/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/000926.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 26, 2000, Vol. 4, No. 188 Headlines ACME METALS: Proposes Bidding Procedures for WCI Steel Subsidiary AHT CORPORATION: Files for Chapter 11 Protection in White Plains AHT CORPORATION: Nasdaq Halts Trading Pending Additional Information AHT CORPORATION: Case Summary and 10 Largest Unsecured Creditors AMERICAN ECO: Extending Time to Assume/Reject Leases Through Year-End AUREAL INC: California Bankruptcy Court Approves Asset Sale To Creative BRADLEY OPERATING: Moody's Lowers Shopping Center REIT's Debt Ratings CENTENNIAL COAL: Judge Walsh to Consider Confirmation at Oct. 16 Hearing CITADEL BROADCASTING: Moody's Assigns Ba3 Rating To Bank Credit Facilities CONSECO, INC.: Banks Extend New Facility as "Restoration Plan" Progresses CORAM HEALTHCARE: Requests Substantive Consolidation of Estates CRIIMI MAE: Declares Dividend, in Preferred Stock, to Preserve REIT Status DT INDUSTRIES: Weinstein & Goldman Files Suit Against Officers & Directors ELDER-BEERMAN: James Bennett Lends Strong Support to Self-Tender Offer FIRSTPLUS FINANCIAL: Completes Sale of Servicing Rights, Fetching $29 Mil FLORU ENTERPRISES: Case Summary and 8 Largest Unsecured Creditors FRUIT OF THE LOOM: Pro Player To Sell Equipment To Hirsch International GENESIS/MULTICARE: Provides Adequate Protection on Edella Mortgage Bonds GOODYEAR TIRE: Moody's Places Debt Ratings On Review For Possible Downgrade GOODYEAR TIRE: S&P Places Ratings On CreditWatch With Negative Implications GRAHAM FIELD HEALTH: Court Establishes November 29 Bar Date GST TELECOMMUNICATIONS: Assets Sold to Time Warner for $690 Million HARNISCHFEGER INDUSTRIES: Fort James Seeks Payment of Administrative Claim HARRISBURG EAST: EQK Sells Shopping Mall at Auction to Prudential Insurance HEILIG-MEYERS: Reschedules Meeting of Creditors to November 13 HILLSBOROUGH RESOURCES: Shareholders Approves Belkorp Refinancing Proposal ICO GLOBAL: Space-Based Telecommunication Losses Approach $1 Billion JUST FOR FEET: Judge Farnan Delays Turnover of Cash to Bank of America KCS ENERGY: Proposes $2.9 Million Employee Retention Program KITTY HAWK: Northwest Airlines Wants More Detail About Proposed Compromises LAIDLAW, INC.: Holding Conference Call Today at 2:00 p.m. Eastern Time LOEWS CINEPLEX: Bank Lenders Agree to Waive Covenants for 90 Days NATIONAL HEALTH: S&P Lowers REIT's Senior Debts Ratings to B+ PAGING NETWORK: Metrocall Shareholders Rally with Latest Takeover Offer PREMIER LASER: Sells Interest in Ophthalmic Imaging for $2,700,000 PRIME SUCCESSION: First Move to Reject Burdensome Contracts & Leases PRO AIR: Passengers with Confirmed Reservations Helped by Spirit Airlines PRS INSURANCE: A.M. Best Downgrades Financial Strength Rating to C SAFETY COMPONENTS: Plans to Emerge Under Confirmed Plan in Early October SAFETY KLEEN: Judge Walsh Fixes October 31, 2000, General Bar Date SHOP AT HOME: E-commerce Leader Sells Bridgeport Television Station SIGNAL APPAREL: Activewear Clothing Maker Files Chapter 11 in New York SIGNAL APPAREL: Case Summary and 20 Largest Unsecured Creditors SONIC AUTOMOTIVE: Moody's Assigns B2 Rating To Proposed Senior Sub Notes SUN HEALTHCARE: Stipulation Provides Sec. 366 Adequate Assurance To GTE UNITED INFORMATION: U.S. Debtor's Trustee to Serve as Brazilian Trustee VENCOR INC: Delaware Court Approves Extension DIP Financing Maturity Date WASTE MANAGEMENT: Completes $570MM Sale of U.K. Waste Services Operations ********* ACME METALS: Proposes Bidding Procedures for WCI Steel Subsidiary ----------------------------------------------------------------- Acme Metals Incorporated filed a motion in the U.S. Bankruptcy Court for the District of Delaware seeking approval for expense reimbursement and establishing bidding procedures, including provisions for a break-up fee and minimum overbid in certain circumstances, relating to a potential sale of the operating assets of its wholly owned subsidiary, Acme Steel Company, to WCI Steel, Inc. The motion includes a non-binding term sheet outlining the significant terms of a potential purchase agreement by WCI. Acme and WCI intend to negotiate toward a definitive purchase agreement subject to the completion of due diligence. Acme is being advised during the process by the New York office of Wasserstein Perella & Co., Inc. Acme Metals Incorporated, the parent company of Acme Steel Company, through its operating subsidiaries, is a fully integrated producer of steel, steel strapping and strapping products, and welded steel tubing. On September 28, 1998, Acme Metals and its subsidiaries filed separate voluntary petitions for protection and reorganization under Chapter 11 of the United States Code. The company is in possession of its properties and assets and continues to manage its business as debtor-in-possession subject to the supervision of the Bankruptcy Code. AHT CORPORATION: Files for Chapter 11 Protection in White Plains ---------------------------------------------------------------- AHT Corporation (Nasdaq:AHTC) and its subsidiaries, Advanced Health Technologies Corporation, Advanced Health Management Corporation and Advanced Health Bukstel and Halfpenny Corporation, filed for Chapter 11 protection in connection with which Bioshield Technologies, Inc. (Nasdaq:BSTI) entered into an agreement to provide interim financing to fund AHT's operations and to purchase the assets of AHT for approximately $15 million in cash and stock. BioShield has already provided $1.5 million to AHT for interim financing. The filing was made in the United States Bankruptcy Court for the Southern District of New York, White Plains Division. During the Chapter 11 case and sale process, AHT expects to be fully operational, including providing full customer service and customer project implementations and conducting sales activities. In addition, no employee lay-offs are planned during this period. BioShield's offer to purchase the assets of AHT is subject to better and higher offers that will be publicly solicited through the bankruptcy process. If BioShield is successful in purchasing the assets of AHT, it is expected that these assets will be merged with BioShield's eMD.com Internet healthcare subsidiary, and AHT's lawsuit against BioShield (filed September 7, 2000) for breach of the original Merger Agreement with AHT (announced July 3, 2000) will be settled and dismissed. The Company will request that the Bankruptcy Court approve the sale transaction within 60 days. After a careful assessment of the Company's current circumstances, AHT's Board of Directors believes commencing a Chapter 11 case is the best course of action, when compared to available alternatives, for its shareholders, creditors, and customers. The Debtor-in-Possession bankruptcy process preserves the assets of AHT during an orderly sales process that is designed to maximize the value of AHT's assets and to minimize disruption to its customers and employees. Under BioShield's planned purchase of the Company's assets, AHT shareholders are expected to receive a combination of BioShield equity and cash equal to approximately $.10 per share for the approximately 11.2 million AHT shares outstanding as of September 21, 2000. It is contemplated that all creditors of the Company will be paid in full. The Company's near-term capital requirements increased significantly following a disruptive and expensive merger process leading to the termination of its original Merger Agreement with BioShield, which negatively impacted sales and anticipated cash flow. Following the termination of the Merger Agreement, AHT had to address its near-term cash requirements. These requirements included capital needed to fund its operations: a) the pursuit of its lawsuit against BioShield; b) the $4 million Senior Convertible Note owed to Cybear, Inc. that is secured by AHT's assets; and c) debts due to other creditors. After evaluating these requirements, as well as the prospects for a very near-term corporate finance transaction or acquisition; the period of time that would be required to complete the litigation against BioShield, the timing and outcome of which would have been uncertain for shareholders and creditors; and the potential that creditors would file an involuntary bankruptcy petition, the threat of such an event and the deleterious effect that would have on the Company's assets, AHT's Board of Directors and management concluded that the voluntary Chapter 11 process presented the best potential outcome for all shareholders and creditors. AHT made this determination after being approached by BioShield to settle the pending lawsuit, which led to the current negotiated agreement. Pending approval by the Court of the proposed sale transaction, a public notice will be made regarding the sale of AHT's assets. AHT CORPORATION: Nasdaq Halts Trading Pending Additional Information -------------------------------------------------------------------- The Nasdaq Stock Market announced that the trading halt status in AHT Corporation (NASDAQ:AHTC) was changed to "additional information requested" from the company. Trading in the company had been halted on September 22, 2000 at 11:33 a.m., Eastern Time, for news pending at a last sale price of 7/16. Trading will remain halted until AHT Corporation has fully satisfied Nasdaq's request for additional information. AHT CORPORATION: Case Summary and 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: AHT Corporation 555 White Plains Road 5th Floor Tarrytown, NY 10591 Type of Business: Provider of enabling technologies, including Internet- based applications, for electronic commerce and communications at physicians and other healthcare providers and organizations. Chapter 11 Petition Date: September 22, 2000 Court: Southern District of New York Bankruptcy Case No.: 00-1446 Judge: John J. Connelly Debtor's Counsel: Tracy L. Klestadt, Esq. Tracy L. Klestadt & Associates 405 Lexington Avenue 42nd Floor New York, NY 10174 (212) 972-3000 Total Assets: $ 2,538,340 Total Debts : $ 8,433,225 10 Largest Unsecured Creditors: Cybear, Inc. 5000 Blue Lake Drive Suite 200 Boca Raton, FL 33431 $ 4,000,000 In re Advanced Health Corp. Sec. Lit. Securities Settlement of Class Litigation-Class Actions action litigation $ 2,954,790 Chase H&Q One Bush Street San Francisco, CA 94104 $ 625,000 Philadelphia Cardiology Group P.C. Warminster Professional Building 205 Newton Road, Suite 207 Warminster, PA 18974 Arbitration award $ 555,632 State College Anesthesia Association P.C. Arbitration award $ 137,500 Donald B. Bibeault $ 100,000 Michael S. Bookkchin $ 25,000 Lerch, Early & Brewer Arbitration award $ 18,069 Automatic Data Processing $ 14,532 NASDAQ Stock Market $ 2,000 Nutter, McClennen & Fish, LLP $ 700 AMERICAN ECO: Extending Time to Assume/Reject Leases Through Year-End --------------------------------------------------------------------- The debtors, American Eco Holding Corp., et al. are attempting to maximize the value of their assets through an orderly liquidation of their businesses. The debtors seek an extension of their time to assume or reject unexpired leases of non-residential real property from October 3, 2000 up to and including December 31, 2000. In the process of liquidating their assets and evaluating whether they need the continued use of certain of their facilities for such purposes, the debtors have made determinations to reject certain of the Leases and have included those leases in motions to reject executory contracts and unexpired leases that are presently scheduled for a hearing on September 27, 2000. The debtors are negotiating certain asset sales which may include the leases that the debtors are not currently rejecting. For that reason, the debtors seek the extension to December 31, 2000. AUREAL INC: California Bankruptcy Court Approves Asset Sale To Creative ----------------------------------------------------------------------- Aureal Inc. (OTC Bulletin Board: AURLQ) announced that the U.S. Bankruptcy Court for the Northern District of California, Oakland Division entered this week the final order approving the sale of substantially all of the assets of Aureal to Creative Technology Ltd. (Nasdaq: CREAF). The sale will include settlement of all outstanding litigation claims between Aureal and Creative. Creative will pay US$28 million in cash, plus two new shares of Creative stock for every 100 outstanding shares of Aureal stock, or 208,079 shares of Creative stock. The Creative shares are valued at approximately US$4,357,174.19, based on the closing price of Creative stock on September 21, 2000. The sale agreement follows Aureal's previous announcement, on April 6, 2000, that it had filed for bankruptcy protection under chapter 11 of the Bankruptcy Code. While the sale will provide substantial cash for distribution to the creditors and, potentially, the shareholders of Aureal, the amount and timing of the distribution has yet to be determined. The amount available for distribution to shareholders will be determined only after the amount of all claims against Aureal have been determined. Distributions to creditors and shareholders will occur only after a plan of reorganization has been submitted to and confirmed by the Bankruptcy Court. Aureal anticipates that a plan of reorganization will be filed with the Bankruptcy Court within the next 90 days. After the filing of a plan of reorganization, the plan will be submitted to creditors and shareholders for voting and thereafter to the Bankruptcy Court for its consideration. Aureal stock is no longer traded on the OTC bulletin board. The National Quotation Bureau is currently quoting Aureal Inc. stock under the symbol AURLQ. Financial service providers that subscribe to the National Quotation Bureau can provide stock quotes. Prior to the commencement of its chapter 11 case, Aureal was a leading provider of advanced audio solutions for the computer, entertainment, Internet, and professional audio markets. The company designed, built and distributed advanced audio semiconductor, audio card and software solutions for personal computers through the OEM, integrator/reseller/VAR and direct- to-customer channels. Aureal also licensed technology designed to define and improve advanced audio standards in the marketplace. BRADLEY OPERATING: Moody's Lowers Shopping Center REIT's Debt Ratings --------------------------------------------------------------------- Moody's lowered its ratings on the debt of Bradley Operating L.P., the Operating Partnership of Bradley Real Estate, Inc. These rating actions conclude a rating review for possible downgrade initiated by Moody's on May 15, 2000 following the merger agreement between Bradley Real Estate and Heritage Realty Investment Trust, Inc., a private real estate investment trust (REIT). The rating outlook for Bradley Operating, L.P. is stable, based on our expectation that Heritage will continue to perform well in the retail real estate sector, while avoiding excessive leverage. Pursuant to the merger agreement, Bradley Real Estate, Inc. and its subsidiaries were merged with and into Heritage Realty Investment Trust, Inc., the surviving corporation. The rating agency noted that Heritage has assumed the senior debt of Bradley Operating, L.P. According to Moody's, the acquisition should strengthen Heritage's market position, making it one of the largest neighborhood and community shopping center REITs in the USA. Post-merger, the REIT owns 151 properties, totaling more than 23 million square feet, in 27 states across the USA. Favorable portfolio fundamentals, including stable cashflows, good occupancy levels and limited market and tenant concentrations are credit positives. The REIT's increased size, enhanced operating efficiencies and greater portfolio and cash flow diversification should help to reduce its risk during economic downturns, Moody's said. Heritage's strong institutional sponsorship with New England Teamsters and Trucking Industry Pension Fund and Prudential Insurance Company of America, which currently own the majority of the REIT's preferred and common stock, should help to support its long-term growth. The REIT's strategic goal to retain the existing financial and operating profile of Bradley Operating, L.P. is also reflected in the ratings. A major concern of Moody's is that Heritage's strategy, although clear, may be subject to fluctuation and reassessment which could result in a higher risk financial and strategic profile. Moody's said that these strengths are attentuated by the REIT's higher pro forma debt levels, including secured and floating rate debt and its lower fixed charge coverage, and its potentially significant refinancing risk over the near term. Moody's believes that Heritage's secured debt could increase as the REIT pursues its strategic growth, but that the REIT will strive to enhance its financial flexibility by unencumbering a significant portion of its assets over time. Moody's views the put option that is a facet of the preferred and common equity investment by Prudential Real Estate Investors in Heritage as a credit negative. Under this agreement, equity investors have the ability to require Heritage to purchase these shares if the REIT fails to execute an initial public offering or some similar event over the next three years. Heritage could be faced with having to repurchase $200 million in preferred and common equity, as well as to refinance its bank credit facility, in three years. Post-merger integration risks, its focus on re/development, its multiple market expansion strategy, as well as risks associated with on-going challenges in the retail industry are additional risk factors. Other credit concerns of Moody's include Heritage's complex organizational and legal structure, the potential for more aggressive growth over the near term, and its limited operating history as a REIT. While progress has been made in integrating the Bradley and Heritage portfolios, Heritage's senior management still has to overcome several hurdles, such as melding operating and accounting systems. Senior management, although experienced and knowledgeable, has been together for a relatively short time, and has yet to manage through a more difficult operating environment and to show its capacity to add substantial value to a larger and more diverse property portfolio. The following ratings were lowered: * Bradley Operating Limited Partnership a) Senior unsecured debt to Ba2, from Baa3 The following ratings were lowered and withdrawn (Bradley's shelf registration is no longer in effect): * Bradley Operating Limited Partnership a) Senior unsecured debt shelf to (P)Ba2, from (P)Baa3; b) subordinated debt shelf to (P)B1, from (P)Ba2 * Bradley Real Estate Incorporated a) Cumulative preferred stock shelf to (P)"b1", from (P)"ba2"; b) non-cumulative preferred stock shelf to (P)"b2", from (P)"ba3" Bradley Real Estate Incorporated, formerly headquartered in Northbrook, Illinois, USA, owned and operated 96 neighborhood and community shopping centers in 15 states throughout the Midwest as of June 30, 2000. Bradley had assets of approximately $986 million and equity of approximately $408 million. Heritage Property Trust, headquartered in Boston, Massachusetts, USA, was is a private umbrella partnership real estate investment trust (UPREIT). Heritage owned and operated 55 neighborhood and community shopping centers in 12 states as of June 30, 2000. CENTENNIAL COAL: Judge Walsh to Consider Confirmation at Oct. 16 Hearing ------------------------------------------------------------------------ By order dated September 5, 2000, the US Bankruptcy Court, Delaware, approved the debtors' Disclosure Statement to the debtors' second amended joint plan of reorganization as containing adequate information within the meaning of the Bankruptcy Code. On October 16, 2000 at 3:00 PM a hearing will commence before the Honorable Peter J. Walsh to consider confirmation of the plan. Counsel for Centennial Coal, Inc., et al. are Thomas E. Pitts, Jr. and Roger G. Schwartz of Sidley & Austin and Joel A. Waite of Young Conaway Stargatt & Taylor LLP. The estimated amount of allowed claims included in each class under the plan as of August 1, 2000 as rounded to the nearest one-hundred thousand are as follows: Class 1 Priority Claims $ 855,000 Class 2 Miscellaneous Secured Claims $ 475,000 Class 3 Lender Claims $ 71,000,000 Class 4 Unsecured Claims $ 35,000,000 Class 5 Interests in the debtors Not estimated CITADEL BROADCASTING: Moody's Assigns Ba3 Rating To Bank Credit Facilities -------------------------------------------------------------------------- Moody's assigned a Ba3 rating to Citadel Broadcasting Company's $750 million of guaranteed senior secured credit facilities. The facilities consist of a $325 million multi-draw term loan A, a $200 million term loan B and a $225 million revolving credit facility. Moody's also confirmed the B1 senior implied rating, the B2 issuer rating, the B3 ratings on the $115 million of 9.25% guaranteed senior subordinated notes due 2008 and the $101 million of 10.25% guaranteed senior subordinated notes due 2007. Citadel's "caa" rating on its $100 million of 13.25% exchangeable redeemable preferred stock due 2009 was also confirmed. The rating outlook is stable. Citadel will use the increase in availability to fund the acquisition of 12 stations (including one operated under an LMA) from Dick Broadcasting Company. The acquisition was fully priced at $300 million or approximately 16.3 times broadcast cash flow. Following the completion of the pending acquisition, Citadel will own or operate 145 FM and 64 AM radio stations. Although the absolute level of debt at Citadel rises as a result of the transaction, the expectation of a commensurate growth in cash flow and continued geographic diversification contribute support to Citadel's Ba3 bank rating and the confirmation of the company's existing ratings. Further, the ratings reflect Citadel's commanding positions in most of its markets, synergies associated with its market cluster strategy and the broad diversification of formats within its markets. Citadel's strong management team has demonstrated the ability to improve same station audience share and operating margins over time. Additionally, the ratings continue to be supported by Citadel's ability to access the equity markets to repay debt and fund acquisitions as evidenced by the initial public offering of $140 million in June 1999 and its follow-on $235 million secondary offering in February 2000. Citadel's current market capitalization is about $900 million. However, the ratings also consider the likelihood that Citadel's debt- financed acquisition activity will continue (albeit this is not likely over the near term), providing the potential for integration challenges and inhibiting its ability to reduce debt. Year-to-date, including the Dick Broadcasting transaction, Citadel has spent approximately $837 million on acquisitions. The company's high leverage and thin interest coverage increase its vulnerability to economic cyclicality. Additionally, Citadel's ratings incorporate the risk of increasing competition from other radio consolidators. The Ba3 ratings on the credit facilities reflect the benefits of the collateral package and debt protection measures within the credit agreement. The facilities are secured by the assets and a pledge of the stock of Citadel and its direct and indirect subsidiaries. In addition, the facilities are guaranteed by the borrower and its subsidiaries. The B3 ratings on the senior subordinated notes reflects its contractually subordinate position relative to the bank facility, while the "caa" preferred stock rating reflects its junior position in the capital structure. Citadel has the option to pay dividends on the exchangeable preferred in cash or in-kind until July 2002 after which dividends must be paid in cash. Over the near term, bank covenants are expected to limit Citadel's ability to make acquisitions. Notably, as a result of this transaction, Citadel's capital structure is increasingly dependent on bank debt. Pro-forma for the transaction, Citadel's leverage is high and total debt is substantial at $889 million ($984 million including the preferred). According to management, at year-end 2000, debt-to-EBITDA will be about 7 times and debt-plus-preferred-to-EBITDA about 7.7 times. Pro forma interest coverage is very thin at 1.3 times. Leverage is expected to decline as cash flow increases following improvements in certain developmental stations as well as cost synergies associated with acquired stations. Moody's expects Citadel to continue to finance its acquisition activity with mostly debt. However, leverage at Citadel will be governed by the incurrence test in the notes indenture, which limits Citadel's ratio of debt to cash flow to 7.0 times, and the maintenance test in the credit facility which begins at 7.25. Citadel is a seasoned operator with the majority of its stations ranked first or second in respect to revenue. Moody's expects Citadel to continue to be acquisitive which may slow down the pace of improvement in the company's leverage. However, the company has proven to be a capable integrator of acquisitions with a history of benefiting from the acquired stations' cash flow appreciation. Headquartered in Las Vegas, Nevada, Citadel owns and operates radio stations in mid-sized market in the United States. CONSECO, INC.: Banks Extend New Facility as "Restoration Plan" Progresses ------------------------------------------------------------------------- Conseco, Inc. (NYSE:CNC) announced that its lender banks have signed amendments that will restructure the company's credit facilities. The restructuring of this debt is a key component of the "Restoration Plan" initiated by Gary C. Wendt after he joined Conseco on June 29 as Chairman and CEO. The agreement with the banks covers $2.8 billion of debt held by a 25-bank consortium led by Bank of America and Chase Manhattan Bank. Wendt called the terms of the debt restructuring important news, but said, "the larger story here -- what we call the Conseco Restoration Plan -- is the complete re-engineering of the company's financial structure. We are executing a plan that provides long term stability and flexibility for our capital structure." Over the past four years, Conseco's bank and public debt had increased to approximately $5.9 billion. The Restoration Plan calls for reducing the company's debt by more than $3 billion by year-end 2003, reducing Conseco's debt from 41% of total capital to less than 25%. More importantly, the Restoration Plan allows Conseco to meet its debt obligations and improve its capital structure dramatically without impacting its core businesses. The beginning elements of the Conseco Restoration Plan center around two initiatives: (1) selling non-strategic assets of the company, and (2) restructuring the operations of Conseco Finance. These initiatives to generate cash were implemented by Wendt soon after his arrival at Conseco; they have proceeded ahead of schedule. Over the next three years, these two cash-generating components of the Restoration Plan are designed to enable Conseco to repay $1.52 billion in bank debt and $1.56 billion in public debt. To begin the debt reduction program the company has identified more than $2 billion in assets to be sold or monetized. More than $700 million of proceeds from these activities have already been realized; total proceeds are expected to exceed $1 billion by year-end 2000. The initial stages of the restructuring of Conseco Finance operations were announced on July 27. That plan, designed to assure stable growth, included the lay-off of 2000 employees and over $150 million in annual expense reductions. Major elements of the Restoration Plan, including terms of the bank debt restructuring, include: -- Payment of $650 million in bank debt on September 22, 2000; -- Payment of 2001 and 2002 public debt as scheduled ($131 million in December 2000 and $668 million in June 2001); -- Extension of $571 million of bank debt to December 31, 2001 funded by the sale of non-strategic assets; -- Payment of 2003 and 2004 public debt as scheduled ($450 million in October 2002 and $310 million in February 2003); -- On $1.5 billion of bank debt previously due September 2003, payments of $150 million in each of 2002 and 2003, with an option to extend the remaining $1.2 billion to 2005; -- Extension to December 2003 of the $570 million of loans and related Conseco guarantees comprising the Conseco directors and officers stock purchase program (to qualify for the loan and guarantee extensions, borrowers will be required to enter into a revised lending program, which will be finalized in the 4th quarter); -- Suspension of the dividend on Conseco common stock beginning in the current quarter (providing approximately $18 million per quarter toward the financial restructuring); Wendt said that winning back top-drawer insurance and debt ratings would be the next step in the Restoration Plan. "With a stable and flexible financial structure in place, we can turn our full attention to building consistently profitable business operations." CORAM HEALTHCARE: Requests Substantive Consolidation of Estates --------------------------------------------------------------- Coram Healthcare Corporation and Coram, Inc. seek substantive consolidation of the Chapter 11 cases of Coram Healthcare Corporation, Coram, Inc., Coram Resource Network, Inc., and Coram Independent Practice Association, Inc. The debtors file consolidated financial statements, the debtors maintained substantially all of the subsidiaries' books, there exists unity of ownership between the subsidiaries and the debtors, many of the obligations of the debtors were joint and were directly or indirectly guaranteed by the subsidiaries, and their assets and liabilities were commingled. CRIIMI MAE: Declares Dividend, in Preferred Stock, to Preserve REIT Status -------------------------------------------------------------------------- The board of directors of Criimi Mae Inc. on September 11, 2000, declared a stock dividend for common shareholders of record as of October 27, 2000. The dividend will be payable on November 13, 2000 in up to an aggregate of 3.76 million shares of a new series of $10 face value Series G Redeemable Cumulative Dividend Preferred Stock. The purpose of the stock dividend is to distribute approximately $37.5 million, or 60 cents per common share, in 1999 taxable income in order to satisfy the company's Real Estate Investment Trust ("REIT") distribution requirements and to eliminate any federal income tax obligation for 1999. Common shareholders as of the record date will be entitled to receive for each share of common stock held 6/100ths of a share of the new Series G Dividend Preferred Stock (i.e., six shares of Series G Dividend Preferred Stock for every 100 shares of common stock held). Series G Dividend Preferred Stock will be issued in whole shares, with shareholders receiving cash from the transfer agent for their fractional share interests at a price equal to the average sales price of all aggregated fractional shares sold by the transfer agent, less transaction costs. The Series G Dividend Preferred Stock will be convertible into shares of common stock during a period of 10 consecutive trading days commencing on February 21, 2001. Conversions will be based on the volume-weighted average of the sale prices of the common stock for the 10-trading days prior to the date converted, subject to a floor of 50% of the volume-weighted average of the sale prices of the common stock on November 13, 2000. At the end of the conversion period, March 6, 2001, all conversion rights of Series G Dividend Preferred shareholders will expire. Holders of Series G Dividend Preferred Stock will be entitled to receive, when declared by the Board of Directors, cumulative dividends, payable in cash or common stock (or a combination thereof) at the company's option, at an annual rate of 15%. The Series G Dividend Preferred Stock will be redeemable, in whole or in part, at the company's option, at any time after issuance at a price of $10.00 per share. Since filing for protection under Chapter 11 of the U.S. Bankruptcy Code on October 5, 1998, Criimi Mae has suspended its loan origination, loan securitization and CMBS acquisition businesses. The company continues to own a substantial portfolio of subordinated CMBS and, through its servicing affiliate, acts as a servicer of commercial mortgage loans. While the company is in bankruptcy, the symbol for the Series G Dividend Preferred Stock will appear as QCMM Pr G on the NYSE tape. The United States Bankruptcy Court for the District of Maryland, Greenbelt Division has scheduled a confirmation hearing for November 15, 2000 on Criimi Mae's Third Amended Joint Plan of Reorganization. DT INDUSTRIES: Weinstein & Goldman Files Suit Against Officers & Directors -------------------------------------------------------------------------- Weinstein Kitchenoff Scarlato & Goldman Ltd. announces that a class action lawsuit has been commenced on behalf of investors who purchased shares of the common stock of DT Industries, Inc. (Nasdaq: DTIIE) between September 29, 1997 and August 23, 2000 (the "Class Period"). The action was filed in the United States District Court for the Western District of Missouri, and charges DT and certain of its officers and directors with issuing false and misleading financial statements for DT's 1997, 1998 and 1999 fiscal years. On August 23, 2000, DT announced that its outside auditors were investigating certain discrepancies involving DT's wholly-owned subsidiary, Kalish Inc. that could force changes to DT's financial statements going as far back as 1997. DT also said it had placed Kalish's senior financial officer on administrative leave, and had accepted the resignation of DT's senior vice president of finance and administration. On September 19, 2000, DT announced a restructuring of its senior management team. It also said that independent auditors discovered overstatements of asset accounts at Sencorp Systems, Inc., another wholly- owned subsidiary of DT based in Hyannis, Mass., and that Sencorp's senior financial officer was placed on administrative leave. The Nasdaq suspended trading in DTIIE stock on August 23, 2000, and trading had not resumed as of the date of this news release. If you purchased shares of DTIIE common stock between September 29, 1997 and August 23, 2000, and if the Court certifies the Class as defined in the Complaint, you may be a member of the proposed Class and need do nothing further at this time. You have two other options. You may choose to file your own Action, or you may seek to serve as a Lead Plaintiff. Lead Plaintiffs are selected by the Court, and are responsible for overseeing the prosecution of the Action and ensuring that the interests of the Class are protected. Courts often select shareholders who have sustained large losses to serve as Lead Plaintiffs. Anyone wishing to serve as Lead Plaintiff must file a motion with the court by October 31, 2000. If you are interested in learning more about the action or the role of a Lead Plaintiff, please contact Paul Scarlato, Esquire or Mark Goldman, Esquire toll free at (888) 545-7201 or by e-mail at pscarlato@wksg.com or msgoldman@wksg.com. The attorneys at Weinstein Kitchenoff Scarlato & Goldman Ltd. of Philadelphia, PA are experienced in representing defrauded investors in class actions in courts throughout the United States. Weinstein Kitchenoff Scarlato & Goldman Ltd. has achieved a total of more than $1 billion in recoveries for investors, consumers, and other victims of unlawful conduct. ELDER-BEERMAN: James Bennett Lends Strong Support to Self-Tender Offer ---------------------------------------------------------------------- Mr. James D. Bennett beneficially owns 1,319,823 shares of the common stock of Elder Beerman Stores Corporation representing 8.86% of the outstanding common stock of the company. He shares beneficial ownership of as well as voting and dispositive power with respect to 905,000 of the shares with Bennett Restructuring Fund, L.P. Mr. Bennett shares beneficial ownership of as well as voting and dispositive power with respect to 414,823 of the shares with Bennett Offshore Restructuring Fund, Inc. 905,000 of the shares of common stock were purchased by BRF in open market transactions at an aggregate cost of $5,419,652.90. 414,823 of the shares of common stock were purchased by BORF in open market transactions at an aggregate cost of $2,854,639.38. The funds for all purchases of common stock made by BRF or BORF, respectively, came from such entity's own funds. No leverage was used to purchase any of the common stock and all shares beneficially owned were acquired for investment purposes. Furthermore, Mr. Bennett, BRF and BORF have encouraged Elder Beerman Stores to embark on a self-tender offer or similar stock buyback program. On August 29, 2000, the company announced its intention to commence a tender offer for up to 3,333,333 shares of common stock at prices not greater than $6.00 per share nor less than $4.50 per share. On September 8, 2000, the company began the self-tender offer. Mr. Bennett strongly supports the company's decision to commence this self-tender offer. FIRSTPLUS FINANCIAL: Completes Sale of Servicing Rights, Fetching $29 Mil ------------------------------------------------------------------------- On August 30, 2000, Western Interstate Bancorp, a wholly-owned subsidiary of FirstPlus Financial Group, Inc., completed its previously announced sale of all of its servicing rights to Countrywide Home Loans, Inc., a New York corporation, for approximately $29 million cash. Prior to the sale, WIB was principally engaged in the business of servicing mortgage loans. The assets sold include all right, title, and interest in and to each of the agreements which govern the rights and obligations owned by WIB with respect to the servicing of certain mortgage loans. WIB consummated the sale in accordance with the Order Confirming Modified Third Amended Plan of Reorganization of FirstPlus Financial, Inc. issued by the United States Bankruptcy Court, Northern District of Texas, Dallas Division. FLORU ENTERPRISES: Case Summary and 8 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Floru Enterprises, Inc. c/o Sukenik, Segal & Graff 417 Fifth Avenue New York, NY 10016 Chapter 11 Petition Date: September 21, 2000 Court: Southern District of New York Bankruptcy Case No.: 00-14426 Debtor's Counsel: Schuyler G. Carroll, Esq. Olshan Grudman Frome Rosenzweig & Wolosky LLP 505 Park Avenue New York, NY 10022 (212) 753-7200 Total Assets: $ 20,350,000 Total Debts : $ 2,569,585 8 Largest Unsecured Creditors: Philips International Holding Corporation 417 Fifth Avenue New York, NY 10016 $ 2,500,000 Forchelli, Curot, Schwartz et al. $ 45,762 Land Design Associates, Inc. $ 10,000 Realco $ 4,500 Tannenbaum, Halpern, Syracuse et al. $ 2,823 Apex Environmental, Inc. $ 2,500 G. Canella Associates $ 2,000 Nelson & Pope $ 2,000 FRUIT OF THE LOOM: Pro Player To Sell Equipment To Hirsch International ----------------------------------------------------------------------- Pro Player, a subsidiary of Fruit of the Loom, sought and obtained Judge Walsh's permission to sell certain equipment outside the ordinary course of business. Pro Player is selling excess tagging machines, frames and other silk-screening equipment to Hirsch International for $748,000. Risa M. Rosenberg Esq., of Milbank Tweed, says Hirsch International will deposit 20% of the purchase price, or $148,000 in an account of Fruit of the Loom. Paul Levine, President of Hirsch International, signed the contract. (Fruit of the Loom Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENESIS/MULTICARE: Provides Adequate Protection on Edella Mortgage Bonds ------------------------------------------------------------------------ Judge Walsh approved a Stipulation under which Edella Street Associates, a debtor-affiliate of Genesis Health Ventures, Inc., agrees to provide adequate protection to First Union National Bank as successor to First Fidelity Bank, N.A., as indenture trustee for the Luzerne County Industrial Development Authority First Mortgage Revenue Refunding Bonds, Series of 1992 (Edella Street Associates Project). As of the Petition Date, Edella was indebted on the Bonds in the principal amount of $3.475 million plus accrued interest, fees and costs. The Debtor agrees that the Trustee's security interests in the Bond Collateral have been duly perfected and are in all respects valid and enforceable. Permitting the Trustee to foreclose on its security interests would cause cessation or, at a minimum, disruption of the Debtor as a going concern. Accordingly, the Debtor agrees to make adequate protection payments in an amount equal to nondefault interest payments on the outstanding Indebtedness as stated in the Bond Documents on a timely basis and in the manner required by the Bond Documents. Such payments shall be applied and paid over to the Trustee for the benefit of the holders of the Bonds in accordance with the terms of the Bond Documents. The Debtor is authorized to use Cash Collateral provided that this does not include any cash on deposit with the Trustee. However, to the extent the Trustee wishes to distribute cash on deposit with the Trustee to Bondholders on account of principal, the Trustee shall obtain either the consent of the Debtor or an appropriate order from the Court. In addition, the Debtor shall pay all post-petition real estate taxes, maintain adequate insurance and comply with all other reasonable requirements of the Bond Documents. Background In or about 1992, the Lackawanna County Industrial Development Authority authorized the issuance of $4,200,000 of 8.875% First Mortgage Revenue Refunding Bonds (Edella Street Associates), Series 1992, due September 1, 2014, pursuant to a certain Trust Indenture, dated as of June 1, 1992 between the Authority and First Union's predecessor, First Fidelity Bank, National Association, as indenture trustee. Simultaneous with its issuance of the Bonds, the Authority loaned the proceeds of the bonds to the Debtor pursuant to an Installment Sale Agreement dated as of June 1, 1992 between the Authority and the Debtor, which the Authority immediately thereafter assigned to the Trustee. As security for payment of all amounts due under the Bonds, the Debtor granted the Trustee a mortgage on the Debtor's facility and a security interest and liens on, among other things, all of the Debtor's revenues including its accounts receivable and any and all proceeds, rents, products, and profits thereof (the Bond Collateral). The Stipulation and Order provides for similar terms as between Dover and First Union. (Genesis/Multicare Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) GOODYEAR TIRE: Moody's Places Debt Ratings On Review For Possible Downgrade --------------------------------------------------------------------------- Moody's Investors Service placed the long term and short term debt ratings of The Goodyear Tire & Rubber Company (Goodyear) under review for possible downgrade following Goodyear's announcement that earnings for the remainder of the year could be breakeven at best or a slight loss could be incurred. The company cited rising raw material and energy costs, lower tire volume globally and associated production inefficiencies, weakening euro, as well as severe price competition as the main factors. Moody's said its review will focus on Goodyear's plans to address these problems, as well as and the stability and predictability of future earnings and cash flow generation. In addition, the impact of the Firestone and Continental tire recalls and anticipated increased labor costs as a result of the recent Firestone settlement will be explored. Debt reduction through net proceeds from asset sales and working capital initiatives will be assessed, as will the adequacy of debtholder protection measures in the near-to-intermediate term. Ratings under review: Baa1 for notes and bonds; (P)Baa1 for senior, unsecured securities issued pursuant to 415 shelf registration; and Prime-2 short-term debt rating. The Goodyear Tire & Rubber Company, headquartered in Akron, Ohio, is the world's largest tire company. It manufactures tires, engineered rubber products, and chemicals in more than 90 facilities in 27 countries. GOODYEAR TIRE: S&P Places Ratings On CreditWatch With Negative Implications --------------------------------------------------------------------------- Standard & Poor's placed its ratings for Goodyear Tire & Rubber Co. on CreditWatch with negative implications. The rating actions follow the company's announcement that it expects to report either break-even net income or a small loss in both the third and fourth quarters of this year. Current ratings had anticipated a significant improvement in operating results during second-half 2000. Goodyear is the world's largest tire manufacturer, supplying both the replacement and original equipment segments of the industry. The company also produces rubber-related industrial and automotive components and chemicals. Goodyear has reported very disappointing financial results in the past 18 months. In 1999, the company generated $241 million in net income (net of $172 million in restructuring charges), compared with $682 million in 1998 (including $61 million in net gains). For the first six months of 2000, the company reported net income of $123 million compared with $91 million for the same period in 1999. A number of factors are affecting Goodyear's current performance, including: escalating raw material prices and energy costs; the continued deterioration of the euro's value versus the U.S. dollar; weak pricing conditions in various markets; and lower-than-expected industry volumes in North America and in Europe. Standard & Poor's will meet with management to discuss how the company plans to deal with the various factors affecting its operating results. In addition, Standard & Poor's will assess Goodyear's prospects for improved earnings and cash generation in the next year, as well as the likelihood of debt reduction in the near to intermediate term. Goodyear's capital structure is currently aggressively leveraged, with debt to capital (adjusted for operating leases and accounts receivable sales) estimated to be in the mid-50% area. If it appears likely that earnings will remain under pressure for an extended period and that debt leverage will stay near their current levels, ratings will likely be lowered. -- CreditWire RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS RATINGS Goodyear Tire & Rubber Co. Corporate credit rating BBB+/A-2 Senior unsecured debt rating BBB+ Commercial paper rating A-2 GRAHAM FIELD HEALTH: Court Establishes November 29 Bar Date ----------------------------------------------------------- The US Bankruptcy Court, District of Delaware entered an order on September 13, 2000 setting the General Bar Date in the case of Graham-Field Health Products, Inc. Each entity that asserts a claim against the debtors must file a written proof of claim so as to be received on or before November 20, 2000 at 4:00 PM. GST TELECOMMUNICATIONS: Assets Sold to Time Warner for $690 Million ------------------------------------------------------------------- Time Warner Telecom Inc. (Nasdaq: TWTC), a leader in delivering converged communications services to businesses over its fiber, facilities-based networks, and GST Telecommunications, Inc., announced they have received approval from the U.S. Bankruptcy Court for the District of Delaware for Time Warner Telecom to purchase substantially all GST assets for $690 million. The court today approved the definitive purchase agreement between GST and Time Warner Telecom following an auction for GST assets that concluded Aug. 25, 2000. "This acquisition significantly expands our footprint into attractive markets in the West," said Larissa Herda, Time Warner Telecom's President and CEO. "By the end of 2001, we expect to grow from 22 to 44 markets. This will include offering services in 14 Tier 1 markets. We expect to close this transaction within 60-90 days, depending upon regulatory and other approvals. Time Warner Telecom and GST teams are already working on the integration planning process." Time Warner Telecom will acquire GST assets that include: a) over 4,200 miles of local and regional fiber networks in the Western United States; b) a network operations center in Vancouver, Washington; c) SS7 networks; d) voice and data switches; and e) substantially all other assets, excluding customers and certain assets in Hawaii and certain non-core businesses. "Time Warner Telecom's reputation and track record proves we are a company that executes and delivers on its business plan," Herda said. "Our expertise in managing extensive fiber-optic networks, and more importantly, selling services that ride over these fiber optic networks, should allow us to capitalize on GST's solid infrastructure." "In addition to integrating GST assets, we will continue our strong growth in existing markets and will launch the seven additional markets we previously announced, between now and the end of 2001," Herda said. "We remain focused on our current operations." Time Warner Telecom has also received commitments from its banks to provide $1.2 billion of additional financing for the GST acquisition, capital expenditures, and general working capital purposes. This includes $525 million of secured financing from The Chase Manhattan Bank and Morgan Stanley Dean Witter and a $700 million unsecured bridge financing facility from Morgan Stanley Dean Witter, Lehman Brothers Inc. and The Chase Manhattan Bank. "Our current plans, including the GST acquisition and expansion of its fiber networks, will be fully funded with this financing commitment, operating cash flow and cash on hand," said David Rayner, Time Warner Telecom's Sr. Vice President and CFO. A presentation with additional information is available on the company's web site at http://www.twtelecom.com. HARNISCHFEGER INDUSTRIES: Fort James Seeks Payment of Administrative Claim -------------------------------------------------------------------------- Following Beloit Corporation's rejection of its executory contracts with Fort James Corporation, a dispute arose between the parties. Under a prepetition contract between Beloit and Ft. James, Beloit was to manufacture for Ft. James a wet-crepe tissue machine at a purchase price of $4,970,000. Ft. James paid Beloit $2,485,000 in three installments. At or about the time that Beloit determined that it would liquidate, it advised Ft. James that it did not intend to complete performance under the Contract. Ft. James contends that because it paid Beloit money post-petition and did not receive the wet-crepe tissue machine, it is entitled to an administrative claim against the Beloit estate. Based upon its contention that its payments of $2,485,000 to Beloit should be refunded, Ft. James refused to pay for goods that it purchased from Beloit and its affiliated companies. Beloit alleges that the amount involved is well over $2,500,000 and the transactions are totally unrelated to then Contract which is the subject of dispute. Beloit points out that although the payments were made post-petition, they relate to pre-petitionn performance. There is no legal support for Ft. James' attempt to elevate a prepetition claim based upon a breach of a prepetition contract to the status of an administrative claim, the Debtor contends. Beloit also asserts that it was performing pursuant to the terms of the Contract and met all performance benchmarks under the Contract and Ft. James made post-petition payments to Beloit only after Beloit had reached the required performance benchmarks. Beloit argues that in seeking an administrative claim rather than seeking breach damages as a general unsecured claim, Ft. James is trying to recover, ahead of other unsecured creditors, payments it made to Beloit as a result of Beloit's performance under the Contract. What Ft. James wants, the Debtor charges, is a money back guaranty under the Contract if the Machine was not delivered, but the Contract doesn't provide for such a guaranty, and Ft. James is essentially stating that it does not like the risk it negotiated and assumed, the Debtor contends. According to Beloit, the Contract, which is for relatively unique services, reflects the sophisticated parties' distribution of risks and the value they placed on each phase of performance by the Debtor and unlike contracts dealt with in most of the cases, the rights and obligations set forth in this Contract are not susceptible to a market valuation. Refuting Fort James' allegations, Beloit asserts that it did not induce Fort James to perform. Fort James also alleges that Beloit was unjustly enriched because it entered into subcontracts with two of its subsidiaries to perform most of the work under the Contract but did not pay its subsidiaries the full amounts due to them pursuant to those subcontracts. Beloit argues that any claim based upon a breach by Beloit of contracts between Beloit and its subsidiaries belongs to the subsidiaries, not Ft. James and the subsidiaries did allege claims against Beloit for the breach of the subcontracts to which Ft. James refers. Beloit further contends that to allow Ft. James an administrative claim based upon the subsidiaries' claims would result in the Beloit estate paying twice for the same alleged breaches. Beloit also accuses that Fort James' refusal to pay undisputed and unrelated invoices it owed to Beloit and affiliated companies without the approval of the Court shows that Ft. James is taking self-help action; as such, it is "tainted with inequitableness" and should not be allowed to resort to equity. Based upon the standard set forth in N.L.R.B. v. Bildisco and Bildisco in a hearing, the Court concluded that Beloit had benefited from the payments made by Ft. James, but there was not enough evidence to enable the Court to determine the extent of the benefit. The Court then directed that another hearing be held in order to make a ruling on the amount of the benefit actually received by Beloit. In response to that, Beloit submits that it benefited very little, if at all, from the payments made to it by Ft. James pursuant to the terms of the Contract. Beloit contends that: -- The initial payment of $497,000 should not be part of any administrative claim granted to Ft. James because it was due upon entry into the Contract which was formed pre-petition and the respective invoice was also sent to Ft. James prior to the Petition Date -- The amount of $235,351 Beloit paid its subcontractor Beloit Poland S.A. for work performed on the Contract should not be part of any administrative claim either because Beloit could not have benefited from amounts Ft. James paid to it that it, in turn, paid to its subcontractors for work performed on the Contract. -- Walmsley Claims relating to the Contract for the amount of $481,937 filed by J. Heathcote for WK Dawson, Joint Administrator on February 25, 2000, in the Beloit and the Beloit Pulping chapter 11 cases on behalf of Beloit Walmsley Limited, the Beloit subsidiary which is in Administration in England are still pending and the payment to be made is currently unknown. -- the release of claims filed by Beloit Poland S.A. on February 28, 2000, in the amount of $1,322,528 was part of the consideration for selling shares in Beloit Poland. Beloit therefore concludes that any administrative claim to be granted to Ft. James by the Court should be no more than the $2,485,000 paid by Ft. James to Beloit less $2,054,879 (which is the sum of the downpayment of $497,000, the $235,351 paid to Beloit Poland, and the amount of $1,322,528 in the Poland Claim) and less the amount finally paid to Beloit Walmsley for the Walmsley Claim or any administrative claim filed by Beloit Walmsley and allowed by the Court. (Harnischfeger Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) HARRISBURG EAST: EQK Sells Shopping Mall at Auction to Prudential Insurance --------------------------------------------------------------------------- EQK Realty Investors I announced that the Harrisburg East Mall, in Harrisburg, Pennsylvania, its sole real estate asset, was sold in a Bankruptcy Court auction on September 21, 2000, to The Prudential Insurance Company of America, the holder of the Mall's first mortgage debt, for a credit bid of $30,000,000. The amount of the first mortgage indebtedness was approximately $45,000,000. The previously announced transactions with American Realty Investors, Inc. (ARI) and American Realty Trust, Inc. (ART) are expected to close on October 2, 2000. The proceeds of those transactions, $1,125,000 in cash and shares of ARI Preferred Stock with an aggregate stated value of $1,250,000, will be distributed to EQK's creditors. Proceeds from the auction, the ARI/ART transactions and other funds in the bankruptcy estate will be insufficient to permit any distribution to EQK's shareholders. Upon the closing of the transactions with ARI and ART, EQK will be wholly owned by ARI and ART. HEILIG-MEYERS: Reschedules Meeting of Creditors to November 13 -------------------------------------------------------------- The meeting of creditors in the case of Heilig-Meyers Company, et al. has been rescheduled to November 13, 2000 at 11:00 AM, US Courthouse, Richmond, Virginia. Counsel for the debtors are H. Slayton Dabney, Jr. of Mcguirewoods LLP and Myron Trepper, Matthew A. Feldman and Paul V. Shaloub of Willkie Farr & Gallagher. HILLSBOROUGH RESOURCES: Shareholders Approves Belkorp Refinancing Proposal -------------------------------------------------------------------------- Hillsborough Resources Ltd. (TSE:HLB) announced that its shareholders have approved a refinancing proposal from Belkorp Industries Ltd., a major shareholder and creditor of Hillsborough. The proposal provides for Belkorp to purchase the $3.1 million secured note owed by Hillsborough's wholly owned subsidiary Quinsam Coal Corporation to Northgate Exploration Ltd. The note is to be repaid over a five year term with a bullet payment of $700,000 due at the date of maturity. Belkorp is to receive four million, five year warrants to purchase common shares of Hillsborough at an exercise price of $0.36 per share, the closing price on August 28, 2000. In addition, Hillsborough is to repay Belkin Enterprises Ltd., a subsidiary of Belkorp, $4.0 million as a reduction on a $5.0 million debenture owing by Hillsborough. The balance of the $1.0 million owing on the debenture is to be paid on or before October 31, 2000. In the event of default, Belkorp retains an option to convert the unpaid balance into common shares at an exercise price of $0.36 per share. The refinancing proposal is still subject to several conditions, including Toronto Stock Exchange approval of the proposal, discharge of the Companies' Creditors Arrangement Act orders in respect of both Hillsborough and Quinsam and completion of all necessary documentation. Unsecured creditors of Quinsam have also approved a Plan of Arrangement under the Companies Creditors Arrangement Act. A key component of the Plan is the refinancing of the Quinsam loan owing to Northgate. Hillsborough also announced the settlement of two substantial legal claims. Seabulk Systems Inc. will pay Quinsam a sum of $1,000,000 in full settlement of all outstanding claims and Oxbow Carbon & Minerals Inc. agreed to pay Quinsam $650,000 prior to September 30, 2000 in full settlement of all outstanding claims. Completion of both settlements is expected shortly. ICO GLOBAL: Space-Based Telecommunication Losses Approach $1 Billion -------------------------------------------------------------------- Teledesic and New ICO, which agreed to merge earlier this year after billionaire Teledesic founder Craig McCaw bailed ICO out of bankruptcy protection, together have lost nearly $1 billion in their attempts to create a space-based telecommunications system, according to a newswire report. The information was posted yesterday in a filing with the Securities and Exchange Commission, giving the world its first peek at the business plan behind McCaw's "Internet in the sky" vision, which would use satellites to create a single, world-wide communications network. The merger is expected to close in November. New ICO, formerly ICO Global Telecommunications, lost a total of $592.6 million since it was founded in 1995. Teledesic, founded by McCaw in 1990, has lost $392.7 million. Neither company has successfully launched a satellite. London-based New ICO emerged from bankruptcy protection on May 17 thanks to a $1 billion infusion of cash from McCaw and other investors, most notably Microsoft Corp. Chairman Bill Gates. Before it went into bankruptcy protection, ICO lost its first $100 million satellite due to a failure aboard a Boeing Sea Launch rocket shortly after liftoff from the floating platform. (ABI 21-Sep-00) JUST FOR FEET: Judge Farnan Delays Turnover of Cash to Bank of America ---------------------------------------------------------------------- The Honorable Joseph J. Farnan, US Bankruptcy Court, Wilmington, Delaware, entered an order on September 7, 2000 on the motion of Bank of America as administrative agent for a group of lenders for relief from the automatic stay. The motion for relief from stay seeks to have all but $5 million of the $20 million currently on hand with the Chapter 7 Trustee turned over to the Bank Group for application to the Bank Group's secured claim. The court relies on certain conditions precedent before approving the relief from the stay. The Trustee must complete an investigation of the Bank Group's claims, and the Trustee must be satisfied that the claims of the Bank Group are not subject to challenge, and the court must first approve an agreement between the Bank Group and the debtor relating to the motion for relief from stay. The court may then approve the terms of agreement allowing a reserve in the amount of $5.5 million for payment of Prior Claims and an additional $1.5 million for payment of allowed Chapter 7 trustee compensation and professional fees and expenses. KCS ENERGY: Proposes $2.9 Million Employee Retention Program ------------------------------------------------------------ On September 13, 2000, the debtors, KCS Energy, Inc., et al. filed a motion to implement an employee retention program for the debtors' employees other than senior management. A hearing on the motion will be held before the Honorable Peter J. Walsh, US Bankruptcy Court, Wilmington, DE on September 27, 2000 at 4:00 PM. The Retention Program provides employment continuation incentives for employees who are crucial to the successful operation and reorganization of the debtors' business. The debtors believe it imperative to implement the Retention Program to reduce the risk of losing employees to competitors. Over the last eighteen months, the debtors have experienced an employee turnover of approximately fifty percent and the debtors are currently experiencing a turnover rate of approximately six percent per month. Under the Retention Program, employees will be eligible to receive a bonus ranging from twenty-five percent to seventy-five percent of one year's salary, based on various factors including seniority, job level, and expected value of the employees' future contributions. The average bonus is expected to be approximately fifty percent of annual base salary. Employees would best in the retention bonus upon the earlier of September 30, 2002 or the involuntary termination of an employee's employment with the debtors, as defined by the retention program. Assuming eighty percent of employees earn the retention bonus, the debtors estimate the total cost of the Retention Program to be $2.9 million. Attorneys for the debtors are Neil B. Glassman, Jeffrey M. Schlerf and Steven M. Yoder, The Bayard Firm, Wilmington, DE and Harvey R. Miller, Martin J. Bienenstock and Michael P. Kessler, Weil Gotshal & Manges (NY) and Harry Perrin, Weil Gotshal & Manges (Houston, Tx.) KITTY HAWK: Northwest Airlines Wants More Detail About Proposed Compromises --------------------------------------------------------------------------- Northwest Airlines, Inc., a creditor and party-in-interest in the case of Kitty Hawk, Inc., et al., objects to the debtors' Disclosure Statement. Northwest states that the plan is an attempt to force general unsecured trade creditors of the estates to vote in favor of a number of compromises, including the debtors' proposed settlement with the Noteholders, without providing creditors with an adequate opportunity to analyze and test the merits of such compromises. Northwest asks why Noteholders, professionals and former and present officers are receiving releases under the plan. The debtors also ask what is the consideration that the non-debtor parties are providing to the debtors to warrant such releases. Northwest states that Class 7 general unsecured creditors are not afforded treatment consistent with another class of similar claims - the Class 6 unsecured claims of the Noteholders. The members of Class 7 share in only 7,500,000 shares. The members of Class 6 receive a pro rata distribution of 42,500,000 new shares of the consolidated reorganized debtor. Class 6 receives nearly six times as many shares as Class 7, yet the amount of claims in Class 6 is merely three to four times more than Class 7 claims. Even though unsecured creditors stand to recover no more than thirty cents on the dollar, Northwest claims that the debtors' existing shareholders are afforded the exclusive right to purchase 5 million new shares of the reorganized debtor at a price per share established by the Court. The plan thus allows debtors' existing equity to retain a significant interest in the reorganized debtor, totaling only slightly less than the 7,500,000 shares allotted to the general unsecured creditors of the estates. Northwest also states that the plan does not fall within the new value exception since it does not provide for competing bidders to take part. According to Northwest, the debtors request that the court (rather than the open market) set the value of the consolidated reorganized debtor's shares, and authorize debtors' equity to purchase 5 million shares. Northwest submits that the procedure does not provide the opportunity for competitive bidding and market valuation contemplated by prevailing case law, and violates the absolute priority rule. LAIDLAW, INC.: Holding Conference Call Today at 2:00 p.m. Eastern Time ----------------------------------------------------------------------- Laidlaw Inc. (NYSE:LDW; TSE:LDM) said that it has scheduled a conference call for Tuesday, September 26, 2000 at 2:00 p.m. ET to discuss the company's pending solicitations of its bondholders. The company is seeking the bondholders' consent to permit certain of its operating subsidiaries to enter into previously disclosed secured financing facilities. The conference call is open to all existing holders of Laidlaw debt. Stephen Cooper, Laidlaw's vice chairman and chief restructuring officer and managing partner of Zolfo Cooper LLC, a New York-based consulting firm specializing in restructurings and reorganizations, will host the call and will discuss the company's current liquidity and capital structure issues and why the company views the secured financing facilities as substantially preferable to other available alternatives. Representatives of the informal steering committee of the bondholders will also participate in the presentation. A question and answer session will follow the presentation. LOEWS CINEPLEX: Bank Lenders Agree to Waive Covenants for 90 Days ----------------------------------------------------------------- Loews Cineplex Entertainment Corporation (NYSE:LCP; TSE:LCX) announced that it has reached an agreement with the syndicate banks that provide funding to the Company under its Senior Secured Revolving Credit Facility to grant a temporary waiver of the restrictions of the terms of its Credit Facility. The waiver, which is for a period of 90 days, will allow the Company to have access to funds to meet its financial obligations during this time. The Company and its lending group will continue discussions in order to arrive at a long-term solution. Loews Cineplex Entertainment Corporation is the world's largest publicly traded theatre exhibition company in terms of revenues and operating cash flow, with 2,960 screens in 376 locations primarily in major cities throughout the United States, Canada, Europe and Asia. Loews Cineplex's divisions include Loews Cineplex United States, Cineplex Odeon Canada and Loews Cineplex International. Loews Cineplex operates theatres under the Loews, Sony, Cineplex Odeon and Europlex names. In addition, the Company is a partner in Magic Johnson Theatres, Star Theatres, Yelmo Cineplex, De Laurentiis Cineplex, Odeon Cineplex and Megabox Cineplex. NATIONAL HEALTH: S&P Lowers REIT's Senior Debts Ratings to B+ ------------------------------------------------------------- Standard & Poor's today lowered its rating on National Health Investors Inc. In addition, ratings were lowered on the company's senior unsecured notes and mixed-shelf registration. All ratings were placed on CreditWatch with negative implications. The rating actions are driven by concerns that debt coverage measures will continue to weaken and that there is uncertainty surrounding current negotiations with the company's unsecured bank lenders. The ongoing challenges facing a number of National Health's health care operators, including its advisor and largest operator, National Healthcare Corp. (NHC), also remain a material credit concern. National Health is a Tennessee-based REIT that has invested roughly $624 million in 188 mortgage and/or equity investments, the majority of which are long-term care and assisted-living facilities. An additional $114 million is invested in health care property or operator-linked securities. Although corporate-level profitability, 12.4% return on investments, and fixed-charge coverage measures, 2.8 times (x), remain strong relative to other health care REIT peers, these measures have been declining and are now likely to deteriorate further due to expected higher financing costs. Any disruption to the strong returns derived from National Health's less- liquid, property-linked securities investments would also negatively impact current debt coverage measures. National Health is currently less than 50% leveraged (on a book-value basis). The company has about $357 million in total debt, $91 million of which represent outstandings under a favorably priced $102 million unsecured revolver that matures on Oct. 10, 2000. While management has been in discussions with its lenders for several months, definitive terms have yet to be agreed upon. National Health's secured debt levels are currently relatively low, and the company does have leverageable assets. Should a revised bank facility and/or alternative financing vehicle be fully secured, Standard & Poor's would be required to 'notch' the rating on the unsecured notes to reflect structural subordination. National Health's largest single-operator exposure (about 35% of revenues) is to its former sponsor and present advisor, unrated NHC. Relative to other rated health care REITs, nearly all of whom are capital constrained and similarly exposed to weakened operators, the company's direct affiliation with NHC does provide it with ready access to a replacement operator in the event of operator or borrower distress at the facility level. However, this trend results in National Health's business risk profile more closely resembling that of a health care operator than that of pure health care lender. NHC was modestly profitable in 1999 (despite the adoption of Medicare's new Prospective Payment System) and has remained so through the first six months of this year. However, NHC has litigation- related contingent liabilities, which, until resolved, will materially constrain its own financial flexibility. National Health's ratings will remain on CreditWatch with negative implications until near-term debt maturities have been resolved, Standard & Poor's said. ---CreditWire OUTSTANDING RATINGS LOWERED; ON CREDITWATCH NEGATIVE Rating National Health Investors Inc. To From a) Corporate credit rating B+ BB b) $100 million 7.3% senior notes due 2007 B+ BB c) $200 million mixed debt and preferred securities shelf(1) B+/B- BB/B+ (1)Preliminary. PAGING NETWORK: Metrocall Shareholders Rally with Latest Takeover Offer ----------------------------------------------------------------------- Metrocall Inc. stock jumped as much as 32 percent after the company said it lined up $337.5 million of financing to bolster its takeover attempt for bankrupt rival Paging Network Inc., or PageNet, according to a Reuters report. Three companies, led by Reston, Va.-based digital wireless provider Nextel Communications Inc., will take a big equity stake in Metrocall. The Alexandria, Va.-based company separately outlined an offer to PageNet bondholders in the event the U.S. Bankruptcy Court in Delaware accepts its merger proposal. Westborough, Mass.-based Arch had agreed to a $552 million merger with Dallas-based PageNet last November. Metrocall made an unsolicited $749 million bid in July, just days after three PageNet bondholders forced PageNet into bankruptcy. Metrocall's announcement is "very significant," said Marcus Jones, a senior analyst at credit rating agency Moody's Investors Service. "This looks to be an improved version of its plan to buy PageNet. Committed financing should be looked upon favorably by the bankruptcy court." Metrocall said its new financing includes $105 million in equity, $57.5 million in senior unsecured notes distributed among at least four investors, and $175 million from the sale of mobile radio licenses to Nextel. (ABI, 21-Sep-00) PREMIER LASER: Sells Interest in Ophthalmic Imaging for $2,700,000 ------------------------------------------------------------------ On August 31, 2000, Premier Laser Systems, Inc., completed the sale of the company's stock in Ophthalmic Imaging Systems, the company's intercompany receivable from OIS, and its inventory of OIS products to MediVision Medical Imaging, Ltd., an Israeli corporation, for $2.7 million in cash and registered stock of MediVision, pursuant to the Securities Purchase Agreement dated July 13, 2000. Under the terms of the agreement, MediVision converted the receivable into OIS stock at a conversion price of $0.55 per share, and as a result of the sale, MediVision now owns approximately 73% of the common stock of OIS. The company received $1.7 million cash at the closing of the transaction, and MediVision is obligated to issue within six weeks of the closing shares of registered stock of MediVision valued at approximately $1 million. This obligation is supported by a letter of credit valued at $1,000,000 received by the company from MediVision at closing. As part of the parties' agreement, MediVision will repurchase the shares at the issue price eleven weeks after the closing if the shares have not been previously sold by Premier. PRIME SUCCESSION: First Move to Reject Burdensome Contracts & Leases -------------------------------------------------------------------- Prime Succession Inc., et al. seeks authority of the US Bankruptcy Court, Delaware to reject certain executory contracts and unexpired leases. A hearing to consider the motion will be held on September 28, 2000 at 2:00 PM before the Honorable Peter J. Walsh. The debtors' rejection of the Designated Agreements complies with the provisions of section 365(a) of the Bankruptcy Code. The Designated Agreements include Equipment leases, Non-Competition Agreements, Consulting/Employment Agreements, Vehicle Leases, and Real Property Leases. The debtors have determined that the leases are no longer necessary for the debtors' ongoing operations. Real property leases to be rejected cover premises located in Ellenville, New York, Miramar, Florida, Urbana, Illinois, Memphis, Tennessee, Orange Park, Florida, Clarksville, Tennessee, Memphis, Tennessee and Boone County, KY. PRO AIR: Passengers with Confirmed Reservations Helped by Spirit Airlines ------------------------------------------------------------------------- Low-fare specialist Spirit Airlines, the largest privately-held airline in the United States, announced further steps to aid passengers inconvenienced since Pro Air suspended service. Passengers booked on Pro Air are being offered confirmed reservations on Spirit Airlines flights. The cities served by both airlines are Detroit, New York/LaGuardia, and Orlando. Spirit Airlines is working with Pro Air to facilitate a transfer of passengers and attempting to offer comparable prices without any additional service fees. Pro Air staff is contacting passengers and offering the ability to rearrange their travel and make reservations on Spirit Airlines flights. Spirit Airlines is accommodating as many Pro Air passengers as space allows. If seats are not available on requested flights, Spirit Airlines is offering alternate dates and alternate cities where applicable, such as service to Tampa as an alternative to Orlando. In order to take advantage of this offer, Pro Air passengers must work directly with Pro Air who can be reached at 1-800-4PROAIR. PRS INSURANCE: A.M. Best Downgrades Financial Strength Rating to C ------------------------------------------------------------------ A.M. Best Co. has downgraded the financial strength rating of two members of PRS Insurance Group Inc., Beachwood, Ohio, to C (Weak) from B++ (Very Good), and has placed the group under review with developing implications. The members are Credit General Insurance Co. and its wholly owned subsidiary Credit General Indemnity Co. The rating reflects the group's inability to file second quarter financial statements and A.M. Best's concerns about the group's loss reserve position and the collectability of reinsurance recoverables. The rating also reflects the group's below average capitalization level, weak balance sheet, declining liquidity measures, dramatic growth in workers' compensation business and the highly priced and competitive commercial- lines market. During 1999 and in 2000, the group experienced a dramatic growth in workers' compensation premium from increased premium retention rates, the elimination of a fronting agreement and organic premium growth. In 1999, the group's business shifted from a mix of commercial automobile and commercial multi-peril to workers' compensation and commercial automobile. The rapid growth in premium volume, the shift in business to long-tailed exposures and minimal growth in the capital base resulted in a decline in overall capitalization. The group's balance sheet also weakened in 1999 from the declining actual value of invested assets and the percentage of invested assets to total assets. The group's liquidity position has decreased in recent years and currently compares less favorably to peers. The group has experienced negative cash flow over the past two years. At year-end 1999, PRS maintained financial leverage of 32.6%, based on total debt to total capital. The group's expense ratio has fluctuated widely in recent years, although its expense structure compares favorably to its peer group. The rating will remain under review with developing implications pending further disclosure of its financial position. SAFETY COMPONENTS: Plans to Emerge Under Confirmed Plan in Early October ------------------------------------------------------------------------ Safety Components International, Inc. and certain of its United States subsidiaries, including Safety Components Fabric Technologies, Inc. and Automotive Safety Components International, Inc., a low cost supplier of automotive airbag fabric and cushions in the United States, announces that their plan of reorganization to emerge from their pre-arranged chapter 11 cases was approved by the District Court of the State of Delaware. The plan will effect a substantial deleveraging of, and strengthening of the balance sheet for, Safety Components. Subject to fulfillment of the conditions precedent to emergence, Safety Components is expected to emerge from chapter 11 in early October. Immediately upon emergence, the company will have access to approximately $56 million in debt financing. The company has reached agreement with Congress Financial Corporation on a three-year $35 million credit facility, which will become effective upon emergence from its chapter 11 case. The Congress facility, which has received District Court approval, is expected to provide adequate funding for Safety Components' ongoing global operating needs. Further, the pre-bankruptcy secured banks will retain a two-year subordinated secured note for approximately $20.9 million. The company has also obtained the support of its major suppliers who have already agreed to extend open credit terms upon the company's emergence. Under the plan, as confirmed, all of the company's 10-1/8% senior notes issued by the company due 2007 will be converted into the right to receive 96.8% of the company's post-bankruptcy equity, and the current share of common stock, excluding stock held by Robert Zummo (Chairman of the company), will receive 3.2% of the company's post-bankruptcy equity and warrants to acquire 12% of such equity. In addition, all trade suppliers and other creditors will be paid in full pursuant to the terms of the confirmed plan. John C. Corey, President and Chief Operating Officer, stated, "We are pleased that our plan of reorganization has been approved. The company has significantly improved its operations over the past few months, exceeding projections. As a result of the operations improvements introduced last year, and new program awards this year, upon emergence, the company will have a much stronger balance sheet and access to flexible financing arrangements from Congress Financial." Mr. Corey added, "Now that the company's position has improved, we can return our primary focus to the fulfillment of our goals: increasing productivity and profitability from the core airbag automotive business, capitalizing on continuing growth opportunities in the airbag automotive business and divesting non-core operations. We have further enhanced our ability to fulfill these goals by retaining our operations management team." Mr. Corey continued, "Finally, we are very appreciative for all of the support provided by our customers, suppliers, employees and advisors during this critical time, which has enabled the company to emerge from chapter 11 on an accelerated timetable. We believe we will be able to demonstrate that such support was warranted by maintaining a strong airbag automotive business." SAFETY KLEEN: Judge Walsh Fixes October 31, 2000, General Bar Date ------------------------------------------------------------------ Pursuant to Rule 3003(c)(3)(i) of the Federal Rules of Bankruptcy Procedure, Safety-Kleen Corp. and its debtor-subsidiaries and affiliates sought and obtained an order establishing 4:00 p.m., prevailing Eastern Time, on October 31, 2000, as the last date for all creditors to file proofs of claim in these chapter 11 cases. In order for the Debtors to develop a plan of reorganization, they will need to have complete and accurate information regarding the nature, amount and status of all claims against each of the individual Debtors in these chapter 11 cases. In particular, the Debtors' ability to develop a plan of reorganization -- and creditors' ability to evaluate meaningfully the Debtors' proposed plan -- depends on Safety-Kleen's ability to prepare thorough estimates of the aggregate amounts of Claims held against each of the Debtors' estates. The Debtors propose that the October 31, 2000, Bar Date will apply to all Entities holding Claims against the Debtors (whether secured, priority or unsecured) that arose prior to the Petition Date, including: (a) creditors whose Claims against a Debtor arise out of the rejection of executory contracts or unexpired leases prior to the entry of the order establishing the Bar Date; and (b) Governmental Units holding Claims against a Debtor for unpaid taxes, whether arising from prepetition tax years or periods or prepetition transactions to which a Debtor was a party. The Debtors propose that the Bar Date will NOT apply to: (1) any Entity whose Claim against a Debtor is listed in the Schedules of Assets and Liabilities or any amendments thereto that are not therein listed as "contingent," "unliquidated" or "disputed" and that are not disputed by the holders thereof as to amount, Debtor or classification; (2) any Entity that has already properly filed a proof of claim against the correct Debtor; (3) any Entity whose claim against a Debtor previously has been allowed by, or paid pursuant to, an order of this Court; and (4) any of the Debtors that hold Claims against one or more of the other Debtors. Rejection damage claims, the Debtors propose, must be filed by the later of (a) 30 days after the date of any order authorizing the Debtor to reject such lease or executory contract and (b) the Bar Date. Holders of equity securities will not be required to file proofs of interest solely on account of an equity ownership interest in or possession of such equity securities. The Debtors propose to serve on all known Entities holding potential prepetition Claims a notice of the Bar Date and a customized proof of claim form indicating how the Debtors scheduled a creditors' claim. To flush-out unknown claims, the Debtors will publish notice of the Bar Date in the national editions of The New York Times and The Wall Street Journal. Creditors asserting claims against more than one Debtor entity will be required to file proofs of claim against each individual Debtor entity. Trumbull Services, LLC, will handle the mailing of the claim forms and anticipates it will complete that mailing by September 15, 2000. All proofs of claim must be returned to Trumbull for docketing. (Safety-Kleen Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392- 0900) SHOP AT HOME: E-commerce Leader Sells Bridgeport Television Station ------------------------------------------------------------------- Shop At Home, Inc. (Nasdaq: SATH), an electronic commerce leader in both broadcast and Internet channels, announced that it has entered into a firm agreement to sell television station WSAH, Bridgeport, Connecticut to Azteca America Stations Group, LLC for $37.5 million in cash at closing. The Company also announced that it had agreed with the holders of its Series B Preferred Stock to amend the terms thereof. The amendment provides for the orderly conversion of the Series B Preferred Stock into Common Stock and extends the restrictions on the shorting of stock by the holders of the Series B Preferred Stock. Kent Lillie, the Company's President and Chief Executive Officer said, "The sale of our Bridgeport station, the least mature of Shop At Home's six owned and operated stations, represents a substantial return on our investment in a very short period of time and is part of our overall strategy to return to profitability. Moreover, our remaining television stations, which are carried in approximately 5.4 million cable households, constitute an impressive mix of properties with four out of five stations in the top fifteen market areas, and three out of five in the valuable UHF Channel 59-69 range." "We will deploy the cash proceeds from the sale to bring greater and more immediate benefits to the Company, consistent with our desire to prudently re-capitalize and repay debt. In addition, we believe the amendment to our preferred stock agreement removes uncertainty over the Company's capital structure and enables us to improve value for our shareholders." Bridgeport Station Sale Shop At Home and Azteca America entered into an agreement on September 20, 2000 outlining the sale of WSAH-Bridgeport, for a total purchase price of $37.5 million. A more definitive purchase agreement between both companies is expected to be signed within 30 days upon completion of due diligence. The parties agreed to file the application to transfer the station's licenses with the FCC as soon as possible. The television station WSAH, Channel 43/DTV Channel 42, licensed to the city of Bridgeport, Connecticut, was purchased by Shop At Home in June of 1999 for $18.1 million. WSAH serves part of the New York designated market area (as defined by Nielsen Media Research). The Company anticipates that the gain from the sale of the station will have minimal tax consequences due to prior net operating losses. The Company intends to replace approximately 765,000 full time equivalent cable households (3% of our national distribution) reached by WSAH in Connecticut and New York with carriage by new and existing Shop At Home affiliates. Restructuring the Convertible Preferred Stock Under the terms of the agreement reached with the holders of the Series B Preferred Stock, the holders have agreed to waive through October 31, 2000 provisions of the Series B Preferred Stock that would have enabled the holders to voluntarily convert their Series B Preferred Stock and which would have rendered inapplicable certain restrictions on shorting the Company's common stock. This waiver will extend until December 31, 2000 in the case of voluntary conversion, and until June 30, 2001 in the case of short selling, if by October 31, 2000 certain conditions are met. The conditions would be deemed satisfied by an agreement to sell a television station on certain specified terms, including for proceeds, net of related fees and expenses, in excess of $30 million. The Company expects that the sale of the Bridgeport station will satisfy this condition. The Company has also agreed with the holders of the Series B Preferred Stock that such holders will convert $5 million of Series B Preferred into Common Stock by October 31, 2000, and another $5 million of Preferred Stock into Common Stock between November 1, 2000 and December 31, 2000, subject to certain volume limitations. Under the existing terms of the Series B Preferred Stock the holders may, among other things, engage in short sales of common stock up to the amount of the conversions referenced above. The Company retains the right, subject to certain conditions, to redeem for cash the remaining $10 million dollars of Series B Preferred Stock (of the original $20 million of Series B Preferred Stock issued). Mr. Lillie stated, "We appreciate the cooperation of Promethean and the other preferred shareholders in restructuring our agreement, which we believe reflects their confidence in the overall value of our Company and business plan." About Azteca America On September 7, 2000, Pappas Telecasting Companies, the nation's largest privately-held owner and operator of television stations, and TV Azteca (NYSE: TZA), the second largest producer of Spanish language programming in the world, announced an alliance to create a new nationwide Spanish language television network called Azteca America. The network will be 80% owned by Pappas Telecasting and 20% owned by TV Azteca. Azteca America will begin full network operations during the second quarter of 2001 with the combination of the popular Spanish language programming of TV Azteca -- the owner of two nationwide broadcast networks in Mexico -- and a broad network of television stations contributed by Pappas Telecasting. The network will initially reach at least seven of the top 10 Hispanic market areas, including the top four. Stations in some select markets will begin broadcasting TV Azteca programming late in the fourth quarter of 2000. Additional acquisitions are pending. About Shop At Home Shop At Home, Inc., a leader in converged technology, is a premier retailer of specialty consumer products, primarily collectibles, through interactive electronic media including broadcast, cable and satellite television and, increasingly, over the Internet. Shop At Home Network reaches over 60 million unique cable and satellite households. In addition to the Bridgeport station, licensed to the New York Market, the Company owns full power television stations in San Francisco, Boston, Houston, Cleveland, and Raleigh making Shop At Home the Nation's 13th largest television broadcaster. Shop At Home also operates collectibles.com, a leading online site for the retail sale of collectibles products that features state-of-the-art technology from Oracle Corp. (Nasdaq: ORCL), and others to offer collectors a unique online shopping experience. collectibles.com recently announced its first million dollar sales month, and has completed exclusive-to-the- Internet distribution agreements with more than 85 of the leading manufacturers and licensees of collectibles products. SIGNAL APPAREL: Activewear Clothing Maker Files Chapter 11 in New York ---------------------------------------------------------------------- Signal Apparel Company, Inc. (OTCBB:SIAY) announced that it filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. The Company is currently in discussions with its senior lender in connection with debtor-in-possession financing. The Company also announced that its senior lender has declared the Company in default under the Company's Revolving Credit, Term Loan and Security Agreement with the senior lender and declared the Company's entire indebtedness with the senior lender immediately due and payable. The Company is currently holding discussions with the senior lender and other parties concerning its alternatives. The firm designs and markets activewear for kids and adults, including items with licensed logos and characters. It sells clothing under its own labels (G.I.R.L, Bermuda Beachwear) and under licenses (Hanes Sport, B.U.M. Equipment, Winnie the Pooh, Major League Baseball). It owns activewear and swimwear maker Tahiti Apparel and is a licensed US supplier of Umbro soccer apparel. The company has completed its transition from manufacturer to marketer, but that may not be enough. After years of losses and failed corrective measures, Signal Apparel's stock was delisted from the NYSE in 2000. CEO Stephen Walsh and director Paul Greenwood own 46% of the firm. SIGNAL APPAREL: Case Summary and 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Signal Apparel Company, Inc. 500 Seventh Avenue, 7th Floor New York, NY 10015 Type of Business: Sales & marketing of apparel primarily to the retail trade. Chapter 11 Petition Date: September 22, 2000 Court: Southern District of New York Bankruptcy Case No.: 00-14462 Debtor's Counsel: Leonard H. Gerson, Esq. Angel & Frankel, P.C. 460 Park Avenue New York, NY 10022 (212) 752-8000 Fax (212) 752-8393 Email: lgerson@angelfrankel.com Total Assets: $ 40,920,000 Total Debts : $ 153,870,000 20 Largest Unsecured Creditors Alara Moda Bronz SokakBize Core Apt 5/2 Macka_Istanbul, Turkey 5770037715 Trade Debt $ 888,629 Disney Enterprises, Inc. Royalty P.O. Box 101947 Atlanta, GA 30392 License Fee $ 454,002 Hanes Sports c/o Sara Lee 1000 East Hanes Mill Avenue Winston-Salem, NC License Fee $ 447,935 Yaffit M. Model Ltd. 23 Imber St K, Arie Petach, Israel 49222 Trade Debt $ 438,119 Warner Brothers Consumer Products 21477 Network Place Chicago, IL 60673 License Fee $ 398,467 Sesame Workshop License Fee $ 248,987 Riddell Sports, Inc. License Fee $ 154,000 Chianti Int'l Inc. Trade Debt $ 117,646 Elizabeth Miller Litigation Settlement $ 111,120 Esprit De Corp License Fee $ 102,647 Fletcher Bright Litigation Settlement $ 99,159 Umbro International Trade Debt $ 91,310 Florence Paper Corp. Trade Debt $ 90,147 Mega Shipping and Forwarding Trade Debt $ 84,642 Delta Apparel Trade Debt $ 81,175 C-Air Customhouse Brokers Services $ 79,288 Major League Baseball Properties License Fee $ 73,487 Dechert Price & Rhoads Legal Services $ 70,213 M. Franabar Associates, Ltd. Trade Debt $ 64,526 Witt, Gaither & Witaker P.C. Services $ 61,100 SONIC AUTOMOTIVE: Moody's Assigns B2 Rating To Proposed Senior Sub Notes ------------------------------------------------------------------------ Moody's Investors Service assigned a rating of B2 to Sonic Automotive's proposed $125 million senior subordinated guaranteed notes due 2008, and assigned a rating of Ba3 to the company's recently completed $500 million senior secured revolving credit facility expiring 2001. Moody's also confirmed Sonic's Ba3 senior implied rating, its B1 senior unsecured issuer rating, and the B2 rating on its existing $125 million 11% senior subordinated notes, due 2008. Sonic's rating outlook remains stable. The ratings reflect the risks of Sonic's high leverage and its debt financed acquisition strategy. The ratings also reflect thin operating margins typical of auto dealerships; sensitivity to cyclical factors; volatile gross margins for used car sales; a high level of intangibles, which comprise over 35% of assets; and the operational challenges of integrating new acquisitions which Moody's believes offer limited opportunities to improve profitability. The ratings are supported by Sonic's improved profitability from its fixed operations, which include parts sales, service and collision businesses, which adds a relatively more stable source of income to the car dealerships; the proven ability to grow revenues from finance and other sources, which carry higher margins than vehicle sales, at a higher rate than vehicle sales; a satisfactory level of fixed cost coverage by its service operation; and significant brand and geographic diversification achieved over the past year. Sonic had previously been heavily dependent on Ford, whose vehicles accounted for about 40% of revenues several years ago and which until recently provided nearly all of Sonic's liquidity arrangements. Ford vehicles now account for less than 15% of new vehicle sales, and financing sources have been diversified to include other lenders. The rating outlook is stable, although Sonic's position in its rating category has weakened somewhat because of a higher than anticpated use of debt to finance acquisitions. Moody's expects debt levels will increase as Sonic borrows for new acquisitions and uses floor plan financing to finance organic growth. However, demand for cars has historically been highly cyclical. In the short term, Moody's is concerned that changes in consumer confidence and gasoline prices could impact overall demand or product mix. In the longer term, the impact of macro-economic changes on sales volume and margins for both new and used cars is a source of uncertainty. Sonic's inventory management appears satisfactory, which limits the time necessary to adjust to adverse changes in the selling environment. Its operating profit margin, while thin, has improved in recent periods and compares favorably with competitors' margins. Moody's expects that total debt (including floorplan financing) to EBITDA will fluctuate between six and seven times. Moody's expects that fixed charge coverage (including floor plan interest and rent) will likely remain near two times, as higher rents from the company's lease financing strategy partly offsets potential margin improvements. The proposed subordinated debt issue will be used to repay short term debt. The new revolving credit facility, shared by Ford Motor Credit and Chrysler Financial Co., replaces a smaller facility with somewhat different terms. The new facility will be used largely for acquisition financing as well as other operating needs as a supplement to floor plan financing, which Moody's expects will remain Sonic's largest debt category. The revolving credit facility is guaranteed by all of Sonic's current and future operating subsidiaries, and is secured by the stock of certain subsidiaries as well as other assets. The Ba3 rating of the revolving credit facility recognizes a fair level of credit protection from the borrowing base restrictions and collateral supporting borrowings, but also recognizes that borrowings will be used primarily to finance the value of goodwill acquired. Tangible asset coverage could therefore vary significantly over time. Borrowings are governed by a borrowing base which takes into account Sonic's receivables, parts inventory, used vehicle inventory not financed with floor plan debt, and other dealership assets. The company may borrow $170 million in excess of amounts allowed under the borrowing base. Collateral includes 5 million shares of Speedway Motorsports stock pledged by Sonic's largest stockholder, Sonic Financial Corp., currently valued at about $120 million. Other collateral includes real and personal property of Sonic and the guarantors, which includes inventory. Priority of claim for inventory is governed by an intercreditor agreement between revolving credit lenders and floor plan lenders, who receive a first-priority claim against specifically financed inventory. In addition to the rated debt, Sonic has a $100 million mortgage facility, largely unused at this time, which will be used to finance property purchases and construction in the future. In addition, Sonic completed a sale-leaseback of certain dealership properties in 1999 which will increase ongoing lease costs while providing additional liquidity. Sonic Automotive, Inc., headquartered in Charlotte, North Carolina, is one of the largest megadealers in the U.S. with operations throughout the Southeast, South, and Western U.S. Revenues are anticipated to be in excess of $6 billion in 2000. SUN HEALTHCARE: Stipulation Provides Sec. 366 Adequate Assurance To GTE ----------------------------------------------------------------------- At the request of GTE Network Services, pursuant to a provision in the Court's order for utilities to request additional assurances of payment, Sun Healthcare Group, Inc., agrees to settle an amount of $107,034 owed to GTE prepetition and to pay GTE a postpetition security deposit in the amount of $74,635 which will be interest-bearing and refundable. The Debtors agree that if any default in payment is not cured within 10 days, then GTE may terminate its post-petition utility services to the Debtors. (Sun Healthcare Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED INFORMATION: U.S. Debtor's Trustee to Serve as Brazilian Trustee ----------------------------------------------------------------------- James H. Feltman, the Chapter 7 trustee overseeing the liquidation of United Information Systems, Inc., a Florida corporation, Case No. 98-16621- BKC-AJC, and United Information Systems, Inc., a Delaware Corporation (OTCBB:UISI), Case No. 98-16634-BKC-AJC, sought and obtained authority from Judge A. Jay Cristol to accept appointment as trustee in a related bankruptcy proceeding in Brazil. UIS Industrial Limitada, located in Manaus, Brazil, is now involved in its own bankruptcy proceeding. Mr. Feltman told Judge Cristol that he is the logical person to coordinate the winding-up of all the United Information- related estates. United Information filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code on July 22, 1998, in the bankruptcy U.S. Bankruptcy Court for the Southern District of Florida, Miami Division. On September 24, 1998, United Information abandoned its restructuring effort and the bankruptcy cases were converted to Chapter 7 liquidation proceedings. James S. Feltman was appointed as the Chapter 7 Trustee. The attorneys for the Chapter 7 Trustee are Jerry M. Markowitz, Esq., and Ilan Markus, Esq., at Markowitz, Davis, Ringel & Trusty, P.A., in Miami. At the time of its Chapter 11 filing, court documents reported assets of $15 million and liabilities of $15 million. VENCOR INC: Delaware Court Approves Extension DIP Financing Maturity Date ------------------------------------------------------------------------- Vencor, Inc., announced that the United States Bankruptcy Court for the District of Delaware approved an amendment to the Company's debtor-in- possession financing to extend its maturity until October 31, 2000. The Amendment also revises certain covenants and permits the Company to file its plan of reorganization through October 31, 2000. The Court has previously extended the Company's exclusive right to file its plan of reorganization through September 29, 2000. The DIP Financing and existing cash flows will be used to fund the Company's operations during its restructuring. As of September 22, 2000, the Company had no outstanding borrowings under the DIP Financing. The Court also approved an amendment to the previously announced commitment letter among the Company and certain of the DIP lenders to extend the date by which Court approval must be obtained for the Commitment Letter to be effective through October 31, 2000. Pursuant to the Commitment Letter, certain of the DIP lenders would finance an amended and restated debtor-in- possession credit agreement that would become effective in the event the Company became involved in a legal proceeding against Ventas, Inc. (NYSE:VTR). The consummation of the Restated DIP also would be subject to other customary conditions contained in the Commitment Letter. At this time, the Company has adjourned the hearing seeking approval of the Commitment Letter and the Restated DIP in light of the status of the current negotiations with its major constituencies to finalize a consensual plan of reorganization. Vencor and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 with the Court on September 13, 1999. Vencor, Inc. is a national provider of long-term healthcare services primarily operating nursing centers and hospitals. WASTE MANAGEMENT: Completes $570MM Sale of U.K. Waste Services Operations ------------------------------------------------------------------------- Waste Management Inc. (NYSE:WMI) announced that its wholly-owned subsidiary has completed the sale of its waste services operations in the United Kingdom to Severn Trent Plc for approximately U.S. $570 million total proceeds. The operations being divested in this transaction include UK Waste, one of the largest integrated waste management companies in the United Kingdom. UK Waste provides recycling and solid waste collection, transfer and disposal services in England, Wales, Scotland and Northern Ireland. The sale stems from Waste Management's strategy to re-focus the company on its North American waste operations. Waste Management subsidiaries are in discussions with other parties regarding the divestiture of certain other international businesses, as well as certain non-core and non-integrated solid waste assets in North America. The company intends to use the proceeds of these divestitures to reduce debt and to make selective tuck-in acquisitions of solid waste businesses in North America. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. 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