/raid1/www/Hosts/bankrupt/TCR_Public/000921.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, September 21, 2000, Vol. 4, No. 185
Headlines
ABS BRAKES: After Selling Its Assets, Converts Case to Chapter 7
AMERISERVE FOOD: U.S. Trustee Gets Court Approval to Hire Fee Auditor
BAPTIST FOUNDATION: Files First Amended Joint Liquidating Plan
CARMIKE CINEMAS: Creditors Committee Taps Akin, Gump as Lead Counsel
CENTRAL RESERVE: S&P Affirms Insurer's Bpi Financial Strength Rating
CENTURYTEL INC: Moody's Downgrades Long-Term Debt Ratings to Baa2
CHECKERS DRIVE-IN: Buying Shares, Giant Group Accumulates 8% Equity Stake
COMMERCIAL MORTGAGE: Fitch Affirms Securitized Mortgage Note Ratings
CONTIFINANCIAL CORPORATION: Files Joint Plan of Reorganization
CONTINENTAL GENERAL: S&P Affirms Insurer's BBpi Ratings
CONTINENTAL NORWOOD: Heritage Owner Seeks Chapter 11 Due To Unisys Glitch
COVAD COMMUNICATIONS: Moody's Assigns B3 Rating To $500MM Convertibles
DT INDUSTRIES: Old Senior Management Team is Out as PwC Continues Audits
FINANCIAL CORPORATION: Look for 3rd Payment on 9% Debentures on October 26
GARIBALDI GRANITE: Creditors Accept Company's Repayment Scheme
GENESIS/MULTICARE: Moves To Reject 14 Non-Residential Real Property Leases
GLOBALSTAR TELECOM: Bear Stearns Agrees to Invest up to $105 Million
HARNISCHFEGER INDUSTRIES: Objects Chase Manhattan Claim Nos. 10926 & 10927
HEILIG-MEYERS: Appoints Paige Wilson as Executive Vice President and CFO
HEILIG-MEYERS: DJM & Trammell Crow Join Forces to Sell 300 Properties
HORIZON PCS: Moody's Assigns Caa1 Debt Rating To Senior Discount Notes
ICG COMMUNICATIONS: Implements Cash Conservation & Customer Service Plan
ICG COMMUNICATIONS: Telecom Company Receives Executives' Resignations
INTEGRATED HEALTH: Young, Conaway Discloses Potential Conflicts
JUMBOSPORTS: Selling Jackson, Mississippi, Property for $1.85 Million
LOEWEN GROUP: Docket Suggests No Contract Too Small to Escape Scrutiny
MILLERS INSURANCE: S&P Lowers Financial Strength Rating to Single-Bpi
NATIONAL HEALTH: Moody's Lowers Senior Debt Ratings & Says Review Continues
PAGING NETWORK: Metrocall Says it Has the Financing in Place to Do a Deal
PARAGON TRADE: Determines Feminine Care Business No Longer a Core Strategy
PATHMARK STORES: Supermarket Company Emerges From Prepackaged Bankruptcy
PHOENIX INDEMNITY: S&P Affirms Insurer's Bpi Financial Strength Rating
PRISON REALTY: Announces Key Dates Relative to Merger with Primary Tenant
PRO AIR: Carrier Suspends Operations and Files for Chapter 11 Protection
PROVIDENT AMERICAN: S&P Affirms Insurer's BBpi Financial Strength Rating
ROBERDS, INC.: Gandy Blvd. Property in Tampa, Fla., Fetches $3.1 Million
SAFETY-KLEEN: First Motion To Extend Time To Assume And Reject Leases
SANYO AUTOMOTIVE: Court Orders Cases Converted to Chapter 7 Liquidation
SFAC NEW: Cookie Maker and Affiliates Files Chapter 11 in Delaware
SUN HEALTHCARE: SunPlus Rejects Tujunga Office Lease In Burbank, Calif.
TELLTHEMNOW.COM: Seattle-Based Internet Retailer May Be Facing Bankruptcy
TOKHEIM CORPORATION: Summary of Joint Prepackaged Plan
URANIUM RESOURCES: Arnold Spellun Discloses 9.2% Equity Stake
VIDEOTRON/CF CABLE: Moodys Places Debt Ratings On Review For Downgrade
VIDEO UPDATE: Minnesota Video Retailer and Affiliates Files for Chapter 11
VIDEO UPDATE: Case Summary and 20 Largest Unsecured Creditors
WESTVACO CORPORATION: Moody's Lowers Long-Term Debt Ratings To Baa1
*********
ABS BRAKES: After Selling Its Assets, Converts Case to Chapter 7
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The debtor, ABS Brakes, Inc., filed a motion in the US Bankruptcy Court,
Eastern District of New York to convert its Chapter 11 case to Chapter 7.
ABS is an affiliate of Sanyo Automotive Parts, Ltd. The debtors ceased
operations in July 2000 following the sale of substantially all of Sanyo's
asset to ANG Brake Systems, Inc. The US Trustee has appointed a Committee
of Unsecured Creditors in the debtors' Chapter 11 cases. The Committee has
retained the law firm of Miller, Canfield, Paddock and Stone, PLC.
AMERISERVE FOOD: U.S. Trustee Gets Court Approval to Hire Fee Auditor
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The U.S. Trustee acting in the AmeriServe Food Distribution Inc. (AMSV)
bankruptcy case has won court approval to hire an independent fee auditor
to analyze final fee applications. The scope of the auditors' duties and
compensations weren't available. The trustee stated in the application that
the review of fee applications had become procedurally burdensome after
local rules were recently changed to require professionals to file detailed
fee applications with corroborated invoices.(ABI, 19-Sep-00)
BAPTIST FOUNDATION: Files First Amended Joint Liquidating Plan
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On September 8, 2000, Baptist Foundation of Arizona, together with its
subsidiaries and affiliates, the Official Collateralized Investor Committee
and the Official Unsecured Creditors Committee filed with the Bankruptcy
Court (District of Arizona) their First Amended Joint Liquidating Plan of
Reorganization.
Counsel to Baptist Foundation of Arizona, et al., debtors, is the firm
Squire Sanders & Dempsey LLP, Phoenix, Arizona. Counsel to Arizona Southern
Baptist New Church Ventures, Inc., et al., debtors, is the firm Greenberg
Traurig LLP. The firms Hendrickson & Associates, Tempe, Arizona and Baker &
McKenzie, San Diego, California are counsel to the Official Collateralized
Investors' Committee.
CARMIKE CINEMAS: Creditors Committee Taps Akin, Gump as Lead Counsel
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The Official Committee of Unsecured Creditors of Carmike Cinemas, Inc.,
Eastwynn Theatres, Inc., Wooden Nickel Pub, Inc. and Military Services
Inc., seeks a court order authorizing retention of Akin, Gump, Strauss,
Hauer & Feld, LLP as its lead counsel. Among other things, the Firm will:
* Advise the Committee with respect to its rights, duties and powers
in these cases;
* Assist and advise the Committee in its consultations with the
debtors relative to the administration of these cases;
* Assist the Committee in analyzing the claims of the debtors'
creditors and the debtors' capital structure and in negotiating with
holders of claims and equity interests;
* Assist the Committee's investigation of the acts, conduct, assets,
liabilities and financial condition of the debtors and of the
operation of the debtors' business;
* Assist the Committee in its analysis of an negotiations with the
debtors or any third party concerning matters related to, among
other things, the assumption or rejection of certain leases of non-
residential real property and executory contracts, asset
dispositions, financing of other transactions and the terms of a
plan of reorganization for the debtors;
* Assist and advise the Committee as to its communications to the
general creditor body regarding significant matters in these Cases;
* Represent the Committee at all hearings and other proceedings;
* Review and analyze all applications, orders, statements of
operations and schedules filed with the court and advise the
Committee as to their propriety;
* Assist the Committee in preparing pleadings and applications as may
be necessary in furtherance of the Committee's interests and
objectives.
Fred Hodara, Esq., leads the engagement. The Firm will bill for its
professional services at its customary hourly rates. For partners, between
$260-$575 per hour, for associates and counsel $140-$365 and for
paraprofessionals, $60-$145. Mr. Hodera indicates that he will cap his
hourly billing rate at $500 per hour.
CENTRAL RESERVE: S&P Affirms Insurer's Bpi Financial Strength Rating
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Standard & Poor's affirmed its single-'Bpi' financial strength rating on
Central Reserve Life Insurance Co. (Central Reserve).
Key rating factors include marginal capitalization, poor and volatile
earnings, and a low two-year average ratio of cash inflows to cash
outflows.
Based in Strongsville, Ohio, this company writes mainly group accident and
health insurance. Approximately two-thirds of the company's business lies
within its major states of operations: Ohio, Indiana, North Carolina,
Kansas, and South Carolina. Central Reserve distributes its products
through independent agents and various E-commerce platforms.
In December 1998, the company purchased all the common stock of Provident
American Life & Health Insurance Co. (financial strength rating double-
'Bpi') from Provident American Corp. (Nasdaq:PAMC). Central Reserve is a
subsidiary of Central Reserve Life Corp. (Nasdaq:CRLC), which is owned by
insurance holding company Ceres Group, Inc. (Nasdaq:CERG). The company,
which began operations in 1965, is licensed in 36 states.
Major Rating Factors:
-- Capitalization is marginal, as indicated by a Standard & Poor's
capital adequacy ratio of 53.7%. Total adjusted capital was $23.4
million at year-end 1999 versus $30.7 million in 1998, a decrease of
23.8%. The decline in surplus of $7.3 million from 1998 was caused
by an increase in net unrealized capital losses of $4.4 million, a
loss of $2.0 million in net income, and a negative $1.0 million
change in non-admitted assets.
-- Profitability is poor. The company's time-weighted return on assets
is negative 6.4%. A gain in net income of $19.2 million in 1999 over
1998 was due to improved results for group accident and health,
which had a $17.1 million increase from 1998 in pretax income before
dividends to policyholders.
-- The company's historical return on assets displays high volatility,
which, together with a low two-year average ratio of cash inflows to
cash outflows (96%), is a rating factor. Since 1994, returns have
varied from negative 21.9% to positive 5.6%.
-- The company's geographic diversification is good, with only 29% of
direct business in its largest state (Ohio). However, the company
has high product-line concentration, with more than 95% of its
direct business in group accident and health related lines.
Although the company (NAIC:61727) is a member of the Ceres Group Inc., the
rating does not benefit from any implied group support.
CENTURYTEL INC: Moody's Downgrades Long-Term Debt Ratings to Baa2
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Moody's Investors Service has lowered the long-term debt ratings of
CenturyTel, Inc. to Baa2 from Baa1. Also downgraded is the senior unsecured
debt rating and issuer rating at the Pacific Telecom, Inc. subsidiary to
Baa2 from Baa1. The company's preferred shelf is confirmed at (P)"baa3". At
the same time, Moody's placed a Prime-2 short-term rating on CenturyTel's
newly authorized $1.5 billion commercial paper program. The company expects
to have no more than $500 million in commercial paper outstanding at any
one time, and any issuance under this program will be 100% backed up by
committed bank credit facilities.
These actions reflect the strain on the company's debt protection
measurements following the approximately $1.5 billion cash acquisition of
about 491,000 access lines from the former GTE Corporation (now Verizon) in
4 transactions and the limited opportunities for leverage reduction as the
company executes on the acquisition arm of its growth strategy over the
next several years. Although the company has traditionally shown discipline
in selecting and structuring its acquisitions and investments, Moody's
believes that the rapid consolidation occurring in the rural
telecommunications industry will pressure CenturyTel to accelerate its own
pace of investment, continuing to negatively impact its credit metrics.
Because the new ratings incorporate significant investment and expansion,
the ratings can absorb relatively substantial transactions without further
downgrade. The new ratings also consider the robust cash flow margins at
CenturyTel and the limited wireline competition the company faces in its
operating clusters. These actions complete the review initiated June 30,
1999, when the first transactions were announced. The outlook on the
ratings is stable.
The rating assigned is:
A) CenturyTel, Inc.- short-term debt rating, Prime-2.
The ratings downgraded are:
A) CenturyTel, Inc.- senior unsecured debt to Baa2 from Baa1;
- senior unsecured bank credit facility to Baa2 from
Baa1 and
- shelf registration of senior unsecured debt to
(P)Baa2 from (P)Baa1.
Pacific Telecom, Inc.- senior unsecured debt to Baa2 from Baa1and Issuer
rating to Baa2 from Baa1.
The rating confirmed is:
A) CenturyTel, Inc. - shelf registration of preferred stock, (P)"baa3".
CenturyTel has demonstrated an ability to drive high operating and cash
flow margins out of acquired access lines and is likely to find the
opportunity to add lines to its clusters an attractive investment. Moody's
expects future acquisitions to be largely debt financed as the company has
shown a reluctance to issue equity at current prices in connection with its
transactions, especially at current market valuations. While CenturyTel has
some investments and some unclustered access lines it could sell to raise
capital, proceeds would likely fall short of the capital needed. However,
Moody's believes management will be disciplined in its acquisition choices,
focusing on strengthening its current clusters and possibly creating new
ones, and will structure deals with a focus on preserving the company's
investment grade rating. Moody's expects management will seek to maintain
debt leverage below 3.0x cash flow, though the company may peak above this
level as it executes on its acquisition strategy.
Following the close of the final 2 of the 4 announced transactions, which
Moody's expects to take place shortly, the company will have about 1.8
million access lines, 8 million operated cellular POPs, 9.9 million total
PCS POPs, 12 million LMDS POPs, and a growing base of ISP subscribers which
numbered about 80,500 at the end of the second quarter. CenturyTel aims to
grow in customer mindshare and walletshare, as well as stave off future
competition, by offering bundles of wireline, wireless, long distance, and
Internet services, including DSL. A stated preference for leading with
wireline has contributed to its desire for acquisitions and the roll out of
its edge-out CLEC strategy. Pro forma for the Verizon transactions, local
exchange operations will account for about 70% of consolidated revenues and
cash flow and should continue to produce EBITDA margins over 50%. The CLEC
hopes to leverage CenturyTel's installed asset base, as well as its LMDS
licenses, although investment should be modest. CenturyTel expects its CLEC
operations to lose about $15 million in 2001 and ongoing investment will be
success based. CenturyTel's good service record and continued emphasis on
customer satisfaction should contribute to a continuation of excellent
regulatory relations.
CenturyTel's consolidated wireless subscribers totaled 749,400 at the end
of the second quarter. Wireless operations continue to benefit from robust
demand which is expected to sustain strong subscriber growth. The high
operating leverage of this business is supporting significant earnings and
cash flow contribution to this segment. In the first half of 2000, wireless
operations provided $86 million in operating cash flow at a 40.6% margin.
Declining ARPU and increased sales and marketing costs associated with a
ramp up in net subscriber additions pressured wireless cash flow margins
which were 48% in 1999. CenturyTel has a limited exposure to roaming rate
reductions compared to other rural wireless providers, with only 4% of pro
forma revenues originating from roaming. Though interested in filling out
gaps in its foot-print and possibly partnering with a 700 MHz bidder for a
small geography of any acquired license, CenturyTel is not expected to
itself be an aggressive bidder in the upcoming spectrum auctions and
reauctions.
Initial financing for the acquisitions is initially being supplied by a
bridge loan, $1 billion of which CenturyTel expects to replace with long-
term debt in the coming months. The remaining $500 million CenturyTel plans
to replace with a commercial paper program and asset sales, with a portion
remaining on its credit facilities to be paid down over time.
CenturyTel is headquartered in Monroe, Louisiana.
CHECKERS DRIVE-IN: Buying Shares, Giant Group Accumulates 8% Equity Stake
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Giant Group, Ltd., headquartered in Beverly Hills, California, discloses in
a regulatory filing that it beneficially owns 274,067 shares with sole
voting and dispositive powers, while KCC Delaware Company, its wholly-owned
subsidiary, beneficially owns 483,216 such shares, also with sole voting
and dispositive powers. The amount of common stock held by Giant
represents 2.9% of the outstanding common stock of Checkers, the 483,216
shares held by KCC represent 5.1% of the outstanding common stock of
Checkers.
Giant, through its 100% owned subsidiary Periscope Sportswear, Inc.,
manufactures women and children's clothing. KCC is in the business of
acquiring, holding and disposing of investment securities for its own
account. Burt Sugarman, David Gotterer, Terry Christensen, David Malcolm
and Jeffrey Rosenthal are the directors of Giant. Burt Sugarman and David
Gotterer are the directors of KCC.
On August 29, 2000, KCC acquired 251,469 Checkers shares from Santa Barbara
Restaurant Group for consideration consisting of 1,005,877 shares of Santa
Barbara. The Santa Barbara shares were recorded as marketable securities
and were included in KCC's current assets. Both Giant and KCC hold their
stock for investment purposes. KCC acquired the Checkers stock from Santa
Barbara in order to increase its investment in Checkers at an attractive
price.
COMMERCIAL MORTGAGE: Fitch Affirms Securitized Mortgage Note Ratings
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Commercial Mortgage Acceptance Corp., commercial mortgage pass-through
certificates, Series 1998-C2, $419.5 million Class A-1, $837.8 million
Class A-2, $671.1 million Class A-3 and interest-only Class X are affirmed
at 'AAA' by Fitch.
In addition, the following classes are also affirmed:
a) the $144.6 million Class B at 'AA',
b) the $173.5 million Class C at 'A',
c) the $173.5 million Class D at 'BBB',
d) the $43.4 million Class E at 'BBB-',
e) the $21.7 million Class G at 'BB',
f) the $36.1 million Class H at 'BB-',
g) the $65.1 million Class J at 'B',
h) the $21.7 million Class K at 'B-', and
i) the $21.7 million Class L at 'CCC'.
The $122.9 million Class F and the $43.4 million Class M are not rated by
Fitch. The affirmations follow Fitch's annual review of this transaction,
which closed in September 1998.
The certificates are currently collateralized by 501 multifamily and
commercial loans. By outstanding balance, the pool consists of mostly of
multifamily (30%), office (23%), retail (17%), hotel (10%) and mobile home
parks (10%) properties. The properties are located in 36 states and the
District of Columbia with concentrations in California (14%), New York
(11.4%), Texas (8%), Illinois (8%) and New Jersey (6%). The majority of the
loans mature in 2007 and 2008 (57.8%). There are nine loans, representing
0.9% of the pool, secured by credit tenant leases (CTL).
As of the September 2000 distribution date, the transaction's aggregate
principal balance has decreased 3% from issuance. The master servicer,
Midland Loan Services, collected approximately 89% of year-end 1999
operating statements. For those loans that reported financials, the
weighted-average debt service coverage ratio (DSCR) was 1.50 times (x)
compared to 1.36x at issuance. There are currently ten loans in special
servicing (3%), thee loans on Midland's watch list (0.3%) and seven
delinquent loans (1%) including three loans in special servicing. Fitch
identified 26 loans of concern, including loans on Midland's watch list,
delinquent loans, loans in special servicing and other loans with low
DSCR's, totaling 4.3% of the pool.
A stress scenario was run in which all 26 loans were assumed to default at
various loss rates. In addition, Fitch included a percentage of those loans
that did not report year-end 1999 financial statements in the default
analysis. These loans combined with the loans of concern. The resulting
subordination levels were sufficient to affirm the current ratings. Fitch
will continue to monitor this transaction as surveillance is ongoing.
CONTIFINANCIAL CORPORATION: Files Joint Plan of Reorganization
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ContiFinancial Corporation and Affiliates filed a Joint Plan of
Reorganization and related Disclosure Statement with the U.S. Bankruptcy
Court. The Company has been operating under Chapter 11 protection since
May 17, 2000. (New Generation Research, Inc. 19-Sep-00)
Contifinancial specializes consumer and commercial finance company that
engage in the business of purchasing, servicing, selling and originating
home equity loans secured primarily by first liens on one to four family
residential properties.
CONTINENTAL GENERAL: S&P Affirms Insurer's BBpi Ratings
-------------------------------------------------------
Standard & Poor's affirmed its double-'Bpi' financial strength rating on
Continental General Insurance Co. (Continental General).
The rating reflects the company's weak but improving capitalization, offset
by poor profitability and instability in its premium revenue.
Based in Omaha, Neb., this company writes health and life insurance
products for the senior market, including long-term care, Medicare
supplement, senior life and annuity products, as well as major medical
plans. The company's major states of Florida, Georgia, Nebraska, Minnesota,
and Illinois account for nearly half of its business. The company's
products are distributed primarily through brokers.
Continental General was acquired by Ceres Group Inc. (NASDAQ:CERG) from
Western-Southern Life Assurance Co. (financial strength rating triple-'A')
effective Feb. 1, 1999.
The company, which began operations in 1961, is licensed in 49 states, the
District of Columbia, and the U.S. Virgin Islands.
Major Rating Factors:
-- Capitalization improved from 1998 but remains weak, as indicated by a
Standard & Poor's capital adequacy ratio of 81.0%. Total adjusted
capital was $36.8 million at year-end 1999 versus $40.5 million in
1998, a decrease of 9.0%. The decline in surplus of $3.5 million
from 1998 was caused by a special $22.5 million dividend at
acquisition and a negative $3.4 million change in all other, offset
by $15.0 million in net income and a favorable $7.4 million change
in reinsurance. Following the Ceres Group's acquisition of Pyramid
Life Insurance Co. (financial strength rating single-'Api') in July
2000, it is expected that Continental General's capital position
will improve further.
-- Profitability is poor. The company's time-weighted return on assets
is 0.3%. Furthermore, the company has very volatile earnings with
respect to its current capital adequacy ratio, a limiting factor.
Since 1994, returns have varied from negative 2.0% to positive 2.6%.
However, profitability did improve in 1999 (positive 0.8% ROA) from
the negative returns of 1997 and 1998.
-- The company has displayed historical instability in its premium
revenue, which, in the context of its 127.8% liquidity ratio, is
also a limiting factor. Annual changes in premium revenue have
varied from negative 35.7% to positive 22.1% since 1995. The drop of
35.7% in 1999 was due to the company's ceding of $80.9 million in
accident and health premiums to Hannover Life Reassurance Co. of
America (financial strength rating single-'Api') effective February
1, 1999 as partial funding for its acquisition by Ceres Group Inc.
The treaty provided an initial pretax ceding allowance of $13
million, with the balance recognized over the duration of the
underlying block of business.
-- Continental General's geographic diversification is very good, with
only 16% of direct business in its major state of Florida. However,
the company has high product-line concentration, with more than 80%
of its direct business in individual accident and health related
lines.
The company (NAIC: 71404) is rated on a stand-alone basis, without implied
support from the Ceres Group Inc. The company is currently a wholly-owned
subsidiary of Central Reserve Life Corp. (Nasdaq: CRLC)
CONTINENTAL NORWOOD: Heritage Owner Seeks Chapter 11 Due To Unisys Glitch
-------------------------------------------------------------------------
New Jersey-based Continental Norwood Holdings, Inc., The Record reports,
was forced to file for bankruptcy protection after cash flow tightened when
a computer glitch in Unisys Corp. delayed $350,000 of Medicare
reimbursements. Unisys, which is a computer manufacturing and consulting
company handles New Jersey's Medicaid reimbursement program. "The company
is not bankrupt," said Patricia Gitt, a Continental spokeswoman. "The
Chapter 11 was done to protect the company until the problem is worked
out."
According to Susan Beck, Unisys spokesperson, said her company was unaware
of the problem at Heritage and records reveal there were "substantial"
reimbursements to Heritage in 1999 and 2000.
COVAD COMMUNICATIONS: Moody's Assigns B3 Rating To $500MM Convertibles
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Moody's Investors Service has assigned a B3 rating to Covad Communications
Group, Inc.'s proposed $500 million convertible senior notes, due 2005.
Moody's has confirmed the existing B3 ratings on the company's $425 million
of 12% senior notes due 2010, its $215 million of 12/1/2% senior notes due
2009,and its $138 million senior discount notes due 2008. Moody's has also
confirmed the B3 senior implied rating and B3 unsecured issuer rating.
The ratings recognize risks, which include those typical for a
communications company in the early phase of its operations, including the
rapid build-out of a national network. Additional risks include the
continued development of demand from the end-user market; a dependency on
third-parties to sell the service; and a focus on a single technology,
which is not yet mature. The rating focuses also on certain strengths
including strong experienced management, good access to capital, a good
capital structure, and successful business execution to date.
Moody's expects that the company will need to raise additional funding in
the future in order to complete its significant network build-out program,
moreover positive EBITDA is not anticipated in the intermediate term.
However, the recently announced agreements with SBC Communications,
including a $600 million resale revenue contract and a $150 million direct
investment (representing an approximately 6% ownership interest) in Covad,
provide some validation of Covad's business model by a leading
telecommunications operator.
The convertible senior notes are being sold in a privately negotiated
transaction without registration under the Securities Act of 1933 (the
"Act") under circumstances reasonably designed to preclude a distribution
thereof in violation of the Act. The issuance has been designed to permit
resale under Rule 144A. Reviewing the structural aspects of the proposed
convertible notes, the issuer is a holding company and therefore the debt
would be structurally subordinated to any debt issued by the operating
companies. Also, in contrast to the existing senior notes, the convertible
notes are not subject to financial covenants.
Covad is headquartered in Santa Clara, California.
DT INDUSTRIES: Old Senior Management Team is Out as PwC Continues Audits
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DT Industries, Inc. (Nasdaq: DTIIE) announced a restructuring of its senior
management team that takes effect immediately. James J. Kerley, the
company's Chairman of the Board, has been appointed as the company's Chief
Executive Officer. In 1993, Mr. Kerley served as interim President and
Chief Executive Officer of Rohr, Inc. in a similar restructuring situation.
He continued as Chairman of the Board until he retired in 1994. During his
business career, he was Vice Chairman, Chief Financial Officer and a
Director of Emerson Electric Co., and Chief Financial Officer and a
Director of the Monsanto Company and TransWorld Airlines, Inc. The
company's President and Chief Executive Officer, Stephen J. Gore, has been
reappointed President and Chief Operating Officer and, as announced
previously, is acting President of the company's Packaging Group.
John F. Schott, President of the Assembly and Test sector of the company's
Automation Group, is now President of the entire Automation Group. In
conjunction with these changes, the company announced that it has
temporarily frozen capital expenditures and will promptly implement expense
reduction measures throughout the company.
In other matters, the company announced that the investigation of the
overstatement of certain asset accounts at Kalish Inc., the company's
wholly-owned subsidiary headquartered in Montreal, Canada, is expected to
be completed within the next few weeks. As part of the investigation, the
company is conducting a further review, and PricewaterhouseCoopers, the
company's independent auditors, has been authorized to perform procedures
to determine whether similar issues exist at any of its other subsidiaries.
As a result of such review and procedures, an overstatement of certain
asset accounts has been identified at Sencorp Systems, Inc., the company's
wholly-owned subsidiary headquartered in Hyannis, Massachusetts. The
company is working diligently with PricewaterhouseCoopers to quantify the
impact of this overstatement. Pending the analysis of these discrepancies
and their cause, the senior financial officer of Sencorp has been placed on
administrative leave.
The company also announced that a Special Committee of the Board of
Directors (the "Committee"), consisting of all of the company's outside
directors, has considered and rejected each of the proposals set forth in
the Schedule 13D/A filed with the Securities and Exchange Commission on
September 11, 2000 by Robert W. Plaster, Stephen R. Plaster and Larry Weis
(collectively the "Plaster Group"). The Committee does not believe it would
be in the best interest of all of the company's shareholders to, in effect,
hand control over the Board of Directors and management of the company to
the Plaster Group, which owns approximately 11% of the company's stock,
particularly in light of the arrangements proposed by the Plaster Group.
DT Industries, Inc. is a leading designer, manufacturer and integrator of
automated production systems used to assemble, test or package industrial
and consumer products. The company also produces precision metal
components, tools and dies for a broad range of industrial applications.
FINANCIAL CORPORATION: Look for 3rd Payment on 9% Debentures on October 26
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Airland Corporation, as the distribution agent for the holders for the 9%
Convertible Subordinated Debentures of Financial Corporation of Santa
Barbara due 2012, announced that it has established a special payment date
of October 26, 2000, for the third payment on the Debentures pursuant to a
Chapter 11 Plan of Reorganization of Financial Corporation of Santa
Barbara, Debtor, confirmed by the United States Bankruptcy Court for the
Central District of California (Case No. LA90-23257- NRR). The special
record date for determining Debentureholders entitled to receive such
payment is October 2, 2000. On the Payment Date, the Agent will distribute
an aggregate amount of $50.00 per each $1,000 par value of outstanding
Debentures to the registered owners of the Debentures as of the Record
Date. This payment represents the third distribution of monies by the
Agent since the Plan was confirmed on March 31, 1995.
In order to receive a distribution on the Payment Date, Registered Owners
must physically present certificates representing the Debentures to the
Agent so that it may affix certain legends and an allonge thereto
indicating that a payment has been made. Debentures surrendered for payment
will be returned to the Registered Owners, together with payment of the
distribution amount at the return address indicated by such Registered
Owner or, in the absence of any such address, to the address of such
Bondholder as shown on the records of the Trustee on the Record Date.
Debentures should be surrendered for payment, by mail or hand delivery at
the following addresses:
Mail Delivery:
Airland Corporation
P.O. Box 2903
Mobile, Alabama 36602
Attn: Matthew Metcalfe
Physical Delivery:
Airland Corporation
5 Dauphin Street, Suite 101
Mobile, Alabama 36652
Attn: Matthew Metcalfe
It is suggested that if Debenture certificates are not surrendered in
person, they should be sent by certified or registered mail, return receipt
requested, or some other secure means.
Registered Owners should not send their Debenture at this time. On October
6, 2000 a formal distribution notice, instructions and a transmittal form
will be sent to each registered Debenture holder.
The Failure of a Registered Owner to present its Debenture Certificate for
payment or to cash a distribution check within 180 days of the Payment Date
will result in a forfeiture of this distribution pursuant to Section 4.3 of
the Plan of Reorganization.
The Agent will make payment to the order of each Registered Owner exactly
as its name (or names) is (are) shown on the face of the Debenture
certificate. Consequently, if any Debenture or denomination thereof is
transferred and registered in the name of a subsequent holder after the
Record Date and before presentation for payment, the Agent, upon
presentation, will not make payment to the person(s) shown as Registered
Owner(s) on the Record Date but rather will make payment to the person(s)
in whose name(s) the Debenture certificate is (are) registered.
GARIBALDI GRANITE: Creditors Accept Company's Repayment Scheme
--------------------------------------------------------------
The proposal of Garibaldi Granite Group Inc. (GGGI) was accepted at the
general meeting of GGGI's ordinary unsecured creditors held on Sept. 8,
2000, pursuant to the Bankruptcy and Insolvency Act.
Under the terms of the proposal, which remains subject to the approval of
the Supreme Court of British Columbia in bankruptcy:
- preferred claims of the Crown, consisting of moneys owning to Revenue
Canada for taxation withholdings and estimated by GGGI to be $250,000,
will be paid within the time frames permitted under the act or as
otherwise may be arranged with the Crown;
- preferred claims of employees or former employees of GGGI for
compensation covered by paragraph 136(1)(d) of the act, if any, will be
paid within the time frames permitted under the act;
- claims of unrelated ordinary unsecured creditors, consisting of trade
payables estimated at $210,000, provincial sales tax estimated at
$235,000, and goods and services tax estimated at $35,000 will be paid
as follows:
* three months after court approval, an amount equal to the lesser
of each unsecured creditor's claim or $300;
* 12 months after court approval, an amount equal to 25 per cent of
the unsecured creditors' claims;
* 24 months after court approval, an amount equal to 25 per cent of
the unsecured creditor' claims; and
* 36 months after court approval, an amount equal to 25 per cent of
the unsecured creditors' claims.
- four of GGGI's related unsecured creditors have agreed to defer and
subordinate claims totalling $2,410,994, including $1,566,956 owing to
the corporation and $623,533 owing to Garibaldi Granite Inc., until the
secured, preferred and unsecured creditors have been paid; and
- the trustee under the proposal, Abakahn & Associates Inc., will be
paid all proper fees and expenses, including legal costs, in priority
to all claims of the preferred creditors and the unsecured creditors.
Under the terms of the proposal, claims of secured creditors are to be
paid in accordance with present arrangements existing or as may be
arranged from time to time between GGGI and its secured creditors.
However, in order to facilitate the proposal, Forest & Marine Financial
Limited Partnership, GGGI's principal secured creditor, has agreed to a
restructuring of the approximately $1.9-million in secured debt under
promissory notes executed by GGGI, Garibaldi Granite Inc. and the
corporation. Forest holds security against all of GGGI's present and
after acquired property pursuant to a mortgage and assignment of rents
dated April 4, 1997, and certain related loan documentation. Under the
terms of the restructuring agreement among Forest, GGGI, Garibaldi
Granite Inc. and the corporation, dated Aug. 17, 2000, the debt is to be
repaid over 7.5 years, as follows:
-- between July 15, 2000, to Jan. 15, 2001, interest only is to be paid
on a monthly basis (approximately $17,360 per month based on
Interest rates in effect on the date of the restructuring
agreement); and
-- between Feb. 15, 2001, to Jan. 15, 2008, principal payments of
$23,009 per month will apply, plus interest.
In addition, Sea to Sky Rock & Gravel Ltd., a company affiliated with
Garibaldi Granite Inc., has provided a limited recourse guarantee to
Forest as further security for the Forest debt, together with collateral
security charging Sea to Sky Rock & Gravel Ltd.'s interest in certain
mineral claims.
GGGI's other secured creditors hold security in the form of capital
leases over certain pieces of equipment and automotive equipment. GGGI
is paying these secured creditors in the normal course of business.
The corporation will continue to endeavour to preserve and maximize
the value of its 50-per-cent interest in GGGI by providing
administrative assistance as well as sales and marketing support. The
corporation will also pursue avenues for further financial support.
GENESIS/MULTICARE: Moves To Reject 14 Non-Residential Real Property Leases
--------------------------------------------------------------------------
Pursuant to section 365(a) of the Bankruptcy Code, Genesis Health Ventures,
Inc., sought and obtained authorization to reject leases and subleases for
nonresidential property because the Debtors no longer require the related
office space due to the restructuring and consolidation of certain of their
operations. In addition to seven Vacant Premises Leases relating to office
space, there are
(a) six leases relating to properties to be vacated:
(i) the Romeoville Lease, relating to property at Care4, LP lease in
Romeoville, illinois, to be vacated on August 15, 2000;
(ii) (a) the Salisbury Lease, relating to property for Professional
Pharmacy Services, Inc. in Salisbury, Maryland,
(b) the Eldersburg Lease, relating to property at Eldersburg,
Maryland
(c) the Oxen Hill Lease, relating to property at Oxen Hill,
Maryland to be vacated on August 31, 2000;
(iii) the Naugatuck Lease, relating to property for the Genesis
Eldercare Home Care Services, Inc. lease in Naugatuck,
Connecticut to be vacated on September 1, 2000; and
(iv) the Agawam Lease, relating to property for the Genesis Health
Ventures of Massachusetts, Inc. in Agawam, Massachusetts, to be
vacated on October 1, 2000; and
(b) The Beachwood Lease and Subleases taken up by Asset Acceptance Corp.
and Sam L. Glazer on July 27, 1999 relating to property at CompuPharm
Ohio Pharmacy, Inc. in Beachwood.
The rejection will be effective:
(1) immediately, with respect to the Vacant Premises Leases, the
Beachwood Lease and the Subleases;
(2) August 15, 2000, with respect to the Romeoville Lease;
(3) August 31, 2000 with respect to the Salisbury Lease, the Eldersburg
Lease and the Oxen Hill Lease;
(4) September 1, 2000 with respect to the Naugatuclc Lease;
(5) October 1, 2000 with respect to the Agawam Lease.
(Genesis/Multicare Bankruptcy News, Issue No. 4; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLOBALSTAR TELECOM: Bear Stearns Agrees to Invest up to $105 Million
--------------------------------------------------------------------
Globalstar Telecommunications Limited announced that it has entered into a
purchase agreement with Bear Stearns, under which Bear Stearns has agreed
to purchase, subject to certain conditions and over several tranches, up to
$105 million of shares of GTL common stock. Bear Stearns will sell the
shares of common stock it purchases directly to certain investors or in the
market. The purchases will be made at prices based upon the market prices
at the time of each tranche.
Globalstar Telecommunications Limited will use the proceeds from the sales
to purchase partnership interests in Globalstar, L.P., which, in turn, will
use the proceeds for general corporate purposes including capital
expenditures, operations (including marketing and distribution of phones
and services) and interest expense.
Globalstar Telecommunications Limited is a general partner of Globalstar,
L.P., which has recently commenced operations of a global
telecommunications network. Globalstar Telecommunications Limited operates
as a holding company to permit public equity ownership in Globalstar, L.P.
Globalstar, L.P. owns and operates a satellite constellation that forms the
backbone of a global telecommunications network designed to serve virtually
every populated area of the world.
HARNISCHFEGER INDUSTRIES: Objects Chase Manhattan Claim Nos. 10926 & 10927
--------------------------------------------------------------------------
The Chase Manhattan Bank has filed two proofs of claim:
* Claim No. 10926 against Joy Technologies, Inc.; and
* Claim No. 10927 against Harnischfeger Industries, Inc.
The Debtors note that these two proofs of claim are identical. By filing
the objection, the Debtors seek to properly allocate liability for these
claims between Joy and HII and object to the bases for Chase's claims.
Claims under the Revolver
As this relates to the Revolving Credit Agreement dated October 17, 1997
among Chase, as lender and administrative agent, various banks and HII,
the Debtors contend that any such claims are assertable against HII only
and belong to Claim No. 10927 but must be disallowed respect to Claim No.
10926.
Claims under the Guarantee
By way of the Deed of Guarantee dated September 23, 1997, Joy guaranteed
the obligations of its subsidiary, Dufcorp Pty Limited under the Loan
Agreement dated September 22, 1997 among Dufcorp, the lenders and Chase
Securities Australia Limited, as agent. Therefore, the Debtors contend,
claims properly assertable under the Guarantee are assertable only against
Joy under Claim No. 10926 but must be disallowed with respect to Claim No.
10927. Moreover, the Debtors make it clear that the contingent
unliquidated claim under the Guarantee should be reflected on the database
as a contingent claim for Claim No. 10926, but disallowed for Claim No.
10927.
Claims Based on L/C Agreements
The Debtors submit that any claims properly assertable under the L/C
Agreements are assertable against HII only and thus belong in Claim No.
10927 but must be disallowed with respect to Claim No. 10926. This applies
also to Chase's claim of $40,924,253 as a contingent liability of the
Debtors under the L/C Agreements with respect to the outstanding letters
of credit and $34,733 with respect to related fees.
Setoff
Chase acknowledges that its claims are subject to a setoff of $4,300. The
Debtors submit that the right to this setoff belongs to Joy, and such
setoff should therefore be made against Claim No. 10926.
Fees and Expenses
Chase claims that it is owed $216,952 in professional fees and expenses,
and $8,731 in travel expenses. The Debtors note that neither the proofs of
claim, nor their attachment(s) show whether these fees and expenses are
asserted under the Revolver or under the Australian Credit Agreement. In
this circumstance, the Debtors object to this portion of Chase's claim in
both Claim Nos. 10926 and 10927 until Chase provides the Debtors with
documentation that will enable the Debtors to make this determination.
Recording Related to Claim No. 10927
The Debtors assert that this should be reflected on the claims database.
Specifically,
(a) $49,484 should be reflected as a fixed liquidated liability on
account of a portion of a letter of credit that has been drawn;
(b) the contingent portion should be reduced to $30,724,956 because
several letters of credit in the aggregate amount of $9,917,873
have been either canceled or have expired by their own terms, and
(c) $34,733 with respect to the related fees should be reflected on the
database as subject to further reconciliation.
(Harnischfeger Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
HEILIG-MEYERS: Appoints Paige Wilson as Executive Vice President and CFO
------------------------------------------------------------------------
Heilig-Meyers Company (OTC Bulletin Board: HMYRQ) announced that Paige H.
Wilson has been appointed to the position of Executive Vice President and
Chief Financial Officer. Ms. Wilson has been with the Company approximately
five and a half years and had previously held the position of Senior Vice
President and Treasurer. Prior to her employment with Heilig-Meyers Ms.
Wilson spent several years with Dominion Resources where she held a number
of management positions in finance and treasury. Donald S. Shaffer,
President and Chief Executive Officer stated, " Ms. Wilson is a talented
executive whose wealth of experience in corporate finance will be a
valuable asset as the Company works to reorganize its financial affairs."
The Company filed Chapter 11 petitions in the U.S. Bankruptcy Court for the
Eastern District of Virginia in Richmond for Heilig-Meyers Company, Inc.,
on August 16, 2000.
HEILIG-MEYERS: DJM & Trammell Crow Join Forces to Sell 300 Properties
---------------------------------------------------------------------
Heilig-Meyers Company (NYSE: HMY), the nation's largest retailer of home
furnishings and related items, announced that it is offering leases and
fee owned properties for sale in 300 prime locations in 26 states and that
it has appointed a joint venture of DJM Asset Management, LLC and Trammell
Crow Company (NYSE: TCC) as its agent to manage the disposition of the
properties.
As announced earlier, Heilig-Meyers is closing the 300 stores as part of
its Chapter 11 Bankruptcy reorganization plan filed in August.
"Buying real estate out of a bankruptcy situation such as this provides a
singular opportunity for other retailers and investors to acquire
additional stores very quickly," said Andy Graiser, a principal of DJM.
"These particular locations are very attractive and we expect them to move
quickly." "We expect three different auctions dates to be set by the
bankruptcy court, but we are accepting bids right now," said Michael Scimo
of Trammell Crow. "We welcome any and all inquiries."
Trammell Crow and DJM will market 29 fee owned properties and 271
leaseholds in freestanding and strip center stores in 26 states, ranging in
size from 9,000 to 60,000 square feet, and two distribution centers, from
286,000 to 400,00 square feet. Additional information including store
photos, location maps and lease abstracts will be available at the joint
venture's web site, www.heilig-meyersrealestate.com, beginning on September
20, 2000.
A property package order form can be obtained from the "fax on demand"
service at 619-682-1054. In addition, bid procedures may be requested from
Deb O'Shaughnessy at Trammell Crow at 800-837-2709, and Emilio Amendola at
DJM at 877-447-1050.
About Heilig-Meyers
Heilig-Meyers company is the nation's largest home furnishings retailer
with over 500 stores throughout the United States. The Company also
operates 57 stores as The RoomStore and 3 stores as Homemakers. It has been
operating under bankruptcy protection since August, 2000.
About DJM Asset Management, LLC
DJM Asset Management, LLC, a Gordon Brothers Group, LLC company, assists
retailers nationwide with the evaluation, disposition and acquisition of
retail locations as well as the mitigation of leasehold obligations. DJM
has been involved in disposing and restructuring over 40 million s/f of
retail space and over 4,000 properties during the past four years. Over the
past year, DJM has disposed of over $300 million of retail estate in
Chapter 11. Its web address is www.djmasset.com.
About Trammell Crow Company
Founded in 1948, and headquartered in Dallas, Texas, Trammell Crow Company
(NYSE: TCC) is one of the largest diversified commercial real estate
services companies in the United States. Through 170 offices in the United
States and approximately 7,600 employees, Trammell Crow Company is
organized to deliver management services, transaction services and
development and project management services to both corporate and
institutional customers. TCC uses more than 50 years of real estate
expertise, local market knowledge, and professional resources to provide
the highest value, surplus property solutions to its customers.
The states and the number of stores available in each:
AL - 17, AZ - 10, CA - 81, CO - 1, FL - 16, GA - 25, IA - 6, ID - 2, IL- 5,
IN - 4, KY - 7, LA - 4, MO - 1, MS - 19, MT - 2, NC - 15, NM - 4- NV - 1,
OH - 7, OK - 5, OR - 2, PA - 5, SC - 11, TN - 19, TX - 7, VA - 5, WA - 9,
WV - 6.
One warehouse each in CA and GA.
HORIZON PCS: Moody's Assigns Caa1 Debt Rating To Senior Discount Notes
----------------------------------------------------------------------
Moody's Investors Service assigned a Caa1 debt rating to the pending issue
of Senior Discount Notes due 2010 of Horizon PCS, Inc. with estimated gross
proceeds of $125 million. Moody's also assigned a B1 rating to the $225
million secured credit facility of Horizon Personal Communications, Inc., a
subsidiary of the notes issuer. The senior implied rating is B2, and the
issuer rating is Caa1. The outlook for all these ratings is stable.
The ratings reflect the early stage of the company's PCS operations, the
highly competitive nature of the wireless communications industry, and the
expectation of negative cash flows for at least the next two and a half
years. The ratings also reflect the favorable characteristics of the
company's markets, with good population density as well as a large amount
of highway corridors; the amount of network that Horizon has already built;
the strengths and weaknesses of the issuer's relationship to and agreements
with Sprint PCS; as well as the company's good liquidity position due to
the $126.5 million investment from affiliates of Apollo Management. The
rating on the discount notes is notched down from the senior implied rating
due to their structural subordination to any outstandings under the secured
credit facility. The rating on this bank credit facility, however, is
notched up reflecting its good asset coverage due the amount of coverage
and subscribers Horizon PCS has already achieved and Moody's expectation of
continued successful execution of the company's business plan.
Horizon PCS has agreements to utilize spectrum owned by Sprint PCS that
covers 10.2 million people in three large service areas, making Horizon one
of the largest Sprint PCS affiliates. Horizon PCS will benefit from
significant amounts of roaming traffic from Sprint PCS subscribers from the
nearby markets of Chicago, Cleveland, Buffalo, Philadelphia, and New York.
While Horizon PCS is the sixth Sprint PCS affiliate to tap the public debt
markets, the company has already launched sevice in over 30% of its markets
and attracted over 34,000 subscribers. Under its buildout plan, the company
expects to have launched over 70% of its markets by the end of October.
Horizon PCS benefits from controlling markets with higher population
densities than most other Sprint PCS affiliates and also their proximity to
more and bigger markets that are controlled by Sprint PCS. This should
allow Horizon to quickly attract its own subscribers while also enjoying
plenty of roaming traffic from Sprint PCS customers travelling into its
markets. Horizon PCS also benefits from agreements with an affiliate of CFW
Communications (senior implied B2) to utilize CFW networks in Horizon's
service areas in West Virginia and parts of Virginia covering a total of
3.3 million people. While Horizon pays usage charges to CFW for use of
their networks, Horizon is able to more quickly launch service in these
markets without having to spend significant amounts of capital. Horizon
earns a spread between the per minute rate paid to CFW and the per minute
rate it receives from Sprint PCS whenever Sprint PCS's customers travel
through this territory.
The stable outlook reflects Moody's opinion that upward pressure on the
ratings that could come from continued successful execution of the
company's business plan could be impacted by the consolidation
opportunities that Horizon may pursue among the other Sprint PCS
affiliates. As one of the stronger affiliates, based upon the nature of its
markets and its sound capital structure, Horizon is a logical candidate to
acquire weaker Sprint PCS affiliates that may not be as successful in
building network and acquiring subscribers, or attracting capital. We have
already seen consolidation among the Sprint PCS affiliates with Alamosa
acquiring two smaller affiliates, and we expect there to be more as Sprint
PCS looks to the success of its affiliate base in order to keep its own
customer base satisfied, and the affiliates themselves look to grow and
leverage their achievements in their original markets.
Despite the success that Sprint PCS is enjoying in attracting large numbers
of subscribers to its service thereby lowering the business risk of its
affiliates, Moody's continues to have concerns regarding the asset value
available to bondholders as these Sprint PCS affiliates (with minor
exceptions) do not own their own spectrum. As Horizon PCS nears completion
of its network build, and successfully acquires a substantial number of
subscribers, Moody's will reassess the company's franchise value in
relation to the claims of its bondholders.
Based in Chillicothe, Ohio, Horizon PCS is an affiliate of Sprint PCS
formed to provide wireless service under the Sprint PCS brand in 54 markets
with a total population of 10.2 million.
ICG COMMUNICATIONS: Implements Cash Conservation & Customer Service Plan
------------------------------------------------------------------------
ICG Communications, Inc. announced a revised business plan in order to
conserve cash resources, address serious customer service issues that have
arisen and for other reasons. The revised business plan calls for
controlled expansion, quality of service enhancements and cost savings. The
new plan anticipates that for the remainder of 2000 and in 2001 the Company
will experience reduced capital and corporate expenditures, slower
expansion, significantly lower line installations, lower overhead costs and
significantly reduced revenues and EBITDA. The revised plan anticipates for
the year 2000 revenues of approximately $630 million, EBITDA of
approximately $17 million and capital expenditures (CAPEX) of approximately
$1 billion. Additionally, the revised plan anticipates for the year 2001
revenues ranging from $700 million to $800 million, EBITDA ranging from
$100 million to $150 million and CAPEX ranging from $250 million to $350
million. This compares to prior estimates for 2001 of approximately $1.4
billion in revenue, approximately $350 million in EBITDA and $800 million
in CAPEX.
Recently ICG has experienced significant customer service issues within
certain segments of its Internet Remote Access Service, or IRAS, business
that represents a significant portion of its revenues. These issues have
involved, among other things, network outages, equipment failures and
technical difficulties. As a result, some of its IRAS customers, including
certain principal customers, have advised ICG that it is not in compliance
with its service agreements. Some of these customers have reduced their
commitments to ICG. These customers have indicated that, absent these
issues being resolved, they intend to terminate their contractual
arrangements with ICG. As a result of these quality of service issues, the
Company expects to receive minimal revenues in the third and fourth
quarters of this year from IRAS services with respect to approximately
150,000 installed IRAS lines. Some customers have also significantly slowed
adding lines, which, along with other factors, will significantly adversely
affect the number of lines provisioned by the Company in the third and
fourth quarters of 2000. The Company previously had anticipated net line
additions of approximately 470,000 lines in the third and fourth quarters
of 2000 and approximately 1,000,000 lines in 2001. The revised business
plan provides for net line additions of approximately 125,000 lines during
the second half of 2000 and approximately 500,000 to 600,000 lines for the
year 2001. Most of the new line additions over these periods consist of the
Company's PRI (primary rate interface) and RAS (remote access service)
products, which have not been materially impacted by current customer
service issues.
ICG is currently addressing its customer service issues internally and with
its customers. The Company is currently working together with its suppliers
and vendors to appropriately and quickly resolve all the existing quality
and service issues.
The revised business plan will result in reduced capital spending for the
remainder of 2000 and 2001 and significantly slowed expansion and line
provisioning for the remainder of the year and into 2001. The plan will
also result in significant downward revisions of previously announced
financial expectations for the Company. At this time, it is expected that
for the remainder of the year 2000 and 2001 it will experience
significantly reduced revenues and EBITDA as compared to the amounts
previously anticipated. Previously, ICG had anticipated in excess of $400
million of revenues and approximately $60 million of EBITDA for the third
and fourth quarters of 2000. The revised estimates are for approximately
$300 million of revenues and negative EBITDA of approximately $25 million
during the same period.
The Company's revised business plan reduces capital expenditures in the
year 2001 by approximately $450 million to $550 million, representing a 56%
to 69% reduction. This reduction and other factors will result in
curtailment of certain expansion plans previously announced, including in
the area of the Company's commercial business, it's DSL business and new
markets. The revised business plan includes the completion of the 22
expansion markets during the year 2001, rather than in 2000 as previously
anticipated.
Under the revised business plan, the Company will be in breach of certain
covenants under its $200 million senior secured bank credit facility, in
the absence of obtaining appropriate waivers.
Under the revised business plan, the Company will still need additional
funding. The Company is engaging leading financial institutions to explore
all strategic options involving the Company.
ICG COMMUNICATIONS: Telecom Company Receives Executives' Resignations
---------------------------------------------------------------------
ICG Communications, Inc. (NASDAQ: ICGX) received the resignation of Carl E.
Vogel as Chairman of the Board of Directors. Mr. Vogel also resigned as
Chief Executive Officer of the Company and as an executive officer of all
other subsidiaries of the Company. The Company also received the
resignations of Gary S. Howard and Thomas O. Hicks from the Board of
Directors. No reasons were given for the resignations.
William S. Beans, Jr. will continue as President and Chief Operating
Officer of the Company. Mr. Beans will be responsible for the day-to-day
operations of the Company and will report to an executive committee of the
Board of Directors.
About ICG Communications
ICG Communications, Inc. is a fast growing telecommunications company with
a nationwide voice and data network. The company is a competitive local
exchange carrier (CLEC) and broadband data communications company, as well
as a provider of network infrastructure, facilities and management. ICG
delivers products and services to its customer base of Internet service
providers (ISPs), business customers, and interexchange carriers through
its national network. For more information about ICG Communications
(NASDAQ: ICGX), visit the company's Web site at http://www.icgcom.com.
INTEGRATED HEALTH: Young, Conaway Discloses Potential Conflicts
---------------------------------------------------------------
In a Supplemental Affidavit filed with the U.S. Bankruptcy Court in the
Integrated Health Services, Inc., chapter 11 cases, Robert S. Brady, Esq.,
a Partner in the law firm of Young Conaway Stargatt & Taylor, LLP discloses
that Young Conaway currently represents Paging Network, Inc., et at, Case
No. 00-3098(GMS), in their chapter 11 cases recently filed in Delaware.
PageNet is a creditor holding certain potential claims in the Debtors'
bankruptcy cases. Mr. Brady assures the Court that, to the extent any
dispute arises over PageNet's claims in IHS' bankruptcy cases, Young
Conaway will not handle that dispute for either party.
Mr. Brady also informs the Court that Young Conaway recently hired John D,
McLaughlin, Jr., Esq., who was formerly employed as an attorney advisor
with the Department of Justice in the Office of the United States Trustee
for Region III. Mr. McLaughlin recently completed the Delaware Bar
Examination and began his employment with Young Conaway on July 27, 2000.
(Integrated Health Bankruptcy News, Issue No. 8; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
JUMBOSPORTS: Selling Jackson, Mississippi, Property for $1.85 Million
---------------------------------------------------------------------
JumboSports, Inc. seeks court authority to sell real property located at
2323 Lakeland Drive in Jackson, Mississippi to Lakeland Management Company,
LLC. The debtor has completed its going-out-of-business sale at its
sporting goods store located on the real property.
The total purchase price for the property is $1.85 million. Any competing
bidder must submit a competing bid for the real property by no later than
5:00 PM on September 27, 2000. Any competing bid or topping bid must start
at $1.86 million and all subsequent higher bids must be in incremental
increases of at least $10,000.
LOEWEN GROUP: Docket Suggests No Contract Too Small to Escape Scrutiny
----------------------------------------------------------------------
Mount Auburn Cemetery Company (an affiliate of The Loewen Group, Inc.),
operating a cemetery in Stickney, Illinois, sought and obtained the Court's
authority to reject, pursuant to 11 U.S.C. Sec. 365, a service agreement
with Crown Recycling and Waste Services, Inc. Crown agreed to haul and
dispose of 8 cubic yards of garbage, trash, recyclable materials and other
solid refuse for a 5-year period for a $216 monthly fee, plus $8 for each
additional cubic yard. Mount Auburn found a cheaper trash hauler, so the
burdens of continued performance under the Crown Agreement outweigh the
benefits. (Loewen Bankruptcy News, Issue No. 26; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
MILLERS INSURANCE: S&P Lowers Financial Strength Rating to Single-Bpi
---------------------------------------------------------------------
Standard & Poor's lowered its financial strength rating on The Millers
Insurance Co. (Millers Insurance) (formerly The Millers Mutual Fire
Insurance Co.) and its related pool member, The Millers Casualty Insurance
Co. (TX) (Millers Casualty), to single-'Bpi' from double-'Bpi'.
Key rating factors include continued weak net underwriting results, a
decline in surplus of nearly 70%, stock market equity exposure, volatile
reserve levels, and a marginal Standard & Poor's capital adequacy ratio.
The rating is based on an interaffiliate pooling arrangement, in which
Millers Casualty cedes 100% of its direct written premiums, losses, and
loss adjustment expenses, excluding Florida homeowners, to Millers
Insurance, which then retrocedes 14.13% of the retained business back to
Millers Casualty.
The Millers Insurance Co. mainly writes auto and general liability
coverages for agriculture-related businesses, and its products are
distributed primarily through managing general agents. The company, based
in Fort Worth, Texas, began business in 1898. In January 1999, it obtained
permission from the Texas insurance commissioner to convert from a mutual
to a stock company and distribute capital stock to its policyholders in
exchange for their membership rights.
Major Rating Factors:
-- Millers Insurance Co.'s five-year average return on revenue of
negative 19.0% is considered weak. Underwriting profitability
continues to be poor, as is evident from a five-year average
operating ratio of 120.1%. These poor returns contributed to
the company's decision in 1999 to hire a new Chairman and
Chief Executive Officer, institute expense reductions, and
refocus on its historically more profitable commercial lines
business.
-- The company's $20.6 million drop in net income in 1999 was caused
primarily by a $28.2 million drop in net realized capital gains,
offset by a $7.0 million improvement in net underwriting income.
-- The company's surplus, which stood at $34.6 million at year-end 1999,
has registered a negative compound annual growth rate (of negative
8.7%) since 1992. The $79.7 million (69.7%) drop in surplus in 1999
comprised a net unrealized capital loss of $54.8 million, a $15.3
million loss in net income, a $7.0 million payment in stockholder
dividends, and $2.6 million in all other.
-- The company's 1999 affiliated common stock leverage is high, at
114.9% of policyholders surplus. Net unrealized capital gains were
negative $54.8 million at year-end 1999.
-- The company's two-year reserve development ratio has been volatile,
averaging 12.6% deficient since 1995. The reported ratio has ranged
from 4.1% deficient to 31.0% deficient in the last five years. This
results from the company's decision to discontinue certain
unprofitable lines and strengthen reserves.
-- Capitalization remained marginal at year-end 1999, as indicated by a
Standard & Poor's capital adequacy ratio of 80.2%. In addition, the
company was more leveraged than similar companies, with its net
premiums written plus liabilities to surplus at more than 4.7 times.
Millers Insurance (NAIC: 23531) is a member of Millers American Group Inc.,
a midsize insurance group with 1999 surplus in excess of $80 million. The
Millers Insurance Co. wholly owns Millers Holding Corp. which, in turn,
owns 99.51% of The Millers Casualty Insurance Co. (TX) (NAIC:23523).
The group also includes Phoenix Indemnity Insurance Co. (NAIC: 34037)
(financial strength rating single-'Bpi'), which was acquired in September
1999, and The Millers Direct Insurance Co. (NAIC: 20150), which was
purchased in September 1997 and remains unrated due to the lack of any
current business activity.
NATIONAL HEALTH: Moody's Lowers Senior Debt Ratings & Says Review Continues
---------------------------------------------------------------------------
Moody's Investors Service lowered its senior unsecured debt rating for
National Health Investors, Inc. (NHI) to B2, from Ba3. The ratings of NHI
remain under review for further possible downgrade. According to Moody's,
these rating actions reflect the status of NHI's negotiations with its bank
group regarding the renewal of its bank credit facility, and the potential
implications if the bank line is not refinanced. NHI's $100 million
unsecured bank line, which is nearly fully drawn, matures October 2000. NHI
and its bank group have been unable to agree on terms to extend the loan,
raising uncertainty around the terms and conditions of the credit facility
renewal. Should a new facility be secured, it would structurally
subordinate bondholders. Higher pricing would also add pressure to the
REIT's coverage ratios.
Moody's ratings reflect the REIT's weakening debt protection measures,
including tight liquidity and declining coverages, and sizable near-term
debt maturities, including its bank line and $38 million in senior
subordinated notes due January 2001. Primary concerns center around the
REIT's ability to meet its financing needs given ongoing healthcare
industry challenges and constrained capital market conditions for
healthcare REITs.
The negative effects of reimbursement and regulatory pressures on some its
operators, including National Healthcare Corporation (NHC), NHI's external
advisor and largest tenant, remain significant credit concerns. National
Healthcare Corporation operates over 25% of the REIT's investments,
representing roughly 35% of NHI's revenues.
NHI's relationship with NHC has enabled the REIT to promptly address
difficulties with unaffiliated operators. However, NHC's performance, which
has been and continues to be under financial pressure from continued
healthcare industry challenges, could contribute to a deterioration in
NHI's earnings and cash flow performance. In Moody's view, the affiliation
between NHC and NHI also increases the REIT's business risk profile to
levels similar to that of a health care operator, rather than a real estate
investor or lender.
Moody's rating review will continue to focus on the REIT's ability to
satisfy its near-term debt maturities and improve liquidity, its ability to
stabilize its operating performance, and the impact of challenges facing
National Healthcare Corporation.
The following ratings were downgraded and remain under review for possible
downgrade:
* National Health Investors, Inc.
a) Senior unsecured debt to B2, from Ba3;
b) senior subordinated debt to Caa1, from B2;
c) cumulative preferred stock to "caa", from "b2";
d) and senior unsecured debt shelf to (P)B2, from (P)Ba3;
e) senior subordinated debt shelf to (P)Caa1, from (P)B2;
f) cumulative preferred stock shelf to (P)"caa", from (P)"b2";
g) non-cumulative preferred stock shelf to (P) "ca" from (P)"b3".
National Health Investors, Inc. [NYSE: NHI], headquartered in Murfreesboro,
Tennessee, USA, is a real estate investment trust which invests in long-
term care and other health care facilities. The REIT is invested in 146
long-term care facilities, two acute care hospitals, eight medical office
buildings, 22 assisted living facilities, seven retirement centers and 17
residential projects for the developmentally disabled, located in 26 states
throughout the USA. As of June 30, 2000, the REIT had total assets of
approximately $787.1 million (book).
PAGING NETWORK: Metrocall Says it Has the Financing in Place to Do a Deal
-------------------------------------------------------------------------
Metrocall Inc. (Nasdaq: MCLL), announced that it has received a total of
$337.5 million of binding financial commitments in connection with its
request to the Bankruptcy Court for permission to submit a competing plan
proposal to acquire Paging Network, Inc.
The total figure of $337.5 million includes $105 million in new common
equity, $57.5 million in new senior unsecured notes with warrants, and $175
million in connection with the sale of certain SMR licenses to Nextel
Communications, Inc. (Nasdaq:NXTL). In addition, Metrocall has obtained
commitments from certain members of its existing senior secured bank group
and others to refinance Metrocall's existing bank facility as part of a new
credit facility that would consolidate Metrocall's and PageNet's bank
facilities and provide liquidity for the combined entity.
Nextel Communications, Inc., a leader in digital wireless communications,
will become a major new equity investor in Metrocall as part of the plan.
Current Metrocall investors, Aether Systems, Inc. (Nasdaq: AETH), a leading
applications service provider (ASP), and PSINet Inc. (Nasdaq:PSIX), the
global Internet supercarrier, have committed to increase their existing
equity positions in Metrocall. SunAmerica, John Hancock, Canyon Partners
and others will purchase the new senior unsecured notes. The financing
commitments are contingent on confirmation by the Bankruptcy Court of the
Metrocall plan, execution of definitive documentation, receipt of
regulatory approvals and other customary closing conditions.
Under Metrocall's plan proposal, PageNet's bondholders would receive $100
million in cash, 106.8 million shares of Metrocall common stock and 81% of
the equity of Vast Solutions, Inc.; PageNet's secured creditors would
receive $75 million in cash and new secured notes as part of a consolidated
bank facility for $671.5 million, together with the proceeds from the
disposition of the capital stock of PageNet's Canadian subsidiary.
The other key elements of Metrocall's plan are as follows:
-- Payment in full in cash, including post-petition interest
through the plan's "effective date", of allowed general
unsecured claims against the debtor operating subsidiaries of
PageNet;
-- Consolidation on the plan's "effective date" of the reorganized
PageNet U.S. operating subsidiaries into reorganized PageNet,
followed by the parent-to-parent merger of reorganized PageNet
with and into Metrocall;
-- Funding by Metrocall of a working capital facility for Vast
Solutions, Inc; and
-- Creation for the benefit of PageNet's shareholders and PageNet's
banks of a Liquidating Trust that shall have, on the plan's
"effective date," assets consisting of equity interests in all of
PageNet's non-U.S. subsidiaries or non-U.S. affiliates, including
any and all proceeds arising from or generated by the
post-effective date sale of such assets by a trustee to be
appointed by Metrocall.
"Our proposal brings together a Who's Who of the telecommunications
industry and offers superior value to PageNet's stakeholders," said William
L. Collins, III, Chairman, President and CEO of Metrocall. "In addition to
the significant amount of cash that we have raised from Metrocall's
strategic and financial partners and which will be made available to the
PageNet creditors, we believe that we are better positioned to realize
substantial operating synergies and to maximize shareholder value from a
combined company. We urge the creditors' and their representatives and
advisors to support this formidable financial and operating plan," Collins
added.
Metrocall's motion also contends that PageNet's plan is unconfirmable as a
matter of bankruptcy law and that any attempt by PageNet to correct such
legal infirmities will likely cause significant delay. The material
confirmation infirmities include, among others:
-- PageNet's recent plan amendments requiring post-effective date
asset sales violate the Federal Communications Act and Section
1129(a)(3) of the Bankruptcy Code.
-- PageNet's Amended Plan violates Section 1129(a)(1) of the
Bankruptcy Code because it (a) improperly classifies general
unsecured creditors, (b) improperly effects a substantive
consolidation, (c) improperly designates and treats certain
general unsecured creditors and (d) improperly grants PageNet
insiders and others a release.
-- PageNet's Amended Plan is not feasible under Section 1129(a)(11)
of the Bankruptcy Code because (i) one-year pro forma financial
projections are insufficient to demonstrate financial stability of
reorganized Arch/PageNet given, among other things, the lack of
assurance that the $110 million required prepayment to the Arch
banks can be made and (ii) separate pro forma projections are not
provided for each debtor.
-- PageNet's Amended Plan does not comply with the "Best Interest of
Creditors Test" of Section 1129(a)(7) of the Bankruptcy Code
because it fails to provide PageNet's creditors and shareholders
with a separate liquidation analysis for each debtor.
Metrocall, Inc., headquartered in Alexandria, Virginia, is one of the
largest wireless data and messaging companies in the United States
providing both products and services to more than six million business and
individual subscribers. The Company offers two-way interactive messaging,
wireless e-mail and Internet connectivity, cellular and digital PCS phones,
as well as one-way messaging services. Metrocall owns and operates on many
nationwide, regional and local networks, including a new Two-Way
Interactive Network (TWIN), and can supply a wide variety of customizable
Internet-based information content services. Also, Metrocall offers totally
integrated resource management systems and communications solutions for
business and campus environments. Metrocall's wireless networks operate in
the top 1,000 markets all across the nation and the Company has offices and
retail locations in more than forty states. Metrocall is the largest
equity-owner of Inciscent, an independent business-to-business enterprise,
that is a national full-service "wired-to-wireless" Application Service
Provider (ASP). For more information on Metrocall please visit our Web site
and On-line store at www.metrocall.com or AOL Keyword: Metrocall.
PARAGON TRADE: Determines Feminine Care Business No Longer a Core Strategy
--------------------------------------------------------------------------
Paragon Trade Brands, Inc. plans to exit the feminine care business. The
company anticipates completing this process by year-end and is in
discussions with several interested purchasers. The orderly transition
from this business will enable the company to focus its resources on the
continued growth and expansion of its core diaper and pant businesses.
Commenting on the decision Chairman and Chief Executive Officer Michael
Riordan noted, "Since emerging from Chapter 11 earlier this year Paragon's
primary focus has been on growing our business and returning it to
profitability as well as servicing our customers' needs. Thanks largely to
the outstanding performance of our diaper and pant product lines we have
recorded significant increases in revenues and cashflow and have achieved
a major turn around."
"A recent in depth review of our business has resulted in our determination
that our feminine care business does not fit into our future core
strategies. The decision to exit this business is an extremely difficult
one, particularly in light of the efforts of our employees at our Gaffney,
South Carolina facility as well as the tremendous support of customers.
However, I am confident that the best way for us to excel and to grow
shareholder value is by narrowing our focus and becoming the best possible
supplier of store brand diapers and pants to our retail customers.
Focusing our energies, technology and capital resources exclusively on
our core businesses will help us achieve that status."
Paragon Trade Brands is a manufacturer of store brand infant disposable
diapers and training pants in North America. Paragon manufactures a line
of premium and economy diapers and training pants, which are distributed
throughout North America through grocery and food stores, mass
merchandisers, warehouse clubs and drug stores that market the products
under their own store brand names. Through its international joint
ventures, Paragon is also a leading supplier of infant disposable diapers
and other absorbent personal care products in Mexico, Argentina, Brazil and
China.
PATHMARK STORES: Supermarket Company Emerges From Prepackaged Bankruptcy
------------------------------------------------------------------------
Pathmark Stores, Inc., emerged from Chapter 11 bankruptcy protection as a
reorganized public company with its nearly $1 billion in bond indebtedness
eliminated. Pathmark also closed on its previously announced $600 million
exit financing with a group of financial institutions led by The Chase
Manhattan Bank.
Pathmark filed its prepackaged plan of reorganization on July 12, 2000 in
the U.S. Bankruptcy Court in Delaware with the overwhelming support of its
bondholders. The Plan, approved by the Court on September 7, 2000, will
result in Pathmark's bondholders receiving 100% of Pathmark's common stock
and warrants to purchase additional shares. Pathmark's new common stock and
warrants will be listed on the NASDAQ Stock Market under the symbols "PTMK"
and "PTMKW," respectively.
Jim Donald, Chairman, President and CEO said, "We are pleased to have
completed a swift and consensual reorganization and look forward to
operating with a greatly improved financial structure."
Pathmark is a regional supermarket company operating 137 stores primarily
in the New York - New Jersey and Philadelphia metro areas.
PHOENIX INDEMNITY: S&P Affirms Insurer's Bpi Financial Strength Rating
----------------------------------------------------------------------
Standard & Poor's assigned its single-'Bpi' financial strength rating to
Phoenix Indemnity Insurance Co. (Phoenix Indemnity).
Key rating factors include the company's membership in Millers American
Group Inc., a midsize insurance group with 1999 surplus in excess of $80
million, along with the company's weak operating returns, potential
interest-rate exposure and geographic concentration, somewhat offset by
strong capitalization.
Phoenix Indemnity mainly writes private passenger auto insurance, with a
specialization in nonstandard auto, and its products are distributed
primarily through independent general agents. Based in Omaha, Neb.,
(domiciled in Arizona) and licensed in 24 states, the company derives more
than 80% of its business from its major states of operation -- Arizona, New
Mexico, Utah, Nevada and Kentucky. It began business in 1988.
The company is 100%-owned by Millers Holding Corp. which is, in turn,
wholly owned by The Millers Insurance Co. Phoenix Indemnity was previously
a part of Acceptance Insurance Companies Inc. , which sold the company in
September 1999.
Major Rating Factors:
-- The rating is limited to the implied single-'Bpi' financial strength
rating on Millers American Group Inc., of which Phoenix Indemnity is
a recent unconsolidated member.
-- Operating performance has been weak, with the time-weighted return on
revenue from 1994 to 1999 at negative 0.5%. Further, the company's
returns have been volatile with, for example, return on assets
ranging from minus 7.9% to plus 5.9% in the last five years.
-- The company (NAIC:34037) has potential interest-rate risk, with the
ratio of collateralized mortgage obligations and loan-backed bonds
at 1.6 times surplus in 1999.
-- The company's geographic and product-line concentration is high with
respect to current capitalization. In 1999, 39.4% of direct premiums
were from Arizona.
-- Capitalization remained extremely strong at year-end 1999, as
indicated by a Standard & Poor's capital adequacy ratio of 200.9%.
The company was more leveraged than similar companies, with its net
premiums written plus liabilities to surplus at 5.4 times.
Other members of Millers American Group Inc. include The Millers Insurance
Co., The Millers Casualty Insurance Co. (TX) and The Millers Direct
Insurance Co.
PRISON REALTY: Announces Key Dates Relative to Merger with Primary Tenant
-------------------------------------------------------------------------
Prison Realty Trust, Inc. (NYSE: PZN) On August 31, 2000 the board of
directors declared a Series B Cumulative Convertible Preferred Stock
dividend for shareholders of record on September 14, 2000, payable on
September 22, 2000. This dividend is in connection with the Company's
election to be taxed and qualify as a real estate investment trust, or
REIT, with respect to its 1999 taxable year.
Each share of preferred stock has a stated value of $24.46. Shareholders
are entitled to one share of preferred for every 20 shares of common stock.
On September 14, 2000, Prison Realty's common stock began trading with
"due bills". The due bills represent full entitlement of 0.05 of a share
of series B preferred stock. If the common stock is sold before September
22, the seller is obligated to deliver the preferred shares as well as the
common stock to the buyer. Therefore, shareholders must hold their common
shares up to and including September 22, 2000 to be entitled to receive the
preferred shares.
The common stock will go ex-dividend on September 25, 2000.
On September 12, 2000, the company announced shareholder approval of the
merger of Prison Realty Trust with its primary tenant Corrections
Corporation of America. The merger is expected to close on or about
September 22, 2000.
The companies operating under the "Corrections Corporation of America" name
provide detention and corrections services to governmental agencies. The
companies are the industry leader in private sector corrections with
approximately 70,000 beds in 77 facilities under contract or under
development and ownership of 50 facilities in the United States, Puerto
Rico, Australia, and the United Kingdom. The companies' full range of
services following the merger include design, construction, ownership,
renovation and management of new or existing jails and prisons, as well as
long distance inmate transportation services.
PRO AIR: Carrier Suspends Operations and Files for Chapter 11 Protection
------------------------------------------------------------------------
Pro Air announced that it has filed for reorganization under Chapter 11 of
the bankruptcy code, citing a recent FAA order which required the carrier
to suspend its operations. Pro Air believes that the suspension was based
upon erroneous and outdated information and will be overturned on appeal.
"We are taking Chapter 11 action at this point to preserve our existing
resources, including our fleet of aircraft" said Craig Belmondo, president
and chief operating officer of Pro Air. "We are confident that we will be
resuming scheduled operations following completion of the appeals process
and we need to be in the position to recommence scheduled operations on an
expedited basis."
Until the FAA issue has been resolved, current Pro Air ticket holders
should visit www.proair.com for information on exchange travel on Northwest
Airlines and Spirit Airlines. Ticket holders desiring a refund instead of
exchange travel will have their credit cards automatically credited 72
hours after the date of their Pro Air reservation.
Pro Air commenced service on July 4, 1997 and employs approximately 350
people.
PROVIDENT AMERICAN: S&P Affirms Insurer's BBpi Financial Strength Rating
------------------------------------------------------------------------
Standard & Poor's affirmed its double-'Bpi' financial strength rating on
Provident American Life & Health Insurance Co. (Provident American).
The rating reflects the company's marginal capitalization, weak operating
performance, and volatile earnings.
Based in Norristown, Pa., this company writes mainly managed-care health
insurance for individuals and specialty health insurance for small groups.
Provident American became a member of the Ceres Group Inc. (Nasdaq:CERG) in
December, 1998, after being previously affiliated with the Provident
Indemnity Group. More than 70% of the company's business lies within its
major states of operations: Georgia, South Carolina, Illinois, Florida, and
Texas. Its products are distributed primarily through independent agents.
Provident American, which began operations in 1949, is licensed in 40
states and the District of Columbia.
Major Rating Factors:
-- Capitalization is less than good, as indicated by a Standard & Poor's
capital adequacy ratio of 87.1%. Total adjusted capital was $3.4
million at year-end 1999 versus $5.4 million in 1998, a decrease of
37.7%. The decline in surplus of $2.0 million from 1998 was caused
primarily by a loss of $1.0 million in net income and a negative
$0.9 million change in non-admitted assets.
-- Operating performance has been weak, with the time-weighted ROA from
1994 to 1999 at negative 7.9%. When the company's returns are
further adjusted for volatility, the result is below Standard &
Poor's secure range benchmark.
-- In addition, the company has very volatile earnings with respect to
current its capital level ($3.4 million), also a rating factor.
Since 1994, returns have varied from negative 10.8% to positive
15.4%.
-- The company's geographic diversification is good, with only 28% of
direct business in its major state of Georgia. Provident American
has high product-line concentration, however, with more than 82% of
its direct business in accident and health related lines.
The company (NAIC: 67903) is rated on a stand-alone basis without implied
support from the Ceres Group Inc.
ROBERDS, INC.: Gandy Blvd. Property in Tampa, Fla., Fetches $3.1 Million
------------------------------------------------------------------------
Roberds, Inc., seeks authority to sell the Tampa, Florida, Gandy Boulevard
real property site. JBS Development offered the highest bid in the amount
of $3.1 million for the site, and a back-up buyer, American InfoAge LLC
submitted an offer through the real estate consultants.
A satisfactory compensation arrangement for the debtor has been reached
with GE Capital Business Asset Funding Corporation, mortgagee, so as to
justify acceptance of the bid of the Buyer. Based on the foregoing the
debtor seeks confirmation of the sale, with $25,000 of that total amount to
be paid to debtor at closing with the agreement of GE.
SAFETY-KLEEN: First Motion To Extend Time To Assume And Reject Leases
---------------------------------------------------------------------
Safety-Kleen Corp. and its debtor-affiliates are lessees under numerous
unexpired leases of nonresidential real property. Many of those Unexpired
Leases are for facilities that are used to conduct the hazardous and
industrial waste disposal services and administrative functions that
comprise the Debtors, businesses, and are assets of the Debtors' estates
and integral to the Debtors' continued operations as they seek to
reorganize.
The Safety-Kleen Debtors tell the Bankruptcy Court that although they have
initiated the process of reviewing their unexpired non-residential real
property leases to determine which are beneficial and which are
burdensome, given the large number of leases to analyze, the complexity of
the Debtors' chapter 11 cases, and the size of the task of evaluating
their Unexpired Leases, the Company simply have not yet been able to
assess the value or marketability of the Unexpired Leases and make
determinations with respect to which Unexpired Leases should be assumed
and which, if any, should he rejected. Indeed, Safety-Kleen says, due to
the enormity of the task and the Debtors' immediate and primary focus on
stabilizing their businesses in the early stages of their chapter 11
cases, it has proved impossible to adequately assess whether to assume or
reject the Unexpired Leases within the 60-day period specified in 11
U.S.C. Sec. 365(d)(4).
The Debtors' decision whether to assume, assign, or reject particular
Unexpired Leases, as well as the timing of such assumption, assignment, or
rejection, depends in large part on the Debtors, formulation of a
comprehensive business plan for the future (i.e., whether the leased
premises will play a role in the Debtors' strategic operating plan going
forward) and the preparation of the Plan to implement the business plan.
The Debtors tell Judge Walsh that they have made progress toward the
development of a business plan; however, many operations and locations are
still in the process of being evaluated. Accordingly, it is not yet
possible for Safety-Kleen to determine whether certain of those operations
and/or locations will play a part in the Debtors' businesses going
forward.
Further, the Debtors say, given special regulatory requirements that apply
to Safety-Kleen's businesses and the related importance of making
successful transitional arrangements in connection with any rejection or
assignment of a leased hazardous waste facility, the Debtors must make
decisions and negotiate transitioning arrangements that will serve their
customers and the public at large. These decisions cannot be made
responsibly, however, without an extension of the time within which the
Unexpired Leases must be assumed or rejected.
Against this backdrop, the the Safety-Kleen Debtors move the Court for an
order under 11 U.S.C. Sec. 365(d)(4) extending the time within which they
may assume, assume and assign or reject unexpired leases of nonresidential
real property. By this Motion, the Debtors seek an extension through and
until the earlier of:
(A) the effective date of a confirmed plan of reorganization in these
chapter 11 cases; and
(B) June 9, 2001,
subject to the rights of each lessor under an Unexpired Lease to request,
upon appropriate notice and motion, that the Court shorten the Extension
Period with respect to a specific Unexpired Lease and specify a period of
time in which the Debtors must determine whether to assume or reject such
Unexpired Lease.
The Debtors say that while they expect to seek the court's permission to
reject certain Unexpired Leases prior to confirmation of a Plan, many of
the Unexpired Leases will prove to be desirable -- or necessary -- to the
continued operation of the Debtors' businesses. Necessary Leases, the
Debtors suggest, will simply be assumed under the terms of a Plan. Other
Unexpired Leases, while not necessary for the Debtors' ongoing operations,
may prove to be "below market" leases that may yield value to the estates
through their assumption and assignment to third parties. Until the
Debtors have had the opportunity to complete a thorough review of all of
the Unexpired Leases, however, they cannot determine exactly which
Unexpired Leases should be assumed, assigned, or rejected.
The Debtors stress that they have paid or will bring current and remain
current on all of their postpetition rent obligations. Thus, the relief
requested by this Motion will not prejudice landlords under the Unexpired
Leases. Indeed, through the operation of 11 U.S.C. Sec. 365(d)(3), the
Debtors argue, the landlords enjoy a preferred position that belies any
notion that they could be prejudiced. In contrast, if the 60-day period
is not extended, the Debtors will be compelled prematurely to assume
substantial, long-term liabilities under the Unexpired Leases (potentially
creating administrative expense claims) or forfeit benefits associated
with some leases, to the detriment of the Debtors' ability to operate and
preserve the going-concern value of their business. Accordingly, the
Debtors urge, the Court should extend the time within which the Debtors
may assume or reject any Unexpired Lease as requested. (Safety-Kleen
Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
SANYO AUTOMOTIVE: Court Orders Cases Converted to Chapter 7 Liquidation
-----------------------------------------------------------------------
By order entered on September 7, 2000 by the U.S. Bankruptcy Court for the
Eastern District of New York, pursuant to Section 1112(a) of the Bankruptcy
Code, the Chapter 11 case of Sanyo Automotive Parts, Ltd. is converted to a
Chapter 7 case. The debtors are represented by Siller Wilk LLP, New York,
NY.
SFAC NEW: Cookie Maker and Affiliates Files Chapter 11 in Delaware
------------------------------------------------------------------
Cookie maker SFAC New Holdings, Inc.; its subsidiary SFC New Holdings,
Inc.; and six other affiliates filed for Chapter 11 protection with the
U.S. Bankruptcy Court in the District of Delaware, listing a total of $1.3
billion in bond debt not including accrued interest. SFAC New Holdings,
which is privately held, listed total assets of more than $100 million.
(New Generation Research, Inc. 19-Sep-00)
SUN HEALTHCARE: SunPlus Rejects Tujunga Office Lease In Burbank, Calif.
-----------------------------------------------------------------------
SunPlus Home Health Life Services, Inc., a debtor-affiliate of Sun
Healthcare Group, Inc., leases 23,545 square feet of office space at 100
East Tujunga, Burbank, California, from Tujunga Properties, Inc., for
$40,733 per month. The term of the lease expires on September 30, 2003.
Tujunga told SunPlus it had located a new tenant and wanted SunPlus to
assume or reject the Tujunga Lease. SunPlus wants smaller space for the
office at lower cost. Tujunga cannot satisfy the Debtor's requirement with
an alternative site. With the help of brokers, SunPlus has located suitable
space of approximately 11,904 square feet at monthly base rent of $22,022
representing monthly savings of approximately $18,710.
The Debtors note that SunPlus moved into a new office in August, 2000 with
fitting-out completed. Accordingly, they seek the Court's authority for the
rejection of the Tujunga Lease to be effective as of the earlier of the
date on which SunPlus surrenders possession of the premises to Tujunga, or
September 15, 2000. Tujunga has filed with the Court their limited
objection to the Debtors' motion for rejection of the lease. (Sun
Healthcare Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
TELLTHEMNOW.COM: Seattle-Based Internet Retailer May Be Facing Bankruptcy
-------------------------------------------------------------------------
According to the Seattle Post-Intelligencer, TellThemNow.com, which handles
news watchers or movie fans giving politicians and celebrities information
by e-mail, may stop operations, sell or possibly face bankruptcy. The
Seattle-based Web site started with $2.5 million of cash, but now has $3
million of debts. "If it's not bought, or we don't get enough money to
negotiate with our creditors, our options are really limited. Bankruptcy
might be one of them," founder Wiley Brooks said. TellThemNow's main assets
are its 800,000 e-mail address database (which they don't intend to sell)
and their technology.
TOKHEIM CORPORATION: Summary of Joint Prepackaged Plan
------------------------------------------------------
On August 28, 2000, Tokheim Corporation filed a Joint Prepackaged Plan of
Reorganization for the company and its U.S. subsidiaries under chapter 11
of the United States Bankruptcy Code with the United States Bankruptcy
Court for the District of Delaware. The company has received support of
the Plan from its senior lenders and the holders of its senior and junior
subordinated notes. The Bankruptcy Court has set a hearing on confirmation
of the Plan for October 4, 2000.
The Plan provides, among other things, that:
(i) the existing bank credit agreement will be restructured to
comprise a 5 year senior term facility of approximately $140
million, and a 5 year special facility of approximately $100
million on which interest will be accrued but not paid until at
least December 31, 2002;
(ii) the company's bank group will provide, in addition to the $240
million facilities detailed above, a debtor-in-possession
facility of approximately $48 million which will be converted
into a revolving facility upon the company's emergence from the
reorganization;
(iii) members of the bank group will receive warrants with a five year
term to purchase 678,334 shares of the new common stock at an
exercise price of $0.01 per share;
(iv) in exchange for their Notes, the holders of $260 million of senior
and junior subordinated notes and certain other unsecured
creditors will receive 4,500,000 shares of new common stock
representing 90% of the equity value of the restructured company,
subject to dilution for warrants to existing shareholders and
management options;
(v) the company's employees' rights to receive cash redemption of
preferred stock held by the Retirement Savings Plan will be
preserved;
(vi) the company's approximately 12,669,000 shares of outstanding
common stock will be cancelled and existing holders of common
stock will receive "out of the money" warrants with a six year
term giving them the right to acquire an aggregate of 549,451
shares of the new common stock of the reorganized company at an
exercise price of $49.50 per share; and
(vii) the holders of junior subordinated notes will receive their pro
rata share of new junior warrants, exercisable at a price of
$30.00 per share, to purchase 555,556 shares of new common stock.
The company and its U.S. subsidiaries are authorized to continue to meet
their financial obligations with respect to salaries and benefits, and
pre-filing and post-filing obligations to on-going trade suppliers provided
that such suppliers agree to provide goods and services on standard
business terms. The company is also authorized to access $20.0 million of
its new $48.0 million debtor-in-possession credit facility to be provided
by the company's bank group. The Bankruptcy Court has set a September 20,
2000, hearing to consider allowing the company access to the remaining
$28.0 million.
URANIUM RESOURCES: Arnold Spellun Discloses 9.2% Equity Stake
-------------------------------------------------------------
Arnold Spellun beneficially owns 2,187,500 shares of the common stock of
Uranium Resources Inc., with sole voting and dispositive powers. The stock
held represents 9.2% of the outstanding common stock of the company.
Mr. Spellun is a lawyer at Parker, Duryee, Rosoff & Haft. On August 21,
2000, Mr. Spellun purchased 1,250,000 shares of common stock and warrants
to purchase 937,500 shares of common stock for an aggregate purchase price
of $125,000 which was paid with Mr. Spellun's personal funds. The
acquisition and disposition of the common stock of Uranium Resources has
been a part of Mr. Spellun's general investment activities.
VIDEOTRON/CF CABLE: Moodys Places Debt Ratings On Review For Downgrade
----------------------------------------------------------------------
Moody's Investor Service has placed the debt ratings of Videotron Ltee
(Baa3 senior unsecured) and CF Cable TV (Ba1 senior secured) on review for
possible downgrade. Both are subsidiaries of Le Groupe Videotron
(Videotron). The review was sparked by the recent announcement that
Videotron has cancelled its all stock merger agreement with Rogers
Communications Inc. The cancellation significantly increases the likelihood
that a takeover bid by Quebecor Inc. and Capital Communications CDPQ Inc.,
a subsidiary of Caisse de depot et placement du Quebec, for Can$45 per
share in cash, or approximately Can$5.4 billion (excluding Videotron debt
totaling about Can$1.1 billion) will occur.
The review for possible downgrade results from Moody's concern that debt
leverage may materially increase as a result of the cash required to
finance the transaction and to fund the ongoing intensive capital
requirements of Videotron's cable operations. In addition, uncertainty
exists regarding the acquiror's plans to integrate Videotron with its other
media assets, and its future strategies for Videotron's cable operations in
a consolidating and more competitive operating environment. Moody's does
not rate any debt of Quebecor Inc. However, its 30% owned subsidiary,
Quebecor World Inc. (Baa2 senior unsecured, negative outlook) is not
included within the review.
Videotron received a joint unconditional Can$45 per share take-over bid
from Media Acquisition Inc., Quebecor Inc. and Capital Communications CDPQ
Inc. In consideration for the offer, Videotron's board of directors has
terminated both the merger agreement with Rogers Communications Inc. and
the support letter from Andre Chagnon and Sojecci Ltee. As consideration,
the company paid Rogers a termination fee of Can$241 million. Andrea
Chagnon and Sojecci have also executed a lockup agreement in favor of Media
Acquisition, whereby they irrevocably committed to tender all their
multiple voting shares and all their subordinate voting shares of Videotron
in this latest offer. Of the Can$5.4 billion cash purchase price, Quebecor
has agreed to invest Can$1.035 billion and to transfer certain media assets
presently held by Quebecor Communications, and Capital Communications CDPQ
has agreed to invest Can$2.2 billion in cash into Media Acquisition Inc.
and already holds about Can$500 million of Videotron stock. The residual
purchase cost totalling about Can$1.7 billion could be funded by additional
investors, new debt, or both.
The ratings on review for downgrade include the Videotron Ltee's Baa3 rated
Can$800 million senior unsecured bank facility and senior unsecured notes;
and CF Cable's Ba1 rated US$100 million of first priority secured notes.
Le Groupe Videotron is a holding company with interests in Canadian cable
through its Videotron Ltee and CF Cable TV subsidiaries, and Canadian TV
broadcasting through its Tele-Metropole subsidiary. The company is
headquartered in Montreal, Canada.
VIDEO UPDATE: Minnesota Video Retailer and Affiliates Files for Chapter 11
--------------------------------------------------------------------------
Leading US and Canadian video retailer, Reuters reports, together with its
20 affiliates filed for Chapter 11 in U.S. Bankruptcy Court in Delaware.
According to a company statement, Video Update Inc. will "attempt to
restructure its operations for the benefit of creditors and shareholders"
and continue operations unhindered. The Minnesota-based company listed
$129.5 million and $ 219.3 million of assets and debts respectively.
VIDEO UPDATE: Case Summary and 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Video Update, Inc.
3100 World Trade Center
30 East 7th Street
Saint Paul, MN 55101
Type of Business: Video retailer
Chapter 11 Petition Date: September 18, 2000
Court: District of Delaware
Bankruptcy Case No.: 00-03663
Debtor's Counsel: Michael R. Lastowski, Esq.
Duane Morris & Heckscher
1201 Orange Street
Wilmington, DE 19801
(302) 657-4942
Total Assets: $ 129,493,000
Total Debts : $ 210,303,000
20 Largest Unsecured Creditors
Ingram Entertainment Inc
David Ingram
Two Ingram Boulevard
La Vergne, TN 37089
(615) 287-4610 Trade Debt $ 16,274,371
Warner Home Video
Gord Edwards
4576 Yonge Street
Suite 303
North York, On M2N 6N4
(416) 730-6217 Trade Debt $ 6,450,059
Sight And Sound Distributors
2055 Walton Road
St. Louis, MO 63114
(314) 253-5402 Trade Debt $ 4,493,212
CNA-Hartford Insurance
Bond (Videoland)
Hartford Fire Insurance Company
Hartford, CT 06115
(860) 547-4387 Insurance Coverage $ 2,301,814
Chubb Insurance, Bond (Monsour)
Shaun Irwin, Bond Underwriting
Anderson Agency
312 Central Avenue Southeast
Minneapolis, MN 55414 Insurance Coverage $ 2,149,499
Columbia Tristar Home Video
Paul Culberg
10202 W. Washington Boulevard
Culver City, CA
(310) 244-4093 Trade Debt $ 1,608,071
Valley Media
James Miller, Coo
1280 Santa Anita CT.
Woodland, CA 95776
(800) 845-8444 Trade Debt $ 1,072,925
Chubb Ins. Bond (Allen)
Shaun Irwin, Bond Underwriting
Anderson Agency
313 Central Avenue Southeast
Minneapolis, MN 55415
(12) 332-3712 Insurance Coverage $ 676,000
Marjack Company, Inc.
P.O. Box 8030
Langley Park, MD 20787
(301) 439-8500 x 313 Trade Debt $ 514,687
Disney
Dennis McGuire
350 S. Buena Vista St
Burbank, CA 91505
(818) 295-4900 Trade Debt $ 502,811
MTI Home Video
14216 South West 136th Street
Miami, FL 33186
(305) 255-8684 Trade Debt $ 271,462
New Concorde Home Video Trade Debt $ 209,697
Securitylink Trade Debt $ 137,510
Video Event Trade Debt $ 134,106
Avalanche Home Entertainment Trade Debt $ 134,019
A-PIX Trade Debt $ 107,467
Metro-Goldwyn-Mayer, Inc. Trade Debt $ 100,000
Full Moon Trade Debt $ 96,380
Sterling Home Entertainment Trade Debt $ 93,845
Trimark Pictures Trade Debt $ 90,700
WESTVACO CORPORATION: Moody's Lowers Long-Term Debt Ratings To Baa1
-------------------------------------------------------------------
Moody's Investors Service lowered to Baa1 the long-term debt ratings and
all pollution control and industrial revenue supported bonds of Westvaco
Corporation. At the same time Moody's confirmed the short-term rating of
Prime-2 for commercial paper borrowings. These rating actions are prompted
by what we believe will be a continuing increase in debt levels at Westvaco
associated with acquisition activity, accompanied by a weakening in debt
protection measurements.
Ratings lowered:
Westvaco Corporation: Senior unsecured notes, bonds, and industrial
revenue and pollution supported bonds - to Baa1
from A3
Rating confirmed:
Westvaco Corporation: Short-term rating - currently at Prime-2
Moody's notes that in the past year Westvaco has embarked on a major debt-
financed acquisition program, purchasing the Evadale bleached board mill
from Temple-Inland, Meban Packaging, IMPAC, and other smaller entities, all
related to Westvaco's strategy of growing its franchise in its core
businesses of packaging and specialty chemicals. While we beieve that
expansion in these businesses will, over the longer term, result in
enhanced operating margins and reduce the company's exposure to the
commodity paper pricing cycle, the addition of over a billion dollars in
additional debt has weakened the company's capital structure and diminished
the level of protection for debtholders. Moody's believes that the company
may continue to pursue additional opportunities to grow its business, using
a combination of debt and equity.
The stable rating outlook for long term debt incorporates our expectation
that leverage at Westvaco has neared its maximum level, and will gradually
be reduced, either with cash from operations or with the proceeds from the
sale of non-core assets. Should additional debt financed acquisitions take
place, negative pressure on ratings would develop.
Headquartered in New York City, Westvaco Corporation is an integrated
manufacturer of packaging, coated papers, and specialty chemicals.
*********
Bond pricing, appearing in each Monday's edition of the TCR, is provided by
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For copies of court documents filed in the District of Delaware, please
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at Nationwide Research & Consulting at 207/791-2852.
*********
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Copyright 2000. All rights reserved. ISSN 1520-9474.
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