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/raid1/www/Hosts/bankrupt/TCR_Public/000504.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, May 4, 2000, Vol. 4, No. 88 Headlines ADVOCAT INC: Voluntary Delisting From Toronto Exchange ATLAS AIR: Announces New Financing Agreements AXIOHM TRANSACTION: Reorganization Plan Confirmed By Court BAPTIST FOUNDATION: Seeks To Extend Exclusive Solicitation Period CALECA USA: Hearing to Approve Disclosure Statement COMMERCIAL FINANCIAL SERVICES: Court Approves Houlihan Lokey CONSOLIDATED CAPITAL: Announces Extension and Renewal of Debt CORAM HEALTHCARE: Settles Suit Against Aetna DRKOOP.COM: Seeks Buyers, Gets Cost Relief FAMILY GOLF CENTERS: Receives Notice of Default FRUIT OF THE LOOM: NYSE Suspends Trading in Common Stock GENERAL-ELECTRO: Hearing on Disclosure Statement Set For May 23 GENEVA STEEL: Bondholders' Committee Taps Rothschild Inc. KITTY HAWK: Moody's Downgrades Notes Following Bankruptcy Filing LEXICON ENVIRONMENTAL: Case Summary and 20 Largest Creditors MARINER POST ACUTE: Taps Stutman Treister as Lead Counsel MICROAGE: To Shut Down Ohio Distribution Center NEW AMERICAN: Health Dept Rescinds Order To Shut Down Facility NEW AMERICAN: Puget Sound Hospital Ordered Closed NUTRAMAX PRODUCTS: Case Summary NUTRAMAX: Submits Pre-Negotiated Plan of Reorganization OMEGA HEALTHCARE: Announces First Quarter Results PAGING NETWORK INC: S&P Cuts Notes To Lowest Rating PATHMARK: S&P Cuts Rating PRINCETON HOSPITAL: New Bidder Surfaces PURINA MILLS: Second Amended Joint Plan Confirmed STERLING PACKAGING: Plan Confirmed Without Objection SYSTEM SOFTWARE: Enters Agreement With Gores; Files Chapter 11 TERRA INDUSTRIES: Reports First Quarter Results TOSHIBA CORP.: Reports 28B Yen group net loss in FY99 ********* ADVOCAT INC: Voluntary Delisting From Toronto Exchange ------------------------------------------------------ Advocat Inc. (OTC:AVCA) (TSE:AVCu.TO) has fallen below the continued listing standards of the Toronto Stock Exchange ("TSE"). As a result of this non-compliance, Advocat Inc. has decided to voluntary delist its common stock from the TSE. The last day that Advocat's common stock will trade on the TSE will be May 30, 2000. ATLAS AIR: Announces New Financing Agreements --------------------------------------------- Atlas Air, Inc. (NYSE:CGO) announced that it has completed a private refinancing of two secured aircraft term loan facilities and its existing Revolving Credit Agreement. The new transactions will result in annual pre-tax interest expense savings of approximately $1.5 million, as well as enhance cash flows and provide more favorable terms. Deutsche Banc Alex. Brown was the lead bank and agent for the transactions. Richard Shuyler, Executive Vice President of Atlas Air, said, "The continuing financial and operating strengths of Atlas in the international heavy cargo market provided Atlas with a unique opportunity to refinance these two important transactions. The net result of these financings will be to immediately reduce the company's debt by approximately $32 million, while extending the term and reducing the company's cash requirements over the next three years." Atlas Air is a United States certificated air carrier that operates a fleet of 747 freighters under long-term ACMI contracts. These contracts include the provision by Atlas of air cargo capacity for some of the world's leading international carriers. Atlas operates scheduled flights on behalf of its customer airlines to 101 cities in 46 countries. AXIOHM TRANSACTION: Reorganization Plan Confirmed By Court ---------------------------------------------------------- Axiohm Transaction Solutions Inc. (OTCBB: AXHMQ) and its U.S. Subsidiaries announced that the United States Bankruptcy Court in Wilmington, Delaware confirmed the Company's Plan of Reorganization on Thursday, April 27, 2000. Subject to certain conditions, including the ability to take the Company private, the Plan is expected to take effect in mid-May. The Plan received overwhelming support of the Company's creditors and shareholders. In addition, the Court approved the Company's exit financing in the form of a new revolving line of credit in the amount of up to $23 million provided by Lehman Commercial Paper, Inc. Upon the effective date of the Plan, the Company's senior secured term indebtedness in the amount of $62,650,000 will be refinanced and the holders thereof will also receive warrants. The holders general unsecured claims, including the holders of $120 million in senior subordinated notes, will receive 100% of the new common stock of the reorganized Company. The old common stock will be cancelled, although shareholders will receive certain limited rights to participate in the proceeds of any future public offering or sale of the Company within the next five years. All claims of suppliers and other trade vendors were not affected by the Plan and will be paid in full. "We are very happy that we were able to restructure and significantly reduce our long term indebtedness in a short period of time and with a minimal disruption to the business," said Nicolas Dourassoff, President and CEO. "We believe the overwhelming support for the restructuring by our creditors and shareholders demonstrates their continued confidence in the Company's future success. The support we received from our customers, vendors, and employees throughout the process was immeasurably important to us and for that we are grateful." With sales offices in eight countries, distribution relationships in 20 countries and seven manufacturing facilities located in four countries, Axiohm is among the largest non-captive designers, manufacturers and marketers of transaction printers in the world. With the completion of the chapter 11 process, the Company will increase its focus on delivery of new products and technology and take advantage of its extensive research and development capabilities. "In short," said Dourassoff, "our financial house is in order and we are better positioned to take advantage of our competitive edge in research and development and continue our tradition of innovation and reliability." Axiohm Transaction Solutions, Inc., based in Blue Bell, Pennsylvania, is a leading designer and manufacturer of printers and ancillary products. The transaction printers employ thermal and impact technology and are used to print documents such as point of sale receipts, gaming tickets, and other transaction records. Axiohm also designs and manufactures thermal and impact printer mechanisms, magnetic-stripe and smart-card readers, and bar code printers. Axiohm sells to distributors, end users, OEMs, and VARs. Approximately 80% of Axiohm's sales are to OEMs; and about 40% of sales come from outside the US. BAPTIST FOUNDATION: Seeks To Extend Exclusive Solicitation Period ----------------------------------------------------------------- The debtor, Baptist Foundation of Arizona, seeks an order extending the period in which the debtors have the exclusive right to solicit acceptances of the joint liquidating plan of reorganization. The court has tentatively set a confirmation hearing for May 30, 2000. The debtors request an extension of the exclusive period until August 31, 2000. The plan provides for the orderly sale over time of all of the debtors' assets. In addition, the plan also contemplates and provides for the so-called substantive consolidation of the debtors and the elimination of the distinction between so-called secured and unsecured investors. In order to minimize any delays, the debtors and their counsel have established a dialogue with the proposed counsel for the Collateralized Investors Committee. The debtor are attempting to implement a litigation protocol for the resolution of the allegedly secured status of some of the investors that can be done expeditiously and without unnecessary delay in the confirmation process. Also, the debtors contemplate separately classifying allegedly secured and unsecured investors. If the debtors prevail in the litigation, and the distinction between investors I s eliminated, the modifications to the plan will place all investors in the same class. If the debtors do not prevail, the separate classification will recognize the lien and collateral positions of the allegedly secured investors. The debtors are currently undergoing an extensive and public marketing process of three of its most valuable assets. More than 12 prospective purchasers have signed confidentiality agreements and are currently undergoing due diligence. In addition, a large institutional distressed investment firm has recently made an unsolicited offer to all investors to purchase their claims at a substantial discount. For these reasons particularly, the debtors seek an extension of their exclusive period to solicit acceptances to their plan. CALECA USA: Hearing to Approve Disclosure Statement --------------------------------------------------- A hearing shall be held before the Honorable Jeffry H. Gallet, US Bankruptcy Judge, in Room 523, US bankruptcy Court for the Southern District of New York, One Bowling Green, New york, NY on May 25, 2000 at 9:30 AM to approve the debtor's Disclosure Statement dated April 21, 2000. COMMERCIAL FINANCIAL SERVICES: Court Approves Houlihan Lokey ------------------------------------------------------------ The US Bankruptcy Court for the Northern District of Oklahoma entered an order on April 18, 2000 authorizing the Official Committee of Asset-Backed Securityholders to employ and retain Houlihan Lokey Howard & Zukin Capital as Financial Advisor, effective March 22, 2000. CONSOLIDATED CAPITAL: Announces Extension and Renewal of Debt ------------------------------------------------------------- Consolidated Capital of North America Inc. (OTCBB:CDNOE) announced that its Board of Directors has authorized management to renew and extend indefinitely its previously announced private offer to its creditors to exchange its outstanding parent-company debt, preferred stock and other payables for shares of its common stock at an exchange price of four cents ($.04) per share. The company had announced the exchange offer for up to approximately $15 million of debt and other claims on Dec. 1, 1999, at an exchange price of two cents ($.02) per share, however, creditors holding a substantial amount of parent-company debt had not yet responded to the offer at its extended expiration date of March 31, 2000. Shareholders affiliated with the company holding approximately $5.8 million of company debt, preferred stock and other payables have accepted the exchange offer at such exchange price. By April 26, 2000, non-affiliated creditors holding debt and other claims of approximately $2.7 million, in the aggregate, had also agreed to exchange their debts and other claims for company common stock. In the aggregate, these acceptances require the issuance of approximately 333 million shares of company common stock. As of the date hereof, 73,430,590 of such shares have been issued or committed for issuance, while for the remainder, the agreement to exchange will be subject to shareholder approval of an increase in the number of authorized shares of company common stock. Currently, the company has issued and outstanding 190,711,825 shares of its 200,000,000 shares of authorized common stock. As announced in December, in light of the fact that the company's three operating subsidiaries have been liquidated to pay creditors and the company had ceased operations in 1999, the company believes that the most likely prospect for the company's financial revival at this time is to negotiate the acquisition of the company by, or other combination of the company with, a private business that desires to become publicly traded in the U.S. securities markets. However, this strategy will only succeed if the company is free of any significant contingent liabilities such as litigation, claims or material creditors that have not reached agreement with the company to exchange their debt obligations for equity in the company. In addition, the company's Board of Directors has set June 5, 2000 as the date for a Special Meeting of its shareholders to vote on a proposal by the company to increase the company's number of authorized shares of common stock from the current number of 200,000,000 to 850,000,000. The Board set the record date as May 5, 2000. If approved by the shareholders, the increased number of authorized shares would be used to continue to pursue the debt for equity exchange announced above, and to pursue financing opportunities that may appear in the future. CORAM HEALTHCARE: Settles Suit Against Aetna -------------------------------------------- Denver-based Coram Healthcare has settled its breach of contract lawsuit against Aetna U.S. Healthcare. Coram, a home health company that provides patients with infusion therapy, has been battling Aetna since last summer. The company claimed that Aetna had provided misleading data that caused it to underprice its contract and lose money. Coram had sued for $50 million. Terms of the settlement were not disclosed. Settling the dispute will allow Coram management to focus on its operations, particularly recent efforts to convert outstanding debt to equity. "The legal dispute has overshadowed many positive things occurring at Coram," said Daniel Crowley, Coram's chief executive who took over the company in November. "Eliminating this distraction should provide reassurance to our patients, referring providers, vendors and employees." The lawsuit was settled amicably and Coram officials hope they can land a new contract with Aetna and other managed care plans to provide their members with home infusion services, said Coram spokesman Kurt Davis. Coram, however, is unlikely to negotiate fixed-fee contracts similar to the disputed Aetna contract and will instead focus on contracts that pay Coram for the services it provides, Davis said. Coram also will steer away from national contracts and negotiate regional contracts to better deal with variances in costs and use of services between geographic areas, he said. Coram, one of the nation's largest home infusion companies, is struggling back to financial health. In March, it was taken off the New York Stock Exchange when its share price fell to 63 cents. One of its subsidiaries, Coram Resource Network, has filed for Chapter 11 bankruptcy protection. The company also is trying to sell its pharmaceutical management and mail-order division. Its most recent focus is an effort to convince debt holders to convert their interest to equity. DRKOOP.COM: Seeks Buyers, Gets Cost Relief ------------------------------------------ According to reports in Investor's Business Daily, shares of Drkoop.com doubled in afternoon trading Wednesday, last week, a day after the company said it was nearly out of cash but had renegotiated several portal deals to slow its burn rate. Shares of the Internet-based consumer health care company closed up 1 1/4 to 3 1 9/32 after trading as high as 5 3/8 earlier in the morning of that same day. Its 52-week high is 45 3/4. The Austin, Texas, company, named after former U.S. Surgeon General C. Everett Koop, warned it has enough cash for only about four months. It expects weak first-quarter results and is seeking a buyer. "People may be mistakenly getting excited about the fact that AOL now owns 10% of the company," said Mark Mulcahy, an analyst at Pacific Growth Equities. "They had a choice of taking stock or taking nothing." Drkoop.com restructured deals with AOL and Disney's Go.com that cut its expected cash outlays by $ 100 million in the next year and reduce its burn rate to $ 2 million a month. FAMILY GOLF CENTERS: Receives Notice of Default ----------------------------------------------- Family Golf Centers, Inc. (NASDAQ:NM FGCI) announced that it has received notices of default from its lenders under its $130 million credit facility and under its Bank of America loan agreement for the company's failure to make its monthly interest payments which were due on May 1, 2000. As a result of such defaults, the lenders have accelerated the company's obligations under such loan agreements and, accordingly, all amounts outstanding are now immediately due and payable. In addition, the lenders under the company's $130 million credit facility have notified the company that it is prohibited from making any payment to the holders of the company's 5 3/4 convertible subordinated notes. In light of these defaults, the company is exploring its alternatives, including, among other things, seeking protection under Chapter 11 of the U.S. Bankruptcy Code. Family Golf Centers is an operator of golf centers in North America. The company also operates sports and family entertainment facilities, including ice rinks and Family Sports Supercenters. Currently, the company owns, operates and has under construction 111 golf facilities and 19 ice rink and family entertainment facilities in 23 states and three Canadian provinces. FRUIT OF THE LOOM: NYSE Suspends Trading in Common Stock -------------------------------------------------------- Fruit of the Loom, Ltd. (OTC Bulletin Board: FTLAF), announced that it has been notified by the New York Stock Exchange ("NYSE") that the NYSE has suspended trading in Fruit of the Loom, Ltd's Class A Common Stock and would apply to the Securities and Exchange Commission to delist the stock. The decision by the NYSE to file an application to delist the Company's common stock is not expected to affect the Company's operating performance and reorganization plan. The Company's common stock will continue to be traded as an over- the-counter ("OTC") equity security under the symbol "FTLAF." Quotation service is provided by the National Quotation Bureau, LLC ("NQB") "Pink Sheets" and the OTC Bulletin Board ("OTCBB"). Investors should call their brokers for daily pricing and volume information. Fruit of the Loom filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code on December 29, 1999 and is currently working through its restructuring in bankruptcy proceedings. GENERAL-ELECTRO: Hearing on Disclosure Statement Set For May 23 --------------------------------------------------------------- A hearing to consider the approval of the Disclosure Statement of General-Electro Mechanical Corp. will be held before the Hon. Michael J. Kaplan, US Bankruptcy Judge, US Bankruptcy Court, Part I, third Floor, Olympic Towers, 300 Pearl Street, Suite 350, Buffalo, NY, on May 23, 2000 at 2:00 PM. May 21, 2000 is fixed as the last date for filing and serving written objections to the Joint Disclosure Statement. A claims bar date has previously been set for May 31, 2000, for the filing of pre-petition claims against the debtor. GENEVA STEEL: Bondholders' Committee Taps Rothschild Inc. --------------------------------------------------------- The Official Bondholders' Committee of Geneva Steel company filed an application to employ Rothschild, Inc. as investment banker to the committee. A hearing on the application has been set for May 16, 2000 at 11:00 AM. The firm will render the following services: Assist the committee in assessing the operating and financial strategies for the debtor's business; Review and analyze the business plans and financial projections prepared by the debtor; Assist the committee and its other professionals in formulating and negotiating a plan of reorganization' Value the debtor in connection with a plan of reorganization'; Assist the Bondholders' Committee in the plan confirmation process, including preparation of expert testimony relating to financial matters, if required; and KITTY HAWK: Moody's Downgrades Notes Following Bankruptcy Filing ---------------------------------------------------------------- Moody's Investors Service downgraded the Senior Secured Notes ('Notes') of Kitty Hawk, Inc. to Ca from Caa2, and the Secured Term Loan and the Revolving Credit ('Bank Facilities') to Caa3 from Caa2 following Kitty Hawk's decision to seek protection under Chapter 11 of the U.S. Bankruptcy Code. Moody's attributes the lower rating on the Notes to a lower expected recovery value on the collateral securing the Notes than on the separate collateral pool securing the Bank Facilities. Collateral for the Notes consists entirely of aircraft, while the Bank Facilities are secured by substantially all of Kitty Hawk's current assets as well as certain aircraft. Moody's liquidation analysis further discounts the current market value of the individual aircraft in the pools reflecting concern about the impact on values from deferral of aircraft maintenance by the company. This concern, combined with general market trends negatively affecting the market value of older wide body aircraft, produces a substantial discount to the original appraised values of the collateral. Thirty aircraft secure the Notes. However, Moody's assigns scrap value to all of the L-1011s in the pool, as well as the two 747-100s which are passenger configured and have been parked since Kitty Hawk exited the passenger business last year. As a result, the range of estimates for ultimate recovery for the aircraft securing the Notes under current market conditions are significantly below the $340 million face value of the Notes. Security for the Term Loan and Revolving Credit (which share collateral) include fifteen 727-200s and nineteen DC-8s, as well as the company's receivables and inventory, spare parts, contract rights, cash and subsidiary stock. The aircraft are expected to have minimal value since the 727s are approximately 30 years old and most of the DC-8s are not Stage III compliant. At September 30, 1999 (the most recently filed Form 10-Q), after deducting the prepaids and current income taxes the company reported approximately $148 million of current assets. This estimates the carrying value of the pledged assets at the time those statements were prepared. Recent publicly disclosed reports from the company suggest a comparable amount for the most recent fiscal year, although the exact amount is still to be determined. Consequently, after assigning a modest value to the pledged aircraft, Moody's believes that the expected loss on the Bank Facilities is somewhat less than for the Notes. Kitty Hawk, Inc., based in Dallas-Ft. Worth, Texas, operates aircraft to move cargo from airport to airport in the United States and around the world, and manages on-demand charters through its air logistics business. LEXICON ENVIRONMENTAL: Case Summary and 20 Largest Creditors ------------------------------------------------------------ Debtor: Lexicon Environmental Associates, Inc. 790 East Market Street, Suite 270 West Chester, PA 19382 Type of Business: An environmental consulting firm which specializes in managing of underground storage tanks and related environmental consulting and construction management work. Petition Date: May 2, 2000 Chapter 11 Court: Southern District of New York Bankruptcy Case No.: 00-11849 Judge: Jeffry H. Gallet Debtor's Counsel: Scott S. Markowitz Todtman, Nachamie, Spizz & Johns, P.C. 425 Park Avenue New York, NY 10022 (212) 754-9400 Fax: (212) 754-6262 Email: smarkowitz@tnsj-law.com Total Assets: $ 2,088,300 Total Debts: $ 1,102,000 20 Largest Unsecured Creditors Tyree Bros Envir Service Trade $ 105,166 Yellowstone Industries, Inc. Trade $ 59,095 Tank Specialists Trade $ 60,707 QC, Inc. Trade $ 45,571 Enpro Services Trade $ 37,030 Drilex Environmental, Inc. Trade $ 30,069 Center Point Tank Services Trade $ 28,383 Salomone Bros., Inc. Trade $ 24,820 CBM Construction Co. Trade $ 21,426 Tone Tank & Pump, Inc. Trade $ 20,080 ISP Automation Trade $ 17,100 Jimmie Harper Construction Trade $ 12,722 Sheldon L. Reich, PC Trade $ 11,634 Lewis Maintenance Co. Trade $ 11,525 E.O. Habhegger Co. Trade $ 9,618 McCall Brothers, Inc. Trade $ 9,110 Lennon Communications Trade $ 8,343 Ideal Electric Company Trade $ 7,984 High Associates, Ltd. Rent $ 14,714 Lancaster Laboratories Trade $ 10,323 MARINER POST ACUTE: Taps Stutman Treister as Lead Counsel --------------------------------------------------------- Pursuant to 11 U.S.C. Sec. 327(a), the Debtors sought and obtained authority to employ Stutman, Treister & Glatt Professional Corporation as their reorganization counsel as of the Petition Date in their respective chapter 11 cases. Isaac M. Pachulski, Esq., leads the engagement from Stutman's Los Angeles office, assisted by Jeffrey H. Davidson, Esq., Alan Pedlar, Esq., Michael A. Morris, Esq., K. John Shaffer, Esq., Andy Winchell, Esq., and Marina Fineman, Esq. Specifically, Stutman will: (a) advise the Debtors regarding matters of bankruptcy law; (b) represent the Debtors in proceedings and hearings in the United States Bankruptcy Court for the District of Delaware involving matters of bankruptcy law; (c) advise the Debtors concerning the requirements of the Bankruptcy Code, federal and local rules relating to the administration of these cases, and the effect of these cases on the operation of the Debtors' businesses and affairs; and (d) assist the Debtors in the negotiation, preparation, confirmation, and implementation of a plan or plans of reorganization. Jeffrey H. Davidson, Esq., a member of the Firm, discloses that Stutman was retained by the Debtors in mid-1999, and billed over $1,000,000 for its professional services. Additionally, Mr. Davidson discloses client relationships with Bank of New York, Apollo Management, L.P., Banque Paribas; P. Schoenfeld Asset Management; Citibank (as expert witness); Oaktree Partners; The Chase Manhattan Bank; Leucadia National Corporation; DLJ Realty Capital Partners; Goldman, Sachs & Co.; Merrill Lynch; Prudential; Appaloosa Management; Oban Financial; Orix Credit Alliance; Magten Asset Management; and Allstate Insurance Company in matters wholly unrelated to the Debtors' chapter 11 cases. Further, Mr. Davidson is aware that Stutman works with and across the table from professionals affiliated with Buchalter, Nemer, Fields & Younger; Gordon & Silver Ltd.; Greenberg, Glusker, Fields, Clainan & Machtinger; Munger, Tolles & Olson; Law Offices of Gerald I. Neiter; Owens & Gach Ray; Pachulski, Stang, Ziehl & Young; and Saltzburg, Ray & Bergman, Mr. Davidson is confident that Stutman is disinterested within the meaning of 11 U.S.C. Sec. 101(14). (Mariner Bankruptcy News Issue 4; Bankruptcy Creditors' Services Inc.) MICROAGE: To Shut Down Ohio Distribution Center ----------------------------------------------- The Arizona Republic reports on April 27, 2000 that MicroAge Inc. is closing a giant computer distribution center in Cincinnati by May 31 as part of its major cutback since filing for Chapter 11 bankruptcy reorganization. MicroAge spokeswoman Michelle Gorel said the number of layoffs is unclear, as some of the 80 warehouse workers will be offered transfers to Raleigh, N.C., or Tempe. The company, which has 4,600 employees, including 2,600 in Arizona, is pinning its survival on a dramatic shift to the Internet. Two weeks ago, the company's technology services division announced plans to create a virtual organization with a mobile sales force rather than a network of branches. NEW AMERICAN: Health Dept Rescinds Order To Shut Down Facility -------------------------------------------------------------- Just a day before the scheduled shutdown of the hospital due to safety violations, the state rescinded its order to close the facility after inspectors found that the hospital had fixed most of the problem and was working on the others. In order to stay open, Puget Sound Hospital did the following: - It has thrown out all the supplies in the room where the investigator found dead bugs and mouse droppings, and new supplies are being purchased. - The supply room has been moved to another floor of the hospital. - An exterminator will perform daily pest inspections for the next month, and the hospital will implement a long-term pest control plan. - The hospital will add new locks and change old ones in the operating room area. - It will purchase lockable anesthesia cards. - It will install a surveillance camera and hire more security guards. - The hospital has already changed its rules about escorting patients. The state health department will continue to monitor the hospital, with at least one inspection in the next three weeks, Gary Bennett, director of facilities and services licensing at the state Department of Health, said. The state will work with the hospital to develop a long-range plan for improvement. The AP reports that the hospital agreed to hire three consultants to solve the deeper patterns that led to the sanitation and security problems. The first consultant will look at infection control, the second will analyze medication management, and the third will study the hospital's quality improvement system. The hospital has agreed to follow the recommendations of all three consultants, Bennett said. NEW AMERICAN: Puget Sound Hospital Ordered Closed ------------------------------------------------- The Seattle Post-Intelligencer reports on April 26, 2000 that the state ordered Puget Sound Hospital in Tacoma, one of eight hospitals owned by bankrupt New American to shut its doors because inspectors found health and safety violations that put patients at risk. Hospital officials disputed the assessment and said last week that they will fight the state's closure order. Gary Bennett, the Health Department's director of facilities and services licensing said that the hospital will remain closed until a formal hearing can be held. NUTRAMAX PRODUCTS: Case Summary -------------------------------- Debtor: Nutramax Products, Inc., 51 Blackburn Drive Gloucester, MA 01930-0223 Type of Business: Leading consumer health care products companies and, collectively, the number one manufacturer and marketer of store brand disposable douches, ready-to-use enemas, pediatric electrolyte oral maintenance solutions, disposable baby bottles, cough drops and throat lozenges. The debtor and its subsidiaries also market a broad line of toothbrushes, dental floss, and various first aid products for the hospital and industrial safety markets. Petition Date: May 2, 2000 Chapter 11 Court: District of Delaware Bankruptcy Case No.: 00-01838 Debtor's Counsel: Lawrence A. First Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 (212) 859-8000 Laura Davis Jones Pachulski, Stang, Ziehl, Young & Jones P.C. 919 North Market Street, 16th Floor Wilmington, Delaware 19899-8705 (302) 652-4100 Total Assets: $ 61,798,977 Total Debts: $ 103,765,425 NUTRAMAX: Submits Pre-Negotiated Plan of Reorganization ------------------------------------------------------- NutraMax Products, Inc. (BB: NMPC) and its subsidiaries filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code. The Company has arranged a pre-negotiated agreement with its existing bank lenders, its subordinated lender, and its principal equity holders and has submitted it to the bankruptcy court as the Company's Chapter 11 plan of reorganization. That plan, which provides for an $18 million junior loan from the Company's principal shareholders that may be converted into equity upon emergence from bankruptcy, is the catalyst for a reorganization that produces a substantial debt reduction and proposes a recovery to unsecured creditors. All shareholders will also be permitted, under the plan, to subscribe to their share of new NutraMax common stock. At the same time, the Company has secured a commitment for $5 million in interim debtor-in-possession (DIP) financing from one of its existing bank lenders, which will be replaced by a $30 million commitment from The CIT Group/Business Credit Inc. upon final approval by the court. Of that $30 million, up to $15 million will be used to fund transactions contemplated as part of the reorganization. A hearing with respect to the proposed financing and other matters has been scheduled for Wednesday, May 3, 2000. Under the terms of the proposed reorganization, NutraMax has reached agreements, subject to court approval, to restructure debt from approximately $ 80 million to approximately $30 million. Unsecured creditors would receive up to 50% of the amount of their claim in the form of a note, based upon current claim estimates. While the reorganization will result in the cancellation of the Company's existing common stock, the reorganization plan also provides that existing NutraMax shareholders would receive subscription rights in a common stock offering in the newly reorganized company and would additionally have beneficial rights to a pro rata share of a litigation trust. All terms of the proposed financing and reorganization plan are presently subject to court approval, and may be modified. Richard G. Glass, NutraMax's Chief Executive Officer said, "This is a very positive development for NutraMax as it will enable us to secure our position as an innovative and valued supplier to our customers. The filing of our reorganization plan follows an extensive evaluation of our business and financial structure. By significantly reducing our debt and implementing cost savings and efficiency programs, NutraMax will emerge from this process as a stronger and more competitive company. We are particularly gratified by the support of our principal shareholders who are stepping up to lead a significant new investment in the Company. Their $18 million commitment reinforces the strength of our prospects and gives us a stable platform from which to build our business." Glass added, "The Chapter 11 process will allow us to continue our day to day operations while we address the steps necessary to achieve our financial restructuring. With the support of our customers and suppliers, and through the hard work and dedication of our 830 employees, I am very confident in our ability to reach new levels of performance in the future." As part of the Company's overall reorganization plans, there are many positive components that will support a successful emergence from Chapter 11: A new executive management team led by Mr. Glass, and including David Radeke, President and Chief Operating Officer, Dawn Larson, Chief Financial Officer, and David Goldstein, Vice President, Sales & Marketing. Implementation of a combination of price increases and cost savings programs with an annualized benefit to the Company of approximately $4 million. Development of short term strategies to improve management and control of day to day business; and long term strategies to drive profitable growth in the future. NutraMax is a leading consumer health care products company. In addition, the Company offers a broad range of pharmaceutical manufacturing capabilities to a select group of contract customers. OMEGA HEALTHCARE: Announces First Quarter Results ------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) today announced results for the three-month period ended March 31, 2000. Revenues for the three-month period ended March 31, 2000 were $26,117,000, a decrease of $3.9 million from the same period last year. Funds from Operations for the period totaled $0.55 per share compared with $0.82 for the first quarter of 1999. Earnings per share before provisions for losses on asset dispositions in the first quarter totaled $0.26 per share, down from $0.52 per share from the same quarter of 1999. Total investments at March 31, 2000 were$1,060,000,000. The reduction in revenues resulted from a $1.4 million provision for losses on restructuring of customer obligations, reduced revenue recognition from properties recovered from tenants during the quarter, and reduced investment caused by 1999 asset sales and the prepayment and foreclosure of mortgages. Recovered properties are now operated indirectly by the Company. Funds from Operations during the quarter totaled $11 million but the recovered properties required $11.4 million of short-term working capital associated with these operations. Cash available for distribution for the quarter was negative. Currently Omega operates 73 properties indirectly through management agreements with independent healthcare firms. Essel W. Bailey, Jr., Chief Executive Officer, stated: "This has been a challenging quarter in the long-term care industry. We recovered 18 owned properties and put them in the hands of capable managers. While this cost both management time and capital, the transition is going well, and payment from funding sources is expected to resume during the second quarter, which is likely to lead to improved cash flows in the second and third quarters, reducing the temporary investment in working capital." The Company announced that its Board of Directors today declared the regular quarterly dividend on the Company's Series A and Series B preferred stock. Dividends of $.578 and $.539, respectively, will be paid on May 15, 2000 to holders of record on May 5, 2000. Omega announced that its Board is continuing to evaluate the effect of industry trends as reflected in previous announcements and near term liquidity issues on the Company's common stock dividend policy. Mr. Bailey continued, "We are delaying announcement of our dividend policy with respect to common stock until we conclude ongoing discussions with our banks and other sources of debt and equity capital, to address our near term liquidity issues, including the July, 2000 maturity of $81 million outstanding exchange notes." Omega also announced that it has received waivers from its banks regarding compliance with certain financial covenants under its revolving credit facility. These waivers extend until June 29, 2000 to permit completion of revised bank loan agreements. The directors also announced postponement of the annual meeting currently scheduled for May 3, 2000. The Company expects to convene a shareholder meeting in late June or July. Finally, Omega announced that two operators, including one operator under bankruptcy court protection, recently have resumed payment of rents and mortgage interest that total approximately $15 million annually. While payments are now being made as agreed, there is no assurance that these customers will be able to continue those payments. Management continues to work with several financially troubled operators to assure continuing quality patient care and the payment of obligations owing to the Company. Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At March 31, 2000, it owned or had mortgages on 278 healthcare and assisted living facilities with more than 28,000 beds located in 29 states and operated by 26 independent healthcare operating companies. PAGING NETWORK INC: S&P Cuts Notes To Lowest Rating --------------------------------------------------- Standard & Poor's cut its rating on subordinated notes issued by Paging Network Inc. , the No. 1 U.S. messaging company, to "D", its lowest level, after the company defaulted on interest payments. Standard & Poor's said Dallas-based Paging Network, or PageNet, failed to make payments on $500 million of 10 percent subordinated notes due in 2008. S&P cut its rating on the notes from single-C, its lowest grade other than default. PageNet agreed in November to merge with No. 2 rival Westborough, Mass.-based Arch Communications Group Inc. in an attempt to survive in a business pressured by intense competition from larger companies and the availability of more sophisticated competing technologies. PageNet and Arch cleared one hurdle in the merger process last Thursday when the U.S. Federal Communications Commission approved the transfer of Arch's and PageNet's licenses into a combined entity. The merger would create a company with more than 16 million wireless communications subscribers. PageNet said on April 17 it missed a second deadline to file its annual report with the U.S. Securities and Exchange Commission. As of Tuesday afternoon, the report was not available on the SEC's "EDGAR" online database. On February 3, S&P cut its ratings for PageNet's corporate credit and some of its other subordinated notes after PageNet said it would consider filing for bankruptcy reorganization if bondholders did not agree to conditions of the Arch merger. PageNet's outstanding 10.125 percent subordinated notes maturing in 2007, rated single-C by S&P, were bid on Tuesday at 55, up 1 point. PageNet's stock closed Tuesday on Nasdaq at 1-23/32, down 1/16. Arch's stock closed on Nasdaq at 7-1/16, down 9/16. PATHMARK: S&P Cuts Rating ------------------------- Standard & Poor's cut its corporate credit and debt ratings for supermarket operator Pathmark Stores Inc. to its lowest "D" rating after the company defaulted on interest payments due May 1. Standard & Poor's cut the ratings after Carteret, N.J.-based Pathmark, which operates 134 supermarkets in the New York and Philadelphia metropolitan areas and New Jersey, announced on Monday that it would take advantage of a 30-day grace period and not pay $33.3 million of interest due May 1 on two outstanding note issues. The rating agency said that it based its decision on the company's marginal liquidity due to substantial debt maturities through 2003. The agency cut Pathmark's corporate credit rating to D from double-C, a low junk grade, and its rating on the notes to D from single-C, its lowest grade other than default. Pathmark said on Monday it would not pay $21.2 million of interest due May 1 on its $440 million of 9.625 percent senior subordinated notes maturing in 2003, and $12.1 million due on its $225 million of 10.75 percent junior subordinated notes, which also mature in 2003. The company had said on March 22 it formed an ad hoc committee of bondholders and was in talks to develop a plan to restructure its finances and cut debt. On the same day, it reported a fourth quarter 1999 net loss of $2.1 million, down from $4.6 million in the same year-earlier period, on revenues of $956.1 million, up from $916.3 million. "Pathmark is on track to emerge from the restructuring process later this year as a financially healthy company," chief executive Jim Donald said in a statement on Monday. The company also said it agreed with lenders to waive its compliance through July 29 with various provisions in a $500 million credit agreement. S&P affirmed its triple-C rating on the credit agreement, and its single-C rating on $293 million of other Pathmark subordinated notes. Another leading rating agency, Moody's Investors Service, last took action on Pathmark's debt on Dec. 16. It rates the credit agreement B3, a medium junk grade, and rates the notes Ca through Caa3, all low junk grades. PRINCETON HOSPITAL: New Bidder Surfaces --------------------------------------- Just five days before a bankruptcy judge is scheduled to rule on a $3.5 million purchase agreement between Princeton Hospital and Lakeside Alternatives Inc., news came out that Morningstar Healthcare LLC, in a letter to the Agency for Health Care Administration, which regulates Florida Hospitals, said that it plans to seek a bankruptcy court judge's approval of its competing bid for the hospital, reports Greg Groeller of The Orlando Sentinel. Morningstar was incorporated on the same day that it sent its letter to AHCA, according to records kept by Arkansas' Secretary of State office. PURINA MILLS: Second Amended Joint Plan Confirmed ------------------------------------------------- On April 7, 2000, the US Bankruptcy Court for the District of Delaware entered an order confirming the Second Amended Joint Plan of Reorganization of Purina Mills, Inc. STERLING PACKAGING: Plan Confirmed Without Objection ---------------------------------------------------- Pittsburgh's Bankruptcy Court ruled late Friday that Sterling Packaging had met the required standards and signed the order confirming its Plan of Reorganization. The plan was confirmed without objection. Exit financing will be provided by Foothill Capital Corporation, a division of Wells Fargo. Sterling will continue to operate as an independent, stand-alone manufacturer with existing management and operations. "We've lowered financial leverage, dramatically improved our productivity, and restructured our entire organization around leading-edge people, processes and technology," said Stanley Ruskin, Chief Executive Officer, Sterling Packaging. "Sterling's new, state-of-the-art equipment and SAP software will insure our role as the industry leader in information technology and folding carton manufacturing, and set the pace for the packaging industry of the future." The restructuring conquers the major challenges the company has historically faced: -- Reduction of high financial leverage and risk; -- Upgrade of sheetfed operations to state-of-the-art technology; -- Expansion of flexographic and laminating capabilities; -- Upgrade of Pre-Press systems. Other benefits of the restructuring include: -- Installation of the world's leading ERP system, SAP software; -- Expanded partnerships with major raw material suppliers; -- Completion of ISO 9000 process standardization; -- An expanded board of directors. Sterling and Foothill anticipate a final closing within three to four weeks. Sterling Packaging is a manufacturer of folding cartons and tissue papers for consumer products, food packaging and gift boxes. Privately held, Sterling has provided high quality, customer service, responsiveness and flexibility in its work for more than 100 years. With multiple facilities and a wide range of manufacturing equipment, Sterling offers state-of- the-art technology and top-notch personal expertise. As an independent company, Sterling has the autonomy to leverage best in-class suppliers of raw materials and value-added services. A midsize organization, Sterling offers an extensive range of products and services, while maintaining the commitment, flexibility and service of a smaller firm. SYSTEM SOFTWARE: Enters Agreement With Gores; Files Chapter 11 -------------------------------------------------------------- System Software Associates, Inc. (OTCBB: SSAX) and Gores Technology Group, a leading international technology and management company, announced today that they have entered into a definitive Asset Purchase Agreement providing for the previously announced sale by SSA of substantially all of its assets to a newly-formed subsidiary of Gores for a total of approximately $52 million in cash and 25% of the common stock of the newly-formed subsidiary. SSA also announced today that it has reached agreement with its senior secured lenders on the terms of a debtor-in-possession loan facility and, as expected, has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The Chapter 11 proceeding is intended to, among other things, allow SSA to complete the sale of its assets in an expeditious manner pursuant to Section 363 of the Bankruptcy Code. The proposed DIP facility, which has been submitted for bankruptcy court approval, provides SSA with up to $5,000,000 of new funding for operations through May 26, 2000. Extension of the DIP facility beyond May 26 is subject to approval by SSA's senior secured lenders of an acceptable budget for such period. Completion of the Gores transaction, which is scheduled for mid- June, remains subject to bankruptcy court approval, among other things. If the Gores transaction is completed, SSA expects that all of the cash received upon closing of the sale will be used to pay SSA's senior secured lenders and administrative claims in bankruptcy, leaving 25% of the common stock of the newly-formed subsidiary available for claims of unsecured creditors of SSA in bankruptcy, including the holders of SSA's 7% Convertible Subordinated Notes due 2002. As previously disclosed, SSA does not expect any distribution to be made to holders of its equity securities. System Software Associates is a worldwide ERP software and services provider with fiscal year 1999 revenue of $316 million. Its principal product, eBPCS Version 6.1 is primarily sold to the industrial sector including: automotive, chemicals, consumer goods, electronics, general manufacturing, food and beverage, forest products and pharmaceuticals. Gores Technology Group (GTG) is a leading international technology acquisition and management company with an aggressive strategy of acquiring promising high-technology organizations, products and services, and managing them for increased growth and profitability. GTG's established infrastructure currently manages a portfolio of 18 companies that are located in 40 countries throughout the world. Those companies provide a broad range of technology-based products and services to a substantial customer base of 12,500 corporations that represent more than 1.5 million active users. TERRA INDUSTRIES: Reports First Quarter Results ----------------------------------------------- Terra Industries Inc. (NYSE: TRA) announced today a net loss of $19.6 million for the 2000 first quarter ended March 31, or $.26 per share, on revenues of $222.2 million. For the comparable 1999 quarter, after reclassification for the sale of Terra's Distribution segment, the net loss from continuing operations was $23.4 million, or $.32 per share, on revenues of $185.7 million. EBITDA (earnings from continuing operations before interest expense, taxes, depreciation and amortization) was $9.9 million in the 2000 first quarter compared with a negative $1.3 million in the 1999 first quarter. The Nitrogen Products business segment recorded revenues of $198.2 million and an operating loss of $10.3 million compared with revenues of $179.7 million and an operating loss of $8.7 million for the 1999 first quarter. The $1.6 million operating loss increase was due to natural gas and other cost increases partially offset by higher net product selling prices. Natural gas costs for the quarter increased by 6% when compared to the 1999 first quarter. Startup of the Beaumont ammonia plant, a longer-than-expected maintenance turnaround of the Billingham ammonia plant and an unscheduled outage of the Woodward ammonia plant contributed to increased 2000 first quarter costs. First quarter 2000 ammonia and urea selling prices realized were 15% and 29%, respectively, higher than comparable 1999 first quarter prices while nitrogen solutions prices were about the same and ammonium nitrate prices declined 11%. The ammonia and urea prices reflected lower than expected industry-wide supplies of these products. Nitrogen solutions prices lagged ammonia and urea prices due to the carryover of dealer storage fill program pricing into the first quarter. The ammonium nitrate price decline was due to continued softness in the U.K. and Western European markets. The Methanol business segment reported 2000 first quarter revenues of $21.1 million and an operating loss of $5.8 million compared with revenues of $10.8 million and an operating loss of $9.2 million in the 1999 first quarter. The nearly 100% increase in revenues reflects the two-month shutdown of Terra's Beaumont plant during the 1999 first quarter when selling prices decreased to a point below the cost of natural gas required to produce methanol. The reduced loss was due primarily to a 22% selling price increase. Burton M. Joyce, President and CEO of Terra, said, "The first quarter in total met our expectations as ammonia and urea price increases offset much of the natural gas and other cost increases. All of our ammonia and upgrading plants are now operating at or near capacity in response to customer demand. Nitrogen solutions and ammonium nitrate selling prices have increased significantly in recent weeks because of lower industry-wide supplies and seasonal demand. We have also experienced methanol price increases. Except for persistently high natural gas costs, all factors are pointing to a much improved 2000 second quarter." TOSHIBA CORP.: Reports 28B Yen group net loss in FY99 ----------------------------------------------------- Toshiba Corp. said Friday it suffered a consolidated net loss of 28.00 billion yen for the fiscal year ended March 31, deeper than the year-earlier loss of 13.90 billion yen. Toshiba said its consolidated sales grew 8.5% to 5.749 trillion yen, marking the first on-year gain in three fiscal years. The company said sales of such products as semiconductors, liquid crystal products and mobile communication goods fared well in the latest reporting period. In addition, inclusion of the Toshiba Tec Corp. group in its group results helped underpin on-year sales gain. Operating profit grew more than threefold to 100.97 billion yen, exceeding the year-earlier levels for the first time in four years. The company attributed the operating profit gains to sales of personal computers and mobile communications goods. Stability in semiconductor prices from the second half contributed to the rapid on-year growth. But it suffered a group pretax loss of 44.84 billion yen, compared with the year-earlier profit of 11.22 billion yen. The company said it reported 106.39 billion yen in non- operating expenses linked to last year's settlement of a U.S. class-action lawsuit over the floppy disk controllers used in its notebook computers. In addition, Toshiba booked other costs related to restructuring of semiconductor and household electric appliance operations in the non-operating category. (Nikkei 28-April-2000) ********* 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. 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