/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000317.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 17, 2000, Vol. 4, No. 54 Headlines AHERF: Three Officers Arrested ALTA GOLD: To Convert To Chapter 7 BREED TECHNOLOGIES: Seeks Approval of Compromise With Tokai Rika CARSON INC: Tender Offer To Purchase Stock CELLNET DATA: Signs Asset Purchase Agreement; Bidding Procedures CROWN VANTAGE: Seeks Chapter 11 Protection EMERALD RESTORATION: Case Summary and 18 Largest Creditors EQUALNET: Gets Court Nod To Purchase ATCALL FRUIT OF THE LOOM: Reschedules Bond Interest Payment FRUIT OF THE LOOM: To Close Frankfort Plant GRAND UNION: Sales Decrease 1.4% GUY'S FOODS: Purchase Of Assets Falls Through INTEGRATED HEALTH: To Retain Klehr Harrison as Local Counsel INTERSCIENCE COMPUTER: Reports Operating Results IPM PRODUCTS: Employment Agreement with John Horton IRIDIUM: Japanese Affiliate Seeks To Liquidate IRIDIUM: Receives Bid As Time Runs Out ISHIKAWAJIMA-HARIMA HEAVY INDUS.: To post 90B Yen loss KCS ENERGY: Seeks Approval of Disclosure Statement LEWIS & PEAT: Exits Chapter 11 PARACELUS HEALTH: Subsidiary Files Chapter 11 ROBERDS: Seeks Order Extending Time To Assume/Reject Leases SMARTONE TELECOM.HOLDINGS: Posts loss of $393M SUNRISE DEVELOPMENT: Files For Bankruptcy Court Protection SUNTERRA: Reports $58.4 Million Loss, Sees Liquidity Risk TEXFI INDUSTRIES: Emergency Motion For Post-Petition Financing TV FILME: First Amended Disclosure Statement UNIVERSAL EXPRESS: Announces New Ancillary Businesses WSR CORP: Extension of Time To Assume/Reject Unexpired Leases DLS CAPITAL PARTNERS: Bond Pricing For Week of March 13, 2000 ********* AHERF: Three Officers Arrested ------------------------------ Pennsylvania Attorney General Mike Fisher today announced that his Bureau of Criminal Investigation has arrested three former top officials of the Allegheny Health, Education and Research Foundation (AHERF) and charged them with illegally spending more than $52 million in charitable endowments in an effort to prop up the ailing medical system. In addition, Fisher said the AHERF officials have been charged with illegally spending AHERF funds on various other items, including a sports luxury box, political contributions and even a new locker room at a high school. Fisher said the charges were recommended by the Fourteenth Statewide Investigating Grand Jury, which conducted a 10-month investigation into AHERF spending. "We allege that while AHERF was losing money, these top management officials used AHERF funds for personal and other improper expenses," Fisher said. "They then stole millions in charitable dollars in an effort to save the mismanaged system. This money wasn't theirs to use as they saw fit. It had been set aside for charitable purposes." According to the Grand Jury presentment, AHERF began experiencing financial problems in the 1996 fiscal year, when the amount of cash to pay bills through accounts payable became limited. AHERF eventually filed bankruptcy on July 21, 1998. The Grand Jury learned that there were three main reasons for the bankruptcy: decreases in hospital occupancy; decreases in reimbursement rates, and excessive administrative costs. For example, the Grand Jury learned that most hospitals have administrative costs of 3 percent. However, AHERF had administrative costs that exceeded 10 percent of its operating costs. Between February and July 1998, AHERF officials transferred $78 million in restricted funds. In addition, the Grand Jury found, AHERF officials did not receive approval from the Loan Committee to use the restricted funds and no repayment plan was ever provided. Three AHERF officials, who received immunity for their testimony, told the Grand Jury that they questioned the legality of using restricted charitable endowments to keep AHERF financially afloat. Ultimately, the Grand Jury learned, AHERF officials "borrowed" $52,442,975 in restricted funds without any justification and without the underlying restrictions being met. ALTA GOLD: To Convert To Chapter 7 ---------------------------------- Alta Gold Co. has attempted to reorganize under Chapter 11 bankruptcy protection while trying to find a buyer for its Olinghouse gold mine in Washoe County. Alta Gold's chief executive officer, Robert Pratt, other officers and all the board members resigned last week. The company filed with the U.S. Bankruptcy Court in Reno for conversion from bankruptcy protection to Chapter 7. The bankruptcy court has set March 30 for the hearing to convert the Chapter 11 to Chapter 7. BREED TECHNOLOGIES: Seeks Approval of Compromise With Tokai Rika ----------------------------------------------------------------- The debtors, BREED Technologies, Inc., et al. seek court approval of a compromise with Tokai Rika Co., Ltd. A hearing on the motion will be held on March 22, 2000 at 11:30 AM. Breed and Tokai are parties to a dispute over a license agreement. In May, 1999, an arbitration award was entered in favor of Breed in the amount of $2,037,958. In the meantime, Tokai has alleged that Breed is violating certain of its interests in other, unrelated intellectual property. The parties have agreed to settle these disputes for payment of $1.74 million to be paid in a lump sum of $1.556 million plus exchange of mutual, fully paid non-transferable licenses of the disputed technology. Breed agrees to obtain a tax credit from the US Government, and if received to pay a portion to Tokai Rica. Breed believes this settlement to be fair and reasonable, and in the best interests of the estate and its creditors. CARSON INC: Tender Offer To Purchase Stock ------------------------------------------ Dated March 8, 2000, Crayon Acquisition Corporation, a Delaware corporation, and wholly-owned subsidiary of Cosmair, Inc., a Delaware corporation, made a tender offer to Carson Inc. to purchase all of the outstanding shares of Class A common stock, par value $0.01 per share, of Carson Inc. The terms in the purchaser's offer were to purchase all outstanding shares at a price of $5.20 per share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase. The Offer is scheduled to expire at 12:00 mignight, New York City time, on April 4, 2000 unless the offer is extended or terminated under the terms of the Merger Agreement. CELLNET DATA: Signs Asset Purchase Agreement; Bidding Procedures ---------------------------------------------------------------- CellNet Data Systems, Inc. (NASDAQ: CNDS) announced today that it has signed an Asset Purchase Agreement for the sale of substantially all of its assets and business operations. A copy of the agreement has been filed under a Report on Form 8-K dated March 10, 2000 with the Securities and Exchange Commission (the "SEC") and with the U.S. Bankruptcy Court in Delaware. As previously reported, on February 4, 2000, CellNet Data Systems, Inc. ("CellNet"), together with its subsidiaries (collectively, the "Debtors"), filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware -- IN RE CELLNET DATA SYSTEMS, INC., ET AL., DEBTORS, Chapter 11, Case No. 00-00844 (PJW). Debtors filed their petitions pursuant to a Proposal Letter and a Summary of Terms of an agreement with Schlumberger Limited pursuant to which Schlumberger, or an entity designated by it, would acquire all or substantially all of the assets and business operations of the Debtors and certain specified liabilities related thereto. On March 3, 2000, Schlumberger Resource Management Services, Inc. (as "Purchaser") and Schlumberger Technology Corporation (its parent company), each affiliates of Schlumberger, entered into an Asset Purchase Agreement dated as of March 1, 2000 with certain of the Debtors including CellNet (as "Sellers"). The Asset Purchase Agreement contains the definitive terms under which the Purchaser would acquire from the Sellers all or substantially all of the assets and business operations of the Debtors and certain specified liabilities related thereto. The Asset Purchase Agreement is intended to carry out the provisions contained in the Proposal Letter and Summary of Terms, copies of which have been previously filed with the SEC in CellNet's Report on Form 8-K dated February 7, 2000 under Item 7 (c). On March 9, 2000, the parties to the Asset Purchase Agreement entered into a First Amendment to Asset Purchase Agreement (the "First Amendment") to effect certain minor changes therein. A copy of the First Amendment has also been filed with the SEC as an exhibit to the Report on Form 8-K dated March 10, 2000 under Item 7 (c) and with the U.S. Bankruptcy Court in Delaware. The approval of the Asset Purchase Agreement is subject to the receipt of higher and better offers. Parties wishing to submit higher and better offers must do so not later than 2:00 p.m. EDT April 12, 2000. If the Debtors receive a qualified bid, an auction will be conducted at 10:00 a.m. EDT April 14, 2000. The final hearing and Court approval of the Asset Purchase agreement is scheduled for April 19, 2000. Subject to any higher and better offers and final approval by the Bankruptcy Court, CellNet anticipates completing the process by the first week of May 2000. As previously reported, if the Court approves the proposed transaction in its present form, the CellNet 14% Senior Discount Notes and those liabilities not assumed by Schlumberger RMS will share in$55 million in cash less certain administrative expenses. Furthermore, there will be no value allocated to the current equity of the CellNet common stock (NASDAQ: CNDSQ) and the 7% Exchangeable Preferred Securities of CellNet Funding, LLC (NASDAQ: CNDPQ). The allocation of the distributions (dividends) held in escrow for CellNet Funding, LLC (NASDAQ: CNDPQ) will be subject to future view by the Court. CROWN VANTAGE: Seeks Chapter 11 Protection ------------------------------------------ Crown Vantage Inc., which provides papers for printing, publishing and specialty packaging, announced that it filed chapter 11 yesterday, according to a newswire report. The Cincinnati-based company also announced that it has arranged for $100 million in debtor-in-possession financing from Morgan Guaranty Trust Co., Chase Manhattan Bank and a group of institutional lenders. Earlier this month, Crown Vantage had said that it had not received anticipated financing from a bank credit agreement, but that it was continuing to explore options. The company's U.K. operations were not included in the filing. (ABI 16-Mar-00) EMERALD RESTORATION: Case Summary and 18 Largest Creditors ---------------------------------------------------------- Debtor: Emerald Restoration & Production, CCC 5501 Stane Gate Avenue Gillette, WY 82718 Petition Date: March 1, 2000 Chapter 11 Court: District of Wyoming Bankruptcy Case No.: 00-20184 Judge: Peter J. McNiff Debtor's Counsel: Lisa K. Rice Lisa Rice, PC 65 Coffeen, Suite B Sheridan, WY 82801 Total Assets: $ 336,803,525 Total Debts: $ 720,335 20 Largest Unsecured Creditors Royalty Owners $ 32,000 Richard Bate $ 54,000 Dept of Revenue $ 38,000 Dept of Revenue $ 18,000 Key Rocky Mountain $ 132,902 BLM Bureau of Land Mgmt $ 103,902 Randall T. Cox $ 58,742 Schlumberger Wireline $ 54,500 James Rolland $ 45,000 Powder River Energy $ 26,850 Renea McKay $ 22,622 Cotton Law Offices $ 15,000 Kisack Water & Oil $ 13,639 Joe's Welding And Rustoabout $ 12,638 Amerigas $ 12,500 Peggy Bicker Star $ 12,500 Black Warrior $ 11,276 Gane Redection $ 10,500 EQUALNET: Gets Court Nod To Purchase ATCALL ------------------------------------------- At a hearing conducted yesterday in U.S. Bankruptcy Court in Alexandria, Virginia, Equalnet Communications Corp. (OTC Bulletin Board: ENET) received the Court's approval to acquire substantially all of the assets of ATCALL, Inc., a long distance company selling both one plus service and prepaid telephone debit cards to major national retailers. Total consideration will be the assumption, on a basis that is non-recourse to Equalnet, of approximately $2.7 million of secured debt and the issuance of $250,000 of restricted Equalnet common stock. The transaction is expected to close on or before March 20, 2000. Mitchell H. Bodian, Equalnet's President and CEO, commented, "We are pleased that the Court approved our offer over two other competing bids. We expect that, by integrating ATCALL's operations with those of Equalnet, we can achieve significant overhead economies and operating efficiencies. We also hope to leverage ATCALL's existing relationships with major retailers to expand Equalnet's prepaid debit card business." EqualNet is a nationwide supplier of telecommunications services headquartered in Houston, Texas. The Company provides a comprehensive array of discounted long-distance and other telecommunications services. FRUIT OF THE LOOM: Reschedules Bond Interest Payment ---------------------------------------------------- Fruit of the Loom Ltd., which filed for chapter 11 protection late last year, said that its interest payments on three public bond issues have been rescheduled, according to Reuters. The underwear and intimate apparel maker will now make quarterly interest payments on the three bonds; previously the payments were scheduled on a semi-annual basis. (ABI 16-Mar-00) FRUIT OF THE LOOM: To Close Frankfort Plant ------------------------------------------- Fruit of the Loom Ltd. will close its Frankfort, Kentucky sports apparel factory as part of a bankruptcy reorganization, a company spokesman said. The plant is expected to close by May 14, spokesman Joel Weiden said on Wednesday, the day the plant's 280 workers were informed of the closure. Fruit of the Loom Ltd. filed for Chapter 11 bankruptcy protection in December. The company is shutting down its Sports & Licensing Division as part of a plan to return to its core business of undergarment manufacturing, Weiden said. "Since December we've been looking for a number of ways to restore the financial health of the company. This particular division has been losing money," Weiden said in a telephone interview from Chicago. The company's sports apparel division produced officially- licensed clothing of professional baseball, basketball, football, hockey and numerous college sports teams. Workers at another sports apparel subsidiary in Hudson, N.H., were informed in February that plant would close. The closure affects 180 workers, the company said. About 20 employees in New York and Canada also were affected. The financially-troubled company closed many of its U.S. textile operations in 1999, shifting production to plants in Mexico, Central America and the Caribbean. The company slashed more than 7,000 Kentucky jobs during the 1990s, leaving fewer than 2,000 workers in the state as it moved operations offshore. One of the biggest cuts came in the summer of 1998, when the plant in Campbellsville closed, leaving 4,200 people jobless. Fruit of the Loom also has a plant in Jamestown, where the company has cut 1,000 jobs. Franklin County Judge-Executive Teresa Barton said she expects former employees of the company's screen printing and embroidery factory in Frankfort to quickly find new jobs. Unemployment is low and workers are in demand in her area, Barton said. Fruit of the Loom is headquartered in Chicago with financial offices in the Cayman Islands. GRAND UNION: Sales Decrease 1.4% -------------------------------- Sales of the Grand Union Company for the 12 weeks ended January 8, 2000 decreased $7.4 million, or 1.4%, compared to the 12 week period ended January 2, 1999. The fiscal 2000 quarter saw sales totaling 520,304. In the same quarter of fiscal 1999 sales were $527,666. The reduction in sales in the fiscal 2000 quarter was, according to the company, primarily due to competitive activity and effects related to implementation of the company's capital expenditure plan. These include delays in new store openings and sales disruptions in stores undergoing significant remodeling. The company opened 2 new stores and closed 2 stores during the fiscal 2000 third quarter. (During fiscal 2000 year to date, the company opened 9 new stores and closed 10 stores). Net losses for each quarter, fiscal 2000 and fiscal 1999, were $35,563 and $26,689 respectively. GUY'S FOODS: Purchase Of Assets Falls Through --------------------------------------------- THE KANSAS CITY STAR reports on March 14, 2000 that an Indiana company's bid to buy the assets of bankrupt Guy's Foods has fallen through after it was unable to come to terms with the principal lender of Guy's, LaSalle National Bank of Chicago. Fort Wayne-based General Products and Services Inc., which does business under the Seyfert's and Ultima Foods brand names, had offered to assume $14.3 million in Guy's debt in exchange for the snack maker's assets. But at a bankruptcy court hearing Monday, representatives of the parent company of Guy's said Guy's had started negotiations with another group, headed by Northland lawyer and former Missouri legislator Randall Robb. "General Products and Services wasn't able to conclude a financing agreement with LaSalle, so we didn't go forward with its bid," said lawyer Steve Sutton, who is representing Guy's in the bankruptcy proceedings. Sutton said Guy's would seek bankruptcy court approval of the Robb group's bid as "the highest and best offer." The group, which includes other, unspecified investors, has offered $14.35 million for the assets of Guy's. The bid is conditioned on reaching a financing agreement with LaSalle. U.S. Bankruptcy Judge Frank Koger scheduled another hearing, at 9 a.m. Friday, to consider the bid, which requires bankruptcy court approval. Family Snacks Inc., which operates Guy's, filed for Chapter 11 protection Feb. 14, citing $5.75 million in losses over the previous 16 months. The 62-year-old company employs 1,000 workers, including 600 at its 325,000-square-foot complex in Liberty. The company's plant, after shutting down for a few weeks, resumed production in late February after LaSalle agreed to continue funding the operation. Guy's, which makes potato chips and other salty snack foods, owes LaSalle more than $11 million in principal. Besides the Robb group, one other would-be buyer emerged at Monday's hearing. Sutton said Guy's had been approached by a group from St. Joseph about a possible asset purchase. But Sutton said the group's $14.435 million offer was contingent on receipt of offshore money, making it less attractive to Guy's. Officials of General Products say they remain interested in purchasing the assets of Guy's. A lawyer for the company, Laurence Frazen, said General Products was continuing to pursue a financing agreement with LaSalle. The bank apparently was not satisfied with the amount of working capital General Products has at its disposal. General Products also faces another potential obstacle. United Food and Commercial Workers Local 211, which represents most of the Guy's labor force, says the proposed sale to General Products would permit the Indiana company to reject the union's collective bargaining agreement with Guy's. The union has moved for an injunction barring the sale. In response, lawyers for Guy's say the agreement would remain in effect if General Products buys the company. INTEGRATED HEALTH: To Retain Klehr Harrison as Local Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors sought and obtained Judge Walrath's permission to retain Klehr, Harrison, Harvey, Branzburg & Ellers LLP as its local counsel, nunc pro tunc to February 23, 2000. Joanne B. Wills, Esq., and Steven K. Kortanek, Esq., lead the engagement, billing, respectively, at $350 and $240.00 per hour for their services. (Integrated Health Bankruptcy News Issue 3; Bankruptcy Creditor's Service Inc.) INTERSCIENCE COMPUTER: Reports Operating Results ------------------------------------------------ Interscience Computer Corporation was organized in 1983 to be a third-party provider of maintenance services for computer hardware and related peripheral equipment. In 1997 the company filed for Chapter 11 bankruptcy protection. Prior to January 25, 2000 the company's principal product was a liquid fusing agent used by the Model 2200 Siemens Printer. The company sold the fusing agent to distributors of the product including OCE Printing Systems, USA Inc., The Bradshaw Group and NCR Corporation. On January 25, 2000, the company sold all of the assets related to the fusing agent business to the Bradshaw Group for $550,000 in cash. Assets included inventory and work in process located in Chino, California and exclusive right to use the company's U.S. Fusing Agent Patent number 5,333,042. The company's sales for the quarter ended December 31, 1999 decreased by $256,709 or 41% (to $366,529) when compared to sales of $ 623,238 for the quarter ended December 31, 1998. According to the company the decrease was attributable to the final payment from the sale of the Xerox maintenance business during the comparable quarter last year and a decline in parts and equipment sales during the current quarter of approximately $100,000 as compared to the quarter ended December 31, 1998. The company realized net profit of $822,936 in the 1999 quarter and net profit of $160,184 in the 1998 quarter. IPM PRODUCTS: Employment Agreement with John Horton --------------------------------------------------- The debtors, IPM Products Company and IPM Service Corporation seek court authority to assume an employment agreement with John Horton. The agreement sets forth the terms and conditions of Horton's employment with the debtors. Horton currently acts as the CEO, Secretary and a member of the Board of Directors of IPM Service Corp. The agreement provides an initial term of his employment for three years, and automatic extension for one year unless terminated by the parties. The agreement provides compensation in the amount of $200,000 per year, plus certain benefits. In the event of termination without cause, Horton's base salary and benefits continue for a period of twelve months. There are contingencies for a termination of employment due to a change in control of the company. Such a change is contemplated due to the sale of the debtors' various businesses expected to occur on March 16, 2000. Horton has agreed to reduce the amount of Severance he is to receive to $200,000 less amounts that he receives as a Stay Bonus. The debtors believe that Horton has undertaken the marketing of the debtors' businesses as competently as any investment banker, and that the compensation is justifiable. IRIDIUM: Japanese Affiliate Seeks To Liquidate ---------------------------------------------- A Japanese affiliate of the troubled U.S. satellite phone venture Iridium LLC sought government approval on Thursday to liquidate its operations. Japan's Ministry of Posts and Telecommunications is expected to approve the request as soon as Saturday, said a spokesman for DDI Corp., a telecommunications provider that holds a 50.5 percent stake in Nippon Iridium Corp. Seven-year-old Nippon Iridium is set to halt its satellite phone services that same day, the unidentified spokesman told Dow Jones Newswires. The U.S. operator of the Iridium service filed for Chapter 11 bankruptcy protection in August, and losses accumulated by the Japanese unit have dragged on DDI's earnings. In its interim earnings report for the fiscal year ending this month, DDI posted an extraordinary loss of 25.6 billion yen ($242.7 million) related to its investment in Nippon Iridium. The move to shut down Nippon Iridium came a day after U.S.-based Iridium received a reprieve from a bankruptcy court. With only hours to go before Iridium would have been forced to begin closing down its pioneering service, the court extended the deadline for the company to find a new backer. Iridium was launched by U.S. telecommunications giant Motorola Inc. in 1991 to provide worldwide mobile phone service via satellite. IRIDIUM: Receives Bid As Time Runs Out -------------------------------------- According to a report in the late edition of The New York Times On March 16, 2000, Iridium L.L.C., received a bid for its assets from Gene Curcio, head of the closely held Crescent Communications Inc., Mr. Curcio said. The court had set Friday, March 17, 2000 as the deadline for Iridium to obtain bids. Motorola, the founder and largest shareholder of Iridium with an 18 percent stake, has said it will wait for the result of the bankruptcy-court hearing on how it will proceed. ISHIKAWAJIMA-HARIMA HEAVY INDUS.: To post 90B Yen loss ------------------------------------------------------ Ishikawajima-Harima Heavy Industries Co. (7013) plans to post some 90 billion yen worth of extraordinary loss for fiscal 1999 to dispose of retirement fund liabilities, company sources said Tuesday. The move will come ahead of the implementation of a new accounting rule requiring disclosure of such shortages from fiscal 2000. The extraordinary loss may increase as the comprehensive heavy machinery manufacturer will chalk up losses incurred from the liquidation of some subsidiaries. But IHI will also enjoy extraordinary profit of about 10 billion yen from the sale of securities holdings. Net loss will increase to about 70 billion yen, up from the 8 billion yen projected last year. IHI has yet to decide on the amount of its annual dividend or whether it will pay one at all. The company paid a 6 yen annual dividend for fiscal 1998, but paid no half-year dividend for fiscal 1999. (Nikkei 15-March-2000) KCS ENERGY: Seeks Approval of Disclosure Statement -------------------------------------------------- The debtors seek approval of a Second Amended Disclosure Statement filed on March 10, 2000. The plan is a joint plan of reorganization for each of the debtors. The plan provides that the reorganized debtors will remain in business with a reorganized capital structure. Funding will be provided pursuant to the New Credit Facility. The Secured Bank Claims under the Resource Facility and the Medallion Facility will be paid in full from funds made available from the New Credit Facility. Allowed Other Secured Claims will be paid in full or reinstated. Allowed General Unsecured Claims will be paid in full in the ordinary course of business. Allowed Administrative Expense Claims, Allowed Professional compensation and Reimbursement Claims and Allowed Priority Tax Claims will be paid in full. The holders of Old Senior Notes will receive cash equal to the amount of the accrued and unpaid interest on such notes as of the last scheduled payment date on such notes prior to the Effective Date. At the option of the holders, such notes shall be reinstated or converted into New Notes. Th Indenture Trustee for the Old Senior Subordinated Notes will receive a new Senior Subordinated Note in the principal amount of $136,094,000. The holders of Old Senior Subordinated Notes Claims will receive in exchange for the new note pro rata distributions of cash in the aggregate amount of $46,875,000 and shares of New KCS Preferred Stock convertible into 49.9% of all authorized, issued and outstanding shares of New Common Stock on the Effective Date, assuming full conversion of such new KCS preferred stock. Holders of Old KCS Common Stock Equity interests will retain their pro rata share of 29,268,310 shares of old KCS common stock, which will constitute 100% of the authorized issued and outstanding shares of the Reorganized KCS and 50.1% of the authorized, issued and outstanding shares of reorganized KCS assuming full conversion of the New KCS Preferred Stock into New KCS Common Sock. All outstanding warrants and options to acquire shares of Old KCS Common Stock will be cancelled and the holders thereof will receive no consideration with respect to such warrants and options. LEWIS & PEAT: Exits Chapter 11 ------------------------------ According to a report in Rubber & Plastics News on March 13, 2000, Lewis & Peat Rubber L.P., the Middlebury-based rubber trader, officially is out of Chapter 11 bankruptcy proceedings. Judge Lorraine Murphy Weil of the New Haven, Conn., federal bankruptcy court granted the company's motion Feb. 23 to drop the Chapter 11 filing it made six weeks before. The U.S. Trustee's Office and Rabobank, the Singapore bank which is Lewis & Peat's biggest unsecured creditor, consented to the motion. The report quoted sources close to the company saying that the bankruptcy was motivated largely by complications in the company's relationship with its Indonesian owners Bakrie Brothers. They also said the company was negotiating a financial agreement with a pool of bankers led by Rabobank and had separate discussions with two unnamed equity partners to take over ownership of the company from Bakrie Brothers and consolidate Lewis & Peat's financial structure. PARACELUS HEALTH: Subsidiary Files Chapter 11 --------------------------------------------- PHC Finance Inc., a second-tier subsidiary of Paracelsus Healthcare Corp., Houston, has filed for chapter 11 protection in the Southern District of Texas, according to a newswire report. The subsidiary's principal assets are several medical office buildings; it does not own or operate and hospital facilities, and neither the subsidiary or any of the Paracelsus hospital corporations are guarantors for any obligations of PHC Finance. The parent company also announced that it does not expect to pay by today its scheduled interest payment of $16.25 million, which was originally due Feb. 15. The company has been in negotiations with major holders of the notes for which the interest is due. Paracelsus said the notes are unsecured claims against the company only, and that the note holders have no claim against any of its hospital operating subsidiaries or their assets. (ABI 16- Mar-00) ROBERDS: Seeks Order Extending Time To Assume/Reject Leases ----------------------------------------------------------- The debtor, Roberds, Inc. seeks to extend the time to assume, assume and assign or reject any unexpired nonresidential real property leases through and including the confirmation date of a plan of reorganization proposed by the debtor. The debtor is lessee under approximately thirty leases. The debtor states that the large number of leases make it impracticable for the debtor to fully evaluate each of the leases at this time to determine whether the assumption or rejection of such leases is in the best interest of its estate and creditors. The debtor needs additional time to analyze and gauge the performance of its various stores and determine the number and location of stores which will maximized profits. The debtor requests that the court grant an extension of time, through and including the Confirmation Date. SMARTONE TELECOM.HOLDINGS: Posts loss of $393M ---------------------------------------------- A significant write-off for handset subsidies dragged SmarTone Telecommunications Holdings' interim results into the red with a net loss of $393 million. For the six months to December 1999, the cellular phone operator incurred an exceptional loss of $488 million. Of this 72 per cent was due to the write-off on handsets and 10 per cent to air-time write-offs. The result confounded market expectations and was a stark contrast to the net profit of $480.47 million for the 1998 half. Some analysts had expected a smaller handset write-off and an interim net profit of about $100 million. "We made a decision to write-off outstanding handset subsidies and other items so our future earnings will better reflect our operational performance as we rapidly evolve into a mobile mutlimedia operator," chief executive officer Ian Stone said. "We don't expect to repeat that (write-off) in the second half." Profit before taxation and exceptional losses was also well down, at $95 million against $525 million a year earlier. Turnover declined by 15 per cent to $1.47 billion year-on- year but grew by 10 per cent when compared with the second half of last fiscal year. Mr Stone said he was confident of further growth for SmarTone. "Our focus is to continue to grow our customer base. We are well-positioned to do that," he said. "All the trends we've seen are positive and will continue throughout the year, particularly when we introduce new revenue strength." SmarTone's customer base grew by 17 per cent during the first half, nearly double the industry average of 9 per cent, Mr Stone said. It has acquired a mobile customer base of 760,000 while its iSm@rt Internet customers grew more than 12 times to 200,000 by the end of last year. Mr Stone said the growth in customer base was underpinned by the company's competitive service offerings and strategies, especially in hi-tech services. "This year, we focus on improving and increasing the value to our customers and forming customer base, and less focus on the price war," Mr Stone said. Amidst fierce competition, SmarTone recorded a churn rate of 3 per cent, down from a peak of 9 per cent when mobile number portability was introduced a year ago. The average revenue per user (ARPU) fell by 29 per cent to $305 in the first half when compared with $393 by end-June 1999. However, Mr Stone said the ARPU had stabilised. The company is considering raising tariffs. "We are currently considering the market conditions for the timing. We do see the need to raise some of the pricing (in the second half)," Stone said. While continuing to strengthen its existing services on mobile voice, wireless data, IDD and the Internet, SmarTone is expanding aggressively into new business areas such as broadband multimedia services and mobile e-commerce. It has applied for a local wireless fixed telecommunications network services licence, as well as an external satellite- based licence with an associated licence to install a satellite dish in the Chung Hom Kok Teleport. Mr Stone said he wants a minimum 20-per-cent market share in the broadband sector. He expects new businesses to contribute up to 30 per cent of the group's total revenue in the next three years. In term of partnership, SmarTone would continue its co-operation with Sun Hung Kai Properties and its Internet arm, SUNeVision. "We continue to look at the whole variety of partnership with SHKP, part of it is to accelerate the access for the local multipoint distribution system in all SHKP's developments," Stone said. The company is also partnering with SUNeVision's information technology service for the provision of WAP. SmarTone declared an interim dividend of 11 cents a share, down 11 cents from a year earlier. David Gibbons, a telecom analyst with HSBC Securities expects the company's profitability to recover in the coming years. "Its revenue will mostly come from wireless fixed network service and mobile data," said Gibbons. He also expects to see higher tariffs later this year because of the improving economy. Edmond Cheung, a telecom analyst with Core Pacific Group said the company's profits would be better in the second half, riding on economic recovery and a pick-up in private consumption. Analysts said they expected SmarTone to stay in the red for the remainder of the year. Richard Ferguson, an analyst at Nomura Securities, forecast SmarTone would post a HK$200M full-year loss. (Hong Kong Standard, South China Morning Post 15-March-2000) SUNRISE DEVELOPMENT: Files For Bankruptcy Court Protection ---------------------------------------------------------- THE KANSAS CITY STAR reports on March 14, 2000, that the developer of a stalled golf course and housing project in Leavenworth County has filed for bankruptcy court protection from creditors while it tries to reorganize its finances. According to Chapter 11 filings in U.S. Bankruptcy Court in Topeka, Sunrise Development, developer of Prairie National Estates, has almost $4 million in debts and $140,300 in assets. The bankruptcy was filed Feb. 18. According to bankruptcy filings, Sunrise Development has $1.7 million in secured claims, $2.3 million in unsecured claims and $2,400 in unsecured priority claims. SUNTERRA: Reports $58.4 Million Loss, Sees Liquidity Risk --------------------------------------------------------- Sunterra Corp., Orlando, Fla., reported a net loss of $58.4 million for the three months ending Dec. 31, as compared to net income of $11.5 million for the same period a year earlier, according to The Wall Street Journal. The company attributed most of the loss to a $43 million charge for mortgage receivables, or mortgages that time share owners had stopped paying. Although the charge was in the range the company expected, the earnings were significantly less than anticipated. Sunterra has cut staff and implemented expense controls to result in a savings of $15 million annually. It also has reorganized its U.S. business. But the company also said it "continues to face liquidity risks" because it has exceeded "triggers" on several credit facilities. It is negotiating with lenders for waivers and advances. Sunterra has arranged with Finova Capital Corp. a $25 million expansion of an existing credit line. Sunterra is one of the largest time share resort companies with 88 locations around the world. (ABI 16-Mar-00) TEXFI INDUSTRIES: Emergency Motion For Post-Petition Financing -------------------------------------------------------------- The debtor, Texfi Industries, Inc. seeks an emergency order authorizing the debtor to obtain post-petition financing and other extensions of credit on an emergency, interim basis from Fleet Nation Bank, f/k/a BankBoston, NA and The CIT Group/Commercial Services, Inc. As of the petition date, the debtor was indebted to the Revolving Lenders under the Pre-petition loan agreement in the approximate aggregate principal amount of $16,850,000. The debtor seeks post-petition asset-based lending in the aggregate sum of $22.5 million. TV FILME: First Amended Disclosure Statement -------------------------------------------- TV Filme, Inc. submitted a Disclosure Statement to the holders of claims against the debtor and the holders of equity interests in the debtor in connection with the solicitation of acceptances or rejections of the proposed First Amended Plan of Reorganization The plan is based upon a Restructuring Agreement dated as of January 24, 2000 among the debtor and certain specified holders of the debtor's 12 7/8% senior notes due 2004. To implement the plan, the debtor will form a new Cayman Islands entity, "the reorganized debtor," to which the debtor will transfer its assets and which will be the successor in interest to the debtor upon the Effective Date. The reorganized debtor will contribute as equity to its subsidiary, ITSA, such portion of an existing inter-company note owed to it by ITSA equal to $105 million less an amount equal to the amount of the fee, if any, imposed by the Central Bank of Brazil in connection with the bank's approval of the debt restructuring contemplated by the plan. The terms of the remaining amount due on the ITSA Note, which remaining amount will equal $35 million plus an amount equal to the amount of the Central Bank fee, will be amended and restated, and new notes in the aggregate principal amount of $35 million plus fees will issued to the reorganized debtor which will then assign the new secured notes to holders of the secured notes, together with $25 million in cash and 80% of the new equity interests in the reorganized debtor. Allowed general unsecured claims, if any, will receive payment in full in cash, the debtor's management will receive 15% of the new equity interests and holders of allowed equity interests will receive 5% of the new equity interests. UNIVERSAL EXPRESS: Announces New Ancillary Businesses ----------------------------------------------------- The business of Universal Express, Inc. has undergone major transitions in recent years. Management has developed new ancillary businesses to support its core packaging and shipping businesses. USXP's principal subsidiaries and divisions include: Private Postal Network.com The Postal Business Center Network.com Manhattan Concierge SkyNet Worldwide Express WorldPost Network.com Images Design and Marketing UniqueNet, Inc. Packaging Plus Services, Inc. The company reported net revenues of $1,395,557 in the three months ended December 31, 1999 with a net loss of $877,143. In the same period of 1998 net revenues were $664,665 and net loss $398,405. In the six months ended December 31, 1999 net revenues for the company were $2,730,001 with a net loss of $1,949,773 while in the same six month period of 1998 net revenues were $1,300,483 and a net loss of $1,177,042. WSR CORP: Extension of Time To Assume/Reject Unexpired Leases ------------------------------------------------------------- The debtors, WSR Corporation, R&S/Strauss, Inc., National Automotive Stores, Inc. and National Auto Stores Corp. seek a court order extending the period within which the debtors must assume or reject unexpired leases of nonresidential real property. On February 29, 2000, the debtors, in response to several offers that had been received, conducted an auction for the sale of substantially all of their assets. It was determined that he final offer made by R&S Parts and Services, LLC and SBCG Strauss, LLC was the highest and best offer for the Assets. At the March 1, 20-00 hearing, the debtors will be seeking the court's authorization to sell the assets to the purchaser. The sale contemplates the assumption and assignment of the leases. Because the leases are among the most valuable assets of the Chapter 11 estates, and because the sale of the assets to the purchaser will likely close after the expiration of the current period during which the leases may be assumed or rejected, the debtors, out of an abundance of caution, move for an extension of their time to assume or reject the leases. The debtors seek an order extending the period to assume or reject leases by approximately 60 days, until May 5, 2000. DLS CAPITAL PARTNERS: Bond Pricing For Week of March 13, 2000 ------------------------------------------------------------- Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 13 - 15 (f) Ameriserve 8 7/8 '06 12 - 14 (f) Asia Pulp & Paper 11 3/4 '05 87 - 88 E & S Holdings 10 3/8 '06 37 - 40 Fruit of the Loom 8 7/8 '06 4 - 6 (f) Genesis Health 9 3/4 '05 10 - 12 Geneva Steel 11 1/8 '01 21 - 22 (f) Globalstar 11 1/4 '04 42 - 45 Hechinger 9.45 '12 5 - 8 (f) Integrated Health 9 1/4 '08 2 - 5 (f) Iridium 14 '05 2 - 3 (f) Loewen 7.20 '03 44 - 46 (f) Paging Network 10 1/8 '07 77 - 79 (f) Pathmark 11 5/8 '02 36 - 38 Pillowtex 10 '06 34 - 38 Revlon 8 5/8 '08 43 - 45 Rite Aid 6.70 '01 58 - 60 Service Merchandise 9 '04 12 - 13 (f) Sunbeam 0 '18 14 - 15 TWA 11 3/8 '06 33 - 35 United Artists 9 3/4 '08 2 - 5 (f) Vencor 9 7/8 '08 18 - 20 (f) ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Edem Alfeche and Ronald Ladia, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *