/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/010130.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, January 30, 2001, Vol. 5, No. 21 Headlines BUCKHEAD AMERICA: Selling Up to 10 Hotels to Regain Profitability CUMMINS INC.: Reports Q4 Earnings & Projects Declining Revenues FINANTRA CAPITAL: Announces Senior Management Shake-Up FRUIT OF THE LOOM: Wants More Time To Act On Unexpired Leases FUJIAN INTERNATIONAL: Moody's Downgrades Ratings To Caa3 GENESIS HEALTH: Court Grants AGE Entities Extension Of Bar Date HORACE MANN: S&P Places Ratings On CreditWatch Negative ICG COMMUNICATIONS: Paying Prepetition Sales, Use and Other Taxes LASIK VISION: Reports Financing Developments LASON, INC.: MacKenzie Exits Chief Restructuring Officer Post LERNOUT & HAUSPIE: Proposes Adequate Protection Package for Amgro LOEWEN GROUP: Rejects Kay Employment And Consulting Agreements LOEWS CINEPLEX: Revolver Covenant Waiver Expires; Talks Continue LTV CORPORATION: Employs Logan as Claims & Noticing Agent MASTER GRAPHICS: Delaware Court Confirms First Amended Plan MASTER GRAPHICS: Names Calvin W. Aurand, Jr. as New CEO OUTBOARD MARINE: City of Waukegan To Sit in Creditors' Meeting OWENS CORNING: Proposes Miscellaneous Assets Sales Procedures PACIFIC GAS: Judge Blocks Major Creditors from Seizing Assets RAILWORKS CORPORATION: Moody's Junks Senior Subordinated Notes RETROSPETTIVA INC.: Nasdaq Delists Common Stock TRANS WORLD: Court Gives Go Ahead For Asset Sale to American TRANS WORLD: Senate Hearing on American Bid Scheduled On Feb. 1 VENCOR, INC.: Agrees to Modify Automatic Stay for Insured Claim WEBVAN GROUP: Expects to Run Out of Cash within Two Quarters WEIRTON STEEL: Moody's Cuts Ratings Seeing Poor Market Conditions ********* BUCKHEAD AMERICA: Selling Up to 10 Hotels to Regain Profitability ----------------------------------------------------------------- Buckhead America Corporation (Nasdaq: BUCK), the hospitality services company, announced it is restructuring its hotel- ownership portfolio and plans to sell up to 10 hotels under a plan to return to profitability. The company said unsatisfactory performance in its hotel- ownership business segment would result in a net loss for the year 2000, the first annual loss in Buckhead America's eight-year history. Losses are expected to continue in the seasonally weak first half of this year, but the company will be solidly profitable in the second half and for the full year 2001, Buckhead America said. Last November, Buckhead America said that while its franchising operations for the Country Hearth Inn limited-service lodging system continued to grow profitably, it was disappointed with hotel-ownership results and was evaluating corrective measures. For the first nine months of 2000 Buckhead America reported a loss of $201,816 on revenue of $21.3 million. "We are fixing our hotel ownership problems in a manner that will return Buckhead America to profitability quickly and that will put us on a solid footing for future growth," said Douglas C. Collins, chairman, president and chief executive officer. Buckhead America also said it installed new management at The Lodge Keeper Group Inc., its hotel management subsidiary, which will focus on sales, marketing and training. Lodge Keeper's corporate office also was relocated to Buckhead America's Atlanta headquarters from Ohio to increase communication and reduce costs. "We are developing a sales and marketing culture at Lodge Keeper that will focus on increasing company fee income from owned and managed properties and increasing profits for third party owners," said Collins. In the hotel-ownership segment, Buckhead America plans to sell up to 10 hotels within six months. Four properties already are under contract, with completion of three sales expected within 30 days. The hotels would continue to operate under the Country Hearth Inn banner. The hotel sales are designed to free capital for growth and, in the aggregate, aren't expected to result in meaningful investment gains or losses. Buckhead America said it remains in a strong financial position and is confident its franchising and hotel management activities can grow profitably in the future. "Despite fierce competition in the limited-service hotel market, awareness of the Country Hearth Inn brand among travelers and potential franchisees continues to grow," said Collins. "We currently have 56 hotels in the franchising system and we expect to add 15 to 20 more properties this year." Collins added, "Lodge Keeper's management portfolio also should grow by 15 to 20 properties this year from its current 59 hotels under management." Buckhead America is a diversified hospitality services company whose holdings include the Country Hearth Inn franchise system, The Lodge Keeper Group and 33 additional hotels owned, leased and/or managed. Buckhead America common shares trade on the NASDAQ National Market System under the stock symbol "BUCK." CUMMINS INC.: Reports Q4 Earnings & Projects Declining Revenues --------------------------------------------------------------- Consistent with its announcement on December 19, 2000, Cummins Inc. (NYSE:CUM) reported that it lost 45 cents per share in the fourth quarter of 2000, or a loss of $17 million, on sales of $1.61 billion, exclusive of a pre-tax charge of $160 million for costs associated with certain restructuring actions. Including the charge, Cummins posted a loss of $120 million or a loss of $3.16 per share. In the fourth quarter of 1999, the company reported net earnings of $25 million, or 65 cents per share, on sales of $1.84 billion, including a pre-tax charge of $60 million for costs associated with the dissolution of its Wartsila joint venture. For the full year 2000, Cummins reported net earnings of $111 million or $2.91 per share, on revenues of $6.6 billion, excluding the charge. For the full year 1999, excluding a charge, Cummins reported net earnings of $205 million or $5.29 per share, on revenues of 6.6 billion. The company said that the significant drop in demand in a number of North American end markets affected the financial results for the fourth quarter of 2000. In the heavy-duty truck market, shipments of engines for the quarter were down more than 52 percent from last year's levels. Shipments of engines for the Dodge Ram pickup truck were down 15 percent from the year-ago quarter due to DaimlerChrysler's decision in the fourth quarter to reduce production of all its vehicles. In the medium-duty truck market, engine shipments for the quarter were 39 percent lower, and construction market shipments were down 21 percent. The drop in the North American truck market affected original equipment exhaust systems demand within the Filtration business. Sales to consumer-oriented markets in both Filtration and Power Generation were also down. For example, compared to the fourth quarter of 1999, generator set sales to the RV market were down 15 percent, and exhaust system sales to small engine markets were down 21 percent. Cost Reductions and Restructuring Continues Cummins Inc. Chairman and Chief Executive Officer Tim Solso said, "We continue to focus on reducing costs as we work through the challenges in the market and are completing the restructuring actions we announced this past December. These actions, which are primarily focused in our Engine business, include the termination of over 350 salaried employees, layoffs and reduced work hours for hourly employees, the cancellation or delay of a number of new product programs and information technology projects. We continue to align staffing levels to address the drop in demand for engines in North America; since May of 2000, we have reduced the number of full-time-equivalent people in our Engine business by over 1000. We are also working on a number of longer-term restructuring activities throughout the company, including closing, consolidating, or exiting nine businesses and facilities. We expect that these actions, when fully implemented, will save the company approximately $55 million per year." Solso continued, "We are also working hard to fundamentally change how Cummins participates in the North American heavy-duty truck engine business, with the goal of further driving out cost while maintaining the quality and reliability our customers demand and have come to expect from Cummins. Our strategy, which we expect to announce in the first quarter of this year, will likely include additional cost reduction actions, and may include an additional restructuring charge." Outlook The company said that it expected that first quarter 2001 revenues would be approximately 10 percent lower than the fourth quarter, citing the continued deterioration of North American truck markets, further reductions in the buildrate by DaimlerChrysler for the Dodge Ram pickup truck, and the slowdown in the RV and other consumer-oriented markets. For the full year of 2001, the company said that it anticipated earnings to be approximately half the level reported for the year 2000. "While we expect challenges in 2001 for the Engine business, both our Power Generation and Filtration and Other businesses will remain strong and profitable," said Solso. "We expect sales in Power Generation to grow 10 to 15 percent this year, with increased sales from new technologies, growth in the internet and telecommunications sectors, and a shift towards services. In our Filtration business, we anticipate growth of 5 to 8 percent for the year; we will also see additional growth in our company-owned distributors overseas. Revenues in our Engine business will likely be down 10 percent for the year. Over the longer term, I am confident that the strategy we are considering for our Engine business will restore it to profitability." Engine Business Fourth quarter revenues for the Engine business were $936 million, down 15 percent from the fourth quarter of 1999. Sales of $322 million to the worldwide heavy-duty truck market were down 28 percent compared to the fourth quarter of 1999, with a 44 percent decrease in unit shipments. In the medium-duty truck market, sales of $113 million were down 12 percent compared to a year ago, primarily due to unscheduled shutdowns at OEM customers. Sales of $222 million to the bus and light commercial vehicle market were 12 percent lower than fourth-quarter 1999, reflecting the drop in shipments of engines to DaimlerChrysler for the Dodge Ram pickup truck. Sales of $279 million to agriculture, construction, mining, marine, and other industrial markets were up 4 percent compared to the fourth quarter of 1999, with increased sales to railroad and agricultural customers offset by the drop in the North American construction markets. Excluding special charges, the Engine business reported a net loss before interest and taxes of $52 million, compared to net profit of $51 million for the same period a year ago. Power Generation Business Power generation sales of $364 million were down 19 percent from the year-ago quarter. In the fourth quarter of last year, the company launched its rental business, and there was increased demand for generators related to the Year 2000 issue. This quarter also reflects a reduction in demand for small gensets used primarily in recreational vehicles and mobile markets. Excluding special charges, earnings before interest and taxes for the fourth quarter were $25 million, or 6.9 percent of sales, slightly higher than the $24 million, or 5.4 percent of sales, reported in the fourth quarter a year ago. ` Filtration Business and Other Sales of filtration and other products of $308 million were up 6 percent from the fourth quarter of 1999, primarily due to increased sales by company-owned distributors. Excluding special charges, earnings before interest and taxes for the quarter were $27 million, or 8.8 percent of sales, compared to the fourth quarter of 1999, when the group reported earnings before interest and taxes of $32 million, or 11 percent of sales. * * * Cummins, headquartered in Columbus, Ind., is the world's largest producer of diesel engines above 50 horsepower. The company provides products and services for customers in markets worldwide for engines, power generation, and filtration. In 2000, Cummins reported sales of $6.6 billion. FINANTRA CAPITAL: Announces Senior Management Shake-Up ------------------------------------------------------ Finantra Capital, Inc. (Nasdaq:FANT) announced several senior management changes as part of the Company's ongoing restructuring following the elimination of its commercial finance operations. Maynard Hellman, a director and the Company's general counsel, has been named acting Chief Operating Officer. Mr. Hellman will serve in that position until Finantra completes a search for a new COO with experience in the consumer finance industry. Steven Beitler, a director of the Company, has been named Chairman of the Company's Audit Committee, a position previously held by Mr. Hellman. The Company also announced that Brian Lazarus has been named vice president of finance and treasurer. Mr. Lazarus was formerly a senior audit manager with KPMG, LLP. A certified public accountant, Mr. Lazarus joined KPMG in 1994 after earning a Bachelor of Science degree in accounting from Babson College. As a senior manager, Mr. Lazarus has extensive experience interacting with financial institutions and mortgage bankers and wide-ranging knowledge of Internet related finance operations. "We were extremely impressed with Brian's broad understanding of mortgage banking and the financial markets in general," said Robert Press, chairman and chief executive officer of Finantra. "Since we recently eliminated our commercial finance operations, all of our resources are now being devoted to growing our consumer finance and mortgage banking operations. Brian will be an integral part of that expansion." Additionally, Finantra announced that Charles Litt has stepped down from his position as President of Finantra to pursue an active role as a consultant in Finantra's business development operations. Mr. Press will assume the title of acting president. During December 2000, Finantra announced it was taking non- recurring charges, primarily in the third quarter of fiscal 2000, to refine its balance sheet and streamline its business model. Pending the completion of several acquisitions, Mr. Press said that he anticipates Finantra returning to profitability in fiscal year 2001. Finantra Capital, Inc. is a multi-faceted specialty finance company specializing in consumer finance and mortgage lending delivered through traditional and online processing systems. The consumer finance group is involved in mortgage banking and other types of retail specialty financing. The company's leading consumer finance subsidiary, Travelers Investment Corporation, which is involved primarily in specialty consumer finance, annually purchases more than $75 million in consumer loans. FRUIT OF THE LOOM: Wants More Time To Act On Unexpired Leases ------------------------------------------------------------- Fruit of the Loom, Ltd. is party to about thirty unexpired nonresidential real property leases that it has not moved to assume or reject yet. The leases relate to Fruit of the Loom's corporate offices and various manufacturing, distribution and other facilities. Since the petition date, the leases have remained in effect and have not expired according to their respective terms. Fruit of the Loom submits that, for reasons described below, cause exists to further extend the deadline to assume or reject each of the leases through and including June 30, 2001, without prejudice to Fruit of the Loom's right to seek additional extensions of this period. Fruit of the Loom tells the Court that it has been re-evaluating every aspect of its business, including its leases. As a result of this review, Fruit of the Loom has either assumed or assumed and assigned certain leases. This evaluation is substantially, but not fully, complete. It must be completed for the remaining leases so management can intelligently decide what action to take with each lease in the context of Fruit of the Loom's overall business plan. In addition, Fruit of the Loom has been working diligently to achieve a consensual plan of reorganization. Given the size and complexity of Fruit of the Loom's operations, the evaluation will not be complete before the January 29, 2001 deadline. Ms. Stickles tells the Court that without further extension, Fruit of the Loom risks prematurely and improvidently assuming leases that could later prove burdensome, thus creating large uncapped potential administrative claims against the estates. Ms. Stickles directs Judge Walsh's attention to Nostas Associates v. Costich, et al. (In re Klein Sleep Products, Inc.), 78 F.3d 18, 28 (2d Cir. 1996). Fruit of the Loom also risks rejecting leases that management could later discover to be critical to its reorganization efforts. Ms. Stickles informs the Court that one of the most extensive lists of factors to consider in determining whether cause exists for an extension was formulated in In re Wedtech Corp., 72 B.R. 464 (Bankr. S.D.N.Y. 1987). According to Ms. Stickles, the Wedtech Court held that the following factors, among others, tend to indicate that cause exists to extend the statutory period: (A) where the leases are an important asset of the estate such that the decision to assume or reject would be central to any plan of reorganization; (B) where the case is complex and involves large numbers of leases; (C) where the debtor has had insufficient time to intelligently appraise each lease's value to a plan of reorganization. Ms. Stickles asserts that under the Wedtech criteria, cause clearly exists to extend the period within which Fruit of the Loom must assume or reject the leases. She tells Judge Walsh that the above criteria are clearly met and, therefore, the deadline should be extended. The relief sought by Fruit of the Loom is without prejudice to the right of lessors to seek a reduction of the time to assume or reject the leases. Attached to the filing is a list of lessors and sub lessees: * SH&S Partnership * Nixon Peabody LLP * Devine, Millimet & Branch P.A. * City of Vidalia, LA * City of Frankfort * Jitney Jungle Stores of America, Inc. * Rollins Leasing Co. * BG-Warren County Regional Airport Board, Inc. * Linda B. Thomas Esq. * Renshaw & Renshaw Management Group, Inc. * David J. & Cynthia C. Theriot * IDB of the City of Aliceville, Alabama * IDB of the City of Fayette, Alabama * IDB of Cherokee County, Alabama * IDB of the City of Jacksonville, Alabama * City of Winfield, Alabama * Development Authority of Rabun County, Georgia * County of Warren, Kentucky * City of Jamestown, Kentucky * Parish of St. Martin, Louisiana * Town of Jeanerette * Moran & Company * Entek Ird International Corp. * Baum Brothers Downers Grove L.L.C. * IRD Mechanalysis * LaSalle National Trust N.A. * Westlake Development Ltd. * Charles Fortino, Esq. * Mori Building Co., Ltd. * John Q. Hammons Hotels Two, LLP * Empire State Building Company * Tom Sullivan * Aracua, Inc. * Urbanizadora Madretierra, A.A. De C.V. (Fruit of the Loom Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) FUJIAN INTERNATIONAL: Moody's Downgrades Ratings To Caa3 --------------------------------------------------------- Moody's Investors Service lowered the long-term foreign currency deposit and debt ratings of Fujian International Trust & Investment Corporation to Caa3 from B2. The Not Prime rating of the company for its short-term obligation was not affected, while its rating outlook remains negative, Moody's said. According to Moody's, the rating was lowered due to increased doubts over the company's ability to meet its remaining debt obligations, as proven by a series of recent defaults, including the company's failure to make an interest payment on its 2006 Samurai bonds on January 24, 2001. Moody's said that China's central bank has recently promulgated a set of new regulations that, as expected, will substantially restrict the company's and other International Trust & Investor Corporation's future business activities. As a result, the sector's longer-term prospects have considerably worsened. The intended closure of most of China's ITICs is running far behind the schedule set out by the central bank in early 1999, and these recent events indicate heightened pressure from the Chinese central authorities on the companies to wind down their business before new style trust-based financial institutions begin operating, pursuant to the new regulations, Moody's said. However, most ITICs are unable to recover funds from the investments and loans that they have made in the past sufficient to repay their creditors, and a large injection of funds from other sources such as the local governments looks in most cases increasingly unlikely to be forthcoming. Financial support from the central government, or the central bank, has, in Moody's view, long been most improbable. Moody's also lowered the foreign currency deposit and financial strength ratings of Shanghai International Trust & Investment Corporation to B3 and E from B1 and E+, and those of Shandong International Trust & Investment Corporation to B3 and E from Ba3 and E+. The Not Prime rating of these companies for their short- term obligations was also not affected. The rating outlook for the two also remains negative. GENESIS HEALTH: Court Grants AGE Entities Extension Of Bar Date --------------------------------------------------------------- The AGE Entities sought and obtained the Court's authority for an extension of the Bar Date to file claims in anticipation of proceedings that will extend far beyond the Bar Date of December 19, 2000. The AGE Entities told the Court that the issues between the AGE Entities and Genesis Health Ventures, Inc, & The Multicare Companies, Inc. are not likely to be resolved without full-scale litigation that will be extremely complex. The AGE Entities refer to: AGE Institute of Pennsylvania, Inc., AGE Institute of Massachusetts, Inc., AGE Institute of Florida, Inc., Delaware Valley Convalescent Homes, Inc. (DVHC), and AGE Holdings, Inc. AGE Pa, AGE Mass and AGE Fla are charitable organizations organized under section 501(c)(3) of the Internal Revenue Code, and are engaged primarily in the provision of nursing care to the aged population in the respective Sates. DVHC is a Pennsylvania for-profit corporation whose shares are wholly owned by Holdings. The AGE Entities own and operate twenty nursing home facilities as well as provide education and training to caregivers in the elder care industry. The AGE Entities told Judge Walsh that certain of the Facilities were acquired from GHV, Inc., or one of its subsidiaries, many at prices in excess of market value. At the time of the sale- purchase transaction, the Debtor and certain Related Debtors entered into long-term Management Agreements to operate the Facilities, and did so through October 31, 2000. With respect to all of the Facilities, the Debtor and the Related Debtors at various times caused the AGE Entities to enter into Ancillary Contracts with respect to providing certain pharmacy, staffing, rehabilitation, physician, ambulance and hospitality services. The Management Agreements permitted the Debtor to, under certain enumerated circumstances, utilize the Related Debtors to provide ancillary service to the Facilities. In that regard, the Debtor entered into the Ancillary Contracts with the Related Debtors on behalf of the AGE Entities. In or about 1997, the AGE Entities began to experience financial difficulties. In many instances there was an inability to pay obligations to the Debtor. Disputes between the AGE Entities and the Debtor and Related Debtors then ensued, the AGE Entities told the Judge. Because of financial problems, the AGE Entities failed to comply with the liquidity and debt service covenants contained in certain bond and other financial agreements entered into between the AGE Entities on one hand and the AGE Entities' lenders and bondholders on the other. As a result, the AGE Entities were prohibited from paying certain management fees and other subordinated obligations to the Debtor and the Related Debtors. The AGE Entities told Judge Walsh that at some point they found that GHV and the Related Debtors had mismanaged the Facilities, and had engaged in fraud, self-dealing, breaches of fiduciary duties, and breaches of the Management Agreements. The AGE Entities and the Debtors and Related Debtors finally agreed that the respective relationships, and the respective agreements should be terminated. The Massachusetts Litigation During the pendency of the GHV chapter 11 proceedings, GHV and Related Debtors filed a "first strike" lawsuit against AGE Mass in Massachusetts State Court seeking injunctive relief and payment for certain services allegedly provided under the Ancillary Contracts. The AGE Entities accused that without giving notice to them, the Debtor and Related Debtors sought and received an ex parte temporary restraining order against AGE Mass in the Massachusetts Litigation, but this temporary restraining order was promptly dissolved after a contest by AGE Mass. "The Massachusetts Litigation is still pending in the Massachusetts state court, where the matter was proceeding," the AGE Entities say. The AGE Entities further relate that the Debtor and Related Debtors removed the Massachusetts Litigation to Massachusetts Federal Court by Notice of Removal. According to the AGE Entities, the Debtor and Related Debtors intend to transfer venue of the Massachusetts Litigation to the Bankruptcy court. Adversary Proceeding The AGE Entities draw Judge Walsh's attention to the Adversary Proceeding instituted by the Debtors and Related Debtors in the Bankruptcy on November 27, 2000, seeking the recovery of the same moneys as alleged in the Massachusetts Litigation, and added similar claims against the remaining AGE Entities. In the Adversary, the Debtor and Related Debtors claim damages against the AGE Entities in excess of $20,000,000. The AGE Entities note that the claims in the Adversary sound exclusively in the law of the Commonwealths of Massachusetts and Pennsylvania and the State of Florida. The Adversary alleges damages, punitive and otherwise, arising out of claims of: (a) breach of contract (b) breach of Trust Indenture (third party beneficiary); (c) unjust enrichment; (d) imposition of constructive trust and equitable lien; and (e) civil conspiracy. The claims for breach of contract, as they relate to AGE Mass, request certain of the same relief requested in the Massachusetts Litigation. The AGE Entities do not believe the claims in the Adversary to be "core" matters as that term is defined under 28 U.S.C. section 157(b)(2) (A) through (0), and intend to demand a jury trial. The AGE Entities intend to immediately move the Bankruptcy Court, pursuant to Bankruptcy Rule 7012 and 28 U.S.C. section 157 (h)(3) for a determination that the matters raised in the Adversary are not "core" matters and at the same time move the District Court for the District of Delaware pursuant to 28 U.S.C. section 157(d) to withdraw the reference as to the Adversary. In addition, with respect to the Adversary, the AGE Entities intend to ask the District Court in Massachusetts, or alternatively the Bankruptcy Court, to abstain from hearing that portion of the Adversary which raises identical claims as the Massachusetts Litigation. The Bar Date for the Filing of Claims The AGE Entities assert that they have rights to set-off and recoupment with respect to the c1aims in the Genesis Massachusetts Litigation and Adversary Proceeding (the Genesis Litigation), and also have claims for affirmative relief, which may exceed the amounts claimed in the Genesis Litigation to be due to the Debtor and Related Debtor from the AGE Entities. Complicated calculations are anticipated. Moreover, the AGE Entities expect that such calculations will require the assistance of experts in the nursing care industry as well as experts in Medicaid cost reporting. The AGE Entities assert that the issues between the AGE Entities span many years and many millions of dollars, and will likely involve full-scale complex litigation, and the claims to which the AGE Entities would be entitled will only be determined after extensive discovery conducted in connection with the Genesis Litigation. Therefore, the AGE Entities voice that the General Bar Date which provided less than forty-five days to file Proofs of Claim is inadequate as to the Entities. Moreover, the AGE Entities note that the Adversary was filed just about twenty-five days prior to the expiration of the Bar Date. The timing, the AGE Entities say, was a litigation tactic intended to force the AGE Entities to submit the state court disputes contained in the Genesis Litigation to the jurisdiction of the Bankruptcy court. The AGE Entities believe that they should not be forced to submit the long running and complex dispute with the Debtors to the Bankruptcy Court when all of the issues arise under the applicable state laws. The AGE Entities note that commentators have often stated that where time is required in order to liquidate claims, or where substantial investigation is required, an extension of time to file proofs of claim is appropriate. In the present case, the Entities tell Judge Walsh that their ability to comply with the Bar Date has been further hampered by the refusal of GHV and Related Debtors to provide complete and fully executed copies of the Ancillary Contracts and other documents related to the claims. Moreover, the AGE Entities observe that even if the Entities were to file Proofs of Claim with the Bankruptcy Court, the claims would be listed as disputed, unliquidated claims against the Related Debtors. Accordingly, the filing of Proofs of Claim at this time would not aid the Debtor or the Related Debtors in determining the universe of claims against their respective bankruptcy estates, the AGE Entities argue. Moreover, the Entities observe that the filing of such Proofs of Claim would waive the rights of the AGE Entities to have their various disputes with the Debtor and Related Debtors before a jury - a right guarantied under the United States Constitution. The AGE Entities therefore submit that "cause" exists for the granting of an extension of time to file Proofs of Claim in the Debtor and Related Debtors' Genesis bankruptcy proceedings. At their behest, the Court granted the AGE Entities an extension of time to file Proofs of Claim until thirty days after such time as there is a final order ruling that the Genesis Litigation must be heard in Bankruptcy Court or alternatively, until 30 days after the termination of the Genesis Litigation, whichever is earlier. (Genesis/Multicare Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) HORACE MANN: S&P Places Ratings On CreditWatch Negative ------------------------------------------------------- Standard & Poor's placed its single-'A'-minus issuer credit and senior unsecured debt ratings on Horace Mann Educators Corp. (HM) on CreditWatch with negative implications. Standard & Poor's also placed its double-'A'-minus counterparty credit and financial strength ratings on Allegiance Insurance Co., Horace Mann Insurance Co., Horace Mann Life Insurance Co., and Teachers Insurance Co. -- which are HM's insurance subsidiaries -- on CreditWatch with negative implications. These rating actions follow HM's announcement of expected operating losses in the fourth quarter of 2000. These losses are the result of reserve strengthening, adverse loss development from winter storms in December, and several corporate charges -- including restructuring to align business groups with the company's strategic direction. With these charges, Standard & Poor's believes HM will have weakened capital adequacy and reduced surplus -- particularly in the property/casualty companies -- following previous year declines. Operating results for 2000 will fall well outside the expected range, with a combined ratio estimated at up to 110% and diminished returns from prior periods. Standard & Poor's believes HM's capital adequacy in 2000 will decline to levels expected for a single-'A' rating, even after the planned $19 million capital contribution from the parent company. The CreditWatch status of these ratings will be resolved following Standard & Poor's meeting with management in February to review 2000 financial results and future strategies. A downgrade of at least one notch appears likely, Standard & Poor's said. ICG COMMUNICATIONS: Paying Prepetition Sales, Use and Other Taxes ---------------------------------------------------------------- ICG Communications, Inc. requested and obtained Judge Robinson's authority to pay certain prepetition sales, use and other taxes to various taxing agencies, as such taxes were and are collected from the Debtors' customers or otherwise incurred in the ordinary course of the Debtors' business. However, Judge Robinson expressly held that nothing in this Order was to be construed as limiting, abridging, or otherwise affecting the Debtors' right to contest on any grounds the validity or amount of any taxes due or paid under the Order. (ICG Communications Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) LASIK VISION: Reports Financing Developments -------------------------------------------- Lasik Vision Corporation (CDNX:LSK.CX.) announced Friday that it has closed a second tranche of $2.0 million of the $7.0 million private placement with Mr. John Porter, one of its external directors, announced on January 3, 2001. As a result, the Company issued a further 9,523,809 shares to Mr. Porter to bring his shareholdings to 19,991,666 shares (33.8% of total outstanding). In addition, Mr. Porter holds warrants to purchase a further 19,791,666 common shares. Following on the appeal by ICON Laser Eye Centers Inc. ("ICON") and its adviser, Northern Securities Inc. ("NSI") to the British Columbia Securities Commission ("BCSC") for a hearing and review of CDNX's approval of the Porter financing, ICON and NSI brought an urgent application to the BCSC Friday for an interim order preventing any further completion of the Porter financing pending the hearing and appeal. ICON and NSI have agreed to adjourn the hearing in view of the fact that the $2.0 million advance had been received earlier in the day and the related shares issued. The issues involved in the appeal and review are expected to be resolved prior to receipt of the next installment of the Porter financing. The Porter financing is the key component of the comprehensive financial restructuring of the Company presently underway, without which the Company would have been unable to meet its financial commitments. ICON is Lasik's principal competitor in the value-priced LVC ("laser vision correction") business and on January 16, 2001 announced a proposed share exchange take-over bid for all the Company's shares. The terms of the bid, as announced, included a condition that the Porter financing should be withdrawn. No formal offer from Icon has yet been received. Lasik also announced that it had reached agreement, subject to the approval of the Canadian Venture Exchange (the "CDNX"), for a new private placement of $2,241,588 of Units at $0.26 per Unit, which is less than the maximum allowable discounted price of the Company's shares which closed at $0.33 on January 25, 2001. Each Unit will consist of one common share and one share purchase warrant entitling the holder to purchase one common share at a price of $0.33 until January 24, 2003. The proposed placement will be made to Tom Bradford, Michael Likierman, Sir Leslie Porter, Jean Selignan, Cliff Stanford, Bruce Steinberg, David Siegel and Anthony Weldon, all of whom are overseas investors, and the Chelverton Fund, a European investment fund. No commissions are payable in connection with this latest placement. The latest private placement is part of the ongoing restructuring of the Company and will be used to improve the Company's working capital position and settle past due obligations as agreed between the Company and its major suppliers. Mr. Fridge, the Company's President and Chief Executive Officer stated, "I am pleased that new investors have expressed confidence in the future of the Company given the recent restructuring of the Company's management, operations and finances. I also believe that the present Board offers a depth of international business experience that has inspired investor confidence. What this proposed placement demonstrates is that the Board, management and finances as restructured with the benefit of the ongoing Porter facility, have the credibility to attract new investors who believe in the long term future of the Company". Based in Vancouver, B.C., Lasik Vision Corporation is Canada's largest operating laser vision refractive Company. Additional information may be obtained on the Company's Web site at www.lasik-vision.com. LASON, INC.: MacKenzie Exits Chief Restructuring Officer Post ------------------------------------------------------------- Lason, Inc. (OTCBB:LSON) announced that it is transitioning financial management responsibilities from a Chief Restructuring Officer to Lason's financial management team headed by Ronald D. Risher, Lason's recently appointed Chief Financial Officer. As part of the transition, Donald MacKenzie, a partner with Conway, MacKenzie and Dunleavy (CMD), has resigned as Lason's Chief Restructuring Officer. Mr. MacKenzie will continue to consult with Lason's management team during the transition period. In addition, Lason will continue to employ two CMD specialists in interim positions to support the Company's efforts in financing transactions and asset disposals. "Don MacKenzie has been an important catalyst in restructuring Lason's financial position and in repositioning our company's operations," stated Robert Yanover, Chairman of the Board for Lason. "His team has helped Lason accelerate our plans to improve our financial structure and position our Company to deliver on strategic initiatives targeting our core services. He has largely completed the restructuring assignment at Lason, and his day-to- day presence at Lason is no longer necessary. We want to thank Don for his significant efforts," continued Mr. Yanover. Regarding the transition from Lason on a day-to-day basis, Don MacKenzie stated, "Ron Risher was recently named CFO of Lason and has worked closely with the CMD team since joining the Company. The new financial team at Lason is very capable and is focused on continuing to build the banking relationships, work with its earnout partners and strengthen its operations. In addition, they are working closely with the CMD team on asset sales to further reduce Lason's debt and improve future liquidity." Lason is a leading provider of integrated information management services for image and data capture, data management and output processing. Since its founding in 1985, Lason has grown to employ over 8,900 people with operations in 29 U.S. states, United Kingdom, Canada, Mexico, India, Mauritius and the Caribbean. The Company currently has over 85 multi-functional imaging centers and operates over 70 facility management sites located on customers' premises. LERNOUT & HAUSPIE: Proposes Adequate Protection Package for Amgro ----------------------------------------------------------------- Lernout & Hauspie Speech Products N.V. and Dictaphone Corp. filed a Motion seeking judicial authority to provide "adequate protection" to Amgro Premium Financing on account of Amgro's security interest in unearned insurance premiums. Prior to the commencement of these Chapter 11 cases, L&H purchased primary and excess director and officer liability insurance coverage. As is said to be typical with other large corporations, L&H financed the premiums due under its director and officer liability insurance coverage through an insurance premium financing agreement. The director and officer liability insurance coverage consists of (i) a claims-made Directors and Officers Liability Insurance Including Company Reimbursement Primary Policy with AXA Global Risks, and (ii) a claims- made Excess Insurance Policy with kemper Indemnity Insurance. These policies provide a maximum aggregate limit of $40,000,000 of coverage and are scheduled to expire on April 12, 2002. In July 2000 L&H financed the premiums due under the policies through a premium financing agreement with Amgro. This agreement provides: (a) Seventeen monthly loan repayments of $23,785.85 which began on June 25, 2000, and which extend through April 12, 2002, and which include an interest component for the financed amount of $382,487; (b) Grant of a security interest in the policies, including the proceeds from any unearned premiums relating to these policies; (c) The ability to accelerate all amounts outstanding upon failure to make payment or upon the filing of a bankruptcy petition; and (d) The ability to cancel the policies upon non-payment of the monthly loan payment. Shortly before the Petition Date Amgro has served a Notice of Intent to Terminate the policies for a default in the payment of pre-petition premiums, and has indicated it will file a motion asking the Court to vacate the stay in order to allow it to exercise the rights that it has under the premium financing agreement if L&H does not adequately protect its interest in the policies. Amgro has agreed by letter that it will not take any action to terminate the policies on or before January 20, 2001, provided that L&H seeks and obtains this Court's approval to continue post-petition to make monthly installment payments due under the premium financing agreement in accordance with the terms of that agreement as adequate protection payments. L&H has asserted that the continuation of these policies is essential to its reorganization efforts. Prior to the commencement of this case a number of lawsuits were filed against L&H and its officers and directors alleging, among other things, securities fraud arising from allegations of accounting irregularities. As a result of these suits, L&H has made a number of claims under the policies. It is possible that additional claims will be made against L&H and its officers and directors, and L&H will need to make additional claims under the policies. If Amgro cancels the policies, which offer claims-made indemnity coverage, L&H will not be able to make additional claims under the policies because L&H is only covered under the policies for claims made while they are in effect. L&H believes it will not be able to obtain replacement director and officer liability insurance coverage at a comparable cost. Without director and officer liability insurance coverage, L&H cannot be assured that it would retain and attract quality directors and officers. (L&H/Dictaphone Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOEWEN GROUP: Rejects Kay Employment And Consulting Agreements -------------------------------------------------------------- The parties agreed that The Loewen Group, Inc. may reject the Employment Agreement and Consulting Agreement, pursuant to section 365 of the Bankruptcy Code. LGII agree to pay Kenneth Kay $25,000 in cash, subject to tax withholding requirements, within 10 business days after the Court approves the Stipulation and Agreed Order. Jennifer Kay will have an allowed general nonpriority unsecured Rejection Claim in LGII's chapter 11 case in the amount of $28,500. The Stipulation says that Kenneth Kay and Jennifer Kay will accept the cash payment and the allowance of the Rejection Claim in full satisfaction of, and as sole consideration for the final release and discharge of any claims and causes of action against the Debtors. The Kays also convenant not to sue upon or pursue in any court or any other forum any claims or causes of action against the Debtors in connection with the Agreements or the rejection of them, or the employment of them or its termination. Notwithstanding this, the parties make it clear that the agreement and stipulation does not affect the rights of Kenneth Kay and Jennifer Kay to unemployment benefits as a result of the termination of their employment by the Debtors. The Debtors expressly agree to waive and release their rights to contest the entitlement of the Kays to such unemployment benefits. The Debtors also agree that they will not attempt to enforce any noncompetition convenants set forth in the Agreements. (Loewen Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOEWS CINEPLEX: Revolver Covenant Waiver Expires; Talks Continue ---------------------------------------------------------------- Loews Cineplex Entertainment Corporation (NYSE:LCP; TSE:LCX) announced that the waiver of compliance with various financial covenants from the syndicate banks that provide funding to the Company under its Senior Secured Revolving Credit Facility has expired. The Company is continuing discussions with the Bank Group to address, among other things, the Company's liquidity needs. Notwithstanding the expiration of the waiver, the Company believes that it has adequate available cash to fund its ordinary course working capital needs during the course of these discussions. The Bank Group has not accelerated the maturity of its loan, and the Company will continue to operate its business during this period. There can, of course, be no assurance that these discussions will be successful. If the Company is unsuccessful in its discussions, the Bank Group could accelerate the maturity of its loans. The Company is not currently in a position to refund this indebtedness should it be declared due and payable and continues to explore all alternatives available to the Company. Loews Cineplex Entertainment Corporation is one of the world's largest publicly traded theatre exhibition companies in terms of revenues and operating cash flow, with 2,965 screens in 365 locations primarily in major cities throughout the United States, Canada, Europe and Asia. Loews Cineplex's divisions include Loews Cineplex United States, Cineplex Odeon Canada and Loews Cineplex International. Loews Cineplex operates theatres under the Loews, Sony, Cineplex Odeon and Europlex names. In addition, the Company is a partner in Magic Johnson Theatres and Star Theatres in the U.S., Yelmo Cineplex de Espana, De Laurentiis Cineplex in Italy, Odeon Cineplex in Turkey and Megabox Cineplex of Korea. LTV CORPORATION: Employs Logan as Claims & Noticing Agent --------------------------------------------------------- The LTV Corporation and its subsidiary debtors asked Judge Bodoh to approve the appointment of Logan & Company, Inc., as the Estates' claims and noticing agent. LTV directed the Court's attention to the large number of creditors and other parties in interest involved in the Debtors' Chapter 11 cases. David G. Heiman, Richard M. Cieri, and Michelle M. Morgan of Jones, Day, Reavis & Pogue of Cleveland, Ohio, joined by Jeffrey B. Ellman and Joseph M. Witalec of Jones, Day, Reavis & Pogue in Columbus, Ohio, suggest that the huge numbers of interested parties, and the related duties of noticing, would impose heavy administrative and other burdens upon the Court and the Clerk's Office. To relieve the Court and Clerk's Office of these burdens, the Debtors propose that the Court appoint Logan & Company as a claims processing and noticing agent. Logan is a data processing firm that specializes in claims processing, noticing and other administrative tasks in Chapter 11 cases. Through their counsel, the Debtors propose that Logan transmit certain designated notices and maintain claims files and claims registers and assist the Debtors with administrative functions related to their plan of reorganization. Under the Logan Agreement, Logan would, at the request of the Debtors or the Clerk's Office: (a) prepare and serve required notices in the Debtors' cases, including: * notices of the commencement of these cases and the initial meeting of creditors; * notice of the claims bar date; * notice of objections to claims; * notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and * such other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these Chapter 11 cases. (b) within five days after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes (i) a copy of the notice served; (ii) an alphabetical list of persons upon whom the notice was served, and (iii) the date and manner of service; (c) maintain copies of all proofs of claim and proofs of interest filed in these cases; (d) maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each claim or interest asserted: * the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; * the date the proof of claim or proof of interest was received by Logan and the Court; * the claim number assigned to the proof of claim or proof of interest; * the asserted amount and classification of the claim; and * the applicable Debtor against which the claim or interest is asserted. (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; (f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; (g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest in these cases and make the list available upon request to the Clerk's Office or at the expense of any party in interest; (h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; (i) record all transfers of claims and provide notice of such transfers to the extent required by Rule; (j) provide temporary employees to process claims, as necessary; (k) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and (l) provide such other claims processing, noticing and related administrative services as may be requested from time to time by the Debtors. The Debtors also expect to receive Logan's assistance in (i) the preparation of their Schedules, Statement of Financial Affairs, and master creditor lists and any amendments to any of these; (ii) the reconciliation and resolution of claims; and (iii) the preparation, mailing and tabulation of ballots for the purpose of voting to accept or reject a plan of reorganization. For these services, the Debtors propose that the Court approve payment of the following fees: (a) Setup fees $.10 per creditor, and $50.00 per hour for manual input and verification (b) Monthly data storage $.10 per record per month (c) Standard court notices From $50.00 per request for initial setup, to $.29 for envelope, fold stuff, meter, mail and duplication, including additional charges for added inserts; notice duplication at $.10 per image, with RUSH services at $.12 per image; gumback labels at $.06 each, and postage at cost; (d) Standard court reporting Claims registers and service lists at $100.00 per request; (e) Internal reconciliation reports Claim variance reports, claim workbook at $100.00 per request, or a customized layout at $90.00 per hour; (f) Consulting From $200 per hour for Statement and Schedule Preparation to $35 per hour for clerical help, $50 per hour for data entry, $105 per hour for a project coordinator; $100 per hour for programming support; and $145 per hour for account executive support. (g) Claims docketing $50 per hour for stamping, labeling, and input to database, and $.25 per image for microfilming for Court if required; (h) Telecommunications On-site connection to mainframe at $.30 per minute; (i) Other services Copies at $.15 each; newspaper and legal notice publications as quoted, and fax at $1.00 per page; and (j) Travel, lodging, courier and other expenses Reimbursable at cost to Logan. (LTV Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-00900) MASTER GRAPHICS: Delaware Court Confirms First Amended Plan ----------------------------------------------------------- Master Graphics Inc. (OTC Bulletin Board: MAGR) announced that the United States Bankruptcy Court for the District of Delaware has approved the First Amended Joint Plan of Reorganization of Master Graphics and its operating subsidiary, Premier Graphics, Inc., along with the Company's $60 million exit financing commitment received from GE Capital. The reorganization plan was confirmed at a court hearing in Delaware on January 25 and was supported by the Official Committee of Unsecured Creditors. Creditors voting on the reorganization plan overwhelmingly approved the reorganization plan with 89% of the creditors who voted and 99% of the dollar amount of the claims voted in favor of the plan. At the time that the Company filed its reorganization cases in July 2000, the Company said that it would reorganize its businesses and emerge from Chapter 11 on a "fast-track" basis. The Company said that it expects to close on its exit financing commitment and formally emerge from Chapter 11 next month. Confirmation also allows the Company to conclude implementation of its go-forward plan of operating 11 core operating divisions. The Bankruptcy Court has already approved sales or other dispositions of its 7 non-core divisions resulting in anticipated proceeds of roughly $30 million, which will also be used to fund payments under the confirmed reorganization plan. Under the reorganization plan, the Company's existing common stock will be cancelled and substantially all of the new common stock of reorganized Master Graphics will be distributed to general unsecured creditors, including holders of the Company's 11-1/2% Senior Notes, on account of and in cancellation of their claims. In connection with the exit financing commitment, the exit facility lenders will receive warrants to purchase up to 15% of the newly issued common stock. Allowed secured, administrative and priority claims will be paid by the reorganized company in full or as agreed with specific creditors. The Company provides high-quality, general commercial printing products throughout the United States. These products are produced through several operating divisions of Premier Graphics, Inc.: Argus Press in Niles, Illinois; B&M Printing in Memphis, Tennessee; Golden Rule Printing in Huntsville, Alabama; Harperprints in Henderson, North Carolina; Jones Printing in Chattanooga, Tennessee; Lithograph Printing in Memphis, Tennessee; McQuiddy Printing in Nashville, Tennessee; Sutherland Printing Companies in Montezuma, Iowa and in Ozark, Missouri; Thomasson Printing in Atlanta, Georgia; White Arts/TPC in Indianapolis, Indiana; and Woods Lithographics in Phoenix, Arizona. MASTER GRAPHICS: Names Calvin W. Aurand, Jr. as New CEO ------------------------------------------------------- Master Graphics announced that Calvin "Cal" W. Aurand, Jr. has been named Chief Executive Officer effective immediately. Mr. Aurand succeeds Michael B. Bemis, who has served as interim CEO and guided the Company's reorganization process since June 2000. Mr. Bemis will continue as Chairman of the Board of Directors through the effective date of Company's reorganization plan. Mr. Aurand is a well-recognized leader in the printing industry, having been inducted into the printing industry Hall of Fame in 1993. Aurand served as president and CEO of Banta Corporation, a publicly traded company on the New York Stock Exchange, from 1989 to 1995. Prior to this, he served as president and COO of American Banknote, the worldwide leading printer of currency and stock certificates, as well as president and CEO of Charles P. Young, one of America's leading financial printing companies. "We said at the outset this would be a swift passage through the reorganization process and it has been," said Mr. Bemis. "We have successfully completed an important milestone in the financial restructuring that positions Master Graphics to operate successfully in today's printing environment. Master Graphics is fortunate to have recruited such a seasoned, industry specialist as Cal Aurand at this very important time in Master Graphics' history. He brings considerable strength and leadership to our organization. We appreciate the strong support the Company has received from its lenders, creditors, suppliers, customers and especially its employees. With a restructured balance sheet, new long-term financing and a seasoned management team, Master Graphics is well-positioned for future leadership in the industry." OUTBOARD MARINE: City of Waukegan To Sit in Creditors' Meeting -------------------------------------------------------------- The City of Waukegan, IL has been included in a federal bankruptcy judge's order that Outboard Marine Corp. meet with its creditors to devise a preliminary plan to sell off its assets. According to published reports, the move is important because city officials want to make sure that lingering environmental problems at the company's lakefront site are dealt with before the land is sold. "We want to sort through the environmental problems, and we want to make sure we can get our two cents' worth in when it's time to redevelop their lakefront property," Waukegan city attorney Brian Grach said January 24 after the case was heard in U.S. District Court in Chicago. OWENS CORNING: Proposes Miscellaneous Assets Sales Procedures ------------------------------------------------------------- In an effort to further their restructuring efforts, Owens Corning desires to divest certain surplus and idle machinery and equipment assets, unfinished goods, inventory, and old finished goods inventory. The Debtors anticipate that the majority of these assets will be sold in lots in which the aggregate consideration received will be less than $200,000 per item of machinery or equipment, or, in the case of inventory, $200,000 per transaction. In the event that the Debtors are able to locate buyers for these assets, it is likely that the proposed buyers' offers will be conditioned upon a quick sale process with a minimum of costs and expenses. Accordingly, the Debtors have asked that Judge Walrath approve an expedited general procedure under which the Debtors may sell miscellaneous assets free and clear of liens, claims and encumbrances which bring in the amounts quoted above or less, and without the costs and delay of preparing, filing, serving and having a hearing on a motion for approval of each such sale. The Debtors believe these procedures offer a way to maximize the value obtained from these sales, while at the same time minimizing the costs associated with the sales. In order to provide parties in interest with notice and an opportunity to object to the sales of the miscellaneous assets, the Debtors propose that: (a) The Debtors will give written notice of each such proposed sale to (i) the United States Trustee, (ii) counsel for the Committees appointed in these cases, (iii) counsel for the Debtors' postpetition lenders, and (iv) any known holder of a lien, claim or encumbrance against the specific property to be sold. (b) The sale notice will specify the assets to be sold, the identity of the proposed purchaser (including any connection between the proposed purchaser and the Debtors), and the proposed sale price. (c) If none of the parties receiving notice of the sale serve counsel for the Debtors with a written objection to the proposed transaction in a manner so that it is actually received by counsel for the Debtors within five business days after the notice of sale is sent, the Debtors may consummate the proposed sale transaction and take such actions as are necessary to close the sale and obtain the sale proceeds. (d) If there is no objection to the sale, but the buyer requests receipt of an Order authorizing the sale, the Debtors may file a certificate of no objection with the Court with an order attached authorizing the transaction as in the best interests of creditors. (e) If the Debtors receive a written objection prior to the expiration of the notice period, and are unable to consensually resolve such objection, the Debtors will not take any further steps to consummate the proposed transaction without first obtaining the Court's approval for that specific transaction. (Owens Corning Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Judge Blocks Major Creditors from Seizing Assets ------------------------------------------------------------- A judge temporarily blocked one of Pacific Gas and Electric Co.'s major creditors from seizing millions in assets Thursday. The order stops the California Power Exchange from liquidating at least $160 million of long-term power contracts the utility, in part, is relying on to keep powering its 4.5 million Northern California customers. San Francisco Superior Court Judge David Garcia said the exchange, which is the state's middleman for the buying and selling of power, must hold off until at least Feb. 5. Garcia issued the order after the state said it wanted time to consider whether Gov. Gray Davis would, among other options, exercise emergency powers and seize the power contracts. (New Generation Research, January 26, 2001) RAILWORKS CORPORATION: Moody's Junks Senior Subordinated Notes -------------------------------------------------------------- Moody's Investors Service lowered the following ratings of RailWorks Corporation: * $250 million senior secured bank facility to B3 from B1, * $175 million 11.5% senior subordinated notes to Caa3 from B3, * senior implied rating to B3 from B1, and * the issuer rating to Caa1 from B2. The rating outlook is negative. According to Moody's, the rating action was prompted by the Company's generally weak financial performance and operating cash flow generation, liquidity concerns resulting from recent reduction in its bank revolving credit line and vulnerability to covenant non-compliance, and the increased credit risk associated with the higher than expected leverage level and thinner interest coverage. Moody's relates that the ratings reflect the Company's highly leveraged financial condition resulting from the heavy acquisition activity of the past two years, relatively weak operating cash flow and thin interest coverage, and, despite the recent charge, the still high level of goodwill on the balance sheet, now representing almost 40% of total assets. Debt has reportedly increased by $89 million from the end of 1999 to $384 million at September 30, 2000 largely due to the acquisition in 2000. According to Moody's, for the twelve months ended September 2000, debt to EBITDA was 5.4x and EBIT to interest coverage of 1.5x. Moody's notes that revenue from fixed-fee construction contracts, as typical, is recognized by the Company on the percentage-of-completion method as measured by the percentage of cost incurred to management's estimate of total cost, and as such, are subject to revision. RailWorks Corporation, headquartered in Baltimore, Maryland, provides vertically integrated rail system services, including track construction and maintenance, and system electrification for transit, corporate, regional, and Class I railroads as well as manufacturing materials for rail track construction. Revenue for the LTM ended September 2000 totaled $586 million. RETROSPETTIVA INC.: Nasdaq Delists Common Stock ----------------------------------------------- Retrospettiva Inc. (Nasdaq:RTRO) announced Friday that it had received a letter from Nasdaq, notifying the company that its common stock would be delisted from the Nasdaq Small Cap Market as of Jan. 24, 2001. The delisting notice resulted from the company's common stock trading for under $1.00 per share, which is below the Nasdaq Small Cap Markets' requirements for continued listing. After Jan. 24, 2001, the company's common stock will trade in the Electronic Bulletin Board under the same stock symbol. Retrospettiva is a supplier of moderately priced women's apparel to national retailers, wholesalers, catalogs and design and manufacturing organizations under its customers' labels on a private label basis exclusively in the United States. Retrospettiva contracts for the manufacture of its finished products only after customers place purchase orders, including quantities, styles and designs. Since Retrospettiva is not involved in the design end of the transaction and the orders are in essence "pre-sold," the company has effectively removed the risk normally associated with fashion and design, a risk that the customer by default assumes. However, the company is subject to the normal and customary risks of doing business inherent in the apparel industry. Additional information on the company can be found at its corporate Web site, which is located at http://www.rtro.com TRANS WORLD: Court Gives Go Ahead For Asset Sale to American ------------------------------------------------------------ At a hearing in Federal District Court in Wilmington, Delaware, U.S. District Judge Sue Robinson ruled in favor of Trans World Airlines on key motions in the TWA bankruptcy proceeding. Approval of the motions clears the way for rapid completion of the sale of TWA's assets to American Airlines or to a higher bidder if one emerges in the bankruptcy auction process. Currently, American Airlines' offer to purchase substantially all of the assets of TWA is the only offer that has been submitted. "This is a great win for TWA, for our employees and for the cities we serve, especially our hub city of St. Louis," said William F. Compton, president and chief executive officer. "This ruling removes a great deal of uncertainty from the process. We can now move forward very quickly with a good resolution of TWA's financial problems." TWA's motions were opposed by lawyers representing Carl Icahn and other parties. The court upheld TWA's position and ruled against Icahn and other opponents on every motion. The court ruled against all objections to the proposals. The court's ruling will set the bid process and procedures for the auction of TWA assets, including a rapid schedule for the process. As a result of the ruling, TWA expects to be able to reach a sale hearing on the purchase of the assets by early March. The court also gave final approval of $200 million in debtor in possession financing that has been provided to TWA by American Airlines. After receiving preliminary approval of the DIP financing two weeks ago, TWA began drawing against the DIP to fund airline operations and repay certain financial obligations. American Airlines recently announced that members of TWA's Aviators(R) frequent flyer program can expect to have all of their miles transferred at full value into American's AAdvantage program(R) when the acquisition of TWA's assets in completed. Additional announcements regarding marketing cooperation between Aviators and AAdvantage and between TWA's Ambassadors Clubs and American's Admirals Clubs are expected soon. TRANS WORLD: Senate Hearing on American Bid Scheduled On Feb. 1 --------------------------------------------------------------- According to published reports, the United States Senate Commerce Committee has scheduled February 1, 2001 hearings on American Airlines, Inc.'s planned purchase of the majority of Trans World Airlines, Inc.'s assets. U.S. Transportation Secretary, Norman Mineta, reportedly informed the committee that he did not support the proposed American Airlines deal; however, he did assert that TWA does need a purchaser. TWA filed for Chapter 11 protection on January 10th. (New Generation Research, January 26, 2001) VENCOR, INC.: Agrees to Modify Automatic Stay for Insured Claim --------------------------------------------------------------- Vencor Nursing Centers East, L.L.C., d/b/a Colonial Oaks Rehabilitation Center-Fort Myers is a defendant in the action captioned Patricia Butrim, with Power of Attorney For George Schultz vs. Vencor Nursing Centers East, L.L.C., d/b/a Colonial Oaks Rehabilitation Center - Fort Myers, Case No. 99-8806 CA WCM, In the Circuit Court of the Twentieth Judicial Circuit In and For Lee County, Florida. Vencor, Inc. consented to and have obtained Judge Walrath's stamp of approval for lifting the automatic stay to permit the plaintiff in the action to prosecute her claim and to collect any judgment in respect of any recovery of damages in the action from any available insurance proceeds. The Debtors have determined that there is an insurance policy issued in favor of Vencor. Any settlement of or recovery of a judgment for damages in the Underlying Action will be limited to applicable insurance proceeds, and the plaintiffs will be permitted to continue to assert an unsecured prepetition claim in the Debtors' chapter 11 cases solely for the portion of the judgment that cannot be satisfied by available insurance proceeds. Except as specifically provided in the stipulation, the Plaintiffs shall not engage in any efforts to collect any amount from the Debtors or any of Debtors' current and former employees, officers and directors, or any person or entity indemnified by Debtors. The parties also agree to mutual general release of claims over the matter. (Vencor Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) WEBVAN GROUP: Expects to Run Out of Cash within Two Quarters ------------------------------------------------------------ Webvan Group Inc. reported a fourth quarter net loss of $173 million. Not including expenses related to charges stemming sfrom its acquisition of HomeGrocer Inc., Webvan reported a pro forma loss of $109 million in the quarter. Its losses for the year totaled nearly $600 million. The firm added that in light of its weakening cash position it would slow down the rate at which it's using up its cash. The San Francisco, Ca. online grocery-delivery company is now projected to run out of its remaining $211 million in cash within two quarters. While the firm's sales have soared over the past year, to an estimated $84 million in its fourth quarter, it's still losing money on an average order. While Webvan's gross margin is actually slightly better than that of big grocery chains, what ends up erasing the potential profit is the more than $30 on an average $112 order needed for packing and delivering the order. In order to overcome those losses, Webvan must reach an economy of scale by signing up more of its typically upscale customers who are willing to pay for the service. For a free copy of an article about Webvan, which expects to report a pro forma loss in its fourth quarter of $109 million, call 800-407-9044. (New Generation Research, January 26, 2001) WEIRTON STEEL: Moody's Cuts Ratings Seeing Poor Market Conditions ----------------------------------------------------------------- Moody's Investors Service downgraded its ratings for Weirton Steel Corporation, anticipating that poor flat-rolled steel market conditions will cause Weirton to record operating losses throughout 2001 and imperil its liquidity. Moody's rating actions on the company are as follows: * $123 million of 11.375% senior notes due 2004 was lowered to Caa1 from B2 * $121 million of 10.75% senior notes due 2005 was lowered to Caa1 from B2 * $56.3 million of 8.625% pollution control revenue bonds due 2014 was lowered to Caa1 from B2 * $100 million senior secured bank credit facility was lowered to B3 from B1 * senior implied and senior unsecured issuer ratings were lowered to Caa1 from B2 The rating outlook is negative. Moody's relates that Weirton's EBITDA for all of 2000 was $23 million, dragged down by a disastrous fourth quarter, which suffered from reduced sheet product shipments and prices, production curtailments necessitated by growing finished goods inventory, and the impact on unit costs of the curtailments and higher energy costs. Fourth quarter sales were 20% lower than the third quarter, and EBITDA was negative $35 million. While US steel producers have scaled back production and inventories are declining, steel orders are also down and every day seems to bring news of soft demand from key steel consuming sectors such as automotive, industrial equipment, and construction. Moody's believes that Weirton's 2001 results will be even worse than 2000 based on the premise that steel market conditions will continue to be very weak in the first half of 2001, and will only slowly recover. This would be the third year in a row where Weirton's EBITDA did not cover interest, Moody's said. The primary reasons for Moody's anticipated weaker performance are lower sheet product shipments and prices (on the order of 5% lower than 2000 for both variables), and somewhat higher unit costs due to lower capacity utilization and higher energy costs. Weirton Steel Corporation is an integrated producer of hot- rolled, cold-rolled, galvanized, and tin-plate steel products headquartered in Weirton, West Virginia. ********* 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 are available at your local bookstore or through Amazon.com. Go to http://bankrupt.com/books/to order any title today. 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 USA, and Beard Group, Inc., Washington, DC USA. Debra Brennan, Yvonne L. Metzler, Aileen Quijano and Peter A. Chapman, Editors. Copyright 2001. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. *** End of Transmission ***