/raid1/www/Hosts/bankrupt/TCR_Public/001030.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 30, 2000, Vol. 4, No. 212
Headlines
910-930 SOUTHERN BLVD: Case Summary and 5 Largest Unsecured Creditors
ADVANTA CORP: Moody's Downgrades Credit Ratings & Says Review Continues
AMERICAN ECO: Argues Success Fees for President & COO Entirely Appropriate
AMERICAN PAD: Extending DIP Facility & Reducing Commitment Amount
AMERISERVE FOOD: Delaware Court Approves Debtors' Disclosure Statement
CARAUSTAR INDUSTRIES: Moody's Places Baa1 Senior Unsecured Rating on Review
CASE CORP.: Moody's Says Investment Grade Rating is Not What it Appears
CHECKERS DRIVE-IN: Rally's Merger Affects 3rd Quarter Financial Results
COMPUTER ASSOCIATES: S&P Affirms BBB+ Ratings & Revises Outlook to Negative
CORAM HEALTHCARE: Court Approves Employment of Weil Gotshal as Tax Counsel
CORRECTIONS CORP.: Announces Definitive Settlement of Shareholder Lawsuit
CROWN VANTAGE: Cherry-Picking Not Permitted, Pulp & Paper of America Argues
FEDERAL-MOGUL: Auto Parts Maker Strongly Denies Facing Liquidity Crisis
FINOVA CAPITAL: Moody's Cuts Rating to B1 & Continues Further Review
FIRST JERSEY: 2nd Cir. Declines to Compel Repatriation of Offshore Trust
FRUIT OF THE LOOM: Settling Pro Player-Related Claims Against Mr. Strumeier
GENEVA STEEL: Confirmation Hearing Continued -- Again -- to Nov. 21
HARNISCHFEGER INDUSTRIES: Insurance Issues are Murky with Morris Material
HEILIG-MEYERS: Motion to Disband Equity Committee Continued to Nov. 17
HOLLYWOOD ENTERTAINMENT: Moody's Lowers Debt Ratings & Remains Negative
KANAK HOSPITALITY: Case Summary and 17 Largest Unsecured Creditors
KITTY HAWK: Asks for Prophylactic Exclusivity Extension through Dec. 31
M GROUP: Moves for Second Extension of Exclusive Period to January 5
MARINER POST-ACUTE: Asks for 3-Month Extension of Time to Propose a Plan
MULTICARE AMC: Creditors' Committee Taps Saul Ewing as Local Counsel
NEVADA BOB'S: Obtains CCAA Stay & PwC Appointed as Monitor
NORTHWEST MEMORIAL: Financial Squeeze Causes Milwaukee Hospital to Close
PAGING NETWORK: Delaware Court Confirms PageNet Merger With Arch Wireless
SAFETY-KLEEN: Debtors Seek Approval Of Miscellaneous Asset Sale Protocol
SAXON MORTGAGE: Fitch Lowers Ratings On Mortgage Participation Securities
TREND-LINES: Rejecting Two Retail Golf Day Store Leases
USG CORPORATION: Moody's Places US Gypsum Company On Review For Downgrade
XEROX CORP: Copier's Restructuring Plan Doesn't Stop Stock Prices Dropping
* Bond pricing for the week of October 30, 2000
*********
910-930 SOUTHERN BLVD: Case Summary and 5 Largest Unsecured Creditors
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Debtor: 910-930 Southern Boulevard LLC
341 East 149th Street
Bronx, New York 10451
Chapter 11 Petition Date: October 26, 2000
Court: Southern District of New York
Bankruptcy Case No.: 00-15013
Judge: Arthur J. Gonzalez
Debtor's Counsel: A. Mitchell Greene, Esq.
Robinson Brog Leinwand Greene et al.
1345 Avenue of the Americas
New York, NY 1010
(212) 586-4050
Total Assets: $ 4,200,000
Total Debts : $ 1,614,667
5 Largest Unsecured Creditors:
J.E. Roberts Co. $ 150,000
NYC Water Board $ 30,000
Barry H. Levites $ 14,000
Bruce Kashkin $ 2,500
NYC Sanitation Department $ 2,000
ADVANTA CORP: Moody's Downgrades Credit Ratings & Says Review Continues
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Moody's Investors Service downgraded the credit ratings of Advanta
Corporation (Advanta)(senior to B2) and Advanta National Bank (ANB)
(deposits to Ba3). ANB's bank financial strength rating is confirmed at E+,
but all other ratings for Advanta and ANB remain on review for possible
downgrade.
Moody's views Advanta's announcement that it will sell its mortgage
operation, and apply at least part of the proceeds to reducing its debt, as
a positive step that should improve the company's liquidity position in the
short to intermediate term. Given the holding company's cash position and
the contemplated use of proceeds to retire outstanding medium-term notes,
Moody's believes that Advanta should have adequate liquidity to meet its
debt obligations over the near to intermediate term.
After the sale of the mortgage unit, the rating agency said, Advanta will
essentially be a monoline operation. The business card portfolio has grown
rapidly, but asset quality has deteriorated somewhat despite a robust
economy. In Moody's opinion, the creditworthiness of Advanta's client base
could decline in the event of a recession.
Furthermore, the rating agency added, there remain significant
uncertainties regarding the ultimate form of Advanta's capital structure,
the profitability of its business card unit on an operating basis, and the
trends in asset quality for that portfolio.
In addition, Moody's said, even if Advanta pays off all its medium-term
notes, the company will have a very large debt burden, including its
capital securities, relative to its cash generating capacity.
Accordingly, Moody's review will focus on the prospects for further debt
reduction as well as the outlook for the profitability and asset quality of
the business card operation.
The following ratings were downgraded:
1) Advanta Corporation -- the rating for senior long-term debt to B2
from B1;
-- the rating for junior subordinated long-term
debt to Caa1 from B3; and
-- the preferred stock rating to "caa" from "b3".
2) Advanta Capital Trust I -- the preferred stock rating to "caa" from
"b3".
3) Advanta National Bank -- the rating of the bank for long-term
deposits to Ba3;
-- the rating of the bank for other long-term
senior obligations to B1;
-- the rating of the senior bank notes to B1;
-- the ratings of the subordinated bank notes
to B2;
-- the issuer rating to B1.
The following ratings were confirmed:
a) Advanta National Bank -- the Not Prime rating of the bank for short-
term deposits and other short-term senior obligations and the bank's
E+ financial strength rating.
Advanta Corporation, headquartered in Spring House, Pennsylvania, had
approximately $12 billion in managed assets as of September 30, 2000.
AMERICAN ECO: Argues Success Fees for President & COO Entirely Appropriate
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American Eco Holding Corp., et al., replies to an objection interposed by
its Official Committee of Unsecured Creditors to the Company's motion for
authority to enter into Success Fee Agreements with Thomas Gardner,
President and Chief Liquidating Officer and Todd Quattlebaum, COO.
The debtors state that the Committee is incorrect in stating that Ingenium
Management, a crisis management firm is retained in these cases. Although
Ingenium Management was retained by the debtors' prepetition, the debtors
state that Mr. Gardner and Mr. Quattlebaum's relationship or previous
relationship with Ingenium have no relationship to the current Success
Fees.
The debtors argue that the standard that should be employed by the Court is
the business judgment rule. The debtors point out that in other cases,
incentive pay and bonuses are key to retaining management through a
liquidation process. Thus, the debtors claim that the issue before the
court is whether the implementation of the success fee agreements is a
proper exercise of the debtors' business judgment.
AMERICAN PAD: Extending DIP Facility & Reducing Commitment Amount
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American Pad & Paper Company and its debtor affiliates seek a court order
approving the Fourth Amendment to the DIP Credit Agreement and a
continuation of the debtors' existing post-petition financing arrangements.
The debtors continue to operate their business under Chapter 11. The
debtors will continue full business operations until the sales of the
remaining operating divisions are closed. Certain operations will continue
after the closing of those sales. The debtors rely on the financing
provided by the Credit Agreement in order to fund all of their operations,
and have no other source of financing sufficient to fund operations.
The debtors request that the termination date under the Credit Agreement be
extended so that the working capital facility under the Credit Agreement
will remain available until December 1, 2000. The DIP Lenders have agreed
to such an extension on the terms set forth in the Fourth Amendment. The
principal terms are as follows:
a) The Maturity Date is extended to December 1, 2000.
b) The Total Revolving Loan Commitment is reduced to $53 million and
c) The agent will receive an amendment fee in the amount of .5% of the
Revolving Loan Commitments for the pro rata benefit of the Revolving
Lenders.
The debtors assert that they negotiated the terms of the Fourth Amendment
at arms' length and in good faith. The debtors believe that the negotiated
terms are fair and reasonable under the circumstances.
The debtors claim that it is essential to the success of the debtors'
chapter 11 cases that they continue to have access to sufficient post-
petition financing to operate the Williamhouse, AMPAD and Forms divisions
during the conclusion of the sale process without the proposed financing ,
the debtors would risk being unable to maximize asset value for creditors.
The debtors lack sufficient funds to continue operating the divisions in
the period before close. Discontinuing operations would have a drastic
negative effect on the value of the two divisions.
Co-counsel to the debtors are Richards, Layton & Finger, PA, (Delaware) and
Gibson, Dunn & Crutcher LLP (Texas and New York).
AMERISERVE FOOD: Delaware Court Approves Debtors' Disclosure Statement
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AmeriServe Food Distribution, Inc. announced that the United States
Bankruptcy Court in Wilmington, Del., has approved AmeriServe's Disclosure
Statement in connection with its Plan of Reorganization. The Disclosure
Statement is being mailed to creditors this week. It will also be available
as part of AmeriServe Food Distribution, Inc.'s 8-K filing with the
Securities and Exchange Commission, as well as NEBCO EVANS Holding
Company's 8-K filing.
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.
CARAUSTAR INDUSTRIES: Moody's Places Baa1 Senior Unsecured Rating on Review
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Moody's Investors Service placed the Baa1 senior unsecured debt ratings of
Caraustar Industries Inc. under review for possible downgrade. The review
stems from a build-up of concerns over time related to declining operating
margins, a gradual increase in the company's debt, and a general weakening
of debt protection measurements.
Ratings placed under review are:
a) Guaranteed revolving credit facility; Baa1,
b) Senior unsecured note; Baa1,
c) Senior unsecured shelf registration; (P)Baa1.
Acquisitions have pushed debt higher over the past two years. This, in
conjunction with higher raw materials costs and lower volumes during the
first nine months of this year have resulted in a sharper than anticipated
decline in debt measurements. Although the company's cash generation is
expected to rebound somewhat during the fourth quarter, it is likely to
remain lower than previously anticipated. During the ratings review,
Moody's will assess the company's plans to raise margins and improve debt
measures over the long term. In addition, we will evaluate management's
longer term strategic plans for growth and capitalization.
Caraustar, headquartered in Austell, Georgia, is one of the largest
manufacturers of recycled paperboard in North American, producing a wide
variety of tubes, cores, composite containers, folding cartons, and
industrial and consumer packaging.
CASE CORP.: Moody's Says Investment Grade Rating is Not What it Appears
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Moody's Investors Service lowered the long-term and short-term ratings of
Case Corp. and Case Credit to Baa3 from Baa2, and to Prime-3 from Prime-2
respectively. The outlook for Case's ratings is negative. Moody's also
confirmed the A3 long-term and Prime-2 short-term ratings of Fiat Spa., and
noted that the financial and strategic importance of Case to Fiat is a
critical factor in Case's ability to maintain an investment-grade rating.
The outlook for the Fiat rating is also negative.
The downgrade of the Case ratings reflects Moody's expectation that the
company's debt protection measures will remain very weak as a result of an
ongoing downturn in the U.S. farm equipment market, the financial and
operating advantages enjoyed by other farm equipment manufacturers, and the
very competitive pricing and marketing strategies being pursued by
competitors. Moreover, in the wake of the merger between Case and New
Holland, the company's market position in the North American farm equipment
sector continues to be undermined by customer uncertainty about the status
of its product line and its dealer network. As a result of these
challenges, Case's debt protection measures will remain under pressure and
will not be supportive of the Baa3 rating during the near term. The
negative outlook reflects the challenges that Case will face during the
intermediate term in further reducing the cost structure of the merged
entity, taking advantage of its platform consolidation strategy, and
restoring the confidence of customers in its products and dealer system.
Success in these areas will be critical to restoring debt protection
measures to levels consistent with the Baa3 rating.
The significant financial and strategic relationship between Case and Fiat
is an important factor in Case's preserving an investment grade rating. On
a stand-alone basis, Case's financial flexibility and business fundamentals
do not support the current Baa3 rating. Moreover, Fiat does not guarantee
or contractually support any of Case's rated debt. Nevertheless, we believe
that the financial and strategic links between the two companies remain
significant, and that this relationship affords meaningful benefits to
Case's credit quality. Fiat owns 84% of CNH Global N.V., the entity created
by the merger between Case and New Holland. CNH is taking on an
increasingly important role within Fiat. Its leading market share position
and global presence in the agricultural and construction equipment sectors
are highly consistent with the criteria that Fiat requires in businesses
that will form the core of its portfolio. In addition, Fiat has invested
approximately $4 billion in CNH in the form of equity contributions and
loans.
Fiat's ratings are supported by the operational and financial benefits that
will likely accrue from the company's sale of a 20% interest in its
automotive operations to General Motors (GM) for about $2.4 billion. In
addition, Fiat's strategy for managing its portfolio of diverse businesses
could strengthen its cash generating characteristics, overall competitive
position, and return measures. These factors bolster Fiat's credit quality,
and afford it the ability to lend support to CNH. However, the outlook for
Fiat's rating is negative. Fiat's ability to sustain its current rating
will be driven by:
1) the operating benefits achieved by its car operations as a result of
the strategic link with GM;
2) the success of Fiat's ongoing portfolio reconfiguration efforts; and
3) the degree to which CNH's integration and cost cutting initiatives
can strengthen its intermediate-term operating performance.
CNH Global N.V., headquartered in Racine, WI, was formed from the merger
between Case Corporation and New Holland N.V. and is a leading manufacturer
of agricultural and small- and medium-sized construction equipment.
Fiat S.p.A., headquartered in Turin, is one of the leading industrial
groups in Italy and the third largest European-based automobile
manufacturer. The company is also a leading European-based manufacturer of
commercial vehicles and one of the leading producers of agricultural
equipment in the world.
CHECKERS DRIVE-IN: Rally's Merger Affects 3rd Quarter Financial Results
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Checkers Drive-In Restaurants, Inc. (Nasdaq: CHKR) reported financial
results for its third fiscal quarter ended September 11, 2000. As the
merger with Rally's Hamburgers, Inc. on August 9, 1999 was accounted for as
a reverse acquisition, Rally's was deemed the acquiring company for
accounting purposes. Accordingly, the historical financial results for the
combined entity prior to August 9, 1999 are those of Rally's. The results
reported for the third quarter of fiscal 2000 include 12 weeks of activity
for both Rally's and Checkers while the 1999 financial results represents
Rally's for the periods stated and Checkers financial results only for the
post-merger four week period ended September 6, 1999.
Results for the third quarter ended September 11, 2000 are as follows:
* Net income increased $2.2 million, to $809,000, or $.08 per diluted
share for the third quarter of fiscal 2000, compared to a net loss of
$1.4 million or $.19 per diluted share during the third quarter of
fiscal 1999.
* Total revenues decreased $7.8 million to $37.8 million for the third
quarter of fiscal 2000 compared with revenues of $45.6 million during
the third quarter of fiscal 1999. The decrease in revenue is primarily
attributable to the sale of 231 restaurants to franchisees during the
past 12 months. Same-store sales at the company-owned Checkers and
Rally's restaurants declined by 3.1 percent and 8.6 percent,
respectively, as compared to the third quarter of 1999.
* On September 29, 2000, the Company completed the sale of 28 Rally's
Restaurants in Kentucky to a franchisee for $8.0 million. The Company
has used proceeds from this transaction to reduce its borrowings under
its credit facility to $17.7 million.
Year-to-date results for the 36-week period ended September 11, 2000 are as
follows:
* Net income increased $4.5 million to $1.9 million or $.20 per diluted
share for the three quarters ended September 11, 2000 as compared to a
net loss of $2.6 million or $.40 per diluted share for the three
quarters ended September 6, 1999.
* Total revenues increased $25 million or 22.3% to $137.1 million for
the three quarters ended September 11, 2000 compared with $112.1
million for the three quarters ended September 6, 1999. The increase
was partially attributable to the operations of the Checkers
restaurants as a result of the merger and to an increase in franchise
revenues and fees. However, the increases are offset by lost revenue
in the markets that were sold to franchisees. Same-store sales at the
company-owned Checkers and Rally's restaurants declined .5% and 5.5%,
respectively, year-to-date compared to the same 36 weeks of the prior
year.
Daniel J. Dorsch, president and chief executive officer commented, "I am
pleased to report that we have achieved consecutive profitable quarters,
but more importantly, we achieved profitability while undertaking needed
fundamental changes in our structure. In January, this company needed major
surgery and there was no simple solution. The sale of 231 company-operated
restaurants and our building manufacturing facility, changes to management
controls, a new training department, extensive restaurant repairs and
maintenance, a restructuring of the field management team, a successful new
Screamin Chicken product rollout, improved franchisee relations, reductions
in overhead expense, and a restructure of our debt were essential to
restoring the prospects of long term profitability. We accomplished every
goal stated herein." Dorsch continued, "Equally important was the
implementation of significant improvements to our culture during the third
quarter that will not immediately show up in earnings but will positively
affect the company. Setting a company up for long term success is a much
bigger job than reducing food and labor costs. We will now accelerate our
efforts in building our franchise system with new domestic and
international store growth. I am very impressed with the strong desire of
our franchise partners to build this company all over again."
COMPUTER ASSOCIATES: S&P Affirms BBB+ Ratings & Revises Outlook to Negative
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Standard & Poor's today affirmed its ratings on Computer Associates
International Inc. and revised the outlook to negative from stable. The
outlook revision reflects the implementation risks associated with the
adoption of a new business model.
Ratings on Islandia, N.Y.-based Computer Associates' reflect a stable
revenue base, favorable business prospects, and strong operating results.
The negative outlook reflects the risks of adopting a new business model
that allows clients to subscribe to Computer Associate software, instead of
licensing specific products in pre-determined quantities.
The company's leading, diversified, high-margin software portfolio is
viewed as defensible because of high switching costs and entrenched
customer relationships. The success of Computer Associates' client/server
and e-commerce products provides an internal growth ramp for the company,
while strategic alliances with key partners are expected to enhance
software sales and services. Mainframe products, although mature, should
continue to generate predictable cash flow and profits.
The ratings are tempered, however, by management's aggressive financial
policy. While the company has had an excellent track record integrating
software product acquisitions, the additional debt burden from recent
acquisitions, coupled with restructuring charges, has weakened Computer
Associates' financial position. The company's strong free operating cash
flow generation, though, could mitigate the impact of these transactions
over the next few years, if it is deployed for debt repayment. Earnings
growth, coupled with moderate capital spending, has resulted in increased
levels of free cash flow, which grew to more than $1 billion in fiscal
2000, ended March 31.
Although near-term debt repayment is likely, Standard & Poor's expects
growth through acquisitions and periodic share repurchases to remain an
integral part of Computer Associates' strategy. At current ratings levels,
debt to EBITDA is expected to peak at about the 2.5x area, depending on
acquisition opportunities and stock repurchase activity.
OUTLOOK: NEGATIVE
Current rating levels incorporate the expectation that the new model will
change the timing of revenue recognition and increase visibility into
future revenue and earnings without a resulting change to cash flows for
the company. However, client confusion and receptivity to the new model,
coupled with a need to re-educate the Computer Associates sales force could
affect operations. Ratings could be lowered if the company experiences a
meaningful disruption in performance as a result of launching its new
model, Standard & Poor's said. -- CreditWire
RATINGS AFFIRMED, OUTLOOK REVISED TO NEGATIVE
Computer Associates International Inc.
a) Corporate credit rating BBB+/Neg/A-2
b) Commercial paper A-2
c) Senior unsecured notes BBB+
d) Bank loan BBB+
CORAM HEALTHCARE: Court Approves Employment of Weil Gotshal as Tax Counsel
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By order entered on October 10, 2000, the Honorable Mary F. Walrath
authorized Coram Healthcare Corp. and Coram, Inc. to employ and retain the
law firm of Weil, Gotshal & Manges LLP as special tax counsel in these
Chapter 11 cases, nunc pro tunc to August 8, 2000.
CORRECTIONS CORP.: Announces Definitive Settlement of Shareholder Lawsuit
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Corrections Corporation of America (formerly Prison Realty Trust, Inc.)
(NYSE:CXW) announced that it has entered into definitive settlement
agreements regarding the settlement of all outstanding stockholder
litigation against CCA and certain of its existing and former directors and
executive officers. The stipulations of settlement, which have received
preliminary court approval, provide for the "global" settlement of a series
of class action and derivative lawsuits brought against CCA by current and
former stockholders of the company and its predecessors. The hearings for
final court approval of the settlement are scheduled to be completed within
the next 90 days.
"We are pleased that we were able to reach a definitive agreement with the
plaintiffs in these actions," said William F. Andrews, Chairman of the
Board of Directors of CCA. "As we have stated before, the settlement of
these matters under the terms of the agreements is in the best interest of
CCA and its stockholders as it frees CCA from the burden of this litigation
and allows the company to focus its attention on its business and restoring
it credibility."
The definitive settlement agreements provide that CCA will pay or issue the
plaintiffs an aggregate of:
* approximately $47.5 million in cash payable solely from the proceeds
under certain insurance policies; and
* approximately $75.4 million in shares of CCA common stock (or
17,235,715 shares at an agreed value of $4.375 per share).
The shares of common stock to be issued by CCA in accordance with the
agreements will be subject to a stock price guarantee of $4.375 per share,
which will require CCA to pay or issue, at its option, cash or additional
shares of common stock to the plaintiffs if the trading price of CCA common
stock does not reach $4.375 per share for a specified number of trading
days during the period from the completion of the settlement through August
31, 2001. In addition, shares issued in the settlement are subject to
certain anti-dilution adjustments if CCA undertakes certain transactions
(generally, raising equity capital in excess of $110.0 million at less than
the stock price guarantee) during the period from August 31, 2001 through
December 31, 2001.
In addition to the payments of amounts specified above, CCA and the
plaintiffs have agreed to certain other matters in connection with the
settlement of the litigation, including:
* a prohibition on payments of any kind by CCA to insiders of the
company and the company's affiliates in connection with its
restructuring except as previously disclosed by the CCA;
* restrictions on CCA's ability to reprice stock options previously
issued to former or current directors or executive officers of the
company without stockholder approval for a period of 24 months; and
* requirements regarding the composition of CCA's board of directors and
its committees and the adoption by the board of certain related
corporate governance policies.
CCA expects to file a Current Report on Form 8-K with the U.S. Securities
and Exchange Commission with respect to the settlement of the litigation
which will include the full text of the stipulations of settlement among
the parties.
CCA and its affiliated companies are the nation's largest provider of
detention and corrections services to governmental agencies. The company is
the industry leader in private sector corrections with approximately 68,000
beds in 75 facilities under contract or under development and ownership of
45 facilities in the United States, Puerto Rico and the United Kingdom.
CCA's full range of services includes design, construction, ownership,
renovation and management of new or existing jails and prisons, as well as
long distance inmate transportation services.
CCA has recently completed a series of previously announced restructuring
transactions which included, among other things, the merger of the company
with its primary tenant. In connection with the merger, the company,
formerly known as Prison Realty Trust, Inc., changed its name to
Corrections Corporation of America.
CROWN VANTAGE: Cherry-Picking Not Permitted, Pulp & Paper of America Argues
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Pulp & Paper of America, LLC and its affiliates, purchased from the debtor
one pulp and one paper mill located in Berlin and Gorham, New Hampshire for
$45 million. The parties entered into a Strategic Alliance Agreement, a
Paper Brokerage Agreement the Pulp Purchase Agreement and the Transitional
Services Agreement.
The debtors then announced an agreement to sell substantially all of their
assets. The debtors seek to reject one of the agreements, the Pulp Purchase
Agreement, and Pulp & Paper of America states that the debtors must assume
all or reject all of the agreements.
Pulp & Paper of America states that under New York law, the law
governing the agreements, the agreements must be treated as one, because
each of the agreements was executed at the same time, by the same parties,
for the same purpose and in the course of the same transaction. The
agreements can not be assumed in part and rejected in part.
FEDERAL-MOGUL: Auto Parts Maker Strongly Denies Facing Liquidity Crisis
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Shares of auto parts maker Federal-Mogul Corp. hit a new 52-week low after
one analyst downgraded the stock to sell over bankruptcy fears, but the
company denied it faced any liquidity crisis and said the analyst was
exaggerating, according to a Reuters report. Deutsche Banc Alex Brown
analyst Kenneth Blaschke last week downgraded his rating on the company
because of fears it may default on its credit agreement, citing weak sales
combined with asbestos claims payments. He said, "Bankruptcy is no longer a
remote risk. As a result, we are downgrading the stock to sell." But
Federal-Mogul officials said Blaschke was exaggerating the Southfield,
Mich.-based company's position and said no major debt payments were due
until 2004. "We are not in the position that he puts us in," Federal-Mogul
spokeswoman Kim Welch said. "There is no liquidity crisis facing us. We do
have significant debt burden, but we have the blessing of time." (ABI 26-
Oct-00)
FINOVA CAPITAL: Moody's Cuts Rating to B1 & Continues Further Review
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Moody's Investors Service has downgraded the ratings of FINOVA Capital
Corporation (senior debt to B1 from Ba1) and its affiliates. The ratings
remain on review for possible further downgrade.
Moody's rating action results from its belief that the stability of
FINOVA's franchise has continued to deteriorate during the period in which
the company has been exploring possible strategic alternatives. This
process has lasted nearly six months without producing a conclusion. If the
firm does not soon reach a successful conclusion involving a third party,
Moody's believes FINOVA's financial flexibility will be extremely limited.
Moody's believes that FINOVA may then need to seek to restructure its
banking facilities, which could prove difficult.
Moody's concerns regarding the negative effects of potential adverse
selection by customers and employees continue to grow with the passage of
time. As discussed in prior Moody's releases, FINOVA has restrained its new
business activity in order to conserve cash and, as time passes, it is
likely that employees and customers will become progressively more
concerned.
This situation places FINOVA's franchise at risk for further portfolio
deterioration and run-off and heightens the risk of reduced earnings
capacity at the firm. Reviving momentum in the franchise will become
increasingly challenging as time goes on, in Moody's opinion. This may
affect the company's ability to reach a successful conclusion to its
strategic process.
In addition, the market for finance properties and assets continues to be
thin. These market conditions may limit FINOVA's operating and strategic
alternatives.
These issues, together with FINOVA's constrained financial flexibility,
result in FINOVA's ratings remaining on review for possible further
downgrade.
The following ratings were downgraded and remain on review for possible
further downgrade:
* FINOVA Capital Corporation
a) Long-Term Issuer to B1 from Ba1
b) Senior to B1 from Ba1
c) Subordinated Shelf to (P)B3 from (P)Ba3
* FINOVA Finance Trust
a) Preferred Stock to "caa" from "b2"
* FINOVA Group Inc.
a) Convertible Subordinated Debt to Caa1 from B1
b) Cumulative Preferred Stock Shelf to (P)"caa" from (P)"b2"
c) Non-Cumulative Preferred Stock Shelf to (P)"ca" from (P)"b3"
FINOVA Capital Corporation is a commercial finance company; its operations
are primarily in the United States. At June 30, 2000, FINOVA Capital
Corporation reported total assets of approximately $14 billion. FINOVA
Capital Corporation is a wholly owned subsidiary of FINOVA Group, Inc., and
it is based in Scottsdale, Arizona.
FIRST JERSEY: 2nd Cir. Declines to Compel Repatriation of Offshore Trust
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The United States Court of Appeals for the Second Circuit handed down a
decision last week that keeps a $5 million trust set-up by Robert E.
Brennan in Nevis intact.
During the course of a 1994 trial, before a Judgment was entered against
Mr. Brennan and before he filed for bankruptcy protection, Mr. Brennan
established an offshore asset protection trust in Gibraltar, called the
Cardinal Trust, and funded the trust with $5 million in municipal
securities. His three adult sons and the "Robert E. Brennan Foundation,
Inc." are the beneficiaries of the Cardinal Trust. The trust terms provide
that the trustee has no obligation to make payments to these beneficiaries
during the life of the trust. Moreover, under the terms of the trust, the
principal and accumulated interest revert to Mr. Brennan after ten
years (or at some point thereafter as established by the trustee).
Notwithstanding this reversionary interest, Mr. Brennan did not list the
Cardinal Trust as property of his estate in his original bankruptcy
petition. After law enforcement authorities discovered the existence of the
trust, Brennan amended his petition to include the trust, but he valued his
interest at $0.
The SEC argues that, notwithstanding Brennan's bankruptcy and the
appointment of a bankruptcy trustee in June 1997, Brennan has exercised,
and continues to exercise, control over the Cardinal Trust. Specifically,
it contends that Brennan has used the trust to support "a lavish,
globetrotting lifestyle" and that he has directed efforts to keep the trust
out of his creditors' reach. The SEC notes, in particular, that since entry
of the July 1995 Judgment and Brennan's filing for bankruptcy, the Cardinal
Trust has been relocated twice, first from Gibraltar to Mauritius and then
from Mauritius to Nevis. According to the SEC, these moves were prompted by
a provision in the trust indenture called a "flight clause," which requires
the trustee to relocate the trust upon occurrence of an "event of duress,"
including government action in any part of the world that attempts to take
control of the trust assets or "any order, decree or judgment of any court
. . . which will or may . . . in any way control, restrict or prevent the
free disposal" of trust property.
The SEC obtained an order from the Bankruptcy Court in New Jersey directing
that the funds be repatriated. The District Court affirmed the order. The
Second Circuit, in turn, was called on by Martin L. Perschetz, Esq., Alan
R. Glickman, Esq., and Adam J. Freedman, Esq., of Schulte Roth & Zabel LLP,
to interpret the automatic stay provision of the Bankruptcy Code, an
exception to that provision, and an exception to that exception, now sides
with Mr. Brennan. Specifically, the question presented, as a matter of
first impression, was whether an order obtained by the Securities and
Exchange Commission from the United States District Court for the Southern
District of New York, requiring defendant Robert E. Brennan, a debtor in
bankruptcy, to repatriate the assets of an offshore asset protection trust
violates the automatic stay provision. The SEC argues that the order fits
within an exception to the automatic stay provision for any "action or
proceeding by a governmental unit . . . to enforce such governmental unit's
. . . police and regulatory power." 11 U.S.C. 362(b)(4). Mr. Brennan
contends that the order violates the automatic stay provision because it
fits within an exception to this "governmental unit" exception for any
effort to enforce a money judgment. In its opinion, Securities and Exchange
Commission v. Brennan, No. 00-6128 (2d Cir. 10/26/2000), the Second Circuit
conclude that the order of the District Court must be vacated.
FRUIT OF THE LOOM: Settling Pro Player-Related Claims Against Mr. Strumeier
---------------------------------------------------------------------------
David Strumeier and Ki Young Lee were partners in the Daniel Young Corp.,
which was sold to Fruit of the Loom for $42,500,000 in 1994. The name was
changed to Pro Player.
J. Kate Stickles, Esq., counsel for Fruit of the Loom asserts that Mr.
Strumeier's situation is similar to that of Mr. Lee. First, Pro Player
entered an employment agreement with Mr. Strumeier, substantially identical
to Mr. Lee's, that included potential bonuses. Second, Mr. Strumeier did
not meet performance standards due in part to his wrongful activities. Mr.
Strumeier and Mr. Lee were dismissed for cause in 1998. Third, Fruit of the
Loom levels accusations against Mr. Strumeier for usurpation of corporate
opportunities and use of corporate assets for personal benefit. A criminal
investigation by the U.S. Attorney's Office and the Federal Bureau of
Investigation are pending. Fourth, the District Court of New Jersey refused
to grant Mr. Strumeier access to the Fruit of the Loom letter of credit,
No. L152580 issued by the Bank of Nova Scotia.
Fruit of the Loom and Mr. Strumeier have reached a settlement agreement.
Mr. Strumeier will pay Fruit of the Loom $660,000 as reimbursement for
costs to maintain the letter of credit. Mr. Strumeier will waive all claims
against Fruit of the Loom including those for 1998 and 1999 bonus payments
and access to the letter of credit.
Within five business days of the Court's approval of the settlement, Mr.
Strumeier will do two things. First, he will make a down payment of
$200,000 to Fruit of the Loom in the form of certified or cashier's check.
Second, Mr. Strumeier will grant junior mortgages to Fruit of the Loom in
the aggregate amount of at least $440,000 against two parcels of property
he owns. The properties are located at 115 Mountainside View, Morganville,
New Jersey, 07751.
Mr. Strumeier is obligated to make $115,000 payments, plus interest at the
rate of 1% above Bank of America's prime rate, annually for the next 4
years. According to the Wall Street Journal of October 25, 2000, the prime
rate is 9.5%. Therefore, Mr. Strumeier's interest rate is 10.5%. Assuming
the prime rate remains stable, Mr. Strumeier will pay $127,075 in year 1,
$140,418 in year 2, $155,162 in year 3 and $171,454 in year 4. Total
payments amount to $794,109. Once Fruit of the Loom receives the $200,000
down payment and the mortgages, its counsel will take action to dismiss
with prejudice the Civil Action against Mr. Strumeier, but not Mr. Lee.
The settlement was negotiated based upon an affidavit of personal financial
condition submitted to Fruit of the Loom by Mr. Strumeier. If additional
assets of Mr. Strumeier are discovered, Fruit of the Loom is entitled to
50% of their value.
Any award to Fruit of the Loom from the criminal proceeding at the expense
of Mr. Strumeier will be reduced by the amount paid through the settlement
agreement. If no criminal charges are brought against Mr. Strumeier, the
entire $660,000 is due within sixty days. Upon full payment, Fruit of the
Loom will cancel the mortgages and return them to Mr. Strumeier.
Payment default renders the entire obligation immediately due and gives
Fruit of the Loom the right to declare the settlement agreement null and
void and reinstate litigation. The settlement agreement indicates that Mr.
Strumeier accepts responsibility for economic harm sustained by Fruit of
the Loom.
The settlement contains a mutual release clause stating that both parties
relinquish and discharge all claims, suits or actions against each other.
However, Ms. Stickles emphasizes that the settlement agreement does not
preclude any Court-ordered restitution resulting from the criminal
prosecution of Mr. Strumeier.
Ms. Stickles asserts that the settlement agreement provides substantial
reimbursement of letter of credit-related costs and eliminates the expense
and uncertainty of litigation. Although the monetary figure is a fraction
of the economic loss suffered by Fruit of the Loom at the hands of Mr.
Strumeier, it is a fair approximation of the amount ultimately collectible
after consideration of legal costs and Mr. Strumeier's financial condition.
Mr. Strumeier's attorney is Stanley S. Zinner, Esq., of Greene & Zinner
P.C., with offices at 202 Mamaroneck Ave., White Plains, New York, 10601.
Mr. Zinner and Mr. Strumeier signed the settlement agreement on August 28,
2000.
Fruit of the Loom relies on Rule 9019(a), which empowers the Court "to
approve compromises and settlements if they are in the best interests of
the estate." Vaughn v. Drexel Burnham Lambert Group Inc., 134 B.R. 499, 505
(Bankr. S.D.N.Y. 1991). (Fruit of the Loom Bankruptcy News, Issue No. 15;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
GENEVA STEEL: Confirmation Hearing Continued -- Again -- to Nov. 21
-------------------------------------------------------------------
Geneva Steel Company announced that, at its confirmation hearing on the
Company's Chapter 11 plan of reorganization scheduled for October 26, 2000,
the Company will request a continuance of the hearing until November 21,
2000 at 1:30 p.m. Salt Lake City time. The purpose of the request is to
allow the Company additional time to resolve various outstanding issues
regarding its plan of reorganization and related financings.
There can be no assurance at this time that the plan proposed by the
Company and the Bondholders' Committee will be confirmed by the Bankruptcy
Court either on the new schedule set forth above or at all, or that, if
confirmed and consummated, the plan will achieve the objectives thereof.
Similarly, there can be no assurance that the financings contemplated by
the plan can be obtained on terms favorable to the Company, or at all.
This press release may be deemed to contain certain forward-looking
statements with respect to the Company that are subject to risks and
uncertainties that include, but are not limited to, those identified in the
Company's press releases, the Disclosure Statement or the Company's
Securities and Exchange Commission filings. Actual results may vary
materially.
Geneva Steel is an integrated steel mill operating in Vineyard, Utah. The
Company manufactures steel plate, hot-rolled coil, pipe and slabs for sale
primarily in the Western and Central United States.
HARNISCHFEGER INDUSTRIES: Insurance Issues are Murky with Morris Material
-------------------------------------------------------------------------
Prior to the Petition Date, Bryan and Dorothy Gatlin sued Nucor
Corporation, Material Handling, LLC, Morris Material Handling, LLC,
Harnischfeger Industries, Inc., and Harnischfeger Corporation in the
Circuit Court of Berkley County, South Carolina (Case No. 99-CP-08-1032).
Mr. and Mrs. Gatlin complain that a Harnischfeger-manufactured crane drove
over a safety lanyard as Mr. Gatlin was repairing a vertical bean 55 feet
into the air. He fell and suffers from permanent injuries.
Morris Material is the real target defendant, the Debtors tell Judge
Walsh. Morris is supposed to indemnify HarnCo for these types of claims.
Of course, Morris is in bankruptcy too. While HarnCo makes its pre-closing
insurance policies available to Morris, Wassau Insurance Companies says
that no policy in force provided appropriate coverage.
Accordingly, because of the complexity of the indemnification and
insurance issues, the Debtors suggest that the automatic stay be left in
place at this time. Neither Harnischfeger nor Morris is prepared to
defend the suit. (Harnischfeger Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
HEILIG-MEYERS: Motion to Disband Equity Committee Continued to Nov. 17
----------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Heilig-Meyers Company, et
al. filed a motion seeking an order from the Court that directs the United
States Trustee to disband the Committee of Equity Security Holders. The
hearing has been rescheduled from October 26, 2000 at 10:00 AM to November
17, 2000 at 2:00 PM, US Bankruptcy Court, Eastern District of Virginia,
Richmond Division.
HOLLYWOOD ENTERTAINMENT: Moody's Lowers Debt Ratings & Remains Negative
-----------------------------------------------------------------------
Moody's Investors Service downgraded the debt ratings of Hollywood
Entertainment Corp. following reports of weaker than expected third quarter
sales which heightened concerns about the company's ability to meet
amortization requirements on its bank debt in December 2000. The following
ratings were affected by this action:
a) Senior implied rating to B2 from B1;
b) $250 million 10 5/8% senior subordinated notes due 2004 Caa2 from B3;
c) Senior unsecured issuer rating to B3 from B2.
The outlook on all debt remains negative.
Moody's notes that for the third quarter, which was weak throughout the
segment, Hollywood's 1% sames store sales increase was still better than
other competitors. However, Hollywood's amended credit agreement requires a
significant paydown in December 2000, limiting the company's flexibility to
miss operating targets. The rating outlook remains negative, reflecting the
potential for further downgrades if Hollywood is unable to improve its
performance as expected during the fourth quarter or successfully negotiate
with lenders if it needs additional flexibility. The rating of the
subordinated notes reflects its subordination to substantial amounts of
bank debt which is secured by essentially all of the the company's tangible
and intangible assets. Moody's does not rate Hollywood's current bank
credit facility and has withdrawn its rating on the prior revolving credit
facility.
The ratings continue to reflect Hollywood's very high leverage and thin
cash flow coverage as a result of rapid growth and its unsatisfactory
investment in Reel.com; the competitive nature of the market; and the high
level of volatility inherent in entertainment retailing. Video rental
retailers have no control over the timing or availability of new product,
which is critical to improving same store sales. The bank facility requires
heavy amortization payments over the next 18 months, which could suffer if
the company experiences adverse sales volatility in any period. The ratings
are supported by the company's franchise value and by the cash flow from
mature stores. Hollywood is the second largest video rental chain in the
U.S., and has been able to successfully co-exist with the much larger
Blockbuster chain owned by Viacom. Moody's believes that decisions taken
earlier this year to curtail growth and outsource Reel.com's e-tail
operation should help the company's cash flow generation over the medium
term.
Hollywood Entertainment Corp., headquartered in Wilsonville, Oregon,
operates the second largest video rental chain the the U.S.
KANAK HOSPITALITY: Case Summary and 17 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Kanak Hospitality Management Corporation
930 E. Virginia Beach Boulevard
Norfolk, VA 23504
Type of Business: Motel
Chapter 11 Petition Date: October 25, 2000
Court: Eastern District of Virginia, Norfolk Division
Bankruptcy Case No.: 00-71931
Judge: David H. Adams
Debtor's Counsel: Karen M. Crowley, Esq.
Marcus, Santoro, Kozak & Melvin, P.C.
355 Crawford Parkway, Suite 700
P. O. Box 69
Portsmouth, VA 23705-0069
(757) 393-2555
Total Assets: $ 1,862,985
Total Debts : $ 3,637,568
17 Largest Unsecured Creditors:
Business Loan Center, Inc. Real property,
645 Madison Avenue furniture, fixtures
New York, NY 10022 and equipment and rents $ 1,063,000
Harjinder Singh Kalsi $ 180,000
Jitentra Patel $ 180,000
Bhakta Chandravadan $ 150,000
Bhakta Mahendra $ 150,000
Dilip Patel $ 150,000
Rajesh Patel $ 90,000
HRUBS $ 13,813
Sejal Bhatt $ 11,000
Brooks Agency Avenue $ 9,000
Virginia Power $ 3,600
Virginia Department of Taxation $ 3,500
Virginia Regional Security $ 2,560
Virginia Natural Gas $ 2,500
IRS Special Procedures $ 1,600
Bell Atlantic $ 800
Cox Communication $ 780
KITTY HAWK: Asks for Prophylactic Exclusivity Extension through Dec. 31
-----------------------------------------------------------------------
Kitty Hawk, Inc. et al. seeks court authority for a second extension of
their exclusivity period for filing and confirming a plan of
reorganization. The debtors filed their joint plan of reorganization in
August, 2000 and their final Disclosure Statement was approved on October
10, 2000 and the confirmation hearing is scheduled to begin on December 5,
2000. In the event currently unforeseen circumstances prevent the debtors
from confirming their joint plan on or before December 31, 2000, their
exclusivity would expire and open the door for possible confusion by yet
another plan. Therefore, the debtors state that cause exists to extend the
debtors' exclusive periods for another approximately ninety days through
January 31, 2001 (to file a plan) and March 31, 2001 (for confirmation).
M GROUP: Moves for Second Extension of Exclusive Period to January 5
--------------------------------------------------------------------
M Group, Inc., TMGH, Inc., and M Sales Corp. seek to extend the exclusive
periods during which the debtors may file a plan of reorganization and
solicit acceptances thereof with the US Bankruptcy Court, District of
Delaware. Objections to the motion must be in writing, filed with the
Bankruptcy Court so as to be received by October 31, 2000 at 4:00 PM. A
hearing on the motion will be held on November 2, 2000 at 3:00 PM before
the Honorable Mary F. Walrath.
The debtors request that the court approve a second extension until January
5 and March 6, 2001 respectively, of the exclusive periods during which the
debtors may file a plan of reorganization and solicit acceptances thereof.
On July 26, 2000, the debtors closed on the sale of substantially all of
their assets to L-M Acquisition. The sale order reserved for a later
determination the appropriate allocation of proceeds of the sale between
the debtors' prepetition secured lenders and the estates. There are certain
U.S. assets of the debtors that may not be subject to any liens. In
addition there are outstanding issues regarding the Lenders' Perfection of
liens against the debtors' European assets. Accordingly, the relevant
constituencies, namely the Lenders, the Committee and the debtors are
attempting to reach a consensual resolution of all issues in this
connection. The parties have not reached such an agreement, but the debtors
are optimistic that the parties will be able to reach a reasonable business
settlement and avoid the costs, expense and delay of litigation. The
process requires additional time, which is the reason that the debtor seeks
this extension.
Additionally, L-M Acquisition did not purchase the debtors' Rhode Island
real estate that remains the debtors' most significant unliquidated asset.
Finally, the bar date for both pre-petition and administrative claims was
August 15, 2000. The debtors, Committee and Lenders cannot conclude
meaningful negotiations on the allocation of estate assets without knowing
the final amount of allowed claims.
An extension of time to determine the extent of distributable proceeds and
other assets and the extent of valid claims is required before a plan can
be negotiated and filed.
MARINER POST-ACUTE: Asks for 3-Month Extension of Time to Propose a Plan
------------------------------------------------------------------------
Although it has developed a business plan and substantive plan negotiations
are underway, the Company says, Mariner Post-Acute Network Inc. (MPANQ)
believes it will likely be several more months before it can propose and
confirm a Chapter 11 plan. In a request for a three month extension of its
exclusive plan periods, the Atlanta-based nursing home operator says it's
unlikely that any plan could be proposed until after it has concluded
negotiations with federal regulators about the amount of any reimbursement-
related claims that may be owed to or owed by the company. (ABI 26-Oct-00)
MULTICARE AMC: Creditors' Committee Taps Saul Ewing as Local Counsel
--------------------------------------------------------------------
The Official Committee of Unsecured Creditors of Multicare AMC, Inc., et
al. seeks court authority to employ and retain the law firm of Saul Ewing
LLP as local Delaware counsel. On July 11, 2000, the Committee selected
Kasowitz, Benson, Torres & Friedman LLP as its primary counsel. Thereafter,
the Committee selected Saul Ewing as its Delaware counsel to represent the
Committee with Kasowitz, Benson, Torres & Friedman in all matters during
the pendency of the Chapter 11 cases.
The firm will provide the following professional services:
a) Provide legal advice with respect to the Committee's rights, powers
and duties in these cases;
b) Prepare on behalf of the Committee all necessary applications,
answers, forms of orders, reports and other legal papers;
c) The representation of the Committee in any and all matters involving
contests with the debtors, alleged secured creditors and other third
parties; and
d) The negotiation of consensual plans of reorganization.
The attorneys and paralegals presently designated to represent the
Committee and their current standard hourly rates are:
* Norman L. Pernick $375 per hour
* Mark Minuti $315 per hour
* J. Kate Stickles $250 per hour
* Tara L. Lattomus $220 per hour
* Pauline Zenner (paralegal) $115 per hour
* Robin Boyd (paralegal)$105 per hour
NEVADA BOB'S: Obtains CCAA Stay & PwC Appointed as Monitor
----------------------------------------------------------
Nevada Bob's Golf Inc., an Alberta Corporation, announces that an order of
the Court of Queen's Bench of Alberta was issued under the Companies'
Creditors Arrangement Act (Canada) granting protection to the Company and
its subsidiaries in Canada from proceedings by their creditors.
PricewaterhouseCoopers Inc. is to act as court appointed monitor pursuant
to the order. The Company has also sought and received creditor protection
for its United States subsidiaries under Chapter 11 of the United States
Bankruptcy Code. These orders have been sought by the Company as part of
its overall restructuring and revitalization plan, with the consent of its
secured lenders. Further, these orders have been granted in respect of the
Company and its subsidiaries only, and not in respect of any of the
independent franchisees in the Nevada Bob's system.
The Company also announces that the Chairman of the Board, Mr. Isadore
Abrams, has been appointed by the Board of Directors as the Chief
Restructuring Officer of the Company.
Nevada Bob's Golf Inc. corporate offices are located in Calgary, Alberta,
Canada. The Company's stock trades under the symbol "NBC" on The Toronto
Stock Exchange.
NORTHWEST MEMORIAL: Financial Squeeze Causes Milwaukee Hospital to Close
------------------------------------------------------------------------
Milwaukee's Northwest Memorial Hospital closed its doors for good last
week, less than a week after announcing its intent to close in 60 days,
according to a newswire report. The hospital, which cared for residents
from some of the city's poorest neighborhoods in recent years, opened its
doors 35 years ago and filed for chapter 11 in 1989. The hospital
transferred its four remaining bed patients to other hospitals and closed
its doors, citing it did not get the funding it needed to stay open the
entire 60 days and to pay its employees. (ABI 26-Oct-00)
PAGING NETWORK: Delaware Court Confirms PageNet Merger With Arch Wireless
-------------------------------------------------------------------------
Arch Wireless, Inc. (Nasdaq: ARCH) and Paging Network, Inc. (OTC: PAGEQ)
announced that PageNet's Amended Plan of Reorganization, which provides for
the merger of PageNet into Arch Wireless, Inc., has been confirmed by the
U.S. Bankruptcy Court for the District of Delaware.
Confirmation of the Plan is the final major approval required to complete
the merger. The business combination of Arch and PageNet will create a
wireless messaging and mobile information company with more than 13 million
units in service nationwide and annual revenue of approximately $1.4
billion. Arch and PageNet expect to close the merger transaction in early
November, at which time PageNet will officially emerge from Chapter 11
protection as a wholly owned subsidiary of Arch.
C. Edward Baker, Jr., chairman and chief executive officer of Arch, said,
"The Court's decision is great news for Arch and PageNet and, upon closing,
allows us to turn our attention toward integrating our two companies. The
merger will position Arch as a leader in two-way wireless Internet
messaging and mobile information. It will also give us substantial
organizational and strategic assets, comprehensive market coverage
nationwide, and a strong presence in all key channels of distribution. We
look forward to closing the merger and the added strength of the
consolidated organization."
John P. Frazee, Jr., chairman and chief executive officer of PageNet, said,
"We are delighted that the court has confirmed our plan and approved the
merger with Arch. We believe the merger provides a successful outcome for
PageNet stakeholders. We look forward to combining our strengths with
Arch's to form a strong wireless messaging competitor."
Arch and PageNet announced their merger agreement last November. The merger
will include an exchange of equity for PageNet's senior subordinated notes
as well as the spin-off of PageNet's wireless solutions subsidiary, Vast
Solutions. Under PageNet's plan of reorganization, PageNet's noteholders
will receive approximately 84.9 million Arch shares and a 60.5% interest in
Vast, owners of PageNet common stock will receive 5.0 million shares of
Arch and a 20.0% interest in Vast, and Arch will receive the remaining
19.5% interest in Vast.
PageNet is a leading provider of wireless messaging and information
services in all 50 states, the District of Columbia, the U.S. Virgin
Islands, Puerto Rico and Canada. The company offers a full range of
messaging services, including two-way wireless e-mail. PageNet's wholly-
owned subsidiary, Vast Solutions, develops integrated wireless solutions to
increase productivity and improve performance for businesses. Detailed
information for PageNet services are available on the Internet at
www.pagenet.com. Detailed information on Vast Solutions is available at
www.vast.com.
Arch Wireless, Inc., Westborough, MA, is a leading two-way Internet
messaging and mobile information company providing a full range of wireless
messaging services, including two-way wireless e-mail, to customers in all
50 states, the District of Columbia and in the Caribbean. Additional
information on Arch is available on the Internet at www.arch.com.
Arch Wireless, Inc. has filed with the U.S. Securities and Exchange
Commission a registration statement on Form S-4 in connection with the debt
exchange that was undertaken in connection with the merger (File No. 333-
93321). Investors and security holders are urged to read the registration
statement carefully. The registration statement contains important
information about Arch Wireless, Inc., Paging Network, Inc., the merger and
related matters. Investors and security holders are able to obtain free
copies of this document through the web site maintained by the U.S.
Securities and Exchange Commission at http//www.sec.gov.
In addition to the registration statement, Arch Wireless, Inc. and Paging
Network, Inc. file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may
read and copy any reports, statements and other information filed by them
at the SEC public reference rooms at 450 Fifth Street, N.W., Washington,
D.C. 20549 or at the Commission's other public reference rooms in New York,
NY and Chicago, IL. Please call the Commission at 1-800-SEC-0330 for
further information on public reference rooms. These filings with the
Commission also are available to the public from commercial document-
retrieval services and at the web site maintained by the Commission at
http//www.sec.gov. You may also obtain for free each of these documents,
when available, from Arch Wireless, Inc. at (508) 870-6700 or write to:
Investor Relations Department, Arch Wireless, Inc., 1800 West Park Drive,
Suite 250, Westborough, MA 01581.
SAFETY-KLEEN: Debtors Seek Approval Of Miscellaneous Asset Sale Protocol
------------------------------------------------------------------------
Safety-Kleen Corp. and its subsidiaries and affiliates present Judge Walsh
with a protocol to streamline and expedite sales of personal property
valued at less than $500,000 and used in the operation of their businesses,
including, but not limited to, office furniture and equipment, fixtures,
automobiles, pickup trucks, and light and heavy duty trucks, spare parts,
excess or obsolete inventory, heavy equipment (e.g., earth movers,
backhoes, etc.), and other specialized equipment, machinery, parts, and
inventory used in the operation of the Debtors' industrial and hazardous
waste management businesses in the course of their chapter 11 cases. Prior
to the Petition Date, on a regular basis and in the ordinary course of
their businesses, the Debtors disposed of assets that they no longer needed
or wanted, such as excess inventory, aged or obsolete vehicles and
machinery, and surplus office equipment, furniture, and equipment, The
Debtors expect that, in conjunction with ongoing efforts to restructure
their operations, similar dispositions of Miscellaneous Assets will he
necessary and desirable during the course of their chapter 11 cases.
The Debtors predict significant costs and delays if required to obtain
Court approval for each and every Miscellaneous Asset Sale, and in many
cases, the administrative costs would exceed the sale proceeds.
Accordingly, the Debtors request that the Court dispense with the
requirements of notice and a hearing for each Miscellaneous Asset Sale, and
instead establish uniform procedures by which the Debtors may undertake
Miscellaneous Asset Sales. The Debtors believe that these procedures will
maximize the likelihood that they can effectively negotiate and consummate
the Miscellaneous Asset Sales, while simultaneously protecting the
legitimate interests of the estates' creditors.
Specifically, the Debtors propose that the Miscellaneous Asset Sale
Procedures be structured in three levels:
* Level 1 Sales. With respect to any single Miscellaneous Asset or
related group of Miscellaneous Assets with a sale price of less than or
equal to $50,000, the Debtors will be permitted to accept and consummate in
the ordinary course of business any offer that the Debtors determine, in
their sound business judgment and in their sole and absolute discretion, to
be a fair and reasonable offer for such Miscellaneous Asset or group of
Miscellaneous Assets. The Debtors will notify counsel for their prepetition
and postpetition lenders and counsel for the Creditors' Committee of all
Level 1 Sales not later than 10 days after a sale.
* Level 2 Sales. With respect to any single Miscellaneous Asset or
related group of Miscellaneous Assets with a sale price of greater than
$50,000 but less than or equal to $250,000, as soon as practicable after
the Debtors' negotiation of a definitive agreement for a Level 2 Sale, the
Debtors will provide counsel for the Lenders and counsel for the Creditors'
Committee a written description of the relevant terms of the sale,
identifying or describing, at a minimum, (A) the purchaser, (B) the
Miscellaneous Asset to be sold, (C) the purchase price to be paid, (D) the
book value of the miscellaneous Asset to be sold, if available, (E) any
appraisal, if available, and (F) what marketing efforts the Debtors
undertook. The Lenders and the Creditors' Committee will have 5 business
days from the date of the Debtors' submission to review the Sale Summary
and bring any objection that can't be resolved before the Court.
* Level 3 Sales. With respect to any single Miscellaneous Asset or
related group of Miscellaneous Assets with a sale price of greater than
$250,000, hut less than or equal to $500,000, the Debtors will be
authorized to consummate such Level 3 Sale without notice and a hearing or
entry of a further order of the Court if such Level 3 Sale is a
"commercially reasonable transaction." A Level 3 Sale shall be deemed a
commercially reasonable transaction if:
(1) as soon as practicable after the Debtors, or a Broker's, as the
case may be, negotiation of a definitive agreement for a Level 3
Sale, the Debtors shall submit to counsel for the Lenders and
counsel for the Creditors' Committee a Sale Summary;
(2) the Lenders and the Creditors' Committee will have 10 business
days from the date of the Debtors' submission to review the Sale
Summary. If the Lenders and the Creditors' Committee (A)
affirmatively assent to the Level 3 Sale pursuant to the terms
and conditions described in the Sale Summary, or (B) fail to
notify the Debtors in writing of their objection to the Level 3
Sale prior to the expiration of the Level 3 Review Period, the
Debtors shall provide notice of their intent to consummate the
Level 3 Sale, by the best or otherwise most appropriate means
practicable, to the United States Trustee, the Lenders, the
Creditors' Committee, and each party having expressed an
interest during the past 6 months in purchasing the
Miscellaneous Assets that are the subject of such Level 3 Sale.
(3) The Level 3 Notice Parties shall be permitted 3 business days to
review the Level 3 Sale Notice and to submit a higher or better
offer for the Miscellaneous Assets that are the subject of such
notice. If no higher or better offers are submitted, the Debtors
shall be authorized to (A) consummate the Level 3 Sale without
notice and a hearing or entry of a further order of the Court
and (B) pay any Broker's Commission, if any, due and payable
with respect to such Level 3 Sale.
(4) If the Lenders or the Creditors' Committee timely object to the
Level 3 Sale described in a Sale Summary, but withdraw for any
reason the objection to such sale, the Debtors shall be
authorized to consummate the Level 3 Sale without notice and a
hearing or entry of a further order of the Court.
(5) If the Lenders or the Creditors' Committee timely object to the
Level 3 Sale described in a Sale Summary and do not withdraw the
objection, the Debtors shall have the option of (A) foregoing
consummation of the Level 3 Sale that is the subject of the
objection, (B) modifying the terms of the Level 3 Sale in a way
that results in the Lenders or the Creditors, Committee
withdrawing the objection, or (C) seeking an order of the Court
authorizing the Debtors to consummate the Level 3 Sale over the
Lenders' or the Creditors, Committee's objection.
(6) Within 10 business days of the date of consummation of a Level 2
Sale, the Debtors shall file with the Court a "Notice of
Consummation of Sale", describing the Level 3 Sale consummated
and attaching all pertinent documentation, if any.
All Miscellaneous Asset Sales consummated pursuant to the foregoing
procedures shall be free and clear of all liens, claims, interests, and
encumbrances of any entity. Any party asserting an Interest in or against
the Miscellaneous Assets being sold will be protected by having that
Interest attach to the net proceeds of the sale, subject to any claims and
defenses the Debtors may possess with respect thereto.(Safety-Kleen
Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
SAXON MORTGAGE: Fitch Lowers Ratings On Mortgage Participation Securities
-------------------------------------------------------------------------
Fitch lowers the ratings of the following Saxon Mortgage Securities
Corporation mortgage participation securities:
Saxon 1994-9 Group 1:
--Class 1B-4 ($997,332 outstanding) rated 'BB', is downgraded to 'B' and
remains on Rating Watch Negative.
--Class 1B-5 ($285,595 outstanding) rated 'CCC', is downgraded to 'D'.
The action is the result of a review of the level of losses incurred to
date and the current high delinquencies relative to the applicable credit
support levels. As of the Sept. 25, 2000 distribution: Saxon 1994-9 Group 1
remittance information indicates that 6.87% of the pool is over 90 days
delinquent, and cumulative losses are $790,322, or 0.89% of the initial
pool. Class 1B-4 currently has 0.89% of credit support, and class B5 has no
credit support remaining.
Further information regarding current delinquency, loss, and credit
enhancement statistics is available on the Fitch web site at
'www.fitchratings.com'.
TREND-LINES: Motion To Reject Leases
------------------------------------
(Deb)
Trend-Lines, Inc. seeks court authority to reject two leases of
non-residential real property currently used as Golf Day retail stores,
effective October 28, 2000. The debtor requests that rejection of the
leases be effective to avoid unnecessary accrual of administrative claims.
In September, 2000, the debtor obtained court authority to divest itself of
its Golf Day operations and golf inventory through the liquidation sale of
the Golf Day Assets.
Pursuant to an agency agreement with Hilco, Hilco may terminate its
liquidation sale at any store prior to January 15, 2001. Hilco has notified
the debtor that it intends to vacate four Golf Day stores as of October 23,
2000. Prior to the filing, the debtor had exercised the so-called "kick-
out" clauses with respect to the leases for two of those Golf Day stores.
The leases therefore have no value to the estate. As such, the debtor
desires to reject the leases. The stores are located in New Hartford, NY
and Greenburg, PA.
USG CORPORATION: Moody's Places US Gypsum Company On Review For Downgrade
-------------------------------------------------------------------------
Moody's Investors Service placed the ratings of USG Corporation (USG) and
its subsidiary United States Gypsum Company (senior at Baa1) on review for
possible downgrade. Moody's action primarily reflects the heightened degree
of uncertainty regarding the potential impact of asbestos litigation on
companies facing this issue.
Ratings placed on review for possible downgrade are:
* USG Corporation
a) senior notes and debentures rated Baa1;
b) $500 million revolving credit facility maturing June30, 2005 rated
Baa1;
c) shelf registration for senior debt rated (P)Baa1;
d) subordinated debt rated (P)Baa2;
e) preferred stock rated (P)"baa2", industrial revenue bonds rated
Baa1.
* United States Gypsum Company
a) industrial revenue bonds rated Baa1.
USG is the leading U.S. producer and distributor of gypsum wallboard and
the second largest global supplier of ceiling products. The current rating
reflects the company's strong debt protection measurements (14x
EBITDA/interest expense in the first nine months of 2000, Debt/EBITDA of
approximately 1.0), conservative financial policies and leading market
positions. Despite these strengths, the degree of uncertainty surrounding
the potential liability posed by asbestos litigation has increased in
recent weeks. The bankruptcy declaration by Owens Corning, while not
engendering an immediate impact upon claims faced by other companies, has
nevertheless heightened concern that secondary effects, such as higher
claim rates or increasing payments per claim, might accelerate in the
future. In addition, the access to capital markets of companies associated
with this issue has been impaired, at least temporarily. Given this
evolving litigation environment, it is necessary to review the ability of
affected companies, including USG, to meet additional obligations that
might arise as this problem is addressed over the long term. While the
rating outcomes will depend on individual circumstances, this review
process could result in multiple-notch downgrades for certain companies.
The review will also consider USG's competitive position, financial
flexibility and the impact of declining wallboard prices on projected
results. It should be noted, however, the the Baa1 rating assigned to USG
earlier this year contemplated prices significantly below today's market
price in the low $100's per msf.
USG Corporation, based in Chicago, IL, is the world's largest producer of
gypsum wallboard and a leading international supplier of ceiling tile and
grid. Revenues totaled $3.6 billion in 1999.
XEROX CORP: Copier's Restructuring Plan Doesn't Stop Stock Prices Dropping
--------------------------------------------------------------------------
Xerox Corp. shares fell the day after the troubled copier giant unveiled an
ambitious turnaround plan, according to a Reuters report. The Stamford,
Conn.-based office equipment maker, which has been struggling with a
plummeting stock price and stiff competition, said it lost $167 million or
20 cents a share for its third quarter, slightly worse than analysts had
been expecting. The company pledged to cut $1 billion in expenses by the
end of 2001, and raise up to $4 billion by selling assets including half of
its 50 percent stake in Fuji Xerox, a joint venture with Japan's Fuji Photo
Film Co. Ltd.
A rumor in European markets that Xerox might be considering seeking
bankruptcy protection drove the stock down, although it rebounded slightly
in the days before the announcement. "The immediate crisis has passed,"
Pete Enderlin, an analyst at Ryan, Beck, said, referring to concerns about
a cash crunch and possible bankruptcy filing by the former blue-chip
stalwart. "Even if they can pull it all off, it's going to take quite a
while." (ABI 26-Oct-00)
* Bond pricing for the week of October 30, 2000
-----------------------------------------------
Data is supplied by DLS Capital Partners, Inc. Following are indicated
prices for selected issues:
AMC Ent 9 1/2 '11 40 - 42
Amresco 9 7/8 '05 50 - 53
Advantica 11 1/4 '08 48 - 52
Asia Pulp & Paper 11 3/4 '05 42 - 45
Carmike Cinema 9 3/8 '09 24 - 26 (f)
Conseco 9 '06 65 - 67
Fruit of the Loom 6 1/2 '03 50 - 53 (f)
Federal Mogul 7 1/2 '04 31 - 33
Genesis Health 9 3/4 '05 6 - 8 (f)
Globalstar 11 1/4 '04 24 - 26
Loewen 7.20 '03 38 - 42 (f)
Oakwood Homes 7 7/8 '04 33 - 36
Owens Corning 7 1/2 '05 27 - 29 (f)
Paging Network 10 1/8 '07 20 - 22 (f)
Pillowtex 10 '06 14 - 16
Revlon 8 5/8 '08 56 - 58
Saks 7 '04 61 - 63
Trump Atlantic 11 1/4 '06 68 - 69
TWA 11 3/8 '06 34 - 36
*********
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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