/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000224.MBX T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 24, 2000, Vol. 4, No. 38 Headlines AGRIBIOTECH INC: 2nd-Quarter Results/De-Listing of Stock ALTIVA FINANCIAL: Annual Meeting Set For March 9 BEVERLY ENTERPRISES: Earns $.06 Per Share Diluted Before Charges BRIGHT NOW: Chronicle Communications Reports 1st Quarter Results BROTHERS GOURMET COFFEES: Court Enters Confirmation of Plan CORAM RESOURCE: Seeks Extension For Use of Cash Collateral COSTILLA ENERGY: Files Proposed Plan With Bankruptcy Court EUROWEB INTERNATIONAL: Sale of 51% of Shares of KPN Telecom GANTOS: Seeks To Extend Time To Assume/Reject Leases GLOBAL OCEAN: Case Summary GRAND UNION CO: Boston Partners Reports Holdings HOGIL PHARMACEUTICAL: To Set Last Day To File Proofs of Interest IPM PRODUCTS: Seeks Approval of Auction Procedures INTERACTIVE NETWORK: Joint Venture Company Formed JUDGE GROUP: Changes Name to JUDGE.com LAROCHE INDUSTRIES: Retains Chanin Capital Partners LOEWEN: Motion For Second Extension of Exclusivity MCDERMOTT: Moody's Places Ratings Under Review/Possible Downgrade ONEITA INDUSTRIES: Wachovia Reports Holdings PHILIP SERVICES: Seeks Extension of Time To Assume/Reject Leases PHYSICIANS RESOURCE GROUP: AmSurg Announces Purchase SERVICE MERCHANDISE: Cuts 4,800 More Jobs, Product Lines SERVICE MERCHANDISE: Seeks To Extend Time To Assume/Reject Leases SILICON GAMING: Increases Number of Authorized Shares TRANSTEXAS GAS: Rebuts High River's Motion For Stay TV FILME, INC: Files Voluntary Petition Under Chapter 11 UNIVERSAL SEISMIC: Disclosure Statement and Plan ********* AGRIBIOTECH INC: 2nd-Quarter Results/De-Listing of Stock -------------------------------------------------------- AgriBioTech Inc. (ABT) (Nasdaq:ABTXQ) today announced fiscal 2000 unaudited second-quarter results for the period ended Dec. 31, 1999. For the second quarter ended Dec. 31, 1999, AgriBioTech reported a net loss of $19.5 million, or 39 cents per share, on revenues totaling $52.0 million, compared with a net loss of $10.3 million, or 26 cents per share, on sales of $ 75.9 million in the same period last year. On an EBITDA basis (earnings before interest expense, income taxes, depreciation, amortization, restructuring and special charges and extraordinary items), the company reported a negative $13.4 million, compared with a negative $4.4 million in the second quarter a year ago. EBITDA is an important, cash-based measure of operating performance, particularly in companies engaged in significant industry consolidation through acquisitions and mergers. Net loss for the first six months of fiscal 2000 was $23.1 million, or 47 cents per share, on sales of $125.5 million, compared with a net loss of $9.9 million, or 25 cents per share, on sales of$165.5 million in the same period last year. EBITDA for the first six months of fiscal 2000 was a negative $11.9 million, compared with a positive $0.8 million for the same period last year. On Feb. 15, 2000, the Bankruptcy Court approved the appointment of William A. Brandt Jr. as the company's responsible person under Federal Rule of Bankruptcy Procedure 9001(5). As the responsible person, Brandt will be in complete control of the day-to-day operations. Although Brandt will not be an officer of the company, he will have all of the powers vested in the members of the board of directors and officers of ABT. To assist Brandt in fulfilling his duties as the responsible person, the court approved the company's retention of Development Specialists Inc. (DSI) as reorganization consultants. Brandt is a principal of DSI. Brandt and DSI maintain a Web site that provides a descriptive background on the firm, its principals and their experience. This Web site can be found at www.developmentspecialists.com. Further, following Brandt's appointment, all of the members of the company's board of directors and all of its officers have resigned. Brandt, together with DSI and ABT's other professionals, have determined that it is in the best interests of the company's estates to sell the assets in one or more going-concern sales as efficiently and expeditiously as possible, provided that sufficient financing for an orderly sale process exists. In that regard, the company is in the process of preparing a bid- solicitation package, which will be disseminated to all parties expressing interest in purchasing any of the company's assets. The company anticipates that the filing of the bankruptcy case, lack of liquidity and current absence of debtor-in-possession financing will have an immediate negative impact on the results of operations. Lower revenues and net losses are anticipated for the foreseeable future as a result of lack of adequate cash reserves to undertake certain activities (e.g., purchase of seed for blends and mixes, freight costs, quality testing, etc.) needed to move products to market during this critical shipping season. ABT is currently operating with funds supplied under interim arrangements with its prepetition secured lenders. This interim financing will expire on Feb. 25, 2000, at which time the company expects to enter into a debtor-in-possession loan agreement that is currently being negotiated with this same group of lenders. The company is confident that the new loan agreement will be completed and funded by the time the interim arrangements expire. The Nasdaq National Market has determined to delist the company's securities from the Nasdaq National Market effective with the close of business on Feb. 18, 2000. The company has chosen not to file an appeal. Because of the burden on the company's remaining management and other personnel resulting from the need to focus on reorganization-related matters, the company has requested a modification of reporting requirements from the Securities and Exchange Commission. AgriBioTech is a vertically integrated, full-service seed company specializing in the forage and turfgrass sector, complete with research and development of proprietary seed varieties, seed- processing plants, and a national and international distribution and sales network. ALTIVA FINANCIAL: Annual Meeting Set For March 9 ------------------------------------------------- Altiva Financial Corporation is inviting its stockholders to the annual meeting of the company to be held at 10:00 a.m., Eastern Standard Time, on Thursday, March 9, 2000 at the offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303. The matters to be considered at the meeting are described in the formal Notice and Proxy Statement. The company has been experiencing a cash shortage since November 1999. In order to improve its liquidity situation, it has been actively seeking new financing and attempting to refinance some of its currently outstanding debt. To this end, the company has reached agreements in principle regarding (1) the raising of additional cash through the issuance of $14,000,000 principal amount of 12% Secured Convertible Senior Notes due 2006 to Value Partners, Ltd. and (2) the refinancing of the company's outstanding 12 1/2% Subordinated Notes Due 2001. Proposals Two and Three in the Proxy Statement relate to the issuance of shares of common stock, par value $.01, in connection with the issuance of the Secured Notes to Value Partners, Ltd. and the current holders of the Subordinated Notes. If the stockholders approve Proposals Two and Three - the company may issue shares of common stock to Value Partners and T. Rowe Price Recovery Fund II, L.P. (through a participation interest in the Secured Notes) which, when added to their existing holdings, will cause them to own approximately 62% of the shares of common stock issuable and outstanding after consummation of the transactions described in Proposals Two and Three; and - the company may issue shares of common stock to the current holders of the Subordinated Notes equivalent to 22.5% of the shares of common stock issuable and outstanding after consummation of the transactions described in Proposals Two and Three. If the transactions described in Proposals Two and Three are approved and the maximum amount of common stock issued, the current holders of the outstanding common stock will hold shares representing 14.2% of the outstanding common stock. The Proposals and Proxy Statement may be accessed at http://www.sec.gov/cgi-bin/srch-edgar?0000950144-00-001881on the Internet, free of charge. BEVERLY ENTERPRISES: Earns $.06 Per Share Diluted Before Charges ---------------------------------------------------------------- Beverly Enterprises, Inc. (NYSE:BEV) today announced that it earned six cents per share diluted in the fourth quarter of 1999, before special charges and other unusual items, compared on a similar basis to 20 cents per share diluted in the fourth quarter of 1998. After unusual pre-tax charges of $60,003,000 and Year 2000 (Y2K) remediation costs of $1,730,000, there was a net loss for the 1999 fourth quarter of $ 32,594,000 (32 cents per share diluted), compared to a net loss of $87,527,000 (86 cents per share diluted) in the year earlier period. The 1998 fourth quarter included unusual pre-tax charges of $168,368,000, Y2K remediation costs of $ 5,844,000, expenses of $1,369,000 related to federal government investigations of Medicare cost-allocation practices and a $1,660,000 extraordinary charge, net of tax. Revenues totaled $643,969,000 in the 1999 fourth quarter, compared to $ 707,230,000 in the year-earlier period. The revenue reduction reflects a 14 percent drop in Medicare per diem rates, a one percentage-point decline in nursing home average occupancy from the 1998 fourth quarter and continued pricing pressure on outpatient therapy clinics by managed-care organizations. The 1999 fourth quarter unusual pre-tax charges include: -- $28,418,000 related to (a) restructuring of agreements with Nationwide Health Properties, Inc. on certain leased facilities that will result in a stronger portfolio of properties for Beverly, (b) severance and other workforce reduction expenses, and (c) asset impairment charges; and -- $31,585,000 related to increased insurance reserves for patient care and other claims liabilities, primarily related to operations in the State of Florida. For the full year 1999 and including the unusual fourth-quarter items, as well as investigation costs and charges totaling $202,447,000 related to previously announced settlements of government Medicare investigations and Y2K remediation costs of $12,402,000, Beverly reported a net loss of $134,647,000 ($ 1.31 per share diluted) on revenues totaling $2,551,007,000. Excluding these unusual items, Beverly's net income for full-year 1999 totaled $38,509,000 (37 cents per share diluted). David R. Banks, Chairman and Chief Executive Officer, made the following comments about the company's performance and outlook: -- "The dramatic shift in Medicare payment systems, coupled with an increasingly punitive approach to regulatory enforcement, severely damaged the financial capabilities of several long-term care providers, large and small, in 1999. At least ten percent of all nursing home beds in this country are now being operated by bankrupt providers." -- "Our strategy has been to provide quality care in a cost- effective operating environment. Because of this, as well as a conservative approach to cash management, we were able to weather the financial hardships of Medicare Prospective Payment. We lowered capital expenditures and acquisition costs by two-thirds from 1998 levels, while still investing $95 million - well above the minimum level required - to maintain, improve and expand our nursing home operations. In addition, we were able to reduce total funded debt during 1999 by more than $125 million." -- "Last fall's Balanced Budget Refinement Act, which restored a portion of the deeper-than-intended cuts in Medicare spending, should result in an increase in Medicare billings for Beverly of about $20 million in 2000. This includes the favorable financial impact of converting approximately 300 of our nursing homes to the full federal rate effective January 1 of this year." -- "During the last six months of 1999, we raised our average nursing home occupancy by more than a full percentage point, to 87.6 percent, compared to 86.5 percent for the second quarter of 1999. Our Performance Plan for 2000 is based on a similar increase in occupancy." -- "The availability and cost of labor continues to be a major operating and financial challenge. Our weighted average wage rate for the 1999 fourth quarter was up 6.4 percent from the year- earlier period and reflected steady increases throughout the year, which continue into 2000. Improving recruiting, retention and training of caregivers is a major focus for us this year." -- "Our Plan calls for operating earnings (earnings before interest, taxes, depreciation and amortization) to increase over 1999 levels by approximately 7 to 9 percent." -- "Florida has become a particularly difficult environment for even the best of nursing home operators. Industry costs per bed in Florida for alleged patient care liability issues are nearly eight times higher than the average in the other 49 states. That's the result of certain plaintiff attorneys exploiting that state's well-intentioned patient rights' laws, which provide attorneys a strong financial incentive to bring suit. Not surprising, half of the industry's total patient liability costs go to lawyers." -- "The rising cost of patient care liability in Florida is a significant factor in the $32 million increase in insurance reserves we booked in the 1999 fourth quarter. We will continue to closely monitor the economics of doing business in that deteriorating environment." Beverly Enterprises and its operating subsidiaries comprise a leading provider of post-acute healthcare in the United States. They operate 561 skilled nursing facilities, as well as 37 assisted living centers, 186 outpatient clinics, and 63 home health and hospice agencies. BRIGHT NOW: Chronicle Communications Reports 1st Quarter Results ----------------------------------------------------------------- Chronicle Communications, Inc., (OTCBB:CRNC), (http://www.chronicleinc.com)announces the results of operation for its first quarter ending December 31, 1999. The complete filing can be viewed at http://www.sec.gov/cgi- bin/srch-edgar?Chronicle+AND+Communications. The Company incurred operating losses of $726,000 and $172,252 for the quarters ended December 31, 1999 and 1998, respectively. The revenues for the quarter ended December 31, 1999, compared to the quarter ended December 30, 1998, increased by $45,086, nearly a 9.0% increase. The increase in revenue from AmeriComp, Inc. was offset by a decrease in revenues from Bright Now, Inc. The recent conversion to Chapter 7 of the United States Bankruptcy Code of Bright Now, Inc. is expected to eliminate $1,600,000 of current liabilities. The quarter involved a significant amount of non-recurring and non-operating charges due to acquisition cost of AmeriComp and the disposition of RKN Enterprises, Inc. The Company has completed the installation of its own printing press in a new 32,000 square foot facility in Tampa, which the company is occupying under and occupancy and purchase agreement. upon completion of the facility acquisition, the company will incur approximately $2,125,000 in mortgage debt. The company's new printing press is subject to a long-term equipment loan of approximately $ 589,000. The Company expects the March 31, 2000 Form 10-Q and consolidated financial statements to reflect a reduction in debt beyond that which will be eliminated by the bankruptcy of Bright Now, Inc. The Company has recently registered 40 million shares with the SEC for satisfaction of minor remaining debt and for possible acquisitions, as well as for sale for cash to improve liquidity. The company expects to announce the re-positioning of the Company in the business-to-business Internet space, the results of Creative Intelligence Associates' marketing plan and name change pending due diligence of a targeted acquisition. BROTHERS GOURMET COFFEES: Court Enters Confirmation of Plan ----------------------------------------------------------------- On January 12, 2000, Judge Mary F. Walrath entered an order confirming the first amended joint plan of reorganization of Brothers Gourmet Coffees, Inc., Brothers Retail Corporation and Brothers Coffee Bars, Inc. The plan is not confirmed with respect to Club Foods, and the Hearing with respect to the plan as it relates to Club Foods is adjourned and re-set for April 7, 2000 at 9:30 AM. CORAM RESOURCE: Seeks Extension For Use of Cash Collateral ---------------------------------------------------------- Coram Resource Network, Inc. and Coram Independent Practice Association, Inc. seek entry of a court order extending the debtors' authority to use cash collateral, through and including March 31, 2000. Without the ability to use cash collateral, the debtors allege that hey will suffer immediate irreparable harm and will be unable to satisfy necessary and ongoing expenses, including wages and employee benefits. The debtors have already made significant progress towards the orderly wind-down of their operations. However, without the use of cash collateral, the debtors' operations will immediately cease. COSTILLA ENERGY: Files Proposed Plan With Bankruptcy Court ---------------------------------------------------------- Costilla Energy, Inc. reports 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. EUROWEB INTERNATIONAL: Sale of 51% of Shares of KPN Telecom ----------------------------------------------------------- Euroweb International Corp., a leading Central European Internet Service Provider, announced through its Chairman, Frank R. Cohen that its shareholders had overwhelmingly approved the sale of 51% of its outstanding shares to KPN Telecom B.V. Mr. Robert Genova, the company's President and CEO, said that: "Management appreciates its shareholders confidence and looks forward to an exciting future with the resources that KPN makes available to the company". GANTOS: Seeks To Extend Time To Assume/Reject Leases ---------------------------------------------------- The debtor, Gantos, Inc. seeks an extension of time within which the debtor may assume or reject unexpired leases of nonresidential real property, for a period of 120 days, to and including June 23, 2000. The debtor asserts that in light of the substantial number of unexpired leases, the debtor will be unable to make reasoned decisions as to whether to assume or reject each such lease prior to the expiration of the sixty-day period. The careful analysis of each leases will be critical to a successful reorganization of the debtor's business. The debtor needs substantial additional data on the profitability of each of the various stores to allow for an informed determination on which stores should be retained as part of the reorganized company. The debtor states that the sheer volume of leases, coupled with their national scope has resulted in a complex and time-consuming analysis process. GLOBAL OCEAN: Case Summary -------------------------- Debtor: Global Ocean Carriers Limited Megaron, Makedonia 367 Syngrou Ave 175 64 Paleo Athens, GU Type of Business: Is an international shipping company that conducts its business from Greece and specializes in the ownership and operation of feeder; container vessels and dry bulk carriers. Petition Date: February 14, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-00956 Judge: Mary F. Walrath Total Assets: $ 92,000,000 Total Debts: $ 178,000,000 13 Largest Unsecured Creditors Oaktree Capital Management, LLC Varde Partners, Inc. AXP Variable Portfolio - Extra High Yield Portofolio Patridge Hill Management Cerberus Int'l Cerberus Partners, LP Pequod Int'l, Ltd. Pequod Investments, LP Chilmark Partners Nomura Corporate Res & Asset Mgmt Norwest Bank, Minnesota $ 126,000,000 Credit Lyonnais Paris Branch $ 52,380,000 GRAND UNION CO: Boston Partners Reports Holdings ------------------------------------------------ Boston Partners Asset Management, L.P. beneficially owns 1,645,100 shares of the common stock of Grand Union Company, exercising shared voting and dispositive powers over the stock which represents 5.5% of the outstanding common stock of the company. As sole general partner of Boston Partners Asset Management, L.P., Boston Partners, Inc. may be deemed to own beneficially all of the shares of common stock that Boston Partners Asset Management, L.P. beneficially owns. As principal stockholder of Boston Partners, Desmond John Heathwood may be deemed to own beneficially all of the common stock that Boston Partners may be deemed to beneficially own. HOGIL PHARMACEUTICAL: To Set Last Day To File Proofs of Interest ----------------------------------------------------------------- The debtors, Hogil Pharmaceuticals Corp. seek court authority to set a bar date for filing proof of pre-petition claims; administrative claims and interests in the debtor. The debtors request that March 31, 2000 be fixed as the bar date for the filing of proof of pre-petition claims, post-petition claims, and interests in the debtor. IPM PRODUCTS: Seeks Approval of Auction Procedures -------------------------------------------------- The debtors, IPM Products Company and IPM Service Corporation seek entry of an order approving the procedures to be employed in connection with a proposed auction sale of substantially all of the assets of the debtors' businesses. The debtors request that the court schedule the date and time of the auction sale for March 16, 2000 at 12:00 noon. The debtors states that the proposed auction sale is not a sub rosa plan of reorganizing. The auction sale simply proposes to sell all of the debtors' assets without altering the rights of the debtors' creditors. The minimum bids for the debtors' facilities are as follows: Guadalajara - $6 million Wabash - $5 million Mini Tune - $1.5 million Electronics - $2.5 million Dallas - $2 million All Units - $17 million INTERACTIVE NETWORK: Joint Venture Company Formed ------------------------------------------------- On January 31, 2000, Interactive Network Inc. consummated the formation of a joint venture company, TWIN Entertainment Inc., to be co-managed by the company and Two Way TV Limited under the terms of a Joint Venture and Stock Purchase Agreement dated December 6, 1999. Interactive and Two Way TV currently expect that TWIN Entertainment will develop, market and supply digital (as well as analog) interactive and related services, products and technology in the Territory, which presently means the United States and Canada. The company and Two Way TV each purchased 2,500,000 shares of TWIN Entertainment's common stock for $500,000, the fair market value of TWIN Entertainment's stock as determined by TWIN Entertainment's Board of Directors (which currently consists of representatives nominated by Interactive and Two Way TV). Interactive utilized its working capital to fund its purchase of shares. As part of the creation of the Joint Venture, the company entered into an Investor Rights Agreement, a Stockholders Agreement and a Joint Venture License Agreement. In exchange for equity investment in TWIN Entertainment, TWIN Entertainment, the company and Two Way TV granted each other certain governance and other rights. These rights primarily consist of (1) written notice upon and restrictions on the sale and transfer of any shares of TWIN Entertainment's common stock or any of its other equity securities; (2) in the event either the company or Two Way TV wishes to sell an interest in TWIN Entertainment, the other party has the right to first purchase the shares and the right to sell or transfer the shares pursuant to the same terms and conditions upon that sale or transfer; (3) right to elect a certain number of directors based on Interactive's and Two Way TV's ownership percentage of TWIN Entertainment's common stock; (4) the company's and Two Way TV's right to approve certain of TWIN Entertainment's major actions; (5) specified procedures upon the occurrence of a deadlock on any matter properly before TWIN Entertainment's board of directors; (6) subject to certain restrictions, the right to demand TWIN Entertainment to register its securities under the Securities Act of 1933 and the right for the company's and Two Way TV's securities to be included among the securities to be registered in any other public offering of TWIN Entertainment's securities; and (7) access to certain of TWIN Entertainment's financial information. Under the Joint Venture License Agreement, Interactive granted TWIN Entertainment a non-exclusive, royalty-free, non-transferable license in the Territory (as that term is defined in that agreement) for all of Interactive's patents, trade secrets and copyrights, excluding trademarks and service marks developed and existing prior to the date of the Joint Venture License Agreement, and Two Way TV granted TWIN Entertainment a license on the same terms of Two Way TV's technology and intellectual property rights. As part of those transactions, the company also has agreed to seek the approval of its shareholders to convert its non-exclusive licenses to TWIN Entertainment to exclusive licenses (at which time the licenses from Two Way TV to TWIN Entertainment also will become exclusive). In addition, as part of the agreements with Two Way TV to create TWIN Entertainment, Interactive entered into a separate worldwide exclusive license agreement that licenses its intellectual property in countries other than the United States and Canada to Two Way TV under a Termination and License Agreement. The consummation of these transactions was subject to approval of the United States Bankruptcy Court for the Northern District of California, which was received on January 7, 2000. JUDGE GROUP: Changes Name to JUDGE.com -------------------------------------- The Judge Group, Inc., effective February 14, 2000, changed its name to JUDGE.com. The change in name reflects the company's focus on the Internet as a tool in its delivery of Information Technology staffing services for its clients. According to Martin E. Judge, Jr., Chief Executive Officer of the Judge Group, "We started an internal Internet division in this company three years ago, and it has quickly proven to be an extremely valuable tool in the placement of individuals with highly specialized technical skills. In our earnings release scheduled for February 14, 2000 we are announcing our future plans for this division and its ability to link the company's nearly thirty years experience in IT placement with its ability to utilize the technology of the Internet, but we take this opportunity to let our investors and the marketplace know of the name change and our excitement about the company's prospects going forward." The company is in the process of filing notices to the Securities and Exchange Commission and with the NASDAQ National Market. Mr. Judge stated that he believes that the name JUDGE.com highlights the company's skills and experience in both the staffing industry and the technology of the web. Said Mr. Judge: "It is my belief that our industry is changing as we move into the 21st century. The companies that are able to make that change of integrating our traditional staffing business with the delivery mechanism of the Internet will lead our industry. JUDGE.com has already moved in that direction." The Judge Group, Inc. offers total Internet and Information Technology staffing solutions through its web-based staffing and training divisions. It states its mission as being to service the needs of its contractors, clients, and employees through professionalism, ethics, technology, and hard work. LAROCHE INDUSTRIES: Retains Chanin Capital Partners --------------------------------------------------- On February 14, 2000, LaRoche Industries Inc., a Delaware corporation, announced that it had retained Chanin Capital Partners to explore capital structure alternatives for the company. This effort is consistent with the company's recent comprehensive review of its business strategy and its ongoing need to reduce financing costs and improve liquidity. Chanin Capital Partners is a national investment banking firm specializing in restructuring transactions. LOEWEN: Motion For Second Extension of Exclusivity -------------------------------------------------- The Debtors ask Judge Walsh for a second extension of their exclusive periods during which to file a reorganization plan and to solicit acceptances of it. Specifically, the Debtors seek to extend the time within which to propose a plan through June 30, 2000, and request a concomitant extension of their exclusive period within which to solicit acceptances of that plan through August 31, 2000. The Debtors assert that they need more time because their operations are large and complex. They also note that, if Judge Walsh grants their proposed extensions, then the American Debtors' deadlines will be the same as deadlines in the Loewens' Canadian bankruptcy proceedings. In their Motion, the Debtors relate that they presented their business plan -- under the terms of strict confidentiality agreements -- to the Creditors' Committee on February 2, 2000, and to the post-petition lenders on February 15, 2000. After they have received and "digested" these parties' responses to their business plan, the Debtors will complete their evaluation of their estates and present their conclusions to the Creditors' Committee. They will then negotiate a term sheet for recoveries given creditors and other stakeholeders under their reorganization plan. Following agreement on the terms of the reorganization plan, the Debtors will begin drafting their disclosure statement and the many documents required to implement their plan. They will then seek approval of their disclosure statement and, if approved, begin soliciting approval of their plan. (LOEWEN BANKRUPTCY NEWS Issue 19; Bankruptcy Creditor's Service Inc.) MCDERMOTT: Moody's Places Ratings Under Review/Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the Ba1 senior unsecured debt rating of McDermott Incorporated, as well as the Ba1 issuer rating and Ba3 senior subordinated rating of J. Ray McDermott, S.A., under review for possible downgrade. Both companies are subsidiaries of McDermott International, Inc. The review is prompted by the announcement by McDermott International that it has placed its subsidiary, The Babcock & Wilcox Company and its subsidiaries Americon, Inc., The Babcock & Wilcox Construction Company, Inc. and Diamond Power International, Inc., into voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. The review will consider the impact, if any, on the operational and financial position of McDermott Inc. and J. Ray McDermott, and how management intends to resolve B&W's' asbestos liability through the reorganization filing. McDermott International, Inc., McDermott Incorporated, and J. Ray McDermott, S.A.'s corporate headquarters are located in New Orleans, Louisiana. ONEITA INDUSTRIES: Wachovia Reports Holdings -------------------------------------------- Wachovia Corporation, parent holding company to Wachovia Bank, National Association, and Wachovia Bank, National Association beneficially own 704,000 shares of the common stock of Oneita Industries Inc. Each holds sole voting and dispositive power over the stock, which represents 7.69% of the outstanding common stock of Oneita. PHILIP SERVICES: Seeks Extension of Time To Assume/Reject Leases ----------------------------------------------------------------- The debtors, Philip Services, Inc., et al. seek to extend the time to assume or reject unexpired nonresidential real property leases until the earlier of the effective date of the debtors' plan of reorganization or April 24, 2000. The debtors have a large number of unexpired leases stemming from operating their businesses from various locations throughout North America. The debtors have obtained confirmation of their plan and they anticipate that the plan will become effective later this month. However, they are seeking this extension out of an abundance of caution. PHYSICIANS RESOURCE GROUP: AmSurg Announces Purchase ---------------------------------------------------- In a report of its fourth quarter earnings, AmSurg Corp.'s CEO, Ken P. McDonald said, "We also recently announced the signing of a definitive agreement with Physicians Resource Group ("PRG"), through which we expect to acquire PRG's interest in at least 11 ophthalmology surgery centers in a transaction anticipated to close in the first half of 2000. At the same time, we announced that we have entered into an agreement with PRG to manage 15 of their surgery centers including the 11 referenced above. These centers are in addition to our purchase of PRG's interests in two other centers, one of which occurred in early 2000. PRG filed for reorganization under Chapter 11 of the United States Bankruptcy Code on February 1. At a hearing on February 14th, the bankruptcy court approved our Management Agreement and certain aspects of our Purchase Agreement. We look forward to expanding the Company's base of centers in operation in 2000 with these PRG centers in addition to our normal acquired and developed centers. SERVICE MERCHANDISE: Cuts 4,800 More Jobs, Product Lines -------------------------------------------------------- Service Merchandise Company Inc. plans to cut 4,800 additional jobs, reduce store sizes and discontinue some product lines as part of its ongoing bankruptcy reorganization plan. The Nashville-based company was forced into Chapter 11 last March by a group of creditors, claiming total debts of $1.29 billion. The company has so far closed 122 stores and cut 5,000 jobs. The company currently about 16,000 full-time employees at its Nashville offices, three distribution centers and 221 stores in 32 states. Service Merchandise will spend $150 million of over the next two years to reduce store sizes and remodel showrooms to include more jewelry display cases and Internet kiosks for merchandise orders. The company will rent or sell the surplus store space. The company will no longer sell toys, sporting goods, most consumer electronics and indoor furniture. It will continue to sell housewares, silver, crystal, small appliances, patio furniture, luggage and clocks. The inventory reduction means the closure of the company's distribution centers in Orlando, Fla., and Montgomery, N.Y., and a consolidation of inventory at the Nashville center. The company expects to get approval of a new four-year, $600 million bank financing agreement from Fleet Retail Finance Inc., replacing a previous financing agreement. It intends to use the funds to pay for its store renovations and other improvements, operating expenses and general working capital once the company emerges from Chapter 11. Service Merchandise reported a net loss of $243.7 million, or a loss of $2.45 a share, for the year ending Jan. 2. Net sales for the period were $2.23 billion. For the prior year, the company reported a net loss of $110.3 million, or a loss of $1.11 a share, on net sales of $3.17 billion. Fourth-quarter earnings were $68.3 million compared to $49.1 million for the same period last year. Operating earnings were $25.2 million for the year ending Jan. 2. SERVICE MERCHANDISE: Seeks To Extend Time To Assume/Reject Leases ----------------------------------------------------------------- The Debtors move the Court for an order pursuant to 11 U.S.C. Sec. 365(d)(4) to extend the time within which they must decide whether to assume, assume and assign or reject unexpired leases of nonresidential real property with respect to certain previously closed stores, from the previous deadline of March 31, 2000 to July 31, 2000. On July 14, 1999, the Court authorized the Debtors to sell, among other things, Designation Rights with respect to the Debtors' interest in certain leaseholds. The Debtors recapture that the Designation Rights permit the purchaser to designate on behalf of the Debtors the party to whom the respective leasehold interests should be assigned, and the right to make such designation expires on March 15, 2000. The Debtors tell the Court that, as of the date of the Motion, Designation Rights with respect to 3 leasehold interests had not yet been exercised, Designation Rights with respect to 2 Leasehold interests had been relinquished by the purchaser to the Debtors and Designation Rights with respect to an additional 13 leasehold interests, while exercised, are the subject of pending motions to assume and assign scheduled to be heard on February 22, 2000, the same date scheduled for the present Motion to be heard. The Debtors say that the requested extension will both permit sufficient time for any Designation Rights to be heard at the April 4, 2000 omnibus hearing, as well as provide sufficient time for the Debtors to re-market any such leases as to which assignment motions are not effectuated or Designation Rights are otherwise not exercised. The Debtors report that as a result of a review to improve performance, they have identified and commenced store closing sales at approximately one-third of their 365 store locations. The Debtors say these are the Surplus Real Estate and include locations pertaining to the Remaining Auctioned Leases. Bidding Procedures to be employed in connection with the sale of the Surplus Real Estate were approved by the Court on June 18, 1999. Among other things, the Bidding Procedures set forth three methods pursuant to which parties were able to bid on the leasehold Surplus Real Estate: (i) the direct assumption and assignment to an ultimate end user; (ii) the termination of the lease if the landlord was the successful bidder; or (iii) the sale of Designation Rights if the successful bidder was not an end user. The Debtors report that they held an auction for the Surplus Real Estate on July 8, 1999. The Debtors claim that as a result of the marketing effort of parties which purchased Designation Rights at the Auction, most of the Designation Rights have been exercised and the underlying leases have been assigned to the parties so designated and the remaining leases subject to Designation Rights are included within the Remaining Auctioned Leases. The Debtors put forward grounds for the requested extension of the Section 365 Deadline with respect to the Remaining Auctioned Leases to July 31, 2000 as follows: * Such extension would give the Debtors a reasonable period of time to re-solicit interest in any Remaining Auctioned Leases as to which the purchasers of the Designation Rights fail to timely effectuate an assignment. * If the request is granted, landlords of the Remaining Auctioned Leases will not be prejudiced. (The Debtors claim they have remained current on their administrative obligations, continue to pay rent and other expenses and have the financial resources and intention to continue to do so.) * Parties in interest would not be precluded from filing a motion to shorten the Deadline if necessary. * Courts may grant and in larger cases have routinely granted such extensions upon a showing of "cause" by a debtor. * These cases are large and complex. * Additional time is necessary to permit the purchaser of Designation Rights an opportunity for a hearing with respect to an assignment motion filed in connection with timely exercised Designation Rights, and in the event such designations are not effectuated, additional time is needed for the Debtors to resolicit interest in the Remaining Auctioned Leases. * The Leases are the Debtors' primary assets value of which lie in the Remaining Auctioned Leases and the opportunity to realize additional value to the extent that the exercise of Designation Rights ultimately do not result in the assignment of the underlying leases to those parties designated by the respective purchasers. Ramco-Gershenson Properites, L.P., represented by Kupelian Ormond & Magy, P.C., leases three stores in Michigan and one store in Florida to Service Merchandise. Ramco asserts that the factors cited by the Debtors to justify its request for an extension only relate to whether the debtor needs more time to examine each lease in light of current market conditions, demographics, etc., rather than changing internal factors such as merchandising, marketing etc. Consequently, Ramco argues, the Debtor's view has the effect of nullifying Sec. 365(d)(4). Ramco maintains that landlords are prejudiced by open-ended extensions. Ramco suggests a short, definitive 60-day extension. Relying on the unrebutted and credible testimony presented by CEO Sam Cusano, Judge Paine held that the Debtors are entitled to an extension of their time to decide how to dispose of go-forward stores through March 31, 2001. Judge Paine points to the fact that the Debtors are current with all post-petition obligations and can demonstrate their ability to continue performing these post-petition obligations. This extension, Judge Paine stressed, is without prejudice to the right of any landlord to request a reduction of this period. (Service Merchandise Bankruptcy News; Issue 10; Bankruptcy Creditor's Service Inc.) SILICON GAMING: Increases Number of Authorized Shares ----------------------------------------------------- On February 7, 2000, Silicon Gaming, Inc. filed a Certificate of Amendment of its Articles of Incorporation with the Secretary of State of California. The amendment was approved and adopted by a written consent action by holders of greater than a majority of the outstanding voting common stock of the company. The amendment increased the number of authorized shares of common stock of the company from 50,000,000 to 750,000,000. TRANSTEXAS GAS: Rebuts High River's Motion For Stay --------------------------------------------------- The debtors, TransTexas Gas Corporation, et al. respond to High River Limited Partnership's motion for stay pending appeal of order confirming the debtor's plan. According to the debtors, they will suffer irreversible injury if a stay, no matter how limited is granted. They will be unable to consummate the contemplated exit financing. They fear that the DIP lenders may not grant another extension to the $30 million DIP Facility, forcing TransTexas into liquidation under either Chapter 11 or Chapter 7; and without the exit financing, TransTexas' drilling and production activities will cease, producing catastrophic results. Liquidation of the TransTexas estates will result in lower values for the estate assets. TransTexas also argues that the plan is the product of extended negotiation and that to change High River's classification under the plan at this time would be treating one creditor differently than all others. TV FILME, INC: Files Voluntary Petition Under Chapter 11 -------------------------------------------------------- TV Filme, Inc. has filed a voluntary petition under chapter 11 of the United States Bankruptcy Code, together with a pre-negotiated Plan of Reorganization and the Disclosure Statement relating to such Plan, with the U.S. Bankruptcy Court for the District of Delaware. A hearing for approval of the Disclosure Statement is expected to be set for late February, 2000. Following approval, ballots respecting the Plan will be circulated to those parties entitled to vote on it, and a hearing to confirm the Plan will be scheduled. Holders of more than 65% of the aggregate principal amount of TV Filme's outstanding 12-7/8% senior notes due 2004 have agreed to support and vote in favor of the restructuring. The company's restructuring represents a consensual arrangement, under a Restructuring Agreement dated January 24, 2000, with holders of more than 65% of the company's outstanding Senior Notes. TV Filme, Inc. expects that this restructuring will significantly reduce the company's existing long-term debt, and enable the company to continue the build-out of its recently acquired multi-point, multi-channel distribution systems ("MMDS") licenses. The restructuring of the company's indebtedness provides, among other things, as follows: The senior noteholders will receive a $25 million cash payment and their existing notes will be converted into (i) New Senior Secured Notes in the aggregate principal amount of at least $35 million, subject to adjustment, with a five year maturity and interest of 12% per annum (interest payable-in-kind at the option of the reorganized company through the first 24 months), and (ii) 80% of the new common equity of the reorganized company. Current management will receive 15% of the new common equity, and existing common stockholders of TV Filme, Inc. will receive 5% of the new common equity of the reorganized company in exchange for their current stake. The Plan provides that the reorganized company will be a newly-formed Cayman Islands holding company, and that the New Senior Secured Notes will be issued by ITSA - Intercontinental Telecomunicacoes Ltda., an existing Brazilian subsidiary of TV Filme. Hermano Studart Lins de Albuquerque, Chief Executive Officer of TV Filme, Inc. said, "We are pleased to announce the execution of this agreement with our largest bondholders and the iling of the Plan. This restructuring represents the result of important negotiations with our investors and will place TV Filme in a much stronger position." He emphasized that the restructuring is being implemented at the U.S. holding company level and will not affect the company's operations in Brazil. "We will continue to provide our customers with the highest quality of programming, service, and reliability." Headquartered in Brasilia, Brazil, TV Filme, Inc. is a provider of subscription television, data and Internet services in mid- sized markets in Brazil. The company has established wireless cable operating systems in Brasilia, Goiania, Belem and Campina Grande, which together comprise over 1.4 million households. Also, the company holds wireless cable licenses in the cities of Bauru, Caruaru, Franca, Porto Velho, Presidente Prudente and Uberaba, which together comprise nearly 0.4 million households. TV Filme, Inc. reports all results in U.S. dollars and prepares its financial statements in accordance with U.S. generally accepted accounting principles. UNIVERSAL SEISMIC: Disclosure Statement and Plan ------------------------------------------------ The debtor, Universal Seismic Associates Inc. and Universal Seismic Acquisition Inc. proposes a First Amended Disclosure Statement and plan of reorganization. The purpose of the plan is to establish a Liquidating Trust to hold and liquidate all assets of the debtor, and then to pay claims consistent with the priorities established by the Bankruptcy Code. All property of the debtor shall vest automatically in the Liquidation Trust on the Effective Date. The debtor shall not operate its business post-confirmation. The assets of UNEXCO, Inc., working interests in two oil and gas wells in Louisiana, are currently valued at $500,000. The assets shall be sold by the Liquidating Trustee. Under the plan, the Collateral of RIMCO Associates, inc. shall be returned to RIMCO. RIMCO's unsecured claims shall be $14,281,608 million, $6.5 million of which shall be subordinated to all other general unsecured claims. $7,781,608 shall be paid pursuant to the terms of Class 7(General Unsecured Claims). RIMCO's claim is impaired as well as the claim of Bell Atlantic Credit Corporation and Input/Output, Inc. Input/Output's unsecured claim is $2,312,135. The debtor estimates that General Unsecured Claims do not exceed $13 million. WESTERN FIDELITY: Trustee Seeks To Operate on Limited Basis ----------------------------------------------------------- Dennis W. King, Chapter 7 Trustee, requests court authority to operate the debtor's business on a limited basis for an additional six months from February 15, 2000 to and including August 15, 2000. The Trustee needs to continue to operate the business in order to monitor, service and collect the line item on the December 31, 1999 balance sheet entitled "N/R Creditors' Pool/BNY Pool." The balance sheet reflects a book value of this item of $4.774 million. The Trustee notes he attempted to sell the private automobile loan portfolio in bulk shortly after conversion, with no buyers. The trustee and his consultants have continued in their efforts to sell the private automobile loan portfolio in bulk. The Trustee also expects to receive an additional approximately $300,000 from Superior Bank, FSB under an Originator Agreement (which amount is included in the $4.774 million). ********* 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. 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