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/raid1/www/Hosts/bankrupt/TCR_Public/001005.MBX T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 5, 2000, Vol. 4, No. 195 Headlines ALLIANCE MEDICAL: Medical Equipment Maker on the Track to Recovery ALLIED PRODUCTS: Chicago Metal Maker Files for Bankruptcy Protection AMERISERVE: Accord Among Core Constituenciies Paves Way for Liquidating Plan AMERISERVE: Delaware Court Grants Extension of DIP Financing to Oct. 30 BAY VIEW: Moody's Downgrades Senior Debt Ratings To B3 & Bay View Bank To B2 BAY VIEW: Fitch Downgrades Long Term Rating To B- & Watch Negative BIG SPRING: Spring Water Company Files Chapter 11 Petition in Montana COMDISCO, INC.: Moody's Lowers Long-Term Senior Rating to Baa2 COMDISCO, INC.: Fitch Lowers Senior Debt Rating To BBB+ & on Watch Negative DICKINISON THEATRES: 80-Year-Old Kansas Theatre Files for Bankruptcy FARMERS UNION: S&P Assigns Insurer BBpi Financial Strength Rating GENESIS/MULTICARE: Blank Rome Gives Greater Disclosure About Relationships GLOBALSTAR TELECOMMUNICATIONS: Partners Provide $67.7M Financing for 2 Months GOLDEN OCEAN: Frontline Acquires VLCC As Restructuring Plan Gets Approval GRAND UNION: Moody's Junks All Ratings After Chapter 33 Bankruptcy Filing GRAND UNION: Files for Chapter 11 Protection in Newark, New Jersey ICON EQUIPMENT: Fitch Downgrades Receivable Securitization Certificates INTEGRATED HEALTH: Continues to Reject Burdensome Equipment Leases LAIDLAW INC: Sale of Manchu Wok to Ken Fowler Enterprises is Finalized LANESBOROUGH CORPORATION: Despite Efforts, Filing Not Prenegotiated LOEWEN GROUP: Moves to Reject Consulting Agreement with Russell Titzer MASTER GRAPHICS: Formulates Plan To Emerge From Bankruptcy By Year-End MILLER INSURANCE: A.M. Best Lowers Financial Strength Ratings to C++ NETTEL COMMUNICATIONS: Allied Capital Invested $22MM, Not $33MM, in Carrier NETTEL COMMUNICATIONS: Telecommunications Carrier Lay-Offs Now Reach 250 PETSEC ENERGY: Interests in Gulf of Mexico Leases Might Be Sold PSEUDO PROGRAMS: Broadband Pioneer To Reorganize Business Under Chapter 11 PSEUDO PROGRAMS: Case Summary and 20 Largest Unsecured Creditors RITE AID: Completes PCS Sale to Advance Paradigm, Proceeds to Pay Down Debt SAFETY-KLEEN: Seeks First Extension of Removal Period through January 5, 2001 STELLEX TECHNOLOGIES: Subsidiary Sells Six Subsidiaries to Raise Cash SUN STATES: A.M. Best Downgrades SSIG Members' Financial Strength Rating to B UNITED COMPANIES: Announces Filing of Fourth Plan of Reorganization VALU FOOD: Creditors' Committee Agrees to SUPERVALU Settlement Pact VENCOR, INC.: Reaches Compromise on Cranbrook Lease Termination Dispute VISION TWENTY-ONE: Divestiture of PPM Business Successful WASTE MANAGEMENT: Subsidiaries Ink Final Waste Treatment Plans with EPA WAXMAN INDUSTRIES: Case Summary and 20 Largest Unsecured Creditors ********* ALLIANCE MEDICAL: Medical Equipment Maker on the Track to Recovery ------------------------------------------------------------------ ALLIANCE MEDICAL INC., the specialist of portable and mobile ultrasound scanners for human and animal medicine, announces its results for the fiscal year ended May 31, 2000. After two difficult years marked by the collapse of the world pork industry in 1998, the Company posted net earnings of $0.9 million on sales of $5.4 million for fiscal 1999-2000, compared with a loss of $6.9 million and sales of $7.1 million for the previous year. "What is most encouraging about these results is that they reflecta distinct improvement in manufacturing and operating costs, in addition to a gain on writeoff of debts subsequent to the holding proposal in December 1999. They attest to the effectiveness of the measures taken to achieve a successful turnaround, increase productivity and enhance production quality. We also cut R&D costs by focusing on our best-selling products. Alliance's balance sheet is healthier due to the injection of $1.4 million inprivate funds in the fourth quarter, showing working capital of $1.1 million at year end versus a deficiency of $1.3 million a year earlier, while shareholders' equity and quasi-equity totalled$1.8 million versus a deficiency of $0.5 million as at May 31, 1999," indicated Andre Leroux, Chairman of the Board, President and Chief Executive Officer of Alliance Medical. "Efforts to consolidate ties with our major distributors worldwidehave yielded rewards and we have started to benefit from the recovery in our various markets. The first three months of the current fiscal year should be the final stage of our turnaround. We expect to reach the break-even point and to post a substantial increase in sales," added Mr. Leroux. Development of new-generation products In recent months, Alliance Medical has started to develop a new generation of scanners that will allow colour imaging, of special use in human cardiac, obstetric and gynecological medecine as wellas in animal medecine. This new equipment line will be available in 2002. New distribution agreements and key certifications expected shortly for the development of the human medicine market "In the next few days, we should obtain the various certificationsneeded to develop the European and American human medicine markets. We are thereby paving the way for this major phase in Alliance's growth. These certifications will also enhance our reputation in animal medicine. While firming up ties with our distributors, we have expanded our network with new agreements in Europe and Africa. In the coming weeks, we will participate in two major international exhibits: MEDICA, which will be attended by specialists from Europe, the Middle East and Africa in D?sseldorf, Germany, and RSNA, at which American and Asian specialists will meet in Chicago," stated Karim Menassa, ExecutiveVice-President and Chief Operating Officer. Strengthening of expertise, creation of a client satisfaction service and implementation of an integrated management informationsystem To efficiently manage its growth, Alliance continues to strengthenits management, R&D, client service and production expertise. It recently set up a client satisfaction service with resources dedicated to after-sales service. To efficiently manage its productivity, it has also started to implement an integrated manufacturing resource planning (MRP) system. Objectives 2000-2001: Net profit and sales of $10 million "Fiscal 2000-2001 will be a consolidation and growth year during which Alliance will become profitable. Buoyant international markets support us. The coming quarters will continue to reflect the measures taken to improve productivity and cost management. Our marketing efforts in both human and animal medicine will also help to gradually enhance Alliance's performance. Finally, we arestepping up our efforts in the high-potential U.S. market, which will raise our sales to over $10 million," concluded Andre Leroux. Profile Alliance Medical Inc. specializes in the design, development, manufacturing and international marketing of portable and mobile ultrasound scanners for human and animal medicine. Its instruments are targeted to veterinary clinics, livestock professionals, farmers and cattle ranchers. Its devices for humanmedicine are increasingly used as a complement to X-rays in diagnosing and treating various pathologies. Alliance Medical Inc.'s principal markets are North America, Europe, Asia, the Middle East, Africa and South America. The Company has about 60 employees and is headquartered in Ville Saint- Laurent, Quebec. ALLIED PRODUCTS: Chicago Metal Maker Files for Bankruptcy Protection ----------------------------------------------------------------------- Allied Products Corp. announced that it filed a voluntary petition for chapter 11, according to a newswire report. In conjunction with the filing it has received a commitment for up to about $4.5 million in debtor-in-possession financing from General Motors Corp. to fund Allied Products' operation and enable it to pay its post-petition trade and employee obligations. The company said the funding should allow its Verson division to continue to work on key contracts during the restructuring process. Allied Products, which is based in Chicago, makes metal forming presses. (ABI 03-Oct-00) AMERISERVE: Accord Among Core Constituenciies Paves Way for Liquidating Plan ---------------------------------------------------------------------------- This week's edition of F&D Reports' Scrambled Eggs publication reports that all constituencies in the AmeriServe (Addison, TX) Chapter 11 Case, namely the Company, its Creditors Committee, Tricon and the AD Hoc Reclamation Claims Committee, have reached agreements in principal to settle all disputes so as to allow the sale of substantially all the Company's assets to McLane, a wholly-owned subsidiary of Wal-Mart. That sale will form the basis of the Plan of Liquidation to be filed in the Chapter 11 Case, which will provide for a measure of recovery for the trade, though most likely a small one. We expect there to be protracted litigation with various parties post-confirmation. There will be a Litigation Trust established under the Plan with an Oversight Committee that will undoubtedly consist in part of some or all members of the current Creditors Committee. Credit Suisse has formally resigned from the Committee due to its pending acquisition of DLJ, in as much as DLJ's involvement in pre-bankruptcy financing will likely result in litigation. AMERISERVE: Delaware Court Grants Extension of DIP Financing to Oct. 30 ----------------------------------------------------------------------- AmeriServe Food Distribution, Inc. announced that the United States Bankruptcy Court in Wilmington, Del., has approved an extension of the maturity date of the DIP financing facility to and including October 30, 2000. The court also authorized further DIP financing extensions past October 30, 2000, that are agreed to in the future by AmeriServe and its DIP lenders. In addition, the Bankruptcy Court approved the bidding procedures and protections in connection with the sale to McLane Company. The Court has set the following initial schedule for the Plan of Reorganization filed by AmeriServe in connection with the sale to McLane Company: October 16, 2000 -- Hearing to Approve Plan of Reorganization Disclosure Statement and Solicitation Procedures October 26, 2000 -- Auction Date (if other bidders for AmeriServe) November 17, 2000 -- Hearing to Approve Assumption/Assignment/Rejection of Executory Contracts and Leases November 28, 2000 -- Hearing to Approve Plan of Reorganization Confirmation Hearing to Approve Sale to McLane (or higher and better bidder) Hearing to Resolve Administrative Claims AmeriServe, headquartered in Addison, Texas, a suburb of Dallas, is one of the nation's largest distributors specializing in chain restaurants, serving leading quick service systems such as KFC, Long John Silver's, Pizza Hut and Taco Bell. BAY VIEW: Moody's Downgrades Senior Debt Ratings To B3 & Bay View Bank To B2 ------------------------------------------------------------------------ Moody's Investors Service downgraded Bay View Capital Corporation -- senior to (P)B3 from (P)B1 -- and the ratings of its subsidiaries -- Bay View Bank to B2 from Ba3. All of the ratings remain on review for possible downgrade. The rating action followed announcements by Bay View of its decision to restructure the operations of its Franchise Mortgage Acceptance Co. (FMAC) operations, and to defer distributions on its Capital Securities. Concerning FMAC, the company decided to immediately shut down all new loan production, to recognize related charges, and to seek ways to maximize the value of its on- and off-balance sheet assets and servicing rights. Concerning the deferral of distributions, the company announced an agreement with the Federal Reserve Bank whereby the company will require prior regulatory approval to disburse dividends on its Capital Securities, in addition to prior approval to pay common stock dividends. Bay View stated that it does not expect to receive regulatory approval for its request to pay quarterly dividends as of September 30, 2000. In such case, the company will defer distributions on the debentures. Moody's said that the aggregate cost of shutting down FMAC, along with potential additional asset write-downs further weakens Bay View's credit fundamentals. The review will focus on Bay View's ability to liquidate FMAC's remaining assets without further additional charges, on the adequacy of reserves, and on the company's ability to sustain sufficient capital levels during the restructuring period, according to Moody's. The following ratings were downgraded, and remain on review for possible downgrade: * Bay View Capital Corporation a) senior unsecured (shelf): to (P)B3 from (P)B1 b) subordinate debt (and shelf): to Caa1/(P)Caa1 from B2/(P)B2 c) junior subordinate (and shelf): to Caa2/(P)Caa2 from B3/(P)B3 d) preferred shelfs: to (P)"caa" from (P)"b2" and from (P)"b3" e) noncumulative preferred shelfs: to "ca" from "b3" * Bay View Bank, N.A. a) bank deposits: to B1 from Ba2 b) long-term issuer and OSO: to B2 from Ba3 c) subordinate debt: to B3 from B1 * Bay View Capital I a) preferred stock: to "caa" from "b2" * Bay View Capital II a) preferred stock shelf: to (P)"caa" from (P)"b2" Bay View Capital Corporation (BVC), headquartered in San Mateo, California, is a financial services holding company with $6.3 billion in assets reported at June 30, 2000. BAY VIEW: Fitch Downgrades Long Term Rating To B- & Watch Negative ------------------------------------------------------------------ Fitch has downgraded the ratings for Bay View Capital Corporation (BVC) and subsidiaries and placed the ratings on Rating Watch Negative. The long-term rating for BVC was lowered to 'B-' from 'B', while the long-term rating for Bay View Bank N.A. (BVB) was lowered to 'B-' from 'B+'. The ratings impacted by this action are outlined at the end of this release. BVC announced Friday, Sept. 29, 2000, that it has entered into a 'Letter Agreement' with the Board of Governors of the Federal Reserve System. The agreement requires the company to seek regulatory approval before paying any common stock dividends or dividends on its capital securities. Further, according to the company, it has not received regulatory approval to pay the Sept. 30, 2000, dividend on its capital securities. As a result, the company will defer payment on the capital securities as outlined in the original prospectus. Dividends can be deferred for a period not to exceed 20 consecutive quarters or beyond the final maturity of the securities. Dividends will accrue during the deferral period and must be paid in full prior to any future payments of common dividends. Fitch is concerned that the recent regulatory action is a result of BVC's inability to establish an appropriate capital plan and profit forecast. Management has not submitted a capital plan to the regulators or Fitch to date, making it difficult to assess overall capital adequacy and support for outstanding obligations. The company plans to accrue for dividend payments and to seek regulatory approval to pay these dividends again in the fourth quarter of 2000. Fitch plans to leave the ratings on Rating Watch Negative until some of these near-term concerns can be resolved and a better indication of long- range profitability can be determined. BIG SPRING: Spring Water Company Files Chapter 11 Petition in Montana --------------------------------------------------------------------- High operating costs and competition contributed to the Chapter 11 filing of Big Spring Water Co. in Butte, Montana, bankruptcy court on Sept. 17, according to The Associated Press. Financial difficulties were due to high oil pricing, which pushed plastic bottles costs way up and the tight competition from other bottlers, Gary Carpenter, CEO of ColMont Springs, Inc. said. Mr. Carpenter acquired the Lewiston company three years back. Founder Charles Cerovski started the spring water business in 1972. Big Spring Water has 18 employees and has a distribution office in Great Falls. The company supplies drinking water for Montana, North and South Dakota, Idaho and in Washington. COMDISCO, INC.: Moody's Lowers Long-Term Senior Rating to Baa2 -------------------------------------------------------------- Moody's has lowered the long term ratings of Comdisco, Inc. and Comdisco Finance (Nederland) B.V. (Senior to Baa2 from Baa1) following the company's announcement that it will cease funding the operations of its non-core subsidiary, Prism Communications, Inc. Comdisco's and Comdisco Finance's Prime-2 ratings for short term debt have been confirmed. The outlook for all of the ratings is stable. Moody's said that while the size of the as yet undisclosed Prism charge is expected to be significant, Moody's primary consideration in its rating action was the implication of this charge to the company's overall risk governance. The charge highlights the execution risk in the company's strategic transition, as well as governance risks the company faces as it seeks to maximize shareholder value. In Moody's view, Comdisco's risk profile has increased over recent years as it intentionally transitioned itself away from its traditional computer leasing business. Comdisco's strategic thrust now centers on its becoming a technology services provider. Comdisco's core service and leasing businesses have provided the company with solid profitability, although these businesses lines are immature, with the exception of its strong continuity service business. Further enhancements to the company's predictable, services-based earnings stream would be beneficial to Comdisco's risk profile. However, Comdisco's efforts in this regard have been slow to bear fruit. Additionally, Comdisco's earnings profile has recently been dominated by its venture leasing business. This portfolio has produced sizeable equity gains for the company. That being said, Moody's views these gains as adding a new level of potential volatility to Comdisco's earnings and capitalization profile. Another source of risk is the potential swings in Comdisco's equity capital base due to the substantial amount of unrealized gains from its equity and warrant portfolio that reside in it. The value of these unrealized gains remain highly vulnerable to equity market dynamics. Additionally, rapid growth in the company's venture debt business is a concern. This portfolio is unseasoned, and, in Moody's opinion, carries a higher risk profile than even the company's venture leasing activities. Moody's believes that the company's meaningful cash on hand, projected cash flow and alternate liquidity position appear strong relative to its potential cash needs. The rating agency also noted that the 364-day portion of Comdisco's two primary committed bank facilities expire in December 2000, although each has a one year term-out option. Moody's says that it will closely monitor the outcome of the bank facility renewal process. The following ratings were downgraded: * COMDISCO, INC a) Issuer Rating to Baa2 from Baa1 b) Senior to Baa2 from Baa1 c) Subordinated shelf to (P)Baa3 from (P)Baa2 * COMDISCO FINANCE (NEDERLAND) B.V. - guaranteed by COMDISCO, INC. a) Senior to Baa2 from Baa1 The following ratings were confirmed: * COMDISCO, INC. a) Short Term to Prime-2 * COMDISCO FINANCE (NEDERLAND) B.V. - guaranteed by COMDISCO, INC. a) Short Term to Prime-2 Comdisco, Inc., headquartered in Rosemont, Illinois, is a technology services provider and technology equipment lessor. As of June 30, 2000, the company reported total assets of $8.6 billion. COMDISCO, INC.: Fitch Lowers Senior Debt Rating To BBB+ & on Watch Negative --------------------------------------------------------------------------- Comdisco, Inc.'s (CDO) senior debt rating is lowered to 'BBB+' from 'A-' and the commercial paper rating has been affirmed at 'F2' by Fitch. Concurrent with this rating action, Fitch placed CDO's senior debt on Rating Watch Negative. Approximately $5.5 billion of debt securities are affected by Fitch's actions. The rating action follows the announcement by CDO this morning that the company will cease funding of Prism Communications Services. CDO acquired Prism in 1999 as part of its corporate strategy to accelerate the company's growth as a global provider of technology solutions. In addition, CDO plans to write-off its net carrying value in Prism and sell all of the unit's equipment. Projected proceeds from equipment sales are not reflected in CDO's action today. While Fitch anticipated that Prism would report operating losses, the losses have significantly exceeded expectations. Instead of maintaining a majority ownership in Prism and completing an initial public offering (IPO) in 2000 as originally planned, management engaged investment bankers in July 2000 to explore their strategic options. At Sept. 30, 2000, CDO's carrying value in Prism totaled $375 million. Positively, quarterly operating losses arising from Prism, which had recently been in the range of $42-65 million will cease. While Fitch recognizes the magnitude of this writedown to CDO's balance sheet and operating fundamentals, this action removes one of the concerns cited on Aug. 1, 2000 when the company's ratings were placed on Rating Outlook Negative. However, the writedown will result in a sharp increase in CDO's leverage, as defined as debt divided by equity less the tax effected unrealized equity gains. At Sept. 30, 2000, Fitch estimated that CDO's leverage, following the special charge, was over 7.00 times (x). Assuming the sale of the Prism equipment and the completion of the Ventures IPO coupled with good operating performance from the company's remaining businesses, leverage could decline to below 5.50x over the immediate term. The completion of these events, along with continued good operating results and subsequent reduction in leverage, will result in the removal of the Rating Watch Negative. Comdisco, Inc. is a worldwide company offering financial solutions that reduce technology cost and risk and offering services supporting technology infrastructure. CDO's businesses are Leasing, Technology Services, Ventures, and Prism. These businesses well-position CDO as a broad-range provider of information technology solutions and services. DICKINISON THEATRES: 80-Year-Old Kansas Theatre Files for Bankruptcy -------------------------------------------------------------------- Dickinson Theatres, an 80-year-old Mission, Kansas-based movie exhibition company and one-time operator of the Glenwood Theatre, filed chapter 11, according to the Kansas City Star. On July 31, Dickinson had assets of $58 million and liabilities of $42 million. The company's attorney, Paul M. Hoffmann of Morrison & Hecker, characterized the need to file as a cash-flow problem, not a cash problem. At this time it is our intent to pay all of our creditors in full - we are not asking the court to discharge any debt owed by the company," Hoffman said. Dickinson Theatres' largest secured creditor is Mission Bank, which is owed $10.6 million. Mission Bank has agreed to provide up to $1 million for Dickinson as it continues to operate while reorganizing. (ABI 03-Oct-00) FARMERS UNION: S&P Assigns Insurer BBpi Financial Strength Rating ----------------------------------------------------------------- Standard and Poor's today assigned its double-'Bpi' financial strength rating to Farmers Union Cooperative Insurance Co. (Farmers Union). The rating reflects the company's marginal capital, erratic operating performance, limited geographic scope, and gross exposure to catastrophes, offset by extremely strong capitalization. The company writes homeowners' and farmowners' multiperil, private-passenger automobile liability, and physical damage coverage, and its products are distributed by independent agents. Based in Omaha, Neb., this stock company is licensed and operates in Nebraska, Illinois, Arkansas, South Dakota, and Missouri. The company is a wholly owned subsidiary of Farmers Mutual Hail Insurance Co. of Iowa (Farmers Mutual Hail) (financial strength rating triple-'Bpi') and together the companies form the Farmers Mutual Hail of Iowa Insurance Group. Standard & Poor's believes the company (NAIC 16381) is strategically important to its parent, and group support is therefore a factor in the rating. Major Rating Factors: -- The company has displayed an irregular pattern of operating earnings which, in conjunction with its small capital base of $4 million, limits the rating. Operating performance has been very weak, with a time-weighted return on revenue of negative 14% (from 1994 to 1999). In addition, the company has recorded losses in four of the last five years. -- The company has no retained earnings. At year-end 1999, its cumulative earnings deficit was $7 million. Earnings have also been volatile, due to adverse weather conditions in the Midwest. -- Capitalization was strong at year-end 1999, as measured by Standard & Poor's capital adequacy model. The company received a $1.8 million capital infusion from its parent, Farmers Mutual Hail. -- Premium volume has remained very stable in the past five years, ranging from $7 million in 1994 to $10 million in 1999. -- Farmers Union's lack of geographic and product-line diversification is a limiting factor. Currently, 48% of direct premiums written are in Nebraska, with private passenger and automobile physical damage representing 67% of business written. Geographic and product-line concentration can expose a company to regulatory and regional economic risk. -- The company operates in a highly regulated and competitive environment, which may affect future earnings. -- The one-year loss development-to-surplus ratio in 1999 was reported at 7%, a limiting factor. -- With a net catastrophe exposure of 3 times surplus, the company has a higher exposure than that of higher rated companies. GENESIS/MULTICARE: Blank Rome Gives Greater Disclosure About Relationships -------------------------------------------------------------------------- To address issues raised by the United States Trustee, Raymond L. Shapiro, Esq., a Partner at Blank Rome Comisky & Mccauley LLP, files a Supplemental Affidavit in support of the applications of Genesis Health Ventures, Inc., and The MultiCare Companies, Inc., to employ BRCM as Special Counsel, pursuant to 11 U.S.C. section 327(e) and 1107(b) of the Bankruptcy Code and 1107(b) of the Bankruptcy Rules. In his Supplemental Affidavit, Mr. Shapiro represents that there will be no actual conflict of interest in BRCM rendering services to both GHV and Multicare becasue to the extent that both a Genesis Debtor and a Multicare Debtor are involved and they have different interests, such a transaction will be assigned to counsel for each respective Debtor. Blank Rome, Mr. Shapiro says, may assist such counsel in providing background information, but will not participate in negotiations, documentation or representation of either a Genesis Debtor or a Multicare Debtor in such circumstances. With respect to concerns over certain other parties identified as to pose potential conflicts, Mr. Shapiro sees no possibility that any potential conflicts will become an actual conflict because in the event that any of such parties are engaged in a matter against the Debtors, Blank Rome will not represent any of the parties in such matters and all of the parties will retain other counsel. Blank Rome's services to the Debtors, Mr. Shapiro advises, are essentially divided into five general categories: * real estate; * general labor; * employee benefits; * general corporate and securities regulation; and * miscellaneous matters. The scope of each category includes transactional, regulatory and litigation. The limited services that Blank Rome will provide, Mr. Shapiro explains, are not services that relate to the "conduct of the case," In response to queries about the roles of Stephen E. Luongo as a senior Blank Rome corporate partner and GHV Director, and a GHV equity interest holder, Mr. Shapiro furnishes the details that Mr. Luongo owns jointly with his wife, approximately 20,000 shares of GHV common stock (his Blank Rome retirement account owns an additional 7,500 shares, his children own another 1,600 shares and he owns 30,000 stock options) out of an approximate, maximum universe of 90 million issued GHV shares of common stock (assuming full dilution). Mr. Shapiro advises that, immediately upon the entry of orders approving the engagement of Blank Rome as special counsel for Genesis Debtors and Multicare Debtors, Mr. Luongo will immediately resign as a member of the Board of Directors of Genesis Health Ventures, Inc., as represented to the UST and counsel for the Committees. Mr. Shapiro further discloses that another Blank Rome partner, Harry Madonna, previously served on the Board of Directors of The Age Institute which is a non-profit company that is apparently indebted to the Genesis Debtors, but Mr. Madonna no longer does so. From time to time, Blank Rome provides miscellaneous and general legal services to AI and, presently, without limitation, is assisting on certain refinancing matters for AI, as well as acquisitions. Blank Rome is not representing and will not represent AI or the Genesis or Multicare Debtors with respect to any matter in which such parties are involved, Mr. Shapiro convenants. Mr. Shapiro submits that to the best of his knowledge, he is not aware of any matter where Blank Rome represents any interest adverse to a Debtor or a Debtor's estate with respect to the matters on which Blank Rome is employed or to be employed. With Mr. Shapiro's affidavits, the concerns of the Committees were addressed, the UST withdrew the limited objection and Judge Walsh authorized the application. (Genesis/Multicare Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBALSTAR TELECOMMUNICATIONS: Partners Provide $67.7M Financing for 2 Months ----------------------------------------------------------------------------- Analyst say that Globalstar Telecommunications, Ltd., has gained more than two months of financing to keep their company out of bankruptcy until next May, Compuserve.com reports. Following a deal with Bear Stearns for a $105 million stock purchase, partners of Globalstar will provide $67.7 million in financing by purchasing its common stock. Spokesman Mac Jeffery says, "We have raised the money that we feel we need at this time. It is what we asked the partners to provide and they complied. This is a significant amount of money that the partners didn't have to put up." According to satellite analyst, Armand Musey, Globalstar throws cash at a rate of $115 million, together with capital expenditures of roughly $80.5 million for each quarter. Mr. Musey added, the finances Globalstar got from the latest transactions would only supplement them for 79 days, "far less than the time it needs to reach break-even." GOLDEN OCEAN: Frontline Acquires VLCC As Restructuring Plan Gets Approval ------------------------------------------------------------------------- The Delaware bankruptcy court and creditors of Golden Ocean Group, Ltd., gave their nods for Frontline Ltd.'s restructuring plan for the financially challenged VLCC and dry bulk operator, WorldNews.com reports. John Fredriksen's struggle has reached its finished line to take over 100% of Golden Ocean Group Ltd.'s equity. Golden Ocean's interests in 13 very large crude carriers and 10 bulk carriers will be a "non-recourse subsidiary" for the Frontline group. The Norwegian shipping company will become the largest VLCC firm in the planet. Golden Ocean filed for bankruptcy protection under Chapter 11 in Delaware last Jan. 14. GRAND UNION: Moody's Junks All Ratings After Chapter 33 Bankruptcy Filing ------------------------------------------------------------------------- Moody's Investors Service lowered all ratings of The Grand Union Company following its Chapter 11 bankruptcy filing. Ratings lowered include the $300.0 million secured bank loan to Caa2 from Caa1, the senior implied rating to Caa2 from Caa1, and the issuer rating to Ca from Caa3. The outlook remains negative. The Grand Union Company filed for Chapter 11 bankruptcy protection today, with the intent of facilitating the sale of the company. The company has arranged for a $60 million debtor-in-possession facility and announced that their major wholesaler, C&S Wholesale Grocers, will continue supplying merchandise. This is the third time that the company has filed for Chapter 11 bankruptcy protection within the past 6 years. The ratings consider the company's highly leveraged financial condition, the company's deteriorating operating profitability and cash flow, the lackluster condition of the store base, and a decrease in vendor promotional resources. The ratings also consider that, with a reinvigorated Pathmark along with other strong competitors such as A&P (rated Ba1), Edward's/Stop & Shop (Koninklijke Ahold rated A3), and Wakefern/Shop Rite (Big V rated B1), Grand Union's competitive position in the Northern New Jersey and metropolitan New York City trade areas continues to be difficult. The Caa2 rating on the $300.0 million bank loan ($230.0 million term loan due 2003 plus $70.0 million revolver) recognizes the security provided by first priority liens on all assets of the company and its subsidiaries. As of July 22, 2000, $39.0 million of the revolver was drawn. However, the rating considers our opinion that, with the continued decline in enterprise value, lenders could suffer impairment even if a buyer for Grand Union is quickly found. Given that Pathmark is also considered to be for sale, we believe that interest in Grand Union could be diluted. The negative rating outlook reflects the possibility that the enterprise value of the company will further decline during the bankruptcy process. EBITDA margin declined to 2.4% for the quarter ending July 22, 2000 versus 4.9% for the corresponding period of 1999, while interest coverage (EBITDA to interest expense) fell to 1.0 times versus 2.6 times. EBITDA was not sufficient to cover both interest expense and modest capital expenditures (considering the company's needs) for the twelve months ending July 22. Adjusted Debt to EBITDAR increased to 6.2 times on July 22, 2000 versus 5.8 times on April 1, 2000. Inventory decreased to 30 days on hand on July 22, 2000 versus 38 days on had on July 24, 1999 as the company attempted to conserve cash. The Grand Union Company, headquartered in Wayne, New Jersey, operates 197 supermarkets in five northeastern states. GRAND UNION: Files for Chapter 11 Protection in Newark, New Jersey ------------------------------------------------------------------ The Grand Union Company (OTC.BB: GUCO) announced that, in order to facilitate the planned sale of the Company and provide for additional funding during the sale process, it has filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court in Newark, New Jersey. The filing will enable the Company to continue to conduct business as usual, provide service to its customers and meet its commitments during the sale process. Grand Union also announced that it has obtained a $60 million debtor-in- possession financing commitment from Lehman Commercial Paper Inc., one of its existing lenders. Upon court approval, these funds will be available to the Company to help meet its ongoing needs and fulfill obligations associated with operating the business, including the prompt payment to vendors for goods and services that are provided after the filing. Employees will continue to be paid in the normal manner. Commenting on Grand Union's announcement, president and chief executive officer Gary M. Philbin said, "This was a difficult but unavoidable decision in view of our recent financial performance and the need to obtain the funds to continue to provide service to our customers and meet our ongoing commitments during the sale process. At the same time, we have been working closely with our investment banker, Merrill Lynch, in seeking a sale of the Company to a new owner or owners, who are financially capable of supporting the business long term. To this end, we have received expressions of interest from several parties and continue to be in discussions with potential purchasers of the Company in whole or in part. We believe chapter 11 protection will enable us to move forward with the sale process in an orderly manner and hope to have an agreement to sell the Company shortly. "In the interim, we expect normal operations of our stores, which will be open for business and serving customers as usual. Our new financing will enable us to meet our commitments to our trade and business creditors and fulfill our obligations to our employees without disruption. Importantly, our major supplier, C&S Wholesale Grocers, has agreed to continue to provide us with a regular flow of merchandise, and other suppliers are expected to continue regular shipments to our stores," Mr. Philbin concluded. In its most recent financial results, for the 16-week first fiscal quarter ended July 22, 2000, the Company posted sales of $658.0 million, compared with $687.3 million reported for the same period a year ago. Total sales were down 4.26%, with 200 stores in operation this year and 219 last year. Same store sales declined 2.67%. EBITDA for the period was $17.7 million this year, including a gain of approximately $6 million from the sale of the Company's Deer Park, NY location. Grand Union operates 197 retail food stores in Connecticut, New Jersey, New York, Pennsylvania and Vermont. ICON EQUIPMENT: Fitch Downgrades Receivable Securitization Certificates ----------------------------------------------------------------------- Fitch downgrades the proceeding classes of securities as follows: --ICON Receivables 1997-A, LLC: Series 1997-A Class A-1 notes are downgraded to 'CCC' from 'BBB'. The Class A-2 notes are downgraded to 'CC' from 'B'. The Class A-3 notes are downgraded to 'C' from 'CCC'. All classes of notes remain on Rating Watch Negative. --ICON Equipment Lease Grantor Trust 1998-A: Series 1998-A, Class A certificates are downgraded to 'BBB-' from 'AA'. The Class B certificates are downgraded to 'BB-' from 'A'. The Class C certificates are downgraded to 'CCC' from 'BB'. The Class D certificates are downgraded to 'CC' from 'B'. All classes of certificates remain on Rating Watch Negative. These rating actions are the result of adverse collateral performance and further deterioration of asset quality outside of Fitch's original base case expectations. Losses from defaulted leases have significantly reduced the remaining credit enhancement available for each class of securities. In the 1998-A transaction, several large obligor defaults have also occurred. In both the 1997-A and 1998-A transactions, delinquencies have also been significantly higher than historical levels. Fitch previously put all classes of the 1997-A and 1998-A transactions on Rating Watch Negative and downgraded all classes of the 1997-A transaction and the Class C and Class D certificates of the 1998-A transaction (see Fitch press release dated Sept. 15, 2000). Fitch will continue to closely monitor these transactions and may take additional rating action in the event of further deterioration. INTEGRATED HEALTH: Continues to Reject Burdensome Equipment Leases ------------------------------------------------------------------ Integrated Health Services, Inc., and its debtor-affiliates tell the Bankruptcy Court that their reviews show that some of their Facilities have consistently operated at a loss. Therefore, the Debtors have determined that it is in the best interest of the Debtors' estates and creditors to close the Facilities and reject the Equipment Leases, in view of the Facilities' lackluster performance and in line with management's cost-cutting strategy. In this motion, the Debtors seek the Court's authority to reject Equipment Leases that relate to: Monthly Location Entered Term Payments -------- ------- ---- -------- Sunnyside Village Facility Feb. 16, 1999 36 months $312 in Sarasota, Florida Palm Harbor Facility Feb. 17, 1999 36 months $283 in Palm Harbor, Florida Chancellor Park Facility Feb. 17, 1999 60 months $410 in Naples, Florida The Debtors propose a period of thirty days from the date of the court order for any filing of claims allegedly arising from the rejection of the lease. (Integrated Health Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAIDLAW INC: Sale of Manchu Wok to Ken Fowler Enterprises is Finalized ---------------------------------------------------------------------- Laidlaw Inc. (NYSE:LDW; TSE:LDM) said it has closed the previously announced sale of its Manchu Wok Chinese food business to an investor group led by Ken Fowler Enterprises. No terms were disclosed. Manchu Wok is the largest chain of Chinese fast food restaurants in Canada, operating service outlets mostly in shopping mall locations. The chain is second largest in North America and franchises two units in Poland. Laidlaw Inc. is a holding company for North America's largest providers of school and intercity bus transportation, municipal transit, patient transportation and emergency department management services. LANESBOROUGH CORPORATION: Despite Efforts, Filing Not Prenegotiated ------------------------------------------------------------------- Lanesborough Corp. filed for bankruptcy protection under Chapter 11 in Wilmington, Del. on Sept. 29. A summary of the Debtor's petition appears in yesterday's edition of the Troubled Company Reporter. A reorganization plan wasn't included with the petition, Dow Jones observed, noting that Lanesborough's board agreed in December to consider a request from U.S. Bank Trust N.A., for the company to reorganize through a prenegotiated Chapter 11 reorganization plan. Buffalo, NY-based, Lanesborough together with its subsidiaries, manufactures and sells synthetic organic chemicals. LOEWEN GROUP: Moves to Reject Consulting Agreement with Russell Titzer ---------------------------------------------------------------------- In 1996, The Loewen Group, Inc., entered into a Consulting Agreement with Russell G. Titzer. That agreement provides that Mr. Titzer agrees (a) to provide, and stand ready to provide through 2006, consulting services to Titzer Funeral Home, Inc., including rendering advice on operational and financial matters and attending certain funerals, visitation services and arrangements conferences, (b) not compete with TFH or LGII, and (c) to hold certain information confidential. In consideration of these obligations, LGII agrees to pay Mr. Titzer $6,000 per year plus $15 per hour when he actually works. LGII conclused that the burden of continued performance under the Consulting Agreement exceeds the benefits to the Debtors' estates. Titzer does no actual work. The non-compete and confidentiality covenants have no real value. Six more years of payments are a waste of money. Accordingly, the Debtors sought and obtained authority from Judge Walsh, pursuant to 11 U.S.C. Sec. 365, to reject the Consulting Agreement. (Loewen Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) MASTER GRAPHICS: Formulates Plan To Emerge From Bankruptcy By Year-End ---------------------------------------------------------------------- Spokesperson Anita-Marie Hill says that Master Graphics, Inc., which filed for Chapter 11 in July, is currently preparing a reorganization plan that will be filed in November, Memphis Bizjournals.com reports. "No one likes to rehash the past," Hill added. "But let me say that we are still in business and plan to stay in business for a long time. We still plan to emerge from this process by the end of the year." If the creditors and the bankruptcy court approves the plan submitted, the printing and graphic design firm will emerge from bankruptcy by next year. MILLER INSURANCE: A.M. Best Lowers Financial Strength Ratings to C++ -------------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength ratings of the Millers Insurance Group, Fort Worth, TX, to C++ (Marginal) from B+ (Very Good) and an affiliate, Phoenix Indemnity Insurance Co., to C++ (Marginal) from B++ (Very Good). The downgrade of Millers Insurance Group reflects weakened capitalization, driven by poor operating performance and a substantial decline in the market value of an affiliate, INSpire Insurance Solutions. Prior to 1999, adverse loss reserve development related to discontinued agribusiness and commercial trucking lines combined with a high expense structure have driven operating losses and eroded capital. In 1997, the IPO of INSpire buoyed capital temporarily, but the drop in market value of INSpire since then has caused surplus to decline rapidly. Despite the divestiture of portions of INSpire stock, the group still maintains a concentration of capital in this issue. As a result, its surplus could be further impaired by an additional decline in value. INSpire is a provider of policy and claims administration and information technology outsourcing services to the property and casualty insurance industry of which Millers is a customer. The rating also considers uncertainty associated with disputes over receivables and ongoing service contracts between Millers and INSpire that may impact the group's current surplus position. Management is currently discussing the resolution of approximately $900,000 of disputed receivables and is actively renegotiating its current contract with INSpire. Because of the surplus decline during the first half of 2000, the group's parent, Millers American Group, Inc., is in technical violation of certain covenants to its bank agreement. However, management is considering a proposal from the lending institution to amend its financial covenants. A.M. Best believes that the weak position of Millers American Group, Inc. poses financial risk to all of its members, including Phoenix Indemnity Insurance Company whose individual capitalization and operating performance are adequate. The business plan, which is expected to enhance capital, includes the termination and sale of businesses, an emphasis on expense reduction, the divestiture of investment concentrations, including INSpire and other common stocks and the pursuit of capital raising opportunities. These actions should reduce the strain in the intermediate term on the group's capital position and minimize volatility in the investment portfolio. However, A.M. Best believes considerable uncertainty remains regarding the group's operating profitability and capitalization as it executes the strategic plan. NETTEL COMMUNICATIONS: Allied Capital Invested $22MM, Not $33MM, in Carrier --------------------------------------------------------------------------- Allied Capital Corporation (Nasdaq: ALLC) addressed investor questions regarding the recent bankruptcy filing of Net-Tel Communications, Inc. Allied Capital has invested approximately $22 million in Net-Tel, the majority of which is senior secured debt. The recent inquiries regarding the Net-Tel bankruptcy stemmed from a Washington Post article that erroneously reported Allied Capital's investment to be $33 million. Net-Tel Communications has experienced recent liquidity and funding problems, and with the consent of its lenders chose to seek Chapter 11 bankruptcy protection. Allied Capital is working with Net-Tel and its other lenders and investors to resolve its funding needs. Allied Capital's $22 million investment represents approximately 1.3% of its total assets and 2.4% of its total equity capital. Allied Capital believes that it will achieve earnings of $0.48 per share for the third quarter of 2000, after accounting for any necessary valuation reserve related to Net-Tel. Allied Capital will release third quarter earnings on Tuesday, October 24, 2000. Allied Capital is a business development company that provides long-term investment capital to fuel the expansion of growing companies nationwide. The company's private finance group provides mezzanine debt and equity financing ranging in size from $5 million to $30 million. Allied Capital Express, the company's small business loan program, provides real estate loans of up to $3 million for small businesses online at www.alliedcapitalexpress.com. The company also participates in the real estate capital markets as an investor in commercial mortgage-backed securities. The company is headquartered in Washington, DC and has regional offices throughout the United States. NETTEL COMMUNICATIONS: Telecommunications Carrier Lay-Offs Now Reach 250 ------------------------------------------------------------------------ Nettel Communications Inc., The Washington Post reports, which filed for Chapter 11 in the District of Columbia, listed $155.7 million of liabilities over $133.5 million of assets. The current layoffs the company is now experiencing has reached roughly 250, which Nettel officials refused to comment more on the situation. "We just don't have any money anymore," Joe Heinzen, 24, said he was told by a Nettel executive Friday morning. Heinzen had been with the company since July. PETSEC ENERGY: Interests in Gulf of Mexico Leases Might Be Sold --------------------------------------------------------------- Petsec Energy Ltd (ASX:PSA) (OTCBB:PSJEY) announced that pursuant to the agreement its wholly owned subsidiary Petsec Energy Inc. ("PEI") reached with the unsecured creditors committee, PEI has either sold or signed purchase and sale agreements for the majority of its leases. PEI sold its 33% interest in Mustang Island 883 and 100% interest in Mustang Island leases 748, 749, 795, 797, 940 and 941 to LLOG Offshore Exploration, Inc. for US$6.375 million. The sale was approved by the Bankruptcy Court presiding over PEI's Chapter 11 proceedings and was completed on September 25, 2000, with an effective date of August 1, 2000. PEI will present the purchase and sale agreements, details of which are given below, to the Bankruptcy Court for approval as initial bids. PEI will also request that the Bankruptcy Court enter an Order approving certain bid procedures with respect to each of these agreements so that other interested bidders may submit higher and better offers to purchase these assets. PEI expects to conduct a final auction of the assets in early November 2000 if any competing bids are received. Net proceeds from the sales of PEI's assets will be distributed to PEI's creditors, Petsec (USA) Inc. (wholly owned by Petsec Energy Ltd), as equity owner, and certain of PEI's senior management team in the USA, in accordance with and upon confirmation by the bankruptcy court of a Plan of Reorganisation. A purchase and sale agreement has been signed with Apache Corporation for the sale of Petsec Energy Inc.'s 50% working interest in Main Pass leases 5, 6, 7, 84, 90, 91, 93, 104 and 105, Grand Isle 45, Ship Shoal leases 192, 193 and 194, South Marsh Island 7, and West Cameron leases 237, 543, 544 and 653. The effective date of the sale is October 1, 2000. The sale price is US$51.2 million. Apache is the operator of the leases. Purchase and sale agreements have been signed with ATP Oil and Gas in respect of the West Cameron 461 lease and South Marsh Island 189 and 190 leases. The purchase prices are US$1,617,000 and US$3,129,000, respectively, each with an effective date of October 1, 2000. Purchase and sale agreements have been signed with Stone Energy Corporation in respect of the South Pelto 22 lease and Vermilion Block 258 leases. The purchase prices are US$800,000 and US$1,700,000, respectively, each with an effective date of June 1, 2000. There are six exploration leases and other miscellaneous assets that are not subject to the Apache, ATP or Stone agreements, which PEI will market and sell subject to Bankruptcy Court approval. PSEUDO PROGRAMS: Broadband Pioneer To Reorganize Business Under Chapter 11 -------------------------------------------------------------------------- Pseudo Programs, Inc. -- the pioneering, original broadband entertainment company -- announced that it has filed and will seek to reorganize its business under the protection of a Chapter 11 bankruptcy proceeding. The filing was made in the United States Bankruptcy Court for the Southern District of New York. The Company, which ceased production of its live, interactive programming and laid off its 175 person workforce on September 18, 2000, continues actively to pursue a buyer for its brand of interactive, streaming video entertainment, its patent-pending operating system and other proprietary software, and its state-of-the-art Webcasting production facilities. According to David Bohrman, Pseudo's former CEO, "The decision to shut down Pseudo's operations was difficult. We developed a brand which became synonymous with innovative Interactive entertainment and came as close as any original content company has in defining a new medium that is right for audiences today and capable of expanding along with tomorrow's projected broadband growth. Despite tremendous progress, good-faith efforts, the hard work and creativity of Pseudo's employees, the loyalty of our vendors and a growing audience base, it was impossible to secure the necessary funding on an urgent basis to continue in today's difficult market climate." "The Chapter 11 filing will protect the interests of our many stakeholders and should ensure that Pseudo's approach to interactive, broadband entertainment has an opportunity to develop and move forward," Bohrman said. "We believe the Company has an approach to programming that is both compelling for viewers and a powerful medium for rich media advertising and sponsorship, as well as a top-notch technology and production infrastructure backbone that is unrivaled in the Webcasting industry today. We are hopeful that this filing will allow Pseudo to live on while allowing us to further explore opportunities for a potential acquisition." PSEUDO PROGRAMS: Case Summary and 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Pseudo Programs, Inc. 632 Broadway, 2nd Floor New York, NY 10012 Chapter 11 Petition Date: October 3, 2000 Court: Southern District of New York Bankruptcy Case No.: 00-14633 Debtor's Counsel: Chester B. Salomon, Esq. Salomon Green & Ostrow, P.C. 485 Madison Avenue, 20th Floor New York, New York 10012 (212) 319-8500 Total Assets: $ 1 Million Above Total Debts : $ 1 Million Above 20 Largest Unsecured Creditors: FD5 Herve de Beublain 11-13 Avenue de Friedland 75008 Paris, France Loan $ 1,000,000 Tribune Company Lisa Wiersma 435 North Michigan Avenue Chicago,IL 60611 Loan $ 1,000,000 Akamai Technologies, Inc. 500 Technology Square, 5th Fl Cambridge, MA 02139 (858) 623-8400 Trade Debt $ 287,900 Silicon Valley Bank Doug Marshall 40 William Street Suite 350 Wellesley, MA 02481 (781) 431-9901 Bank Loan $ 270,445 Coudert Brothers Michael Hagan 1114 Avenue of the Americans New York, NY 10036-7703 (212) 626-4400 Legal Services $ 263,053 Realnetworks.com Trade Debt $ 237,500 Opensystems.com Trade Debt $ 135,858 Dan Klores Associates, Inc. Trade Debt $ 119,332 Siemen's Credit Corp. Trade Debt $ 84,291 Spencer Stuart Trade Debt $ 81,149 Network Engines, Inc. Trade Debt $ 74,274 Mezzina Brown & Partners LLC Trade Debt $ 70,000 Microwarehouse Trade Debt $ 51,046 Technisphere Corporation Trade Debt $ 48,113 Morrison Cohen Singer Legal Services $ 47,219 Internet Profiles Corp. Trade Debt $ 44,000 Doubleclick Dart Trade Debt $ 42,074 Peerless Insurance Company Contract $ 41,786 BP Air Conditioning Corp. Trade Debt $ 41,506 Hixon Design Consultants, Inc. Trade Debt $ 40,337 RITE AID: Completes PCS Sale to Advance Paradigm, Proceeds to Pay Down Debt --------------------------------------------------------------------------- Rite Aid Corporation (NYSE, PSE: RAD) announced that it has completed the previously announced sale of PCS Health Systems, Inc., its pharmacy benefits management company, to Advance Paradigm, Inc. (Nasdaq: ADVP). In the transaction, Rite Aid received $675 million in cash, $200 million in senior subordinated notes, and preferred stock in what will be known as AdvancePCS. The preferred stock will be convertible upon receipt of stockholder approval into 6.25 million shares of common stock valued at $255 million based on the October 2, 2000 closing price. Other financial considerations including approximately $200 million for forgiveness of inter-company debt, $38 million in proceeds from the sale leaseback of the PCS headquarters building, and $20 million in excess real estate bring the value of the sale to Rite Aid to approximately $1.4 billion. "Selling PCS is another step towards a Rite Aid turnaround," said Bob Miller, Rite Aid chairman and chief executive officer. "Cash proceeds from the transaction will be used to strengthen our balance sheet by paying down debt. We believe we're also getting a very valuable asset in the equity investment we made in AdvancePCS. AdvancePCS is the nation's largest health improvement company, serving more than one quarter of the U.S. population, and our 15 percent ownership will allow us to continue to benefit from the potential growth of the pharmacy benefit management industry." Rite Aid Corporation is one of the nation's leading drugstore chains with annual revenues of more than $14 billion and approximately 3,800 stores in 30 states and the District of Columbia. Rite Aid owns approximately 15 percent of drugstore.com, a leading online source for health, beauty and pharmacy products. Information about Rite Aid, including corporate background and press releases, is available through the company's website at www.riteaid.com. SAFETY-KLEEN: Seeks First Extension of Removal Period through January 5, 2001 ----------------------------------------------------------------------------- At the Petition Date, Safety-Kleen Corp. and its debtor-affiliates were parties to lawsuits pending in state and Federal courts across the country. Pursuant to Rule 9027 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to extend their 90 day period of time within which they must decide whether to remove a legal proceeding from the court in which it is pending to the District of Delaware for resolution. The Debtors have not had a full opportunity to investigate their involvement in the Prepetition Lawsuits, and decisions about the appropriate forum in light of the chapter 11 and CCAA insolvency proceedings would be imprudent at this early juncture, the Debtors argue. Accordingly, the Debtors ask that the time within which they must decide whether to remove any Prepetition Lawsuit be extended to the later to occur of (a) January 5, 2001, or (b) 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be removed. (Safety-Kleen Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) STELLEX TECHNOLOGIES: Subsidiary Sells Six Subsidiaries to Raise Cash -------------------------------------------------------------------------- Stellex Aerostructures, Inc., Wichita Bizjournals.com reports, seeks to sell Stellex Precision Machining, Inc., together with five more companies belonging to its organization. President and CEO of Stellex Aerostructures Bradley Call says, a sale could be probable in the next three to six months. "It's being offered as a total group and will not be broken up," Mr. Call added. Stellex Precision Mining, Inc., is one of the aviation subcontractors included in the sale, which would add enough cash for its Chapter 11 restructuring. SUN STATES: A.M. Best Downgrades SSIG Members' Financial Strength Rating to B ----------------------------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating of the members of the Sun States Insurance Group, Atlanta, to B (Fair) from B++ (Very Good). The downgrade applies to International Indemnity Co., Atlanta, and Queensway International Indemnity Co., Orlando, Fla. The downgrade reflects A.M. Best's ongoing concerns regarding Sun States' weakening balance-sheet strength as well as concern regarding the ongoing financial support of its parent company, Queensway Financial Holdings. A review of the group's six-month financial statements, revealed a significant decrease in the group's policyholders surplus. This decrease was due to the group's inability to reconcile receivables due from parents, subsidiaries and affiliates, uncollectable premiums and agents' balances and an unfavorable tax adjustment. A.M. Best believes that the group's deteriorating capital position may be further challenged by future balance sheet adjustments and continued restructuring efforts at its subsidiaries. Furthermore, the group's access to additional capital remains questionable due to the weakened financial condition of Queensway Financial Holdings, the ultimate parent. A.M. Best will be meeting with the management of Queensway Financial Holdings to review the company's future business strategy and its effect on the ratings of all operating subsidiaries. UNITED COMPANIES: Announces Filing of Fourth Plan of Reorganization ------------------------------------------------------------------- United Companies Financial Corporation filed a Fourth Amended Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court. The Court subsequently approved the adequacy of the Disclosure Statement. The Company has been operating under Chapter 11 protection since March 1, 1999. (New Generation Research, Inc., 02-Oct-00) VALU FOOD: Creditors' Committee Agrees to SUPERVALU Settlement Pact ------------------------------------------------------------------- The Creditors Committee of Valu Food and Solo Foods (Baltimore, MD) has reached an overall settlement with SUPERVALU, which had become the wholesaler for the failed chains for a relatively short period of time prior to its Chapter 11 filings. Under the proposed settlement, this week's edition of F&D Reports' Scrambled Eggs publication reports, SUPERVALU will receive approximately $200,000 of the funds in the estate and will relinquish its liens against all property of the Companies and the proceeds derived therefrom. F&D notes that the settlement is subject to Bankruptcy Court approval. Further, F&D says, SUPERVALU will withdraw its motion to have the Chapter 11 Case converted to a Chapter 7 Case and will support a Plan of Liquidation to be filed by the Creditors Committee, which Plan shall contain a post-confirmation Litigation Trust to pursue claims against other parties. Finally, SUPERVALU will retain its approximately $8.1 million deficiency claim, but will subordinate it to all General Unsecured Creditors, clearing the way for those creditors to receive more than a token distribution in this case. The Committee has also obtained the formal consent of the Companies for the Committee to have the standing to propose, confirm and administer a Plan of Liquidation. VENCOR, INC.: Reaches Compromise on Cranbrook Lease Termination Dispute ----------------------------------------------------------------------- Vencare Rehab Services, Inc., entered into a 3-year lease agreement with Cranbrook Realty Investment Fund, L.P., in September, 1999, for office space located in Dubmlin, California. Vencare posted an $8,066 security deposit and agreed to pay $1,569 per month in rent. Vencare vacated the premises on March 16, 2000. Cranbrook asserted all kinds of claims about how Vencare violated the terms of the Lease. Negotiations followed and culminated in a Settlement Agreement providing that (a) Vencare will pay rent through May 31, 2000; (b) Cranbrook will return the Security Deposit; and (c) this Settlement will terminate the lease and settle all claims. With no objection interposed by any party-in-interest, Judge Walrath approved the Settlement Agreement in all respects. (Vencor Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) VISION TWENTY-ONE: Divestiture of PPM Business Successful --------------------------------------------------------- Vision Twenty-One, Inc. (OTCBB:EYES.OB), announced that it has successfully completed the divestiture of its physician practice management business involving optometry and ophthalmology practices. The Company is now in a position to implement its strategy of principally focusing the Company's resources and efforts on its managed care business. As a result of the Company's increased focus on its managed care business, the Company is evaluating strategic options regarding its ambulatory and refractive surgery divisions, including the possible sale of these business units. Concurrent with this shift in the Company's operating focus, the Company announced the appointment of a new executive management team. Effective immediately, Mark Gordon, O.D., will serve as Chief Executive Officer and Andrew Alcorn will serve as President. The Company has also appointed Richard Jones as Chief Financial Officer, Ellen Gordon as Chief Operating Officer and Howard Levin, O.D. as Vice President and Clinical Director. Dr. Gordon and Mr. Alcorn have extensive experience in the managed care business, having previously served as the head of the Company's MEC Health Care, Inc. and Block Vision, Inc. subsidiaries, respectively. Dr. Gordon was the original founder of MEC Health Care, Inc. and has served as its CEO since 1986. Mr. Alcorn assumed the leadership of Block's managed care business in 1993 and has served as its president for the past several years. Ms. Gordon has served as the Chief Operating Officer of MEC Health Care, Inc. since 1986. Dr. Levin was a founder of MEC Health Care, Inc. and has served as its Clinical Director since 1986. Mr. Jones joins the Company as its Chief Financial Officer, after many years of extensive experience as a senior level financial and operating officer for a number of health care organizations. Bruce Maller, Chairman of Vision Twenty-One, commented, "The divestiture of the physician practice management (PPM) business unit was a critical component of our ongoing restructuring plan. The new executive group has previously been in charge of two of our most successful operating units. We are confident that their experience and success in the managed care business will prove invaluable to the Company and its shareholders as we continue to narrow our focus to what we do best." Mr. Maller also commented that, "The Company continues to make good progress in implementing its restructuring plan and is hopeful to resolve many of its remaining issues over the next several months." Vision Twenty-One also announced the appointment of Messrs. Gordon and Alcorn to its Board of Directors as well as Howard Hoffmann and Barbara Hill, effective immediately. Mr. Hoffmann previously served as the Company's interim Chief Financial Officer who, along with Mr. Maller, has been instrumental in designing and implementing the Company's restructuring plan. Mr. Hoffmann is a partner in the management consulting firm of Nightingale and Associates. Ms. Hill joins the board with an extensive background in the managed health care field. Most recently, Ms. Hill served for about 5 years as the President and CEO of Rush Prudential Health Plan. With these board changes, the Company is now represented by a five member board including two representatives of the new executive management team. The Company's founder and former CEO, Ted Gillette, recently resigned his officer and board positions in order to pursue other business interests. The Company expressed its appreciation for Mr. Gillette's contributions to the restructuring process and wished him well in his new endeavors. Mr. Maller also thanked the departing board members and welcomed the new directors. Mr. Maller reinforced his view that the new board will be very focused in assisting the new management team in executing its business plan. WASTE MANAGEMENT: Subsidiaries Ink Final Waste Treatment Plans with EPA ----------------------------------------------------------------------- Waste Management, Inc. (NYSE: WMI) announced that its subsidiaries, USA Waste of Virginia, Inc., and King George Landfills, Inc., have signed a Final Project Agreement with the U.S. Environmental Protection Agency (EPA) and the Virginia Department of Environmental Quality (DEQ) for waste treatment projects at the Maplewood Landfill in Amelia County, Va., and the King George County Landfill in King George, Va. The "bioreactor" projects are part of the EPA's Project XL program, which stands for "eXcellence and Leadership." "This project with the EPA and the Virginia DEQ will provide valuable information on the use of bioreactors at landfill sites," said A. Maurice Myers, Chairman and CEO of Waste Management. "The information we gain will be significant to the EPA and the waste industry as a whole." The projects will include two different bioreactor techniques. The Maplewood Landfill will recirculate leachate from the landfill itself, and the King George Landfill will recirculate leachate plus other liquids such as stormwater and non-hazardous liquid waste water. The bioreactor process accelerates the decomposition of municipal solid waste, or household waste. By using this technique, airspace in a typical landfill can be increased by 20 to 40 percent, decreasing the need for new landfills. The Maplewood and the King George County landfills have double-liner systems that exceed the performance requirements for municipal solid waste landfills and make them excellent candidates for the bioreactor programs. Project XL is a national pilot program that allows state and local governments, businesses, and federal facilities to work with the EPA in developing innovative strategies to test better or more cost-effective ways of achieving environmental and public health protection. Waste Management, Inc. is its industry's leading provider of comprehensive waste management services. Based in Houston, the Company serves municipal, commercial, industrial, and residential customers throughout North America. Certain statements provided in this release include statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements, and all phases of Waste Management, Inc.'s operations, are subject to risks and uncertainties, any one of which could cause actual results to differ materially from those described in the forward-looking statements. Such risks and uncertainties include or relate to, among other things: - the impact of pending or threatened litigation and/or governmental inquiries and investigation involving the Company. - the Company's ability to stabilize its accounting systems and procedures and maintain stability. - the uncertainties relating to the Company's proposed strategic initiative, including the willingness of prospective purchasers to purchase the assets the Company identified as divestiture candidates on terms the Company finds acceptable, the timing and terms on which such assets may be sold, uncertainties relating to regulatory approvals and other factors affecting the ability to prospective purchasers to consummate such transactions, including the availability of financing and uncertainties relating to the impact of the proposed strategic initiative on the Company's credit ratings and consequently the availability and cost of debt and equity financing to the Company. - the Company's ability to successfully integrate the operations of acquired companies with its existing operations, including risks and uncertainties relating to its ability to achieve projected earnings estimates, achieve administrative and operating cost savings and anticipated synergies, rationalize collection routes, and generally capitalize on its asset base and strategic position through its strategy of decentralized decision making; and the risks and uncertainties regarding government-forced divestitures. - the Company's ability to continue its expansion through the acquisition of other companies, including, without limitation, risks and uncertainties concerning the availability of desirable acquisition candidates, the availability of debt and equity capital to the Company to finance acquisitions, the ability of the Company to accurately assess the pre-existing liabilities and assets of acquisition candidates and the restraints imposed by federal and state statutes and agencies respecting market concentration and competitive behavior - the effect of competition on the Company's ability to maintain margins on existing or acquired operations, including uncertainties relating to competition with government owned and operated landfills which enjoy certain competitive advantages from tax-exempt financing and tax revenue subsidies. - the potential impact of environmental and other regulation on the Company's business, including risks and uncertainties concerning the ultimate cost to the Company of complying with final closure requirements and post-closure liabilities associated with its landfills and other environmental liabilities associated with disposal at third party landfills and the ability to obtain and maintain permits necessary to operate its facilities, which may impact the life, operating capacity and profitability of its landfills and other facilities. - the Company's ability to generate sufficient cash flows from operations to cover its cash needs, the company's ability to obtain additional capital if needed and the possible default under credit facilities if cash flows are lower than expected or capital expenditures are greater than expected. - the potential changes in estimates from ongoing analysis of site remediation requirements, final closure and post-closure issues, compliance and other audits and regulatory developments. - the effectiveness of changes in management and the ability of the Company to retain qualified individuals to serve in senior management positions. - the effect of price fluctuations of recyclable materials processed by the Company. - certain risks that are inherent in operating in foreign countries that are beyond the control of the Company, including but not limited to political, social, and economic instability and government regulations. - the potential impairment charges against earnings related to long- lived assets which may result from possible future business events. - the effect that recent trends regarding mandating recycling, waste reduction at the source and prohibiting the disposal of certain types of wastes could have on volumes of waste going to landfills and waste-to-energy facilities. - the potential impact of government regulation on the Company's ability to obtain and maintain necessary permits and approvals required for operations. Additional information regarding these and/or other factors that could materially affect future results and the accuracy of the forward-looking statements contained herein may be found in Part I, Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1999 and in Part I, Item 2 of the Company's Quarterly Report on Form 10-Q for the three months ended June 30, 2000. WAXMAN INDUSTRIES: Case Summary and 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Waxman Industries, Inc. 24460 Aurora Road Bedford Heights, OH 44146 Type of Business: One of the leading suppliers of specialty plumbing, hardware, and other products to the repair and remodeling market in the United States. Chapter 11 Petition Date: October 2, 2000 Court: District of Delaware Bankruptcy Case No.: 00-03815 Debtor's Counsel: Robert J. Dehney, Esq. Morris, Nichols, Arsht & Tunnell 1105 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 Total Assets: $ 33,497,524 Total Debts : $ 103,077,387 20 Largest Unsecured Creditors: Huntington National Bank, Indenture Trustee Indenture Trustee Francis Lamb for Waxman P.O. Box 5065 Industries Inc. Cleveland, Ohio 44101 12 _% Deffered (216) 515-6662 Coupon Notes $ 92,797,000 Congress Financial Corporation Cindy Denbaum 1133 Avenue of the Americas New York, NY 10036 Guarantor of (212) 545-4558 bank debt $ 8,258,865 Donaldson, Lufkin & Jenrette Tim Flynn 2121 Avenue of the Stars Fox Plaza Los Angeles, CA 90067 Investment banking (310) 282-5519 & advisory services $ 588,000 Houlihan Lokey Howard & Zukin Professional Services $ 175,000 Bowne Annual Reports $ 19,500 Milbank, Tweed, Hadley & McCloy Professional Services $ 15,000 The Altman Group, Inc. Services-Voting Agent $ 10,000 The Illuminating Company Utilities-Electricity $ 8,000 On-Site Services Computer Consulting $ 6,000 CompuPlus Computer Consulting $ 4,000 American Express Credit Card $ 3,000 TWI International Taiwan, Inc. Interest Payment $ 2,500 The Robins Companies Consulting $ 2,500 Beechmont Country Club Business Entertainment Expense $ 2,500 Global Crossing Telecom-local and long distance $ 2,500 DiMarco Mechanical HVAC $ 800 Dr. Barbara Kaufman Medical Bills $ 600 Boise Cascade Office Supplies $ 400 Division of Water Utilities-Water $ 400 Benesch, Friedlander Professional Services $ 332 ********* 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. All titles available from Amazon.com -- go to http://www.amazon.com/exec/obidos/ASIN/189312214X/internetbankrupt-- or through your local bookstore. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Ronald Ladia, Zenar Andal, and Grace Samson, Editors. Copyright 2000. All rights reserved. ISSN 1520-9474. 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