/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000302.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, March 2, 2000, Vol. 4, No. 43 Headlines APPLE ORTHODONTIX: Meeting of Creditors APPLE ORTHODONTIX: Court Approves Counsel BOSTON CHICKEN: Sixth Amendment to DIP Financing Facility BUSH LEASING: Taps KPMG LLP as Tax Accountants CLAREMONT MANAGEMENT: Case Summary & Largest Unsecured Creditors CONVENIENCE MORTGAGE: Hearing Rescheduled DLJ MORTGAGE: S&P Lowers Ratings on Two Classes of Mortgage EAGLE FOOD: Files Voluntary Petition Under Chapter 11 EAGLE GEOPHYSICAL: Seeks Extension of Exclusivity FRUIT OF THE LOOM: Extension To Assume/Reject Leases GENICOM: Receives Default Notice GREAT TRAIN STORE: Announces Reorganization Under Chapter 11 GULF STATES STEEL: Noteholders Support Exclusivity Extension HOGIL PHARMACEUTICAL: SmithKline Beecham Objects To Exclusivity IMPERIAL HOME: Taps Edward Howard as Communications Consultants INBD, INC.: Case Summary and 20 Largest Unsecured Creditors INSILCO HOLDING: Completes Sale of Taylor Publishing KCS ENERGY: Announces Court Decision KEY PLASTICS: Third Amendment To Senior Credit Facility LOEHMANN'S: Extension of Time To Assume/Reject Leases MARTIN COLOR-FI: Signs Merger Agreement NATIONAL RESTAURANTS: Seeks Order Pursuant To Sec.365(d)(4) NAVIGATOR GAS TRANSPORT: MOODY'S Downgrades Notes PACIFIC INTERNATIONAL: Zaremba Group Delivers Letter of Credit PAGING NETWORK: Trading Moved to Nasdaq Small Cap Market PLANET HOLLYWOOD: Disney to Purchase All Star Cafe PREMIER LASER SYSTEMS: Quinn Appointed to Board SABRATEK: Enters Interim Management Agreement with Jay Alix SERVICE MERCHANDISE: Reports Year-End Results to SEC SERVICE MERCHANDISE: Kovats Promoted to Sr. Vice President SHADE TOWERS: Case Summary and 6 Largest Unsecured Creditors SUN HEALTHCARE: Founder Sells Most of His Stock TEU HOLDINGS: Case Summary TOTAL RENAL CARE: Moody's Downgrades Ratings; Outlook Is Negative TOWER AIR: Case Summary and 23 Largest Unsecured Creditors TOWER AIR: Announces $18 Million Secured DIP Credit Facility TOWER AIR INC.: S&P Cuts Credit To D TREESOURCE INDUSTRIES: Reports $1.538M Net Loss For Quarter TRISM INC: Notice of Confirmation and Effectiveness of Plan UNITED INDUSTRIES: Moody's Confirms Ratings US OFFICE PRODUCTS: S&P Cuts Ratings VENTAS: Completes 2nd Phase Closing of Long Term Credit Facility ********* APPLE ORTHODONTIX: Meeting of Creditors --------------------------------------- A chapter 11 case concerning the debtor corporation, Apple Orthodontix, Inc. was filed on January 27, 2000. The attorney for the debtor is Norman L. Pernick, Saul Ewing, Remick & Saul, 222 Delaware Ave, Suite 1200, Wilmington Delaware. A meeting of creditors will take place on March 17, 2000 at 1:30 PM, 844 King Street, Room 2313, Wilmington DE. APPLE ORTHODONTIX: Court Approves Counsel ----------------------------------------------------------------- By orders entered onFebruary 22, 2000, the US Bankruptcy Court for th eDistrict of Delaware entered orders authorizing the employment and retention of Katten Muchin Zavis as counsel to the debtor, and the firm of Saul, Ewing, Remick & Saul LLP as co- counsel. BOSTON CHICKEN: Sixth Amendment to DIP Financing Facility --------------------------------------------------------- Judge Case approved a Sixth Amendment to the DIP Financing Facility, pursuant to 11 U.S.C. Sec. 364. Boston Chicken explained to the Court that, in their business judgment, Amendment No. 6 is necessary to continue the business operations in a manner that will enable management to sustain its business turn around plan and to pursue to closing the sale contemplated by the asset purchase agreement executed between the Debtors and Golden Restaurant Operations, Inc. The Debtors believe that the terms of the amendment provide greater flexibility with respect to availability of previously segregated liquidity reserves. The principal economic terms under Amendment No. 6 provide that: (1) the Agents and Lenders reduce the Availability Reserve effective December 20, 1999, Availability Period Reserve Amount ------ -------------- Sixth Amendment Closing Date - $11,000,000 December 16, 1999 December 17, 1999 $10,000,000 December 18, 1999 - December 19, 1999 $12,000,000 December 20, 1999 - January 2, 2000 $9,500,000 January 3, 2000 - January 9, 2000 $7,000,000 January 10, 2000 - January 17, 2000 $9,000,000 January 18, 2000 - January 23, 2000 $5,000,000 January 24, 2000 - January 29, 2000 $6,000,000 January 30, 2000 - February 6, 2000 $5,000,000 February 7, 2000 - February 13, 2000 $7,000,000 February 14, 2000 - February 18, 2000 [$5,000,000] February 19, 2000 and thereafter $12,000,000 (2) extend the previously granted waiver relating to any noncompliance by Borrowers with respect to the Minimum System EBITDAL Covenant for Retail Periods 7-12 of 1999, (3) grant a waiver with respect to the Minimum System EBITDAL Covenant for Retail Period 13 of 1999 and Retail Period 1 of 2000, and (4) the Agents and Lenders have agreed to reduce the Availability Reserve and grant the requested waivers, in each case through February 18, 2000. General Electric Capital Corporation continues to serve as the Administrative Agent; Bank Of America, N.A. continues to serve as the Collateral Agent. (Boston Chicken Bankruptcy News Issue 21; Bankruptcy Creditor's Service Inc.) BUSH LEASING: Taps KPMG LLP as Tax Accountants ---------------------------------------------- The debtor, Bush Leasing, Inc. applies to the court for the entry of an order authorizing the debtor to retain and employ KPMG LLP as its tax accountants. The debtor anticipates that the firm will provide the following services: Preparation of the federal, state and local income tax returns for the year ended June 30, 1999; Tax Consulting relating to an IRS audit for the year ended June 30, 1997; Tax Consulting relating to the tax basis of leases; Tax Consulting services relating to the filing of all sales tax returns. Preparation and review on current sales tax returns; Tax Consulting services relating tot he filing of all personal property tax returns, Including the preparation and review of 1999 and 2000 personal property tax returns; and Consultation, preparation and review of sales tax returns relating to sales tax refunds. The firm will charge its customary hourly rates which range from $450 per hour for a partner/principal to $100 per hour for a para professional. CLAREMONT MANAGEMENT: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Claremont Management, Inc. 222 North Wall Street Suite #310 Spokane, WA 99201 Petition Date: February 24, 2000 Chapter 11 Court: Eastern District of Washington Bankruptcy Case No.: 00-01127 Judge: Patricia C. William Debtor's Counsel: John D. Munding, 21734 CRUMB & MUNDING, PCS 601 W. Riverside, Suite 1950 Spokane, WA 99201 (509)624-6464 Fax(509)624-6155 Total Assets: $ 1,000,001 to 10 mill(estimate) Total Debts: $ 1,000,001 to 10 mill(estimate) 20 Largest Unsecured Creditors A-1 Linen $ 15,292 Allen Prime Meats $ 26,988 City of Claremont #3010 $ 13,541 County of LA $ 48,484 Desert SW Insurance Brokers $ 15,397 Douglas, Eden, Phillips & DeRuyter $ 15,452 EZ Rentals $ 9,158 Evans, Craven & Lackie, PS $ 10,590 Farmers Market $ 20,289 GTE Leasing $ 7,747 Inland Valley Daily Bulletin $ 12,246 Intervalley Health Plan $ 6,959 Mesa Energy Systems $ 17,652 Mr. Poolman $ 13,431 Southern California Edison $ 12,382 Staples $ 12,519 Starside Protection, Inc. $ 6,941 Superior Coffee & Foods $ 6,879 Sysco Food Services $ 44,617 Waxie Sanitary Supply $ 7,300 CONVENIENCE MORTGAGE: Hearing Rescheduled ----------------------------------------- The hearing to consider approval of the Disclosure Statement of Convenience Mortgage Corporation, previously scheduled to be held on February 28, 2000 has been rescheduled for March 16, 2000 at 2:30 PM. DLJ MORTGAGE: S&P Lowers Ratings on Two Classes of Mortgage ----------------------------------------------------------- Standard & Poor's lowered its ratings on two classes of DLJ Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates series 1997-CF1 and removed the two classes from CreditWatch with negative implications, where they were placed on May 4, 1999 (see list). Simultaneously, Standard & Poor's affirmed its ratings on six other classes of series 1997-CF1 (see list). The rating actions reflect Standard & Poor's concerns regarding two loans in the pool that comprise approximately 6.1% of the total principal balance of the series. Based on appraisal reduction amounts and on outstanding principal and interest advanced to date, potential losses could significantly reduce the principal balance of the class C certificates and could materially affect the subordination levels of the class B-3 and B-4 certificates. The first loan, currently in default and representing 4.8% of the transaction's remaining principal balance, consists of 10 crosscollateralized and crossdefaulted hotel properties located in Texas, Missouri, Kansas, and New Mexico. The second loan, representing 1.3% of the transaction's remaining principal balance, is collateralized by a stand-alone retail store in Islandia, N.Y. EAGLE FOOD: Files Voluntary Petition Under Chapter 11 ----------------------------------------------------- Eagle Food Centers, Inc. (NASDAQ: EGLE), a full service, regional supermarket chain operating under the trade names "Eagle Country Market" and "BOGO's", today filed a voluntary petition under Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware. The Company stated that it intends to file a plan of reorganization (The "Plan") to restructure the Company's capital structure. The critical terms of The Plan were negotiated with the Company's largest secured lender, Congress Financial, and the largest identifiable unsecured institutional holders prior to the bankruptcy filing. Eagle has definitive lock-up agreements from the largest identifiable institution holders of their 8 5/8% Senior Notes due April 15, 2000 (the "Senior Notes"), representing approximately $29 million of the estimated $30 million of institutional holders. The identified institutional holders have agreed to vote in favor of The Plan as filed today and have accordingly executed their lock-up agreements. The Plan provides for, among other things, replacement of the Senior Notes with new notes (the "New Senior Notes") that have the following material terms and conditions; (i) a maturity date of April 15, 2005, (ii) an interest rate to 11%, (iii) a $15 million reduction of outstanding principal by Eagle upon the effective date of the Plan; and (iv) Eagle may, at its option, redeem the New Senior Notes at 100% of the principal amount outstanding at the time of redemption. In addition, under the Plan, Eagle proposes to give 15% of the fully-diluted common stock of Eagle to the holders of the Senior Notes, some of which can be returned to Eagle (up to 10%) upon the occurrence of certain conditions. Eagle has entered into a $50 million interim Debtor-in-Possession (DIP) financing through Congress Financial to ensure its ability to fund continuous operations and meet ongoing financial commitments to vendors and employees. The Company will continue operating 64 stores in Illinois and Iowa with forecasted sales of over $800 million next year after closing 19 underperforming locations. "The strong capital structure provided by this proposed Plan will enable us to move forward with a renewed focus on growing sales through an aggressive marketing campaign supported by ongoing cost-management programs," said Jeffrey Little, president and CEO of Eagle Food Centers, Inc. "In particular, this reorganization will permit Eagle to continue to build, remodel and replace stores to better compete in the markets we serve." While the Company has made progress in its turnaround efforts, management and the Board of Directors have determined that Eagle Food Centers must take these immediate steps to reorganize its operations and restructure its debt obligations to ensure the availability of sufficient resources to fund continued operations. "This action will allow the Company to achieve its restructuring objectives in a timely and orderly manner," said Robert Kelly, chairman of Eagle Food Centers, Inc. Eagle has retained Jefferies & Co. as financial advisors throughout the restructuring process. Eagle Food Centers, Inc., is a leading regional supermarket chain headquartered in Milan, Illinois, operating 83 stores in central Illinois, eastern Iowa, and northwestern Indiana. EAGLE GEOPHYSICAL: Seeks Extension of Exclusivity ------------------------------------------------- The debtors, Eagle Geophysical, Inc., et al. seek an order further extending the exclusive periods during which only the debtors may file a plan or plans of reorganization and solicit acceptances thereof. The debtors seek entry of an order further extending the Exclusive Filing Period for approximately sixty days to and including April 27, 2000, and further extending the Exclusive Solicitation Period also for approximately sixty days, to and including June 27, 2000. A substantial amount of the debtors' reorganization effort has been focused on the development of a plan of reorganization and negotiations concerning such a plan with the Committee. The debtors have substantially completed the plan drafting process but are desirous of prosecuting a consensual plan. The Committee has requested that the debtors seek an additional extension of the Exclusive Periods in order to permit the Committee and its members additional time in which to review and consider the terms of the plan. FRUIT OF THE LOOM: Extension To Assume/Reject Leases ---------------------------------------------------- The Fruit of the Loom entities are lessees under 40-some unexpired nonresidential real property leases for Fruit of the Loom's corporate offices and various manufacturing, distribution, and other facilities. As part of these chapter 11 cases, Fruit of the Loom is re-evaluating every aspect of its business and the Leases to determine the potential consequences of assuming, assuming and assigning, or rejecting the Leases under the Bankruptcy Code. This evaluation must be completed before Fruit can intelligently decide whether to assume, assume and assign, or reject each of the Leases in the overall context of Fruit of the Loom's business plan. Given the complexity and size of these cases, that evaluation will not be complete within the 60-day period described in 11 U.S.C. Sec. 365(d)(4). Accordingly, Fruit of the Loom sought and obtained an extension of that 60-day period within which to decide whether to assume, assume and assign or reject its Leases through April 19, 2000, without prejudice to the right to request further extensions. (Fruit of the Loom Bankruptcy News Issue 4; Bankruptcy Creditor's Service Inc.) GENICOM: Receives Default Notice -------------------------------- As previously reported, GENICOM Corporation (Nasdaq: GECM) has been operating in violation of its credit facility since the third quarter of 1999. Since then the Company and its lender group led by Bank of America, N.A. have been in discussions concerning the situation. On February 25, 2000 Genicom received formal notice from the lender group of the occurrence of certain events of default under the credit facility, including the Company's failure to make required principal and interest payments. The notice also stated that all amounts due under the credit facility have been accelerated and are fully due and payable. Under the terms of the credit facility, the lenders can immediately exercise all of their rights and remedies, including but not limited to their right to offset the Company's bank accounts and foreclose on their collateral. The lender group has exercised its right of offset against the Company's operating accounts, including those at Bank of America, and notified the Company that it will continue to exercise its offset rights against such accounts. The Company has been directed to notify its account debtors to continue to remit all payments of amounts due to the Company to its lockbox account at Bank of America in accordance with current practice. The Company has been actively working to develop a refinancing proposal for submission to the lender group. The proposal would include an asset based senior secured facility and additional mezzanine financing. The Company has been notified of credit committee approval of the availability of the senior secured portion of its refinancing needs. In addition, the Company has identified and is negotiating with a potential investor for the mezzanine level of financing. Part of these negotiations include the potential investor purchasing all of the Company's outstanding debt from the lender group. The Company is attempting to find solutions to the lender group's issues and is considering all available alternatives, including refinancing or the filing of a Chapter 11 bankruptcy petition. The actions of the lender group described above will have a material adverse effect on the Company. There can be no assurance that the Company will be able to continue as a going concern. GENICOM Corporation is a global provider of integrated network solutions, multivendor services and printer solutions focusing on the midrange, client/server market. Its Document Solutions company (DSC) designs and markets a wide range of high- performance serial matrix, line matrix, page and travel industry printers, along with a complementary line of supplies, parts and services. GENICOM is headquartered within metropolitan Washington, DC. GREAT TRAIN STORE: Announces Reorganization Under Chapter 11 ------------------------------------------------------------ The Great Train Store Company (OTC Bulletin Board: GTRN), a Dallas-based national chain of train-themed toy, hobby and gift stores, announced that it yesterday filed a voluntary petition for protection and reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the district of Delaware. The filing was necessitated by the Company's poor performance and the decision of the Company's principal lender not to advance funds at a level sufficient to satisfy the Company's working capital requirements. A Chapter 11 proceeding is rehabilitative in nature and designed to give a company reasonable time to reorganize its operations and finances while being afforded certain protection from creditors' activities. Under the Chapter 11 proceeding, the Company will continue to operate its business and manage its properties under court supervision as a debtor in possession. To facilitate the reorganization, the Company has obtained debtor in possession financing from its principal lender. With this financing, the Company anticipates it will be able to continue to receive merchandise in a timely manner, and expects to emerge from the reorganization as a stronger and more viable entity. As part of this restructuring, subject to the approval of the Court, the Company currently expects to close up to approximately eleven of its fifty-six stores. As these eleven stores are under-performing, their closing should provide additional liquidity that can be utilized by the Company during the restructuring. The Great Train Stores are owned and operated by The Great Store Partners, L.P., a wholly-owned subsidiary of The Great Train Store Company. The Great Train Store Company is a public company with its shares traded on the OTC Bulletin Board (GTRN). GULF STATES STEEL: Noteholders Support Exclusivity Extension ------------------------------------------------------------ The official committee of holders of the 13 1/2% First Mortgage Notes due April 15, 2003 issued by Gulf States Steel, Inc. of Alabama supports the debtor's motion to further extend through April 30, 2000 and June 30, 2000, respectively, the exclusive periods within which the debtor may file a plan of reorganization and solicit acceptances thereto. The Noteholder Committee remains of the belief that the filing of a non-consensual plan of reorganization in the midst of the application process for a loan under the Emergency Steel Loan Guarantee Act of 1999 would be counter-productive for all of the parties in interest. HOGIL PHARMACEUTICAL: SmithKline Beecham Objects To Exclusivity --------------------------------------------------------------- SmithKline Beecham Consumer HealthCare, LP holds two promissory notes of debtor whose unpaid principal and interest at the date of filing aggregate approximately $3.071 million. SmithkKline asserts that the debtor promised the Creditor's Committee and indicated that at least two court hearings that the debtor would file a plan by March 1, 2000. SmithKline states that the debtor advances no reason why it cannot file its plan by March 1, and in any event gives no reason for the need of a sixty-day extension. The debtor's operating statement for January reflected a loss of $76,613 and SmithKline states that the debtor provides no reason to believe that losses will not continue during the period of the requested extensions. IMPERIAL HOME: Taps Edward Howard as Communications Consultants --------------------------------------------------------------- The debtors, The Imperial Home D�cor Group Inc., et al., seek to retain and employ Edward Howard & Co. as corporate communications consultants. The firm will provide the following services: Develop and implement communications programs and related strategies and initiatives for communications with the debtor's key constituencies regarding the debtors' operations, financial performance and progress in the case; Develop public relations initiatives for the debtors to maintain public confidence and internal morale during the Chapter 11 cases; Prepare press releases and other public statements for the debtors, including statements relating to asset sales and other major Chapter 11 events; Prepare other written communications to the debtors' key constituencies; The firm charges on an hourly basis. Rates range from $360 per hour to $70 per hour. The firm states that it will charge at least $25,000 per month in fees notwithstanding the hourly rates. The debtor has paid a total of $65,000 as a retainer. INBD, INC.: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: INBD, Inc. 2610 North Van Marter Suite #2 Spokane, WA 99206 Petition Date: Feb 17, 2000 Chapter 11 Court: Eastern District of Washington Bankruptcy Case No.: 00-00955 Judge: Patricia C. Williams Debtor's Counsel: Barry W. Davidson, 07908 Davidson Bailey & Medeiros 1280 Bank of America Center 601 West Riverside Avenue Spokane, Washington 99201 (509)624-4600 Total Assets: $ 1,000,001 to 10 mill(estimate) Total Debts: $ 1,000,001 to 10 mill(estimate) 20 Largest Unsecured Creditors A&B Asphalt $ 13,074 B&E Electric $ 9,219 Cavanaughs River Inn $ 1,846 Computer Bus. Solutions $ 3,044 Double Tree Hotel $ 3,491 Lukins & Annis, P.S. $ 5,124 Mechanical Svcs $ 2,963 Moss Adams $ 24,802 Muzak $ 6,267 Nelson, Doug $ 8,814 Pepsi-Cola Company $ 9,043 Pepsi-Cola Pasco $ 5,656 Pepsi-Cola Yakima $ 4,927 Prosource Distribution Svc $ 2,735 Sysco Food Service of Montana $ 163,638 The Office Depot $ 9,237 Todd Uniforms $ 4,701 Tri State Sign Co. $ 4,572 Weinstein Beverage Co. $ 4,644 Z Media $ 1,919 INSILCO HOLDING: Completes Sale of Taylor Publishing ---------------------------------------------------- Insilco Holding Company has completed the previously announced sale of Taylor Publishing, its Dallas-based specialty publishing business unit, to a newly formed company owned by Castle Harlan Partners III, L.P. for proceeds of $93.48 million before adjustments for working capital and transaction-related costs. David A. Kauer, Insilco President and CEO, reiterated, "Taylor is a fine business with solid prospects, however it does not fit with our long-term strategy of pursuing growth in our core technology and heat exchanger businesses." Kauer concluded, "We have benefited from our long association with Taylor Publishing and wish them much success in the future." KCS ENERGY: Announces Court Decision ------------------------------------ Houston-based KCS Energy Inc. announced that the U.S. Bankruptcy Court for the District of Delaware orally denied on Feb. 25 the company's motion for an order determining that the class of senior notes under its proposed chapter 11 plan would be unimpaired if the notes were reinstated and the third supplemental indenture were effective, according to a newswire report. KCS President and CEO James W. Christmas said, "Taking into account the court's ruling and remarks, we believe we are unable to submit an amended plan which leaves the holders of the senior notes unimpaired. Accordingly, the disclosure statement hearing has been adjourned to March 26." He also said that he believes an amended chapter 11 plan can be filed based on the existing noteholder agreement, but that there is no assurance that the proposed plan will be approved. KCS is an independent energy company engaged in the acquisition, exploration, development and production of natural gas and crude oil. (ABI 01- Mar-00) KEY PLASTICS: Third Amendment To Senior Credit Facility ------------------------------------------------------- On February 15, 2000, Key Plastics L.L.C. executed a third amendment to its Senior Credit Facility, which, among other things, extended to March 10, 2000 the terms of a previously reported modification to the Facility that had been agreed to by the company, and the agent and lenders on December 15, 1999. The previously reported Maintenance/Support Agreement executed by certain shareholders of the company's majority member, Key Plastics Holdings, Inc., was also amended on February 15 to extend until March 25, 2000 the time period during which the shareholders have agreed to contribute $5 million to the company if it is unable to borrow under its Senior Credit Facility. LOEHMANN'S: Extension of Time To Assume/Reject Leases ----------------------------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an orde4r on February 22, 2000 granting the debtor, Loehmann's, Inc. an extension of time, to and including March 13, 2000 to assume or reject unexpired leases. MARTIN COLOR-FI: Signs Merger Agreement --------------------------------------- Martin Color-Fi, Inc.("MCF") announced that it has signed a merger agreement with an affiliate of Dimeling, Schreiber & Park ("DS&P"), a Philadelphia, Pennsylvania-based investment partnership which specializes in private equity investments primarily in the form of Chapter 11 reorganizations. If the agreement (which must be approved by the Bankruptcy Court) is consummated, all of the currently outstanding shares of MCF will be canceled. New MCF shares will be issued to DS&P, which will become the sole shareholder of restructured MCF upon effectiveness of the merger. The agreement (together with the merger consideration) will be reflected in the proposed Plan of Reorganization and Disclosure Statement that MCF anticipates filing imminently in Bankruptcy Court in the District of South Carolina. The agreement provides that it is subject to competing overbids, MCF's obtaining debt financing acceptable to DS&P (a non-binding commitment letter from a lending institution has been obtained by MCF) and the confirmation of a Plan of Reorganization, among other conditions. Neither the agreement nor the proposed Plan of Reorganization will provide for any recovery for MCF's existing shareholders. Martin Color-Fi, Inc. produces polyester fibers and pellets from recycled plastic materials such as soft drink bottles, off-class packaging resins, polyester fiber waste and film waste. The company uses these materials to produce polyestrr fibers for a wide range of markets, including automotive fabrics, carpet, apparel, home furnishings, industrial fabrics and construction reinforcement materials. The company also produces yarns from synthetic fibers, as well as dyes and pigments. MCF is operating under the protection of the Bankruptcy Court in the District of South Carolina. The Bankruptcy Code places the interests of creditors ahead of the interests of shareholders. As stated above, if the Bankruptcy Court approves a plan of reorganization based on the merger agreement with DS&P's affiliate, all existing shares of MCF will be cancelled and shareholders will receive no compensation for such cancellation of their shares. NATIONAL RESTAURANTS: Seeks Order Pursuant To Sec.365(d)(4) ---------------------------------------------------------- National Restaurants Management, Inc. et al. seeks entry of an order extending the time period within which the debtors may assume or reject leases. Kahn Consulting Inc. and Committee counsel are undertaking a comprehensive investigation of the financial condition of the NRM Companies in order to determine the value of the debtors. AS a result, the Creditors Committee has requested that the debtors not seek approval of their Disclosure Statement and otherwise move forward with the additional steps required for confirmation of the plan until the valuation analysis is complete. The debtors seek such an extension to June 12, 2000. NAVIGATOR GAS TRANSPORT: MOODY'S Downgrades Notes ------------------------------------------------- Moody's Investors Service downgraded the rating of Navigator Gas Transport's first priority ship mortgage notes due 2007 to Caa2 from Caa1, and the second priority notes due 2007 from Ca to C. The senior implied rating was reduced to Caa2 from the previous B3. The rating outlook is negative. The rating downgrade primarily reflects the reduction in earnings capacity of the ships due to the continued weak rate environment of the transport market for petrochemical gasses, the concurrent decline in the market value of the ships under construction (collateral for the notes), the fragility of the company's balance sheet due to the high leverage, and increasing expectations that restructuring options will likely be explored and effected with the bondholders. Navigator Gas Transport PLC is an Isle of Man public limited company. PACIFIC INTERNATIONAL: Zaremba Group Delivers Letter of Credit -------------------------------------------------------------- The Zaremba Group LLC has delivered their irrevocable letter of credit to the Murray family to guarantee that the proposed transaction can proceed on an insured payment basis. Zaremba has agreed to purchase the assets of PCIE and lease back those assets to PCIE for a nominal yearly amount. With the placement of the letter of credit, Zaremba has asserted his undeniable willingness to assist in the re-emergence of PCIE from its Chapter 11 status. "This action bodes well for PCIE's attempt to successfully re- organize and emerge from the Chapter 11 Bankruptcy and sends a clear message that PCIE does not stand alone in its efforts", states CEO, Binks Graval. PAGING NETWORK: Trading Moved to Nasdaq Small Cap Market -------------------------------------------------------- Paging Network, Inc. was notified that Nasdaq would move the trading of PageNet's shares from the Nasdaq National Market System to the Nasdaq Small Cap Market, effective February 25, 2000. The determination was made following a hearing before the Nasdaq Listing Qualifications Panel on January 29. PageNet and Arch Communications Group, Inc. expect that when their proposed merger is consummated, the combined company will meet the Nasdaq NMS listing qualifications. Arch's shares remain NMS listed. PageNet's shares are still traded under the symbol PAGE. PageNet is a leading provider of wireless messaging and information services with approximately 9 million subscribers in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and Canada. The company offers a full range of paging and advanced messaging services, including guaranteed-delivery messaging, two-way wireless e-mail, and global messaging. PageNet's wholly owned subsidiary, Vast Solutions, develops integrated wireless solutions to increase productivity and improve performance for major corporations. In November 1999, PageNet announced a definitive agreement to merge with Arch. Expected to be completed by mid-year 2000, the merger will create a new company with more than 15 million wireless communications subscribers. The merger, which will include an exchange of equity for PageNet's senior subordinated notes and Arch's senior discount notes, remains subject to clearance by the Federal Communications Commission, the Securities and Exchange Commission, the Department of Justice and bondholders and shareholders of PageNet and Arch. PLANET HOLLYWOOD: Disney to Purchase All Star Cafe -------------------------------------------------- Walt Disney Co. announced that it is negotiating to purchase a sports-themed restaurant on its central Florida property from Planet Hollywood International Inc. by the end of the week, according to a newswire report. The purchase price for the 280- seat Official All Star Cafe at Disney's Wide World of Sports attraction was not disclosed. The park hosts sporting events year-round and is the spring training site for the Atlanta Braves. The restaurant is one of eight All Star Cafes owned by Planet Hollywood, which emerged from chapter 11 protection last month. PREMIER LASER SYSTEMS: Quinn Appointed to Board ----------------------------------------------- In mid-January Premier Laser Systems Inc. announced that the board of directors had appointed Premier President and CEO Michael J. Quinn, 55, to the board, effective immediately. The company also announced that Colette Cozean, Ph.D., 41, had resigned from the board, and Patrick Day, 72, and G. Lynn Powell, DDS, 58, had announced their retirement from the board. The appointment of Quinn fills one of the three vacancies created by the resignations of Cozean, Day and Powell, bringing the total number of directors to five, with two vacancies to be filled. According to the announcement, the board was to immediately commence a search to fill the remaining seats on the board. Quinn joined the company as president and CEO in mid-November of last year. Both Cozean and Day had served on the board since 1991, Powell joined the board in 1997. Earlier in January Premier Laser Systems Inc. announced that its board of directors elected Fredric J. Feldman, as its chairman, replacing Cozean, who had served as chairman since 1992. Premier Laser Systems develops, manufactures and markets diagnostic and therapeutic products for the eyecare, dentistry and surgical markets including lasers, fiber optic delivery systems and associated products for a variety of applications. SABRATEK: Enters Interim Management Agreement with Jay Alix ----------------------------------------------------------- The debtor, Sabratek Corporation, filed an Interim Management and Financial Consulting Services Agreement which was entered into between Sabratek Corporation and Jay Alix & Associates. One objective of the engagement is to sell portions of the company for the benefit of creditors and or shareholders. Jay Alix will be compensated for these services based on a contingent success fee calculated as 1.5% of the total aggregate consideration tendered as a result of any such transaction. SERVICE MERCHANDISE: Reports Year-End Results to SEC ---------------------------------------------------- Service Merchandise Company indicates that the success of its stabilization efforts during 1999 is reflected in its EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring charges) from continuing operations of $25.2 million for the year ended January 2, 2000. EBITDAR from continuing operations for the three months ended January 2, 2000 was $68.3 million compared to $49.1 million for the prior year fourth quarter. EBITDAR from continuing operations for the nine months ended January 2, 2000 - encompassing reporting periods following the commencement of the company's voluntary Chapter 11 case on March 27, 1999 - was $47.6 million, exceeding the company's 1999 Stabilization Plan by $12.6 million, or 36.1 percent. As key components of its 2000 Business Plan, Service Merchandise also announced strategic initiatives involving the refinement of its product mix with a heightened focus on jewelry and a more targeted assortment of hardlines, and a convergence of its store selling environments and established Internet structure. The company's 2000 Business Plan also includes initiatives designed to maximize the value in the company's real estate holdings. To fund its 2000 Business Plan as well as future operations, and in anticipation of emergence from Chapter 11 in 2001, the company has obtained a fully underwritten commitment from Fleet Retail Finance Inc., the co-agent under the company's current $750 million debtor-in-possession (DIP) financing facility, for a new four-year $600 million credit facility. This new facility will replace the existing DIP financing and includes a commitment for exit financing post-reorganization. In connection with the completion of its independent audit for the year ended January 2, 2000, the company announced a net loss of $243.7 million for the fiscal year, on net sales of $2.23 billion. For the prior year, the company reported a net loss of $110.3 million on net sales of $3.17 billion. For the 13 weeks ended January 2, 2000, the company reported net income of $28.0 million on net sales of $835.7 million, as compared with a net loss of $41.8 million on net sales of $1.29 billion for the 14 weeks ended January 3, 1999. Service Merchandise will present its 2000 Business Plan to its lenders, vendors, landlords, employees and other creditors in March 2000. The Plan is said to capitalize on Service Merchandise's key assets, including its jewelry franchise, the best of its hardlines business, its real estate assets and its established Internet infrastructure. Based on the company's analyses and market review, Service Merchandise will expand its focus during 2000 on its core competency - the design, manufacture and sale of jewelry - while also offering a more targeted selection of hardlines items that customers have historically shown an affinity for purchasing at Service Merchandise. The company will exit certain unprofitable hardlines categories, including toys, juvenile, sporting goods, most consumer electronics and indoor furniture. The company plans to conduct clearance sales at its 221 stores in the ordinary course of business over the next several months in order to rebalance its inventory requirements consistent with the 2000 Business Plan. An important element of the company's strategy is the convergence of the Internet and store selling environments. Each Service Merchandise store will feature Internet kiosks that will provide immediate access to the company's web site, its bridal and gift registry, and its store directory. Using the in-store Internet kiosks, customers will be able to purchase and pick up merchandise from the store or have it delivered to their homes. The company also expects to enter into additional vendor partnerships similar to its recently announced alliances with brands such as Corning, Black and Decker and Panasonic Home. Under these alliances, Service Merchandise plans to offer a portion of each company's product line in its stores and the entire product line via the Internet. The company is working to establish a system to offer the hardlines categories which will no longer be carried in stores for purchase via the Internet based on vendor ability to ship directly to consumers. The 2000 Business Plan, if successfully implemented, should provide the framework for a plan of reorganization to be proposed, filed, prosecuted, confirmed and consummated by the company during 2001. The company said that the plan or plans of reorganization presently being considered by the it involves a debt conversion of the its prepetition unsecured claims into new common equity of the reorganized company. Under such circumstances, the existing common stock of the company would be cancelled and existing shareholders would not receive any distribution in connection with the reorganization. The company said that the value of its common stock was highly speculative since it was highly probable that it would be cancelled and therefore worthless if the expected plan of reorganization is consummated. SERVICE MERCHANDISE: Kovats Promoted to Sr. Vice President ---------------------------------------------------------- Eric Kovats has been promoted to Senior Vice President, Stores, assuming overall responsibility for Service Merchandise Company Inc.'s 221 stores. Mr. Kovats, 45, joined Service Merchandise in 1973, and has served in various store management and district management positions, including three years as Regional Vice President. He has been Vice President, Hardlines Stores Organization, since March 1999. As part of the 2000 Business Plan, the company will begin immediately to reduce the workforce at its corporate offices in Nashville and throughout its stores organization which will result in the elimination of approximately 4,800 positions in stages during the 2000 fiscal year. Approximately 350 distribution center positions will be also be impacted. "The reductions in force will bring our store and corporate support functions in line with the service requirements of our smaller store layout and corresponding reduced merchandise volume. We recognize and regret the impact this action will have on the associates whose hard work and contributions have played key roles in our progress during the past year," Mr. Cusano said. He also stated that the company plans to seek approval of modifications to its existing employee retention program which will benefit go-forward employees and provide enhanced severance to most transitional employees who are asked to stay with the company for a limited period of time to complete specific projects and objectives established by the company. Following the expected approval of the Bankruptcy Court and closing, the company's new four-year, $600 million DIP and exit credit facility will replace the company's existing $750 million DIP financing agreement and is expected to provide adequate DIP financing as well as exit financing for ongoing capital improvements, operating expenses and general working capital once the company emerges from Chapter 11. The new facility will be agented by Fleet Retail Finance Inc., a co-agent of the current DIP facility, and fully underwritten by FleetBoston Robertson Stephens Inc. The new credit facility is presently structured as a $600 million revolver, although Fleet has reserved the right to allocate up to $85 million to a term loan prior to closing. The facility also includes a letter of credit subfacility of $150 million and permits subordinated secured financing in amounts up to an additional $50 million on terms reasonably satisfactory to Fleet. The facility requires superpriority claim status and a first priority security interest in all assets subject to existing liens, and contains certain other customary priority provisions. The financing is subject to various customary terms and conditions, and must be closed by the company no later than May 31, 2000. The facility will mature four years from closing but can be converted to exit financing by the company at any time during the four-year term as long as applicable conditions to conversion are satisfied. The interest rate during the first year of the term is LIBOR plus 250 basis points or prime plus 75 basis points; thereafter, the interest rate on the facility is subject to quarterly adjustment pursuant to a pricing grid based on availability and/or EBITDA with ranges of 200 to 275 basis points over LIBOR and 25 to 100 basis points over prime. The borrowing base under the facility is substantially similar to the company's existing $750 million DIP facility except for increases in certain seasonal advance rates and total availability based on real estate holdings. The facility has no mandatory commitment reductions or mandatory prepayments except, prior to exit from Chapter 11, the facility includes a daily sweep of cash towards the revolver balance (subject to certain exceptions). Following exit from Chapter 11, the daily sweep would occur only during specified cash dominion events. The facility includes various covenants designed to facilitate implementation of the 2000 Business Plan and the company's anticipated emergence from Chapter 11 in 2001. To fund capital expenditures, including the company's planned two-year store renovation program, the proposed facility will permit the company to invest up to $70 million of capital expenditures during 2000 (plus certain incremental amounts based on the amount of subleased space completed during the fiscal year). In 2001, the facility will permit capital expenditures up to $150 million less actual capital expenditures invested during 2000. During 2002 and 2003, the company may invest up to $50 million each year with 100 percent carry over of unexpended amounts from prior years. The facility will include a financial covenant test similar to the test in the current $750 million DIP facility. The company would not breach this financial covenant unless unused borrowing availability falls below $50 million and the company fails to meet specified minimum EBITDAR performance. Excluded from the EBITDAR calculation are revenues and expenses associated with discontinued inventory lines, the Orlando and Montgomery warehouses and the reduction in force plan (including payroll and severance) except with respect to non-continuing EBITDAR amounts in excess of $100 million. There are no restrictions in the facility on the company's ability to sublease and lease store space pursuant to the 2000 Business Plan; lease all or part of the corporate headquarters; sell, pursuant to sale-leasebacks or outright, the corporate headquarters, the Orlando and/or the Montgomery distribution centers; and/or implement a credit card receivables securitization program. The company also retains the ability to complete intercompany restructurings, intercompany asset transfers and intercompany/third-party real estate transactions. Events of default under the facility include customary default provisions as well as key management provisions that would trigger a default in the event that both the current CEO and President ceased to be employed, unless at least one of them is replaced by a person reasonably satisfactory to Fleet within 90 days and/or the acquisition by any one person or entity of 50 percent of the voting stock of the company. Closing of the proposed facility is subject to customary closing conditions, including at least $155 million of availability at close and no material adverse change at the time of closing. Conversion of the DIP Facility to an exit facility is also based on customary closing conditions, including the Agent's reasonable satisfaction with capital structure, plan of reorganization and any materially revised projections, as well as the achievement by the company of a specified trailing 12-month EBITDA (which varies depending on time of exit) and certain minimum availability (which varies from $50 to $100 million) depending on the time of exit. SHADE TOWERS: Case Summary and 6 Largest Unsecured Creditors --------------------------------------------------- Debtor: Shade Towers, LLC 528 E. Trent Avenue Spokane, WA 99202 Petition Date: February 15, 2000 Chapter 11 Court: Eastern District of Washington Bankruptcy Case No.: 00-00887 Judge: Patricia C. Williams Total Assets: $ 1,000,000 to 10 mill(estimate) Total Debts: $ 1,000,000 to 10 mill(estimate) 6 Largest Unsecured Creditors James W. Elmer Const. Const. debt $ 225,000 Sound Elevator Co. Disputed to exact amount only $ 40,000 3-E Design Group Disputed to exact amount only $ 10,500 Spokane Concrete Const. debt $ 750 Thomas Cabinets Const. debt $ 750 Joel McCormick III Notice for Elmer Const. SUN HEALTHCARE: Founder Sells Most of His Stock ----------------------------------------------- Andrew Turner reported to the SEC a sale of 5.95 million shares of his common stock in Sun Healthcare. Turner now holds 1.9 percent of the company's stock - down from 11.5 percent. The SEC requires shareholders who own more than 5 percent of a company's stock to file annual reports on their holdings. Other Sun executives also sold shares in December, according to reports filed with the SEC on Jan. 7. Many shareholders who have capital gains sold Sun stock to reduce their income tax, Goodman said. Sun Healthcare filed for bankruptcy-court protection on Oct. 14. The company was delisted from the New York Stock Exchange on June 29. Sun's stock reached a high of $6.88 for the year in early 1999 and a low of 1 cent at the end of the year. In 1998, Sun stock traded as high as $20.31. TEU HOLDINGS: Case Summary --------------------------- Debtor: TEU Holdings, Inc. 1309 Exchange Alley Richmond, VA 23219 Petition Date: February 17, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01098 Judge: Peter J. Walsh Debtor's Counsel: Mark Felger(David W. Carickhoff, Jr.) Cozen and O'Connor Chase Manhattan Centre 1201 N. Market Street Suite 1400 Wilmington, DE 19801 (302)295-2087 Total Assets: $ 10,000,001 to 50 mill(estimate) Total Debts: $ 10,000,001 to 50 mill(estimate) TOTAL RENAL CARE: Moody's Downgrades Ratings; Outlook Is Negative ----------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Total Renal Care Holdings, Inc. ("TRL") and its subsidiary, Renal Treatment Centers, Inc. The ratings affected are as follows: Total Renal Care Holdings, Inc.: � $1.1 billion senior secured credit facilities due 2003 to 2006 from Ba2 to B1 � $345 million 7% convertible subordinated notes due 2009 from B1 to B3 � Senior implied rating from Ba2 to B1 � Senior unsecured issuer rating from Ba3 to B2 Renal Treatment Centers, Inc.: � $125 million 5.625% convertible subordinated notes due 2006 from B1 to B3 The rating outlook is negative. TRL is a provider of integrated dialysis services. The rating action reflects the deterioration in TRL's operating results and debt protection measures in recent periods as the company has exhibited lower revenue per treatment and increased costs, while also incurring substantial charges related to increased provisions for accounts receivable, asset write-offs, and other issues. The company also recently announced that it would be taking substantial additional charges (primarily non- cash) in its fourth quarter ended December 31, 1999 for items including asset impairment, losses on asset sales, and further provisions for accounts receivable. Moody's further notes that the company's Florida-based laboratory operation is currently in a dispute with its third party carrier relating to potential Medicare overpayments of roughly $19.8 million. The carrier has suspended all Medicare payments to the laboratory during its review. These operating issues and charges have led to covenant violations under the company's senior credit agreement. Management is currently in the process of negotiating an amendment with its bank group. The company has recently entered into an agreement to sell all of its non-continental U.S. operations for approximately $161 million, proceeds of which will be used to reduce outstanding debt. However, given TRL's reduced earnings and the scale of recent and pending charges, leverage will likely remain substantially higher than historical levels. The negative rating outlook reflects the challenges that the new management team will continue to face in improving the company's operating results and financial condition given the scope of its recent difficulties. Total Renal Care Holdings, Inc., headquartered in Torrance, California, is the nation's second-largest provider of dialysis services for patients suffering from chronic kidney failure. TOWER AIR: Case Summary and 23 Largest Unsecured Creditors --------------------------------------------- Debtor: Tower Air, Inc. Hangar No. 17 J.F.K. Int'l Airport Jamaica, NY 11430 Type of Business: Provides primarily long-haul scheduled and charter passenger air service in diverse international and domestic markets served by its fleet of Boeing 747 aircraft. Petition Date: February 25, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01280 Judge: Peter J. Walsh Debtor's Counsel: Jay M. Goffman; Mark S. Chehi Skadden, Arps, Slate, Meagher & Flom, LLP One Rodney Square, PO Box 636 Wilmington, DE 19899-0636; and Four Times Square, New York, New York 10036 (302)651-3000; and (212)735-3000 Total Assets: $ 380,726,000 Total Debts: $ 356,895,000 23 Largest Unsecured Creditors General Electric Co. Contact: Gutto Davis Phone: 44-1443-847-840 Fax: 44-1443-847-362 trade debt $ 36,400,000 US Treasury tax $ 8,439,828 Lufthansa Airomotive Contact: Fergus Fenlum Phone: 353-1-401-1111 trade debt $ 8,804,009 LSG/Sky Chefs Contact: Janice Crowley Phone: 817-792-5553 trade debt $ 3,794,750 China Airlines Contact: Mark Hsu Phone: 886-3-383-4251 Fax: 886-3-398-7764 trade debt $ 3,598,650 Ameco PO Box 563 Capital Airport Beijing P.R. China Contact: Andreas Meisel Phone: 86-10-6456-1122 ext 4000 Fax: 86-10-6456-7974 trade debt $ 3,488,723 Pratt & Whitney 400 Main Street East Hartwood, CT 06180 Contact: Bart Frankel Phone: 860-565-7163 Fax: 203-250-4767 trade debt $ 3,026,803 Dynair Services 45025 Aviation Drive Suite 350 Dulles, VA 20166 Contact: John Sanders Phone: 703-742-4328 Fax: 703-742-4342 trade debt $ 2,371,324 Texaco, Inc. Contact: John Swalfs Phone: 914-838-7292 trade debt $ 2,039,758 Eagle Services 51 Calshot Road Singapore, 509927 Contact: Roger Diquenoy Phone: 65-548-2438 trade debt $ 2,013,974 Port Authority of NY One World Trade Center NYC, NY 10048 Contact: Steve Borrelli Phone: 212-435-7000 Landlord $ 1,496,705 Mercury Air Group Contact: Eric Beelar Phone: 310-577-8758 Fax: 310-577-8765 trade debt $ 1,487,102 Treasurer of US-Kelly AFB $ 1,138,537 City of Los Angeles trade debt $ 849,002 Prudential Insurance One Prudential Drive Cranbury, NJ 08512 Contact: James Paradee Billing Tech Phone: 609-708-4047 Fax: 609-708-5555 trade debt $ 847,005 Air BF Ltd. Contact: Art Hudson Phone: 281-560-5530 trade debt $ 770,815 Litton Systems 21050 Burbank Blvd. Woodland Hills CA 91367 Contact: Scott McBee Phone: 818-226-2309 trade debt $ 644,994 Israel Aircraft Ind Ben Gurion Int'l Airport Tel Aviv Contact: Daniel Lesham Phone: 972-3-935-8476 trade debt $ 642,682 Aviation Safeguards 175-01 Rockaway Blvd. Jamaica, NY 11434 Contact: Marry Blake Phone: 718-995-5000 Fax: 718-995-4350 trade debt $ 625,946 US Customs duties $ 571,260 Dade County Aviation PO Box 592616 AMF Miami, FL 33159 trade debt $ 569,253 Hewes Gelband Lambert Contact: Steve Gelband Phone: 202-337-6200 trade debt $ 513,894 Puerto Rico Ports Authority GPO Box 362829 San Juan, PR 00936-2829 Contact: Ivelisse Castro Phone: 787-729-8440 Fax: 787-724-6844 trade debt $ 494,654 TOWER AIR: Announces $18 Million Secured DIP Credit Facility ------------------------------------------------------------ Tower Air, Inc. (Nasdaq National Market:TOWR) today announced that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. In connection with the filing made in the United States Bankruptcy Court in Wilmington, Delaware, Tower also announced that its existing secured lender, GMAC Business Credit, LLC has agreed to provide an $18 million secured debtor-in-possession credit facility, which will allow the Company to continue its regular schedule of flights and otherwise operate its business in the ordinary course while it seeks to negotiate promptly the terms of a consensual reorganization plan with its major creditor constituencies. "Given the Company's current financial condition, we had no choice but to file for Chapter 11 protection. Even with the filing, however, we do not expect any interruptions in service or significant changes in the Company's current operations," said Morris Nachtomi, chairman and chief executive officer of Tower. Nachtomi added that "the Company left no stone unturned in trying to avoid a Chapter 11 filing, but simply was unable to do so. Operating under the supervision of the Bankruptcy Court is the only alternative that will give Tower the breathing space and relief from debt obligations necessary to reorganize the Company's finances expeditiously." TOWER AIR INC.: S&P Cuts Credit To D ------------------------------------- Standard & Poor's lowered its corporate credit rating on Tower Air Inc. to 'D' from triple-'C'-plus, following Tower's filing for bankruptcy under Chapter 11. There is no rated debt, as the high yield debt issue originally planned in 1998, when the corporate credit rating was assigned, was withdrawn. Tower Air, based at New York's John F. Kennedy International Airport, provides scheduled and charter passenger service to mostly leisure travelers and charter service to the U.S. military. It also has a small air cargo operation. Tower is the second-largest provider of service between Kennedy Airport and Tel Aviv (after El Al Israel Airline). It also flies to a limited selection of U.S. and European destinations. The entry of Continental Airlines Inc. into the New York-Tel Aviv market in August 1999, flying from Newark Airport, greatly increased competition. Tower has had a weak financial profile for years, posting losses since 1996 (with the exception of 1998 when it earned only $1.5 million). Like the rest of the industry, Tower has also been hurt by increased fuel prices over the past year. Standard & Poor's had revised its rating outlook to negative in February 1999. TREESOURCE INDUSTRIES: Reports $1.538M Net Loss For Quarter ----------------------------------------------------------- TreeSource Industries, Inc., (OTC Bulletin Board: TRES) reported a net loss of $1,538,000 or $0.14 per common share for the three months ending January 31, 2000. This compares to a net loss of $3,222,000 or $0.29 per common share for the same period last year. The quarter's results include non-ordinary charges to income of $1,095,000 of which $942,000 relates to the Company's current Chapter 11 reorganization and $153,000 relates to a loss on the disposition of certain assets. Fiscal 2000 year-to-date net income for the nine months ended January 31, 2000 was $4,083,000 or $0.37 per common share as compared to a net loss of $ 5,313,000 or $0.48 per common share for the same period last year. Year to date results include non- ordinary charges to income of approximately $1,972,000 of which $1,819,000 relates to the Company's current Chapter 11 reorganization and $153,000 relates to a loss on the disposition of certain assets. Net sales were $186.1 million for the nine months as compared to $143.2 million for the same period last year. Lumber sales volume was up 13 percent and revenue per unit of lumber sold was up 15 percent. TreeSource President, Jess Drake commented, "Financially, the quarter was disappointing due to soft markets and substantial one-time costs related to the restructuring. We continue to focus on beginning the process of updating our facilities, and selling non-core assets to pay down debt." As announced earlier, the Company filed for reorganization under Chapter 11 of the Bankruptcy Code on September 27, 1999. A Disclosure Statement and Joint Plan of Reorganization has been filed with the U.S. Bankruptcy Court in Seattle. The proposed plan, if confirmed, would result in the cancellation of the Company's current classes of common and preferred stock. Proceeds from the sale of assets will be used to pay down the Company's secured debt and a significant portion of the debt would be converted to equity. TreeSource CFO Robert Lockwood stated, "Financially, the Company's results are on-track with the business plan. A weak third fiscal quarter due to a softening market and increased costs related to the bankruptcy was anticipated. The lumber market experiences wide seasonal and cyclical fluctuations that, when combined with a highly leveraged balance sheet, cause financial instability. The proposed plan of reorganization address these issues through facility modernization and de- leveraging the balance sheet." TreeSource Industries, Inc. operates facilities in Oregon, Washington, and Vermont, producing softwood and hardwood lumber products. TRISM INC: Notice of Confirmation and Effectiveness of Plan ----------------------------------------------------------- On December 9, 1999, the US Bankruptcy Court for the District of Delaware entered an order confirming the Second Amended Joint Plan of Reorganization dated October 25, 1999. The Effective Date of the plan occurred on February 15, 2000. UNITED INDUSTRIES: Moody's Confirms Ratings ------------------------------------------- Moody's Investors Service confirmed the B3 rating of United Industries Corporation's ("UIC") $150 million of 9.875% senior subordinated notes, due 2009, and the B1 rating of its $335 million secured credit facility, which includes a $110 revolving credit and $225 million of original term loans, of which $211 million is currently outstanding. In addition, Moody's confirmed the company's B1 senior implied rating and its B2 senior unsecured issuer rating. The outlook has been changed to stable from positive. The change in the ratings outlook reflects UIC's slower than anticipated growth in sales and cash flow in fiscal 1999 and the expectation that the company's future growth will be slower than originally planned. As a result, its debt protection measures may not materially strengthen in the near term. The risks associated with UIC's high leverage and thin interest coverage have been heightened as a result of its substantial customer concentrations, increasing competition from The Scotts Company ("Scotts" - Ba3 senior implied; positive outlook), and concerns over its value-brand's recent loss of shelf space at Home Depot. Sales and earnings of UIC's Terminate business suffered in 1999 primarily due to volume shortfalls driven by FTC litigation. Although the FTC suit was settled in mid-season, it significantly delayed the company's marketing and merchandising plans. Furthermore, high year-end retailer inventories in 1998 reduced 1999 sell-in of the Terminate product. Unfavorable product mix and high operating expenses also contributed to Terminate's poor operating performance. UIC has relaunched the Terminate product in fiscal 2000 and early reports are promising. Fiscal 1999 EBITDA coverage of interest expense was moderate at approximately 1.7-times (1.6-times after capex) versus 1.6-times in 1998. Furthermore, with total debt of $369 million (down $15 million from the January 1999 recapitalization), EBITDA leverage remains high more than 6-times, while retained cash, as measured by EBITDA minus capex minus interest expense minus taxes, is modest at only $18 million, or 5% of total funded debt. The company has low depreciation and capital expenditure requirements. At December 31, 1999, UIC had no outstanding borrowings under its $110 million revolving credit facility, which adds to its financial flexibility. The financial covenants governing the secured credit facility have recently been amended to reflect the lower-than-expected levels of cash flow. Secured bank debt represents approximately 57% of the company's total funded debt. Headquartered in St. Louis, Missouri, United Industries Corporation is a leader in branded consumer lawn and garden care products, as well as household insect control products. Its value and opening price point brands include, among others, Spectracide, Spectracide Terminate, Hot Shot, Cutter, Peters Professional, Real-Kill (Home Depot), No-Pest (Lowe's), KRid and KGro (Kmart). US OFFICE PRODUCTS: S&P Cuts Ratings -------------------------------------- Standard & Poor's lowered its corporate credit and bank loan ratings on U.S. Office Products Co. (USOP) to triple-'C'-plus from single-'B'. At the same time, Standard & Poor's lowered its rating on the company's subordinated notes to triple-'C'-minus from triple-'C'-plus. The outlook is negative. The downgrade reflects continued deterioration in credit protection measures; weak performance, especially in the North America Office Supplies Division; and a near-term likelihood of default on certain bank loan covenants. USOP participates in the highly competitive industry of supplying office products and services to corporate customers. This business has historically been served by contract stationers like USOP, but superstore chains and mail order marketers have been gaining market share. USOP will continue to face significant competition, especially as stronger companies like Staples Inc. and Office Depot Inc. continue to grow their contract businesses. Over the past 12 months, USOP's credit protection measures have deteriorated substantially as a result of weak operating performance. Cash flow has fallen well below interest expense, and the company has needed to raise funds through asset sales and borrowings against its revolving credit facility to meet its debt service requirements. Although the company continues to prune its portfolio of businesses and is likely to sell other noncore assets, no assurance can be given that the company will be able to negotiate acceptable terms on a timely basis. Operating profits declined 67% in the third quarter and 61% in the first nine months of fiscal 2000. The sharp decline in profitability is a result of continued problems integrating the company's acquired businesses, particularly due to new systems and warehouse conversions in the North American businesses. The company has about $100 million of availability under its credit facility and was in compliance with its bank covenants at the end of the third quarter of fiscal 2000. However, the company has little room for error in its cash flow projections for the fourth quarter and Standard & Poor's is concerned that, given the declining trend in operating performance, the company may violate its bank covenants. OUTLOOK: NEGATIVE Operating performance is expected to continue to decline as the company still faces significant integration and operational issues in its core North American businesses, Standard & Poor's said. VENTAS: Completes 2nd Phase Closing of Long Term Credit Facility ---------------------------------------------------------------- Ventas, Inc. (NYSE:VTR) announced that as part of its recently completed amended long-term senior credit facility, it has executed and delivered to its lenders mortgages, assignments, and other related documentation granting liens and security interests in substantially all its real property assets and in other related assets by the date required under the loan agreement. "Successfully completing this phase of our loan agreement by the February 28 deadline is another positive and important step," President and CEO Debra A. Cafaro said. "Our energies are now entirely focused on our continuing work to finalize Vencor's plan of reorganization and with it, a settlement of the government investigations of Ventas and Vencor." Vencor, Inc. (OTC/BB: VCRI) is the Company's principal tenant. As previously announced, Ventas entered into an amended long-term senior credit facility with its existing senior lenders on January 31, 2000, which restructured approximately $973 million of debt. Bank of America and J.P. Morgan are co-agents under the amended credit facility. Ventas announced that its Board of Directors has set March 28, 2000 as the record date for its annual meeting, which will be held on May 23, 2000 at The Olmstead in Louisville, Kentucky. Ventas also said that, consistent with its previously announced position, it will not declare or pay a dividend at this time. The Company intends to maintain a strong cash position pending developments in Vencor's bankruptcy proceedings. Currently, the Company has approximately $120 million in cash and cash equivalents. Vencor filed for bankruptcy court protection in mid-September 1999. It has the exclusive right to file a plan of reorganization until March 13, 2000 and has recently announced that it intends to extend the expiration date for its Debtor-in-Possession financing until June 30, 2000 (subject to bankruptcy court approval). There can be no assurances that Vencor's plan of reorganization, when filed, will be on the terms previously announced or otherwise be acceptable to Ventas and its creditors. Ventas intends to qualify as a real estate investment trust for the year ended December 31, 1999 and expects to make the required distribution for 1999 no later than September 15, 2000. The terms of the Company's amended long-term senior credit facility specifically permit the Company to pay as distributions to shareholders all dividends necessary to qualify as a REIT. The required dividend distribution for 1999 equals 95 percent of the Company's 1999 taxable income, less amounts that were paid as a dividend in February 1999. Ventas announced that Steven T. Downey has resigned as its CFO to pursue other business opportunities. Ms. Cafaro will continue to be responsible for the Company's financial reporting and audit obligations. A search for a new CFO is underway. Ventas, Inc. is a real estate company whose properties include 45 hospitals, 218 nursing centers and eight personal care facilities operating in 36 states. ********* 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. 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