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/raid1/www/Hosts/bankrupt/TCR_Public/000204.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 4, 2000, Vol. 4, No. 25 Headlines AGRIBIOTECH: Seed Producers May Be Able To Recoup Some Losses ALAMOSA PCS HOLDINGS: Moody's Assigns Caa1 To Snr Discount Notes APPLE ORTHODONTIX: Case Summary & 20 Largest Unsecured Creditors AUTOINFO: Files Disclosure Statement and Reorganization Plan CASMYN CORP: Court Authorizes Committee To Employ Counsel COMPLETE MANAGEMENT: Seeks Extension of Exclusivity CORAM RESOURCE: Committee Objects To Extending Use of Cash Collateral DEVLIEG-BULLARD: Continued Retention of Argus Management FULCRUM DIRECT: Seeks Order Granting Exclusivity Extension GARDEN BOTANIKA: Announces Year 2000 Business Plan, January Sales IMPERIAL HOME: Receives Approval for Use of Up to $75 M in DIP Financing INTEGRATED HEALTH: Files Voluntary Petition for Bankruptcy INTEGRATED HEALTH: First Day Orders Approved INTILE DESIGNS: Order of Dismissal JUMBOSPORTS: Seeks To Sell Ft. Worth Property JUST FOR FEET: Seeks Order Approving Auction Sale LOEWEN: NEWEOL'S Statement of Financial Affairs MACTELL: Placed Into Bankruptcy MARVEL ENTERPRISES: Toy Biz Appoints Bohach Vice President, Licensing NUMBER NINE VISUAL: Committee Supports Sale of Assets ORANGE COUNTY: Judge Approves Final Orange County Bankruptcy Report SABRATEK: Court Approves Sale of Assets SABRATEK: Orders Authorize Professionals SERVICE MERCHANDISE: Receives Approval to Extend Exclusivity Period TANNER'S: Restaurant Teams to Acquire Subsidiary Assets TELEGROUP INC: Order Authorizes Debtor To Employ Consultant TOPS APPLIANCE CITY: File Petition For Relief Under Chapter 11 BOND PRICING FOR WEEK OF January 31, 2000 ********* AGRIBIOTECH: Seed Producers May Be Able To Recoup Some Losses ------------------------------------------------------------- Seed producers doing business with AgriBioTech, Inc. (ABT), may be able to recoup some of their losses. The company announced Jan. 24 that it will file bankruptcy so it can implement an operational restructuring and financial reorganization. The state Department of Agriculture holds a $220,000 surety bond on ABT that could provide partial payment to those that qualify. Under state law, producers who sell, ship or deliver agricultural products for processing, sale or resale may be eligible. State law gives Department of Agriculture authority to make a claim against the surety bond on behalf of qualified producers. "This bankruptcy is a terrible blow to an industry already suffering the effects of a weak agricultural economy," said Jerry Buendel, manager of the Commission Merchant Program. "We anticipate there will be many qualified claims, and that the value of the bond will not be sufficient to satisfy them all. Growers should contact their personal attorneys to determine if they have other legal options." The process begins by filing a verified complaint with Department of Agriculture. The deadline is April 1. To obtain a complaint form call Department of Agriculture in Olympia at 360/902-1854 or in Yakima at 509/225-2616. Forms also are available from Alfalfa Seed Commission and the Turfgrass Seed Commission. Both commissions can be reached at 509/547-5538. If you believe you are qualified to file a claim against AgriBioTech, or are unsure, send a completed complaint form to the Washington State Department of Agriculture, Consumer and Producer Protection Division, PO Box 42560, Olympia, WA 98504-2560 or FAX: 360/902-2086. Investigators at Department of Agriculture will work to identify all potential claimants on the bond. The $220,000 will be distributed on a pro rata basis to eligible claimants. Eligibility for a share of the bond will be determined after the verified complaints are investigated. In 1999, Washington turfgrass and alfalfa seed producers contributed $23.9 million to the state's economy. ALAMOSA PCS HOLDINGS: Moody's Assigns Caa1 To Snr Discount Notes ---------------------------------------------------------------- First Time Rating/Approximately $156 Million of Debt Securities Affected. Moody's Investors Service assigned a Caa1 issuer rating to Alamosa PCS Holdings, Inc. and a Caa1 debt rating for its $156 million (proceeds) senior discount notes due 2010. The senior implied rating is B2, and the outlook for all these ratings is stable. The ratings reflect the early stage of the company's PCS operations, the highly competitive nature of the wireless communications industry, and the expectation of negative cash flows for at least the next two and a half years. The ratings also reflect the strengths and weaknesses of the issuer's relationship to and agreements with Sprint PCS. The rating on the senior discount notes is notched down from the senior implied rating due to the note's structural subordination to borrowings under a $250 million secured credit facility being provided by Nortel to a subsidiary of the issuer. This credit facility is expected to reduce to $175 million upon the prepayment of a portion of the facility with the proceeds from the senior note offering. Alamosa PCS was formed to operate as the exclusive provider of Sprint PCS products and services in a territory covering 8.4 million people, predominately in the southwestern US. Sprint PCS is one of the fastest growing wireless operators, having added 1 million subscribers in the fourth quarter of 1999. The Sprint PCS affiliates, such as Alamosa, AirGate and US Unwired, were formed to facilitate the build out the Sprint PCS network in second and third tier markets. To this end, Alamosa has already launched service in 11 of the 43 markets in its service territory, and attracted close to 32,000 subscribers. This ability to rapidly deploy network and quickly gain subscribers bodes well for the future success of the company. Notwithstanding this strong early performance, Alamosa still has good deal of development ahead of it. The buildout of the remainder of its service territory, and the attraction of a meaningful subscriber base will entail negative cash flows for at least the next two and a half years. Further, Moody's is concerned about the lack of asset protection available to Alamosa bondholders. As a Sprint PCS affiliate, Alamosa PCS owns no spectrum of its own, instead paying 8% of collected service revenue to Sprint PCS as a franchise fee for the use of the Sprint PCS spectrum. The assets of operating subsidiaries are pledged to secure the Nortel vendor financing, and while those operating subsidiaries do guarantee the senior discount notes, those guarantees are subordinated to the guarantees for the Nortel financing. As Alamosa develops a more meaningful subscriber base, Moody's will reassess the company's franchise value in relation to the claims of its bondholders. Based in Lubbock, Texas, Alamosa PCS is the exclusive provider of Sprint PCS products and services in a territory covering 8.4 million people in the southwest and Wisconsin. APPLE ORTHODONTIX: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Apple Orthodontix, Inc. A Delaware Corporation 2777 Allen Parkway Suite 700 Houston, Texas 77019 Type of Business: Provides practice management services to orthodontic practices in the United States and Canada Petition Date: January 27, 2000 Chapter 11 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: Norman L. Pernick Saul, Ewing, Remick & Saul, LLP 222 Delaware Avenue, Suite 1200 Wilmington, Delaware 19801 (302) 421-6800 Total Asset: $ 72,321,770 Total Debt: $ 40,556,093 20 Largest Unsecured Creditors (claim amounts not indicated in Petition) Arthur Anderson Baker & Botts Jackson & Walker Code Hunter Duncan Brown Caprock Consulting, Inc. Steve Walton Mayor Day Imperial Insurance WRW Leasing GAC OCA 3M UNITEK ORMCO3 Laurcat REVENUE CANA Beth Durrett VALPAKEAST SCHEIN Johnson, Bauer, Carillo AUTOINFO: Files Disclosure Statement and Reorganization Plan ------------------------------------------------------------ AutoInfo, Inc. (OTC BB:AUTO) today announced it has filed a disclosure statement and reorganization plan ("the Plan") pursuant to Chapter 11 of title 11 of the United States Bankruptcy Code. The Plan provides for the issuance of one share of Common Stock and a cash payment of $ 0.03 for each dollar of approximately $9.5 million of unsecured debt. The Company further announced that the requisite number and dollar amount of the unsecured creditor group has voted to support of the Plan. William Wunderlich, President and Chief Financial Officer of AutoInfo, stated, "we appreciate the cooperation received from the unsecured creditor group in supporting the Board of Directors and management in this restructuring effort. Once the Plan is confirmed by the Bankruptcy Court, AutoInfo will have no remaining debt. This will enable us to seriously pursue opportunities to consummate a transaction with an operating business and maximize the benefit of our tax loss carryforward of approximately $26 million. We view this development as a significant step in our continuing effort to restore shareholder value. CASMYN CORP: Court Authorizes Committee To Employ Counsel --------------------------------------------------------- The US Bankruptcy Court for the Central District of California, San Fernando Valley Division entered an order authorizing the Official Committee of Unsecured Creditors of Casmyn Corp. to employ Irell & Manella LLP as its counsel. COMPLETE MANAGEMENT: Seeks Extension of Exclusivity --------------------------------------------------- The debtor, Complete Management, Inc. seeks to extend the debtor's exclusive periods for ninety days. The debtor asserts that its management has been preoccupied with stabilizing the debtor's businesses, including reduction of operating expenses and corporate overhead, operating in Chapter 11, including the preparation of the debtor's schedules and statements of financial affairs, negotiating the Chouake purchase and settlement agreements, responding to requests for information related tot he sale of MMI and requests for information from the Creditors Committee, winding down IPG, evaluating the debtor's continued viability as a going concern, and conducting weekly meetings with the Creditors Committee, commencing in mid-November 1999. Although the debtor anticipates its ability to file a plan promptly that resembles the Terms Sheet, with some modifications, the debtor need an extension of the exclusive filing date to May 9, 2000 and the solicitation date to July 8, 2000. CORAM RESOURCE: Committee Objects To Extending Use of Cash Collateral --------------------------------------------------------------------- The Committee points out that the debtors projected a total of $8.2 million in accounts receivable would be collected and that an average of $1.5 million would be collected per month for the moths of January 2000 through March, 2000. The budget projects a shortfall in collected accounts receivable from the original budget of approximately $1.15 million per month for the months of January 2000 through March 2000. The debtors have not provided the Committee with information supporting the feasibility and reasonableness of the projections set forth in the debtors' budget and specifically the feasibility and reasonableness s of collecting $6.5 million in accounts receivable during April 2000. The Committee further states that the debtors are showing an operating loss of $8,500 since the Petition Date. Because the debtors are operating at a loss, the Committee believes that certain expense amounts set forth in the budget may be unnecessary for the wind-down of the debtors' operations and detrimental to the value of the debtors' estates. The Committee has asked to see the debtors' books and records, and the debtor has refused to make them available, therefore the Committee objects to the debtors' continued use of cash collateral until the Committee's accountants are granted unlimited access to the debtors' books and records. DEVLIEG-BULLARD: Continued Retention of Argus Management -------------------------------------------------------- The debtor, DeVlieg-Bullard, Inc., the Official Committee of Unsecured Creditors, The CIT Group/Business Credit, Inc. and the US Trustee agree and stipulate that the terms and conditions of the order retaining Argus Management Corporation as management consultants shall remain in full force and effect and is extended by agreement. The debtor is authorized to continue its retention of the firm until February 15, 2000 unless an order is entered extending the retention. FULCRUM DIRECT: Seeks Order Granting Exclusivity Extension ---------------------------------------------------------- The debtors, Fulcrum Direct, Inc. and its debtor affiliates seek an extension of the exclusive periods to file plan or plans and solicit acceptances thereto. A hearing on the motion will take place on February 11, 2000 at 4:00 PM before the Honorable Mary F. Walrath, US Bankruptcy Court for the District of Delaware, 6th Floor, Marine Midland Plaza, 824 market Street, Wilmington, Delaware 19801. The debtors seek an extension of the filing period through and including March 31, 2000 and an extension of the solicitation period through and including May 30, 2000. Until Fulcrum has had additional time to further analyze and pursue potential causes of action against third parties, it is not able to fully assess the recoveries that will be available to the estates and, accordingly, is not in a position to formulate a plan of liquidation. GARDEN BOTANIKA: Announces Year 2000 Business Plan, January Sales ----------------------------------------------------------------- Garden Botanika, Inc. (OTCBB:GBOT), the Redmond-based cosmetics and personal care products company, announced that it had submitted its business plan for the upcoming fiscal year, commencing January 30, 2000, to the Company's Creditors' Committee, which was a condition the Committee had imposed as a condition for the Company's continued operations under Chapter 11 of the Bankruptcy Code. The plan is based on the operation of a streamlined store base of 109 of the Company's best performing locations and the closing of 38 unproductive stores. In addition, the plan calls for an increased emphasis on the Company's existing Internet site, www.gardenbotanika.com, and on sales through other channels of distribution such as licensing and wholesale opportunities. The Company also announced that Arlee Jensen will resign as President and CEO later this month but will remain as a member of the Board of Directors. Bill Lawrence will serve as acting president and CEO until a permanent successor is named. Garden Botanika also reported comparable store sales for January (the four-week fiscal period ended January 29, 2000). Comparable store sales increased 16% from sales in January of 1999 for the 109 stores open at least one complete fiscal year. Total sales declined to $4.1 million from $4.9 million in the prior year, primarily due to a decrease in the number of stores. For the month, combined mail order and Internet sales were $251,000, and the Company recognized $213,000 in revenue from sales of annual memberships in the Company's discount shopping "Garden Club" program, which membership sales are amortized over the course of a year. During the month, the Company also commenced the process of closing 37 store locations. These stores have been excluded from the comparable store sales results. For the fifty-two weeks ended January 29, 2000, total Company sales decreased to $69.7 million from $102.8 million in the comparable prior period. Included in total sales are mail order and Internet sales of $3.0 million and the recognition of $2.9 million in revenue from sales of annual memberships in the Company's Garden Club program. In a separate and unrelated announcement, the Company said George Newman has resigned his position as Chief Financial Officer, although he will continue with the Company for an additional three months as the Company completes its annual audit and the initial stages in the implementation of its year 2000 business plan. Garden Botanika markets botanically-based cosmetic and personal care products through its 109 stores across the U. S. and its own catalog. IMPERIAL HOME: Receives Approval for Use of Up to $75 M in DIP Financing ------------------------------------------------------------------------ The Imperial Home Decor Group Inc. said that it has received final approval from the United States Bankruptcy Court to use its post-petition Debtor-in-Possession (DIP) financing facility, which provides for up to $75 million. The DIP financing is a two-year working capital facility from The Chase Manhattan Bank. This DIP financing includes a $7 million facility for use by the company's United Kingdom operations. The company said the DIP facility will provide more than ample financing for the company's ongoing worldwide operations and other working capital needs. As previously announced on January 5, 2000, IHDG and it U.S. affiliates, The Imperial Home Decor Group (US) LLC; Vernon Plastics, Inc.; Imperial Home Decor Group Holdings LLC; WDP Investments, Inc. and Marketing Services, Inc., filed voluntary petitions for protection under chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company's operations in Canada and the United Kingdom were not included in the filing. On January 5, the bankruptcy court granted the company immediate approval to borrow up to $25 million on its DIP credit facility and scheduled today's court hearing to approve the company's use of the balance of those funds. Today's final DIP financing hearing has now concluded with the court approving the company's use of the entire$75 million facility. Scott R. Levin, IHDG's Chief Financial Officer and Acting Chief Executive Officer, said, "This working capital facility provides more than ample funds to cover the company's worldwide financing needs throughout the reorganization period, especially now that the additional levels of spending to complete our merger are no longer required. We are very grateful and appreciative for the support we are receiving from all our stakeholders -- banks, secured and unsecured creditors, customers, suppliers and employees. This overwhelming support has enabled IHDG to continue business as usual." In addition to its use for ongoing operations and other working capital needs, Levin said the DIP financing will be used for the purchase of materials and services from vendors, for ongoing support of customer promotional programs, and for employee salaries and benefits. "Since the filing, we have made significant progress in maintaining the critical relationships with our suppliers that enable us to continue serving our customers without interruption, missing no shipments," Levin said. "The Court's approval of the entire amount of our financing is an important vote of confidence and a significant step in our restructuring process." Levin pointed to a number of achievements since the January 5th filing: -- Maintaining ongoing relationships with major retailers, trade channels and customers. -- Establishing agreed-to terms with major suppliers and vendors for purchases of materials and services. -- Maintaining normal operations in all of the company's worldwide manufacturing facilities, enabling it to position inventory for the spring selling season. -- Maintaining agreements with high profile brand-name licensors. -- Attending the Heimtextiles trade show in Germany and the Wallpaper Association annual meeting in Puerto Rico to address many industry issues, as well as full participation by the company at customer-specific trade shows. Imperial Home Decor Group is the world's largest designer, manufacturer and distributor of residential wallcovering products. Headquartered in Cleveland, Ohio, Imperial Home Decor Group supplies home centers, national chains, independent dealers, mass merchants, design showrooms and specialty shops. The company was created in 1998 through the merger of Imperial Wallcoverings and Borden Decorative Products. In 1998, Imperial Home Decor Group reported net sales of$416.7 million. INTEGRATED HEALTH: Files Voluntary Petition for Bankruptcy ---------------------------------------------------------- Integrated Health Services, Inc. (OTC Bulletin Board: IHSV) announced that IHS and many of its operating subsidiaries have filed voluntary petitions with the U.S. Bankruptcy Court for the District of Delaware to reorganize under Chapter 11 of the U.S. Bankruptcy Code in order to restructure the company's debt obligations. The company elected to seek court protection in order to facilitate its efforts to restructure its capital and lease obligations. In announcing today's Chapter 11 filing, company management emphasized that the filing has been organized to permit normal operations of its long term care facilities and other businesses. To ensure that the company has the working capital necessary to operate its business, it has obtained a commitment for up to $300 million in debtor- in-possession (DIP) financing with Citibank, N.A. IHS has requested the Court's permission to access the DIP financing to fund normal business operations and other cash needs during the bankruptcy proceeding. Because of significant debt repayment obligations, the company has commenced discussions with its banks and other lenders regarding the restructuring of the company's debt. The Court protection afforded by Chapter 11 will give the company an opportunity to develop a plan for reorganization with the goal of emerging from bankruptcy in a stronger financial position. The company is also in discussions with some of the owners of the long term care facilities it operates in an effort to renegotiate or cancel certain unprofitable leases. IHS is the seventh national provider to file for bankruptcy protection in the past six months. Other companies which have filed include Vencor Inc., Sun Healthcare Group Inc., Mariner Post-Acute Network Inc., Lenox Health Care Inc., Frontier Group Inc., and Newcare Health Corporation. "The dramatic impact of the implementation of the 1997 Balanced Budget Act on our revenues and cash flow severely impacted the company's ability to service our current capital structure," said Robert N. Elkins, Chairman and Chief Executive Officer. Integrated Health Services is a highly diversified health services provider, offering a broad spectrum of post-acute medical and rehabilitative services through its nationwide healthcare network. IHS's post-acute services include home respiratory services, subacute care, long term care and contract rehabilitation services. A free copy of the first issue of INTEGRATED HEALTH BANKRUPTCY NEWS -- tracking the multi-billion reorganization undertaken by Integrated Health Services, Inc., and its 430-plus debtor-affiliates, before the United States Bankruptcy Court in Wilmington -- is available at: http://www.bankrupt.com/ihs.txt INTEGRATED HEALTH: First Day Orders Approved -------------------------------------------- Integrated Health Services, Inc. (OTC Bulletin Board: IHSV) announced that the United States Bankruptcy Court for the District of Delaware entered first day orders granting authority to the Company and its subsidiaries to pay pre-petition and post-petition employee wages, salaries, benefits and other employee obligations. The Court also approved orders granting authority, among other things, to pay pre- petition claims on certain critical vendors and patient obligations. Until approval of its plan of reorganization, the Company intends to pay post-petition claims of all other vendors and providers in the ordinary course of business. The Court also approved, on an interim basis, the Company's $300 million debtor-in-possession (DIP) financing with Citibank, N.A. The final hearing on the DIP financing is scheduled for February 25, 2000. The DIP financing and existing cash flows will be used to fund the Company's ongoing operations during the restructuring and will be more than ample for such purposes. INTILE DESIGNS: Order of Dismissal ---------------------------------- The debtor did not effectuate a plan of reorganization on or before December 1, 1999 as ordered by the court. The case is dismissed effective December 1, 1999. JUMBOSPORTS: Seeks To Sell Ft. Worth Property --------------------------------------------- JumboSports Inc. seeks to sell real property located in Ft. Worth, Texas to The Bruder Company, Inc. The property is presently unoccupied and the debtor does not conduct any business on the real property. The debtor and The Bruder Company, Inc. entered into a purchase and sale agreement. The total purchase price for the real property is $3.5 million. A hearing to consider this motion is scheduled for February 17, 2000 at 2:30 PM before the Honorable C. Timothy Corcoran, III, US Bankruptcy Judge, in courtroom 9B, Sam M. Gibbons US Courthouse, 801 North Florida Avenue, Tampa, Florida. JUST FOR FEET: Seeks Order Approving Auction Sale ------------------------------------------------- Just For Feet, Inc., et al., debtors, seek court approval of certain auction procedures designed for a sale of substantially all of the debtors' assets. All of the debtors' efforts to sell its business have proven unsuccessful, and the only alternative left for the debtors is to liquidate their assets. The debtors seek to continue limited operations at the store level for a few weeks leading to an auction sale or sales of all or parts of the assets and the debtors' businesses with termination of all employees not essential to conduct and consummate such a sale or sales, coupled with the immediate cessation of unprofitable operations that are unlikely to be purchased at such an auction. The lenders consent to this decision of the debtors, and the debtors now seek court approval of the auction procedures, the forms of asset purchase agreement and agency agreement to be used in connection with the sale of the assets and the notice and sale order. LOEWEN: NEWEOL'S Statement of Financial Affairs ----------------------------------------------- Neweol (Delaware), L.L.C. filed its Statement of Financial Affairs with the Bankruptcy Court. These Statements are required of every Debtor. Of particular interest, the Statement explains that Neweol had income of $31,732,594.24 during 1999, as opposed to $23,241,187.36 during 1998. In addition, during the ninety-day period immediately preceding its bankruptcy petition, Neweol paid approximately $20,000,000 to Fairway Finance Corporation. Fairway set-off these payments against debt already owed it by Neweol. Finally, during the one-year period immediately preceding its bankruptcy petition, Neweol paid $52,235,593.59 to Loewen Group International Inc. LGII is an "insider creditor" under bankruptcy law for purposes of these payments. (Loewen Bankruptcy News Issue 18; Bankruptcy Creditor's Service Inc.) MACTELL: Placed Into Bankruptcy ------------------------------- Mactell Corporation (OTC Bulletin Board: MTLLE), a former manufacturer of performance enhancement computer products today announces that it has been placed in Chapter 7 bankruptcy by three of its former creditors. Mactell had previously attempted to work its way out of the financial problem created when Apple Computer, Inc. made the decision to discontinue the licensing of the Macintosh operating system to clone manufacturers in August of 1997. Mactell incurred an operating loss of approximately $2,800,000 during the year ended June 30, 1998 and an additional loss of approximately $1,800,000 for the year ended June 30, 1999. The Company had amassed payables in excess of $ 3,200,000 between many different vendors, much of which was well beyond their payment terms and was unable to meet the creditor demands. Realizing it couldn't meet creditor obligations and having no source for additional working capital at the time, the Board of Directors made the decision to close the Company operations effective October 22, 1999. Former officers of the Company have attempted to recapitalize the Company subsequent to closing its operations on October 22, 1999, after receiving several inquiries from potential investors. However, as of this date no formal agreements or terms have been agreed upon to recapitalize the Company and it is doubtful that it will be recapitalized. Headquartered in Austin, Texas, Mactell Corporation is a publicly traded company, trading on the NASD electronic bulletin board, key symbol: MTLLE. Contact information via email is info@mactell.com or via regular mail to Mactell Corporation, P.0. Box 142281, Austin, Texas 78714. MARVEL ENTERPRISES: Toy Biz Appoints Bohach Vice President, Licensing --------------------------------------------------------------------- Toy Biz, a division of Marvel Enterprises, Inc. (NYSE: MVL) announced today that it has appointed John Bohach as Vice President, Licensing. John brings to Toy Biz over 25 years of Toy Industry experience, having served in management positions with Tyco Toys, Inc., Kenner Toys and LBS Communications. In his new post at Toy Biz, John will be responsible for the evaluation and acquisition of licensed properties across all forms of media. Alan Fine, President and CEO of Toy Biz, commented, "We are delighted to have an individual of John's talent and track record join our growing Company. John's many years of experience in youth oriented marketing will prove to be a very valuable asset to us in his new role as Vice President of Licensing." Marvel Enterprises, Inc. is one of the world's leading entertainment companies with operations in the licensing, comic book publishing and toy businesses. The company was formed on October 1, 1998 upon the emergence of Marvel Entertainment Group, Inc. from bankruptcy and its merger with Toy Biz, Inc. Through its ownership of over 3,500 proprietary characters, the company has published comic books for over 60 years in over 70 counties. Marvel licenses the right to use its characters in a wide range of consumer products such as video games, interactive software and apparel, as well as for television series and feature films. For additional company information visit the company's corporate web-site http://www.marvel.com. NUMBER NINE VISUAL: Committee Supports Sale of Assets ----------------------------------------------------- The Official Committee of Unsecured Creditors of Number Nine Visual Technology Corporation submits a statement in support of the debtor's motion for authority to sell substantially all of its assets to S3 Incorporated upon the terms and conditions set forth in a written Asset Purchase Agreement between the debtor and S3 dated January 26, 2000. ORANGE COUNTY: Judge Approves Final Orange County Bankruptcy Report ------------------------------------------------------------------- U.S. Bankruptcy Judge John Ryan yesterday approved Orange County, Calif.'s final bankruptcy report, clearing the way for distribution of $871 million in settlements recovered from Wall Street investment firms, according to the Associated Press. The ruling brings to an end the $1.64 billion ordeal for most of the schools, cities and special districts involved in the largest chapter 9 filing ever. The county filed chapter 9 in December 1994 and emerged from bankruptcy in June 1996. (ABI 03-Feb-00) SABRATEK: Court Approves Sale of Assets --------------------------------------- The US Bankruptcy Court for the District of Delaware entered an order on January 27, 2000, approving the sale of LifeWatch's assets at the price of $11 million, plus such other consideration set forth in the Asset Purchase Agreement dated January 18, 2000 to URS Acquisition Inc. SABRATEK: Orders Authorize Professionals ---------------------------------------- By separate orders, dated January 12, 2000, the US Bankruptcy Court for the District of Delaware authorized the employment of Young Conaway Stargatt & Taylor LLP as attorneys for the debtors and Jay Alix & Associates as restructuring and management consultants to the debtors. SERVICE MERCHANDISE: Receives Approval to Extend Exclusivity Period ------------------------------------------------------------------- Service Merchandise Company, Inc. (OTC:SVCDQ) announced today that it has received Court approval to extend the period in which the Company has the exclusive right to file and advance a plan of reorganization in its Chapter 11 case to April 30, 2001 and further extend the Company's exclusive right to solicit acceptances of its plan to June 30, 2001. "Consistent with the strategic reorganization timeline established in the first quarter of 1999, the extension of exclusivity should enable the Company to complete and implement its Year 2000 Business Plan, which will serve as the basis for its reorganization plan and emergence from Chapter 11 in 2001," said Chief Executive Officer Sam Cusano. The Court also extended the Company's time to assume or reject executory contracts and unexpired real property leases in connection with its go-forward stores as to 11 objecting landlords through March 31, 2001. Although it is still in the process of finalizing its December results and annual audit, the Company provided the Court with preliminary 1999 results. Those results, as subsequently refined, indicate gross EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring charges) of approximately $62 million for the nine months ended exceeding its 1999 Business Plan by $19 million or 44 percent -- based on preliminary financial information. Since the commencement of the Company's voluntary Chapter 11 case in March 1999, it continues to make significant progress in its restructuring initiatives: -- Vendor support has improved significantly. Substantially all jewelry vendors and more than 60 percent of hardlines vendors are now extending payment terms to the Company, and the extension of exclusivity is expected to help to continue vendor support throughout the 2000 retail cycle. -- Customer relations improved through the refocusing of the stores' merchandise mix, the reestablishment of a private label credit card program and the reduction of out-of-stock occurrences from 14 percent at the commencement of the Chapter 11 case to 2 percent at the onset of the 1999 holiday season. -- Beginning in March 1999, 122 underperforming stores were closed. Inventory liquidation sales at those locations surpassed projections, generating approximately $100 million in net proceeds. -- The Company sold its interests in 76 previously-closed store locations and other surplus real estate properties throughout the country to various retail chains, real estate developers and landlords, generating more than $76 million of net cash proceeds. Service Merchandise also divested its B.A. Pargh Company, Inc. subsidiary, resulting in approximately $8 million in net proceeds. -- During 1999, the Company reduced its corporate workforce by some 250 positions and closed two distribution centers and five regional jewelry repair centers to adjust the cost structure to correspond with the existing store base, resulting in annualized savings of $25 million. -- Liquidity remains strong. Throughout the critical fall season, liquidity remained very strong, with minimum availability of $150 million at peak inventory and maximum excess availability of more than $400 million. At the Company's regular monthly hearing on January 25 and 26, the Court designated May 15, 2000 as the Bar Date, or deadline for filing creditor claims. The Company intends to mail the Bar Date Notice and Proof of Claim forms to all known creditors by March 15, 2000. Service Merchandise and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Tennessee in Nashville on March 27, 1999. Service Merchandise Company, Inc. operates 221 stores in 32 states. TANNER'S: Restaurant Teams to Acquire Subsidiary Assets ------------------------------------------------------- Restaurant Teams International, Inc. (OTC BB:RTIN), has reached an agreement to acquire substantially all of the operating assets of the chapter 11 subsidiaries of Tanner's Restaurant Group, Inc. RTIN has agreed to manage Tanner's and provide debtor in possession financing to Tanner's until completion of the sale process (acquisition is subject to approval of the US Bankruptcy Court in Atlanta). Bob Hoffman, acting Chief Executive Officer of Tanner's Restaurant Group, Inc. commented, "We are pleased with the solutions and agreements reached with RTIN. We expect this transition to RTIN to allow our restaurants to continue operating and to provide an opportunity for our team of over 300 people to retain their position in the Tanner's restaurants." Stanley L. Swanson, Chief Executive Officer of Restaurant Teams International, Inc. stated, "We are very excited about the acquisition of the Tanner's restaurants in Atlanta. We believe this is a concept which, with our resources, can be developed into a viable franchise opportunity marketed throughout the Southeast. Our plan is to add as many as 10 new Tanner's restaurants in the greater Atlanta area over the next 12 to 18 months. The acquisition of 8 company owned and 2 franchised Tanner's restaurants in Atlanta generating approximately eight million dollars in annual revenues is a tremendous step forward, moving us closer to our objective of becoming a multi-concept holding company." Curtis A. Swanson, Chief Financial Officer stated, "After review of Tanner's operations our management has determined that the unit economics meet our initial model criteria for size volume and capital investment per unit." Swanson further stated, "Although the unit economics were acceptable, they simply could not support the significant additional debt and increased G&A expenses after Tanner's was acquired in a leveraged buy out three years ago. We feel very strongly that without these G&A expenses and eliminating the debt, Tanner's restaurants will flourish." Tanner's is a 14 year-old restaurant concept with a reputation built on friendly service and quality food. The concept is that of a full service family restaurant serving foods such as rotisserie chicken, BBQ ribs, shrimp, chili, salads, 13 varieties of vegetables, and more. Tanner's restaurants are said to be "An Atlanta Tradition." Restaurant Teams International, Inc. is a public holding company whose stock trades on the fully reporting NASDAQ OTC BB. TELEGROUP INC: Order Authorizes Debtor To Employ Consultant ----------------------------------------------------------- The US Bankruptcy Court for the District of New Jersey entered an order authorizing the debtor, Telegroup, Inc. to employ PricewaterhouseCoopers as its consultants, effective as of September 22, 1999. TOPS APPLIANCE CITY: File Petition For Relief Under Chapter 11 -------------------------------------------------------------- Tops Appliance City, Inc., a leading retailer of home appliances, air conditioners, housewares, and kitchen cabinetry filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on February 2, 2000, in the United States Bankruptcy Court for the District of New Jersey. The Chapter 11 filing was precipitated by increased operating expenses associated with its 3 stores in Mahnattan and Brooklyn and lower than expected sales in the fourth quarter of 1999 during the company's implementation of its operating strategy to phase-out the sale of consumer electronics. Over the weekend, Tops closed its stores located in Manhattan (14th Street) and Brooklyn in order to streamline operations and to focus on its remaining 5 most profitable stores located in Edison, Lakewood, Union and Jersey City, New Jersey, and Hawthorne, New York. According to the company's 10-Q Report filed with the Securities and Exchange Commission, Tops had sales of approximately $80 million for the 3-month period ending September 28, 1999, an increase of approximately 8% from the same period for the previous year. However, during the 3rd quarter of 1999, Tops reported a 21% decline in the sale of consumer electronics, an 8.4% decrease in sales from the commercial division and increased operating expenses associated with the Manhattan and Brooklyn stores. The company has retained Cole, Schotz, Meisel, Forman & Leonard, P.A. of Hackensack, New Jersey as its counsel. BOND PRICING FOR WEEK OF January 31, 2000 ========================================= DLS Capital Partners, Inc. Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 18 - 20 (f) Ameriserve 8 7/8 '06 26 - 28 (f) E & S Holdings 10 3/8 '06 37 - 40 Fruit of the Loom 8 7/8 '06 6- 8 (f) Genesis Health 9 3/4 '05 33 - 35 Geneva Steel 11 1/8 '01 16 - 18 (f) Globalstar 11 1/4 '04 67 - 69 Hechinger 9.45 '12 9 - 11 (f) Integrated Health 9 1/4 '08 6 - 8 (f) Iridium 14 '05 3 - 4 (f) Loewen 7.20 '03 48 - 50 (f) Pathmark 11 5/8 '02 23 - 25 Pillowtex 10 '06 43 - 45 Revlon 8 5/8 '08 42 - 44 Rite Aid 6.70 '01 81 - 83 Service Merchandise 9 '04 11 - 13 (f) Sunbeam 0 '18 14 - 15 TWA 11 3/8 '06 38 - 39 United Artists 9 3/4 '08 6 - 9 Vencor 9 7/8 '08 18 - 20 (f) ********* A listing of Meetings, Conferences and Seminars appears each Tuesday in the TCR. Bond pricing, appearing each Friday, is supplied by DLS Capital Partners, Dallas, Texas. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co- published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. 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