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/raid1/www/Hosts/bankrupt/TCR_Public/000803.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, August 3, 2000, Vol. 4, No. 151 Headlines AUTOINFO, INC.: Announces Conditional Confirmation of Chapter 11 Plan BC OIL: Files Chapter 11 Protection in California BREED TECHNOLOGIES: Bondholders Sue AlliedSignal, et al., to Recover Losses DIAGNOSTIC HEALTH: Joint Plan Proposes Transfer of 100% Equity to Unsecureds GENESIS HEALTH: Healthcare Resources Unit Files Chapter 11 GIBBS CONSTRUCTION: Texas Court Okays Debtors' Solicitation of Acceptances GRAHAM-FIELD: Receives $21.5 Million Offer for Stock in Prism Enterprises GRAHAM-FIELD: Committee Interposes Limited Objection to Prism Stock Sale GULF STATES: Debtor Argues that Shared Savings Has No Equity in Equipment HEILIG-MEYERS: Continues to Explore Options -- Like a Sale or a Bankruptcy IRIDIUM: Perhaps a Third Proposal Will be the Charm to Avert De-Orbiting LAROCHE INDUSTRIES: Proposes $5.6 Million Employee Retention Program PARAGON TRADE: Diaper Company Announces Strong Second Quarter Results PHONETEL TECHNOLOGIES: Results of First Post-Emergence Shareholder Meeting PREMIER SALONS: Moves to Obtain Limited Post-Petition Financing From Sears RIDGEVIEW, INC.: Hosiery Company Files for Chapter 11 Protection TOKHEIM CORP.: S&P Cuts Debt Rating to "D" With Bankruptcy Filing in View ********* AUTOINFO, INC.: Announces Conditional Confirmation of Chapter 11 Plan --------------------------------------------------------------------- Stamford, Connecticut-based AutoInfo, Inc., (OTCBB:AUTO) obtained conditional confirmation of its chapter 11 plan of reorgnaization from the Honorable Adlai S. Hardin, Jr., United States Bankruptcy Judge. The Plan, AutoInfo says, will become effective without further action by the Court upon the closing of AutoInfo's merger with Sunteck Transport Co., Inc. Such closing is subject to the fulfillment (or waiver by Sunteck) of certain conditions, including AutoInfo's obligation to secure a commitment for $2 million in debt or equity financing prior to closing. A copy of the Sunteck merger agreement is filed as an exhibit to the Company's Disclosure Statement filed in the bankruptcy proceeding and can be accessed on the Bankruptcy Court's website at http://ecf.nysb.uscourts.gov/index.html (Bankruptcy Case No. 00-10368). William Wunderlich, President and Chief Financial Officer of AutoInfo stated, "The conditional confirmation of the Plan is a significant milestone in our reorganization process. We are extremely pleased that our Plan was accepted by our creditors without a single vote of rejection and that we are now cleared to secure a financial commitment and consummate the merger with Sunteck Transport Co., Inc." "We have begun our quest for financing and are developing business strategies to expand Sunteck's revenue base," Mr. Wunderlich added. "Both Harry Wachtel, President of Sunteck, and I are excited about this achievement. We continue to look toward the future, the consummation of the merger and the restoration of shareholder value." BC OIL: Files Chapter 11 Protection in California ------------------------------------------------- U.S. Restaurant Properties Inc. acknowledged the chapter 11 filing this week by BC Oil Ventures LLC, one of its largest tenants, with the U.S. Bankruptcy Court for the Central District of California, according to a newswire report. BC Oil leases 26 properties and one wholesale terminal in Hawaii, 11 properties in California, and one property in Texas, which represents approximately 4.4% of the company's total portfolio. Rental revenues from these leases contributed approximately 4.2% to the company's total rental revenues. The company has the infrastructure in place to deal with underperforming assets and will continue to closely monitor this operator as it restructures the operations. U.S. Restaurant Properties is a non-taxed financial services and real estate company dedicated to acquiring, managing, financing, and selectively developing branded service retail properties, primarily chain restaurants and service stations such as Burger King, Arby's, Chili's, Pizza Hut, Shell and ExxonMobil. The company currently owns or finances 887 properties located in 48 states. AutoInfo Announces Conditional Confirmation of Its Reorganization Plan AutoInfo Inc. yesterday announced that the U.S. Bankruptcy Judge Adlai S. Hardin Jr. (E.D.N.Y.) conditionally confirmed its reorganization plan, according to a newswire report. The plan will become effective without further action by the court upon the closing of Stamford, Conn.-based company's merger with Sunteck Transport Co. Inc. The closing is subject to the fulfillment (or waiver by Sunteck) of certain conditions, including AutoInfo's obligation to secure a commitment for $2 million in debt or equity financing prior to closing. (ABI 02-Aug-2000) BREED TECHNOLOGIES: Bondholders Sue AlliedSignal, et al., to Recover Losses --------------------------------------------------------------------------- Bondholders of bankrupt Breed Technologies Inc. on Monday sued AlliedSignal Inc., now Honeywell International Inc., and others for alleged losses of $130 million, possibly setting the stage for a bankruptcy court battle with Breed's secured creditors, according to a Reuters report. In papers filed in the U.S. District Court in Delaware, eight fixed-income funds, including American High-Income Trust, The Bond Fund of America and Capital Guardian U.S. Fixed-Income Master Fund, alleged that "AlliedSignal pulled the wool over Breed's eyes" when it sold its Safety Restraints System Division (SRS) to Breed in October, 1997 for $710 million. To finance the acquisition, Breed sold 9.25 percent senior subordinated notes due 2008. Plaintiffs, who bought about $160.0 million par amount of the bonds in initial ($55.9) and secondary ($103.7) offerings, allege they were given "false" historical financials for SRS and projections that "were wildly and intentionally overstated." According to the court papers, Breed learned "it had been defrauded" in July 1998, and bondholders claim they did not learn of any problems for more than a year after that in August 1999. After failing to meet interest payments owed to its banks and bondholders, Breed, a Lakeland, Fla.-based manufacturer of automotive safety devices such as air bags, filed for chapter 11 in Delaware on Sept. 20. In addition to AlliedSignal, defendants include Breed's underwriters, NationsBanc Montgomery Securities LLC and Prudential Securities Inc., and three directors of Breed including the widow of the founder. Breed Technologies is not a defendant. (ABI 02-Aug-2000) DIAGNOSTIC HEALTH: Joint Plan Proposes Transfer of 100% Equity to Unsecureds ---------------------------------------------------------------------------- Diagnostic Health Services and its debtor-affiliates present their Disclosure Statement in support of a joint plan of reorganization by to the bankruptcy court for approval on August 22, 2000 at 1:45 p.m. The joint plan is premised upon the substantive consolidation of the debtors. The Reorganized Company will have the responsibility for making all distributions required to be made under the joint plan. Under the joint plan, allowed secured claims shall receive deferred cash payments equal to the allowed amount of such holder's claim, plus interest at the contract rate. The payments rare to be made over the course of seven years on a quarterly basis with interest. The first payment shall be made on the Effective Date. The holders of the Allowed secured Claims retain their liens on their collateral until their claims are paid in full. Class 3 under the plan consists of unsecured claims. Under the joint plan, holders of allowed unsecured claims will receive Equity Interests in New Common Stock of New DHS. Each holder of an Allowed Unsecured Claim will specifically receive its pro rata ownership of 100% of the Issued New Common Stock of New DHS calculated based upon the total amount of all Allowed Unsecured Claims. 100% of the equity of New DHS will be distributed to holders of Allowed Class 3 claims. The Debtors estimate that the total unsecured claims will exceed $29 million and there is insufficient value to pay these claims. Accordingly, no distributions to holders of Common Sock Equivalents or Common Stock Interests will be made under the joint plan. The joint plan provides that stock interests will be cancelled and that the unsecured creditors receive 100% of the stock of the reorganized company. GENESIS HEALTH: Healthcare Resources Unit Files Chapter 11 ---------------------------------------------------------- Genesis Health Ventures Inc.'s wholly-owned Healthcare Resources Corp. unit joined its eldercare provider parent in bankruptcy by filing chapter 11 in Wilmington, Del., late Monday, according to a newswire report. The Willowgrove, Pa., nursing center listed assets of $11.1 million and liabilities of $31.5 on its bankruptcy petition. The company's largest unsecured creditor is listed as Sysco Food Services Inc., which holds a $26,583 claim against Healthcare Resources. Genesis and Multicare Cos., which is 43.6 percent owned by Genesis, filed separate bankruptcy petitions for themselves and numerous affiliates on June 22. Genesis owns 311 nursing homes and manages 141 Multicare facilities all under its Genesis ElderCare brand name. (ABI 02-Aug-2000) GIBBS CONSTRUCTION: Texas Court Okays Debtors' Solicitation of Acceptances -------------------------------------------------------------------------- Gibbs Construction, Inc. (GBSE) received permission to solicit acceptances of its Plan of Reorganization from a Bankruptcy Court in Texas. Gibbs filed a Petition pursuant to Chapter 11 of the United States Bankruptcy Code on May 20, 2000 after suffering heavy losses on hotel construction projects. The Company has continued to operate in its normal course of business pending approval of its Plan of Reorganization. The Company's plan centers around an agreement with its major creditor whereby a portion of the creditors debt will be converted to equity and an asset acquisition and subsequent consolidation with an Atlanta based construction services company. A copy of the Plan and Ballot is being mailed to Shareholders and Creditors. Gibbs plans to continue to operate in the construction and construction services sector as a Public Company. It is expected its stock will trade on the OTC (Bulletin Board). Company President, Danny Gibbs, stated, "I believe most of our creditors and shareholders will recognize our plan affords the best possible alternative for recovery and preservation of value and will vote in favor of our plan." Additional information and a copy of the company's Plan of Reorganization can be found on its corporate Web site at http://www.gibbsconstruction.com. Gibbs is a general contractor providing construction services for retail, office, warehouse, and specialty real estate. Gibbs is currently headquartered in the Dallas-Fort Worth Metroplex and its stock was formerly traded on the Nasdaq Exchange (GBSE). GRAHAM-FIELD: Receives $21.5 Million Offer for Stock in Prism Enterprises ------------------------------------------------------------------------- Graham-Field Health Products, Inc. and Prism Enterprises, Inc., signed a Letter of Intent with Prism Acquisition Corp. providing for the sale of all the issued and outstanding stock in Prism Enterprises. Prism Acquisition offers $21.5 million, in cash, less certain adjustments. Graham and Prism Enterprises are convinced that Prism Acquisition is advancing the highest and best offer but, to be sure, the offer will be subjected to a competitive bidding process. If Prism Acquisition's bid is topped by a competitive bidder, the Debtors agree to pay a $1,000,000 Break-Up Fee. GRAHAM-FIELD: Committee Interposes Limited Objection to Prism Stock Sale ------------------------------------------------------------------------ The Official Committee of Unsecured Creditors of Graham-Field Health Products, Inc. and its affiliated debtors interposes a limited objection and reservation of rights to the approval of the sale of the outstanding stock of Prism Enterprises. The Committee, the debtors and the Indenture Trustee for the Notes are endeavoring to resolve issues with respect to the use of the proceeds of the Prism Sale. The Committee does not object to the purchase price, although clearly disappointed the number wasn't higher, so long as the court finds that Prism is properly exposed to the market. The Committee believes that with respect to the application of the proceeds of the sale, the Noteholders can be given protection while the debtors use proceeds to pay down the current DIP financing and utilize the remainder as Cash Collateral on a basis favorable to the debtors, Unsecured Creditors and the Estate. GULF STATES: Debtor Argues that Shared Savings Has No Equity in Equipment ------------------------------------------------------------------------- Gulf States Steel, Inc., of Alabama, debtor, objects to a motion for relief from stay or, alternatively, for adequate protection filed by Shared Savings Contracts, Inc. According to the debtor, SSC is not entitled to relief from the automatic stay because it no longer has an interest in the equipment installed under the Energy Cost Savings Agreement on which SSC bases its claim. Golf States says that the parties never intended for SSC to retain any right in the equipment after the Fee Entitlement Period expired or for SSC to remove any of the equipment. The terms of the Agreement make no provision for the removal of the equipment upon the termination of the contract. Because SSC has no remaining interest in the equipment installed, at least according to the debtor's interpretation of the Agreement, SSC has no basis for requesting relief from the stay or for receiving adequate protection. HEILIG-MEYERS: Continues to Explore Options -- Like a Sale or a Bankruptcy -------------------------------------------------------------------------- Home furnishings retailer Heilig-Meyers Co. (NYSE:HMY) says it is considering a "restructuring or sale of the company" and will "defer debt interest payments while it considers its short- and long-term liquidity needs and evaluates strategic alternatives," according to a report circulated by Reuters. As previously reported in the TCR, the 800-plus store, Richmond, Virginia- based retailer hired Lazard, Freres & Co. LLC to help it "explore strategic alternatives." It sounded like a bankruptcy in the making then, and it sounds many steps closer today. The company now says it will defer its scheduled Aug. 1 interest payments on its MacSaver Financial Services 7.60% unsecured notes due 2007 and its MacSaver Financial Services 7.88% unsecured notes due 2003. Additionally, the Company will defer the Aug. 15 interest payment on its MacSaver Financial Services 7.40% unsecured notes due 2002. Sarah Schafer, writing for the Washington Post observes that as of May 31, the company had $516 million in long-term debt and only $6.5 million in cash on hand. "My guess is that the company will be thrown into bankruptcy," Kenneth Gassman, a retail analyst for Davenport & Co. in Richmond, told Ms. Schafer. Heilig officials would not comment on the possibility of bankruptcy. IRIDIUM: Perhaps a Third Proposal Will be the Charm to Avert De-Orbiting ------------------------------------------------------------------------ Jeff Foust, reporting for SPACE.com, relates that the Bankruptcy Court in Manhattan gave the Iridium satellite venture a week and a half to find a buyer for the company's assets or else face a plan to deorbit its $5 billion network of satellites in space. The decision by the federal bankruptcy court in New York City came after merchant bank Castle Harlan backed out of plans Friday to buy the company's assets, including the more than 70 satellites currently in orbit, for $50 million. "Although Iridium provides a magnificent international point-to-point telephone service, our due diligence and marketing studies were unable to confirm that Iridium would generate even low levels of revenue with a high degree of certainty," Castle Harlan said in a statement. In June the bankruptcy court granted Castle Harlan a 45-day "due diligence" period, during which time the bank investigated Iridium to determine if the company's assets would be worth the $50 million offer it made. Iridium now has until August 9 to try and work out a new deal with Castle Harlan or another company, such as New York-based Venture Partners, which expressed interest in the company earlier this year. If no deal is made by then, Motorola, which operates the satellites for Iridium, will have approval from the court to begin deorbiting Iridium's satellite constellation. "We have a plan in place to decommission the constellation once the deorbiting plan is finalized," Motorola said in a statement on its website. "Details of that plan will be discussed once it is finalized." LAROCHE INDUSTRIES: Proposes $5.6 Million Employee Retention Program -------------------------------------------------------------------- Laroche Industries, Inc., and Laroche Fortier, Inc., seek an order authorizing the implementation of an employee retention, emergence and severance payment program. The purpose of the program is to minimize management and other key employee turnover by implementing a stay bonus program. The program has three principal components: (a) a retention payment program, (b) an emergence payment program, and (c) an executive severance program. The proposed award pay-outs under the program are based on competitive market data compiled by Ernst & Young. The total cost(maximum aggregate retention and emergence payments plus maximum severance cost) associated with the program is estimated to be $5,657,657. The participants in the program have been identified as critical to accomplishing the effective management of the debtors' ongoing operations, the enhancement of employee morale throughout the organization; and the successful emergence from Chapter 11. The program recognizes both the debtors' previous plans in place prior to the Chapter 11 filings, as well as a competitive market analysis of similarly situated companies in Chapter 11. Judge Farnan will entertain the Debtors' Motion at a hearing in Wilmington, Delaware on August 10, 2000 at 11:30 a.m. PARAGON TRADE: Diaper Company Announces Strong Second Quarter Results --------------------------------------------------------------------- Paragon Trade Brands, Inc. (OTC Bulletin Board: PGTR) announced its results for the quarter ended June 25, 2000. Paragon reported net sales for the quarter of $131.7 million compared to $117.8 million for the second quarter of 1999, an increase of 12 percent. Unit sales of infant diapers and training pants for the quarter increased 12 percent compared to the second quarter of 1999. Earnings before interest, taxes, depreciation and amortization and bankruptcy costs (EBITDA), adjusted for non-recurring items, for the second quarter totaled $9.4 million compared to $4.9 million for the second quarter of 1999. Second quarter operating profit, adjusted for non-recurring items, totaled $3.1 million compared to an operating loss, adjusted for non-recurring items, of $6.2 million for the second quarter of 1999. Non-recurring items in 2000 of $3.2 million relate primarily to severance costs to former senior management. In 1999 the non-recurring item relates to plant closure expenses. For the six months ended June 25, 2000, the Company reported net sales of $260.8 million compared to net sales of $244.1 million for the same period last year, an increase of 7 percent. Unit sales of infant diapers and training pants for the six-month period increased 4 percent compared to the first six months of 1999. EBITDA, adjusted for non-recurring items, for the six months ended June 25, 2000, totaled $20.0 million compared to $7.6 million for the same period last year. Operating profit adjusted for non-recurring items, for the six months totaled $7.2 million compared to an operating loss, adjusted for non-recurring items, of $11.9 million for the six months of 1999. Non- recurring items in 2000 of $3.6 million relate primarily to severance costs to former senior management. In 1999 the non-recurring item relates to plant closure expenses. Commenting on the second quarter results, Chief Executive Officer, Michael Riordan said, "The second quarter results reflect the inherent strength of Paragon's business. The combination of increased sales, increased manufacturing efficiencies and reduced SG&A expenditures have contributed to what continues to be a dramatic turnaround in our operations. Although our results were impacted by an unsatisfactory performance in our feminine care and adult incontinence business and non-recurring items, we look forward to a strong second half. Increased distribution to new customers as well as the continued expansion of our training pant sales and destination store brand programs should translate into increasingly positive results for the Company. With six-month EBITDA up more than 163 percent over the prior year and sales up from the first quarter as well as on a year-to-year basis, the strength of our business model is evident. With the consistency of our ongoing cash flow, borrowings under our bank facilities fully repaid and our conservative capital structure, we are extremely well positioned to meet our debt obligations and support the growth and expansion of our business." PHONETEL TECHNOLOGIES: Results of First Post-Emergence Shareholder Meeting -------------------------------------------------------------------------- PhoneTel Technologies, Inc. reported that shareholders at its 2000 Annual Meeting voted to re-elect the five members of the Company's Board of Directors to new terms expiring at the 2001 Annual Meeting. The individuals re-elected are Thomas M. Barnhart, II; John D. Chichester; Eugene I. Davis; Peter G. Graf; and Kevin L.P. Schottlaender. Mr. Chichester also serves as the Company's president and chief executive officer; the others are not employed by the Company. The Company also sought shareholders' approval of three proposals, including an increase in the number of authorized shares of common stock from 15,000,000 to 45,000,000. This proposal passed; however, the other two proposals--to authorize a class of preferred stock and to increase the number of shares of common stock authorized to be issued under PhoneTel's 1999 Management Incentive Plan of Reorganization--both failed. The Company emerged from Chapter 11 protection in November 1999. (New Generation Research 02-Aug- 2000) PREMIER SALONS: Moves to Obtain Limited Post-Petition Financing From Sears -------------------------------------------------------------------------- Premier Salons International, Inc., et al., seeks entry of an order, pursuant to 11 U.S.C. Sec. 364(b), authorizing the debtor to obtain limited post- petition financing from Sears, Roebuck & Co. effective as of May 18, 2000. A hearing will be held in Wilmington, Delaware, on August 7, 2000. Subject to certain terms and conditions, Sears has agreed to lend Premier Salons $118,461 with respect to certain capital improvements at the Sears Salon located at the Market Place Mall, 2000 North Neil St., Champaign, IL. RIDGEVIEW, INC.: Hosiery Company Files for Chapter 11 Protection ---------------------------------------------------------------- Ridgeview, Inc. (Nasdaq-NM: RIDGE) filed a petition for Chapter Eleven Bankruptcy Protection in order to recapitalize the company and reorganize its operations. Hugh R. Gaither (Telephone 828-464-2972), President of Ridgeview, Inc., says that the Newton, North Carolina-based company has a very specific plan of reorganization which addresses bringing cash into the Company now for operations and completely closing the Ladies Hosiery operation and concentrating all efforts and all resources on its sport sock business. In addition, the Company will continue to seek an equity sponsor and a new lender to provide the funding required to exit the bankruptcy proceeding. Ridgeview has already taken steps towards accomplishing this plan. Plans have been completed to close a new factoring arrangement and new lending facilities for the Company's sport sock operations immediately. Last week the Company took steps to close the remainder of its Ladies Hosiery operation, ultimately reducing weekly cash requirements. The division will operate for approximately three weeks to complete customer orders. Finally, the Company will continue to negotiate with potential equity sponsors and new lenders in order to complete the recapitalization process and emerge from the Chapter Eleven proceeding with a much stronger balance sheet. TOKHEIM CORP.: S&P Cuts Debt Rating to "D" With Bankruptcy Filing in View ------------------------------------------------------------------------- Standard and Poors cut Tokheim Corp.'s (OTC BB:TOKME) corporate credit and subordinated debt ratings to "D," or default, after the troubled gasoline pump maker reported a fiscal second quarter loss and said it expects to file for bankruptcy. This news comes by way of Jonathan Stempel, writing for Reuters. The rating cuts by Standard & Poor's came one day after Fort Wayne, Ind.-based Tokheim said it expects to restructure about $504 million of loans and debt as part of a prepackaged plan of reorganization for itself and its U.S. subsidiaries under Chapter 11 of the U.S. Bankruptcy Code. At the same time, the company said it lost $17.7 million, or $1.40 a share, in its fiscal second quarter ending May 31, on revenue of $134.8 million. In the equivalent period in 1999, Tokheim lost $5.4 million on revenue of $177 million. In a press statement, chief executive Douglas Pinner attributed Tokheim's liquidity problems to a ``substantial downturn'' in demand for petroleum dispensing systems resulting from consolidation among big oil companies and the weakening of European currencies against the U.S. dollar. He said the restructuring of Tokheim's U.S. operations will not result in factory closures or job losses, and said when the planned restructuring is completed, ``Tokheim will emerge as a stronger company with a sound financial structure.'' ********* A list of Meetings, Conferences and seminars appears in each Tuesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Bond pricing, appearing in each Friday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* 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, Ronald Ladia, Zenar Andal, and Grace Samson, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *