/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000215.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, February 15, 2000, Vol. 4, No. 32 Headlines ACE BAKING CO: Ice Cream Shops Worry About Cone Shortage ACME METALS: Objection of Committee To Exclusivity Extension AMERISERVE: Rittenmeyer Named President and CEO BRADLEE'S: One Year After Bankruptcy BUSH LEASING: Hearing On Motion For Employee Severance Plan CONE MILL CORP.: Moody's Downgrades Ratings COSTILLA ENERGY: Costilla Energy Submits Proposed Plan DYLAN MORTGAGE: Can No Longer Make Loans EMBASSY INVESTMENTS: Case Summary & Largest Unsecured Creditor GENEVA STEEL: Geneva Steel Announces First Quarter 2000 Results HECHINGER: Klaff Realty Acquires Hechinger Property Portfolio INCOMNET: Notice of Hearing on Disclosure Statement JITNEY JUNGLE: Jitney Jungle Announces Store Closings JUST FOR FEET: Court Approves Emergency Motion MARVEL ENTERTAINMEN: Judge Dismisses Suit Against Perelman NAGASAKIYA: Japanese Retailer Seeks Bankruptcy Protection SABRATEK CORP: Committee Taps Zolfo, Cooper SAFELITE GLASS: Moody's Lowers Ratings SHARPE: Sharpe Files Final Proposed Reorganization Plan SHOE CORPORATION: J. Baker Signs to Acquire Assets THAI PETROCHEMICAL: Thai Court Delays Ruling on TPI Debt Plan WSR CORP: Seeks Authorization of Sale of Certain Assets Meetings, Conferences and Seminars ********* ACE BAKING CO: Ice Cream Shops Worry About Cone Shortage -------------------------------------------------------- Because Ace Baking Co. filed for chapter 11 in December and halted production, many ice cream shops are concerned about a shortage of cones this summer, according to the Associated Press. Ace, based in Green Bay, Wis., made 1.3 billion ice cream cones last year--more than half of those were produced in the United States. Ace Baking CFO Jim Lepore said that he believes the company's assets will be sold at a bankruptcy auction later this month and that production would resume, thus averting a cone shortage. Competitor Joy Cone Co., Hermitage, Pa., however, expects a shortage anyway, however. Joy President and CEO Joe George said, "You can count on there being a cone shortage this summer." A Baskin-Robbins owner in a suburb of Milwaukee said she already has run out of waffle cones and was making her own. Ace bankruptcy attorney Peter Blain of Reinhart, Boerner et al., Milwaukee, said that consumers may pay more for cones because Ace's financial problems may drive up the cost of cones. He also said that more than 20 companies are interested in a Feb. 29 auction of Ace Baking's assets, and that he expects there will be "sufficient cone production to meet summer demand." National chains such as Baskin-Robbins, Dairy Queen and McDonald's all use Ace's Eat-it-All brand cones, made at plants in Chicago, Atlanta and Dallas. Ace Baking has more than $5 million worth of cones on inventory in various warehouse. It listed liabilities of about $40 million when it filed chapter 11. (ABI 14-Feb-00) ACME METALS: Objection of Committee To Exclusivity Extension ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Alpha Tube Corporation submits an objection to the motion of Alpha Tube Corporation to extend for a fifth time the exclusive periods during which Alpha Tube alone may file a plan of reorganization and seek acceptances. The Committee complains that approximately 250 claimants hold nearly $7 million in unsecured claims against Alpha Tube, an operationally solvent debtor. No plan has been proposed to deal with their claims. The Committee alleges that Alpha Tube has been a debtor for over 16 months, and should have been working on a reorganization plan long before the court's ruling on January 20 that general creditors should await a plan for their payment while assets are used to benefit other claims of creditors. From the Alpha committee's perspective, it is mysterious that Acme Metals and Alpha Tube have not simply confirmed that they will offer payment in full to Alpha tube's creditors if that is truly what they intend. The Committee objects to the continuing abuse of the cash resources of Alpha tube and the imprudent business practice of advancing unsecured loans of over $12 million to affiliates of Acme Metals to benefit creditors of Acme Metals who hold "disputed, fanciful or contingent claims" in the Alpha Tube case. Finally, the Committee states that Alpha Tube has neither negotiated with the Alpha committee nor proposed a plan to the committee. While Acme Metals ahs developed term sheets and reached agreements with its creditors on reorganization planning, the Alpha tube creditors have watched their company transfer more and more cash to its affiliates. The financial condition of Alpha Tube has weakened since the Case was commenced. The Committee concludes that the court should deny the extension of exclusivity. AMERISERVE: Rittenmeyer Named President and CEO ----------------------------------------------- AmeriServe Food Distribution, Inc. today announced the appointment of Ronald A. Rittenmeyer as President and Chief Executive Officer and a member of the Board of Directors. He will be responsible for reorganizing the restaurant-chain foodservice distributor, which is operating under Chapter 11 of the Federal Bankruptcy Code. Rittenmeyer's appointment is subject to approval of the U.S. Bankruptcy Court in Wilmington, Delaware. He will report to the Board of Directors of AmeriServe. Rittenmeyer, 52, has extensive senior management experience in numerous industries. He joins AmeriServe following the successful merger earlier this month of RailAmerica, Inc. and RailTex, Inc., the world's largest shortline railroad holding company, where he was Chairman, President and CEO. Prior to RailTex, Rittenmeyer was President and Chief Operating Officer of Ryder TRS, Inc., the nation's second largest truck rental company, which was acquired by Budget Group, Inc. in 1998. He was also a principal of Jay Alix & Associates, a turnaround consulting firm. AmeriServe filed a voluntary petition under Chapter 11 of the Federal Bankruptcy Code on January 31. The Company is continuing operations under Chapter 11 and has received interim financing from its two largest customers, Tricon Global Restaurants, Inc. and Burger King Corporation. AmeriServe, headquartered in Addison, Texas, a suburb of Dallas, is the nation's largest distributor specializing in chain restaurants, serving leading quick service systems such as Arby's, Burger King, Chick-fil-A, Dairy Queen, KFC, Long John Silver's, Pizza Hut and Taco Bell. BRADLEE'S: One Year After Bankruptcy ------------------------------------ The Providence Journal reported on February 13, 2000, that one year after emerging from bankruptcy protection, Bradlees is experiencing an 11.8 percent jump is sales to $ 1.545 billion. And the Northeast discount chain, which eliminated 6,000 jobs and closed 33 stores while in bankruptcy, is opening new ones, remodeling old ones and hiring employees. With 104 stores in 7 Northeast states and 10,000 employees, Bradlees is three-fourths the size of what it was before filing for Chapter 11 bankruptcy protection five years ago. "We've had a tremendous year," Bradlees' chairman and chief executive Peter Thorner said, during an interview at Bradlees' corporate headquarters in Braintree, Mass. One year ago, on Feb. 2, 1999, Bradlees emerged from its June 23, 1995 Chapter 11 filing, a victory Thorner commemorates by handing visitors Swiss Army knives engraved with the chain's Chapter 11 dates. CEO Thorner convinced creditors not to liquidate the company, and implemented a bold rescue plan. He closed unprofitable stores; eliminated $ 185 million in overhead costs; and changed advertising and merchandising to "woo customers back." According to the report, it seems to have worked. Backed by a $ 270-million loan from the former BankBoston (now FleetBoston Financial) to finance operations, Bradlees has repositioned itself as a viable player in the discount chain business in the Northeast. By 2002, it expects total sales of $ 2 billion and net income of $ 20 million to $ 25 million. Despite the improvement of Bradlees' financial picture, the stock (BRAD:NASDAQ), which peaked at about $ 21 last summer, has been at about $ 8 a share. BUSH LEASING: Hearing On Motion For Employee Severance Plan ----------------------------------------------------------- An expedited hearing before Judge Thomas F. Waldron for an order authorizing implementation of an employee severance plan has been scheduled for Thursday, February 17, 2000 at 9:00 AM at the US Bankruptcy Court for the Southern District of Ohio, Western Division, 120 West Third Street, 2nd Floor, Dayton, Ohio 45402. The motion seeks an order of the court authorizing the debtor to implement an employee severance plan. The debtor has also lost many of its key employees, and according to the debtor, loss of any more would be devastating to the debtor's reorganization, including its efforts to sell its lease portfolio. The debtor's ability to service the portfolio as a going concern is critical to the value of that portfolio, the protection of the secured lender's collateral, and the reorganization prospects upon which recov3ery by unsecured creditors hinges. The employee severance agreement covers 150 key employees, and provides a commitment of continuous employment through July 1, 20001. If the debtor terminates the employee prior tot hat time,(other than for cause), the employee would receive severance pay equal to three months' salary at today's salary level. The cost of the agreement if paid in full would be approximately $1.7 million. CONE MILL CORP.: Moody's Downgrades Ratings ------------------------------------------- Moody's Investor's Service downgraded to Caa1, Cone Mill Corporation's B1 rated $80 million, senior secured revolving credit facility due 2000, and to Caa1 from B1, its $100 million issue of 8.125% senior secured notes due 2005. The senior implied rating was lowed to Caa1 from B1and the senior unsecured issuer rating was lowered to Caa2 from B1. This action concludes a review for downgrade initiated in August 1999. The outlook on the ratings is negative. The downgrade reflects the continued losses in Cone's primary businesses, with no near term recovery expected by Moody's, which compounds the company's existing refinancing risk of the bank facility which matures this year. Moody's continues to expect asset writedowns given the low 0.4% EBITA return on assets, continued worldwide overcapacity in denim, negative pressure on denim volume and pricing, and a mature market for khakis. While the company exceeded its planned operational savings, the company still posted its second consecutive year-end EBIT loss. Cone Mills Corporation, headquartered in Greensboro, North Carolina, is the largest producer of denim fabrics in the world and the largest commission printer of home furnishing fabrics in North America. COSTILLA ENERGY: Costilla Energy Submits Proposed Plan ------------------------------------------------------ Costilla Energy, Inc. (OTC Bulletin Board: COSEQ) today reported that it has filed a proposed plan of reorganization with the U.S. Bankruptcy Court for the Western District of Texas, Midland Division, in accordance with Chapter 11 of the United States Bankruptcy Code. The reorganization plan, which is subject to approval by the Bankruptcy Court, sets forth the means for addressing claims and interests in the Company. Under the proposed plan, Costilla's existing common and preferred stock will be cancelled and will receive no distributions. Holders of the Company's $180 million of 10 1/4% Senior Notes due 2006, and other unsecured creditors will receive New Common Stock representing 100% ownership of the reorganized company. The Company's bank credit facility will be treated as a secured claim which may be satisfied by either refinancing provided by other parties or a renewal note with the existing bank group. Any allowed claim related to the Company's commodity hedging contracts will be treated as a secured claim that may be paid either by refinancing provided by other parties or through the issuance of a renewal note by the claimant. Consummation of the proposed plan of reorganization will require approval of the U.S. Bankruptcy Court. There are no assurances that the Company's plan of reorganization will be approved or when the effective date of a plan will be set. The Company intends to file a disclosure statement relating to the plan of reorganization on or before February 29, 2000. Costilla Energy, Inc. is an independent oil and gas company with operations primarily in the Gulf Coast region of South Texas and the Permian Basin of West Texas and Southeastern New Mexico. DYLAN MORTGAGE: Can No Longer Make Loans ---------------------------------------- The Morning Star (Wilmington, NC) reports on February 11, 2000, that Dylan Mortgage Co. can no longer make loans. Its registration has been revoked by the state banking commissioner, meaning the Wilmington-based mortgage broker is prohibited from making loans in North Carolina. The action capped an investigation by the state Attorney General's office that found Dylan routinely charged customers loan fees totaling up to 10 percent of the loan amount and often added large "balloon payments" due at the end of a loan period. Attorney General Mike Easley's office said in a release issued late Thursday that its investigation also indicated "gross financial mismanagement" by Dylan and its owner and president, Clarence "Chuck" Caviness. The probe found that Dylan: * Delayed closing hundreds of mortgage loans because it had defaulted on its lines of credit. * Failed to pay appraisers even after it collected money from consumers for the appraisals. * Failed to pay employees on time and bounced payroll checks on several occasions. * Failed to pay payroll taxes, and kept money deducted from employees' paychecks for medical coverage. The office accused Mr. Caviness of recommending overcharges for appraisals. It also found that he filed a false statement on his mortgage broker application to the state of South Carolina by failing to reveal prior felony drug convictions in North Carolina. At one time, Dylan had six loan offices in North Carolina and originated more than 5,000 home loans, the Attorney General's Office said. The company, formerly known as Chase Mortgage, also operated in neighboring states. It filed for Chapter 11 bankruptcy protection last September, listing nearly 400 creditors. The Attorney General's Office began investigating Dylan last spring in response to complaints by consumers. In May, Dylan laid off many of its employees in Wilmington, and they were unable to cash their paychecks. Several said later than they were eventually able to cash the checks. EMBASSY INVESTMENTS: Case Summary & Largest Unsecured Creditor -------------------------------------------------------------- Debtor: Embassy Investments LLC 734 Arrowhead Trail Henderson, NV 89015 Type of Business: Land development Petition Date: February 8, 2000 Chapter 11 Court: District of Nevada Judge: Linda B. Riegle Debtor's Counsel: William M. Noall, Esq. Nevada Bar No. 3549 Gordon & Silver, Ltd. 3960 Howard Hughes Parkway Ninth Floor Las Vegas, Nevada 89109 (702)796-5555 Total Assets: $ 1,400,000 Total Debts: $ 1,025,000 Largest Unsecured Creditor Las Plumas Lumber & Truss Co. $ 50,000 GENEVA STEEL: Geneva Steel Announces First Quarter 2000 Results --------------------------------------------------------------- Geneva Steel reported today net income of $1.8 million, or income of $.09 per dilutive common share, for the fiscal quarter ended December 31, 1999. This compares with a net loss of $49.8 million, or a loss of $3.30 per dilutive common share (after accounting for dividends on preferred stock), for the same period last year. The operating loss for the first fiscal quarter was $4.0 million, compared with an operating loss of $39.2 million during the same period last year. The net income for the three months ended December 31, 1999 included a gain of $8.3 million on asset sales. In addition, net income for the three months ended December 31, 1999 included expenses of $1.1 million for professional fees relating to the Company's Chapter 11 proceeding. Sales and tons shipped during the quarter were $126.2 million and 443,700 tons, respectively, compared with sales and tons shipped of $78.7 million and 255,700 tons, respectively, for the same period last year. As of February 1, 1999 (the date of the Company's Chapter 11 filing), the Company discontinued accruing interest on its senior notes and dividends on its redeemable preferred stock. Contractual interest on the senior notes for the first fiscal quarter of 2000 was $8.3 million, which is not included in the Company's financial statements. Contractual dividends on the redeemable preferred stock for the first quarter of 2000 were $3.3 million, which is also not included in the Company's financial statements. As of December 31, 1999, accrued dividends on the redeemable preferred stock were approximately $40.2 million, which is $11.7 million in excess of dividends accrued in the Company's balance sheet. Recent Operating Results: Concurrent with increased demand for coiled products, the weighted average sales price per ton of sheet and slab products increased by approximately 3.6% and 18.6%, respectively, during the first fiscal quarter of 2000, while the weighted average sales price per ton of plate and pipe products decreased by approximately 12.4% and 2.1%, respectively, as compared to the first fiscal quarter last year. As a result of various trade cases, as well as improving market conditions in several foreign economies, market conditions for the Company's products continue to improve. Both the Company's order entry and price realization have improved significantly in recent months. Similarly, overall price realization has increased despite a product mix shift to lower-priced sheet. The timing and magnitude of the recent volume and pricing improvements are generally consistent with initial market recoveries following the success of previously-filed trade cases. In response to improving market conditions, the Company started a second blast furnace in September 1999 and is currently operating near full capacity. The Company expects in the near term that both volume and pricing will continue to improve gradually. There can, however, be no assurance that market conditions will continue to justify a full, two-blast furnace operation or that pricing and order volumes will not decline. The Company's operating costs per ton for the three months ended December 31, 1999 decreased as compared to the same quarter last year. The overall average cost of sales per ton shipped decreased primarily as a result of production efficiencies associated with returning to a two-blast furnace operating level, reduced labor costs and favorable costs of certain raw materials. Operating costs per ton decreased as production volume increased in part because fixed costs were allocated over more tons. Liquidity: As of February 10, 2000, the Company's eligible inventories, accounts receivable and equipment supported access to $55.0 million in borrowings under the Company's credit facility. As of February 10, 2000, the Company had $14.5 million available under the credit facility, with $38.1 million in borrowings and $2.4 million in letters of credit outstanding. The Company's operations generated positive cash flow in each month since the beginning of fiscal year 2000. A reversal in the current market trend or a disruption in the Company's operations would, however, likely cause the Company to return to negative cash flow. The Company is currently developing a plan of reorganization (the "Plan of Reorganization") through, among other things, discussions with the official creditor committees established in the Chapter 11 proceeding. The objective of the Plan of Reorganization is to restructure the Company's balance sheet to (i) significantly strengthen the Company's financial flexibility throughout the business cycle, (ii) fund required capital expenditures and working capital needs, and (iii) fulfill those obligations necessary to facilitate emergence from Chapter 11. In conjunction with formulating the Plan of Reorganization, the Company, with its lender, filed an application on January 31, 2000 for a government loan guarantee under the Emergency Steel Loan Guarantee Program (the "Loan Guarantee Program"). The application seeks a government loan guarantee for $110 million, which is a portion of the financing required to consummate the Plan of Reorganization. The Plan of Reorganization will likely contemplate that the Company will also establish of a revolving credit facility as well as receive an equity infusion. There can be no assurance that the Company's application under the Loan Guarantee Program will be accepted or that, with or without a guarantee, the Company can obtain the necessary financing to consummate the Plan of Reorganization. Although management expects to file the Plan of Reorganization, there can be no assurance at this time that a Plan of Reorganization will be proposed by the Company, approved or confirmed by the Bankruptcy Court, or that such plan will be consummated. The Bankruptcy Court has granted the Company's request to extend its exclusive right to file a Plan of Reorganization through February 28, 2000. While the Company has requested a further extension of the exclusivity period through May 30, 2000, there can be no assurance that the Bankruptcy Court will grant such extension. If the exclusivity period were to expire or be terminated, other interested parties, such as creditors of the Company, would have the right to propose alternative plans of reorganization. A plan of reorganization could materially change certain amounts currently disclosed in the financial statements. The statements do not present the amount which may ultimately be paid to settle liabilities and contingencies which may be allowed in the Chapter 11 bankruptcy case. Under Chapter 11 bankruptcy, the rights of, and ultimate payment by the Company to, pre-petition creditors may be substantially altered. This could result in claims being paid in the Chapter 11 bankruptcy proceedings at substantially less than 100 percent of their face value. At this time, because of material uncertainties, pre-petition claims are generally carried at their face value in the Company's financial statements. Moreover, the interests of existing preferred and common shareholders could, among other things, be eliminated. Management expects that a Plan of Reorganization will be completed and ready to file with the Bankruptcy Court during early 2000. The Plan of Reorganization will be premised on the Company being approved for a loan guarantee under the Loan Guarantee Program, and the Company may not file its Plan of Reorganization until a decision on the loan guarantee has been announced. There can be no assurance as to the actual timing for the filing of the Plan of Reorganization or the approval thereof by the Bankruptcy Court, if at all. Geneva Steel is an integrated steel mill operating in Vineyard, Utah. The Company manufactures steel plate, hot-rolled coil, pipe and slabs for sale primarily in the Western and Central United States. HECHINGER: Klaff Realty Acquires Hechinger Property Portfolio ------------------------------------------------------------- Klaff Realty, LP, has announced the acquisition of a Hechinger Company real estate portfolio. The 11-property portfolio, which Klaff purchased with joint venture partner Philadelphia, Pa.- based Lubert-Adler Funds, was acquired for $ 5.9 million at a bankruptcy auction. Seven of the properties comprised lease-hold interests, many of which Hechinger's had subleased to other retailers. Four of the 11 properties are fee-owned, vacant land sites ready for development. "Our goal is to further the retail evolution to create value in diverse retail markets," said Hersch Klaff, president of Chicago, Ill.-based Klaff Realty, LP. "In many cases, we will reposition, redevelop and/or re-tenant properties that we acquire." Hechinger Company, headquartered in Largo, Md., was a do-it- yourself home improvement chain with locations in the Northeast, South and Midwest, and its core market in the mid-Atlantic. The properties were available for sale as a result of Hechinger's total liquidation of all its operations including Home Quarters stores, Hechinger stores and the Builders Square chain. The seven lease-hold interests that Klaff acquired totaled 401,816 square feet. The retail and office properties are located in Virginia Beach and Norfolk, Va.; Allentown and York, Pa.; and Greensboro, N.C. The vacant land sites comprise 41.2 acres and are located in Memphis, Tenn.; Baltimore, Md.; Richmond, Va.; and Johnstown, Pa. A leader in identifying underutilized retail locations, Klaff Realty, LP, has been involved in the successful redevelopment and repositioning of retail properties throughout the country. The following are the properties in the portfolio of Hechinger sites that Klaff Realty LP acquired in 2000. 4485 Virginia Beach Boulevard Virginia Beach, VA 59,815 sf 211 East Little Creek Road Norfolk, VA 6,900 sf 1200 N. Military Highway Norfolk, VA 60,000 sf 2864 Virginia Beach Boulevard Virginia Beach, VA 103,161 sf 3703 Farmington Road Greensboro, NC 65,340 sf 4750 W. Tilghman Street Allentown, PA 58,600 sf Route 30 & Kenneth Road York, PA 48,000 sf 4875 Stage Road Memphis, TN 10 acres 7005 Security Boulevard Baltimore, MD 0.6 acres 4101 Mechanicsville Turnpike Richmond, VA 10.4 acres 640 Galleria Drive Johnstown, PA 11.2 acres INCOMNET: Notice of Hearing on Disclosure Statement --------------------------------------------------- A hearing with respect to the adequacy of disclosure with respect to the original Disclosure Statement describing the joint Chapter 11 plan of reorganization of Incomnet Inc, Incomnet Communications Corporation f/k/a National Telephone & Communications Inc. will take place on March 14, 2000 at 9:30 AM, Courtroom 5A, 411 West 4th Street, Santa Ana, California. JITNEY JUNGLE: Jitney Jungle Announces Store Closings ----------------------------------------------------- Jitney Jungle Stores of America, Inc. announced the closing of the following 10 stores on Saturday February 12th, 312 Schillinger Road Mobile, AL., 4725 Moffat Road Mobile, AL., 1113 College Street Jackson, AL., 220 South Industrial Road Tupelo, MS., 393 West Espanade Ave. Kenner, LA., 3100 U.S. Highway 90 Luling, LA., 2703 Belle Chasse Highway Gretna, LA., 3640 MacArthur Blvd. New Orleans, LA., 3810 Judge Perez Drive Meraux, LA., and 2869 Gulf Breeze Highway Gulf Breeze, FL. These closings are part of the as many as 50 store closings to come as a result of the company's October 12, 1999 Chapter 11 filing for protection from its creditors in U.S. Bankruptcy Court. Ron Johnson President and Chief Executive Officer of Jitney Jungle Stores of America said, "JJSA, Inc. has an 80 year history of successful operations in its core markets. Our objective is to use the reorganization process on a fast track basis to create a more manageable capital structure and strengthen our business operations. We are confident that by either through sales or closing a group of underperforming stores and streamlining operations JJSA, Inc. can significantly enhance its profitability." Each store employed about 50 associates, all of whom were offered jobs at other stores within the chain where openings were available. Johnson also said that these store closings are part of the ongoing process of completing our transition into a somewhat smaller, but stronger company. "Our plans are to emerge from bankruptcy by the end of the year without debt and with a financial structure in place that should enable this company to move forward for the next 80 years," Johnson said. Jitney Jungle Stores of America, Inc. currently operates 178 grocery stores, 55 gas stations and 10 liquor stores located throughout Mississippi, Alabama and Louisiana and in Tennessee, Florida and Arkansas. JUST FOR FEET: Court Approves Emergency Motion ---------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an order granting the emergency motion of the debtors for an order approving procedures for proposed auction sales of substantially all of the debtors' assets. The auction shall be held on Febr4uary 15, 2000 at 4:00 PM, at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY. MARVEL ENTERTAINMEN: Judge Dismisses Suit Against Perelman ---------------------------------------------------------- U.S. District Court Judge Roderick McKelvie (D. Del.) last week dismissed a lawsuit and a potential $550 million claim against financier Ronald Perelman brought by LaSalle National Bank, the trustee for noteholders of Marvel Holdings companies, according to the Associated Press. At issue was LaSalle's allegation that Perelman, through his Marvel Holdings and other related entities, acted improperly when he issued $550 million in dividends to the parent companies of Marvel Entertainment Group Inc. with money from three bond sales. In a 34-page ruling last week, Judge McKelvie said that noteholders, led by investor Carl Icahn, "were warned that the notes were a high-risk investment. Accordingly [they] cannot complain because the potential risk that they were warned of materialized. The court finds that the officers and directors of Marvel Holding Cos. did not owe fiduciary duties to the noteholders when they paid the dividends" or that they breached their duties in actions taken during the subsequent chapter 11 case. Perelman took Marvel Entertainment into chapter 11 in December 1996, hoping, along with his secured lenders, to restructure and emerge in three months, but bondholders, led by Icahn, gained control of Marvel Holding Co. and began a protracted legal battles that continued until July 1998. Judge McKelvie then approved a reorganization plan in which Marvel Entertainment would merge with Toy Biz Inc. (ABI 14-Feb-00) NAGASAKIYA: Japanese Retailer Seeks Bankruptcy Protection --------------------------------------------------------- Japanese supermarket operator Nagasakiya Co. filed for bankruptcy protection on Sunday with the Tokyo District Court, according to the Associated Press. Established in January 1948, the company had been in the process of restructuring. The nationwide retailer, which employs about 2,600 workers, plans to continue operating its 95 stores. SABRATEK CORP: Committee Taps Zolfo, Cooper ------------------------------------------- The Statutory committee of Unsecured Creditors of Sabratek Corporation seeks to employ and retain Zolfo Cooper, LLC nunc pro tunc as of January 7, 2000 as bankruptcy consultants and special financial advisors. SAFELITE GLASS: Moody's Lowers Ratings -------------------------------------- Moody's Investors Service lowered the rating of Safelite Glass Corporation's $155 million of senior subordinated notes, due 2006, to Ca from B3 and lowered the ratings of its Senior Unsecured Issuer Rating to Ca from B2. Ratings on Safelite's $450 million of secured credit facilities have been lowered to Caa1 from B1. The senior implied rating has been lowered to Caa1 from B1. The outlook is negative. The downgrades and negative outlook reflect our expectation for recovery value of the debt based on Safelite's deteriorating financial performance as a result of the increasing pressure on price combined with low demand; the expectation of substantially lower cash flow going forward, and consequent decrease in liquidity as the year proceeds. In addition, Moody's expects that the company will need to undertake a comprehensive debt restructuring. As of 10/2/99 the company's debt was substantial at $477 million. As a part of the company's restructuring, management is examining several alternatives with its bank group and shareholders, including Belron International and Thomas H. Lee Company. Though this industry leader is still earning meaningful returns on tangible assets, these returns are not sufficient to support the level of debt incurred in the buy out and subsequent acquisition. Moody's considers the company's current valuation to be materially less than the company's outstanding obligations. Safelite Glass Corporation, headquartered in Columbus, Ohio, is the largest provider of automotive glass and repair services in the United States. SHARPE: Sharpe Files Final Proposed Reorganization Plan ------------------------------------------------------- Sharpe Resources Corporation's (ME:SHO.)(OTCBB:SHGPF) wholly owned subsidiary Sharpe Energy Company (SEC) announced today that on February 9, 2000, the Company filed with the U.S. District Bankruptcy Court of the Southern District of Texas a final proposed plan of reorganization in accordance with federal bankruptcy laws. The plan of reorganization sets forth the means for satisfying claims, including liabilities subject to compromise and subsequent adjustments to the plan. In general the plan provides for the following: Secured bank debt of $2.4 million will be paid in full on the closing date. The agreed to secured vendor lien claims will accept a cash payment of $0.45 as full payment of their claims. Alternatively, one of the sub-classes of secured claimants will have the option to be paid in full over 6 years at 9% interest. The first payment would commence 18 months after the closing date. The unsecured vendor claims will accept a $0.10 cash payment 120 days after closing. At that time the balance of the claim is to be converted to Sharpe Resources Corporation Preferred Class A stock which is subject to regulatory approval. The Preferred Class A stock will pay a quarterly stock dividend of 4% per annum. Additionally, the Preferred Class A stock may be redeemed by the Company, all or in part, at a discount based upon the time of issuance, i.e., from 0-15 months the preferred can be redeemed for 35% of the remaining value, from 16-24 months the redemption is 40% of the remaining value, from 25-36 months the redemption is 60% of the remaining value and thereafter at 100% of the remaining value plus interest. Sharpe Resources Corporation has negotiated a US $2.3 million private placement financing. Schwartz Investments Corporation and Palos Capital Corporation of Montreal, Quebec have agreed to complete a US $2.3 million debenture financing subject to a due diligence evaluation, US Bankruptcy Court and regulatory approvals. The term of the debenture is five years and a 12 % fixed interest rate coupon with quarterly interest and principal payments which includes 2.3 million in warrants exercisable for three years at $C0.25 per warrant. The consummation of the final proposed plan of reorganization will require bankruptcy court approval and is expected to be voted on by the Company's creditors and shareholders entitled to vote. At this time, no assurances can be given that the plan of reorganization submitted by the Company will be approved or when the effective date of the plan will be set; however, at the present time, the Company anticipates that a hearing to consider its plan will be scheduled by mid-February, 2000. SHOE CORPORATION: J. Baker Signs to Acquire Assets -------------------------------------------------- J. Baker, Inc. (NASDAQ:JBAK) announced today that it has signed an agreement to acquire the ongoing assets of the Shoe Corporation of America, Inc. ("SCOA"). As part of this transaction, J. Baker will acquire the rights to operate approximately 205 licensed footwear departments in department and specialty stores nationwide. J. Baker management anticipates that this business will account for approximately $60.0 million in annualized revenue, and that the transaction will be accretive to earnings in the current fiscal year. Under the terms of the agreement, SCOA will assist J. Baker in operating the business for a transition period of up to six months following the closing, which is anticipated to occur in early March. Besides customary and usual closing conditions, the consummation of the transaction is contingent upon SCOA, which filed a voluntary bankruptcy petition in June 1999, obtaining the approval of the United States Bankruptcy Court for the Southern District of Ohio. The consummation of the transaction is also conditioned upon the parties obtaining certain approvals from key licensors. Alan I. Weinstein, President and Chief Executive Officer, commented, "The acquisition of SCOA's 205 licensed footwear departments affords J. Baker the opportunity to expand our leadership position in the fragmented licensed footwear market by adding several very desirable department and specialty stores. We believe we will improve the merchandise offerings and profitability of these operations by leveraging our infrastructure, human talent and considerable experience, developed over our 50 year history in the footwear business and through our operation of greater than 750 self-serve departments." Mr. Weinstein concluded, "Looking ahead, we believe that opportunities exist to further our leadership position in areas in which we have an established core competency, and we will continue to seek increased market share in the footwear, big and tall and health and workwear businesses." J. Baker, Inc. is a leading specialty retailer of apparel and footwear. Along with 859 self-service licensed footwear departments in discount department stores nationwide, the Company operates 445 Casual Male Big & Tall stores, 135 Repp Big & Tall stores and the Repp By Mail catalog, which specialize in casual and dress clothing and footwear for the big and tall man; and the Work 'n Gear chain, comprised of 65 utility workwear, healthcare apparel and custom uniform stores. THAI PETROCHEMICAL: Thai Court Delays Ruling on TPI Debt Plan ------------------------------------------------------------- Thailand's Central Bankruptcy Court has delayed ruling on a petition filed by creditors of Thai Petrochemical Industry PLC (TPI) to take over management of the firm, the country's largest debt defaulter, according to Reuters. Five major creditors had filed a petition to the court to nominate a different executor for the company's $3.4 billion debt restructuring. If the court agrees, the new executor would replace TPI's CEO, who was appointed in January after an agreement between TPI and creditors. Analysts have said that further delay of the debt plan dispute could hurt TPI's liquidity position and impede the pace of debt restructuring at TPI's largest creditor bank, Bangkok Bank. WSR CORP: Seeks Authorization of Sale of Certain Assets ------------------------------------------------------- The debtors, WSR Corporation, R&S/Strauss, Inc., National Automotive Stores, Inc. and National Auto Stores Corp. seek court authority to sell certain assets of Strauss. The debtors and the Committee retained Conway, Del Genio, Gries & Co. LLC to provide a variety of investment banking services. Based on an evaluation of interest in the sale of the debtor's assets, the debtors and the Committee concluded that a sale of the assets as a going concern would result in the debtors' creditors receiving more value than that which would be realized in a piecemeal liquidation of assets. They also determined that it is in the best interest of the debtors and their creditors to sell the assets prior to confirmation of a plan of reorganization. The purchaser is Strauss Discount Auto, LLC and the seller is R&S/Strauss, Inc. The proposed purchase price is $15,030,710. Any other qualified bidders must submit a written offer by February 24, 2000. The cash portion of any offer must exceed the cash portion of the purchase price by $500,l000. An auction will be conducted on February 29, 2000 at 10:00 AM at the offices of the debtors' counsel, Young Conaway Stargatt & Taylor LLP. Meetings, Conferences and Seminars ---------------------------------- February 17, 2000 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Lending to Distressed Businesses In & Out of Bankruptcy Conference Charlotte Hilton & Towers, Charlotte, North Carolina Contact: 1-541-858-1665 or aira@ccountry.net February 24-26, 2000 ALI-ABA Chapter 11 Business Reorganizations Walt Disney World, Orland, Florida Contact: 1-800-CLE-NEWS February 27-March 1, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute I Olympic Park Hotel, Park City, Utah Contact: 1-770-535-7722 March 2-5, 2000 COMMERICAL LAW LEAGUE OF AMERICA 1st Annual Winter Conference Radisson Resort Hotel, Scottsdale, Arizona Contact: 1-561-241-7301 or 1-213-487-7550 March 8-10, 2000 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. Healthcare Restructurings: Successful Strategies for Managing Distressed Finances The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com March 10, 2000 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza Hotel. Los Angeles, California Contact: 1-703-739-0800 March 10 & 11, 2000 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Spring Seminar Hotel Monteleone, New Orleans, Louisiana Contact: 1-803-252-5646 or info@nabt.com March 23-25, 2000 SOUTHEASTERN BANKRUPTCY LAW INSTITUTE, INC. 26th Annual Southeastern Bankruptcy Law Institute Marriott Marquis Hotel, Atlanta, Georgia Contact: 1-770-451-4448 March 23-25, 2000 ALI-ABA Partnerships, LLCs, and LLPs -- Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Doubletree Paradise Valley Hotel, Scottsdale, Arizona Contact: 1-800-CLE-NEWS March 30-April 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute II Flamingo Hilton Hotel, Las Vegas, Nevada Contact: 1-770-535-7722 April 3-4, 2000 PRACTISING LAW INSTITUTE 22nd Annual Current Developments in Bankruptcy and Reorganization Conference PLI Conference Center, New York, New York Contact: 1-800-260-4PLI April 5-8, 2000 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference The Pointe Hilton Squaw Peak Resort Phoenix, Arizona Contact: 1-312-822-9700 or info@turnaround.org April 6-7, 2000 ALI-ABA Commercial Securitization for Real Estate Lawyers Walt Disney World, Orlando, Florida Contact: 1-800-CLE-NEWS April 10-11, 2000 PRACTISING LAW INSTITUTE 22nd Annual Current Developments in Bankruptcy and Reoorganization Conference Grand Hyatt Hotel, San Francisco, California Contact: 1-800-260-4PLI April 27-30, 2000 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 May 4-5, 2000 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com May 15, 2000 AMERICAN BANKRUPTCY INSTITUTE 2nd Annual New York City Bankruptcy Conference Association of the Bar of the City of New York, New York, New York Contact: 1-703-739-0800 May 26-29, 2000 COMMERCIAL LAW LEAGUE OF AMERICA 52nd Annual Meeting of the New England Region Colony Hotel, Kinnebunkport, Maine Contact: 1-617-742-1500 or richard@landayleblang.com June 8-11, 2000 AMERICAN BANKRUPTCY INSTITUTE 7th Annual Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 June 14-17, 2000 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 16th Annual Bankruptcy and Restructuring Conference Swissotel, Chicago, Illinois Contact: 1-541-858-1665 or aira@ccountry.net June 29-July 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 July 13-16, 2000 AMERICAN BANKRUPTCY INSTITUTE 7th Annual Northeast Bankruptcy Conference Doubletree Hotel, Newport, Rhode Island Contact: 1-703-739-0800 August 3-5, 2000 ALI-ABA Fundamentals of Bankruptcy Law Somewhere in Boston, Massachusetts Contact: 1-800-CLE-NEWS August 9-12, 2000 AMERICAN BANKRUPTCY INSTITUTE 5th Annual Southeast Bankruptcy Workshop Hyatt Regency, Hilton Head Island, South Carolina Contact: 1-703-739-0800 August 14-15, 2000 TURNAROUND MANAGEMENT ASSOCIATION Advanced Education Workshop Loewes Vanderbilt Plaza, Nashville, Tennessee Contact: 1-312-822-9700 or info@turnaround.org September 12-17, 2000 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Convention Doubletree Resort, Montery, California Contact: 1-803-252-5646 or info@nabt.com September 15-16, 2000 AMERICAN BANKRUPTCY INSTITUTE Views From the Bench 2000 Georgetown University Law Center, Washington, D.C. Contact: 1-703-739-0800 September 21-22, 2000 RENAISSANCE AMERICAN MANAGEMENT & BEARD GROUP, INC. 3rd Annual Conference on Corporate Reorganizations The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com September 21-23, 2000 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Emory University School of Law, Atlanta, Georgia Contact: 1-703-739-0800 September 21-24, 2000 AMERICAN BANKRUPTCY INSTITUTE 8th Annual Southwest Bankruptcy Conference The Four Seasons, Las Vegas, Nevada Contact: 1-703-739-0800 November 2-6, 2000 TURNAROUND MANAGEMENT ASSOCIATION Annual Conference Hyatt Regency, Baltimore, Maryland Contact: 312-822-9700 or info@turnaround.com November 30-December 2, 2000 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800 The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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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