/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000601.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, June 1, 2000, Vol. 4, No. 107 Headlines ATOLS TOOL: Case Summary and 20 Largest Unsecured Creditors BLADES ICE: Case Summary and 20 Largest Unsecured Creditors BLUESTAR BATTERY: Revenues Decrease 29% BREED TECHNOLOGIES: Seeks Approval of Compromise with DMR DAI-ICHI HOTEL LTD: Goes Bust, Files For Bankruptcy ELECTRO-CATHETER: Merit Medical Acquires Electro-Catheter Assets EXCELSIOR-HENDERSON: Offers To Make Principal Payments In Loans FAMILY SNACKS: Unsecured Creditors File Suit FINE AIR SERVICES: Moody's Downgrades Ratings; Outlook Negative FORMICA CORPORATION: Moody's Downgrades Ratings HOUSING RETAILER: GEIPPPII and Ardhouse Object to Re-Conversion HURRICANE HYDROCARBONS: Emerges from Bankruptcy, Reverses Losses ISUZU MOTORS LTD.: Suffers 50.8B Yen group operating loss LAKE SHORE: Involuntary Case Summary LAMONTS: Gottschalks To Increase Credit Line by $40M LEASING SOLUTIONS: Seeks Approval of Disclosure Statement LET'S TALK CELLULAR: To Receive $15 Million in DIP Financing LINC CAPITAL: No Bankruptcy Plans LOEWEN: Applies To Employ Yantek as Contract Consultant NEW AMERICAN HEALTHCARE: Taps KPMG LLP as Accountants PHYSICIANS RESOURCE: US Trust Objects to Exclusivity Extension SAFETY COMPONENTS: Committee Taps Chanin and Company LLC SUNTERRA CORP: Files Voluntary Chapter 11; Seeks DIP Financing UNITED COMPANIES: Signs Purchase Agreements with EMC Mortgage ********* ATOLS TOOL: Case Summary and 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Atols Tool & Mold Corporation 3829 N. River Road Schiller Park, IL 60176 Type of Business: Mold making. Petition Date: May 26, 2000 Chapter 11 Court: N. District of Illinos Bankruptcy Case No.: 00-15958 Judge: Joan Humphrey Lefkou Debtor's Counsel: Michael J. Chmiel 50 Virginia St Crystal Lake, IL 60014 Tel:(815) 459-2050 Total Assets: $ 4,500,000 Total Debts: $ 4,000,000 20 Largest Unsecured Creditors J. L. Franch 3101 S. Taylor PO Box 1024 Sheboyan, WI 53082 (920) 458-7724 Down payment $ 483,000 Internal Revenue Service St. Louis, Missouri Taxes $ 476,000 Tool Crib Supply Trade debt $ 146,426 Bohler/Uddeholm Trade debt $ 132,539 InsurAmericorp Business Insurance $ 54,930 FPM Trade debt $ 53,338 Illinois Dept Taxes $ 50,000 Nowell Weidling Trade debt $ 27,159 Falk Trade debt $ 19,475 ComEd Trade debt $ 17,155 Buderus Steel Trade debt $ 16,665 Action Metal Trade debt $ 15,926 Cad Potential Trade debt $ 13,537 Unigraphics Trade debt $ 12,280 Johnstown Corp Trade debt $ 12,110 Catching Fluidpower Trade debt $ 11,810 Charmilles Tech Trade debt $ 10,923 Hydradyne Trade debt $ 9,476 Martin, Craig Chester Trade debt $ 8,620 EDM Graphite Trade debt $ 7,061 BLADES ICE: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Blades Ice Rink & Fitness Center, LLC 475 S. Grace Addison, Il 60101 Petition Date: May 30, 2000 Chapter 11 Court: N. District of Illinois Bankruptcy Case No.: 000-15997 Judge: Susan Pierson Sonderby Debtor's Counsel: David R. Brown David R. Brown & Associates, P.C. 116 South Prospect Street Roselle, IL 60172 (630) 258-0416 Total Assets: $ 6,257,500 Total Debts: $ 5,967,110 20 Largest Unsecured Creditors Daniel Consalvo 1117 Rugeley Addison, IL 60126 $ 350,000 John Giovenco, Jr. 3 N 768 Baert Lane St. Charles, IL 60175 $ 275,000 Internal Revenue Service $ 208,690 Frank J. Stallone $ 165,000 Internal Revenue Service $ 78,441 Commonwealth Edison & Company $ 49,252 Sher-Wood $ 19,595 Sabella Sibley & accounting Graham services $ 13,263 Maksa US, Inc. $ 10,589 Jones Sports Equipment $ 5,519 Igloo Viski $ 4,825 Cimco $ 3,204 Kal & Koeppel legal fees $ 2,584 Alumital $ 890 USF Holland Motor $ 472 Alper Services, Inc. $ 456 BFI $ 410 Village of Addison $ 378 Norcomm Public Safety Communication $ 240 Michael Canulli $ 150 BLUESTAR BATTERY: Revenues Decrease 29% --------------------------------------- BlueStar Battery Systems International Corp. announced that revenues for the six months ended March 31, 2000 were $63.1 million, compared to $82.4 million for the same period last year. Revenue for the second quarter was $27.7 million, a decrease of 29% compared to $38.8 million for the corresponding period in 1999. The decrease in revenues for the period ended March 31, 2000 was primarily the result of a decision by the Company's management to discontinue a major customer agreement at the end of March 1999, the continued rationalization of the Company's suppliers and customers, and generally overall unfavorable market conditions resulting from unseasonably warm weather during the second quarter of the fiscal year. EBITDA (earnings before interest, taxes, depreciation and amortization) was $ 2.0 million for the six-month period, as compared to $3.0 million for the same period in 1999. EBITDA was $0.2 million for the three-month period ended March 31, 2000, as compared to $1.4 million for the same period in 1999, resulting from the lower revenue and one-time administrative costs resulting from financing and restructuring activities. "While the second quarter is traditionally a slower period for the BlueStar distribution organization, weather conditions and a larger than expected decline due to the discontinuation of a major customer agreement in 1999 led to disappointing quarterly revenues and operating results that were lower than originally anticipated," said Marty R. Kittrell, BlueStar's recently appointed Executive Vice President of Finance and Administration and member of the Board of Directors. "However, gross margins have continued to improve as the organization rationalizes its customer and strategic alliances. Gross margin increased to 17.5% for the second quarter of fiscal 2000, as compared to 14.4% for the corresponding period of 1999." Mr. Kittrell continued, "The Company has continued to focus its attention on expanding product offerings and pursing sales channels where BlueStar's value added capabilities are embraced, resulting in higher overall customer satisfaction and profits. This strategy has required the organization to rationalize its supplier and customer base, and at times, exit low-margin business relationships. As a result, during 1999, the Company terminated certain relationships, and in connection with a final settlement of an amount owed to the Company for services provided under the terms of a distribution agreement, a net amount of $0.95 million was written-off in the period ended March 31, 2000." "Overall we are committed to improving our distribution business. Management continues to concentrate its efforts on reducing operating and overhead costs and improving working capital management throughout the organization," added Mr. Kittrell. While rationalization of current customers and channels has reduced revenue in the current year, the BlueStar organization continues to be very successful in signing new corporate accounts. In the current fiscal year Target Stores Inc., an upscale mass merchandiser, with over 950 stores in the United States, agreed to offer BlueStar's products to their automotive and cellular customers. In March the Company announced a strategic distribution alliance with Trak Auto Inc. of Landover, MD and it's subsidiary companies, Trak Autoparts Grundy Twin B and Forest City. Trak Auto Inc. an automotive retail chain with over 250 stores nationwide agreed to offer BlueStar batteries to their motorcycle and lawn and garden customers. The Company is also entering agreements with the Canadian subsidiaries of Honda and Acura for the supply of battery and battery related products. BlueStar is one of North America's largest integrated networks for power and charging systems, providing supplier and customer participants with sales, marketing, distribution and support capabilities. The Company, through its electronic commerce network, markets over 11,000 different battery products and automotive electric components from many of the world's finest suppliers. BlueStar's common stock trades on the Canadian Venture Exchange. BREED TECHNOLOGIES: Seeks Approval of Compromise with DMR --------------------------------------------------------- BREED Technologies, Inc. and its affiliates, debtors, seek a court order approving a compromise of controversy between BREED and DMR Consulting Group Inc. and DMR Consulting Group SA. DMR provided certain IT services to BREED and its affiliates. Under the parties Settlement Agreement, the debtors will pay DMR the sum of $1.3 million. DMR will have a prepetition general unsecured claim in the amount of $2,484,199. The parties will otherwise release any and all claims between and among them. DAI-ICHI HOTEL LTD: Goes Bust, Files For Bankruptcy --------------------------------------------------- Japan's Dai-Ichi Hotel Ltd. group went bust Friday with 1.1 billion dollars in liabilities after failing to persuade creditors to waive massive debts, a private credit research agency said. Dai-Ichi Hotel, a Tokyo-based hotel operator burdened with liabilities of 117 billion yen (1.1 billion dollars), filed a petition with the Tokyo District Court for protection from creditors, Teikoku Databank Ltd. said. It was the largest bankruptcy of a Japanese hotel operator, with the liabilities exceeding the 106.6 billion yen left behind by Sazale Corp. in November 1995, a Teikoku official said. Dai-Ichi Hotel, established in 1937, employs 470 people and runs 43 hotels at home and three overseas, Teikoku Databank said. The group's sales peaked at 23.37 billion yen in the year to March 1994. Dai-Ichi Hotel "gave up rehabilitation on its own as it failed to get an accord with financial institutions on a debt waiver," Teikoku Databank, which monitors Japanese corporate failures, said in a statement. The talks hit a snag partly because its main creditor, Long-Term Credit Bank of Japan Ltd. (LTCB), was taken over by a syndicate led by US investment group Ripplewood Holdings in February, it said. LTCB collapsed in October 1998 under the weight of massive bad loans dating back to Japan's "bubble economy" speculative investment boom of the late 1980s. It had been placed under temporary state control until becoming the first Japanese bank to be sold outright to foreigners. Neither Dai-Ichi Hotel nor LTCB were immediately available for comment. (Agence France Presse 26-May-2000) ELECTRO-CATHETER: Merit Medical Acquires Electro-Catheter Assets ---------------------------------------------------------------- Merit Medical Systems Inc. (Nasdaq: MMSI) announced that it has purchased from bankruptcy substantially all of the inventory, equipment and intangible property such as patents, regulatory approvals and trademarks from Electro-Catheter Corp. of Rahway, N.J. The purchase price was under $1 million. The Electro-Catheter assets contain a substantial number of products and technologies which are synergistic with Merit's existing product lines as well as some under development. These include drainage catheters, embolectomy catheters, temporary cardiac pacing devices, thermodilution and pressure monitoring products, electrophysiology catheters and steerable catheters. "This acquisition presents us with an opportunity to broaden our technology focus in cardiology and radiology," said Fred P. Lampropoulos, chairman and chief executive officer. "There are two products that fit very well into some of our research projects and existing product lines and have the potential to provide near-term revenue opportunities. "There are several other opportunities which will have to be assessed as to their potential benefits to Merit. "By immediately integrating one of the new technologies into a current research project, Merit expects to have a new product available to market sometime in the fourth quarter of this year," Lampropoulos said. Founded in 1987, Merit Medical Systems is a world leader in the development, manufacture and distribution of proprietary disposable medical products used in interventional and diagnostic procedures, particularly in cardiology and radiology. The company serves client hospitals worldwide with a domestic and international sales force totaling approximately 70 individuals. Merit Medical employs approximately 1,100 individuals worldwide, with manufacturing facilities in South Jordan and Salt Lake City; Santa Clara, Calif.; Angleton, Texas; and Galway, Ireland. EXCELSIOR-HENDERSON: Offers To Make Principal Payments In Loans --------------------------------------------------------------- Star Tribune reports on May 25, 2000 that Excelsior-Henderson Motorcycle Manufacturing Company's latest bankruptcy reorganization plan includes a new proposal to make principal payments on $6.1 million in loan proceeds from the state of Minnesota. The loan would be paid off in nine years, with the 9.5 percent interest on the loan deferred until the end of the term. Another $1.1 million in related loan reserves would be applied to the loan as soon as the plan is approved. Earlier plans had called for a balloon payment of principal and interest at the end of 10 years. Other secured creditors also will receive restructured notes. Unsecured creditors will receive about 14 cents on the dollar, in addition to 35 cents on the dollar in royalties from future sales of motorcycles. FAMILY SNACKS: Unsecured Creditors File Suit -------------------------------------------- The Kansas City Star reports on May 25, 2000 that unsecured creditors of Family Snacks Inc., the bankrupt company that operated Guy's Foods, have filed a suit in U.S. Bankruptcy Court against Guy's former president and chief executive officer Victor Sabatino, alleging him that he borrowed $426,726 from Family Snacks in March and owes $145,000 on the note. The committee wants the money returned to the bankruptcy estate and distributed to the creditors. FINE AIR SERVICES: Moody's Downgrades Ratings; Outlook Negative --------------------------------------------------------------- Moody's Investors Service lowered all ratings of Fine Air Services Corporation including the $45.0 million bank facility due November 2000 to B2 from Ba3, the $190.0 million 9 7/8% senior unsecured notes due 2008 to Caa1 from B2, and the issuer rating to Caa2 from B3. The senior implied rating was also downgraded, to B3 from B1. The rating outlook is negative. Liquidity pressures that the company continues to confront prompted the rating action. Fine Air is exploring various options, including asset sales and additional financing, to raise approximately $10 million necessary to meet projected cash requirements for the next twelve months. Consideration is also being given to possible deferral of the $9.4 million interest payment on the senior notes due June 1, 2000. We believe that the company's cash position has deteriorated because of operating losses--caused in part by increased fuel prices, weaker than expected non-scheduled cargo revenues, and expenses associated with the integration of the Arrow Air operation acquired in early 1999-- combined with the high mandatory capital expenditures necessary to bring the aircraft fleet to regulatory compliance. Besides the aforementioned liquidity pressures, the ratings continue to reflect the company's highly leveraged financial condition, the high dependence on the volatile Latin American market, significant exposure to variable fuel prices, and high maintenance expense associated with their old aircraft. Supporting the ratings are the company's strong established market position serving Central and South America (largely out of Miami International), low capital costs achieved through the utilization of old aircraft (average age 32 years), the use of in-house maintenance personnel, and the diverse customer base. The B2 rating on the bank revolver considers that that this facility is secured by inventories, accounts receivable, and 11 specific aircraft (10 DC-8 and 1 L-1011 aircraft). However, with an average age of about 30 years and a limited market, the value of the collateral aircraft is uncertain. The Caa1 rating on the senior unsecured notes considers that these notes, while guaranteed by the operating subsidiaries, are effectively subordinated to the bank revolver. In a distressed scenario, we believe that the company's value may not be sufficient to fully repay the company's debt. The negative outlook reflects the uncertainty pending resolution of the cash crunch. If circumstances such as continued operating losses or additional debt cause a leverage increase or a default, then Moody's would reconsider the ratings. Moody's notes that the company's reliance on scheduled cargo and flat rate charter services, while potentially higher margined business, leaves the company vulnerable to increases in operating costs such as fuel prices. Only about a third of the company's air freight revenue derives from ACMI (aircraft, crew, maintenance, and insurance) contracts in which the customer pays for fuel. For the first quarter of 2000, gross profit margin fell to 23% versus 32% for the like period in 1999. Operating income for the first quarter was a loss of $2.3 million in 2000 versus a loss of $0.5 million in 1999. In addition to the normal schedule of maintenance checks, the FAA mandated the placement of hushkits on the DC-8 aircraft by December, 1999 to comply with noise abatement regulations. Without the modifications, the aircraft are not permitted to fly in the United States. As of March 2000, the company had installed or purchased hushkits for 21 DC-8 aircraft but still needed to purchase hushkits for 3 aircraft plus 2 spares at $3 million per hushkit. For the twelve months ending March 2000, EBITDA covered interest expense by about 2.0 times, but EBITDA did not cover both interest expense and capital expenditures. EBITDA margin fell to 10.6% in the first quarter of 2000 versus 14.5% in the same period of 1999. The company had about $4 million of cash on hand and approximately $10 million available on the revolver. Fine Air Services Corporation, headquartered in Miami, Florida, provides air cargo services with a fleet of 24 DC-8 and 4 L-1011 aircraft between the United States and Latin America. FORMICA CORPORATION: Moody's Downgrades Ratings ----------------------------------------------- Moody's Investors Service has downgraded the $342.2 million credit facility on Formica Corporation to B1 from Ba3 and assigned a B1 rating to a new $110 million term loan within the amended credit facility. Moody's also confirmed the B3 rating on Formica Corporation's $215 million senior subordinated notes due 2009 and the B2 issuer rating. The senior implied rating is confirmed at B1, but the rating outlook is changed to negative from stable. The ratings reflect Formica's weaker than expected financial performance over the past few years, as well as its high leverage, and thin interest coverage. It also reflects Formica's vulnerability to extensive near-term integration risks (the acquisition of the surfacing division of Perstorp Surface Materials AB ("PSM") -its aggressive acquisition strategy - and to exchange rate exposure in its European and Asian operations. These factors, coupled with the company's vulnerability to cyclicality in the decorative surfacing products market, pose additional threats to the bottom line. The negative outlook reflects the risk of continued deterioration of profitability in North America as the economy may be reaching its peak, the possibility of not achieving the expected cost savings from restructuring along with the competitive environment. If core operating profits do not start to improve and adequately cover interest there is a strong possibility a downgrade may occur in the near future. Moody's ratings concerns are tempered by Formica's 87-year history, its strong global market position, broad brand awareness worldwide, and the positive efforts the current management team has made since returning to the company in April 1998. Formica's current management team proved its ability to weather tough times when, during the recession and slow recovery period from 1990 through 1994, it grew sales to $489 million from $437 million. EBITDA improved marginally during that period, to $71.4 million from $66.1 million. In addition, in the two years that the former management team has been back, they have improved EBITDA margins from 7.2% in 1997 to 10.8% at year-end 1999. Also supporting the ratings are the company's significant investment of capital expenditures over the past four years, its global distribution network, and the diversification of its sales revenues, which flow from both the new construction and the repair and remodeling segments, as well as from both the residential and commercial markets. In addition, an $80 million equity infusion by the sponsors for the PSM transaction (DLJ Merchant Banking Partners II.L.P. and CVC Capital Partners, Limited) enhances the capital structure. Formica has a senior secured credit agreement with DLJ Capital Funding, as syndication agent, for $342.2 million, expiring May 2004. The facility includes a $150 million revolver that includes four $5 million facilities with the UK, French, Canadian, and Spanish subsidiaries as borrowers, a $85 million amortizing term loan that is broken out among the US, UK, and Canadian subsidiaries at $35 million, $40 million, and $10 million, respectively (each priced at Libor plus 2.75%). In addition the credit facility is comprised of a new $110 amortizing term loan to be used to acquire PSM, (priced at Libor plus 3.50%). The facility is secured by all property and assets (tangible and intangible) of Formica and its present and future domestic subsidiaries and 100% of the capital stock of Formica and its domestic subsidiaries, and 65% of the capital stock of non-U.S. subsidiaries of Formica (including PSM Holdco). The downgrade of the $342.2 million bank facility rating to B1 from Ba3 reflects its increased amount of $140 million, its secured position, the collateral package supporting the facility which also takes into consideration that the banks have liens only on U.S. assets not on the foreign assets, and guarantees from all of Formica's existing and future subsidiaries. The B3 rating of the $215 million senior subordinated notes also reflects their contractual subordination to borrowings under the $342.2 million secured credit facility. The PSM transaction, which is valued at approximately $190 million, including fees and expenses, is 6.2 times pro forma 1999 EBITDA of $30.7 million. The $30.7 million includes expected cost savings in initial restructuring of $12 million. On a pro forma basis, without the cost savings, the multiple is a high 10.2 times. Formica is highly leveraged with the ratio of total debt to capitalization equaling 78% and debt-to-EBITDA is approximately 4.6 times. Moody's expects it will be difficult to reduce debt in the near-term. Including pro forma for the PSM and STEL acquisitions Formica's book equity is $141 million. After subtracting goodwill, however, it is a negative $61 million at December 31, 1999. Total debt as of December 31, 1999, was $501 million (excluding preferred of $240 million). Sales and total assets for twelve months were $833 million, and $943 million, respectively. Formica is depending on the success of two cost-savings programs. The first program centers on an anticipated $25 million in cost savings to be generated over the next two years from Formica's acquisition of PSM. The acquisition brings Formica expanded market positions in Europe, Asia and South America. The second program involves a restructuring of its domestic operations, initiated in the first quarter of 2000 from which Formica is anticipating significant cost savings, of more than $7 million. The program centers on headcount reductions from the closing of the Mt. Bethel, PA solid surfacing facility and rationalizing sales, manufacturing and administration. The new management team has done a good job at getting the SG&A margin down to 25.3% as of December 31, 1999, from 29.4% as of December 31, 1998. The target level, however, is 24%, the level of the early 1990s. Formica generated 36% of its sales outside of North America based on figures through December 1999, approximately flat with 1998; however all of its operating income came from Europe and Asia. The North American market continues to be very competitive. Gross profit margins have improved, on a year-over-year basis at December 31, 1999, to 28.4% from 27.7%. But competition, product mix and lower than planned pricing have contributed to a decline in profitability. In response to these pressures, Formica this year formulated an action plan that should improve mix and margins and has implemented price increases. Formica retains significant brand awareness and leadership in the high pressure laminates (HPL) market. The worldwide HPL market is approximately $3 billion and Formica has a 22% market share. It is the largest producer of HPL in Europe, the second largest producer in North America next to Wilsonart (a subsidiary of Illinois Tool Works Inc.), and one of the largest producers in Asia. HPL products are used in applications requiring surface durability including kitchen countertops, furniture, doors, and flooring. Formica's products are marketed under the Formica, Surell, and Fountainhead brand names through more than 7,500 locations worldwide by domestic and international independent distributors and dealers. The company also has its own sales force. 1999 sales by category were as follows: high pressure laminates 83%, solid surfacing 7%, and flooring 10%, broken down regionally with North America furnishing 64% of sales, followed by Europe with 24%, and Asia at 12%. In the broad class of residential versus commercial sales, in the United States, sales are split evenly. In Europe, commercial sales make up a larger percentage of total sales than residential sales do. Within both residential and commercial markets, repair and remodeling account for a larger percentage of sales than new markets do. Formica Corporation, established in 1913 and headquartered in Cincinnati, Ohio, is one of the largest producers of decorative high pressure laminates ("HPL") in the world and a leading brand name in the decorative surfacing products market. HOUSING RETAILER: GEIPPPII and Ardhouse Object to Re-Conversion --------------------------------------------------------------- GE Investment Private Placement Partners II, a Limited Partnership ("GEIPPPII") and Ardhouse LLC object to the moiton of the "Parker Entities" and the Official Committee of Unsecured Creditors seeking the re-conversion of the Chapter 7 cases of Ted Parker Home Sales, Inc. and Carolina Home Sales, Inc. to chpater 11 cases, or in the alternative the conversion of the chpater 11 cases of Housing Retailer Holdings, Inc. and H Squared, LLC to chapter 7 cases. GEIPPPII and Ardhouse state that a Chapter 11 proceeding will be to the detriment of all parties in interest because of the significant and unnecessary expense that will be incurred, particularly with respect to a contested plan process. They point out that the Holding Companies' cases have made significant progress, a plan and disclosure statement have been filed and DIP financing approved. The Parker Entities claim that the Operating Companies' decision to convert to Chapter 7 was not an appropriate business decision, but rather, was a strategic device employed by GEIPPPII and Ardhouse to prevent the neutral oversight of the Holding Companies by the Committee. The Committee also argues that "the debtors' focus on the concerns and desires of the controlling group, GEIPPPII and Ardhouse, rather than unsecured creditors in these cases constitutes additional ground for re-conversion." GEIPPPII and Ardhouse argue that neither contention is true and that the Parker Entities have not established cause for conversion. HURRICANE HYDROCARBONS: Emerges from Bankruptcy, Reverses Losses ---------------------------------------------------------------- Hurricane Hydrocarbons Ltd., Calgary, Alta., newly emerged from creditor protection, said on Monday it had reversed its quarterly loss from a year earlier, according to Reuters. Hurricane, which runs a big oil operation and refinery in the former Soviet republic, said operating earnings were $17.5 million, or $0.39 a share, up from a loss of $15.3 million, or $0.34 a share, in the first quarter of 1999. The company purchased 88.36 percent of the refinery for $51 million and 33 percent of its stock as part of its restructuring plan, which it completed in late March; the arrangement enabled the company to emerge from bankruptcy. Revenues more than tripled to $60 million from $18.9 million a year earlier. "Currently, we have more than a third of that production going to export, so that's becoming an important component as well," said Hurrican Spokesman Ihor Wasylkiw. (ABI 31-May-00) ISUZU MOTORS LTD.: Suffers 50.8B Yen group operating loss --------------------------------------------------------- Isuzu Motors Ltd. (7202) announced Friday that it posted 50.8 billion yen in consolidated operating loss in the fiscal year ended March 31, compared with a profit of 9.2 billion yen a year earlier, due to poor truck sales. Group net loss totaled 104.2 billion yen, compared with a net profit of 6.2 billion yen in fiscal 1998, as a result of writing off the entire underfunding in its retirement program. This is the first time in seven years the major truck maker posted group operating and net losses. Group sales fell 7% in fiscal 1999, as poor truck sales reduced domestic overall vehicle sales by 15% to 77,000 units and by 3% in overseas markets. Domestic operating loss totaled 46.3 billion yen, compared with a profit of 1.9 billion yen a year earlier. It also suffered operating losses in Australia and Poland. Operating profit also declined sharply in North America as a result of inventory adjustments. For the current term ending March 2001, Isuzu expects group sales to rise 7% to 1.61 trillion yen. Group operating profit is projected at 15 billion yen and group net profit at 3 billion yen. Although the yen's appreciation is expected to reduce the operating balance by some 6 billion yen, this will be covered by 24 billion yen in savings from restructuring and 40 billion yen in cost reductions, company officials said. (Nikkei 26-May-2000) LAKE SHORE: Involuntary Case Summary ------------------------------------ Alleged Debtor: Lake Shore Motors, Inc. 343 N. Ashland Avenue Chicago, IL 60647 Involuntary Petition Date: May 26, 2000 Case Number: 00-12869 Chapter: 11 Court: N. District of Illinois Judge: Eugene R. Wedoff Petitioners' Counsel: Daniel A. Zazove 3First Nat'l Plaza 70 W. Madison #1500 Chicago, IL 60602 Tel:(312) 263-0939 David G. Anderson Garvey, Anderson, Johnson, Geracl & Mirr, B.C. 402 Graham Avenue Eau Claire, WI 54702-0187 Tel:(715) 834-3425 Jay B. Kalieh 31731 Northwestern Highway Suite 182 Farmington, MI 48334 Tel:(248) 832-3000 Petitioners: Carnica, Inc. Worked performed on used cars $ 5,190 Standard Hardware Parts and supplies $ 6,030 Marquart Mazda Dealer trade/ bounced check $ 20,000 Metro Mazda Breach of Contract/Fraud $ 25,221 Prime Market Targeting Advertising $ 76,270 LAMONTS: Gottschalks To Increase Credit Line by $40M ---------------------------------------------------- The Seattle Times reports on May 25, 2000 that Gottschalks has increased its credit line by $40 million to pay for inventory to stock the Lamonts Apparel stores it will take over in late July. A federal bankruptcy-court judge approved the sale of Lamonts to Gottschalks last week. Lamonts is in the process of conducting a for-real going-out-of-business sale until all merchandise is gone. Gottschalks will close the 38 stores around July 23, redecorate and restock them and reopen all but two around Sept. 1. The California-based department-store chain does not plan to reopen Lamonts stores in Lynnwood and Olympia. LEASING SOLUTIONS: Seeks Approval of Disclosure Statement --------------------------------------------------------- Leasing Solutions, Inc., debtor, seeks approval of its Disclosures Statement. A hearing will be held on June 21, 2000 at 1:45 PM. The debtor also requests that the court schedule a confirmation hearing on August 2, 2000 at 9:30 AM. LET'S TALK CELLULAR: To Receive $15 Million in DIP Financing ------------------------------------------------------------ Let's Talk Cellular & Wireless Inc., one of the nation's largest specialty cellular and wireless retailers, announced yesterday that it has filed for chapter 11 in the District of Delaware, and that it has received a $15 million debtor-in-possession (DIP) financing commitment from a syndicate of banks led by Chase Manhattan Bank, according to a newswire report. "New inventory made available by our new DIP facility should be arriving in stores immediately," said founder Brett Beveridge, who returned to Let's Talk as chief executive officer in March. "By providing our customers with the full range of inventory and service options on which our company was founded and implementing our new cost-saving strategies, we anticipate moving forward quickly through a reorganization process that will maximize value for the benefit of all creditors and stockholders." Let's Talk reported in its petition that it had exhausted its working capital and accumulated total debt of approximately $52 million. Operating 259 retail outlets in 21 states, the District of Columbia and Puerto Rico, the company reported consolidated net sales for the nine months ending April 30 of $88.6 million. (ABI 31-May-00) LINC CAPITAL: No Bankruptcy Plans --------------------------------- Specialty finance company LINC Capital Inc., Chicago, said it is continuing talks with its lenders and has no immediate plans for bankruptcy, Reuters reported yesterday. The company states that it has been successful in selling its Select Growth leasing business, while retaining ownership of all warrants and equity rights. "We are aware that rumors have been circulating about LINC's future," commented Robert Laing, LINC's president and chief operating officer. "We have made the decision to exit the leasing business and our plans contemplate continuing as a going concern focused on our profitable distribution and rental business. We are working diligently to restructure our loan agreements to accomplish this goal." LOEWEN: Applies To Employ Yantek as Contract Consultant ------------------------------------------------------- As party to more than 7,000 executory contracts and unexpired leases, the Debtors need a knowledgeable consultant to assist them with the evaluation for the possible assumption, assumption and assignment, rejection, renegotiation or recharacterization of these Contracts. Specifically, the Debtors desire that the consultant will assist them to: (1) determine the appropriate treatment in these cases; (2) minimize claims arising from the assumption and rejection of certain contracts; and (3) renegotiate the terms of certain of the contracts for terms favorable to the Debtors. The Debtors have determined that Yantek Enterprises is well suited for this job, in view of their expertise and experience in the areas of work that the Debtors contemplate and in particular because Yantek has been performing preliminary work for the Debtors since the Retention Date of February 15, 2000 and as a result has gained substantial familiarity regarding the Debtors. The Debtors seek the Court's authorization for them to retain and employ Yantek as their Contract Consultant pursuant to section 327 of the Bankruptcy Code, nunc pro tunc to February 15, 2000. Subject to Court approval, Yantek will charge at the hourly rate $160 per hour for services provided by Frank Yantek, the president of Yantek, and a maximum of $130 per hour for services provided by all other Yantek professionals, as stated in Frank Yantek's Affidavit and the Agreement between Yantek and the Debtors and as the Debtors stated in their Amendment to Application. The Debtors report to the Court that Yantek noted that it has been employed by Montgomery Ward, which is an affiliate of General Electric Capital Corporation, an unsecured creditor of the Debtors, but the matters under the employment were unrelated to the Loewen's chapter 11 cases. As the Debtors are a large enterprise with thousands of creditors and other relationships, Yantek is unable to state with certainty that every connection has been disclosed, the Debtors note. However, the Debtors assure the Court that if Yantek discovers additional information that requires disclosure, Yantek will file a prompt supplemental disclosure with the Court. The Debtors also submit that Yantek does not represent any interest adverse to the Debtors or related parties, that their services will not duplicate those of other professionals employed by the Debtors. NEW AMERICAN HEALTHCARE: Taps KPMG LLP as Accountants ----------------------------------------------------- The debtors, New American Healthcare Corporation et al., seek court authorization to employ and retain KPMG LLP as special accountants and tax advisors to render assistance with respect to accounting matters that may arise in this case. The services to be performed will include, without limitation, preparing or assisting with the preparation of medicare/medicaid cost reports and federal, state and local tax returns and providing accounting services needed with respect to the debtors' employee 401(k)plans. KPMG will charge the debtors for its services on either a fixed fee or an hourly basis in accordance with its customary rates as are in effect on the date services are rendered. Cost reports will be prepared for a fixed fee of $11,500 per cost report. Other work will be performed on an hourly basis. KPMG's hourly rates range from $440 per hour for a partner, and $75 per hour for administrative services. PHYSICIANS RESOURCE: US Trust Objects to Exclusivity Extension -------------------------------------------------------------- US Trust Company of New York, NA, on behalf of all holders of debentures in the case filed a proof of claim in the amount of $134,543,766., the largest claim in the case. US Trust states that this is a liquidating case, and that no cause exists to extend exclusivity. The sale of practice assets to the AmSurg corporation will give the debtor almost $40 million, and the creditor states that there is no reason why the debtor should retain this money together with the $50 million that the debtor has from the inception of the case while its creditors and shareholders receive nothing. The extension will also increase the professional fees, and US Trust states that the additional three months will not provide the time to wrap up the case, but will just add costs. SAFETY COMPONENTS: Committee Taps Chanin and Company LLC -------------------------------------------------------- The statutory committee of unsecured creditors in the cases of Safety Components International, Inc. and its subsidiaries seek to employ Chanin and Company LLC as its financial advisors. The firm will provide the following services: Analysis of the debtors' operations, business strategy and competition in each of its markets; Analysis of the debtors' financial condition, business plans, operating forecasts, management and the prospects for future performance; Financial valuation of the ongoing operations of the debtors; Assistance to the Committee in developing, evaluating, structuring and negotiating the terms and conditions of a Chapter 11 plan for the debtors; Analysis of potential divestitures of the debtors' operations; and Provision to the Committee of such other financial advisory services with respect to the debtors as requested by the Committee, including without limitation, valuation, and advice with respect to financial, business and economic issues that may arise during the course of the Chapter 11 cases. The debtors will pay Chanin a monthly advisory fee of $75,000 for its services, payable each month in advance. SUNTERRA CORP: Files Voluntary Chapter 11; Seeks DIP Financing -------------------------------------------------------------- Sunterra Corporation (NYSE: OWN) announced that it and certain of its subsidiaries have filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code. The petition was filed in the United States Bankruptcy Court for the District of Maryland (Baltimore). The filing should allow Sunterra and its subsidiaries to operate while Sunterra seeks approval of a plan of reorganization. The Company also announced that it has executed a financing commitment letter with Ableco Finance LLC, an affiliate of Cerberus Capital Management LP and Gabriel Capital Group, for "debtor-in-possession" ("DIP") financing, which, subject to court approval, will provide immediately to Sunterra an interim facility of up to $25 million. Subject to satisfactory completion of other conditions, including further due diligence by the lender and court approval, the DIP lender has agreed to expand the facility to $53 million. Sunterra Europe, Sunterra Pacific, Marc Resorts and RPM are not included in the filing. Sunterra Corporation is the largest international owner and manager of vacation ownership resorts, with 90 resort locations around the world and about 300,000 worldwide owners and members. In addition, Sunterra currently manages 17 third party condominiums and other resorts in Hawaii. The Company's operations consist of (i) marketing and selling vacation interests, (ii) developing, acquiring and operating vacation ownership resorts, (iii) financing customers' purchases and (iv) providing resort rental, management and maintenance services. UNITED COMPANIES: Signs Purchase Agreements with EMC Mortgage ------------------------------------------------------------- United Companies Financial Corp., Baton Rouge, La., which has been operating in chapter 11 reorganization since March 1, 1999, announced that yesterday it signed an asset purchase agreement and a mortgage loan and REO property purchase agreement for the sale of substantially all of its whole loan portfolio and REO properties, assets related to its mortgage servicing operations and its interest only and residual interests as of Dec. 31 to EMC Mortgage Corp. and EMC Mortgage Acquisition Corp., subsidiaries of The Bear Stearns Companies Inc., for a cash purchase price of about $781 million, according to a newswire report. United Companies' cash on hand and certain other assets are not included in the sale, and the sales are subject to bankruptcy court approval and possibly higher bidding. The agreements stipulate that the whole loan and REO properties transaction shall be consummated no later than July 31, and the other transaction no later than Sept. 15. "The EMC transactions will allow the company to substantially complete its reorganization efforts," said Lawrence Ramaekers, chief executive officer of United Companies. "We believe that these transactions, and the bankruptcy court approval process, will maximize the value of United Companies and ensure parties-in-interest an opportunity to be heard." On June 1, United Companies sold its loan origination platform to Aegis Mortgage Corp. United Companies is a specialty finance company that services non-traditional consumer loan products. ********* 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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