/raid1/www/Hosts/bankrupt/TCR_Public/000519.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, May 19, 2000, Vol. 4, No. 99
Headlines
ADVANCED GAMING TECHNOLOGY: Reports Loss of $115,130 for Quarter
AIOC: Chapter 11 Trustee Seeks Approval of Plan of Liquidation
AMERICAN HEALTH: To Close After Finance Plan Rejected
AMERISERVE: Sues Founder and Former Chief Executive
AMERISERVE: Workers to File Unfair Labor Charges
APPLE ORTHODONTIX: Order Approves Counsel to Committee
BOSTON CHICKEN: Third Amended Plan
CODON PHARMACEUTICALS: Entry of Confirmation Order
CONTIFINANCIAL: Files for Chapter 11 Protection
CONTIFINANCIAL: Fitch IBCA Lowers Senior Debt To D'
CONTIFINANCIAL: MBIA Does Not Expect Losses Due To Bankruptcy
DELTA FINANCIAL: Announces Plans for Retail Originations
DEN: Announces Plans to File Chapter 11
EAGLE FOOD: Extension of Time to Assume/Reject Leases
FAVORITE BRANDS: Order Confirms Plan
FIRSTPLUS FINANCIAL: Effective Date of Confirmed Plan
FOSTER WHEELER: Reports Net Loss of $3,743 For Quarter
GST TELECOM: Case Summary and 20 Largest Creditors
GST TELECOMMUNICATIONS: Case Summary and 20 Largest Creditors
HARNISCHFEGER: Third Motion For Extension of Exclusivity
HMT TECHNOLOGY: Komag To Merge Into HMT
HUDSON OVERLOOK: Case Summary and 7 Largest Unsecured Creditors
INACOM CORP: Moody's Lowers And Assigns Ratings; Negative Outlook
INTEGRATED HEALTH: Enters Letter Agreement With Heller
JUMBOSPORTS: Order Grants Authority to Sell Real Property
MORRIS MATERIAL: Case Summary and 20 Largest Creditors
MOSSIMO: Announces Filing of Involuntary Petition
NUCENTRIX BROADBAND NETWORKS: Contemplates Decline in Revenues
PHONETEL TECHNOLOGIES: Reports Financial Results
SAFETY-KLEEN/LAIDLAW: S&P Cuts Ratings To Default
STOCKSCAPE TECHNOLOGIES: Reorganization-Positive Effect on Stock
SUN HEALTHCARE: Court Approves Employ of Boudreau & Associates
SUNTERRA CORP.: D&P Downgrades Ratings To Triple-C
SUNTERRA CORP.: Moody's Lowers Ratings Of Notes
SUNTERRA CORP: S&P Cuts Ratings To Default, Sees Risk Of Shutdown
TREESOURCE INDUSTRIES: Reorganization Update
VENCOR: Ventas Files Proof of Claim in Bankruptcy Proceeding
VENCOR: Ventas Objects to Proposed Plan Changes
VISTA EYECARE: Begins Trading on OTC Bulletin Board
BOND PRICING FOR WEEK OF May 15, 2000
*********
ADVANCED GAMING TECHNOLOGY: Reports Loss of $115,130 for Quarter
----------------------------------------------------------------
Net income for Advanced Gaming Technology Inc. for the three
months ended March 31, 2000 was a loss of $115,130 compared to
a net loss of $110,888 for the same period in 1999. Revenue for
the three months ended March 31, 2000 was $15,163 compared to
$87,501 in 1999.
The company is currently pursuing new distribution arrangements
for the Max Lite electronic bingo system. Management is working
to establish a network of distributors to market, service and
support the product. Modifications have been made to the system
to restore its competitiveness in the market. The company
indicates that these updates have been accomplished at minimal
cost. Management is currently considering a national
distribution contract for exclusive marketing rights to the
system.
The company has adequate inventory of finished units to supply
many new installations. Since the reorganization new
arrangements have been made with suppliers of parts and materials
essential to production of additional units.
The damage done to the company's image prior to the
reorganization of the company was significant. Vendors and
suppliers were alienated and thus were unwilling to support the
company's ongoing efforts. Distributors and customers became
disenchanted with the company's level of service and
support.
The new strategic plan of the company stresses the importance of
moving cautiously and with complete competence in developing new
relationships. Management reports that it is confident at this
time that the bridges to suppliers have been rebuilt. New
relationships with distributors of the products are now possible.
Advanced Gaming Technology says its image is being rebuilt on a
solid foundation.
AIOC: Chapter 11 Trustee Seeks Approval of Plan of Liquidation
--------------------------------------------------------------
According to Edward G. Moran, the Chapter 11 Trustee of AIOC
Corporation ("Corp.") and AIOC Resources AG ("Resources"), he is
seeking court approval of his Amended Joint Transnational Chapter
11 Plan of Liquidation, dated May 3, 2000, for those chapter 11
debtors. The plan provides for 100% distributions on all allowed
administrative and priority claims, and for distributions that
are estimated at approximately 19% and 27% on allowed general
unsecured claims against Corp. and Resources, respectively.
In an order dated May 4, 2000, the U.S. Bankruptcy Court for the
Southern District of New York approved the disclosure statement
for the plan, and scheduled a hearing to consider confirmation of
the plan for 9:45 a.m. on June 1, 2000. Ballots accepting or
rejecting the plan must be received by the balloting agent, and
objections to confirmation of the plan must be filed and
served, by 4 p.m. (New York City time) on May 26, 2000. Copies of
the plan, the disclosure statement, the order approving the
disclosure statement, and the notice of the confirmation hearing
may be obtained electronically by accessing the Court's website
at: www.nysb.uscourts.gov. Parties in interest may also
obtain further information by contacting (1) the balloting agent,
Bankruptcy Services LLC, Attn: Mr. Alex Houghton, at 888-498-7763
(telephone) or 212-376-8989 (fax), or (2) the Chapter 11 Trustee,
Mr. Edward G. Moran, at 212-697-3515 (telephone) or 212-986-1530
(fax).
Before the commencement of their chapter 11 cases in April 1996,
Corp. and Resources were engaged, among other things, in the
purchase and sale of ferrous, nonferrous, and precious metals
with trading partners throughout the world, and maintained more
than twenty offices worldwide. In August 1996, Resources also
became the subject of an involuntary bankruptcy proceeding in
Zug, Switzerland, which is being administered by the Bankruptcy
Office for the Canton of Zug, Switzerland. The Swiss and U.S.
proceedings involving Resources have been administered and
coordinated under a Cross-Border Liquidation Protocol entered
into by and between the Chapter 11 Trustee and the Swiss
Bankruptcy Office, and approved by the U.S. Bankruptcy Court.
AMERICAN HEALTH: To Close After Finance Plan Rejected
-----------------------------------------------------
May 11, 2000 (Chicago Tribune/KRTBN)--Ending a four-month battle
with state insurance regulators, troubled American Health Care
Providers Inc. said Wednesday that it is shutting down.
American's chief executive and founder, Asif Sayeed, said the
Richton Park-based health maintenance organization was powerless
to avoid liquidation proceedings sought by the Illinois Insurance
Department after the department rejected its $10 million
recapitalization plan.
"They have never given us a chance from the get-go," said Sayeed,
who founded the HMO 16 years ago.
State Insurance Director Nat Shapo, however, said American was
given a fair opportunity to turn the business around, but its
reorganization plan was "unacceptable" and did not address the
HMO's myriad financial problems and complaints from doctors and
hospitals.
Now American's remaining 35,000 customers will be required to
choose another health plan.
As part of the liquidation, eligible claims up to $300,000 will
be paid by the Illinois HMO Guaranty Association, which is funded
by contributions from HMOs operating in the state.
With the fund paying the claims, insurance regulators say
American enrollees will not be held legally liable by doctors or
hospitals for unpaid medical bills other than deductibles or co-
payments.
"My immediate interest with the entry of the liquidation order is
to work with the Illinois HMO Guaranty Association to see that
all of American's enrollees receive continuing and appropriate
medical coverage," Shapo said.
In February, the Illinois Department of Insurance filed suit
against American in Cook County Circuit Court, alleging that the
HMO has $25 million more in liabilities than assets and therefore
should be liquidated. The department requires HMOs to be in the
black by at least $1.5 million.
"The reorganization plan would have provided additional cash
infusion into the company . . . and would have easily exceeded
the statutory net worth requirements for health maintenance
organizations licensed in the state," Sayeed said.
American, however, was unable to "ensure the success of the
reorganization plan" because of a dramatic drop in cash flow with
the departure of more than 50,000 customers in the last four
months. Despite repeated attempts by American to offer a
reorganization plan, Shapo said, "not a single penny ever entered
the company."
"These plans were all unacceptable and did not begin to seriously
address American's financial and operational dysfunctions," Shapo
said.
Within weeks of the state's lawsuit, American began to lose
business. Major employers and providers of medical care decided
they would no longer do business with American.
Two weeks ago, the Illinois Department of Public Aid, which
administers the state-federal Medicaid program, terminated its
15-year relationship with American because of the alleged
insolvency. That contract accounted for 19,000customers, the most
profitable of American's operations.
Earlier, the Medicare program also terminated its HMO contract
with American, forcing 4,000 seniors in Cook County to choose a
new health plan.
AMERISERVE: Sues Founder and Former Chief Executive
---------------------------------------------------
Bankrupt restaurant supplier AmeriServe Food Distribution Inc.,
Addison, Texas, has filed a lawsuit against its founder and
former chief executive, claiming he improperly pulled tens of
millions of dollars out of the company before it filed for
bankruptcy in January, the Associated Press reported. The
company, which has lost more than one-third of its restaurant
business, including accounts with such restaurant chains as
Burger King and Chick-fil-A, charged in its lawsuit, filed
Tuesday in Wilmington, Del., that John Holten wrongfully diverted
funds from the company into other companies under his control
under the guise of expense reimbursements, management fees and
other transactions, and that the transfers had "no legitimate
business purpose," leaving the company short of money to meet its
obligations. The company has asked for the return of the money
and unspecified punitive damages; Holten's attorney denied any
wrongdoing and called the lawsuit a typical tactic in bankruptcy
cases. "In a bankruptcy proceeding, where there is ever a
transfer of money, lawsuits are filed...creditors are trying to
maximize their return," said Robert S. Burrick, a New York
bankruptcy lawyer. "We can justify the payments." Burrick said
Holten's companies, principally closely held Holberg Industries
Inc. of Greenwich, Conn., maintained financing for AmeriServe.
David Margulies, an AmeriServe spokesman, said yesterday that the
amount of money involved is "substantial," but that the company
wasn't alleging that the transfers alone forced the bankruptcy
filing.
In a related matter, investors who bought AmeriServe bonds have
asked the U.S. Bankruptcy Court in Wilmington for assistance in
investigating a $200 million bond offering in September
underwritten by Donaldson, Lufkin & Jenrette Inc. Burrick said
Holten and Holberg Industries put $30 million into the company in
early December, along with $100 million from DLJ and $15 million
from a major customer, Tricon Global Restaurants Inc. of
Louisville, Ky. (ABI 18-May-00)
AMERISERVE: Workers to File Unfair Labor Charges
------------------------------------------------
According to an article in the Milwaukee Journal Sentinel/KRTBN
on May 10, 2000, workers who are losing their jobs at the
AmeriServe Food Distribution Inc. facility in Waukesha said this
week that the bankrupt fast-food supplier is reneging on
severance pay and other obligations.
Members of the Employee Relations Committee, an independent union
at AmeriServe's 150-worker distribution center in Waukesha, said
they're filing charges of unfair labor practices against
AmeriServe, which is based in Addison, Texas.
Tony Fischer, president of the union, said that in addition to
severance pay, AmeriServe still owes its Waukesha workers for
paid days off.
David Margulies, a spokesman for AmeriServe in Texas, said
Tuesday that the company was not aware of any major paycheck
problems with its Waukesha employees and that workers who detect
errors should alert their local managers.
Margulies also said that AmeriServe doesn't plan on owing
severance pay to workers at the Waukesha facility because the
company is offering them a chance to continue employment at
AmeriServe's operations in Oak Creek. He said AmeriServe will
make its last deliveries out of Waukesha on Monday and will close
the facility June 4.
AmeriServe announced the closing last month, about three months
after filing for Chapter 11 bankruptcy protection.
APPLE ORTHODONTIX: Order Approves Counsel to Committee
------------------------------------------------------
The US Bankruptcy Court for the Southern District of
Texas(Houston) entered an order approving retention of Traub,
Bonacquist & Fox LLP nunc pro tunc to March 7, 2000 as cousnel to
the Official Committee of Unsecured Creditors.
BOSTON CHICKEN: Third Amended Plan
----------------------------------
Based on the compromises set forth in the Global Settlement
Agreement, the Debtors sought and obtained, in the absence of any
remaining objections of substance, confirmation of a Third
Amended Plan dated May 3, 2000.
The Debtors argued before Judge Case that confirmation of the
Third Amended Plan is appropriate under the "cram down"
provisions of 11 U.S.C. Sec. 1129(b) notwithstanding the fact
that (i) several classes of claims and interests are deemed to
have rejected the Amended Plan because they will not receive any
distribution under the Amended Plan and (ii) the general
unsecured creditor class of BCI has not accepted the Plan by the
requisite 2/3 majority in dollar amount, and, therefore, has
rejected the Plan.
The Third Amended Plan provides that substantially all of the
Debtors' assets will be sold to GRO pursuant to the Asset
Purchase Agreement and that the proceeds of the sale, as well as
proceeds from the sale of Retained Assets, will be used to fund
the Amended Plan.
Pursuant to the Global Settlement, the major amendments include:
(1) a $3 million voluntary re-distribution from the proceeds of
the sale of the 1996 Collateral to the Unsecured Classes,
including the Debenture holders.
(2) an Allowed Secured Claim of the 1995 Lenders of $6 million
to be paid in full in Cash at the closing.
(3) an Allowed Secured Claim of the 1996 Lenders of the amount
paid by the Buyer less the payments to all other Secured
Creditors including the $6 million payment to the 1995 Lenders.
(4) an increase of $2.65 million in the purchase price, from
$173.5 million to $176.15 million;
(5) limiting the Administrative Claim of the Indenture Trustees
under the Debentures to $150,000 to be allowed and paid in full
from the proceeds of the sale.
(6) payment from the proceeds of the 1996 Collateral to the
Unsecured Classes of $2 million in cash on the Effective Date and
the first $1 million in net recoveries by the Plan Trustee from
causes of action retained by the Estates, with all the $3 million
to be distributed pro rata to holders of Allowed Unsecured
Claims, other than the unsecured deficiency Claims of the 1996
Lenders and the 1995 Lenders, as compared to provision under the
original plan, that the net recoveries obtained by the Plan
Trustee were to be used first to pay: (1) the Remimbursement
Claims of the 1996 Lenders for all payments they agreed could be
made to priority creditors from the 1996 Collateral, and (2) the
Adequate Protection Claim, if any, to which the 1996 Lenders are
entitled.
(7) a waiver of rights by The 1996 Lenders and the 1995 Lenders
to seek a turnover of funds distributed to Debenture holders
pursuant to the subordination provisions of the Debentures.
In addition, assets not transferred to the Buyer will be retained
by the states and Gerald K. Smith will be appointed Plan Trustee,
for liquidating the Retained Assets. If the Retained Assets
generate sufficient proceeds to pay the costs of administration,
and the 1996 Lenders Adequate Protection Claims and Reimbursement
Claims, if any, the remaining surplus will be distributed to
Unsecured Creditors on a pro-rata basis.
To comply with court-imposed tests with respect to the agreed
redistribution by the 1996 Lenders from the proceeds, the Debtors
are not going to directly provide the Unsecured Classes with any
payment under the Plan but will make a distribution to the 1996
Lenders, who will then distribute $2,000,000 of their bankruptcy
dividends to the Unsecured Classes. The Debtors contend
that once the 1996 Lenders have obtained their plan dividends,
they are free to distribute them to any other creditors. As the
Debtors observe, SPM, 984 F.2d at 1312-13, says that any sharing
between the secured creditor and the general, unsecured creditors
was to occur after distribution of the estate property, having no
effect whatever on the bankruptcy distributions to other
creditors, but the Code does not govern the rights of creditors
to transfer or receive non-estate property. The Debtors note that
distributions under the Plan will be the same as they would if
the Agreement did not exist.
The Amended Plan establishes three classes of unsecured claims
against BCI in addition to subordinated securities fraud claims:
(1) Class 5 consists of the senior Unsecured Claims that benefit
from the subordination provisions of the Debentures (the
deficiency claims of the 1995 Lenders and the 1996 Lenders);
(2) Class 6 is the Debentures; and
(3) Class 8 is general Unsecured Claims.
The Debtors assert that the distributions under the Third Amended
Plan comply with the priorities established by the Bankruptcy
Code and will enable creditors to receive no less than they would
receive if the Debtors were liquidated in cases under chapter 7.
Finding that the Debtors make their case for confirmation of the
Third Amended Plan pursuant to the confirmation standards set
forth at 11 U.S.C. Sec. 1129, Judge Case ruled that the Third
Amended Plan, premised on the sale of substantially all of Boston
Chicken's assets to McDonald's affiliate Golden Restaurant
Operations, Inc., for $176.15 million and the compromises
described in the Global Settlement Agreement, is confirmed in all
respects.
The parties advised Judge Case at the Confirmation Hearing that
they anticipate closing on the Asset Purchase Agreement with
McDonald's to occur on May 26, 2000.
CODON PHARMACEUTICALS: Entry of Confirmation Order
--------------------------------------------------
On March 7, 2000, the US Bankruptcy Court for the District of
Delaware entered its findings of fact, Conclusions of law and
order confirming the second amended Liquidating Chapter 11 plans
of Oncor, Inc. and Codon Pharmaceuticals, Inc. The Effective
Date of the plans occurred on April 7, 2000.
CONTIFINANCIAL: Files for Chapter 11 Protection
-----------------------------------------------
ContiFinancial Corporation (OTCBB:CFNI) announced that it has
filed for protection under Chapter 11 of the Federal bankruptcy
laws.
The Company has taken the action as part of its efforts to
reorganize the company's capital structure and preserve value for
its creditors.
The possibility of a Chapter 11 filing had been disclosed
publicly by the Company in previous announcements over the course
of several months while management explored its strategic
options. Last week, the Company announced that it had reached a
definitive agreement to sell its ContiMortgage home equity loan
servicing platform and rights to Fairbanks Capital Corporation.
ContiMortgage is seeking prompt Bankruptcy court approval of sale
procedures. The Company also is in negotiations regarding the
future of its loan origination operations. Transactions will be
subject to approval under Section 363 of the bankruptcy code.
The Company has more than sufficient cash resources to meet trade
obligations and employee expenses while in Chapter 11.
Alan Fishman, CEO of ContiFinancial, said, "The Chapter 11 filing
is a necessary step in the process of reorganizing ContiFinancial
to preserve value. This moves us closer to completing that
reorganization process."
ContiFinancial Corporation is a financial services company with
headquarters in New York City
CONTIFINANCIAL: Fitch IBCA Lowers Senior Debt To D'
--------------------------------------------------
The senior debt rating of ContiFinancial Corp. has been lowered
to D' from C' by Fitch IBCA. Approximately $700 million in
outstanding senior debt is affected.
The downgrade to D' reflects the announcement that ContiFinancial
has filed for protection under Chapter 11 of the Federal
bankruptcy laws.
Last week, the company announced that it reached a definitive
agreement to sell its ContiMortgage home equity loan servicing
platform and rights to Fairbanks Capital Corp. ContiMortgage is
seeking prompt Bankruptcy court approval of sale procedures. The
company is also said to be in negotiations regarding the future
of its loan origination operations. Transactions will be
subject to approval under Section 363 of the bankruptcy code.
CONTIFINANCIAL: MBIA Does Not Expect Losses Due To Bankruptcy
-------------------------------------------------------------
MBIA Inc. (NYSE:MBI) announced that it does not expect to incur
any losses as a result of today's Chapter 11 bankruptcy
protection filing by ContiFinancial Corporation and its
subsidiary, ContiMortgage Corporation. MBIA has a current
net par exposure of $4.9 billion on securitizations of home
equity loans and first-lien residential mortgages originated,
issued and serviced by ContiMortgage Corporation.
Last week, ContiFinancial announced that it had reached a
definitive agreement to sell ContiMortgage's home equity loan
servicing platform and rights to Fairbanks Capital Corporation.
Under a related agreement, Fairbanks is providing backup
servicing and management assistance to ContiMortgage for its
entire portfolio.
"We have been aware of the financial stress at ContiFinancial for
a long time and have been working closely with ContiFinancial to
assure a smooth and successful transfer of servicing," says MBIA
Vice Chairman Richard L. Weill. "At this time, the MBIA-insured
transactions are performing satisfactorily, and we do not expect
to incur any losses on these securitizations."
MBIA Inc., through its subsidiaries, is the world's preeminent
financial guarantor and a leading provider of specialized
financial services. MBIA provides innovative and cost-effective
products and services that meet the credit enhancement, financial
and investment needs of its public- and private-sector clients,
domestically and internationally. MBIA Insurance Corporation has
a financial strength rating of Triple-A from Moody's Investors
Service, Standard & Poor's Ratings Services, Fitch IBCA and Japan
Rating and Investment Information, Inc. Please visit MBIA's web
site at http://www.mbia.com.
DELTA FINANCIAL: Announces Plans for Retail Originations
--------------------------------------------------------
Delta Financial Corporation (NYSE: DFC) announced that its
wholly-owned subsidiary, Fidelity Mortgage Inc., plans to open a
new retail originations call center. The call center is scheduled
to open on July 1, 2000 and will be operated out of the Company's
existing space at its headquarters in Woodbury, New York. The
call center will expand the Company's existing retail production,
which currently comes from 14 offices in nine states.
The Company also announced today that its wholly-owned
subsidiary, Delta Funding Corporation, will be closing its
correspondent lending division. Delta Funding intends to transfer
its employees working in its correspondent lending division over
to its broker originations division or to support the new
Fidelity Mortgage retail call center.
"We are very excited about the new retail call center," said Hugh
Miller, President and Chief Executive Officer. "The opening of
the call center and the concurrent closing of our correspondent
lending division solidifies the strategy that we have been
implementing since the fourth quarter of 1998, which has been
shifting our loan production away from our more cash intensive
correspondent purchases and towards our more profitable and less
cash intensive retail and broker originations. We are currently
purchasing less than $10 million of correspondent loans per
month. Therefore, it did not make economic sense to carry the
infrastructure and personnel costs of a correspondent lending
division when we can shift these resources to where we need them
most, to our expanding retail and broker originations
operations."
The Company expects the cost to open the retail call center to be
minimal, since the space, equipment and systems are already
present. Through the retail call center, Fidelity Mortgage
intends to further geographically diversify its loan production
by concentrating on lending in states where the Company is not
currently originating a large number of loans through either the
retail or broker channels.
"We are already seeing an increase in retail originations in the
second quarter compared to the first quarter," said Mr. Miller.
"We expect to see contributions from our retail call center
beginning in the third quarter of this year. We expect
originations from the new call center to help us meet or exceed
our goals for retail production for 2000."
Founded in 1982, Delta Financial Corporation is a Woodbury, NY-
based specialty consumer finance company engaged in originating,
acquiring, selling and servicing non-conforming home equity
loans. Delta's loans are primarily secured by first mortgages on
one- to four-family residential properties. The Company
originates home equity loans primarily in 27 states. Loans are
originated through a network of approximately 1,500 brokers and
the Company's Fidelity Mortgage retail offices. Loans are also
currently purchased through a network of approximately 120
correspondents. Since 1991, Delta Financial has sold
approximately $6.0 billion of its mortgages through 25 AAA rated
securitizations. As of March 31, 2000, the Company's servicing
portfolio was approximately $3.7 billion.
DEN: Announces Plans to File Chapter 11
---------------------------------------
Digital Entertainment Network, a startup online entertainment
company, told its 150-person staff yesterday that it has run out
of funding and can no longer pay employees, according to Reuters.
The Santa Monica, Calif.-based company, which was backed by high-
profile investors including Chase Capital Partners, Microsoft,
Dell, NBC and former Warner Bros. co-chairman Terry Semel, said
it plans to file for chapter 11 protection as soon as possible.
DEN had already laid off more than 100 staffers earlier this
year. Since it launched in 1998, the site has been sharply
criticized for lavish spending on its two facilities and top
execs, management shuffles and a sexual harassment lawsuit
against co-founder Marc Collins-Rector by a 20-year-old, which
many in the industry said had tainted the company's brand
identity, crippling its fund-raising capabilities. In an attempt
to make a comeback, DEN tried to appeal to its young audience,
industry naysayers and investors with a flashy new site and
original content, but financiers decided not to pump more money
into the startup. DEN had raised $60 million to date, and last
month announced it would halt production on its original slate of
shows, which targeted such audiences as Christian teens and
extreme-sports fanatics, and would acquire content from outside
production houses in order to cut rising costs. An IPO filing,
which would have sought out to raise $75 million, was canceled in
February. (ABI 18-May-2000)
EAGLE FOOD: Extension of Time to Assume/Reject Leases
-----------------------------------------------------
The Honorable Roderick R. McKelvie entered an order on April 17,
2000 extending the period within which the debtor must move to
assume or reject the leases until the earlier of the effective
date of the plan or August 29, 2000.
FAVORITE BRANDS: Order Confirms Plan
------------------------------------
By order entered on April 7, 2000, the Honorable Peter J. Walsh
confirmed the first amended joint plan of reorganization of
Favorite Brands International Holding Corp. and its debtor
subsidiaries.
FIRSTPLUS FINANCIAL: Effective Date of Confirmed Plan
-----------------------------------------------------
FIRSTPLUS Financial Inc. filed a notice of Designation of
Effective Date of confirmed Modified Third Amended Plan of
Reorganization.
Accordingly, April 25, 2000 is the Effective Date of the plan.
FOSTER WHEELER: Reports Net Loss of $3,743 For Quarter
------------------------------------------------------
Foster Wheeler Corporation's continuing business strategy is to
maintain focus on its core business segments in Engineering and
Construction and Energy Equipment. In order to remain competitive
in these segments while improving margins, the corporation has
been reducing costs through staff reductions and closure of some
smaller operating facilities. These changes include the reduction
of approximately 1,600 permanent positions, including 500
overhead and other support positions from its worldwide workforce
of 11,000. In addition, approximately 800 agency personnel within
the Engineering & Construction Group have been reduced. The
positions eliminated included engineering, clerical, support
staff and manufacturing personnel.
The corporation reported a net loss of $3,743 on revenues of
$836,296 in the quarter ended March 31, 2000. In the same
quarter of 1999, ended March 26, 1999, the coporation realized a
net gain of $540 on revenues of $1,017,978.
GST TELECOM: Case Summary and 20 Largest Creditors
---------------------------------------------------
Debtor: GST Telecom Inc.
4001 Main Street
Vancouver, WA 98663
Type of business: Integrated Communications Provider (ICP)
headquartered in Vancouver, Washington providing a broad range of
integrated communications products and services to business
customers throughout United States. The company's core business
includes enhanced data and Internet services, point-to-point
transport, local telephone, and long distance services delivered
over the Company's integrated voice and data networks.
Petition Date: May 17, 2000 Chapter 11
Court: District of Delaware
Bankruptcy Case No.: 00-01982
Debtor's Counsel: Steven M. Yoder
Bayard Firm
222 Delaware Avenue, Suite 900
PO Box 25130
Wilmington, DE 19899
Total Assets: $ 564,635,978
Total Debts: $ 2,993,548
20 Largest Unsecured Creditors
DMR Consulting Group
10900 NE 8th St., Ste 1680
Bellevue, WA 98004
(P) 425-451-3100
(F) 425-451-3101 Trade Creditor $ 758,808
Compucom, Inc.
7171 Forest Lane
Dallas, TX 75203
(P) 800-597-0999
(F) 800-368-3982 Trade Creditor $ 258,406
Basis Incorporated Trade Creditor $ 193,071
Tekelec Trade Creditor $ 179,110
Sun Microsystems Inc. Trade Creditor $ 172,434
Eldorado Resorts, LLC Trade Creditor $ 167,453
Nortel Networks/
Northern Telecom Inc Trade Creditor $ 151,730
METAMOR-COMSYS Trade Creditor $ 74,910
Level (3) Communications,
Inc. Trade Creditor $ 57,494
Four Seasons Resort/Mani Trade Creditor $ 55,068
AT&T Wireless
Services Nat'l Trade Creditor $ 42,742
Remedy Corporation Trade Creditor $ 41,836
QDS-Quantum Data
Solutions, Inc Trade Creditor $ 39,683
Cascade Software
Consulting Trade Creditor $ 37,123
Carrier Management
Systems, Inc. Trade Creditor $ 36,198
COMSYS Inc. Trade Creditor $ 35,760
ComPlus Trade Creditor $ 34,209
VOLT Services Group Trade Creditor $ 31,733
Global Knowledge Trade Creditor $ 28,735
MCI WorldCom
Communications, Inc. Trade Creditor $ 27,189
GST TELECOMMUNICATIONS: Case Summary and 20 Largest Creditors
-------------------------------------------------------------
Debtor: GST Telecommunications, Inc.
4001 Main Street
Vancouver, Washington 98663
Type of business: Integrated Communications Provider (ICP)
headquartered in Vancouver, Washington providing a broad range of
integrated communications products and services to business
customers throughout United States. The company's core business
includes enhanced data and Internet services, point-to-point
transport, local telephone, and long distance services delivered
over the Company's integrated voice and data networks.
Petition Date: May 17, 2000 Chapter 11
Court: District of Delaware
Bankruptcy Case No.: 00-01983
Debtor's Counsel: Steven M. Yoder
Bayard Firm
222 Delaware Avenue
Suite 900
PO Box 25130
Wilmington, De 19899
Total Assets: $ 489,161,008
Total Debts: $ 179,719,929
20 Largest Unsecured Creditors
Bank of New York
925 Patterson Plan Rd
NJ 07094
(P) 201-319-3066
(F) 291-319-3073 Bondholder $ 67,420,000
Chase Manhattan Bank
4 New York Plaza
New York, NY 10004
(P) 212-623-6174
(F) 212-623-4821 Bondholder $ 21,975,000
Morgan Stanley & Co.
One Pierpoint Plaza
Brooklyn, NY 11201
(P) 718-754-5266
(F) 718-754-4291 Bondholder $ 15,100,000
State Street Bank
& Trust Co.
1776 Heritage Drive
No. Quincy, MA 02171
(P) 617-985-6453
(F) 617-537-5004 Bondholder $ 14,010,000
US Bank National Association
601 Second Avenue South
Minneapolis, MN 55402
(P) 612-973-1145
(F) 612-973-1170 Bondholder $ 6,750,000
Northern Trust Company
801 S. Canal C-IN
15th Floor Hancock Tower
Chicago, IL 60607
(P) 312-630-1828
(F) 312-444-3882 Bondholder $ 6,500,000
Investors Bank & Trust
Custody
220 Clarendon Street
Boston, MA 02116
(P) 617-330-6562
(F) 617-330-6549 Bondholder $ 4,500,000
UMB Bank, National
Association
PO Box 419260
Kansas City, MO 64141-6260
(P) 816-860-7759
(F) 816-860-5905 Bondholder $ 3,500,000
Boston Safe Deposit
& Trust Company
c/o Melon Bank
Pittsburgh, PA 15259
(P) 412-234-2929
(F) 412-234-7244 Bondholder $ 1,840,000
Bankers Trust Company
648 Grassmere Park Drive
Nashville, TN 37211
(P) 615-835-3410
(F) 615-835-3409 Bondholder $ 1,540,000
American Express Trust
Company
32 AXP Financial Center
Minneapolis, MN 55474
(P) 612-671-2638 Bondholder $ 750,000
Wilson Sonsini Goodrich
& Rosali Trade Credit $ 89,687
Bear, Stearns Securities
Corporation Bondholder $ 50,000
Brown Brothers
Harriman & Co. Bondholder $ 40,000
Olshan Grundman Frome
and Rozenweig Trade Credit $ 38,962
Credit Suisse First
Boston Corp. Bondholder $ 25,000
Joseph Fogg Board Member
Expenses $ 15,848
Bullivan, Houser, Bailey Trade Credit $ 4,203
Independent Investor
Communications Corp Trade Credit $ 1,962
Montreal Trust
Accounts Receivable Trade Credit $ 1,092
HARNISCHFEGER: Third Motion For Extension of Exclusivity
--------------------------------------------------------
"[T]o avoid premature formulation of a chapter 11 plan and . . .
to ensure that the plan that is formulated takes into account the
interests of all of the Debtors, their employees, their creditors
and their estates," Harnischfeger asks Juldge Walsh to grant a
third extension of their exclusive periods during which to file a
plan of reorganization and solicit acceptances of that plan.
Specifically, the Debtors ask that their exclusive period within
which to file a plan of reorganization be extended through and
including October 1, 2000, and they ask for a concomitant
extension of their time to solicit acceptances of that plan
through and including December 1, 2000.
The Debtors advise Judge Walsh that they have, in fact, delivered
a five-year business plan to the Creditors' Committee. They have
also delivered to the Creditors' Committee a term sheet
describing the cornerstones of the plan of reorganization the
Debtors envision based on the five-year business plan as well as
"draft portions of a draft disclosure statement relating solely
to "a general description of the businesses of Joy and Harnco
[and] a draft narrative of the five-year business plan." These
transmittals were discussed in face-to-face meetings between the
Debtors' Management and members of the Creditors' Committee
convened on May 2, 2000.
The Debtors advise the Court that with the February 29, 2000,
General Claims Bar Date having passed, they now face a mountain
of 19,487 scheduled and filed claims aggregating
$9,990,581,037.74 to sift through -- and that process is
underway.
The Debtors remind Judge Walsh that four of the five Beloit-
related asset sales have closed. The Mitsubishi Sale is expected
to close in July.
Terminating the exclusive periods at this juncture, the Debtors
caution, would likely cause a deterioration in their businesses
and the value of their assets to the detriment of creditors.
Maintaining exclusivity will afford the Debtors a meaningful and
reasonable opportunity to negotiate with creditors and propose
and confirm a consensual plan of reorganization.
Judge Walsh will entertain the Debtors' request at a hearing on
June 7, 2000. (Harnischfeger Bankruptcy News Issue 23; Bankruptcy
Creditors' Services Inc.)
HMT TECHNOLOGY: Komag To Merge Into HMT
---------------------------------------
Pursuant to an Agreement and Plan of Reorganization dated April
26, 2000, between Komag, KHM, Inc., a Delaware corporation and
wholly-owned subsidiary of Komag and HMT, and subject to the
conditions set forth therein (including approval by stockholders
of Komag and HMT and Komag's lenders), Komag will merge with and
into HMT and Komag will become a wholly-owned subsidiary of HMT
(such events constituting a merger). Once the Merger is
consummated, Komag will cease to exist as a corporation and all
of the business, assets, liabilities and obligations of Komag
will be merged into HMT with HMT remaining as the surviving
corporation.
As an inducement to Komag to enter into the Merger Agreement,
Komag and HMT entered into a company Stock Option Agreement dated
April 26, 2000 under which HMT granted Komag the right, under
certain conditions, to acquire up to 9,193,051 shares of HMT
common stock which, based upon the 46,196,238 outstanding as of
April 24, 2000, equals 19.9% of HMT's outstanding common stock,
excluding shares of HMT common stock issuable upon exercise of
the Option and excluding shares of HMT common stock subject to
the Voting Agreements.
HMT's obligation to issue shares upon the exercise of the Option
is subject to the occurrence of certain events, which may not
occur. The granting of the Option was negotiated as a material
term of the entire Merger transaction. Komag did not pay
additional consideration to HMT in connection with HMT entering
into the Stock Option Agreement and granting the Option. In the
event the Option becomes exercisable, Komag anticipates it will
use working capital for any exercise of the Option.
When fully exercised Komag's beneficial ownership of HMT common
stock would be an aggregate 13,762,350 shares, representing 23%
of the outstanding common stock of HMT. Sole voting and
dispositive power would be exercised over 9,193,051 such shares
with shared voting power over 4,569,299 shares.
HUDSON OVERLOOK: Case Summary and 7 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Hudson Overlook, LLC
25 West 43rd Street
Suite 800
New York, NY 10036
Petition Date: May 17, 2000 Chapter 11
Court: Southern District of New York
Bankruptcy Case No.: 00-12156
Debtor's Counsel: Avrum J. Rosen
Law Offices of Avrum J. Rosen
38 New Street
Huntington, N.Y. 11743
Tel: (516) 423-8527
Fax: (516) 423-4536
Email: AJRLAW@aol.com
Total Assets: $ 3,157,513
Total Debts: $ 1,407,355
7 Largest Unsecured Creditors
ARC Realty Management Trade Debt $ 42,740
Sterling Elevator Trade Debt $ 4,879
Castle Oil Corp. Trade Debt $ 2,960
The Paint Depot Trade Debt $ 1,296
R & R Fire Door Corp. Trade Debt $ 1,271
Suburban Pest Control Trade Debt $ 976
Landlord Supply Trade Debt $ 756
INACOM CORP: Moody's Lowers And Assigns Ratings; Negative Outlook
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to InaCom
Corporation's amended and restated $225 million guaranteed senior
secured bank revolving credit facility, due 2003, of which
approximately $110 million has been drawn. At the same time,
Moody's lowered the rating to "c" from "b3" on the Vanstar
Financial Trust $195 million 6.75% guaranteed trust convertible
preferred securities, due 2016, which were assumed by InaCom in
conjunction with the Vanstar merger in 1999Q1. InaCom's quarterly
interest payments on the underlying debentures which secure the
trust convertible preferred securities have been blocked by
InaCom's banks in accordance with the fourth amendment and waiver
to the credit facility on February 15, 2000. The rating on the
remaining $115 million of InaCom's omnibus shelf registration of
senior debt, subordinated debt, and/or preferred stock has been
lowered to (P)Caa1/(P)Ca/(P)"c" from (P)Ba3/(P)B2/(P)"b3".
InaCom's senior implied rating was lowered to B3, and the
company's senior unsecured issuer rating was lowered to Caa1. The
ratings outlook is negative.
Moody's ratings downgrade completes a review commenced January 5,
2000 upon the announcement of InaCom's sale to Compaq Computer of
the net assets of its hardware customization and logistics
operations. Although the transaction was consummated for $370
million on February 16, 2000, InaCom has failed to complete its
annual financial audit, which, in turn, has delayed its annual
and FY2000Q1 filings to the U.S. Securities and Exchange
Commission and has led to a sharp sell-off in the company's
publicly traded equity, now quoted at about $1 per share. Moody's
is concerned that potential covenant violations on the company's
amended bank facility could result in a new liquidity crisis.
Prior to the sale of the distribution business, InaCom
experienced liquidity problems stemming from a precipitous
decline in computer services revenues and reduced integration
activities attributable largely to the "Y2K lockdown" implemented
by corporate customers, resulting in the postponement of new
hardware deliveries and installations. These problems have
continued despite the reduction in overall debt from cash
proceeds and the repayment of advances under the company's asset
securitization facility from receivables. Departures from within
the professional services organization have been widely reported,
resulting in personnel losses beyond those set out by management
in a restructuring plan unveiled last December. Furthermore,
InaCom's liquidity issues have exacerbated relationships with
certain of the company's OEM vendors.
The fourth amendment and waiver under the bank credit facility
related to the anticipated FY1999Q4 loss, an estimated $100-150
million of restructuring charges taken in 1999Q4, and an
additional $80-100 million of 1999Q4 write-offs of accounts
receivable. As a result, a lock-box arrangement for all
receivables has been put into effect. Furthermore, expectations
for delay in attaining near-term profitability are reflected in
the minimum EBITDA covenant stipulating that EBITDA be no less
than negative $20 million for FY2000Q2 and negative $6 million
for FY2000Q3. Moody's believes that the company's debt to cash
flow ratio remains high, based on recent operating losses, and
the company's balance sheet continues to be leveraged.
The ratings also take into consideration InaCom's decreased
revenues in both products and services in FY1999Q4 and FY2000Q1
attributable to reduced sales momentum during the pendency of the
sale of the hardware configuration business to Compaq.
Management's distraction from the day-to-day operations of the
business does not augur well for sustaining operating levels
while implementing the dramatic changes that have been explicated
to the investment community. Although InaCom's interface with its
customer base has been virtually unchanged in the wake of the
Compaq transaction and the accompanying supply and sales
agreement, questions arise as to the company's retention of
existing client relationships. The company's renewed dedication
to expense management, intended to reform a corporate culture of
decentralized decision-making, could destabilize the company's
continuing sales force (after 100 sales positions are taken out)
and make it difficult to retain highly trained computer services
personnel whose capabilities are in intense demand nationwide.
To the extent that InaCom survives the current transition period,
it will confront several problems as it evolves its professional
services from life cycle management, encompassing procurement and
configuration, deployment of equipment, asset and network
management, help desk and break/fix services; to the provision of
technology solutions to Fortune 500 companies and purveyors of
electronic commerce. As the largest reseller of Lucent
communications products, InaCom is comfortably positioned to
leverage its services offerings off the accelerating convergence
of data communications and telecommunications activities.
However, while the company is well regarded as an integrator and
life cycle services provider, it is a relative newcomer in the
highly competitive professional services field. It must penetrate
a domain dominated by substantially larger, more formidably
capitalized concerns such as IBM Global Services, EDS, Arthur
Andersen, Unisys and, through its Digital Equipment Corporation
acquisition, Compaq. Even within the emerging area of electronic
commerce, the company will have to identify niche markets that
haven't been suffused by the highly successful IBM, Hewlett-
Packard and Oracle campaigns. These companies have well
established track records and are firmly entrenched with the
customers InaCom would be likely to target.
InaCom Corporation, headquartered in Omaha, Nebraska, architects,
builds and manages solutions that optimize corporations' return
on information technology investments.
INTEGRATED HEALTH: Enters Letter Agreement With Heller
------------------------------------------------------
IHS entered into a letter agreement dated April 6, 2000, with its
Executive Vice President of Facility Operations, John F. Heller,
providing for:
* a $400,000 annual Base Salary;
* payment of a $250,000 Initial Bonus in recognition of his past
contributions to IHS and in exchange for Mr. Heller's release of
all claims against IHS as of April 6, 2000;
* participation in a Retention Bonus Program, to be presented to
Judge Walrath for approval, paying Mr. Heller $375,000 per year;
* payment of minimum $200,000 annual non-discretionary
performance bonus payments based on the achievement by IHS of
Performance Goals established by the Chief Executive Officer for
each year (or portion thereof), which will include EBITDA
targets;
* implementation of a new stock ownership plan in which Mr.
Heller may participate; and
* severance equal to 12-month's salary in the event Mr. Heller
resigns for Good Reason or is terminated without cause;
(Integrated Health Bankruptcy News Issue 4; Bankruptcy Creditors'
Services Inc.)
JUMBOSPORTS: Order Grants Authority to Sell Real Property
---------------------------------------------------------
The US Bankruptcy Court for the Middle District of Florida
entered an order granting the debtor's motion for authority to
sell real property located at 9880 W. Broad Street, Glen Allen,
Virginia (Richmond North) to Jubilee Limited Partnership
The court also entered an order granting the debtor's motion for
authority to sell real property located at 5000 North 27th
Street, Lincoln, Nebraska to Furniture Row USA, LLC for $2.4
million.
MORRIS MATERIAL: Case Summary and 20 Largest Creditors
------------------------------------------------------
Debtor: Morris MaterialHandling Inc.
315 West Forest Hill Avenue
Oak Creek, WI 53154
Type of Business: One of the largest international providers of
"through the air" material handling products and services, with
operations in the United States, United Kingdom, South Africa,
Singapore, Australia, Canada, Mexico, Chile and Thailand.
Petition Date: May 17, 2000 Chapter 11
Court: District of Delaware
Bankruptcy Case No.: 00-02028
Debtor's Counsel: Mary Caloway
Duane, Morris & Hecksher
PO Box 195
Wilmington, DE 19899
(302) 571-5550
Total Assets: $ 94,181,000
Total Debts: $ 299,623,000
20 Largest Unsecured Creditors
United States Trust
Company of New York
Corporate Trust Div
114 West 47th Street
New York, NY 10036 Sen Subordinated
(212) 852-1625 Notes due 2008 $ 200,000,000
Robert Riethmiller
2207 E. Ontario St
Philadelphia, PA 19134
(215) 533-5100 Non-compete $ 1,490,000
Philadelphia Tram Rail
2207 E. Ontario St
Philadelphia, PA 19134
(215) 533-5100 Purchase price $ 1,010,000
Glen Mary Bryson
1121 West Wetmore
Tucson, AZ 85705
(520) 623-4387 Purchase price $ 599,000
United Crane
PO 7466
Charlotte, NC 28241
(704) 588-7767 Purchase price $ 289,000
A.O. Smith Corp. Trade Payable $ 222,192
McKees Rock
Forgings Inc. Trade Payable $ 159,323
Standard Electric
Supply Co. Trade Payable $ 119,865
Butler Gear
Company Inc. Trade Payable $ 113,759
ABB Industrial
Systems, Inc. Trade Payable $ 98,166
Magnetic ESI Trade Payable $ 97,826
Telemotive Industrial
Controls Trade Payable $ 89,724
Bearing Headquarters
Company Trade Payable $ 84,465
SEW Eurodrive Inc. Trade Payable $ 80,870
Apallo Machining Inc. Trade Payable $ 75,948
American Centrifugal Trade Payable $ 75,718
Julius Melvin Non-compete $ 75,000
Whistler Machine Trade Payable $ 74,562
Electric Sales
and Engineering Trade Payable $ 73,396
Prime Cast, Inc. Trade Payable $ 72,228
MOSSIMO: Announces Filing of Involuntary Petition
-------------------------------------------------
Mossimo, Inc. (NYSE: MGX) announced that on May 16, 2000 an
involuntary petition was filed against it under the United States
Bankruptcy Code by Pacific Apparel Resources, Inc., Caeco
Enterprises, Inc. and Wilmar Concepts, each alleging claims
against the Company. Company management is evaluating the
petition at this time.
Founded in 1987, Mossimo, Inc. is designer of men's and women's
sportswear.
NUCENTRIX BROADBAND NETWORKS: Contemplates Decline in Revenues
--------------------------------------------------------------
Nucentrix Broadband Networks, Inc. provides wireless broadband
services in medium and small markets in the central United
States. The company controls up to 196 megahertz of radio
spectrum in the 2.1 gigahertz and 2.5 - 2.7 GHz band licensed by
the Federal Communications Commission in 93 markets including
three markets for which the company has entered into letters
of intent to acquire). The company currently provides high-speed
wireless Internet access service under temporary developmental
FCC licenses in two markets, primarily to medium-sized and small
businesses, small offices/home offices and telecommuters.
At April 30, 2000, the company provided wireless subscription
television service in 58 markets, including an offering of up to
185 digital channels from DIRECTV, Inc. and its distributors in
over 50 markets.
In February 2000, it announced a strategic alliance and agreement
with Cisco Systems, Inc. to pursue testing and deployment of
wireless broadband services using VOFDM technology on a Cisco
Powered Network(R). The agreement includes two field trials to be
completed in Austin and Amarillo, Texas between September 2000
and the end of 2000. The company expects to launch at least 20
total markets by the end of 2001 using this technology.
Nucentrix' business strategy contemplates a decline in revenues,
wireless subscription television subscribers and EBITDA in 2000
and beyond, as it continues to allocate more of its spectrum and
other resources to develop and expand its wireless broadband
Internet and other wireless broadband Internet protocol ("IP")-
based businesses.
Revenues for the first quarter of 2000 were $16.3 million,
compared to $18.5 million for the first quarter of 1999.
Nucentrix has recorded net losses since its inception. During the
first quarter of 2000, the company incurred a net loss of $2.0
million compared to a net loss of $7.6 million for the first
quarter of 1999. The improvement in net loss resulted
primarily from $3.8 million in other income recognized in
connection with the sale of the company's equity interest in
Wireless One and from lower reorganization costs in the current
year.
PHONETEL TECHNOLOGIES: Reports Financial Results
------------------------------------------------
PhoneTel Technologies, Inc. (OTCBB:PHTE) reports financial
results for the three months ended March 31, 2000.
Revenues for the first quarter were $16.0 million, compared
to$19.8 million in the prior year's first quarter. First quarter
EBITDA (earnings before interest, taxes, depreciation and
amortization, and other unusual charges and contractual
settlements) was $1.5 million, compared to $0.5 million in the
prior year's first quarter. The net loss for the first quarter
was $5.5 million, or $ 0.54 per common share, compared to a net
loss of $10.7 million, or $0.59 per common share, in the first
quarter of 1999.
As previously announced, PhoneTel's prepackaged plan of
reorganization (the "Plan") was confirmed by the U.S. Bankruptcy
Court for the Southern District of New York and was consummated
on November 17, 1999 to complete the reorganization of the
Company. PhoneTel completed the refinancing of its $46 million
secured debt and pursuant to the terms of the Plan, converted its
12% Senior Notes into approximately 95% of the reorganized
Company's common stock. Former equity holders, including the
former holders of PhoneTel's mandatorily redeemable preferred
stock, received the remaining 5% of the new common stock.
As a result of the above changes in the Company's debt and
outstanding shares, and the adoption of fresh start reporting,
the reported net loss and per share amounts for the first quarter
are not comparable to the corresponding amounts in 1999.
Depreciation and amortization, interest expense and the number of
shares used in determining loss per share are less than the
amounts that would have been reported if the reorganization had
not been completed.
PhoneTel Technologies, Inc, is a leading independent provider of
pay telephones and related services with operations in 46 states
and the District of Columbia. PhoneTel serves a wide array of
customers operating in the shopping center, hospitality, health
care, convenience store, university, service station, retail and
restaurant industries.
SAFETY-KLEEN/LAIDLAW: S&P Cuts Ratings To Default
-------------------------------------------------
Standard & Poor's cut its corporate credit rating on Columbia,
S.C.-based Safety-Kleen from CC, a low junk grade, after the
company said in a Monday press release it will not make a $10.4
million payment due May 15 on its $225 million of 9.25 percent
senior notes maturing in May 2009.
Safety-Kleen said it was prohibited from making the payment under
an agreement with its lenders, announced April 14, under which it
will defer certain interest payments until May 30.
S&P said at the time there were "considerable uncertainties about
Safety-Kleen's true financial performance" after the company's
auditor, PricewaterhouseCoopers LLP, on March 14 withdrew its
financial statements for Safety-Kleen's three most recent fiscal
years.
U.S. securities regulators are investigating Safety-Kleen for
accounting irregularities, and the company's top three executives
resigned on Friday.
S&P on Tuesday also cut its corporate credit rating on
Burlington, Ontario-based Laidlaw, which owns 44 percent of
Safety-Kleen's shares, from BB-minus, a high junk grade, after
Laidlaw said in a Tuesday press release it missed $7.47 million
in payments due on $100 million of 7.05 percent debt maturing in
May 2003, and $100 million of 8.25 percent debt maturing in May
2023.
Laidlaw also said it missed a $15.3 million payment on $400
million of 7.65 percent notes maturing May 2006.
Chief executive John Grainger called the missed payments "a
necessary part of the company's repositioning process."
S&P on Tuesday cut its ratings on Laidlaw's remaining senior
unsecured debt, as well as the corporate credit and senior
unsecured debt of its Greyhound Lines Inc. unit, eight notches to
CC from BB-minus.
It had previously cut Laidlaw's ratings on April 27, after the
company took a $1.39 billion write-down, including $560 million
on its $593 million stake in Safety-Kleen. The agency said at the
time that Laidlaw's "credit measures and financial flexibility
have weakened significantly."
Another rating agency, Moody's Investors Service, on March 10 cut
Safety-Kleen's various ratings to Caa1 through Ca, all low junk
grades. On Tuesday, it cut Laidlaw's various ratings to Caa1 and
Caa2, and Greyhound's senior unsecured note rating to B3.
Moody's said its Safety-Kleen ratings affected $2.4 billion of
debt, and its Laidlaw ratings affected $4.2 billion.
Safety-Kleen stock closed Tuesday on the New York Stock Exchange
at 3/4, up 1/16. Its 52-week high is 19-3/8.
Laidlaw stock closed Tuesday on the Toronto Stock Exchange at 85
Canadian cents, down 10 cents. Its 52-week high is C$11.50. It
closed on the New York Stock Exchange at 5/8, down 1/8. Its 52-
week high on that exchange is 7-15/16.
STOCKSCAPE TECHNOLOGIES: Reorganization-Positive Effect on Stock
-----------------------------------------------------------------
In a recent report to stockholders Stockscape.com Technologies
Inc. reports that the effect of the corporate reorganization upon
the market for the company's shares has been extremely positive.
20,656,000 shares were traded between July 13th and December 31,
1999. The high trade was US$2.25 and the low was US$0.58. During
the first ten weeks of 2000, the market has been even more active
with over 10 million shares trading within a range of US$0.65 and
US$2.00. According to the company, this vigorous trading and the
high level of liquidity which it represents is most encouraging.
At the time of the corporate reorganization in July 1999, the
company had a staff of 9 employees. On December 31, 1999 the
company employed 11 technical and sales people. At mid-March
2000, staffing has grown to 16 dedicated, highly skilled
employees. Management anticipates a staff of over 40 by year end.
SUN HEALTHCARE: Court Approves Employ of Boudreau & Asssociates
---------------------------------------------------------------
The Debtors sought and obtained Court approval for the employment
of Boudreau & Associates as Special Administrative Appeal
Consultants, pursuant to 11 U.S.C. Sec. 327(a), under the terms
of a Letter Agreement dated November 16, 1995, between Boudreau &
Associates Consulting, Inc. and Sunrise Healthcare Corporation.
Boudreau has been rendering administrative appeal-related
services to Sun Healthcare in Massachusetts since November, 1995,
approximately four years prior to the commencement of the
Debtors' chapter 11 cases. Boudreau has recovered for Sun
Healthcare approximately $634,633.74 through the administrative
appeals process and has litigated with the Massachusetts Division
of Medical Assistance regarding numerous claims of Medicaid
payments withheld from approximately eleven of the Debtors'
healthcare facilities. If ultimately successful, these
facilities would fetch reimbursement of more than $1,000,000.
With respect appeal-related services in Massachusetts, the Letter
Agreement provides for Boudreau to:
(i) research and document each administrative appeal;
(ii) write administrative appeals for all identified accounts
receivable in excess of 365 days of age; preparing all claims
that are required by regulation to accompany the administrative
appeals;
(iii) produce a summary report for use in tracking the
administrative appeals; and
(iv) ensure that acceptable administrative appeals are filed
timely with the claims review board for consideration.
The Debtors note that Boudreau has good expertise in management
consulting services to long-term care facilities and other
healthcare providers, including the prosecution of appeals for
payment from various payors such as state Medicaid programs, the
Medicare program, and various third party insurers, and has
extensive experience in dealing with complicated reimbursement
processes.
Boudreau's president, Janine Boudreau, was personally cited by
the Debtors for her credentials. After graduating with a BA
degree from Emmanuel College in 1991, Ms. Boudreau was employed
by the Massachusetts Medicaid program with responsibility for
oversight of diverse portions of the Medicaid claims payment
process. After leaving Medicaid in 1994, she served as Director
of Medical Services for ACS Service Bureau, supervising billing
and regulatory compliance for all provider types. While at ACS,
she developed their consulting product line, including consulting
services to maximize reimbursement for providers.
The Debtors agree to pay Boudreau 15% of administrative appeals
allowed by the State, inclusive of expenses, costs and attorney's
fees. In connection with the collection of receivables, the
Debtors propose to authorize Boudreau to use professionals and to
compensate such professionals with the proceeds of recoveries.
The Letter Agreement also provides for a retainer of $22,000 to
cover certain upfront costs associated with the administrative
appeals, but to be credited against the contingency fee due
Boudreau as administrative appeals resulted in any recovery of
monies for the Debtors. The Debtors report that the retainer was
paid in 1995 and since then has already been credited to monies
previously recovered by the Debtors.
The Debtors further assure Judge Walrath that the requested
services are not duplicative of services to be performed by other
professional retained by the Debtors and Boudreau has no
connection with, and does not hold interest adverse to the
Debtors, their estates and creditors.
SUNTERRA CORP.: D&P Downgrades Ratings To Triple-C
--------------------------------------------------
Duff & Phelps Credit Rating Co. has downgraded the senior note
and senior subordinated note ratings of Sunterra Corporation
(NYSE: OWN) to CCC (Triple-C).
The ratings remain on Rating Watch-Down where they were first
placed on January 21, 2000.
The rating action follows the company's announcement that it
failed to make a scheduled interest payment on its $140 million
9.25 percent senior notes that was due on May 15 as well as the
occurrence of an event of default under certain credit facilities
due to nonpayment. The securities affected by this downgrade
include:
$140 million 9.25 percent senior notes due 2006
CCC (Triple-C) from B (Single-B)
$200 million 9.75 percent senior subordinated notes due 2007
CCC (Triple-C) from B- (Single-B-Minus)
Additionally, the ratings of the company's $138 million 5.75
percent convertible subordinated notes due 2007 have been
reaffirmed at CCC (Triple-C), but also remain on Rating Watch-
Down.
OWN's liquidity is extremely low as the company's severely
weakened operating performance combined with certain asset write-
downs and one-time charges have resulted in violations of net
worth and net worth-related financial covenants on several of its
credit facilities, which has presently placed the company without
any external funding sources.
As a result, OWN did not have the ability to make mandatory
payments of $4 million on its senior bank credit facility and
$1.1 million on its presale line that were due on May 1.
The company is presently negotiating with its banks and financial
institutions to seek waivers of these violations and to obtain
their agreement not to declare the entire indebtedness due and
payable, which could trigger a cross default on the above-rated
notes.
At the same time, OWN is pursuing major asset sales to maintain
the necessary liquidity to meet its debt obligations and provide
the necessary funds to continue operations.
Unsatisfactory resolution of these negotiations and initiatives
could lead to a further ratings downgrade to DD (Double-D).
SUNTERRA CORP.: Moody's Lowers Ratings Of Notes
-----------------------------------------------
Moody's Investor's Service lowered the ratings of Sunterra
Corporation's 9.25% of $140 million senior notes, due 2006, to
Caa3 from Caa1, its 9.75% of $200 million senior subordinated
notes, due 2007, to Ca from Caa2, and its 5.75% of $138 million
convertible subordinated notes, due 2007, to C from Caa3. In
addition, Moody's lowered the company's senior implied rating to
Caa2 from B3 and its senior unsecured issuer rating to Caa3 from
Caa1. The rating outlook is stable.
The lower ratings reflect Sunterra's lack of liquidity, uncertain
ability to continue to operate without protection under a
bankruptcy filing, and the likelihood that recovery of principal
on the company's notes could be significantly impaired. The
company recently announced that it did not make its interest
payment on its 9.25% senior notes and that it has violated
covenants under several of its credit facilities. Although the
company is pursuing methods to improve liquidity, including
selling assets and establishing new credit lines, its cash
position is low and is expected to be soon depleted.
Moody's believes that the distressed operating condition of the
company may significantly diminish the potential recovery value
to noteholders. Factors that may impact recovery values include
weaker sale prices of assets due to the company's poor
negotiating position with potential timeshare property buyers,
and declining operating results due to scaled down operations and
tight liquidity as well as the diversion of management's
attention on liquidity issues. Should the company be forced to
seek protection from its creditors under the bankruptcy courts,
recovery value would most likely be further diminished by the
multitude of expenses associated with a bankruptcy filing, as
well as the potential that debtor-in-possession financing would
be senior to the existing notes.
Sunterra's most valuable assets are its mortgages receivable and
its inventory of unsold timeshare units. As of March 31, 2000,
the book value of the company's net mortgages receivable was $249
million and its real estate and development costs, which includes
inventory, was $368 million. Out of Sunterra's funded debt of
$712 million at March 31, about $234 million is secured by
mortgages receivable and inventory. The majority of the
receivables and inventory, however, are pledged as collateral.
Under a liquidation scenario, Moody's expects that potential
recovery value to the real estate and development costs could be
significantly impaired.
Sunterra Corporation is an owner and manager of vacation
ownership resorts in the value, upscale and luxury segments. It
is the largest timeshare company in the world, with about 300,000
timeshare owners and members and 90 locations primarily
throughout North America and Europe. The company also manages 17
properties in Hawaii.
SUNTERRA CORP: S&P Cuts Ratings To Default, Sees Risk Of Shutdown
-----------------------------------------------------------------
Standard & Poor's cut its corporate credit and senior unsecured
debt ratings on Orlando-based Sunterra from BB-minus, its third-
highest junk grade, after the company said late Monday it did not
make three scheduled payments.
Sunterra said it missed a $6.475 million payment on its 9.25
percent senior notes maturing May 2006. It has 30 days to cure
before this becomes an "event of default."
Sunterra said it also missed a $4 million payment under its
senior bank credit facility, and a $1.1 million payment on its
"pre-sale line," a line of credit to finance certain notes and
mortgages receivable.
In addition, the company said that because it suffered an after-
tax loss of $15.6 million, or 43 cents a diluted share, in the
first quarter, it violated net worth and net worth-related
covenants in the credit facility, the pre-sale line, and a $50
million inventory line of credit to finance unsold vacation
interests inventory.
First-quarter revenues totalled $98.1 million, down 14 percent
from $114.3 million a year earlier, when the company reported net
income of $10 million, or 27 cents per diluted share.
S&P said "there is no availability under existing credit
facilities, and cash balances are at a minimum. The company
continues to seek additional liquidity alternatives, but if
unsuccessful, it is unlikely to be able to continue operations."
Separately, the agency cut Sunterra's subordinated debt rating to
C, its lowest grade other than default, from CCC-plus.
Another leading rating agency, Moody's Investors Service, on
March 16 cut its various ratings for Sunterra to between B3 and
Caa3, all medium to low junk grades.
Sunterra operates 90 resort locations worldwide and has about
300,000 customers.
Sunterra shares were off 1/16 at 11/16 in morning trade on the
New York Stock Exchange. The 52-week high is 15-3/4.
TREESOURCE INDUSTRIES: Reorganization Update
--------------------------------------------
TreeSource Industries, Inc., (OTC Bulletin Board: TRES) reported
that it has requested a suspension of the hearing on confirmation
of its Plan of Reorganization, which had previously been
scheduled for June 5, 2000. Unfortunately, the current lumber
market is not consistent with the conditions that had been
expected upon emerging from the Chapter 11 process. The Company
made the decision to reset the hearing date based on its
evaluation of the continuing decline in lumber markets and after
consulting with a number of its creditor constituencies. The
Company is continuing to monitor market conditions but does not
expect that a hearing would take place within the next 90 days.
TreeSource President Jess Drake commented, "Although our
facilities are increasing their competitiveness and efficiency,
we would like to take a longer view of the market to evaluate its
impact on our strategic goals. Postponing confirmation of our
Plan of Reorganization is a prudent step while we reconfirm our
strategic goals."
As announced earlier, the Company filed for reorganization under
Chapter 11 of the Bankruptcy Code on September 27, 1999. The
Company is currently operating as a debtor-in-possession. The
proposed plan, if confirmed, would result in the cancellation of
the Company's current classes of common and preferred stock.
Proceeds from the sale of certain assets will be used to pay down
the Company's secured debt and a significant portion of the debt
would be converted to equity.
TreeSource Industries, Inc. operates facilities in Oregon,
Washington, and Vermont, producing softwood and hardwood lumber
products.
TreeSource Industries, Inc. can be found at its web site at
http://www.treesource.com. For more information, contact
TreeSource investor relations at 503-246-3440.
VENCOR: Ventas Files Proof of Claim in Bankruptcy Proceeding
------------------------------------------------------------
Ventas, Inc. (NYSE:VTR) said that it has filed its proof of claim
of approximately $4 billion in the Vencor, Inc. (OTCBB:VCRI)
Chapter 11 bankruptcy proceeding. Filing a proof of claim is a
customary requirement to preserve a claimant's rights against a
debtor during the bankruptcy process.
"The filing of this proof of claim protects and preserves Ventas'
rights as the Vencor bankruptcy proceeding moves forward. It is a
step toward Vencor's emergence from bankruptcy as a creditworthy
company," Ventas President and CEO Debra A. Cafaro said.
Included in the proof of claim is rent from Vencor due at the
contract rental rates in the Master Lease Agreements until the
expiration of those agreements. Additionally, the proof of claim
includes liquidated and unliquidated amounts arising from other
agreements between Ventas and Vencor.
"Filing our proof of claim is another step in the Vencor
reorganization process," Cafaro added. "We continue to believe
that the best outcome is a consensual restructuring agreement
between Ventas, Vencor and Vencor's creditors. As the largest
claimant in the Vencor bankruptcy, we must be sure that any
restructuring plan for Vencor is fair to the Ventas
shareholders." Ventas will assert its full rights and remedies in
the Vencor bankruptcy if a consensual arrangement is not reached.
Vencor, Inc. filed its Chapter 11 bankruptcy petition on
September 13, 1999. On May 11, 2000, Vencor asked the United
States Bankruptcy Court for the District of Delaware to extend
until July 18, 2000, the date by which Vencor has the exclusive
right to file its plan of reorganization.
Ventas, Inc. is a real estate company whose properties include 45
hospitals, 218 nursing centers and eight personal care facilities
operating in 36 states.
VENCOR: Ventas Objects to Proposed Plan Changes
-----------------------------------------------
Ventas reveals in a regulatory filing with the Securities and
Exchange Commission that it has received from Vencor certain
proposed amendments that materially alter the plan of
reorganization Vencor outlined and agreed to under the September
1999 Agreement in Principle. Ventas says that it maintains its
support of the Agreement in Principle but rejects Vencor's
proposed changes.
Vencor has told Ventas that events arising after the filing of
its bankruptcy petition have resulted in adjustments to its
financial projections, and have caused it to enter into
additional negotiations with its various creditors and Ventas
regarding its ultimate plan of reorganization. Ventas says it has
been negotiating with Vencor and Vencor's major creditors on the
Vencor plan of reorganization and any necessary amendments to the
September 1999 Agreement in Principle but no agreement has been
reached yet.
Ventas and Vencor continue to negotiate with the federal
government to seek settlement and resolution of all federal civil
and administrative claims against them arising from Vencor's
participation in various federal health benefit programs. The
United States asserted approximately $1.3 billion, including
triple damages, against Vencor in these proofs of claim. The
Department of Justice has filed two proofs of claim in the Vencor
bankruptcy case covering the United States claims and the qui tam
suits. DOJ has indicated that it is the Department's position
that Ventas and Vencor will be jointly and severally liable for
the portion of the claims pertaining to the period prior to the
date of the 1998 Spin off in the event liability is asserted.
Vencor has requested Ventas to file a proof of claim in the
Vencor bankruptcy cases by May 17, 2000, and Ventas intends to do
accordingly. On the other hand, Vencor has asserted various
potential claims against Ventas arising out of the 1998 Spin Off.
Ventas says it intends to defend these claims vigorously if they
are asserted in a legal or mediation proceeding.
VISTA EYECARE: Begins Trading on OTC Bulletin Board
---------------------------------------------------
Vista Eyecare, Inc. (OTC Bulletin Board: VSTAQ), announced that
its shares of common stock have been delisted from the Nasdaq
SmallCap Market and that its common stock is now trading on the
Over-the-Counter Bulletin Board under the symbol VSTAQ.
Vista Eyecare, Inc. is one of the nation's largest retail optical
companies. The Company's retail operations offer a full line of
optical goods including spectacles, contact lenses, prescription
and non-prescription sunglasses and a full line of optical
accessories. In addition, independent Doctors of Optometry are
available adjacent to most store locations. The Company filed
for protection under Chapter 11 of the bankruptcy laws on April
5, 2000.
BOND PRICING FOR WEEK OF May 15, 2000
=====================================
DLS Capital Partners., bond pricing for week of May 15, 2000
Following are indicated prices for selected issues:
Acme Metal 10 7/8 '07 11 - 13 (f)
Advantica 11 1/4 '08 67 - 70
Asia Pulp & Paper 11 3/4 '05 71 - 73
Conseco 9 '06 65 - 67
E & S Holdings 10 3/8 '06 35 - 37
Fruit of the Loom 6 1/2 '03 51 - 53 (f)
Genesis Health 9 3/4 '05 12 - 14 (f)
Geneva Steel 11 1/8 '01 17 - 19 (f)
Globalstar 11 1/4 '04 31 - 33
GST Telecom 13 7/8 '05 39 - 42 (f)
Iridium 14 '05 2 - 3 (f)
Loewen 7.20 '03 44 - 46 (f)
Paging Network 10 1/8 '07 40 - 43 (f)
Pathmark 11 5/8 '02 24 - 27 (f)
Pillowtex 10 '06 37 - 39
Revlon 8 5/8 '08 49 - 51
Rite Aid 6.70 '01 74 - 76
Service Merchandise 9 '04 9 - 11 (f)
Trump Atlantic 11 1/2 '06 70 - 72
TWA 11 3/8 '06 29 - 30
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.
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