/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000211.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 11, 2000, Vol. 4, No. 30 Headlines AAMES FINANCIAL: Annual Meeting Set For March 3, 2000 ALTIVA FINANCIAL: Merrill Lynch Reports Holdings AMERICAN PAD: Receives Court OK for $65 M of DIP Financing BREED TECHNOLOGIES: Board Delays Meeting to Consider Sale Offers CAREMARK RX: Original Rights Amended and Restated CAROL PUBLISHING: Seeks Authority to Sell Assets CLARIDGE HOTEL: Applies To Extend Exclusivity CPX CORP: Gabriel Capital and J. Ezra Merkin Reprot Holdings DAYTON MINING: T. Rowe Price Divests of Stock DOW CORNING: Announces 1999 Results FACTORY CARD: Seeks Extension of Time to Assume/Reject Leases FAMILY DOLLAR STORES: Bank of America Reports Holdings FILENE'S BASEMENT: Emergency Hearing In Connection With Sale FRUIT OF THE LOOM: Emergency Motion For Insurance Premiums GENERAL RENTAL: Seeks Extension To File Financial Statements GENEVA STEEL: Committee Taps E&Y Restructuring GRADCO SYSTEMS: Reports Third Quarter Results GRAND UNION: Appaloosa and Tepper Hold 6.3% of Stock HARNISCHFEGER: Announces Results of Sale Hearing HIGHWAYMASTER COMMUNICATIONS: Fourth Quarter Financial Results IMPERIAL HOME: Final Order Authorizing Post-Petition Financing IRIDIUM: Investors Led By McCaw To Provide $74.6 Million IRIDIUM: Motorola Comments on Financing JUST FOR FEET: Auction Procedures KMART: Vanguard Windsor Funds - Windsor II Fund Reports Holdings LAMAUR: Elects Pesin New CEO and Chairman LONDON FOG: Seeks to Set April 5, 2000 as Bar Date MEDPARTNERS PROVIDER: Seeks Approval of Disclosure Statement MERRY-GO-ROUND: Snyder Weiner Awarded $77 Million; Fidelity Appeals PENNCORP FINANCIAL: Case Summary & 20 Largest Unsecured Creditors PRIMARY HEALTH: Selling Part of Surgery Center To Doctors SINGER USA: Case Summary T&W FINANCIAL: Announces Loss of Servicing TALON INC.: Moody's Lowers Ratings (Senior Subordinated To Caa2) TULTEX: To Liquidate Assets and Go Out of Business BOND PRICING FOR WEEK OF February 7 ********* AAMES FINANCIAL: Annual Meeting Set For March 3, 2000 ----------------------------------------------------- Stockholders are being invited to attend the annual meeting of Aames Financial Corporation, which will be held at The Hotel Inter-Continental, 251 S. Olive Street, Los Angeles, California 90012, on Friday, March 3, 2000. The meeting will begin promptly at 10:00 a.m. in order that stockholders may consider: 1. Approval of an amendment to the company's Certificate of Incorporation as amended, to effect a one-for-five reverse stock split of the shares of the company's common stock; 2. Approval of an amendment to the Certificate of Incorporation to effect a one-for-five reverse stock split of the shares of the company's Series C Convertible Preferred stock; 3. Approval of an amendment to the Certificate of Incorporation to enable stockholders to act by written consent as permitted by Delaware law; 4. Election of four Series B Directors to hold office until the 2000 annual meeting of stockholders and thereafter until such directors' successors are duly elected and qualified; 5. Election of two Class II Common Stock Directors to hold office for three years and until such directors' successors are duly elected and qualified; 6. Ratification of the appointment of Ernst & Young LLP as the company's independent accountants for the fiscal year ending June 30, 2000. Only stockholders of record of the company at the close of business on January 21, 2000 are entitled to notice of and to vote at the meeting and adjournment(s) thereof. ALTIVA FINANCIAL: Merrill Lynch Reports Holdings ------------------------------------------------ Merrill Lynch & Company, Inc., on behalf of Merrill Lynch Asset Management Group and Merrill Lynch Phoenix Fund, Inc. hold 300,000 shares of common stock of Altiva Financial Corporation, representing 9.81% of the outstanding common stock of the company. The group has shared powers of voting, directing the vote, disposition, or disposing of the 300,000 shares. Merrill Lynch & Co., Inc. is a parent holding company. The Merrill Lynch Asset Management Group is an operating division of Merrill Lynch & Co. consisting of Merrill Lynch & Co.'s indirectly owned asset management subsidiaries. Certain of these subsidiaries hold certain shares of the security which is the subject of this report. AMERICAN PAD: Receives Court OK for $65 M of DIP Financing ---------------------------------------------------------- American Pad & Paper Company (OTC BB:AMPP) (AP&P) announced that it has received final approval from the Bankruptcy Court for $65 million of debtor-in-possession (DIP) financing. The Company further announced that the Williamhouse division sale process is progressing as expected, and that it plans to explore other possible business unit sales to reduce debt. As previously announced, the Company has engaged Lazard Freres to analyze strategic and financial alternatives, including the sale of the Williamhouse division, possible sale of other assets and restructuring of the Company's debt. The Williamhouse sale process is moving forward as planned with the sale of this division anticipated to be completed around mid-year 2000. In addition, AP&P plans to proceed with marketing its other major business units including AMPAD, Creative Card and Forms. Lazard will also continue to evaluate other actions that would address the Company's debt structure. American Pad & Paper Co., which invented the legal pad in 1888, is a leading manufacturer and marketer of paper-based office products in North America. Product offerings include envelopes, writing pads, file folders, machine papers, greeting cards and other office products. The key operating divisions of the Company are Williamhouse, AMPAD, and Creative Card. Company revenues in 1998 were $662 million, additional information is available on the Company's Website at http://www.americanpad.com. BREED TECHNOLOGIES: Board Delays Meeting to Consider Sale Offers ----------------------------------------------------------------- Breed Technologies Inc. (BDTTE) on Tuesday postponed for seven to 10 days a board meeting to consider bids to purchase substantially all of the Lakeland, Fla., automotive parts suppliers' assets. Charles J. Speranzella, Jr., Breed's chief operating officer, wouldn't give details on the nature or quality of bids for the company. Speranzella told the Daily Bankruptcy Review that Breed had a lot of analysis to do and it intends to get a unified recommendation from its investment bankers, accountants and restructuring consultants from Development Specialists Inc. (The Daily Bankruptcy REview and ABI; February 10, 2000) CAREMARK RX: Original Rights Amended and Restated ------------------------------------------------- On March 1, 1995, the Board of Directors of the predecessor of Caremark Rx, Inc. declared a dividend, which was subsequently paid, of one preferred share purchase right for each outstanding share of common stock, par value $.001 per share. The Original Rights were subsequently amended and, on February 1, 2000, the Original Rights were amended and restated in their entirety to represent a right to purchase from the company one one-hundredth of a share of Series C Junior Participating Preferred Stock of the company, par value $.001 per share, at a price of $52.00 per one one-hundredth of a Preferred Share, subject to adjustment. CAROL PUBLISHING: Seeks Authority to Sell Assets ------------------------------------------------ On February 16, 2000, at 10:00 AM a hearing will be held before the Honorable William F. Tuohey, US Bankruptcy Court, King Federal Building, 50 Walnut Street, 3rd Floor, Newark, NJ, with respect to the debtor's motion for an order authorizing the debtor to sell assets by means of auction, scheduling the auction, and approving the procedures of the auction. The debtor wishes to conduct the auction during the last week of March, 2000, thereby affording the debtor sufficient time to assure that all of its assets are properly sold or otherwise disposed of prior to May 15, 2000 when the debtor must vacate the Secaucus property. CLARIDGE HOTEL: Applies To Extend Exclusivity --------------------------------------------- The debtors, The Claridge At Park Place, Inc. and The Claridge Hotel and Casino Corporation apply for an extension of the debtors' exclusive time to file a plan and to solicit ballots accepting the plan. The debtors filed their Disclosure Statement and plan on January 27, 2000. The hearing on the adequacy of the Disclosure Statement is scheduled for March 21, 2000. The debtors request an extension of exclusivity for 90 days, through May 14, 2000, which will allow sufficient opportunity to provide notice of the plan to parties in interest and negotiate any issues which may arise with respect to treatment of claims and interest under the plan. There are indications form certain parties in interest that they may seek to require substantial modification to the plan and Disclosure Statement. The debtors also seek an extension to solicit ballots through July 16, 2000. CPX CORP: Gabriel Capital and J. Ezra Merkin Reprot Holdings ------------------------------------------------------------ Gabriel Capital Corporation holds 441,515 shares of common stock of CPX Corporation representing 3.0% of the outstanding common stock of the company and J. Ezra Merkin, in addition to sharing voting and dispositive powers with Gabriel Capital over the 441,515 shares, holds sole powers over 299,282 additional shares. The total held by Mr. Merkin represents 5.1% of the outstanding shares of common stock of CPX. Gabriel Capital Corporation is a Delaware corporation and the Investment Advisor of Ariel Fund Limited, a Cayman Islands corporation, and J. Ezra Merkin is the General Partner of Gabriel Capital L.P., a Delaware limited partnership. Merkin is also the sole shareholder, sole director and president of Gabriel Capital. As of February 1, 2000, Gabriel is the holder of 299,282 shares of common stock, or 2.0% of the outstanding shares of common stock. As of February 1, 2000, Ariel Fund is the holder of 441,515 shares of common stock, or 3.0% of the outstanding shares of common stock. Gabriel and Ariel Fund are managed investment vehicles and neither is the beneficial owner of said shares. Gabriel, as Investment Advisor to Ariel Fund, has the power to vote and to direct the voting of and the power to dispose and direct the disposition of the 441,515 shares of common stock owned by Ariel Fund. Mr. Merkin may be deemed to be the beneficial owner of 740,797 shares of common stock, the 5.1% of outstanding shares of common stock cited. DAYTON MINING: T. Rowe Price Divests of Stock --------------------------------------------- T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund, Inc. no longer hold common stock in Dayton Mining Corporation having divested themselves of all formerly held stock in the company. DOW CORNING: Announces 1999 Results ----------------------------------- Dow Corning Corp. reported 1999 global net income of $109.7 million. In 1998, the company had a loss of $595 million, which included an after tax charge of $801.7 million to reflect developments in the company's Chapter 11 bankruptcy proceeding. Sales for 1999 were $2.6 billion, up 1.4 percent compared with 1998. "We finished the year with strong positive momentum," Dow Corning's vice president for planning and finance and chief financial officer Gifford Brown said. "Our fourth-quarter sales grew 5 percent compared with the fourth quarter of 1998, reflecting a strengthening in many of our markets. We are beginning to realize productivity benefits from our investments in restructuring and business process re-engineering. In addition, our major capacity expansion in Barry, Wales, is now coming on-line and producing high quality silicon-based materials for sale to domestic and export markets." Dow Corning, a global leader in silicon-based materials, is a Michigan corporation with shares equally owned by The Dow Chemical Company (NYSE: DOW) and Corning Incorporated (NYSE: GLW). More than half of Dow Corning's sales are outside the United States. FACTORY CARD: Seeks Extension of Time to Assume/Reject Leases ------------------------------------------------------------- The debtors, Factory Card Outlet Corp. and Factory Card Outlet of America Ltd., seek an extension of time within which they may assume or reject unexpired leases of nonresidential real property. A hearing on the motion will take place at the US Bankruptcy Court, District of Delaware, on February 29, 2000. During the first seven months of these cases the debtors have assumed and assigned one lease and rejected 39 leases, and the debtors have exited the Texas and Kansas markets entirely. The debtors have a balance of 183 leases. The annualized rental obligations under the leases totals approximately $2.8 million. The results of the fiscal year 1999 will not be available for review until approximately April, 2000. Once available, the debtors require time to review such results with the statutory committee of unsecured creditors, and to take them into account in determining whether to assume or reject leases. The debtors are also engaged in discussions with various third parties regarding possible alternative plans of reorganization. To the extent that such plan may involve third parties, the debtors need to take into account the requirements of such third parties with respect tot he leases. The debtors claims that the requested extension to and including August 24, 2000 is in the best interests of the debtors, their creditors and all parties in interest. FAMILY DOLLAR STORES: Bank of America Reports Holdings ------------------------------------------------------- Bank of America Corporation and NB Holdings Corporation beneficially own 16,668,826 shares of the common stock of Family Dollar Stores Inc. with shared voting and dispositive powers. 9.64% of the common stock of Family Dollar is represented in the 16,668,826 shares held. Bank of America, N.A holds 16,199,606 shares of the common stock with sole powers, and 386,050 shares exercising shared powers over that number. The total number of shares held represents 9.60% of the outstanding common stock of the company. NationsBanc Montgomery Holdings Corporation and Banc of America Securities LLC each hold 83,170 shares of the company's common stock, however, NationsBanc exercises shared voting and dispositive powers while Banc of America Securities may exercise sole powers. 83,170 shares is .04% of the outstanding common stock of Family Dollar Stores Inc. FILENE'S BASEMENT: Emergency Hearing In Connection With Sale ------------------------------------------------------------ Filene's Basement Inc. and Filene's Basement Corp. seek an emergency hearing in connection with their motion for an order approving bidding procedures by which the debtors may sell substantially all of their assets and assume and assign certain executory contracts and unexpired leases, and to conduct store closings of Aisle 3 stores. The debtors are selling substantially all of their assets, with the exception of their Aisle 3 stores to Base Acquisition Corp. At the present time, the debtors are suffering substantial losses and net negative cash flow. It is not anticipated that the debtors will be able to generate net positive cash flow until at least the summer months. The debtors do not have sufficient cash on hand to fund their operating losses from now until the summer. The debtors currently have insufficient loan availability with which to prudently and properly conduct their business, and, in particular, have no current ability to purchase any inventory whatsoever. The debtors' lenders have declined to provide additional credit. The debtors conclude that their only alternative is to sell all of their assets to the Buyer. FRUIT OF THE LOOM: Emergency Motion For Insurance Premium --------------------------------------------------------- The debtors, Fruit of the Loom, Inc., et al. seek entry of an order authorizing the debtor to enter into a stipulation for adequate protection of AFCO Credit Corporation's security interest in unearned insurance premiums and authorizing the debtors to enter into an insurance premium financing agreement with AFCO on an interim basis, pending a final hearing. The terms of the stipulation provide that Fruit Delaware shall pay as adequate protection under the Existing Premium Finance agreements to AFCO the total sum of $1,091,320.54. In addition to the Existing Premium Finance agreements, the debtors wish to enter into a premium finance agreement with AFCO to finance three umbrella policies for coverage. Each policy provides umbrella coverage for a 8 month period at a cost of $313,000. Fruit Delaware has agreed to make eight monthly installments of $30,105. Objections, if any, to the motion, must be made in writing, filed with the US Bankruptcy Court for the District of Delaware and received no later than February 7, 2000. A hearing will be held on February 8, 2000 at 1:30 PM before the Honorable Peter J. Walsh. GENERAL RENTAL: Seeks Extension To File Financial Statements ------------------------------------------------------------ The debtor, General Rental, Inc. seeks an extension of time to file schedules, lists and statements of financial affairs. The debtor states that during the course of the past few weeks, the debtor's employees have focused their attention upon the administration of the estate, including the obtaining postpetition financing and the disposing of certain lease obligations. As a result, the debtor reuqires additional time in which to file its schedules. The debtors are requesting an extension through and including February 15, 2000. GENEVA STEEL: Committee Taps E&Y Restructuring ---------------------------------------------- The Official Committee of Unsecured Creditors of Geneva Steel Company, seeks entry of an order granting the Committee's application for authorization to employ E&Y Restructuring LLC as financial advisors to the Committee. The firm has agreed to cap its fees at a maximum of $75,000 per month for the first four months of its retention, subsequently reduced to $62,500 per month. A hearing on the motion will be held on March 7, 2000. GRADCO SYSTEMS: Reports Third Quarter Results --------------------------------------------- Gradco Systems Inc. (the "Company") (Nasdaq:GRCO) Wednesday announced the results of operations for the three and nine months ended Dec. 31, 1999. The Company reported net earnings of $600,000, or $.08 per share, in the current quarter compared with a loss of $2,953,000, or $.37 per share, for the three months ended Dec. 31, 1998. Net earnings were$1,137,000, or $.15 per share, for the nine months ended Dec. 31, 1999 as compared with a loss of $ 2,947,000, or $.37 per share, in the nine-month period of the prior year. Revenues for the three and nine months ended Dec. 31, 1999 decreased $ 6,513,000 and $25,747,000, respectively, from the comparable prior year periods principally as a result of decreases in net sales. Unit sales in the office automation market decreased 45% in the quarter from the comparable quarter in the prior year and sales of the Company's contract engineering and manufacturing services subsidiary, Venture Engineering Inc. ("Venture"), decreased 30%. When compared with the preceding quarter, unit sales were up 9%. A stronger yen, which increased by 13% against the dollar when compared with the same period in the previous year, caused an increase of $0.9 million in revenue when yen denominated sales were translated into dollars. In the nine-month period, unit sales in the office automation market decreased 52% and Venture's sales decreased 25%. Yen denominated sales translated into $2.8 million more in revenue due to the stronger yen which gained 14% against the dollar during this period. The results of the quarter were affected by two non-recurring events. Mita Industrial Co. Ltd. ("Mita"), one of Gradco (Japan) Ltd.'s ("GJ") largest customers, emerged from bankruptcy. The court approved Mita's reorganization plan, making Mita a wholly- owned subsidiary of Kyocera Corporation, and directed Mita to repay 18% of the unsecured creditors' debt over a period of 10 years. GJ, which had reserved for Mita's indebtedness in full, will recover a total of $ 1,357,000 based on the value of the yen at Dec. 31, 1999. The Company has recorded a non-current receivable and a pre-tax credit to income in the amount of $935,000, representing the present value of the non-interest bearing payments to be received using an 8% discount rate. In an effort to reduce operating expenses in future years, GJ management has agreed to terminate its retirement plan at the end of the current fiscal year. The Company has elected to expense the unamortized prior service cost of $693,000 in the current quarter, which results in the full value of the vested benefits being reflected in non-current liabilities at Dec. 31, 1999. The $693,000 is included in selling, general and administrative expenses. A lawsuit remains pending by a former employee. Motions for summary judgment filed in the case were denied on Oct. 28, 1999. The Court entered a scheduling order calling for an early year 2000 trial. The case will be tried before a jury so that there are substantial elements of uncertainty. Nevertheless, the Company believes that this case will not have a material adverse effect on its consolidated financial position or liquidity. Working capital increased to $18,426,000 at Dec. 31, 1999 from$15,388,000 at March 31, 1999. At Dec. 31, 1999, the Company had$15,788,000 in cash, an increase of $3,365,000 from March 31, 1999, and no long-term debt. The Company has acquired approximately 572,000 of its shares to date and is continuing to purchase its stock pursuant to a board authorization to acquire up to 2 million shares. GRAND UNION: Appaloosa and Tepper Hold 6.3% of Stock ---------------------------------------------------- Appaloosa Management L.P. and David A. Tepper hold 1,889,400 shares of common stock of Grand Union Company, with sole voting and dispositive powers. The amount held represents 6.3% of the outstanding common stock of the company. Appaloosa Management L.P. is the general partner of Appaloosa Investment Limited Partnership I, the investment advisor to Palomino Fund Ltd., and the managing member of Tersk LLC, which are the holders of record of the reported securities (828,501, 924,862 and 136,037 shares, respectively). David A. Tepper is the sole stockholder and president of Appaloosa Partners Inc. which in turn is the general partner of Appaloosa Management L.P. and David A. Tepper owns a majority of the limited partnership interests of Appaloosa Management L.P. Persons other than David A. Tepper and Appaloosa Management L.P. have the right to receive dividends from, or the proceeds from the sale of, the reported securities, however, none of these persons has the right to direct such dividends or proceeds. HARNISCHFEGER: Announces Results of Sale Hearing ------------------------------------------------ Harnischfeger Industries, Inc. (OTC Bulletin Board: HRZI) announced results of a sale hearing held before the Bankruptcy Court in Delaware on Tuesday, February 8, 2000. At the hearing, the Bankruptcy Court approved the following three sales transactions involving Beloit Corporation assets: -- Paper Aftermarket and Roll Covers Division: Valmet Corporation -- Paper Technology: Mitsubishi Heavy Industries, Inc. -- Pulp and Finishing Divisions: Groupe Laperriere & Verreault Inc. Sales of these assets remain subject to certain closing conditions. In addition, certain of the transactions are subject to clearance from United States regulatory authorities. The Bankruptcy Court previously approved transactions involving the sale of Beloit's OASIS business and Woodyard Division. The company indicated that it is pursuing the sale and liquidation of the remaining assets of Beloit. These assets include Beloit's primary manufacturing facilities in Beloit, Wis. and Rockton, Ill. and certain overseas paper machinery manufacturing businesses. Robert N. Dangremond, Chief Restructuring Officer for the company and Beloit, is directing the Beloit sale process. The company cautioned that, while it continues to pursue sales of Beloit assets, there can be no assurance as to whether or when any transactions will take place. On June 7, 1999, the company and its U.S. subsidiaries, including Beloit, filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Harnischfeger Industries, Inc. is a global company with business segments involved in the manufacture and distribution of equipment for underground mining (Joy Mining Machinery), surface mining (P&H Mining Equipment), and pulp and papermaking (Beloit Corporation). HIGHWAYMASTER COMMUNICATIONS: Fourth Quarter Financial Results -------------------------------------------------------------- HighwayMaster Communications, Inc. (Nasdaq:HWYM), the leading provider of wireless voice and data communications services to the commercial trucking and service vehicle industries, reported financial results for the fourth quarter and year ended Dec. 31, 1999. For the 1999 fourth quarter, total revenues were $16.1 million, up 9.7 percent from $14.7 million for the 1998 fourth quarter. The company's loss before extraordinary items was reduced by 39.3 percent to $5.9 million ($0.24 per share) for the fourth quarter this year, compared with a loss before extraordinary items of $9.8 million ($0.39 per share) for the fourth quarter of 1998. Net loss for the fourth quarter 1999 was $5.9 million ($0.24 per share), compared to net income of $9.1 million ($0.37 per share), including an extraordinary gain of $18.9 million ($0.76 per share) for early extinguishment of debt. For the year ended Dec. 31, 1999, total revenues were up 50.9 percent to $ 95.5 million, versus $63.3 million for the year ended Dec. 31, 1998. EBITDA for 1999 improved 118 percent to a positive $6.4 million, including $3.3 million in net non- recurring income items, versus a negative $35.8 million for 1998, including $9.9 million in non-recurring charges. The 1999 net loss improved 67.1 percent to $11.5 million ($0.46 per share), including $3.5 million in net non-recurring income items, from a net loss of $35.1 million ($1.41 per share), including an extraordinary gain of $18.9 million and $9.9 million in non-recurring charges, for 1998. Excluding the extraordinary item and one-time income items and charges, the net loss improved 66.0 percent to $15.0 million ($ 0.60 per share), versus $44.1 million ($1.77 per share) for 1998. HighwayMaster provides intelligent wireless mobile communications, fleet management and mobile asset-tracking solutions to the commercial trucking and service vehicle industries. Its technology, currently covered by 29 issued U.S. patents and additional U.S. and international patents pending, combines voice and data with Global Positioning System (GPS) satellite vehicle-location capabilities to offer a seamless mobile communications system. The enhanced cellular network utilizes the systems of more than 70 cellular providers in the U.S. and Canada offering coverage in essentially all of the available U.S. markets and A-side markets in Canada. The company's mobile asset product, TrackWare(TM), combines the technologies of GPS and control channel messaging to track trailers and other mobile assets. IMPERIAL HOME: Final Order Authorizing Post-Petition Financing -------------------------------------------------------------- By order of the US Bankruptcy Court for the District of Delaware, the debtors, The Imperial Home Decor Group Inc., et al. were granted authority to obtain post-petition financing up to the principal amount of $75 million from The Chase Manhattan Bank and a syndicate of lenders, of which up to $68 million may be used for direct loans or letters of credit for the Borrower and up to $7 million may be used for the Affiliate Loan. IRIDIUM: Investors Led By McCaw To Provide $74.6 Million -------------------------------------------------------- A group of investors led by telecommunications pioneer Craig McCaw has agreed, subject to certain conditions, to provide $74.6 million in interim financing for Iridium LLC, which operates the world's first handheld global satellite communications system. The debtor-in-possession (DIP) financing will enable Iridium to continue the company's operations beyond February 15, when terms will expire on a commitment of $20 million from current investors led by Motorola to fund operations from December 16, 1999, to February 15, 2000. Iridium LLC today asked the U.S. Bankruptcy Court for the Southern District of New York to authorize the McCaw-led DIP financing for Iridium. The investment is the result of Iridium's efforts since its August 13, 1999, Chapter 11 filing to find an outside investor to fund a reorganization plan or to purchase the company's assets. Under the plan submitted to the court today, the DIP financing would provide Iridium with the funds necessary to continue its operations and global service while an investor group led by McCaw completes due diligence on possibly purchasing the assets of the company and the company completes a reorganization plan. Subject to court approvals, this additional financing is intended to support Iridium's operations and restructuring activities until mid-year, when it expects to emerge from bankruptcy. "This interim financing is a critical step toward Iridium's successful restructuring and emergence from bankruptcy under the control of Craig McCaw," said John Richardson, Chief Executive Officer of Iridium LLC. "Iridium continues to believe that personal satellite communications has a bright future, and we will continue to aggressively pursue our mission of delivering valuable communications services to customers around the world." Iridium has not reached final agreement with McCaw or its creditors concerning a reorganization plan. However, based on its debt level in excess of $4 billion and the legal priorities in bankruptcy, the company continues to believe that any reorganization will not result in value remaining from the bankruptcy estate for current holders of its publicly traded equity or unsecured debt. Iridium LLC became the world's first global satellite phone and paging company on November 1, 1998. Its network of 66-low earth orbiting satellites, combined with existing terrestrial cellular systems, enables customers to communicate around the globe. Iridium World Communications, Ltd. is the public investment vehicle of Iridium LLC. Craig McCaw is chairman and chief executive officer of Eagle River, Inc., a company formed to make strategic investments in telecommunications ventures. He also is chairman of Teledesic LLC, which is building a global broadband Internet-in-the-Sky satellite communications network. He founded NEXTLINK Communications, Inc., one of the nation's fastest growing providers of competitive telecommunications services, and is a primary shareholder of Nextel Communications, Inc., a leading national wireless communications provider. Iridium is a registered trademark and service mark of Iridium IP LLC. IRIDIUM: Motorola Comments on Financing --------------------------------------- Motorola issued the following statement concerning the announcement by Iridium LLC that a group of investors led by Craig McCaw has arranged "debtor in possession" or (DIP) financing for Iridium LLC. This interim financing would allow Iridium LLC to continue operations until June 15, 2000 while the investors led by McCaw work to complete potential arrangements for the reorganization of the company: Since August 1999 when Iridium LLC began operating under the regulations of Chapter 11 of the U.S. Bankruptcy Code, Iridium LLC has been working to attract additional investors to help Iridium LLC achieve a sound business and financial restructuring plan. During this period, Motorola has consistently stated that unless there was substantial participation by other parties with a significant financial interest in Iridium LLC, Motorola would not provide additional funding for the satellite communications company. Today, Iridium LLC filed in U.S. Bankruptcy Court a motion for approval of an interim financing plan that is intended to enable the parties to reach agreement on a long-term financial restructuring plan, as well as meet Motorola's requirements of a sound business plan. An element of the new plan would include a Motorola equity position in a newly formed company. However, this investment by Motorola would represent only a minority position in the new company that would be led by Craig McCaw. Motorola believes that its equity participation in the restructuring of Iridium LLC will not increase its exposure beyond the amounts reserved for at the end of December 1999. Also, Motorola would not expect its participation in the restructuring of Iridium LLC to adversely affect the earnings guidance the company has provided for the current year. Motorola, Inc. (NYSE:MOT) is a global leader in providing integrated communications solutions and embedded electronic solutions. Sales in 1999 were $ 30.9 billion. JUST FOR FEET: Auction Procedures --------------------------------- On February 1, 2000, the US Bankruptcy Court for the District of Delaware entered an order approving the auction procedures in connection with the proposed sale by the debtors of all of their assets to one or more bidders. The auction shall be conducted at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 25th Floor, New York, NY 10153 on February 15, 2000 at 10:00 AM. The court has scheduled February 24 2000 at 4:00 PM as the date for a hearing to consider entry for an order pursuant to the sale motion, authorizing and approving the sale of assets. KMART: Vanguard Windsor Funds - Windsor II Fund Reports Holdings ---------------------------------------------------------------- Vanguard Windsor Funds-Windsor II Fund beneficially owns 41,622,500 shares of the common stock of Kmart Corporation, exercising sole voting and dispositive powers, and thereby holding 8.55% of the outstanding common stock of the company. LAMAUR: Elects Pesin New CEO and Chairman ------------------------------------------ To strengthen its turnaround efforts, The Board of the Lamaur Corporation announced the recent election of Lawrence Pesin as its new CEO and Chairman. The 60-year old company is a developer and provider of hair and skin care products. Pesin said, "We will focus on growth through a 3-pronged strategy encompassing traditional retail, alternative distribution channels and globalization initiatives." Lamaur currently formulates and markets a broad range of hair care shampoos, conditioners and styling products through consumer retail outlets. Retail brands include WILLOW LAKE(R), PERMASOFT(R), COLOR SOFT(TM), SALON STYLE(R) Design Elements and Style Natural Reflections(TM). LONDON FOG: Seeks to Set April 5, 2000 as Bar Date -------------------------------------------------- The debtor, London Fog Industries, Inc., and certain subsidiaries seek a court order setting April 5, 2000 as the deadline for filing proofs of claim. The debtors are currently taking steps toward formulating a consensual plan of reorganization. In order to negotiate with the Committee, the debtors' pre-and post- petition lender and other parties in interest and to prepare the plan, the debtors must ascertain, to the extent reasonably practicable, the number, amount, nature and character of all claims against the debtors. It is imperative that the debtors undertake and complete analysis to determine which, if any, asserted claims are in addition to, or at variance with, those set forth in the schedules. MEDPARTNERS PROVIDER: Seeks Approval of Disclosure Statement ------------------------------------------------------------ The debtor, Medpartners Provider Network, Inc. seeks approval of its Disclosure Statement. A hearing will be held on February 28, 2000 at 2:00 PM, Courtroom 1668, 255 East Temple Street, Los Angeles , California. MERRY-GO-ROUND: Snyder Weiner Awarded $77 Million; Fidelity Appeals ------------------------------------------------------------------- Rejecting the suggestion that a $77,200,000 contingency fee -- the largest contingency awarded in bankruptcy history -- sought by the Baltimore-based law firm of Snyder, Weiner, Weltchek, Vogelstein & Brown, in connection with its extraction of a $185 mil lion settlement from Ernst & Young, should be subjected to a test for overall reasonableness, Judge E. Stephen Derby ruled that "a deal is a deal" and it is appropriate for the chapter 7 trustee overseeing the liquidation of Merry-Go-Round Enterprises, Inc., to pay the 40% contingency fee to which she agreed. As previously reported in the TCR, Trustee Deborah H. Devan, retained Snyder Weiner to pursue exceedingly complex litigation against the Big Five accounting giant Ernst & Young. On the eve of trial before a Baltimore state court jury last year, E&Y settled for a whopping $185,000,000. Bruce R. Zirinzky, Esq., of Caldwalader, Wickersham & Taft, argued on behalf of Fidelity Management & Research Company, that the bankruptcy court -- whether or not it approved the Trustee's engagement of Snyder Weiner -- has an independent duty to determine the reasonability of a $77 million payout at this juncture. Fidelity's argument didn't persuade Judge Derby; the Bankruptcy Court issued its Order Awarding a Fee to Special Litigation Counsel for the Trustee (Doc. 7735) and a separate Memorandum Opinion (Doc. 7736) on January 27, 2000, directing that Snyder Weinder should collect the full amount. Disgusted by Judge Derby's decision, Fidelity timely-filed a Notice of Appeal with the bankruptcy court this week indicating its intention to put the reasonableness question before the U.S. District Court for review. PENNCORP FINANCIAL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Penncorp Financial Group, Inc. c/o Southern Financial Services Corp. 717 North Harwood Street Dallas, Texas 75201 Type of Business: Holding company whose principal assets consists of the shares of stock of its direct and indirect insurance company subsidiaries. Petition Date: February 7, 2000 Chapter 11 Court: District of Delaware Debtor's Counsel: Jeffrey L. Tannenbaum Weil, Gotshal & Manges, LLP 767 Fifth Ave New York, NY 10153 (212) 310-8000 Martin A. Sosland Weil, Gotshal & Manges, LLP 100 Crescent Court, Suite 1300 Dallas, Texas 75201-6950 (214) 746-7700 Thomas L. Ambro Mark D. Collins Paul N. Heath Richards, Layton & Finger, PA One Rodney Square PO Box 551 Wilmington, Delaware 19899 (302) 668-6541 Total Assets: $ 385,000,000 Total Debts: $ 181,148,000 20 Largest Unsecured Creditors HSBC Issuer Indenture $ 114,646,000 Bear Stearns Bond Debt $ 66,406,000 Salomon Smith Bond Debt $ 14,834,000 Chase Bank Bond Debt $ 12,885,000 Morgan Stanley Bond Debt $ 6,230,000 Goldman, Sachs & Co Bond Debt $ 2,000,000 Spear, Leeds & Kelogg Bond Debt $ 2,000,000 State Street Bank & Trust Co. Bond Debt $ 2,000,000 Neuberger Berman, LLC Bond Debt $ 1,500,000 Charles Schwab & Co. Bond Debt $ 973,000 Merrill Lynch, Pierce Fenner & Smith Bond Debt $ 631,500 Prudential Securities Incorporated Bond Debt $ 543,000 Bank of New York Bond Debt $ 525,000 Dean Witter Reynolds, Inc. Bond Debt $ 355,500 Lewco Securities Corp. Bond Debt $ 315,000 Paine Webber Inc. Bond Debt $ 294,000 FUND - Phila. Main Bond Debt $ 250,000 Mercantile Bank Bond Debt $ 250,000 US Bancorp Piper Bond Debt $ 229,000 USCC/FSI Bond Debt $ 163,000 PRIMARY HEALTH: Selling Part of Surgery Center To Doctors --------------------------------------------------------- According to Crain's Cleveland Business on February 7, 2000, Primary Health Systems Inc. is seeking court approval to sell a majority interest in the surgery center within its Beachwood medical campus to a Texas-based management firm. Under the agreement, Acumen Healthcare of Dallas would organize an unspecified number of local surgeons to operate and buy a controlling interest in the surgery center within the PHS Integrated Medical Campus on Cedar Road. A hearing on the agreement is set for Feb. 24 in U.S. Bankruptcy Court in Wilmington, Del. According to the article, PHS would spend $970,000 to make improvements to the surgery space, $960,000 on equipment and $250,000 in medical surgical supplies. In return, PHS would receive a 40% interest in the limited liability company that would own the surgery center. Surgeons that join the joint venture would hold a 55% interest in the limited liability company and Acumen would own the other 5%. The other parties in the deal would give PHS $230,000 in cash and $250,000 for medical and surgical supplies used in the joint venture. PHS owns PHS Mt. Sinai Medical Center in Cleveland, PHS Mt. Sinai East in Richmond Heights, PHS Deaconess Hospital in Cleveland's Old Brooklyn neighborhood and Saint Michael Hospital in Cleveland's Broadway neighborhood. SINGER USA: Case Summary ------------------------ Debtor: Singer USA, LLC. 915 Broadway, 18 Floor New York, NY 10017-7108 Petition Date: January 4, 2000 Chapter 11 District: S. Dist. of New York Judge: Burton R. Lifland Debtor's Counsel: John Wm. Butler, Jr. Skadden Arps Slate Meagher & Flom (IL) 333 West Wacker Drive Chicago, IL 60606-1285 (312) 407-0730 Fax: (312) 407-0411 Email: jbutler@skadden.com Timothy R. Pohl Skadden Arps Slate Meagher & Flom 333 West Wacker Suite 2100 Chicago, IL 60606 (312) 407-0772 Fax: (312) 407-0411 Email: tpohl@skadden.com Total Assets: 100 million plus (estimated) Total Debts: 100 million plus (estimated) T&W FINANCIAL: Announces Loss of Servicing ------------------------------------------ T&W Financial Corporation (Nasdaq:TWFC) announced that its operating subsidiary T&W Financial Services Company L.L.C. was terminated effective Feb. 8, 2000, as servicer on substantially all of its remaining portfolio of leases serviced, or about $450 million of leases serviced. The company also announced that Paul Luke and Kenneth McCarthy had resigned from the board of directors and from their positions as vice president/director of finance and vice president/general counsel, respectively. As previously announced, the company anticipates filing a petition in bankruptcy in the near future. TALON INC.: Moody's Lowers Ratings (Senior Subordinated To Caa2) ---------------------------------------------------------------- Moody's Investors Service lowered the rating of Talon Inc.'s $120 million 9.625% senior subordinated notes, due 2008, to Caa2 from B3 and lowered the rating of its Senior Unsecured Issuer Rating to Caa1 from B2. Talon's $100 million revolving credit facility rating has been lowered to B3 from Ba3. The senior implied rating has been lowered to B3 from B1. The outlook is stable. The downgrade in ratings reflects concerns regarding Talon's significant operating costs combined with increasingly high leverage and insufficient operating cash flow from operations to cover interest expense. Talon's capital expenditure requirements are high and during 2000 the company anticipates several new product launches. The company's financial performance was negatively affected during 1999 by several factors including: low scrap steel prices; the cost of product launches and the breakdown of a large press. (Since then $3.9 million in insurance has been collected.) Furthermore, Talon operates in a competitive and cyclical environment and is vulnerable to customer and platform concentration. (Daimler Chrylser comprises approximately 48% of Talon's total revenues and General Motors, 23%.) However, the ratings also consider Talon new business opportunities facilitated by its recent investments in new equipment and plant consolidation. The B3 rating on the $100 million revolving credit facility reflects the benefits and limitations of the collateral package. All Talon domestic subsidiaries are guarantors of the credit facility. Obligations under the facility are secured by a first priority lien on substantially all the assets of the company and its subsidiaries. As a result of financial covenant violations at September 30,1999 (which have been waived), the company is in the process of amending its credit agreement. As a consequence, borrowings are likely to be limited to an asset-based calculation. As of September 30, 1999, the company had $47 million outstanding. The Caa2 senior subordinated note rating reflects their contractual subordination to the company's senior debt including the secured credit facilities. The notes are guaranteed on a senior subordinated basis. As of September 30, 1999, Talon's debt is substantial at $166 million. The balance sheet is highly leveraged with debt-to-book- capitalization of 107% and debt-to-EBITDA of about 7.7 times. The company's tangible book equity is negative $70 million, due to a significant level of intangibles at 25% of total assets. Talon's operating cash flow is extremely weak with neither EBITA nor EBITDA-less-capital expenditures sufficient to cover interest expense. Talon's EBITA return on assets has also slipped to a low 5.6%. Talon's management expects profitability to improve as a result of the increased efficiencies and volume provided by the product launches, consolidation of certain facilities and the completion of new facilities. However, unless improvements become evident during 2000, downward pressure on the rating is likely to continue. Talon, headquartered in Troy, Michigan, is a designer and manufacturer of stamped metal components and assemblies used by North American automotive original equipment manufacturers. The company specializes in underbody/chassis and unexposed body structure assemblies. TULTEX: To Liquidate Assets and Go Out of Business -------------------------------------------------- Fleecewear maker Tultex Corp. plans to liquidate its assets and go out of business rather than try to reorganize and pay off its debts, according to a company attorney. Tultex is in the process of being split up and sold, after which it will close, the lawyer, Bruce Matson, said Wednesday. Faced with increasing losses, the company filed for Chapter 11 bankruptcy protection in December, with plans to restructure as a small clothing marketer and hiring other companies to make its products. Some 3,300 workers were laid off. Most of the company's remaining 650 workers likely will be let go soon under the change in plans, although it could take months or even years to complete the selloff. Tultex assets include a 1.1 million square-foot factory in Martinsville, a modern warehouse in Henry County and two out-of-state distribution companies. Judge William Anderson said he doubted Tultex can raise enough money to pay all 11,000 of its creditors, including at least 2,400 past and present employees hoping to collect Christmas bonus checks. Tultex, which began in Martinsville in 1937 as Sale Knitting Co., was until recently the fifth largest activewear manufacturer in the country. After a run of 60 profitable years, the company has lost money in recent years as competition in the industry grew. In January, Tultex ceased all manufacturing. BOND PRICING FOR WEEK OF February 7 =================================== DLS Capital Partners, Inc., bond pricing for week of February 7, 2000 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 18 - 20 (f) Ameriserve 8 7/8 '06 26 - 28 (f) Asia Pulp & Paper 11 3/4 '05 84 - 85 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 21 - 25 Geneva Steel 11 1/2 '01 17 - 18 Globalstar 11 1/4 '04 62 - 64 Hechinger 9.45 '12 6 - 9 Integrated Health 9 1/4 '08 6 - 8 (f) Iridium 14 '05 3 - 4 (f) Loewen 7.20 '03 48 - 50 (f) Paging Network 10 1/8 '07 62 - 64 (f) Pathmark 11 5/8 '02 25 - 28 Pillowtex 10 '06 45 - 49 Revlon 8 5/8 '08 40 - 42 Rite Aid 6.70 '01 81 - 83 Service Merchandise 9 '04 12 - 13 (f) Sunbeam 0 '18 14 - 15 TWA 11 3/8 '06 36 - 39 United Artist 9 3/4 '08 5 - 7 Vencor 9 7/8 '08 18 - 20 ********* 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. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *