private Placement Partners II, a limited partnership, and Ardhouse, LLC, lenders, reply to the objection of Ted D. Parker, Victoria S. Parker and MLP Investments Inc. to the motion for an order authorizing H Squared LLC and Housing Retailer Holdings, Inc. to obtain secured post-petition financing. In their DIP motion, the debtors seek authorization to borrow monies from the lenders for two primary purposes (i) to fund the prosecution of valuable avoidance and other claims held by the debtors against the Parker Entities and (ii) to fund the expenses that have been and will be incurred in connection with confirming a plan of reorganization in these Chapter 11 cases. The Parker entities, as targeted defendants object, and according to the lenders, their objections are not valid, but are potential defendants "whose only goal is to prevent these debtors from ever prosecuting their claims against them." The lenders claim that the terms of the financing are fair and reasonable and necessary to preserve and maximize assets of the estate. INCOMNET: Extension of Exclusivity ---------------------------------- The Honorable John E. Ryan entered an order on December 22, 1999, extending the time period within which Incomnet has the exclusive right to file a plan of reorganization until January 31, 2000. The court also granted an extension of the time period to solicit acceptances of the plan until May 1, 2000, so long as the plan is filed on or before January 31. IRIDIUM: Incurs $114.2 Million In Operating Losses in November -------------------------------------------------------------- According to a report in MOBILE SATELLITE NEWS on January 13, 2000, Iridium LLC [IRID] and its affiliates incurred $114.2 million in operating losses during November 1999, according to an 8-K document filed by the company with the SEC. Nearly all of the November 1999 deficit stems from non- reorganization costs that totaled $111.2 million during November compared with just $3 million spent to help reorganize the company after its August 1999 filing for Chapter 11 bankruptcy court protection. The expense of operating Iridium drained $16 million from its cash and cash equivalents to leave $181.6 million at the end of November, according to the 8-K. Motorola Inc. [MOT], Iridium's primary contractor and a significant shareholder, agreed to lead a $20 million financing in December to let Iridium continue operating through Feb. 15. JUST FOR FEET: Seeks Authority To Reject 8 Leases ------------------------------------------------- Gordon Brothers Retail Partners LLC, conducting closing sales at specialty stores, has notified the debtor, Just For Feet, Inc. and its subsidiaries that 8 specialty stores have been closed. According to Keen Realty Consulting Inc. the leases have no value to a third party and the debtors ask that the leases be rejected. The leases cover property at the following locations: Mall of Avenues, Jacksonville, FL Shoppingtown Mall De Witt, NY Marketplace Mall, Rochester, NY Marley Station Glen Burnie, MD Frandor Mall Lansing , MI Clearview Mall Metairie, LA Oaks Mall, Gainsville, FL Aviation Mall Queensbury, NY JUST FOR FEET: Renewed Motion Authorizing Employee Benefits ----------------------------------------------------------- The debtors, Just For Feet, Inc. and its direct and indirect debtor subsidiaries, seek authority for payment of prepetition employee benefits. The debtor seeks to pay certain unpaid bonuses that total approximately $90,000. KCS ENERGY: Fiduciary Trust Owns Stock -------------------------------------- Fiduciary Trust Company International beneficially owns an aggregate 2,307,936 shares of common stock in KCS Energy Inc., representing 7.89% of the outstanding common stock of the company. The following powers are held: Sole voting power over 136,670 shares, shared voting power over 2,171,266 shares, sole dispositive power over 2,656 shares, and shared dispositive powers over 2,305,280 shares. LA ROCHE INDUSTRIES: May Be Able to Avoid Bankruptcy ---------------------------------------------------- LaRoche Industries Inc., Atlanta, has been considering bankruptcy protection to deal with its liquidity problems, but the company now believes that better product pricing and support from its lenders will eliminate the need for chapter 11, according to a newswire report. CEO Harold Ingalls said, "We do not expect a chapter 11 filing at this time. Two things have changed. Our businesses have made a significant change in pricing--they've gone up--and our lending group continues to support the company." The company also is working on an extension to amend its secure credit facility, which expires Thursday. MARINER POST-ACUTE: Nursing Home Chain Seeks Bankruptcy ------------------------------------------------------- Mariner Post-Acute Network, Inc. (OTC Bulletin Board: MPAN) and Mariner Health Group, Inc., and certain of their respective subsidiaries ("Mariner") have filed separate voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the District of Delaware. Mariner Post-Acute Network has obtained a commitment for $100 million in debtor-in-possession ("DIP") financing with Chase Manhattan Bank. Mariner Health Group has obtained a commitment for $50 million in DIP financing with PNC Bank. Mariner's immediate need to relieve its debt burden is due, in part, to the significant financial pressure created by the Balanced Budget Act (BBA) of 1997 and its implementation, which reduced Mariner's Medicare reimbursement rate by $115 per resident, per day. According to the Congressional Budget Office, BBA implementation resulted in Medicare spending $19 billion below what the Congress provided. "While the measure of relief provided by Congress last year in the Medicare Balanced Budget Refinement Act was an important step, the crisis in long-term care continues to grow as dramatic Medicare cuts, explosive litigation costs and staffing shortages threaten the viability of long-term care providers," said Francis W. Cash, chairman, president and chief executive officer. In addition to the Chapter 11 filing, Mariner announced that Apollo Management, LP and its affiliates sold on December 20, 1999 substantially all the Mariner equity owned by Apollo and its affiliates. As a result, all Apollo board of directors designees resigned from the Mariner board effective January 2, 2000. Mariner Post-Acute Network, Inc, headquartered in Atlanta, Georgia, operates more than 400 skilled nursing, sub-acute and assisted living facilities with approximately 50,000 beds. American Pharmaceutical Services, the Company's institutional pharmacy group, operates approximately 40 institutional pharmacies, serving more than 2,000 facilities, comprising approximately 125,000 beds. In addition, the Company's Specialty Hospital group operates 13 Long-Term Acute Care hospitals in key markets. MICHAEL PETROLEUM: Order Resets Hearing To Extend Deadline ---------------------------------------------------------- In the case of Michael Petroleum Corporation, Michael Petroleum Alpha corporation and Michael Holdings, Inc., the US Bankruptcy Court, Southern District of Texas, Laredo Division, will conduct a hearing on the debtors' motion for an order extending the debtors' 11 USC 365(d)(4) deadline on January 31, 2000 at 11:30 AM. MICHAEL PETROLEUM: Meeting of Creditors Set ------------------------------------------- In the case of Michael Petroleum Corporation, Michael Petroleum Alpha Corporation and Michael Holdings, Inc., a meeting of creditors is set for February 1, 2000 at 10:00 AM, 515 Rusk Avenue Suite 3401, Houston, Texas. Attorney for the debtor is Scott Everett, Haynes and Boone LLP, 901 Main St. Suite 3100, Dallas, TX. NEXTWAVE: Judge Orders FCC To Show Cause --------------------------------------- U.S. Bankruptcy Judge Adlai S. Hardin, Jr., the presiding judge in NextWave Telecom's pending reorganization proceeding, has ordered the FCC to appear in federal court and show cause why last week's agency action purporting to cancel the Company's licenses and schedule them for reauction is not null and void as a matter of law and without force or effect. Judge Hardin's action came in response to a request filed by NextWave, which also filed a memorandum of law demonstrating that the FCC's action is contrary to explicit provisions of the federal Bankruptcy Code and governing judicial precedent. The hearing is scheduled for Friday, January 21, 2000, at 11:00 a.m. in federal court in White Plains, New York. "The FCC has violated the legal rights of NextWave and its creditors and investors," said a NextWave spokesperson. "The FCC acted unlawfully and its action was not even supported by a vote of the Members of the Commission. The Commission's attempted action leaves NextWave with no choice but to take all legal steps necessary, in every appropriate forum, to protect its rights and the rights of over 3000 creditors and shareholders of NextWave, the majority of whom are small businesses and individuals, including numerous private and state pension funds." In its filings last Friday, NextWave also announced its intention to file a petition for rehearing regarding the recent decision of the United States Court of Appeals for the Second Circuit concluding that federal bankruptcy courts lack authority to adjudicate fraudulent conveyance actions brought against the government in connection with obligations arising out of FCC spectrum auctions. "The Second Circuit's decision is an inexplicable departure from the plain language of numerous governing statutes and settled judicial decisions, including the opinions of other federal courts that have directly considered this precise issue," said a NextWave spokesperson. "The FCC's claim that NextWave's PCS licenses cancelled a year ago, and its announcement purporting to schedule those licenses for reauction, are precluded by the plain provisions and core purposes of the Bankruptcy Code," NextWave's spokesperson continued. "If the Company's licenses canceled over a year ago, what have the FCC, the Courts, Congress and the Company been doing all this time? Tens of millions of dollars and hundreds of thousands of hours have been expended on these issues by judges, lawyers, bankers, creditors, investors and others. Congress itself has spent a great deal of time and energy focusing on the matter -- while ultimately declining each year for the past three years to adopt legislation that the FCC itself has admitted it needs to obtain before acting in the manner it did last week. The agency's attempt to eviscerate all this effort and settled law by purportedly canceling the licenses is clearly null and void." "In taking its purported action last week," the spokesperson said, "the FCC inexplicably rejected NextWave's written offer to make an immediate and full cash payment to the FCC of $4.3 billion, the amount of NextWave's auction bid which the FCC had earlier accepted. The FCC thus abandoned the largest payment ever tendered for spectrum licenses, as well as an opportunity to make the benefit of those licenses available to the American public immediately." In June of 1998, NextWave sought protection under the Bankruptcy Code to reorganize its business. Consistent with the purposes of the bankruptcy laws, which are designed to facilitate and support the rehabilitation of businesses, NextWave was able to prepare and finance a plan of reorganization that paid the FCC $4.3 billion and would put its spectrum into immediate use for the public benefit. Instead, eighteen months after giving NextWave, its creditors and investors assurances that it recognized NextWave's entitlement to the protections of bankruptcy law, the FCC now seeks to ignore those assurances in order to revoke and re-auction the Company's licenses, alleging that NextWave missed interest payments while in bankruptcy. That attempt to deprive NextWave of its licenses is baseless. As Congress made clear in enacting the Bankruptcy Code, the filing of a petition for reorganization under the bankruptcy laws "gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy." The FCC explicitly acknowledged these purposes in a court filing in July of 1998, stating that "NextWave will still enjoy bankruptcy protection from collection of C block license payments pending reorganization of its business affairs." The FCC's belated attempt to deprive NextWave of its statutory rights is improper and invalid. The FCC's efforts to block the commercialization of NextWave's licenses and its election to pursue unlawful actions designed to punish NextWave for exercising statutorily granted rights are at odds with federal law and with the Commission's own statements regarding the need for prompt utilization of NextWave's PCS spectrum. The Bankruptcy Code encourages and fosters the efforts of debtors to reorganize and pay creditors. It is mystifying why the FCC, in an action contrary to the law, would reject NextWave's proposal to pay the government $4.3 billion in cash upon confirmation of the modified plan. This rejection deprives the American taxpayers of the immediate payment of $4.3 billion and the prompt introduction of new and innovative wireless technologies through the spectrum licenses held by the NextWave. Almost four years after the C block auction concluded, the FCC's continuing opposition to the C block licensees has prevented utilization of over 90% of the licenses auctioned in that auction. This unfortunate result has devastated many small investors and stymied the goals and objectives of Section 309(j) of the Communications Act. The FCC's position on this matter defies the law and common sense, and continues to frustrate the will of Congress and the public interest. The effect of the FCC's purported actions is to deny the taxpayers of the United States full payment for the licenses and deny consumers the beneficial use of the licenses for an extended period while litigation continues. In deference to consumers and taxpayers, and to the rule of law, the FCC should accept NextWave's tendered payment and clear the way for the licenses to be put into use immediately. NUMBER NINE VISUAL: Committee Taps Brown, Rudnick ------------------------------------------------- The Official Committee of Unsecured Creditors of Number Nine Visual Technology Corporation filed an application for authority to employ the law firm of Brown, Rudnick, Freed & Gesmer PC. PAGE AMERICA GROUP: Court Confirms Prepackaged Liquidating Plan --------------------------------------------------------------- The plan of Page America Group, Inc., et al., debtors, designates two classes of claims and two classes of interests. The holders of Class 1 subordinated note claims re impaired and have voted to accept the plan. Holders representing 100% of the Class 1 subordinated note claims voted to accept the plan, and no holders of Class 1 claims voted to reject the plan. The holders of Class 2 general unsecured claims are not impaired under the plan. The holders of Class 3 Preferred stock interests are impaired and have voted to accept the plan. Holders representing 84.3% of the Class 3 Preferred stock Interests voted to accept the plan, and no holders of Class 3 interests voted to reject the plan. The holders of Class 4 common stock interests are impaired under the plan, and are deemed to have rejected the plan. The order of confirmation issued on December 21, 1999. PARAGON TRADE: Court Confirms Plan ---------------------------------- Paragon Trade Brands Inc., Norcross, Ga., announced Friday that the Bankruptcy Court for the Northern District of Georgia entered an order confirming the company's second amended plan of reorganization and that the company expects to emerge from chapter 11 protection by the end of the month, according to a newswire report. The plan embodies a previously announced commitment by Wellspring Capital Management LLC to purchase the company as part of its exit from chapter 11. Paragon Trade Brands is a leading manufacturer of store-brand infant disposable diapers in the United States. PRIMARY HEALTH: Court Approves Amendment to DIP ----------------------------------------------- On January 7, 2000, the US Bankruptcy Court for the District of Delaware entered an order authorizing the debtors to enter into a fourth amendment relating to loan documents and to consummate any and all transactions in connection with the amendments. The debtors are authorized to obtain additional postpetition financing in a maximum principal amount outstanding not to exceed $50 million. The debtors are authorized to borrow from the Lenders an additional $7.6 million under the credit agreement, as amended. ROBERDS: To File for Bankruptcy Protection ------------------------------------------ Roberds, Inc. (NASDAQ:RBDS) announced today the closing of all eight of its stores and its distribution center in the Tampa, Florida market, and its single store in the Cincinnati, Ohio market. Roberds will engage an inventory liquidator to sell the inventory in both the Tampa and Cincinnati markets. That sale is expected to begin within the next two weeks, and conclude within 90 days. Roberds also announced that it will be seeking protection under Chapter 11 of the United States Bankruptcy laws. A petition is expected to be filed in the Southern District of Ohio on January 19, 2000. Roberds employes approximately 370 people in the Tampa market and 160 in the Cincinnati store. The employees in those markets will be dismissed as the business activity winds down. Some of the employees will be involved in the liquidation sales. The withdrawal from the Cincinnati market will cause a reduction of employment in the Company's Fairborn, Ohio distribution center. It has not yet been determined how many people will be affected in Fairborn. Roberds also announced the sale of its Buckhead, Atlanta, Georgia store. The property has been listed for sale with Tramell Crow Company, Atlanta, Georgia. The Buckhead store is expected to continue to operate until a buyer for the property is identified and under contract. At that time, the Buckhead store will cease business and the employees will be absorbed into other Roberds stores in Atlanta. "The first-half of 1999 showed some improvement for Roberds, but we suffered a $3.3 million loss in the third quarter, compared to $1.2 million during the same period in 1998. "It finally became a matter of company survival in a very competitive industry," said Mr. Baskin. "The actions that we have announced today have been very difficult, as they affect many outstanding, dedicated employees and their families. While these actions are regretful, they were necessary to again become competitive and continue operations. Our emphasis will be on providing our customers with the very best service and product value available to them in this industry." The Company will apply to the bankruptcy court for authority to honor all customer deposits and warranty obligations. The Company expects no interruption in its day-to-day business in Dayton or Atlanta. The Company expects to continue to make regular payments to its employees for payroll and payroll-related items. Roberds, Inc., which reported sales of $287 million in 1999, is a major retailer of name brand home furnishings products, including furniture, bedding, major appliances and consumer electronics. Roberds, with a total of 24 stores in four marketing areas, operates 23 large format superstores: six in the greater Dayton, Ohio area; nine in greater Atlanta, Georgia; and eight in greater Tampa, Florida; and a single megastore in Cincinnati, Ohio with 250,000 square feet of selling space. Roberds has 1,800,000 square feet of selling space and 1,122,000 square feet of warehouse space. SUN HEALTHCARE: Castel Moves For New or Expanded Committee ---------------------------------------------------------- The Creditors' Committee objects to Mr. Castel's motion, arguing that multiple committees would lead to a slippery slope. Every creditor would argue that his interests are unique and that there must be a separate committee for him. As a real-life example, the Committee notes that it has been "advised that a motion is currently being prepared on behalf of tort claimants seeking the appointment of a tort claimants' committee." The Committee also disputes Mr. Castel's argument that at least two committees are necessary: one for creditors of profitable Debtors and another for creditors of less profitable Debtors. Mr. Castel is a creditor of the Debtors' rehabilitation and therapy services line of business. This business is run primarily through SunDance and its eleven direct and indirect subsidiaries. Mr. Castel argues in his Motion that the rehabilitation and therapy business has been historically profitable. He further argues that a committee composed largely of creditors of 'unprofitable debtors' could not represent him or other creditors of 'profitable debtors.' In rebuttal, the Committee contends that Mr. Castel "ignores the writing on the wall." They contend that the Debtors' rehabilitation and therapy business is no longer profitable. SunDance has been and will continue to be severely impacted by Medicare's four-year phase in of a prospective payment system for Medicare reimbursement. SunDance was forced to take reserves against its accounts receivable, and SunDance's net revenues declined over 66% for the nine months ended September 30, 1999. Net revenues for rehabilitation and respiratory services declined 65.1% for the same period, the most dramatic decrease in revenues from any of the Debtors' lines of business. In addition, while SunDance had a traditional net operating margin of 24%, the operating margin for rehabilitation and therapy services was a mere 4.4% for the nine months ended September 30, 1999. As of September 30, 1999, 75% of SunDance's accounts receivable were over 120 days old. The Debtors took a $42.5 million write-down of the value of the SunDance business in 1999. The Committee also opposes Mr. Castel's request that he be appointed to the current Committee if new committees are not formed. They argue that it is impossible for every unsecured creditor to be on the Creditors' Committee in a large bankruptcy case. They point-out that in the Sun bankruptcy there are thousands of unsecured creditors holding claims over $2 billion, and the current Committee members hold over $1 billion of this amount. By contrast, the Committee argues that Mr. Castel's $5.5 million claim is relatively small. (Sun Healthcare Bankruptcy News Issue 9; Bankruptcy Creditor's Service Inc.) THERMOGENESIS: Completes Offering of Stock ------------------------------------------ On January 4, 2000, Thermogenesis Corporation completed an offering of 4,040 shares of Series B Convertible Preferred Stock and warrants to purchase 444,562 shares of Thermogenesis Corporation common stock. The initial placement was made to the lead investors, Advantage Fund II Ltd. and Koch Investment Group Limited, on December 22, 1999, and the final closing was held on January 4, 2000 with Clarion Capital Corporation. The placement resulted in gross proceeds to Thermogenesis Corporation of $4,040,000, before commissions and expenses payable in connection with the placement. Unless stockholder approval is obtained, the Series B Convertible Preferred Stock is convertible into a maximum of 4,236,000 shares of Thermogenesis Corporation common stock, in the aggregate. For the first six months from December 22, 1999, the Series B Convertible Preferred Stock is convertible at a fixed conversion price of $2.2719 per common share, which represents the average bid price of the common stock for the ten days prior to December 22, 1999. Thereafter, the conversion price is adjusted every six months to be the lesser of (a) 130% of the fixed conversion price or (b) 90% of the average market price for the ten days prior to such adjustment date. The Series B Convertible Preferred Stock is entitled to dividends at the rate of 6% per annum which amount, at the option of Thermogenesis, may be added to the $1,000 per share conversion value of the Series B Convertible Preferred Stock. The conversion price is subject to further adjustment under certain circumstances, provided such circumstances are outside of the company's control, including the following events: (i) no closing bid price for the common stock for five consecutive trading days; (ii) delisting of the common stock from the Nasdaq SmallCap Market or any other market or exchange; (iii) inability of the investors to sell shares of common stock under an effective registration statement for 30 days or more, in the aggregate; (iv) certain business combination events where Thermogenesis stockholders do not control 51% of the combined company, unless certain conditions are satisfied; and (v) certain defaults by Thermogenesis in the performance of its obligations to the institutions; and (iv) the adoption of any amendment to Thermogenesis Corporation's Certificate of Incorporation materially adverse to the holders of the Series B Convertible Preferred Stock without the consent of the majority of the shares of Series B Convertible Preferred Stock. If Thermogenesis takes action to affect any of the foregoing, and such action is deemed to be within its control, the Series B holders can require that Thermogenesis redeem the shares at a premium. Thermogenesis has the right to redeem the Series B Convertible Preferred Stock at a premium and under some circumstances at the market price of its common stock that the Series B Convertible Preferred Stock would otherwise be convertible into. The net proceeds from the offering will be used for general corporate purposes and working capital. UNITED STATIONERS: Farallon Partnerships Invest in Common Shares ----------------------------------------------------------------- The Farallon Partnerships and Managing Members, in November, invested in the common shares of United Stationers in the following manner: the net investment cost (including commissions) for the shares held by each of the Partnerships and Managed Accounts was Farallon Capital Partners, 320,100 shares at a net investment cost of $6,457,196.00; Farallon Capital Institutional Partners, 304,200 shares, cost $6,331,926.00; Farallon Capital Institutional Partners II, 88,100 shares, cost $1,726,695.00; Farallon Capital Institutional Partners III, 79,600 shares, cost $1,646,073.00; Tinicum, 32,600 shares, cost $662,542.00 and the Managed Accounts, 882,800 shares at a net investment cost of $17,741,301.00. The principal business of each of the Partnerships is that of a private investment fund engaging in the purchase and sale of investments for its own account and together hold an aggregate of 1,707,400 shares, which is 5.0% of the outstanding shares of common stock of United Stationers Inc. Each of the Managing Members, i.e., Andrew B. Fremder, David I. Cohen, Enrique Boilini, Jason M. Fish, Joseph F. Downes, Meridee A. Moore, Richard B. Fried, Stephen L. Millham, Thomas F. Steyer, William F. Duhamel and William F. Mellin held shared voting and dispositive powers over the total 1,707,400 shares, representing 5.0% of the outstanding shares of common stock of the company. Fleur Fairman exercised such powers over 824,600, or 2.4% of such stock. The following shares were purchased by the various entities which make up the Partnerships and in the percentages shown: Farallon Capital Institutional Partners II, L.P., 88,100 shares, 0.3%; Farallon Capital Institutional Partners III, L.P., 79,600 shares, 0.2%; Farallon Capital Institutional Partners, L.P., 304,200 shares, 0.9%; Farallon Capital Management LLC, 882,800 shares, 2.6%; Farallon Capital Partners, L.P., 304,200 shares, 0.9%; Farallon Partners, L.L.C., 824,600 shares, 2.4%; and Tinicum, 32,600 shares, 0.1%. UNIVERSAL EXPRESS: Reports Revenues and Losses ---------------------------------------------- Universal Express, Inc., is an integrated business service conglomerate. Its principal subsidiaries and divisions include the Private Postal Network.com (with two divisions, Postal Business Center Network.com (PBC Network Inc. and WorldPost Network.com), Manhattan Concierge, Packaging Plus Services, Inc. (corrugated business), Images Design and Marketing, and UniqueNet. During the three months ended September 30, 1999, the company's current business operations generated revenues of $1,334,444, as compared with operating revenues of $635,838 for the same three month period in 1998, an increase of 110%. The net losses experienced in the 1999 three month period were $1,072,630 as compared with net losses in the 1998 three month period of $778,637. VENCOR: Franklin Mutual Advisers No Longer Holds Stock ------------------------------------------------------ Franklin Mutual Advisers, LLC no longer hold common stock in Vencor Inc. having divested itself from all formerly held shares. ********* A listing of Meetings, Conferences and Seminars appears each Tuesday in the TCR. 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