/raid1/www/Hosts/bankrupt/TCR_Public/000615.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, June 15, 2000, Vol. 4, No. 117
Headlines
ACCESSAIR: Midwest Express Takes Over Routes
AEROLINEAS ARGENTINA: Spain Plans Bail-Out
AMC ENTERTAINMENT: Moody's Lowers Ratings; Outlook Still Negative
BREED TECHNOLOGIES: Ernie Green's Offer Off Table
BREED TECHNOLOGIES: Harvard Industries Enters Agreement
CARMIKE CINEMAS: Moody's Lowers Debt Ratings; Outlook Negative
CELLNET DATA: Seeks Hearing To Consider Disclosure Statement
DATAPOINT: Datapoint Reports Third Quarter Results
DISTRICT MEMORIAL: Files for Chapter 11
FOODTOWN SUPERMARKETS: Wholesaler Nash Finch Holds 75% of Debt
FRUIT OF THE LOOM: Seeks To Establish Bar Date
GOLDEN OAK MINING: Reports Almost $15 Million in Debt
GRAHAM-FIELD: Signs Agreements With VGM
GST TELECOM: Seeks Court Approval to Auction Off Assets
INACOM: Prediction of Chapter 11 Filing
INNOVATIVE CLINICAL SOLUTIONS: Bond Restructuring Plan
LOEWS CINEPLEX: Moody's Lowers Debt Ratings; Outlook Negative
MICHAEL PETROLEUM: Committee Objects To Disclosure Statement
PACIFICARE HEALTH: To Exit Ohio and Kentucky Markets
PHILIPPINE AIRLINES: Reports Profit
PIETRAFESA CORP: Files Chapter 11 Petition
PRISON REALTY: Waiver Of Credit-Pact Defaults, New CEO
READ RITE: Announces CEO Succession
REGAL CINEMAS: Moody's Lowers Ratings; Outlook Still Negative
SAFETY-KLEEN: NYSE Suspends Trading in Stock
SCB COMPUTER: May Be Delisted From NASDAQ
SERVICE MERCHANDISE: Information From Consolidated Balance Sheets
SHOTMAKER COMPANY: Court Approves Reorganization Plan
TELEQUEST: Files for Chapter 11 Protection
VENCOR: Court Approves Tax Stipulation Agreement With Ventas
*********
ACCESSAIR: Midwest Express Takes Over Routes
--------------------------------------------
The Associated Press reports on June 11, 2000 that Milwaukee-based Midwest
Express, with routes to Milwaukee and to Indianapolis en route to New
York's LaGuardia Airport, is taking over the routes of the bankrupt
airline, AccessAir, from Des Moines to New York this week.
AEROLINEAS ARGENTINA: Spain Plans Bail-Out
-----------------------------------------
Aerolineas Argentina needs a $650 million capital injection and
sweeping cost cuts to save it from bankruptcy, according to Reuters.
According to a rescue plan published yesterday the plan now needs to be
agreed to by Argentina's government and airline employees, who face pay
cuts of up to 20 percent. Aerolineas' biggest shareholder is now covering a
bulk of its losses, which Spanish sources put at $300 million this year.
Spanish flag-carrier Iberia, due to be fully privatized later this year,
owns 8.5 percent of Aerolineas and has served as a model for the Aerolineas
plan. Iberia was technically bankrupt itself in the mid 1990s, but has cut
costs, returned to profit and attracted British Airways as a foreign
partner. (ABI 13-Jun-00)
AMC ENTERTAINMENT: Moody's Lowers Ratings; Outlook Still Negative
-----------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of AMC Entertainment
Inc. (AMC), concluding its review which began May 2000. Affected ratings
and debt instruments include the company's $200 million and $225 million
issues of 9-1/2% senior subordinated notes due 2009 and 2011, respectively,
the ratings for which were lowered to Caa3 from Caa1; its $425 million
senior unsecured bank revolving credit facility due 2004, the ratings for
which were lowered to B3 from B1; and the senior implied and senior
unsecured issuer ratings, which were lowered to B3 and Caa2, from B1 and
B3, respectively. The outlook for AMC's ratings continues to be negative.
The downgrades and negative outlook broadly reflect more severe weakness in
the company's operating performance than anticipated, coupled with Moody's
expectation of continued difficulties for the theatrical exhibition
industry overall over the intermediate term, and related implications for
reduced recovery prospects for the company's creditors. While we believe
that AMC will ultimately be a survivor, either on its own or, more likely,
by partnering with another theater chain, the company's current
capitalization has now become excessively burdened with debt and debt-like
leases and is in need of a material equity injection. Moreover, Moody's
revised ratings incorporate our expectation that some ultimate loss
absorption will be realized by bondholders (40%-50%), with the bank group
remaining slightly better than fully-covered today (but also potentially
absorbing some losses in the 5%-10% range on a go-forward basis), both
determined under the assumption of a going-concern valuation basis and
dependent on the specifics of any future recapitalization.
AMC's theaters continue to be adversely impacted by competing exhibitors,
shorter average film lives, and correspondingly weaker economic returns.
Additionally, AMC has not been immune to the faster than expected decay of
its older theaters, a theme that remains a defining characteristic for the
exhibition sector on an almost universal basis. The company also continues
to spend capital aggressively on theater expansion, notwithstanding some
recent curtailment of the same.
Cash flow erosion and ongoing asset impairment charges have placed greater
financial strain on the company's balance sheet, particularly in
consideration of AMC's industry-leading operating lease commitments.
Run-rate lease-adjusted leverage of approximately 8.7x (note the absence of
the industry standard add-back for what Moody's believes has become
increasingly "recurring non-recurring" charges) and an essentially
breakeven 1.0x coverage of forward interest and rents by pre-rent cash flow
have measurably weakened the company's credit profile. On a relative value
basis, AMC's lease-adjusted debt-to-revenue of 2.1x is in-line with its
peers and at the low end of an overleveraged sector overall, but
lease-adjusted debt per screen ($864 thousand) and per theater ($11.9
million) lead the rated exhibitor universe (clearly at least partially a
function of the types of theaters and markets in which AMC operates), while
EBIT tends to lag most comparables. Moody's also anticipates that the
company will need to take additional write-offs to better reflect the
likely more impaired asset values associated with its older and
underperforming theaters. Moreover, as poorly capitalized exhibitors
continue to disappear, Moody's believes that competition among the major
theater chains will intensify further, particularly in competitive film
zones, which are generally concentrated in major markets where many of
AMC's theaters are located.
The revised ratings continue to be supported, nonetheless, by the company's
large size and important presence in key markets. We also commend
management for acting swiftly to finally reduce the company's comparatively
excessive overhead infrastructure, which should result in a meaningful
amount of general and administrative savings annually. The company has also
been a leader in defining and rolling out the megaplex concept, which was
quickly adopted by the broader exhibition market participants. Although we
question the long-term viability of some of AMC's largest theaters, which
appear to be uneconomical due to their higher fixed (and construction)
costs and the inability to recoup these costs in the absence of screen
cannibalization given normalized Hollywood release patterns, the company
still arguably remains one of the better positioned exhibitors from an
asset valuation perspective based on the relative newness and attractive
markets served by a majority of its theater circuit. Partially as a result
of the aforementioned, and in conjunction with the relatively short average
remaining lease terms for many of its older theaters, AMC should also
retain an above average ability to exit unprofitable locations.
These strengths are largely tempered, however, by AMC's high absolute debt
burden after capitalizing its substantial amount of off-balance sheet
leases, which the company has entered into to finance its growth, as well
as the notably weaker position of senior subordinated noteholders by virtue
of their highly flexible indenture which has permitted the same.
AMC Entertainment is one of the largest movie theater exhibition companies
in the United States, with 2,916 screens in 210 theaters located mostly in
the United States, as well as a presence in certain international markets,
as of March 2000. The company maintains its headquarters in Kansas City,
Missouri.
BREED TECHNOLOGIES: Ernie Green's Offer Off Table
-------------------------------------------------
Ernie Green, chairman and CEO of Dayton-based EGI Corp., and the leader of
the investor group seeking to acquire ownership of BREED Technologies (OTC:
BDTTQ), said he was "regretfully withdrawing" his Minority Business
Enterprise bid for the Company. This move is in response to bank creditors'
committee intention to direct the Breed Technologies board to publicly
endorse a bid from Harvard Industries (NASDAQ: HAVA).
Mr. Green is an African American with more than 20 years experience in the
automotive supply industry. If the bid were successful, it would have
created the largest minority-owned enterprise in the U.S. automotive
industry and the first qualified MBE operating as a first tier supplier.
"This new venture would have allowed us to jump a few rungs of the ladder
and move minority business enterprises from low-tech to high-tech, from
third tier to first tier." Said Mr. Green. "We have an outstanding,
well-financed plan. "
"Our offer of more than $370 million would have been used to retire the DIP
(Debtor in possession) loan, fund the court approved employee retention
plan, pay all allowed professional fees while providing a cash payment of
$328 million on account of the pre-petition indebtedness held by the Bank
Group. This totaled approximately a 53-cent recovery. The MBE proposal was
a very attractive bid for all creditors," said Mr. Green.
The investor group lead by Ernie Green includes Johnnie Cordell Breed,
current Chairman & CEO of Breed Technologies, and other minority
shareholders. Breed Technologies has been operating under the protection of
Chapter 11 of the United States Bankruptcy Code since September of 1999.
Although the environment
has been difficult for Breed, the company has not lost a single customer
contract since the filing. In fact, its major customers have been very
supportive of the MBE proposal.
"At the request of BREED's North American customers the MBE investor group
will complete its due diligence examination. Daimler-Chrysler and Ford have
been very supportive of our bid therefore we do not intend to simply walk
away," said Mr. Green. "However, we need to monitor the reaction of key
customers to the
creditors' committee recent move and their overall handling of the matter
which may require us to reassess the future value of BREED."
According to Mr. Green, his bid would have secured the long-term success of
the Company and assure stable, low-cost, high-quality sourcing of
integrated safety systems to its global customer base.
A strong advocate for "giving back to the community," Mr. Green is an
acknowledged civic leader in the Dayton, Ohio metropolitan area. He serves
on the board of directors of the Dayton Power and Light Corporation, a
position he has held since 1991, and since 1995 he has served as a member
of the Cleveland-based Eaton Corporation's board of directors. In 1997, Mr.
Green joined the board of Stamford, CT-based Pitney Bowes, Inc. He is a
former board member of Gradall Industries, New Philadelphia, Ohio. For nine
years, from 1989 to 1998, he was a Bank One of Dayton board member.
Mr. Green currently serves as a trustee of WPTD-Channel 16-Public
Television, Dayton. Since 1994 he has been a member of the Central State
University of Ohio's foundation board, which he now chairs. He is a trustee
of Kettering University, formerly known as GMI Institute, Flint, Michigan.
EGI, based in Dayton, Ohio, a certified minority business enterprise, has
provided components to the automotive industry for 20 years. EGI has 1,200
employees at six facilities in Ohio, Kentucky and Florida.
BREED Technologies, one of the world's most fully integrated suppliers of
complete automotive occupant safety systems, has approximately 16,000
employees in 42 facilities around the world. In FY 1999, it is estimated
that the company had $1.4 billion in revenues
BREED TECHNOLOGIES: Harvard Industries Enters Agreement
-------------------------------------------------------
Harvard Industries Inc. (NASDAQ: HAVA) and Breed Technologies, Inc. (OTC:
BDTTQ) announced that the two companies have entered into an agreement to
combine their businesses, as part of a plan for Breed to emerge from
Chapter 11. If consummated, the transaction will create a premier global
supplier of automotive occupant safety systems and engineered products for
OEM and
aftermarket uses, and for a broad range of industrial applications.
The combined entity will have annual revenues of approximately$1.7 billion.
The transaction is subject to Breed obtaining Bankruptcy court approval and
confirmation of a reorganization plan which is expected to occur in the
third or
fourth calendar quarter of this year.
Breed Technologies is currently operating under the protection of Chapter
11 of the United States Bankruptcy Code. The company filed for bankruptcy
protection on September 20, 1999, two years after Breed's$710 million
acquisition of AlliedSignal's automotive safety restraint division. Breed
is one of the world's most fully integrated suppliers of complete
automotive occupant
safety systems, supporting a growing list of automotive customers with
advanced engineering, testing and manufacturing operations.
Harvard Industries designs, develops and manufacturers a broad range of
components for OEM manufacturers and the automotive aftermarket, as well as
aerospace, industrial and construction equipment applications worldwide.
The company successfully emerged from Chapter 11 Bankruptcy in November
1998, after
a significant restructuring and reorganization led by Roger Pollazzi,
Chairman and Chief Executive Officer. As a result, Harvard today is
generating positive operating income (before amortization) and has no
long-term debt. The Company has a stated strategy of pursuing growth
through acquisition.
The letter of intent was approved by the Board of Directors of both
companies and Breed's senior secured bank group. Under the terms of this
transaction, valued at over $600 million, Harvard would assume
approximately $300 million of liabilities, Breed secured creditors will
receive $220 million in cash and
notes, and through the issuance of stock and warrants, approximately 45% of
the equity of the combined Harvard/Breed entity. Harvard stated that The
CIT Group and Citibank, N.A. are highly interested in providing up to $325
million to finance the transaction. CIT has financed Harvard in the past,
and is familiar with the company's management team.
The non-binding letter of intent contemplates entry into a definitive
agreement that will be subject to usual conditions including: a firm
financing commitment, board, shareholder and bankruptcy court approvals,
and required government and third party approvals. Both Harvard management
and Breed's secured lenders anticipate that the strong operating
performance of the combined companies will result in significant equity
appreciation. Breed notes that its agreement with Harvard is subject to a
continuing effort to solicit higher and
better offers.
Roger Pollazzi will continue as Chairman and Chief Executive Officer of the
combined operation. Pollazzi and his senior management team, together for
nearly 10 years and with significant experience in the OEM automotive
industry, have
had notable successes in turnaround situations.
CARMIKE CINEMAS: Moody's Lowers Debt Ratings; Outlook Negative
--------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Carmike Cinemas, Inc.
(Carmike), including the company's $200 million issue of 9-3/8% senior
subordinated notes (to Caa2 from B2), and its senior secured bank credit
facilities totaling $275 million (to B3 from Ba3). Moody's also lowered
Carmike's senior implied rating (to B3 from Ba3) and senior unsecured
issuer rating (to Caa1 from B1), and maintained its negative outlook for
all ratings. This concludes our review of Carmike's debt ratings which
began March 2000.
The downgrades and negative rating outlook reflect the company's weak
operating results and deteriorating credit profile following its material
underperformance relative to original expectations, as well as Moody's
expectations of continued financial strain and a difficult operating
environment over the intermediate term and commensurate reductions in
projected loss severity implicit in the revised ratings. Specifically,
Moody's suggests that holders of the company's senior subordinated notes
have experienced impairment of their expected recovery value against the
same in the range of 20%-30% over the last year, with susceptibility to
further erosion noted in the ongoing negative rating outlook.
Since our initial rating of the company's debt in January 1999, Moody's has
remained concerned about Carmike's comparatively older theater base, as
well as management's concerted shift from a predominantly
acquisition-driven strategy to a new build growth model. Partially
compensating for these concerns, however, Moody's had historically taken a
measure of comfort in the relatively less leveraged balance sheet and more
conservatively structured bond indenture and bank credit agreement of
Carmike in comparison to its rated peer group, as well as the large number
of non-competitive markets in which the company operated.
Recent results suggest that Carmike's theaters have been more adversely
affected than anticipated by the heightened competitive environment and
poor box office performance (from an exhibitor perspective) for the theater
industry in general, nonetheless. Operating weakness has been noted at both
Carmike's older and its more recently constructed theaters, suggesting that
its "non-competitive" markets may be fairly competitive after all, as
audiences appear to be driving farther distances to the newer plexes.
Additionally, there is increasing evidence to confirm Moody's belief that
Carmike remains more susceptible to box office risk given its
lower-screened theaters, and the possibility that some of its newer builds
may have been completed in less than optimal locations and/or were
inappropriate construction projects to begin with. Carmike's liquidity
position has subsequently been eroded by a material amount, and the company
will likely need to complete additional sale-leaseback transactions (which
Moody's has long viewed as nothing more than alternative financing, to the
detriment of unsecured bondholders, with at most a short-lived benefit to
enhance liquidity) to bridge any near-term cash shortfalls.
Carmike's run-rate lease-adjusted leverage has grown dramatically to 9.1x
(note the lack of adjustment for what Moody's deems to be "recurring
non-recurring" charges, which have become the norm for the entire sector)
at the end of first quarter 2000, up from 6.3x at the comparable prior year
period. Pre-rent cash flow coverage of forward interest and rents has
declined materially to a breakeven 1.0x level, from 1.6x over the same
period last year, leaving no capital available for investment or debt
amortization. Although these levels still remain strained for even the
revised ratings, Moody's does expect some near-term (albeit potentially
short-lived) improvement. It is also noteworthy that Carmike's
lease-adjusted debt-to-revenue of 2.1x remains in-line with its peers and
at the low end of an arguably overleveraged sector overall, while
lease-adjusted debt per screen ($359 thousand) and per theater ($2.3
million) also remain the lowest for the rated exhibitor universe (partially
a function of the types of theaters and markets in which Carmike operates,
but some comfort is taken, nonetheless, in that per screen leverage is low
even in light of Carmike's less modern, lower screened theaters relative to
it comps), while some positive EBIT is also present.
The company has announced that its formerly aggressive capital expansion
program will effectively cease this year, which Moody's views as a
near-term mitigant against the further weakening of its credit profile and
an opportunity to potentially generate positive free cash flow by the end
of the year. However, Moody's remains particularly concerned with the large
number of theaters that need to be closed due to cash flow losses and/or
diminimus returns, a situation which is exacerbated by Carmike's generally
high average remaining lease terms for a material percentage of the same,
and the very limited alternative usage for these sites in Moody's
estimation. Moody's correspondingly believes that additional asset
write-offs are needed and will likely be forthcoming over the next year,
notwithstanding the company's recording of an already meaningful amount of
theater impairment charges over the last few years. Moreover, the
curtailment of capital spending could prove more problematic over time
given the relatively old age of Carmike's theater circuit and the
anticipated deferred maintenance issues that are likely to ensue, both of
which Moody's suggests are beginning to be noted already in the company's
fairly dramatic drop-off in attendance levels.
Carmike Cinemas is the third largest domestic motion picture exhibitor in
terms of the number of screens operated, with 2,821 screens at 447 theaters
located in 36 states at the end of the first quarter. The company maintains
its headquarters in Columbus, Georgia.
CELLNET DATA: Seeks Hearing To Consider Disclosure Statement
------------------------------------------------------------
This is a relatively simple liquidating chapter 11 case. The debtors have
already liquidated their assets and are no longer in operation. All that
remains to be done is the distribution of funds to creditors. There are no
significant contingencies such as major ongoing litigation. Hence, the
proposed disclosure statement is relatively straightforward. Unsecured
creditors are likely to receive only a modest dividend, and there is no
possibility of a distribution to equity holders.
DATAPOINT: Datapoint Reports Third Quarter Results
--------------------------------------------------
Datapoint Corporation (OTCBB:DTPTQ) reported a net loss of $1.0 million on
revenue of $32.2 million for the Company's third quarter, ended April 29,
2000.
This compares with a net loss of $1.3 million on revenue of $32.5 million
for the same period in the prior year. For the third quarter of fiscal
2000, net loss per common share was $.06, basic and diluted, including
accumulated dividends due preferred shares and the gain on the exchange and
retirement of preferred stock. For the third quarter of fiscal 1999, net
loss per common share was $0.07, basic and diluted, including accumulated
dividends due preferred shares and the gain on the exchange and retirement
of preferred stock.
For the first nine months of fiscal 2000, the Company reported a net loss
of $5.4 million on revenue of $95.9 million, compared with a net loss of
$3.1 million on revenue of $103.5 million for the same period a year ago.
For the first nine months of fiscal 2000, net loss per common share was
$.32, basic and diluted, including accumulated dividends due preferred
shares and the gain on the exchange and retirement of preferred stock. For
the first nine months of fiscal 1999, net loss per common share was $0.18,
basic and diluted, including the extraordinary credit, accumulated
dividends due preferred shares and the gain on the exchange and retirement
of preferred stock.
The Company had operating losses of $13 thousand and $1.8 million,
respectively, for the third quarter of fiscal 2000 and the first nine
months of fiscal 2000, compared to operating income of $113 thousand and an
operating loss of $290 thousand, respectively, for the same periods of the
prior year.
Consistent with the determination of its Board of Directors to shift the
focus of the Company towards acquiring, developing and marketing products
with Internet and e-commerce applications, the Company and several of its
subsidiaries entered into a Letter of Intent dated Jan. 26, 2000 and
subsequently a Stock Purchase Agreement (the "Stock Agreement"), dated
April 19, 2000, to sell the European subsidiaries of the Company which
comprise substantially all of the Company's operations (the "European
Operations") to the European based CallCentric Ltd. ("CallCentric").
Pursuant to such Stock Agreement, the Company agreed to sell its European
Operations to Datapoint Newco I Limited ("Newco"), a limited company
affiliated with CallCentric, for $49.5 million in cash, less certain
adjustments, in the event that the aggregate shareholder's deficit of the
European Operations exceeds $10.0 Million. The Stock Purchase Agreement
contemplated, among other things, that the Company would file for
reorganization pursuant to Chapter 11 of the United States Bankruptcy Code
and that the sale of the European Operations to Newco would be subject to
higher and better offers and the approval of the Bankruptcy Court.
On May 2, 2000 the Company filed a petition pursuant to Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy Court for the
District of Delaware. The case has assigned docket number 00-1853 (PJW). On
May 12, 2000, the Bankruptcy Court scheduled a hearing for June 15, 2000 to
consider the Company's motion to approve the sale of the European Operations.
The Company intends to file a reorganization plan pursuant to Chapter 11 of
the Bankruptcy Code and in that respect has commenced negotiations over the
terms of such plan with members of an Official Committee of Unsecured
Creditors appointed in the bankruptcy case.
The following financial statements have been prepared on the basis of
current ongoing operations without regard to the sale of the Company's
European operations and the effect of the bankruptcy proceedings.
The sale of its European Operations is consistent with the direction of the
Corporation to focus its efforts and resources on acquiring, developing and
marketing products with Internet and E-commerce applications. The
previously acquired Corebyte Networks(tm) product family
(www.corebyte.com), highlights this effort. The Corebyte subsidiary has
developed an intelligent browser-based communications networking system.
With a single interface, users of Corebyte Networks(tm) products directly
access every application necessary to manage their enterprise from basic
E-mail to advanced group computing tools. Corebyte Networks(tm) products
users seamlessly share and exchange valuable information, selectively and
securely, within their networked community and across enterprises via the
Internet. Companies that standardize their network on Corebyte Networks(tm)
products gain all the benefits of the Internet and eliminate the fear of
obsolescence.
With its U.S. headquarters in San Antonio, and international headquarters
in Paris, France, Datapoint is a recognized innovator in modern networking
infrastructure. Datapoint specializes in the design, integration, and
maintenance of data, voice, and networking communications solutions including
call center, and computer-telephony integration (CTI).
DISTRICT MEMORIAL: Files for Chapter 11
---------------------------------------
According to an AP report on June 8, 2000, District Memorial Hospital has
filed for bankruptcy protection under Chapter 11. A total number of 200
creditors was revealed during the filing. Cherokee County hospital points
its fingers for the cause to Medicare when it decided to cut its funding.
Aside from the CEO working without pay, the hospital also is no longer
offering its staff a health insurance program, still it will not cease
operations.
FOODTOWN SUPERMARKETS: Wholesaler Nash Finch Holds 75% of Debt
----------------------------------------------------------
Foodtown Supermarkets of Kentucky, which operates seven high-end Slone's
Signature Markets and three Big Valu Discount Foods stores, has filed for
reorganization under Chapter 11 of the US Bankruptcy Code. As yet, no
decision has been made about which or how many stores will close. The
filing lists assets of $8.3 million and liabilities of approximately $9.3
million, of which $750,000 is secured bank debt, nearly $7 million is owed
to Nash Finch, the Company's principal wholesaler and some $2.5 million is
unsecured debt, which includes trade debt. Foodtown has consistently been
posting monthly losses, as revenues dropped from $50 million in 1998 to $45
million last year, according to the filing, following increasing
competitive pressures from Kroger, Wal-Mart and Meijer. Foodtown's Chapter
11 filing will have additional repercussions for Nash Finch, analysts for
F&D Reports say, estimating Nash Finch could lose more than $40 million in
annual revenues if Foodtown is not abe to successfully reorganize.
FRUIT OF THE LOOM: Seeks To Establish Bar Date
----------------------------------------------
Fruit of the Loom asks that August 15, 2000, at 4:00 p.m., Eastern Standard
Time be fixed as the filing deadline for all entities holding claims of any
kind that arose before the December 29, 1999, Petition Date.
Fruit of the Loom asserts that a Claims Bar Date is necessary to develop an
effective reorganization plan. Management requires complete and accurate
information regarding the nature, amount and status of all prepetition
claims. A Bar Date will flush-out all claims against the estates and help
quantify pre-petition liabilities.
The Debtors propose to serve notice of the Bar Date and customized proof of
claim forms on all known creditors no later than July 1, 2000. Proof of
claim forms must then be returned to the Claims Agent:
If delivered by courier of hand delivery, to:
Donlin Recano & Company Inc.
As Agent for the United States Bankruptcy Court
Re: In re Fruit of the Loom Inc., et al., No. 99-04497 (PJW)
419 Park Avenue South, Suite 1206
New York, New York 10016
If delivered by U.S. Mail, to:
Donlin Recano & Company Inc.
As Agent for United States Bankruptcy Court
Re: In re Fruit of the Loom Inc., et al., No. 99-04497 (PJW)
P.O. Box 2035 Murray Hill Station
New York, New York 10156
Facsimile submissions will not be accepted. Donlin Recano will sent and
acknowledgement of receipt if a claimant provides a copy of the proof of
claim and a self-addressed envelope with necessary postage prepaid.
Because of the size, complexity and geographic diversity of the business,
there may be potential claims of which Fruit of the Loom is unaware. The
Debtors propose to publish notice of the Claims Bar Date, prior to July 1,
2000, in The Wall Street Journal, USA Today, The Daily News Record, and
Women's Wear Daily.
The Debtors ask that claimants asserting claims against more than one Fruit
of the Loom debtor entity be required to file separate proofs of claim
against each Fruit of the Loom debtor entity against which a claim is
asserted.
With respect to rejection damage claims, the Debtors propose that the Bar
Date be fixed as later of the August 15, 2000, and 30 days after the entry
of any order authorizing rejection of an executory contract or unexpired
lease. (Fruit of the Loom Bankruptcy News Issue 7; Bankruptcy Creditors'
Services Inc.)
GOLDEN OAK MINING: Reports Almost $15 Million in Debt
-----------------------------------------------------
Golden Oak Mining has total indebtedness of just under $15 million,
according to documents filed with the U.S. Bankruptcy Court in Lexington, Ky.
Golden Oak filed May 16 for Chapter 11 bankruptcy protection (CO 5/22). It
listed total assets of $9,517,733 and total liabilities of $14,889,908. The
liabilities are divided between secured creditors ($6.6 million) and
unsecured creditors ($8.3 million).
By far the largest single unsecured creditor is Long-Airdox Co. of
Blacksburg, Va., which is owed $2,114,938. The next largest creditors
include Joy Mining Machinery, $737,330; Drill Steel Service, $689,650;
Childers Oil Co., $450,243; Network Supply, $381,273; Industrial Rubber
Products, $232,459; Cook Brothers, $170,305; Drives & Conveyors, $159,273;
M.J. Electric Enterprises, $ 111,514; and Carroll Engineering, $99,301.
Also on the list are Coastal Coal, $63,000, and Montgomery Coal, $60,120.
GRAHAM-FIELD: Signs Agreements With VGM
----------------------------------------
Graham-Field Health Products, Inc. (OTC: GFIHQ), a manufacturer and
supplier of home healthcare products, and VGM & Associates, the largest
private nationwide buying group of home healthcare products, based in
Waterloo, Iowa, jointly announced the signing of a multi-year purchase and
supply agreement between the two companies. Under the agreement, the VGM
group will continue to have access to sell and distribute the full line of
products offered by Graham-Field.
According to Van Miller, President of VGM, Inc., "Graham-Field and their
recognized brand name products, such as Everest & Jennings, Lumex and
LaBac, continues to be a significant provider in the manufacturer/supply
side of our industry. This important agreement demonstrates our faith in
the ability of Graham-Field's new management team to deliver its products
to our members and to the public, and our expectation that Graham Field
will continue to play a major supply role to the Home Healthcare Industry.
Our organization and its members and affiliates are committed to supporting
Graham-Field throughout their restructuring efforts and on a going forward
basis over the long term."
According to David A. Hilton, President of Graham-Field, "We are extremely
gratified by the support which we have received from VGM and its members
and affiliates. This agreement will allow us to continue to provide our
full range of healthcare products to the public through the VGM
organization. The agreement and the anticipated revenues is part of our
program for moving Graham-Field forward. We expect significant benefits for
both of our organizations."
GST TELECOM: Seeks Court Approval to Auction Off Assets
------------------------------------------
Dow Jones reports on June 12, 2000 that GST Telecommunications Inc., which
filed for bankruptcy protection last month, said it will seek court
approval to auction off its assets after it failed to reach a definitive
agreement regarding Time Warner Telecom Inc.'s offer to acquire most of the
local-phone company's assets for $450 million.
In addition, GST said it also will seek court approval for an employee
retention plan to reward employees who stay with the company during the
bankruptcy process.
INACOM: Prediction of Chapter 11 Filing
---------------------------------------
According to an article in TechWeb News on June 12, 2000
Inacom expects to file for bankruptcy protection even if it sells off its
main services component, the company said.
The company is negotiating to separately sell its services and
telecommunications businesses in a deal that could be revealed later this
week, sources said.
But even if such a sale is completed, the company (stock: ICO) is expected
to file Chapter 11 to seek protection under the federal bankruptcy law from
its creditors, the company said in a statement Monday.
The negotiations with the interested parties have gained the integrator
additional time from creditors. It now has until Friday to find a buyer or
file for bankruptcy. The deadline had been June 9.
However, the company said that because it has a cash flow problem it will
most likely seek bankruptcy protection.
Industry sources said Inacom is talking with CompuCom Systems (stock:
CMPC), which is interested in Inacom's service's business, and Westcon, a
distributor of networking equipment that is interested in Inacom's
telecommunications business.
One of the sources said Inacom's telecommunications business is healthy and
on a $200 million run-rate, and is Lucent Technologies' (stock: LU) largest
reseller of voice equipment.
Inacom on Monday said it cut 750 positions, or 13 percent of its workforce,
in administrative and support positions in noncritical areas. Those
employees were notified on Friday.
INNOVATIVE CLINICAL SOLUTIONS: Bond Restructuring Plan
------------------------------------------------------
Innovative Clinical Solutions, Ltd. (OTC Bulletin Board: ICSL.OB)
announced that on June 12th it commenced the solicitation of consent from
holders of its $100 million 6.75% convertible debentures due 2003 to the
exchange of these debentures for ICSL common equity through a voluntary
prepackaged plan of reorganization of ICSL and its subsidiaries under
Chapter 11
of the Bankruptcy Code. The Company has opted to implement the
recapitalization through a prepackaged plan, primarily because this process
enables the Company to convert all $100 million of debentures so long as
the plan is approved by (i) holders of at least two- thirds (2/3) of the
principal amount of the debentures that actually vote on the plan and (ii)
more than one-half (1/2) of the number of debentureholders who actually
vote on the plan.
Holders of more than 50% of the principal amount of the debentures have
agreed in writing to vote in favor of the prepackaged plan. The plan must
also be confirmed by a U.S. Bankruptcy Court.
As would be the case in an exchange offer, only the debentureholders would
be affected by the prepackaged plan. The Company fully expects to continue
operating its businesses in the normal course both before and during the
Chapter 11 process and that it will be authorized to pay all other lenders,
customers,
trade creditors and employees in full, without interruption.
Under the proposed recapitalization, ICSL would issue new common equity to
its debentureholders and existing stockholders. Following the
recapitalization, approximately 90% of ICSL's common stock will belong to
the Company's debentureholders, with the remaining 10% being distributed to
existing shareholders in exchange for their existing shares, subject to
dilution by
options the Company proposes to issue to executive management and
non-employee directors. At the present time, it is not possible to
determine the value of the stock to be issued to ICSL's debentureholders
and stockholders in the recapitalization.
The Company's existing common stock has been trading on the OTC Bulletin
Board under the symbol "ICSL.OB" since being delisted from the NASDAQ
National Market on December 8, 1999. The Company hopes to relist the new
common stock on the Nasdaq National Market following the recapitalization.
In January 1999, the Company embarked on an aggressive restructuring plan
that included:
1) Commit to three core businesses--ICSL Clinical Studies, ICSL Network
Management and ICSL Healthcare Research, 2) Divest all non-core businesses,
3) Recruit a new management team, 4) Strengthen its financial structure,
and 5) Develop and implement an aggressive growth plan. The Company has
substantially
completed the first 3 phases, and the proposed recapitalization will allow
the Company to focus on its growth plans.
ICSL's financial advisor is Donaldson, Lufkin & Jenrette Securities
Corporation.
Innovative Clinical Solutions, Ltd., headquartered in Providence, Rhode
Island, provides services that support the needs of the pharmaceutical and
managed care industries. The Company integrates its pharmaceutical services
division with its provider network management division to create innovative
solutions for its customers. The Company's services include clinical and
economic research and disease management, as well as managed care functions
for specialty and multi-specialty provider networks including close to 10
million patients nationwide. The Company's components include ICSL
Clinical Studies, ICSL Healthcare Research and ICSL Network Management.
LOEWS CINEPLEX: Moody's Lowers Debt Ratings; Outlook Negative
-------------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Loews Cineplex
Entertainment Corporation (Loews), concluding its review which began March
2000. Affected debt instruments and ratings include the company's $300
million issue of 8-7/8% senior subordinated notes due 2008, the rating for
which was lowered to Caa2 from B3; its $750 million senior secured
revolving credit facility, the rating for which was lowered to B2 from Ba3;
and the company's senior implied and senior unsecured issuer ratings, which
were lowered to B2 and Caa1, from Ba3 and B2, respectively. The outlook for
all ratings continues to be negative.
The downgrades generally reflect the company's weaker than expected
operating performance, and correspondingly weaker overall credit profile
relative to original expectations, including a distinctly higher
probability of ultimate default and expected loss severity for its
creditors. While Moody's believes that Loews is indeed a survivor in the
theatrical exhibition industry, the Cineplex chain has arguably been
problematic for management. The revised ratings incorporate Moody's belief
that new equity capital will be necessary to augment the current capital
structure and absorb further theater decay prior to what will likely evolve
into ultimate consolidation with another industry participant. While the
company's bank group continues to be marginally covered from an asset
valuation perspective, Moody's contends that the claims of Loews' senior
subordinated noteholder class have been impaired by an estimated 20%-25%.
Specifically, Moody's notes that the company's balance sheet has become
considerably more strained, with run-rate lease-adjusted leverage reaching
7.3x for the most recently completed period. The company also continues to
display only modest coverage of forward interest and rental payments by
pre-rent cash flow (1.2x), with no anticipated improvement as competitive
pressures mount further, expensive buildouts continue, and Hollywood film
product fails to aid exhibitors in general due to shorter average
run-times. On a relative value basis, however, Loews' lease-adjusted
debt-to-revenue of 2.1x is in-line with its peers and at the low end of an
overleveraged sector overall, and lease-adjusted debt per screen ($659
thousand) and per theater ($5.0 million) also remain at the low end for
large market participants and somewhere in the middle for the overall rated
exhibitor universe, while EBIT is positive (at just $22 million, however)
and near the top relative to most comparables. Moody's also expects that
Loews will remain a net borrower over the next few years (subject to its
revised bank covenants), continuing to invest large amounts of capital (in
a somewhat atypical fashion relative to the rest of the industry) to expand
its circuit, both domestically and internationally.
The negative outlook further incorporates Moody's expectation that the
competitive market for Loews will remain difficult over the near-term,
particularly for the company's still fairly large number of older theaters
that are already underperforming and which, when combined with the
reasonable expectation of some further performance deterioration due to
heightened competition and other market factors, may erode the incremental
cash flows being generated by the newer theaters coming on-line. Indeed,
the desire to combat this latter assumption and mitigate against further
decay by offsetting with new growth underlies management's ongoing
commitment to continue spending meaningful amounts of capital on new
theater site construction and circuit expansion. Although Loews' management
does not agree, Moody's also continues to remain concerned about the
potential need for large asset write-offs over the medium term,
particularly given the company's comparatively low returns historically.
However, the ratings continue to be supported by the company's large size
and strong market positions in major metropolitan areas, which also
generally enjoy good asset quality. Moody's also notes Loews' management's
somewhat more fiscally conservative approach to both proactive theater
dispositions and new build activity historically, with evidence of more
realistic and assertive practices involving the former (notwithstanding the
almost universally greater than expected levels of decay for older
theaters) and arguably more prudence in terms of well-researched and
generally known markets for the latter. These factors have effectively
allowed Loews to remain comparatively less leveraged than its rated peer
group, which in turn has provided the company with a better cushion and
ability to weather short-term box office volatility in terms of having
sufficient liquidity (even with its former relatively conservative
covenant-constrained bank revolver availability) and adequate coverage of
ongoing fixed charges. As expected, the company's bank group has also
recently amended its credit agreement, effectively freeing-up the undrawn
revolver availability for the next 15-months. Finally, while the Cineplex
Odeon chain has certainly been problematic for the combined company,
management has largely been able to realize its projected cost savings
through the combination of this circuit with that of Loews.
Loews Cineplex Entertainment is one of North America's largest theater
exhibitors, with 2,926 screens in 385 theaters located principally in urban
markets throughout the United States and Canada, as well as some
international ventures. The company maintains its headquarters in New York,
New York.
MICHAEL PETROLEUM: Committee Objects To Disclosure Statement
------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the case of
Michael Petroleum Corporation objects to the debtors' Second Amended Joint
Disclosure Statement. The Committee states that the Disclosure Statement
should not be approved because the EnCap Plan is unconfirmable on its face.
At present there is at least one alternative bid for the debtors' assets
which unquestionably would result in the debtors' unsecured creditors
receiving a substantially greater distribution on their claims than they
would receive if the EnCap Plan is consummated.
The Committee complains that the debtors are disparaging the Energen Bid on
the basis that it is "contingent" and consequently should be dismissed out
of hand. The Committee argues that it is certainly not too late to
entertain the Energen Bid. Rather, the Committee states that the EnCap
Plan has bought debtors' management/equity with millions of dollars of
benefits - continued salary, bonus and executive perks; a substantial stock
option plan; $2.5 million of stock in exchange for their money old MPS
Equity. If the court decides that the EnCap plan should proceed, the
Committee requests that the court shorten and terminate the debtors'
exclusivity to allow the Committee to file the Energen Plan so that both
plans can be considered by creditors.
PACIFICARE HEALTH: To Exit Ohio and Kentucky Markets
----------------------------------------------------
PacifiCare Health Systems, Inc. (Nasdaq: PHSY) announced its plans to end
operations of its HMO and other managed care health plans serving Ohio and
Kentucky, affecting approximately 54,400 members in its commercial HMO,
PPO, indemnity and self-funded programs, as well as 6,300 members of Secure
Horizons, the company's Medicare+Choice plan. The company has entered into
a transition agreement with Anthem Blue Cross and Blue Shield, permitting
Anthem to provide comparable health care coverage for commercial members
affected by the departure. The transition will proceed over the coming
months with PacifiCare's exit finalized by December 31, 2000.
PacifiCare officials said the departure was based on its plans to
strategically focus resources on its business in the Western United States,
where the company has strong competitive positioning in the commercial and
Medicare HMO arenas. Many of the company's 49 employees in its Cincinnati,
Ohio office are expected to be recruited by Anthem Blue Cross and Blue
Shield during the transition. Employees whose positions are eliminated
will receive severance and outplacement services.
The exits from Ohio and Kentucky are expected to result in a $3 to $4
million charge (or $0.05 to $0.06 diluted loss per share, net of tax),
which will be included in the results for the quarter ended June 30, 2000.
The charge includes severance and legal costs to surrender the company's
license to operate
in the affected states.
PacifiCare Health Systems is one of the nation's largest managed health
care services companies. Primary operations include managed care products
for employer groups and Medicare beneficiaries in eight states and Guam
serving more than four million members. Other specialty products and
operations include
behavioral health services, life and health insurance, dental and vision
services, pharmacy benefit management and Medicare+Choice management
services. More information on PacifiCare can be obtained at
www.pacificare.com.
PHILIPPINE AIRLINES: Reports Profit
-----------------------------------
Philippine Airlines, near bankruptcy just a year ago, reported yesterday
its first annual profit in seven years, according to an Associated Press
report. The airline reported unaudited net income of more 44.2 million
pesos (US$1.04 million) in the fiscal year, which ended March 31. It was
the first year under a rehabilitation plan, which allowed it to generate
more revenues. However, Philippine Airlines Chairman and
majority owner Lucio Tan said the amount "is really nothing to crow about."
Tan also attributed the gains to the airlines' creditors, suppliers and its
more than 5 million passengers last year. Philippine Airlines was unable to
repay $2.2 billion in debts. (ABI 14-Jun-00)
PIETRAFESA CORP: Files Chapter 11 Petition
------------------------------------------
The Pietrafesa Corp., a maker of fine men's clothing for more than 75
years, filed for federal bankruptcy protection, saying it hopes to
reorganize its finances and concentrate on its core business.
The Clay-based company and its four subsidiaries listed $31.9 million in
assets, and $29.3 million in liabilities in bankruptcy papers filed Monday
with the U.S. Bankruptcy Court in Wilmington, Del.
The company has 320 workers making fine men's clothing sold under the brand
names such as FUBU, Joseph Abboud, Brooks Brothers and Nordstrom.
President Richard C. Pietrafesa Jr. said the company plans to abandon its
10-year-old women's clothing business. It will return its license to make
clothing for hip-hop designer FUBU, exit from its golf sportswear business
and close its Diversified Apparel Group division, which it bought last year.
Chapter 11 grants a company court protection from its creditors as it
reorganizes to pay off its debts.
"The Chapter 11 filing gives us time to rebuild the financial strength our
company requires to survive and to adjust to our rapidly changing market,"
Pietrafesa said. "We continue to operate and will continue to meet payroll
and benefit commitments to all current employees."
Pietrafesa said he believes the company will emerge from bankruptcy soon.
Many of the creditors had already signed on to an out-of-court settlement
of their debts, he said.
However, because so many of its creditors were foreign companies, the
agreements took too long to reach and put too much strain on the company,
Pietrafesa said.
When the company emerges from Chapter 11 it will likely be smaller and
focused on manufacturing in Clay and some importing, Pietrafesa said.
Chapter 11 offers the possibility that shareholders in the private company
could see a return on their investment. Given the company's current
conditions, staying out of Chapter 11 might have led to liquidation and a
greater potential loss, the company said.
In court documents, the Pietrafesa companies listed $20 million in secured
debt owed to PNC Bank and the New York State Urban Development Corp. The
company also owes $9.1 million of unsecured debt owed to 800 creditors.
The company's financial woes began last year when it decided to sell stock
to the public for the first time since its founding in 1922. It expected to
raise $ 44 million to $52 million to buy four companies and expand the
business.
The stock market, however, soured on clothing manufacturers before the
company could begin selling stock.
In the meantime, Pietrafesa spent $4 million in preparation for the stock
sale and buying the other companies. That money was the equity used to run
the business, Pietrafesa said. When the equity wasn't replaced by money
raised from the stock sale, it caused a cash flow problem, he said.
PRISON REALTY: Waiver Of Credit-Pact Defaults, New CEO
------------------------------------------------------
Dow Jones reports on June 12, 2000 that Nashville-based Prison Realty Trust
Inc., the largest corporate prison owner in the U.S., which announced a
major restructuring late last year, received a waiver of existing defaults
under its $1 billion senior secured credit facility with a syndicate of
banks led by Lehman.
Prison Realty said that the waiver and credit agreement, which has been
amended by Commercial Paper Inc. to allow for continued borrowing, require
selection of new senior management, including the hiring of a new chief
executive and chief financial officer.
READ RITE: Announces CEO Succession
------------------------------------
Read-Rite Corporation (Nasdaq: RDRT) announced that its Board of Directors
has named Alan Lowe, currently the company's president and chief operating
officer, to the post of president and chief executive officer, succeeding
Cyril Yansouni who will continue as the company's chairman of the Board.
REGAL CINEMAS: Moody's Lowers Ratings; Outlook Still Negative
-------------------------------------------
Approximately $1.8 Billion of Debt Securities Affected
New York, June 13, 2000 -- Moody's Investors Service lowered the debt
ratings of Regal Cinemas, Inc. (Regal), taking the former Caa2 and B2
ratings for $800 million of senior subordinated notes and approximately
$1.0 billion of senior bank credit facilities to Ca and Caa1, respectively.
Moody's also lowered the company's senior implied and senior unsecured
issuer ratings to Caa1 and Caa3, from B2 and Caa1, respectively. The
outlook for all ratings remains negative.
The downgrades reflect Moody's belief that the probability of default on
the company's debt instruments, and, of greater significance, the estimated
loss severity for the company's creditors in the event of a default, have
increased dramatically over recent periods and are unlikely to improve (and
may worsen) over the intermediate term. While Regal maintains some very
strong assets and continues to generate industry-high operating margins,
Moody's contends that its present business model cannot adequately support
its current capitalization, and assumes that a large-scale restructuring
will ultimately be necessary, particularly in the absence of a significant
new equity contribution (which we do not expect), including a substantial
conversion of subordinated debt to equity (estimated today at 70%-80% or
more, and potentially 100%), along with some loss absorption by the
company's bank group (10% or more, depending on the specifics of any
recapitalization).
The negative outlook continues to incorporate Moody's expectation that the
company's operating environment will remain difficult over the next
12-to-18 months, causing further financial strain over this period.
Regal has been one of the most aggressive exhibitors in terms of expanding
its theater circuit over the last couple of years, and remains committed to
a still large (albeit curtailed) new build program for the years 2000-2001.
Although many of Regal's theaters are performing well and are expected to
improve as they approach more mature operating levels over the coming
periods, Moody's notes that a very large number of theaters (approx. 70-75,
or 17%-18% of the total circuit) are currently generating cash flow losses
and will need to be closed. However, given the relative newness of Regal's
theaters, which itself is a strong point when analyzed independently,
management's ability to effect necessary closures and/or mitigate against
further loss absorption is likely more limited than most in the industry.
We are also fairly resolute in our belief that meaningful theater
impairment charges, and other asset and goodwill write-offs more broadly,
are necessary and will likely be forthcoming. Of greater concern, however,
is recent evidence that, in addition to its comparatively older acquired
theaters, several of Regal's new builds are also underperforming,
suggesting the potential inappropriateness and deeming questionable their
site selection, target size and competitive impact, considerations which
may have been compromised in favor of rapid growth over the last year.
These concerns are exacerbated by the company's highly leveraged balance
sheet, particularly in consideration of its sizeable and growing operating
lease commitments (14.3x run-rate lease-adjusted leverage at March 2000,
including its large amount of write-offs; 8.2x otherwise), and pre-rent
cash flow shortfalls necessary to cover forward interest and rents (0.7x).
Regal's lease-adjusted debt-to-sales (2.9x) leads the industry by a wide
margin, and Moody's suggests that its lease-adjusted debt per screen ($707
thousand) and per theater ($7.3 million) is quite a bit higher than
appropriate for the markets in which the company generally operates,
particularly in comparison to more urban-located exhibitors. Liquidity is
also eroding, with revolver availability wearing thin and anticipated
near-term sale-leasebacks, if completed, only serving as a short-lived
bridge, particularly given the ongoing committed capital investments for
new theater construction. Finally, the high degree of flexibility inherent
in the company's senior subordinated notes indenture and its bank credit
agreement continue to weigh on the relative ratings and notching of the
individual debt instruments.
Notwithstanding these concerns, however, Moody's notes that Regal continues
to generate industry-leading margins and retains an above average quality
asset base. Moody's also views management's recently announced plans to
reduce capital spending as a positive development, although in our
estimation it may prove a moot issue at this point given ongoing and
current remaining theater construction commitments and the company's
already over-leveraged capital structure. Under a less debt-burdened
capitalization, and a more tempered and manageable growth program, in
concert with continued cost containment initiatives and generally strong
operating execution as realized historically by Regal management, the
company could thrive again as its circuit throws off meaningful cash flows
and regains its former dominant and favorably reputable industry position.
Regal Cinemas is one of the largest domestic motion picture exhibitors with
4.376 screens in 423 theaters as of March 2000. The company maintains its
headquarters in Knoxville, Tennessee.
SAFETY-KLEEN: NYSE Suspends Trading in Stock
--------------------------------------------
The New York Stock Exchange suspended trading in Safety-Kleen Corp.' s
stock Monday and said it would apply for the stock's removal from the
exchange.
The stock exchange acted the first business day after Safety-Kleen, the
embattled Columbia-based waste recycler, filed for Chapter 11 bankruptcy
protection.
The NYSE said Monday afternoon that Safety-Kleen's stock was suspended and
that the exchange would apply to the U.S. Securities and Exchange
Commission to delist the stock. Trading of Safety-Kleen's stock had been
halted since the market opened Monday.
A Safety-Kleen spokesman could not be reached for comment Monday afternoon.
Safety-Kleen and 73 of its U.S. subsidiaries filed for Chapter 11
protection Friday in U.S. Bankruptcy Court in Wilmington, Del.
The company, which has disclosed a series of severe financial problems over
the past three months, said it was seeking financing from a group of banks
to support its operations during its reorganization.
For the fiscal quarter ended Nov. 30, Safety-Kleen said it had
$ 4.5 billion in assets and $ 3.1 billion in liabilities. However,
Safety-Kleen's financial reports might be unreliable, as the company is
under investigation for accounting irregularities, an analyst said.
"At this point, their financial records are very questionable," said Roman
Szuper, who follows Safety-Kleen for Standard & Poor's Rating Services in
New York.
Safety-Kleen's stock price has fallen nearly 97 percent from its 52-week
high of $ 19.38 June 30.
Laidlaw Inc., the Canadian transportation company that owns nearly 44
percent of Safety-Kleen, has lost more than $ 800 million on its investment
since then. Laidlaw's stock fell 6 cents a share Monday to close at 38
cents a share on the New York Stock Exchange.
Laidlaw spokesman T.A.G. Watson said the company was unsure how
Safety-Kleen's bankruptcy filing would affect the Burlington, Ontario-based
company. Laidlaw took a $ 560 million charge in April to write down the
value of its investment in Safety-Kleen.
SCB COMPUTER: May Be Delisted From NASDAQ
-----------------------------------------
SCB Computer Technology, Inc. (Nasdaq: SCBI) which is a defendant in a
shareholder class action lawsuit filed in the United States for the Western
District of Tennessee, Western Division at Memphis, may be delisted from
the NASDAQ exchange as a result of the accounting irregularities which are
the subject of the shareholder action. The investor action seeks damages
for violations of the federal securities laws on behalf of all investors
who purchased the common stock of SCB Computer Technology between August
19, 1997 and April 13, 2000 (the "Class Period").
The lawsuit charges SCB Computer Technology and certain of its directors
and officers with issuing a series of false and misleading financial
statements and press releases concerning the Company's publicly reported
revenues and earnings. Specifically, the complaint alleges that the
Company's financial statements issued during the Class Period overstated
its revenues, income and earnings through improper accounting in violation
of GAAP. SCB Computer Technology's outside auditors have resigned and SCB's
financial statements will be restated as a result. Due to these false and
misleading statements, the Company's stock traded at artificially inflated
prices during the Class Period.
SERVICE MERCHANDISE: Information From Consolidated Balance Sheets
-----------------------------------------------------------------
Consolidated Balance Sheets (Unaudited)
(In thousands)
APRIL 30,
2000
-----------
TOTAL CURRENT ASSETS 704,986
TOTAL CURRENT LIABILITIES 372,758
TOTAL LIABILITIES 1,188,949
APRIL 2, 2000 THROUGH APRIL 30, 2000
-------------------------------------
Net Sales 106,871
Total Selling, General and Administrative Expenses 31,993
Net earnings (loss)
$ (13,917)
SHOTMAKER COMPANY: Court Approves Reorganization Plan
-----------------------------------------------------
Camera Platforms International, Inc. dba The Shotmaker Company (OTC:CPFR),
a leading provider of film and video production equipment, announced that
its plan of reorganization was approved by creditors and confirmed
yesterday by the United States Bankruptcy Court for the Central District of
California.
Under the court approved reorganization plan, a new investor, DOOFF, LLC,
has acquired a 49% equity interest in Shotmaker and will provide the
company a $ 250,000 working capital line of credit. DOOFF also has acquired
the secured lender's position. All of Shotmaker's unsecured debt has been
converted to
equity. Including all of the newly issued shares, there are now
approximately 26,000,000 Shotmaker common shares outstanding.
"With our debt restructuring now complete, cash flow from Shotmaker's core
camera car, dolly and crane sales and rental operations is expected to be
positive. In addition, the 'Shotmaker' name, well known and respected in
the entertainment production industry, is a significant, leveragable asset
for the
company's future. We currently are evaluating a variety of options to
expand our franchise of supplying specialized equipment and services to the
entertainment production industry, including expanding our relationship
with www.shotmaker.com, a unique business-to-business entertainment
production resources Web site that is licensed to use our name. We look
forward to working with our new investors to take advantage of the many
growth opportunities now available to us," said Ron Riddle, chief operating
officer.
The Shotmaker Company operates the largest fleet of camera cars in the
world for use in motion picture, television and commercial productions. The
vehicles were designed by former stuntman and director Hal Needham, who
founded the company in 1985. Shotmaker also manufactures and sells the
Shotmaker Blue Dolly(R), a hydraulic scissor arm dolly available in the
United States
exclusively from the Company. Shotmaker also owns the rights to the Enlouva
crane and the Akela crane, which is the world's largest remote crane and is
able to reach 85 feet for "helicopter" shots. The Company has received five
awards
for technical achievement from the Motion Picture and Television Academies
of Arts & Sciences.
TELEQUEST: Files for Chapter 11 Protection
------------------------------------------
Arlington-based Telequest Teleservices, one of the country's largest
telemarketing companies, has filed for Chapter 11
bankruptcy protection.
Telequest, which occupies three floors in Copeland Tower, employs
2,000 to 3,000 people, 400 of them in Arlington.
The voluntary action was filed June 6 in the Northern District of
Texas Bankruptcy Court in Dallas. The company listed 20 unsecured
creditors.
Telequest offers inbound and outbound calling services and
markets credit cards, other financial services and consumer
products. Last year, the 14-year-old firm estimated that it would
post $60 million in sales during its 1999 fiscal year.
In the past few years, Telequest has given no public indication
that it was struggling. In 1998, Call Center Solutions magazine
named the company as the industry's largest in the country by
percentage growth and the sixth-largest by calling minutes gained.
Telemarketing Magazine ranked it as the industry's fastest-growing in the
United States the same year. In 1999, Telequest was awarded its 10th "Top
50" award from Call Center Solutions for completing more than 50 million
customer interactions.
According to its Web site, Telequest has experienced annual
average growth of 82 percent during the past five years. The
company said it has also begun to expand internationally in the
past two years.
In April, Telequest signed a five-year renewal lease for its
north Arlington headquarters and call-center operations in Copeland Tower,
according to Trammell Crow Co., which negotiated the deal. The company told
Trammell Crow that it planned to remodel its 15,807 square feet of space on
floors one, six and eight in the tower, converting its calling floor into
an open-office format and renovating its executive offices.
Telequest Chairman Gordon McKenna said in a Star-Telegram
interview last year that he would "semi-retire" in 2000 to assist
with a presidential campaign, declining to specify which one.
The company Web site lists active call centers in Arlington,
Wichita Falls, Tyler and Lexington, Ky., with more than 1,000
workstations in operation. In early 1999, the company said it
planned to open centers in Argentina, Mexico and Chile.
David Walters of Fobare Commercial, the leasing firm for
Copeland Tower, said the Telequest bankruptcy was largely the
result of a dispute with an unspecified outside company.
"They [Telequest] are still very viable," he said.
VENCOR: Court Approves Tax Stipulation Agreement With Ventas
------------------------------------------------------------
Out of its 1998 consolidated federal income tax return filed on September
15, 1999, Ventas received Refund Proceeds of tax and interest in the amount
of $26.6 million. Prior to that, Ventas had received Tax Refunds in the
amount of $0.5 million, and the Debtors had received Tax Refunds in the
amount of $2.3 million. The Debtors and Ventas had provided each other with
a list of
the Pre-Spin Refunds received.
The Debtors and Ventas each assert an entitlement to the Refund Proceeds on
various legal grounds. To protect the Refund Proceeds pending resolution
of the rights of the parties, the Debtors and Ventas, Inc., on behalf of
itself and each of Ventas Realty, Limited Partnership and Ventas LP Realty,
L.L.C.
have entered into a stipulation which provides that:
(1) The Ventas Refund Proceeds shall be deposited in one or more
segregated interest-bearing accounts at a federally insured depository
institution in the name of Ventas, Inc. or Ventas Realty, Limited Partnership.
(2) All or a portion of the Ventas Refund Proceeds may be invested in a
commercially reasonable manner so long as the investment remains segregated
from the other investments of Ventas, Inc.
(3) The Vencor Refund Proceeds shall be deposited in one or more
segregated interest-bearing accounts at a federally insured depository
institution in the name of Vencor, Inc.
(4) All or a portion of the Vencor Refund Proceeds may be invested in a
commercially reasonable manner so long as investment of the Vencor Refund
Proceed remains segregated from other investments of Vencor, Inc. and any
of the other Debtors.
(5) Either party will provide the other with notice within two business
days after the opening of the respective Account and the receipt of a Tax
Refund.
(6) Either party will provide the other with notice within two business
days of any transfer of the Refund Proceeds to that party's other accounts.
(7) Upon request, either party will promptly provide the other and in any
event not later than two business days with the monthly written account
statements for the Accounts.
(8) Ventas shall be permitted to make Tax Payment Withdrawals from Ventas
Accounts and the Debtors shall be permitted to make Tax Payment Withdrawals
from Vencor Accounts but either party must give the other at least 5
business days' advance notice of such withdrawals.
(9) The stipulation will automatically terminate in the event it is not
approved by the court on or before May 31, 2000, or such approval is
subsequently modified, rescinded or stayed.
(10) The Stipulation and Order shall be automatically terminated, without
further order of the Bankruptcy Court, on the earlier date on which:
(a) the Rent and Reorganization Stipulation is terminated; and (b) the
Debtors provide notice pursuant to Paragraph 4 (b) of the Rent and
Reorganization Stipulation.
Judge Walrath approved the Tax Stipulation in all respects.
(Vencor Bankruptcy News Issue 13; Bankruptcy Creditors' Services Inc.)
*********
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