/raid1/www/Hosts/bankrupt/TCR_Public/010208.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 8, 2001, Vol. 5, No. 28
Headlines
ATHEY PRODUCTS: Enters Into Purchase Agreement With Alamo Group
BRIDGE INFORMATION: State Street Closely Monitoring Progress
CORAM HEALTHCARE: Equity Committee Launches Attack on Cerberus
FIRSTCITY FINANCIAL: Reports $18.5 Million Year-End Loss
FRUIT OF THE LOOM: Assumes IBM Computer Equipment Lease
HOME PRODUCTS: Moody's Cuts Senior Subordinated Debt To Caa2
IMPERIAL SUGAR: Assumes Raw Cane Sugar Purchase Contracts
INTEGRATED HEALTH: Seeks Approval Of Office Lease In Florida
KMART CORPORATION: Releases Third Quarter Financial Results
LTV CORP.: Retirees Group Moves For Appointment Of A Committee
MARINER POST-ACUTE: Has Until March 19 to Assume/Reject Leases
NATIONAL AIRLINES: Substantial Reorganization Progress, Co. Says
NETGATEWAY, INC.: Restructures King William Convertible Debenture
NUTRAMAX PRODUCTS: Reorganizes & Emerges from Chapter 11
OUTBOARD MARINE: Bombardier & JTC to Acquire Engine Assets
PENN TRAFFIC: Reports Third Quarter Financial Results
PERSONNEL GROUP: Posts Weak Q4 Results & Seeks Covenant Waiver
PERSONNEL GROUP: Discloses Organizational & Management Changes
PILLOWTEX CORPORATION: Court Okays $150 Million DIP Facility
PLAY BY PLAY: Posts Q3 Loss in Wake of 13% Sales Decline
RELIANCE GROUP: Icahn Extends Tender Offer To Friday
RESPONSE ONCOLOGY: Appeals Nasdaq Delisting
RESPONSE ONCOLOGY: Sells OHG of South Florida Assets
SAFETY-KLEEN: Rejects Contracts With General Motors & ECDC
SAFETY-KLEEN: To Close Waste Facility In New Jersey In May
SMITHWAY MOTOR: Reports Fourth Quarter and Year-End Results
SOUTHERN CALIFORNIA: Bank Lenders Set Feb. 13 Payment Deadline
SUNBEAM CORP.: Files for Bankruptcy Protection in New York
SUNBEAM CORP.: Case Summary & 16 Largest Unsecured Creditors
SUNBEAM CORP.: Paying Obligations to Vendors and Employees
SUNBEAM CORPORATION: Court Grants Approval for $400MM Financing
SUN HEALTHCARE: Cotter Seeks Turnover Of Real Property In CA
TENNECO AUTOMOTIVE: Posts $63 Million Loss in Q4 2000
VENCOR INC.: Wants To Transfer Operations Of Hillhaven Facilities
VLASIC FOODS: Gets Interim Court Approval To Use Cash Collateral
XATA CORPORATION: Won't Make SEC Filing On Time
*********
ATHEY PRODUCTS: Enters Into Purchase Agreement With Alamo Group
---------------------------------------------------------------
Athey Products Corporation (Nasdaq: ATPCQ), a manufacturer of
street sweeping and material handling equipment, filed a
voluntary petition for relief pursuant to Chapter 11 of the
Bankruptcy code with the U. S. Bankruptcy Court for the Eastern
District, Raleigh Division, on December 8, 2000. After
considering various reorganization options, including asset
sales, the Company announced that it had entered into a Purchase
Agreement with Alamo Group (NC) Inc. (a subsidiary of the Alamo
Group Inc., (NYSE: ALG) San Antonio, Texas) for the sale of
substantially all of its assets. The purchase price is $11
million in cash (subject to contractual adjustments as
applicable) and the assumption by Alamo of certain obligations
including existing sale agreements to its customers, warranties
and dealer agreements.
The sale is subject to notice and hearing by the Bankruptcy
Court. The initial hearing is scheduled for February 9, 2001,
with the final hearing on February 20, 2001. Possible overbids
are due on or before February 20. In the event there are
overbids, they will be reviewed and a final determination as to
the purchaser will be made on February 20 with a projected
closing date of March 5, 2001.
Pending closing of the Alamo offer or an overbid offer, the
Company will continue production of its products and operation of
its business as presently being conducted.
BRIDGE INFORMATION: State Street Closely Monitoring Progress
------------------------------------------------------------
State Street Corporation announced that it is closely monitoring
Bridge Information Systems announced proposal to implement
recapitalization by filing a Prepackaged Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code. State
Street, a minority stockholder in Bridge since 1996, owns an
investment carried at $49.5 million.
State Street is also reviewing its options concerning taking a
non-recurring charge equal to all or a portion of the carrying
value of its investment in Bridge. State Street will continue its
evaluation in light of any new developments.
With $6.1 trillion in assets under custody and $711 billion under
management, State Street Corporation is one of the world's
leading specialists in serving institutional investors. Offices
are located in the United States, Canada, Chile, Cayman Islands,
Netherlands Antilles, Ireland, United Kingdom, Netherlands,
France, Belgium, Luxembourg, Switzerland, Germany, Czech
Republic, United Arab Emirates, Russia, People's Republic of
China, Taiwan, South Korea, Japan, Singapore, Australia, and New
Zealand. State Street Corporation's common stock is traded on the
New York Stock Exchange under the symbol STT. For more
information, visit State Street's web site at www.statestreet.com
CORAM HEALTHCARE: Equity Committee Launches Attack on Cerberus
--------------------------------------------------------------
The Equity Committee for Coram Healthcare Corporation
(OTCBB:CRHEQ) asked the U.S. Bankruptcy Court for the District of
Delaware for permission on behalf of Coram to sue Stephen A.
Feinberg, principal of the company's largest debt holder,
Cerberus Partners LLP and related Cerberus entities, as well as
the company's Chairman, President and CEO Daniel D. Crowley, for
breach of fiduciary duties.
This breach, the Equity Committee said, was the result of an
"impermissible conflict of interest" that was created by Feinberg
to induce Crowley to secretly manage Coram for the benefit of
Cerberus and other note holders and to the detriment of its
shareholders. By conspiring to run the company exclusively for
debt holders' benefit, the committee charges that Feinberg caused
"significant monetary damage" to the company and should pay
compensatory and punitive damages to shareholders. The other note
holders who are not named as proposed defendants are Goldman
Sachs Credit Partners LLP and Foothill Capital Corporation.
The Equity Committee said it needed permission from the
bankruptcy court to file a complaint seeking damages on behalf of
Denver-based Coram, one of the nation's largest home infusion
companies. The committee, which is opposing the company's
reorganization plan, said that it would also ask for removal of
Crowley from the Coram board of directors.
Richard F. Levy, Esq., a partner in Chicago-based Altheimer &
Gray, represents the Equity Committee in Coram's bankruptcy case.
The Equity Committee's proposed complaint, which was attached to
the request for permission, charges that the conflicts of
interest arising from the secret compensation agreements between
Crowley and Feinberg had tainted the reorganization process under
the company's Chapter 11 filing submitted August 8, 2000. The
Committee reminds Judge Walrath that she acknowledged this
conflict of interest when the Court declined to approve the
company's reorganization plan in December. As a result of the
secret agreements, the Equity Committee contends that the
company's business and cash flow were seriously damaged in
numerous ways including missed business opportunities, strategic
mismanagement and misallocation of cash to debt holders.
Specifically, the complaint alleges that Crowley and Feinberg
breached their fiduciary duties to Coram because Crowley was in
the pay of Cerberus pursuant to an undisclosed employment
agreement which paid him more than $1 million per year, plus the
opportunity for substantial bonuses. Upon becoming a director of
Coram in May 1998, Feinberg is alleged to have initiated a plan
to divert all of Coram's available cash flow to repayment of an
estimated $250 million in notes held by Cerberus. To implement
this plan, Cerberus, acting through Feinberg, employed Crowley to
work full-time for Cerberus and then persuaded Coram's board to
also hire him, initially as a consultant, and later, as Chairman,
CEO and president.
Upon hiring Crowley in August 1998, Feinberg urged Coram's board,
of which he was a member, to also hire Crowley's consulting
company, Dynamic Health Care Solutions, as a consultant to Coram.
The substantial fees paid by Coram to Dynamic were additional
hidden compensation for Crowley, the complaint said. Further,
Feinberg, acting as a director of Coram and chairman of the
compensation committee, negotiated and executed a $13 million
incentive increase in Crowley's compensation from Coram.
As a result of these arrangements, the complaint asserts that
Crowley used his position as chairman and CEO to run Coram in a
manner designed principally to benefit Cerberus without regard to
any injury caused to Coram shareholders. Among the actions that
Crowley and Feinberg, acting together, took that were harmful to
Coram:
- Adopting a business strategy that focused on liquidation
of assets and reduction of debt even when such actions were
adverse to the interests of Coram. Weeks before Coram's chapter
11 filing, for example, they caused the company to make
substantial cash interest payments to Cerberus and other Note
holders that were not required to be made.
- Failure to take appropriate steps to preserve the
stockholder equity of Coram so that it could comply with federal
health care regulations regarding Medicare and Medicaid payments.
- Sale of Coram Prescription Services, one of the company's
operating units, at a price far below the value estimated by
Coram's investment banker, Deutsche Bank Alex Brown.
- Failure to explore opportunities for business
combinations, capital infusions and strategies to grow the
company
The complaint further alleges that Coram's decision to file for
bankruptcy was part of a deliberate scheme to wipe-out the public
equity holders and convert Coram into a privately-held company in
order to remain in compliance with federal health care
regulations. These regulations, commonly known as "Stark II",
make it unlawful for a physician to refer patients for certain
designated health services reimbursable by Medicare and Medicaid
to an entity with which the physician has a financial
relationship. "Stark II" includes an exception for a physician's
ownership of publicly traded securities if, among other things,
the company has stockholders equity exceeding $75 million as of
the end of the most recent fiscal year. Early last year, it
became evident to Crowley that Coram, given its deteriorating
finances, would no longer qualify for this exception as of the
end of 2000. To deal with the problem, and to secure the future
value of Coram for Cerberus and the two other note holders,
Goldman Sachs Credit Partners and Foothill Capital Corporation,
Crowley filed for bankruptcy despite the fact that the company
was far from insolvent. The proposed plan of reorganization would
have wiped out the public shareholders equity, allowing Coram to
emerge from Chapter 11 with the note holders in control of a
private company. This would solve the "Stark II" problem because
no referring physicians would be shareholders of Coram and thus
no physician referrals would contravene Coram's "Stark II"
obligations.
Background
Coram filed a voluntary petitions with the federal bankruptcy
court under Chapter 11 last August, submitting a reorganization
plan that would have given all of its equity to its debt holders.
In October, the U.S. Trustee for the bankruptcy court appointed
the Equity Committee to represent the interests of shareholders
in the Chapter 11 petition. In December, the court said that it
would not confirm the company's plan of reorganization because
there was a conflict of interest arising from the fact that
Crowley was in the pay of Cerberus pursuant to the aforementioned
concealed employment agreement.
Cerberus is a limited partnership whose business includes large
investments in high-risk, high yield debt instruments of troubled
companies. Cerberus is the holder of" "Series A" and "Series B"
Notes issued by Coram, which are by far the company's largest
obligations. Stephen A. Feinberg is the managing director of
Cerberus Associates L.L.C., which is the general partner of the
defendant and he was a member of Coram's board of directors from
the summer of 1998 until July 24, 2000.
* * *
Additional details can be found in the January 8, 2001, edition
of the Troubled Company Reporter.
FIRSTCITY FINANCIAL: Reports $18.5 Million Year-End Loss
--------------------------------------------------------
FirstCity Financial Corporation (Nasdaq: FCFC) announced a loss
for the quarter ended December 31, 2000 of $511,000. After
accrued dividends on the Company's preferred stock, the net loss
to common shareholders was $1.1 million or $.14 per share on a
diluted basis. For the full year 2000, the Company reported a net
loss to common shareholders of $18.5 million or $2.21 per share
on a diluted basis.
Portfolio Asset Acquisition
Acquisitions for the quarter were comprised of four portfolios,
two of which were in France for $41 million, one in Mexico for
$49 million and one in the United States at a cost of $10 million
for a total purchase price of $100 million. FirstCity invested
approximately $9.4 million in these portfolios for the quarter
which brings the total invested capital for the year 2000 to
$22.1 million, which is in line with the target of $22.5 million
as stated in the company's third quarter press release.
In 2000 FirstCity completed its largest acquisition year in the
history of the Company, purchasing $394 million of portfolio
assets. While FirstCity was constrained as to the amount of
equity it could invest in these portfolios, in certain markets
FirstCity was able to obtain servicing contracts which provide
for incentive fees to be paid to FirstCity once a target return
threshold to the investors has been achieved. Current estimates
indicate that these contracts should generate significant
additional fee revenue over the next three to five years.
Not included in year 2000 acquisitions was a $66.3 million
domestic portfolio, in which FirstCity invested $4.1 million in
equity. The portfolio that was originally contemplated to close
prior to year-end was closed in January 2001.
The prospects for investment in distressed assets in 2001
continue to be robust. The recent increase in non-performing
assets witnessed in the domestic banking sector has resulted in a
dramatic increase in the availability of product. Additionally,
we continue to see increasing availability of distressed assets
in France and Mexico.
During January 2001 FirstCity increased its line of credit with
Cargill to $30 million from $17 million which will provide
liquidity for additional equity investments. To complement these
equity investments FirstCity will continue to utilize its
established acquisition and servicing franchise to attract new
capital and generate incentive based servicing fees.
31% Interest in Drive Financial
During the quarter Drive Financial Services LP completed a
securitization of $100 million of face value of automobile
receivables. FirstCity's portion of the quarterly earnings from
this entity was $1.8 million. Earnings from this entity correlate
closely with the timing, size and execution of securitizations of
originated automobile receivables. Therefore earnings from this
entity on a quarterly basis will fluctuate. Management is
encouraged with the results to date.
Dividends on Preferred Stock
As discussed in previous releases, Term Loan B, which resulted
from the corporate debt restructure completed in August 2000
restricts the payment of dividends on preferred shares until it
is repaid in full. Company management is currently evaluating
alternatives to repay Term Loan B prior to August 31, 2001 to
terminate the option to obtain warrants to acquire the 1,975,000
shares of the Company's common stock. This would allow the
Company to utilize these shares in a transaction that would
maximize long-term shareholder value. Currently, FirstCity has
approximately 1.2 million preferred shares outstanding with
accrued and unpaid dividends of approximately $3.9 million or
$3.15 per share.
FRUIT OF THE LOOM: Assumes IBM Computer Equipment Lease
-------------------------------------------------------
Fruit of the Loom, Ltd. obtained authority from Judge Walsh to
assume certain computer lease agreements with International
Business Machines. The contractual parties are Union Underwear
and IBM Credit Corporation.
There are two separate agreements. First, under the master lease
agreement, Union Underwear leases computer equipment that is
installed in Fruit of the Loom facilities. Second, in the
customer agreement, IBM and Fruit of the Loom enter into
transactions that include equipment purchases, program licenses
and the provision of various services. Fruit of the Loom states
that both agreements are essential to its ongoing operation of
business.
IBM Credit Corp. and IBM have filed proofs of claims against
Fruit of the Loom for $4,587,356.79, which relates to previous
agreements. In addition, Fruit of the Loom has scheduled IBM
claims aggregating $1,252,162.38. Fruit of the Loom has post-
petition outstanding invoices for the use of IBM equipment that
has been billed and may not be yet due but which it intends to
pay. IBM has asserted that certain invoices contain unpaid post-
petition amounts, which, according to Fruit of the Loom, does not
match its books. Fruit of the Loom and IBM have agreed to proceed
promptly to consensually resolve all issues with respect to the
disputed invoices.
Ms. Stickles told the Court that assumption of the agreements is
a sound exercise of business judgment. Performance of the
agreements will benefit Fruit of the Loom, its estate and
creditors.
In accordance with section 365(b), Rabun will pay IBM $378,664.45
to cure defaults under the agreement.
In consideration for Fruit of the Loom's payment of the cure
amount and assumption of the agreements, the claims will be
disallowed and IBM waives any and all prepetition claims in
excess of the cure amount, other than the agreement arrearages
and the disputed invoices. The proofs of claims numbers
disallowed are 00150, 00153, 00156 and 00175.
Michael Luskin, Esq., at Luskin, Stern & Misler, serves as
counsel to IBM. (Fruit of the Loom Bankruptcy News, Issue No. 21;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
HOME PRODUCTS: Moody's Cuts Senior Subordinated Debt To Caa2
------------------------------------------------------------
Moody's Investors Service has lowered the rating of Home Products
International, Inc.'s ("HPI") $125 million senior subordinated
notes, due 2008, to Caa2 from B3. It also downgraded Home
Products' ratings as follows:
* The $125.5 million secured credit facility rating from B1
to B2, which includes an $85 million revolving credit due
2003 and $40.5 million remaining on an amortizing term
loan due 2004
* The company's senior implied rating from B1 to B2
* The senior unsecured issuer rating from B2 to B3
The outlook is negative.
According to Moody's, the ratings reflect HPI's continued high
leverage and limited financial flexibility resulting from lower
operating performance and cashflow available to support the debt
levels resulting from the company's acquisitions during the
period 1996 -1999.
Moody's relates that HPI, for the nine months ended 9/23/2000,
wasn't able to generate enough cash flow to cover its debt
service (principal and interest) requirements and CAPEX because
its gross profit margin was strained by higher resin costs (30%
increase during 2000), coupled with lower selling prices to
maintain market share and a shift in sales to lower margin
products. Accordingly, the company reported nine-month EBITDA of
$26.8 million, which did not cover interest of $16.4 million,
term loan principal payments of $3.8 million and CAPEX of $11.1
million. The company's revolving line of credit, which continues
to have availability, was utilized to cover the $4.5 million
shortfall, Moody's says.
Based in Chicago, Illinois, Home Products International, Inc.
manufactures and markets diversified houseware products that
include storage and laundry products sold under the HOMZ brand.
IMPERIAL SUGAR: Assumes Raw Cane Sugar Purchase Contracts
---------------------------------------------------------
As of the Petition Date, Imperial Sugar Company were parties to
certain executory contracts for the purchase of raw cane sugar.
By this Motion, the Debtors sought Judge Robinson's authority to
assume these sugar contracts, thereby ensuring a continuous
postpetition supply of raw cane sugar:
Supplier Contract
-------- --------
Amerop Sugar Corp. March 20, 2000 - Jan 2001
701 Brickell Avenue
Suite 2200
Miami, Florida 33131
Louis Dreyfus July 12, 2000 - January 2001
187 Danbury Road Oct 20, 2000 - September 2001
Wilton, Connecticut 06897 December 15, 2000 - May 2001
Florida Sugar Marketing & October 5, 2000 - July 2001
Terminal Association
2655 North Ocean Drive
Ste. 201
Singer Island
Riviera Beach, Florida 33404
Kraft Foods, Inc. December 19,2000-January 2001
One Kraft Court
Glenview, Illinois 60025
Man Sugar Inc., E.D.&F. March 18,1999 -September 2001
2 World Financial Center September 14,2000 -Sept. 2001
27th Floor November 14, 2000 -Sept. 2001
New York, New York 10281
Talisman November 1,1999 -October 2002
2655 North Ocean Drive February 11,1986 - Oct. 2002
Suite 201 - Singer Island
Riviera Beach, Florida 33404
United States Sugar Corp. November 8,2000 -October 2001
P. O. Box 1207 Various - October 2001
Clewiston, Florida 33440 March 30, 1961 - October 2001
The Debtors use the raw cane sugar purchased under these
contracts to produce refined sugar. These contracts generally
provide for the delivery of either multiple cargoes of raw cane
sugar over a specified period or for a specified percentage of a
seller's production of raw cane sugar over one or more crop
years. Prices are typically based on futures markets, but some of
the contracts utilize fixed prices. These contracts also provide
for a premium, if the quality of the raw cane sugar is above a
specified grade, or a discount, if the quality is below a
specified grade. For most of these contracts, the seller pays
freight, insurance charges, and other costs of shipping.
After consideration of this Motion, Judge Robinson agreed with
the Debtors that these contracts were important to the bankruptcy
estate and approved the Debtors' proposed assumption of these
agreements. (Imperial Sugar Bankruptcy News, Issue No. 2;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
INTEGRATED HEALTH: Seeks Approval Of Office Lease In Florida
------------------------------------------------------------
Integrated Health Services, Inc., sought the Court's approval of
a lease between Rotech Oxygen and Medical Equipment, Inc.
(Tenant) and Douglas B. Cohen (Landlord) related to premises
located at 3640 West Cypress Street, Tampa, Florida to house
Rotech's corporate offices and its durable medical equipment
warehouse.
The proposed lease is for a term of 5 years at monthly rent of
$3,500 with yearly increments culminating at yearly rent of
$4,000 for the fifth year.
The Debtors told the Judge that Rotech investigated numerous
properties and have determined that the lease rent is
commensurate with or below market rate for property similar to
the premises. Simply put, the Debtors believe that the lease
represents an exercise of sound business judgement. In addition,
the lease terms are the product of vigorous, arm's length,
good faith negotiations among sophisticated parties and are fair,
adequate and reasonable, the Debtors submit.
The situation related to the Rotech office prior to the subject
about the lease is not specified in the motion, presumably
because the Debtors think this is not necessary. Previously the
Debtors sought and obtained the Court's approval for an amendment
for the lease between Aetna Life Insurance Company (the Landlord)
and Rotech related to premises for the Rotech Headquarters in
Florida. It is not clear whether the two motions refer to the
same matter. (Integrated Health Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
KMART CORPORATION: Releases Third Quarter Financial Results
-----------------------------------------------------------
Kmart Corporation's sales increased 3.0% to $8,199,000,000 for
the 13 weeks ended October 25, 2000 from $7,962,000,000 in the
same period of 1999. Divisions showing strength during the third
quarter included prescription drugs, cosmetics/fragrances, home
fashions and housewares, jewelry, sporting goods and consumables.
The company opened 3 stores and closed 5 during the third
quarter. Net loss for the quarter ended October 25, 2000 was $67
million as compared to a net gain of $27 million for the same
period of 1999.
Sales increased 2.3% for the 39 weeks ended October 25, 2000 to
$25,392,000,000. For the same period in 1999 sales were
$24,820,000,000. Divisions showing strength on a year-to-date
basis included prescription drugs, kidswear, home electronics,
housewares and consumables. Kmart opened 10 stores and closed 18
during the 39 week period ended October 25, 2000. Net loss for
the 39-week period ended October 25, 2000 was $493 million as
compared to a $9 million net loss for the same period of 1999.
As a result of various store closings the company expects
earnings before income taxes to benefit by approximately $10
million annually. Specifically, these stores had combined annual
revenues of $770 million in fiscal year 1999, the loss of which
will be offset by expense savings of $780 million, comprised of
costs of sales, buying and occupancy expenses, selling, general
and administrative expenses and interest expense.
LTV CORP.: Retirees Group Moves For Appointment Of A Committee
--------------------------------------------------------------
The Republic Steel Salaried Retirees Association, an association
of some 8,000 retirees and their spouses, have requested that
Judge Bodoh order the appointment of a committee of retired
employees to act as the designated and authorized representative
for all retirees receiving benefits not conferred under a
collective bargaining agreement. The Retirees Association,
through their counsel Charles T. Rieho and James D. Wilson of the
Cleveland Ohio firm of Walter & Haerfield LLP, cited authority to
Judge Bodoh in support of their argument that appointment of such
a Committee is appropriate where modifications to retirees
benefits may be proposed by The LTV Corporation, the debtor, or
where a need would be fulfilled by such a Committee. In point of
fact, counsel states, the procedure in the Bankruptcy Code for
temporary protection of retirees' rights, good-faith
negotiations, mechanisms for proposals by the debtors for
modifications to retirees' benefits, and the possibility for
court interventions and ultimate decision by the court by way of
confirmation process upon invocation of that procedure by either
side was enacted as a direct result of the previous LTV
bankruptcy filing.
The Retirees Association produced a letter dated January 11,
2001, authored and signed by LTV General Manager of Human
Resources Frank E. Filipovitz, in which the Debtor expressly
references the cessation of payment of termination allowance
benefits, including medical coverage.
The Retirees Association believes this an indication that the
Debtor has undertaken certain specific actions to modify medical
and other benefits programs in connection with certain LTV
salaried retirees. (LTV Bankruptcy News, Issue No. 3; Bankruptcy
Creditors' Service, Inc., 609/392-00900)
MARINER POST-ACUTE: Has Until March 19 to Assume/Reject Leases
--------------------------------------------------------------
With respect to certain of the leases for which the authorized
deadline for assumption or rejection was previously fixed at
January 15, 2001, Mariner Post-Acute Network, Inc. sought and
obtained the Court's authority for an extension of the period
within which they must assume or reject the leases until March
19, 2001, or until such later date as the Court permits upon
subsequent motion.
The leases affected relate to:
Property Address Landlord Tenant
---------------- -------- ------
Asheboro Health & Rehab, E.C. & Living Ctrs.
230 East Presnell St., Ruby P. Powell - Southeast, Inc.
Asheboro, NC 27204
Brian Center Inn, Heritage Inn of Brian Center Health &
2255 Fredricka Road, St. Simon's, Inc. Retirement/St Simon's
St. Simon's, GA 31522
Brian Ctr.-Waynesville Ms. Pearl Hayes Living Ctrs.
700 Wall Street, - Southeast, Inc.
Waynesville, NC
East Valley HC Center LTC Properties GCI East Valley
420 West 10th Place, Medical and Rehab.
Mesa, AZ 85201 Center, Inc.
Hayward Hills Health Robert A. GranCare, Inc.
Care Center, Gilmartin &
1768 B Street, William H. Trevor
Hayward, CA 94541 et. al.
Hearthstone of Mesa Unispec Dev. Corp.
215 South Power Road,
Mesa, AZ 85206
The Debtors told Judge Walrath that they are either continuing to
negotiate with the lessors to such Unexpired Leases, or have made
proposals to the lessors and have not yet received a response.
Therefore, they are unable to make reasoned final decisions as to
whether to assume or reject any or all of the Unexpired Leases
and complete the restructuring of these leases before the
previous deadline of January 15, 2001.
However, because the Unexpired Leases could provide value to the
MPAN estate, the Debtors do not want to forfeit their right to
assume any of the Unexpired Leases as a result of the "deemed
rejected" provision of section 365(d)(4) of the Bankruptcy Code,
or be compelled to assume all of the leases prematurely thus
imposing of potentially substantial administrative expenses on
their estates.
Therefore, the Debtors believe that the extension is necessary is
well justified. (Mariner Bankruptcy News, Issue No. 12;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
NATIONAL AIRLINES: Substantial Reorganization Progress, Co. Says
----------------------------------------------------------------
In U.S. Bankruptcy Court, representatives of National Airlines
Inc. stated that substantial progress has been made toward an
agreement for financing from a group of investors with aerospace
interests.
Michael J. Conway, chairman, president and chief executive
officer for National, said: "We are very pleased with the
progress that has been made towards reaching an agreement with
entities with whom we have had long-standing relationships in our
industry. Along with the continued support we have received from
all of our aircraft lessors and other key vendors, we are very
optimistic about the company's future."
He added, "Our optimism is further founded by the high esprit de
corps of our dedicated work force, and the support of our loyal
customers and travel-agent partners that have resulted in our
recent record bookings."
National has continued to operate its scheduled service
uninterrupted since its reorganization filing on Dec. 6, 2000,
and recently added its fifth daily round trip between New York
JFK and Las Vegas. Conway noted that the airline has operated
3,162 of its scheduled 3,236 flights since it filed for
reorganization protection, a 97.7 percent flight-completion
factor.
"While not quite up to our enviable standard of 99 percent, we
experienced a number of cancellations during this period due to
winter storms that affected all airlines," Conway noted. The CEO
said that the airline would not make any further statements about
the identities of potential investors or proposed terms until
definitive agreements are reached.
NETGATEWAY, INC.: Restructures King William Convertible Debenture
-----------------------------------------------------------------
Netgateway, Inc. (OTC Bulletin Board: NGWY) announced it has
reached an agreement with King William, LLC to restructure the
approximately $2.5 million convertible debenture held by King
William. Under the terms of the agreement the note is scheduled
to be repaid in installments with a 15% prepayment premium over
the remainder of calendar year 2001.
Said newly appointed Netgateway Chairman and Chief Executive
Officer, Don Danks, "Achieving this agreement with King William
has been one of my highest priority objectives since being
appointed CEO. Shareholders faced the risk of severe dilution
under the original terms of the debenture and a related Private
Equity Credit Agreement as King William had the right to acquire
millions of Netgateway shares at a very low price. With our new
agreement, we are now obligated to repay only the principal and
interest with a 15% premium and the Private Equity Credit
Agreement is terminated. Clearly, this eliminates the uncertainty
caused by the possibility of an almost unlimited number of shares
of Netgateway stock being issued and hitting the market. This is
a very good transaction for our shareholders."
Under the terms of the restructuring agreement, Netgateway has
allowed King William to retain the right to convert any or all
portion of the outstanding debt to equity, but only after the
stock has traded at or above $3.00 for twenty consecutive trading
days or if Netgateway does not make a required payment of
principal. As additional consideration, warrants already earned
by King William were repriced at $.25 per share and King William
was issued a warrant for an additional 269,000 shares of common
stock at $.25 per share. No additional payment will be made or
warrants will be issued in connection with the termination of the
Private Equity Line.
Danks added, "We anticipate being able to make the payments to
King William to retire this debt through a combination of
internally generated cash flow and additional equity financing at
such a time as the value of the company's stock is more in line
with what management believes to be the value of the core
businesses of Netgateway. With this agreement completed, we can
now focus our efforts on building revenues, becoming profitable,
and broadening the market for the Company's stock."
About Netgateway
Netgateway enables companies of all sizes to extend their
business to the Internet quickly, effectively -- with minimal
investment. Netgateway develops, hosts, licenses, and supports a
wide range of built-to-order B2B, B2E, and B2C applications
including enterprise portals, e-Retail, e-Procurement, and e-
Marketplace solutions. Netgateway (www.netgateway.com) is located
at 754 Technology Ave., Orem, UT 84097.
NUTRAMAX PRODUCTS: Reorganizes & Emerges from Chapter 11
--------------------------------------------------------
NutraMax Products, Inc. announced that it and its subsidiaries
have successfully emerged from Chapter 11 reorganization. The
company had filed to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on May 2, 2000.
The company also announced that it has entered into a new $40
million credit facility with CIT Group/Business Credit, Inc., its
senior debtor in possession lender. The credit facility will
allow the company to complete certain transactions contemplated
within the plan and to fund the ongoing operations of the
company.
The company's Chapter 11 plan of reorganization, which received
overwhelming approval of all classes of creditors and equity
holders and was confirmed by the bankruptcy court on November 7,
2000, has now become effective. In connection with its emergence
from Chapter 11, the company has concluded a rights offering
whereby existing stockholders were permitted to purchase new
equity in the reorganized NutraMax. The proceeds of the rights
offering, together with the new common stock that was not
subscribed for under the rights offering, were used to satisfy
the company's $18 million junior debtor in possession facility.
The newly reorganized NutraMax will be a non- reporting company,
and accordingly, will not be listed on a stock exchange for
public trading of the company's securities.
Richard G. Glass, NutraMax Chief Executive Officer said, "We are
truly pleased to reach this successful conclusion of our
reorganization process. We have built a very solid foundation for
a healthy and prosperous NutraMax by significantly reducing our
debt and strengthening our balance sheet. We are implementing
many strategies at this time, allowing NutraMax to secure its
position as a leading supplier of high quality consumer
products."
Glass added, "We appreciate the great support that we received
from all of our key stakeholder groups. It would have been
impossible for us to accomplish what we have in the past 9 months
if we had not had such a universal commitment from our employees,
customers, suppliers, and shareholders. We look forward to a
bright future with the continued support of these most valued
business partners.
NutraMax Products, Inc. is a leading manufacturer and marketer of
consumer health care products with distribution in over 75,000
retail, institutional, and industrial outlets in the U. S. and
throughout the world. The company offers a broad range of
products including: Cough & Cold Products (cough drops and
lozenges), First Aid Products (adhesive strips, tape, gauze and
kits), Personal Care Products (douche, enema, oral electrolyte
maintenance solution, and baby bottle liners), and Oral Hygiene
Products (dental floss and toothbrushes). NutraMax products are
sold under store brands, by major consumer packaged goods
companies through contract manufacturing services, and under
various NutraMax brands including, American White Cross, Powers,
Sweet 'n Fresh, Pure & Gentle, Pro Dental, and NutraMax.
OUTBOARD MARINE: Bombardier & JTC to Acquire Engine Assets
----------------------------------------------------------
Bombardier (TSE:BBD.A.) (TSE:BBD.B.) announced that its
subsidiary Bombardier Motor Corporation of America and JTC
Acquisition LLC have been selected the highest and otherwise best
bidders for the assets of Outboard Marine Corporation (OMC) and
certain of its affiliates at an auction administered under an
order of the Bankruptcy Court of Illinois.
In December 2000, OMC filed for Chapter 11 bankruptcy protection,
suspended operations and initiated an auction process to
liquidate its assets.
The joint bid by Bombardier and JTC is for a consideration of
US$95 million. The sale is subject to bankruptcy court approval
at a hearing to be held on Thursday February 8, 2001 and
regulatory approval. Upon closing, Bombardier Motor Corporation
of America will receive specified engine assets and JTC
Acquisiton LLC will receive the boat assets. The engine assets
include the Evinrude and Johnson outboard marine engine brands as
well as the FICHT fuel injection technology.
JTC Acquisiton LLC is an affiliate of Genmar Industries.
Bombardier Inc., a diversified manufacturing and service company,
is a world leading manufacturer of business jets, regional
aircraft, rail transportation equipment and motorized
recreational products. It is also a provider of financial
services and asset management. The Corporation employs 56,000
people in 12 countries in North America, Europe and Asia, and
more than 90% of its revenues are generated outside Canada.
PENN TRAFFIC: Reports Third Quarter Financial Results
-----------------------------------------------------
Penn Traffic Company emerged from Chapter 11 proceedings June 29,
1999.
Recent financial information reveals total revenues for the third
quarter of fiscal 2001 increased to $611.3 million from $610.6
million in the third quarter of fiscal 2000. The increase in
revenues for the third quarter of fiscal 2001 is primarily
attributable to the commencement of the company's operation of
nine New England stores, partially offset by the closure of
certain stores and a decline in wholesale revenues. Net losses
for the two periods were $28.3 million in the third quarter of
fiscal 2001; $27.1 million in the third quarter of fiscal 2000.
Total revenues for the 39-week period ended October 28, 2000
decreased to $1.83 billion from $1.86 billion for the 39-week
period ended October 30, 1999. The company indicates that the
decrease in revenues for the 39-week period ended October 28,
2000 is primarily attributable to (1) a reduction in the number
of stores it operated during the 39-week period ended October 28,
2000 as compared to the 39-week period ended October 30, 1999
resulting from the company's decision to close or sell certain
stores as part of the its store rationalization program (during
the fiscal year ended January 29, 2000, Penn Traffic sold or
closed 21 stores in connection with this program; 19 of these
stores were sold or closed in the 13-week period ended May 1,
1999) and (2) a decline in wholesale revenues. These decreases
were partially offset by the increase in same stores sales for
the 39-week period ended October 28, 2000 and the addition of the
nine New England stores in the Third Quarter Fiscal 2001. Net
loss for the 39-week period ended October 28, 2000 was $78.6
million compared to the net income of $433.8 million for the 39-
week period ended October 30, 1999.
PERSONNEL GROUP: Posts Weak Q4 Results & Seeks Covenant Waiver
--------------------------------------------------------------
Personnel Group of America, Inc. (NYSE: PGA), a leading
information technology and professional staffing services
company, announced its results for the fourth quarter and year
ended December 31, 2000.
For the fourth quarter, total revenues were $218.2 million
compared to $220.8 million in the fourth quarter last year. PGA's
Information Technology (IT) Services practice contributed $133.1
million, or 61 percent, of total revenues during the quarter, and
the Company's Commercial Staffing business unit added $85.1
million, or 39 percent, of total revenues. Exclusive of non-
recurring charges, the Company lost $2.8 million, or ($0.11) per
share, for the quarter, versus net income of $6.4 million, or
$0.23 per share, last year. After the non-recurring charges, PGA
reported a net loss of $13.9 million, or ($0.54) per share, for
the fourth quarter.
For the full year, revenues decreased to $882.0 million from
$918.4 million in 1999. Exclusive of non-recurring charges, net
income decreased to $9.8 million, or $0.39 per share, from $29.8
million, or $0.99 per share, last year. As a result of the non-
recurring charges, PGA reported a net loss of $2.2 million, or
($0.09) per share, for the year 2000.
As previously announced, the Company recorded a non-recurring
impairment charge of $11.5 million ($11.1 million after tax), or
($0.43) per share, related primarily to CareerShop.com
intangibles and other assets. Cash earnings per share were not
impacted by this charge.
"PGA's fourth quarter earnings were lower than expected," said
Larry L. Enterline, PGA's Chief Executive Officer. "The IT
staffing sector remained weak all year, and our Commercial
Staffing business, especially the permanent placement operations,
weakened in the fourth quarter amid signs of an economic slowdown
in a number of our markets. As we move into 2001, we expect these
trends to continue, at least through the first half of the year.
In addition to the CareerShop.com non-recurring charges, we also
recorded other unusual charges that totaled approximately $6.7
million ($4.2 million after tax), or ($0.16) per share, in the
fourth quarter. We believed it was appropriate to strengthen our
balance sheet as we move into these less certain economic times."
The Company reported these unusual charges related primarily to a
tax dispute involving one of its operations, termination and
other payroll related costs associated with billable consultant
reductions in the Company's IT practice and certain other early
retirement benefits, higher than expected receivable charge-offs
and increases in its reserves for uncollectible accounts and
write-offs due to the replacement of certain equipment. Exclusive
of the non-recurring and other unusual charges, net income was
$1.4 million, or $0.05 per share in the fourth quarter. Cash
earnings per share (net income before amortization expense, non-
recurring and other unusual charges) were $0.18 and $0.96 for the
fourth quarter and the year, respectively."
"PGA is a fundamentally strong company operating in services
sectors where there is sustainable, long-term demand," Enterline
continued. "Recent financial performance in a difficult
environment and our debt levels have combined to limit our
flexibility. Accordingly, we will be focusing on three priorities
in 2001. First, we are going to focus on our field personnel and
our operations and eliminate distractions that could negatively
impact operating performance. Due to economic uncertainties in
2001, we have implemented a number of cost containment
initiatives that will enable us to hit our bottom line targets
and reverse the downward earnings trend we have experienced for
the last five quarters. Consequently, further discussion of a
major rebranding of our operations will be put on hold for the
time being."
"Second, we are going to focus on our revolving credit agreement
with our bank syndicate," said Enterline. "PGA has done an
outstanding job of reducing its revolving credit balance since
its peak in June 2000, and we are optimistic that we can achieve
further reductions in 2001, especially as our final earn-out
commitments are extinguished. Equally as important, however, we
intend to begin the process of extending or refinancing the
revolving credit facility immediately, so that we can have this
issue resolved before the credit facility becomes a current
liability this summer."
"Third," said Enterline, "we are going to focus on restoring
PGA's credibility with Wall Street and our shareholders. To do
that in this uncertain environment, we are going to be cautious
in our guidance for 2001 and conservative in our financial
management, so that we deliver on our financial commitments and
reestablish our track record."
"As a result of the non-recurring and other unusual charges, the
lower earnings and the earn-out payments made during 2000, PGA
violated certain of the financial covenants in its bank revolving
credit agreement for the fourth quarter," said PGA Chief
Financial Officer James C. Hunt. "Management has requested a
waiver of these covenant violations from PGA's banks, and we are
in discussions with our banks regarding appropriate terms.
Although we have no assurance that waivers will be granted, or
what the terms might be, management believes that PGA will obtain
appropriate waivers and that such waivers will require, among
other things, an increase in the interest rates payable under the
revolving credit facility."
"Related to the tax dispute, PGA has been taking advantage of a
tax credit program since 1995," Hunt said. "As the result of a
recent meeting with applicable tax authorities, the Company
believes that the tax authorities are now taking a position that
will result in an adverse finding regarding tax credits
previously claimed. Management believes that these credits are
valid and we intend to vigorously appeal any adverse finding. We
did, however, record a charge in the fourth quarter, since we are
no longer able to predict with reasonable certainty the amount
and the timing of the collection of such credits."
The Company continued its debt reduction initiatives in the
fourth quarter and reduced its outstanding revolving credit
balance by $9.0 million from $159.0 million at the end of the
third quarter to $150.0 million at the end of December. Days
sales outstanding (DSO) at the end of the fourth quarter were 45
days in Commercial Staffing, 60 days in IT and 54 days overall.
DSO at the end of 1999 were 46 days in Commercial Staffing, 55
days in IT and 51 days overall.
About PGA
Personnel Group of America, Inc. is a nationwide provider of
information technology consulting and custom software development
services; high-end clerical, accounting and other specialty
professional staffing services; and technology systems for human
capital management. The Company operates through a network of
proprietary brand names in strategic markets throughout the
United States.
PERSONNEL GROUP: Discloses Organizational & Management Changes
--------------------------------------------------------------
Personnel Group of America, Inc. announced a number of
organizational and management changes, including the appointment
of Mike Barker as president of PGA's IT Services practice and Jim
McArdle as president of CareerShop, PGA's Technology Systems
Group. Larry Enterline will serve, on an interim basis, as
president of PGA's Commercial Staffing business unit. PGA also
announced the appointment of Jim Hunt as the Company's chief
financial officer and treasurer, Ken Bramlett as general counsel
and Jim Schwab as the new vice president of marketing. Tom
Stafford will continue in his current role as vice president of
human resources.
Enterline continued, "PGA has a talented management team, and I
am pleased that they have remained intact through this
transitional period. Consistent with our renewed focus on
operations, we have reorganized our IT and Commercial Staffing
operations into distinct business units and made adjustments in
our management structure to align new roles and responsibilities
with our top priorities. I'm confident that this team will
provide solid leadership in the future."
PILLOWTEX CORPORATION: Court Okays $150 Million DIP Facility
------------------------------------------------------------
Judge Sue L. Robinson entered a final order authorizing Pillowtex
Corporation to enter into postpetition financing agreements with
Bank of America, N.A., as Administrative Agent for a group of
several lenders and the letter of credit issuing bank, and obtain
postpetition financing, and has further authorized the provision
of adequate protection and the granting of liens, priming liens,
mortgages, security interests and superpriority liens to secure
that financing to Bank of America as agent for the postpetition
lenders, upon the amounts, terms and conditions set forth in the
Motion.
The Debtors judicially acknowledged that the prepetition liens
constitute valid, binding, enforceable and perfected first-
priority liens, subject only to liens descried in or otherwise
permitted by the prepetition credit agreements, and are not
subject to avoidance or subordination, and stipulate that no
offsets, defenses or counterclaims to such obligations exist.
Substantially all of the Debtors' prepetition assets are subject
to these liens and obligations.
The Judge authorized the Debtors to enter into any non-material
modifications and amendments to the postpetition financing
documents without further Order as may be agreed upon in writing
by the Debtors, the Postpetition Agents, and the Postpetition
Lenders, but expressly excepted from this any modification of the
amount, rate or maturity of these loans. (Pillowtex Bankruptcy
News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
PLAY BY PLAY: Posts Q3 Loss in Wake of 13% Sales Decline
--------------------------------------------------------
Play By Play Toys & Novelties Inc.'s net sales for the three
months ended October 31, 2000 were $41.6 million, a decrease of
13.4%, or $6.4 million, from $48.0 million in the comparable
period in fiscal 2000. The decrease in net sales was primarily
attributable, according to the company, to a decrease in the
company's worldwide retail net sales of 45.5%, or $7.4 million,
to $8.8 million, offset by an increase in the company's worldwide
amusement net sales of 2.8%, or $868,000, to $32.1 million over
the comparable period in fiscal 2000.
The company showed a net loss of $1.01 million in the three-month
period ended October 31, 2000, as compared to a net gain of $1.15
million in the same period of 1999.
RELIANCE GROUP: Icahn Extends Tender Offer To Friday
----------------------------------------------------
On December 22, 2000, High River Limited Partnership, an
affiliate of Carl C. Icahn, commenced an Offer for up to $40
million in principal amount of the outstanding 9% senior bonds
issued by Reliance Group Holdings, Inc. for $170 per $1,000 in
principle amount. The terms of the Offer are set forth in
Purchaser's Offer to Purchase and Supplement No. 1 thereto and in
the related Letter of Transmittal. The Offer was due to expire at
5:00 p.m., New York City Time, on February 6, 2001. Purchaser has
extended the Offer. The Offer, Withdrawal Rights and Proration
Period will now expire at 5:00 p.m., New York City Time, on
February 9, 2001, unless the Offer is extended to a later date
and time. As of the end of the business day on February 6, 2001,
approximately $21.7 million in principle amount of 9% Bonds
issued by Reliance were deposited pursuant to the Offer with
Wilmington Trust Company, the depositary for the Offer, and not
withdrawn.
RESPONSE ONCOLOGY: Appeals Nasdaq Delisting
-------------------------------------------
Response Oncology, Inc. (Nasdaq: ROIX) announced that it has
requested a hearing before the Nasdaq Listing Qualifications
Panel to appeal the Nasdaq Stock Market Staff's determination to
delist the Company's common stock for failure to comply with
Marketplace Rule 4450 (a)(5) which requires the Company to
maintain a minimum bid price of $1.00. The hearing will be held
on Friday, March 9, 2001. There can be no assurance that the
Panel will grant the Company's request for continued listing.
Response Oncology, Inc. is a comprehensive cancer management
company. The Company provides advanced cancer treatment services
through outpatient facilities known as IMPACT Centers under the
direction of practicing oncologists; compounds and dispenses
pharmaceuticals to certain medical oncology practices for a fee;
owns the assets of and manages the nonmedical aspects of oncology
practices; and conducts clinical research on behalf of
pharmaceutical manufacturers. Approximately 300 medical
oncologists are affiliated with the Company through these
programs.
RESPONSE ONCOLOGY: Sells OHG of South Florida Assets
----------------------------------------------------
Response Oncology, Inc. announced that it has sold the assets of
Oncology/Hematology Group of South Florida (OHG) to the existing
physician group. Concurrent with the sale of assets, the
Physician Practice Management (PPM) contract was terminated, and
the parties signed a pharmacy management agreement for Response
Oncology to provide turnkey pharmacy management services to OHG.
The terms and conditions of the transaction were not disclosed.
"This transaction is consistent with our goal to transition our
business into higher-margin, strong cash-generating areas, such
as specialty pharmacy management services," said Anthony
LaMacchia, the Company's president and chief executive officer.
"In just one step, we have replaced an underperforming asset with
a new, profitable revenue stream, exchanged fixed costs for
variable costs, and improved our cash flow."
Miami-based OHG, a 13-physician oncology practice, was the first
PPM group acquired by Response Oncology in 1996. Under the terms
of the new pharmacy management agreement, Response Oncology will
provide a complete turnkey, on-site pharmacy service for OHG,
including buying drugs, staffing the pharmacy and compounding and
dispensing prescriptions. Response Oncology will continue to
operate the IMPACT Center of Dade County, which is affiliated
with OHG, for the administration of high dose chemotherapy.
The Company also announced that it will record a non-cash, pretax
charge of $9.5 million to write off the goodwill associated with
the original OHG transaction and to reduce the value of certain
assets sold. The charge will be reflected in operations for the
fourth quarter of 2000. The goodwill writeoff is projected to
reduce fiscal 2001 amortization expense by $900,000.
SAFETY-KLEEN: Rejects Contracts With General Motors & ECDC
----------------------------------------------------------
Safety-Kleen Corp. asked Judge Walsh for authority to reject a
corporate purchase contract between and among General Motors
Corporation, Saturn Corporation, and Delco Electronics
Corporation, on the one hand, and each of Safety-Kleen Services,
Inc., as successor in interest to USPCI, Inc., Safety-Kleen (Lone
& Grassy Mountain), Inc., as successor to United States Pollution
Control, Inc., Safety-Kleen (Sawyer), Inc., as successor to
Municipal Services Corporation, and ECDC Environmental, L.C., for
lack of benefit to the estates in bankruptcy.
In addition, the Debtors requested authority to reject a waste
disposal agreement by and among ECDC, and Safety-Kleen Services,
Inc., as successor to Laidlaw Environmental Services (US), Inc.
In an effort to reduce postpetition administrative costs and in
an exercise of the Debtors' business judgment, the Debtors have
determined that it is in the best interests of the Debtors, their
estates, their creditors, and all parties-in-interest for the
Debtors to reject both the 4070 Contract with GM and the related
Waste Disposal Agreement at this time.
The 4070 Contract with General Motors
Under the 4070 Contract, which by its terms runs through March
16, 2012, certain Debtors, as Contractors, provide both hazardous
and non-hazardous waste management services to GM at designated
facilities owned, operated or managed by the Contractors. These
services include, among others, the transportation and disposal
of certain streams of waste generated by GM in its manufacturing
processes and otherwise. By letter dated May 15, 2000, GM
notified the Debtors that, as a result of the Debtors' alleged
failure to meet certain performance obligations under the 4070
contract, GM considers the 4070 contract terminated for default
as of December 31, 2000. The Debtors vigorously dispute the
allegations in the May 15 letter and disagree that GM has, or
had, any right to terminate the 4070 contract for default.
The Debtors have determined that the terms and conditions of the
4070 Contract are burdensome to the Debtor-Contractors. As a
result, continued performance under the 4070 Contract is not
beneficial to the Debtors, their estates, or their creditors. The
Debtors assert that, in their sound business judgment, and
notwithstanding the gross revenues generated by this agreement,
it is financially burdensome to the Debtors and results in a net
loss. Any increase in performance under this agreement would only
further impair the Debtors' earnings under this agreement because
the marginal costs associated with performance exceed the
marginal benefits. Consequently, the Debtors wish to cease
performance under this agreement to avoid any further unnecessary
drain on their resources.
The Waste Disposal Agreement with ECDC
Pursuant to the Waste Disposal Agreement, ECDC, among other
things, provides all services necessary to "landfill" conforming
waste materials into its Class V landfill located in East Carbon,
Utah. The Debtors and ECDC originally entered into the Waste
Disposal Agreement to provide the Debtors with waste management
services and landfill space specifically designated for -- and in
some instances, dedicated to -- the waste streams produced by GM
and required to be managed by the Debtor-Contractors under the
4070 Contract. Because the Debtors are seeking to reject the 4070
Contract they will no longer need to manage and dispose of GM
waste produced under the 4070 Contract and, accordingly, will
have no further need or use for the Waste Disposal Agreement.
Since the purpose of this agreement is limited to providing
an outlet and repository for GM waste to be managed by the
Debtors/contractors under the 4070 agreement, rejection of the
4070 agreement means that there is no further benefit in the
waste disposal agreement for the Debtors.
After consideration of the Debtors' arguments, Judge Walsh
entered an Order authorizing the Debtor to reject these two
agreements, effective on the date the Order was signed and
entered on the Court's docket. Judge Walsh expressly held,
however, that these rejections constitute breaches of these
contracts and are not deemed to negate, invalidate or terminate
these agreements. (Safety-Kleen Bankruptcy News, Issue No. 13;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
SAFETY-KLEEN: To Close Waste Facility In New Jersey In May
-----------------------------------------------------------
Safety-Kleen Corp. announced that it will close its underutilized
hazardous waste incineration facility located in Bridgeport, New
Jersey. This move is part of the Company's continuing strategy to
better align its North American waste-disposal services with the
needs of its customers. The facility will cease all operations by
May 8, 2001. "We are not going out of the incineration business,
we are simply streamlining our incineration operations," said
President, Grover Wrenn. "Even with the closure of the Bridgeport
facility, and our recent announcement not to renew the
incineration permits at our Coffeyville, KS, facility, Safety-
Kleen will continue to operate almost half of North America's
hazardous waste incineration capacity. Safety-Kleen is, and will
remain, the largest manager of hazardous and industrial waste in
North America." The Company has been operating under Chapter 11
protection since June 9, 2000. (New Generation Research, February
6, 2001)
SMITHWAY MOTOR: Reports Fourth Quarter and Year-End Results
-----------------------------------------------------------
Smithway Motor Xpress Corp. (Nasdaq: SMXC) announced financial
and operating results for the fourth quarter and year ended
December 31, 2000. For the fourth quarter, operating revenue
decreased to $46.9 million from $48.5 million during the 1999
quarter. Net loss was $2.3 million, or ($.46) per basic and
diluted share, compared with earnings of $290,000, or $.06 per
basic and diluted share, during the same quarter of 1999. The
2000 quarter included after-tax adjustments totaling $1.2
million, or ($.24) per basic and diluted share, relating to
tractor values and reserves for accounts receivable.
For the year, operating revenue increased to $199.0 million from
$197.0 million in 1999. Net loss for 2000 was $1.99 million, or
($.40) per basic and diluted share, compared with net earnings of
$3.9 million, or $.78 per basic and diluted share, during 1999.
Chairman, President, and Chief Executive Officer William G. Smith
stated, "The trucking industry, Smithway included, operated in a
very difficult business environment in 2000. For the entire year,
we faced high fuel prices, a depressed used truck market, a
declining number of owner-operators, and slowing freight demand.
These challenges continue in the first quarter of 2001.
"High fuel prices had a significant impact on Smithway's results,
as our average price per gallon increased 33% over 1999. The
higher price of fuel, net of fuel surcharges, decreased operating
income by $2.3 million for the year. The slowing economy also
affected our results, particularly in the second half of the
year. Revenue per tractor per week declined approximately 4.6% in
the second half of 2000 and 6.3% during the fourth quarter.
"The combination of lower freight demand and high fuel prices
placed tremendous pressure on our owner-operators, who provide a
tractor and cover their own expenses. Our average owner-operator
fleet dropped approximately 11% during 2000. With fewer tractors
operating, our revenue base suffered.
"Smithway battled these conditions all year and remained
profitable through the third quarter. However, deteriorating
freight demand in the fourth quarter and two non-recurring
charges produced the first loss Smithway has experienced in its
over forty-year history. During the quarter, the economy slowed
noticeably. In December, a convergence of plant closings and
severe ice, snow, and cold compounded the effect, resulting in a
revenue shortfall of approximately $4.9 million for the quarter.
This led to a pretax loss of $1.6 million for the quarter, before
non-recurring adjustments for accounts receivable and tractor
values.
"During the quarter, three of Smithway's significant customers
declared bankruptcy. We reserved the full amount of the
receivables owed by these and other customers experiencing
economic difficulties. These adjustments totaled $775,000 before
tax.
"The slumping market for used tractors plagued the industry in
2000, with prices declining by approximately 20% in 2000 compared
with 1999. Following the fourth quarter, we reviewed the carrying
value of our entire tractor fleet. Following the review,
management believed that the value of approximately 10% of
Smithway's company-owned tractors should be adjusted to reflect
market levels. Smithway recorded an approximately $1.0 million
pretax charge, reflected in depreciation and amortization
expense, to reflect the adjustment in tractor values.
"As we had announced at the beginning of the year, Smithway
controlled its growth in 2000 to focus on reducing overall debt
and balance sheet leverage. Despite a difficult year, Smithway
generated positive cash flow, allowing us to reduce long-term
debt by more than $7 million. We also repurchased approximately
168,000 shares of our Class A common stock. We intend to continue
our balance sheet focus in 2001. We believe this will position
Smithway to capitalize on freight opportunities as
undercapitalized competitors are forced from the market. Our
entire Company is working diligently to improve Smithway's
performance in all areas and we expect to return to profitability
in 2001."
Smithway is a truckload carrier that hauls diversified freight
nationwide, concentrating primarily on the flatbed segment of the
truckload market. Its Class A common stock is traded on the
Nasdaq National Market under the symbol "SMXC."
SOUTHERN CALIFORNIA: Bank Lenders Set Feb. 13 Payment Deadline
--------------------------------------------------------------
The cash crunch has worsened for California's No. 2 utility.
Southern California Edison (SoCal Edison) said it has defaulted
on $395 million of short-term debt, deferred $743 million of
payments to suppliers and would have run out of cash last Friday
had it paid everything on time, according to a Reuters report.
"If SoCal Edison had paid all obligations as they became due,
SoCal Edison would have run out of cash on Feb. 2, 2001," the
company said. SoCal Edison said it has $1.36 billion of cash left
as of Monday.
SoCal Edison could face additional financial pressure as the
result of a Feb. 13 deadline given by its bank lenders. The
utility and its parent, Rosemead, Calif.-based Edison
International, also reiterated that its bank lenders have agreed
not to act until Feb. 13 upon their defaults under their bank
credit lines. SoCal Edison and its parent made their disclosures
in mirror filings with the Securities and Exchange Commission. It
wasn't clear how much beyond that date the banks will refrain
from action or what SoCal Edison might need to do to satisfy its
lenders. The short-term debt, or commercial paper, defaults were
expected. Yesterday, credit rating agency Moody's Investors
Service warned that "the threat of bankruptcy still remains for
the utilities and their holding companies" unless California
crafts a solution addressing the utilities' uncollected debts.
(ABI World, February 6, 2001)
SUNBEAM CORPORATION: Files for Bankruptcy Protection in New York
----------------------------------------------------------------
Sunbeam Corporation (NYSE: SOC) filed voluntary petitions for
itself and its domestic operating subsidiaries under chapter 11
of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court in the
Southern District of New York.
Jerry W. Levin, Chairman and Chief Executive Officer of Sunbeam,
said, "Chapter 11 reorganization provides a legal framework that
allows us to keep the business running normally while we put our
financial house in order. When we emerge from the proceedings in
a matter of months, Sunbeam will be a stronger, more competitive
company."
Mr. Levin continued, "This was a difficult, but absolutely
necessary decision for us to make. It is, in fact, the only
option that will free Sunbeam from its overwhelming burden of
debt and securities-related litigation expenses. Sunbeam is a
strong company, and with a new capital structure and the
commitment of our management team and our employees to execute
our strategy, I believe Sunbeam will become a truly great branded
consumer products company, global in scope, known for innovation
and leadership in each market segment in which it competes."
Mr. Levin also said, "Over the past two and a half years, we
struggled to find a different solution for all our stakeholders.
However, we were not able to reach an agreement with all groups
to satisfactorily restructure the financial obligations of the
Company. In addition, the depth of the problems facing Sunbeam
did not allow for any realistic choice other than to pursue the
necessary restructuring under chapter 11."
Mr. Levin concluded, "We intend for this restructuring of our
financial obligations to free Sunbeam from its debt burden and
litigation expenses and put the reorganized Sunbeam on the track
for economic viability and successful operations. I look forward
to working with our management team and dedicated employees, as
well as our suppliers and retailers, to continue to build on
Sunbeam's solid foundation of outstanding brands and a global
reputation for quality and dependability."
Senior management, including Mr. Levin, has committed to remain
in place and lead Sunbeam throughout this process and beyond.
They have made substantial progress and will continue their
efforts to: streamline operations; institute strict financial
controls; improve the product mix; enhance research and
development; strengthen the brand names; provide superior
customer and consumer service; and build closer relationships for
the company with vendors and customers.
Sunbeam Corporation is a leading consumer products company that
designs, manufactures and markets, nationally and
internationally, a diverse portfolio of consumer products under
such world-class brands as Sunbeam(R), Oster(R), Grillmaster(R),
Coleman(R), Mr. Coffee(R), First Alert(R), Powermate(R), Health o
meter(R) and Campingaz(R).
SUNBEAM CORP.: Case Summary & 16 Largest Unsecured Creditors
------------------------------------------------------------
Lead Debtor: Sunbeam Corporation
2381 Executive Center Drive
Boca Raton, FL 33431
Debtor-affiliates filing separate chapter 11 petitions:
AI Realty Marketing of New York, Inc.
Beacon Exports, Inc.
BRK Brands, Inc.
CC Outlet, Inc.
CMO, Inc.
Coleman Argentina, Inc.
Coleman International Holdings, LLC
Coleman Powermate, Inc.
Coleman Puerto Rico, Inc.
Coleman Venture Capital, Inc.
Coleman Worldwide Corp.
DDG I, Inc.
Family Gard, Inc.
First Alert, Inc.
General Archery Industries, Inc.
GHI I, Inc.
JGK, Inc.
Kaimona, Inc.
Kansas Acquisition Corp.
L.A. Services, Inc.
Laser Acquisition Corp.
Nippon Coleman, Inc.
Packs & Travel Corporation
Pearson Holdings, Incorporated
PH III, Inc.
River View Corporation of Barling, Inc.
SI II, Inc.
Sierra Corporation of Fort Smith, Inc.
Sunbeam Americas Holdings, Ltd.
Sunbeam Health & Safety Company
Sunbeam Latin America, LLC
Sunbeam Products, Inc.
Sunbeam Services, Inc.
Survival Gear, Inc.
Thalia Products, Inc.
The Coleman Company, Inc.
THL-FA IP Corp.
Vero Dunes Venturer, Inc.
Woodcraft Equipment Company
Type of Business: Manufacturing, marketing, and distribution of
durable household and outdoor leisure consumer
products through mass market and other
distribution channels in the United States and
internationally
Chapter 11 Petition Date: February 6, 2001
Court: Southern District of New York
Bankruptcy Case Nos.: 01-40252 through 01-40291
Judge: Arthur J. Gonzalez
Debtors' Counsel: Harvey R. Miller, Esq.
Marc D. Puntus, Esq.
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, NY 10153
(212) 310-8048
Fax: (212) 310-8007
Total Assets (Consolidated): $2,959,863,000
Total Debts (Consolidated): $3,201,512,000
Sunbeam Corporation's 16 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
The Bank of New York Subordinated Bonds $863,675,461
As Indenture Trustee
Mary Lagumina
101 Barclay Street
New York, NY 10286
Seaboard Surety Company Surety Bonds $39,110,386
Anthony J. Garbarini
c/o St. Paul Surety
499 Thornall Street
Edison, NJ 08837
732-205-8462
Price Waterhouse Coopers Professional $1,049,558
1177 Avenue of the Americas Services
New York, NY 10036
212-596-8000
St. Paul Fire and Marine Surety Bonds $2,331,518
Ins. Co.
Anthony J. Garbarini
499 Thornall Street
Edison, NJ 08837
732-205-8462
Donaldson, Lufkin & Jenrette Professional $3,074,943
277 Park Avenue Services
New York, NY 10172
212-892-3000
Brian Rosner, Esq. Professional $693,873
Three New York Plaza Services
14th Floor
New York, NY 10004
212-785-2577
Skadden, Arps, Slate, Professional $252,154
Meagher & Flom LLP Services
One Rodney Square
PO Box 636
Wilmington, DE 19899-0636
302-651-3000
Proskauer Rose LLP Professional Services $134,856
American Arbitration Professional Services $77,325
Association
Jenner & Block, LLC Professional Services $72,985
The Concourse Group Trade Association Fees $37,500
Greenberg Traurig Professional Services $19,193
Ackerman, Link, & Sartory,PA Professional Services $7,933
Paul, Weiss, Rifkin, Wharton, Professional Services $5,847
& Garrison
META Group Incorporated Professional Services $5,800
Roth and Scholl Professional Services $3,582
SUNBEAM CORPORATION: Paying Obligations To Vendors and Employees
----------------------------------------------------------------
Sunbeam Corporation (NYSE: SOC) announced that the U.S.
Bankruptcy Court in the Southern District of New York has
approved the Company's request to pay in the ordinary course of
business its pre-filing obligations to all vendors who continue
to provide goods or services to its operating businesses on
normal trade terms. The Company also said, as in all chapter 11
cases, post-petition obligations to vendors, employees and others
will be honored and satisfied in the normal course of business
without the need to obtain Court approval.
Sunbeam's operating businesses are moving forward with business
as usual. Sunbeam's operating businesses include Sunbeam
Products, which conducts the Household and Health businesses, The
Coleman Company, Coleman Powermate, Inc., and First Alert, Inc.
The international subsidiaries are not parties to the chapter 11
reorganization cases and are not affected by them.
The Company expects that there will be no interruption in
production or distribution. Sunbeam continues to be committed to,
and fully in support of, all sales plans and programs with its
retailers. Sunbeam employees, worldwide, will not experience any
change in their job status or the work they do. Employee
compensation and benefits will continue without interruption. The
Company does not anticipate any reductions in workforce or plant
closings as a result of the chapter 11 reorganization. Sunbeam's
management team is committed to lead the company through the
reorganization process and beyond.
Jerry W. Levin, Chairman and Chief Executive Officer of Sunbeam,
said, "This is positive news for Sunbeam, our employees and trade
partners. We've worked very hard to present to the court a plan
for reorganization that would minimize any disruption to the
production and distribution of our products, and this is a good
first step in that direction. We will be conducting business as
usual at our operating businesses as we continue to work with the
Court and our lenders to reorganize the Company over the next
several months."
SUNBEAM CORPORATION: Court Grants Approval for $400MM Financing
---------------------------------------------------------------
Sunbeam Corporation (NYSE: SOC) announced that the Company
reached agreement with its bank lenders to reorganize its debt
and certain other obligations.
The Court also approved the following:
* Interim approval to immediately access $200 million of the
$285 million line of credit provided by Sunbeam's banks.
* Approval of a commitment from GE Capital Corporation for a
$200 million accounts receivable financing program for Sunbeam's
domestic businesses.
The total financing made available to the Company by the Court
amounts to $400 million, which the company expects to be more
than adequate to continue to conduct business as usual in all its
operating businesses. Upon the Court's final approval of the
total facility provided by Sunbeam's banks, the combination of
the $285 million line of credit from Sunbeam's banks -- Bank of
America, First Union and Morgan Stanley -- and a commitment from
GE Capital Corporation for a $200 million accounts receivable
financing program for Sunbeam's domestic businesses will provide
the Company with a total of $485 million that will be available
to the operating businesses to fund normal operations worldwide.
The Company's proposed chapter 11 plans of reorganization for
Sunbeam and its operating subsidiaries and affiliates contemplate
converting the existing bank debt into term debt, convertible
debt and equity interests in the reorganized Sunbeam. The chapter
11 plans also contemplate the discharge of all of the Company's
securities-related litigation and bondholder debt. The chapter 11
plans are supported by the holders of the bank debt
(approximately $1.7 billion). Sunbeam expects that the
reorganized Company and its operating subsidiaries and affiliates
will emerge from chapter 11 in six to nine months.
Jerry W. Levin, Chairman and Chief Executive Officer of Sunbeam,
said, "The financial tools and reorganization process are being
put in place to make sure Sunbeam continues to be a great branded
consumer products company. Freed from its burden of debt and
securities-related litigation that have held the Company back for
years, Sunbeam will have the ability to grow and prosper again
and provide more and better opportunities for our employees and
the many companies we work with, across America and around the
globe."
SUN HEALTHCARE: Cotter Seeks Turnover Of Real Property In CA
------------------------------------------------------------
After winning summary judgment by the District Court for the
Northern District of California on unlawful detainer claims,
granting Cotter entitlement to possession of the subject
properties as the leases at issue terminated prior to Sun
Healthcare Group, Inc.'s filing of chapter 11 petition, Cotter
Health Services, Inc., Coachella House, Inc. and James F. Cotter
asked the Bankruptcy Court to authorize for their (a) immediate
possession of certain non-residential property in California and
(b) compelling the Debtors to pay administrative rent.
The 4 subject leases relate to 4 different nursing facilities:
(a) the Manzanita Manor Convalescent Hospital in Coverdale,
California;
(b) the Coachella House Convalescent Hospital located in
Palm Springs, California;
(c) the Mission Convalescent Hospital in Sonoma, California;
(d) the Northbrook Manor Convalescent Hospital in Willits,
California.
Sun Health claims a lease interest in the properties through
acquisition which, according to Cotter, was not permitted under
the original leases without the landlord's consent, and was the
subject of the District Court Action in Cotter Health Services,
Inc. et. al. v. Wasatch Medical Management Services, Inc. N.D.
Cal. C.A. No. C-98-3242 VRW. In December 1999, shortly after
commencement of the Debtors' chapter 11 cases, Cotter sought and
obtained the Bankruptcy Court's approval for relief from
automatic stay in order to pursue the District Court litigation.
Wasatch and Cotter entered into the leases in 1982. Wasatch later
changed its name to Care Rehabilitation and then to Care
Rehabilitation West, a wholly owned subsidiary of Care
Enterprises, Inc.
In 1994 Regency Health Services, Inc. acquired 100% of the
corporate stock of Care Enterprises, Inc. As such, Care
Enterprises became a wholly owned subsidiary of Regency.
In October 1997 Regency was itself acquired by and became a
wholly owned subsidiary of Sun Health Care Group, Inc.
Cotter asserts that both the transfer of Care Enterprises' stock
to Regency and the transfer of Regency's stock in turn to Sun
Health constitute a change in the effective control of existing
shareholders of the respective entities and each was an
assignment of the leases, requiring the prior written of Cotter,
but Cotter has never consented to the purported assignments.
On or about August, 1998, that is, prior to the commencement of
the Sun chapter 11 cases, Cotter filed a 12-Count Complaint in
the District Court against Wasatch and the Debtor alleging
various causes of action for breach of contract, fraud and deceit
and ejectment stemming from Wasatch and the Debtors' violation of
the anti-assignment provisions common to all four leases. Cotter
later sought summary judgment on claims for ejectment against
Debtor under California law. In an order entered July 20, 1999,
the District Court denied Cotter's Motion for Summary Judgment.
However, the District Court found that the various changes in
corporate control of Wasatch amounted to a breach of the non-
assignment clauses of the leases.
Following the District Court's order, Cotter sent written notice
of default to Wasatch and the Debtor and indicated it was seeking
termination of the leases due to violation of the non-assignment
clauses. Wasatch denied default and attempted to cure by
requesting Cotter's consent to the alleged assignment. Cotter
declared the leases terminated effective August 27, 1999.
On August 25, 2000 the District Court ruled that the leases were
terminated under applicable California law on August 27, 1999,
nearly two months prior to the Debtors' petition for chapter 11
relief. Four months after the District Court ruling, the Debtors
unlawfully remain in possession of the properties, Cotter tells
Judge Walrath.
Accordingly, Cotter asked that the Court enter an order:
(a) granting Cotter the immediate possession of its
properties;
(b) compelling the Debtors to transfer all licenses
applicable to the properties over to Cotter;
(c) compelling the Debtors to pay all outstanding
administrative rent due and owing, including attorney's
fees, costs and expenses incurred by Cotter in the
matter in Bankruptcy Court as well as the Northern
District of California matter.
(Sun Healthcare Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
TENNECO AUTOMOTIVE: Posts $63 Million Loss in Q4 2000
-----------------------------------------------------
Tenneco Automotive (NYSE: TEN) reported a fourth quarter 2000
loss from continuing operations of $63 million, or $1.74 per
diluted share, which includes restructuring and other charges of
$42 million after-tax, or $1.18 per share. The company had a loss
from continuing operations of $143 million, or $4.25 per diluted
share, for the same period in 1999.
Before charges, the company reported a loss from continuing
operations of $21 million, or 56 cents per diluted share,
compared with income of $1 million, or 5 cents per diluted share
in the fourth quarter of 1999.
"Obviously, we are disappointed with our fourth quarter results.
Tough industry conditions in the auto parts sector, coupled with
our highly leveraged position, had a significant impact on our
performance," said Mark P. Frissora, chairman and CEO, Tenneco
Automotive. "We have responded aggressively by implementing
global cost reduction initiatives, sharply reducing spending and
improving productivity in the face of this industry downturn. We
will focus intensely on these efforts as we confront an equally
challenging year in 2001."
For the full year 2000, Tenneco Automotive reported a loss from
continuing operations of $41 million, or $1.18 per diluted share,
compared with a loss from continuing operations of $63 million,
or $1.87 per diluted share in 1999. Included in these results are
one-time non-operational items taken in the third quarter of
2000, and fourth quarter charges in both years related to
restructuring, as well as transaction expenses. Excluding one-
time items, income from continuing operations in 2000 was $4
million, or 10 cents per diluted share. Excluding one-time items
and assuming the company had incurred the same level of stand-
alone and interest costs in 1999 as it did in 2000, income from
continuing operations in 1999 would have been $24 million, or 74
cents per share.
"Despite this very difficult operating environment, we reduced
working capital and capital spending, and initiated a
securitization program for receivables to bring our senior debt
level down by $107 million in 2000," said Frissora. "We also
generated a $23 million improvement in EVA last year, and
improved net cash flow before financing and factoring activities
by $61 million."
Fourth Quarter Results
Tenneco Automotive reported revenue of $849 million for the
fourth quarter 2000, which includes $56 million in pass-through
sales for catalytic converters. Excluding the pass- through
sales, revenue was slightly down compared with fourth quarter
1999 revenue of $806 million.
Reported EBITDA for the quarter was a loss of $7 million,
compared with a loss of $37 million in fourth quarter 1999.
Excluding the $61 million in pre-tax charges, EBITDA was $54
million in the quarter compared with $77 million for the same
period last year. The company also reported EBIT as a loss of $42
million, compared with a loss of $71 million in fourth quarter
1999. Without charges, EBIT was $19 million compared with $43
million the previous year.
North America
Revenue from the company's North American original equipment
business declined, primarily due to light vehicle production
cutbacks, and continuing lower heavy-duty ride control and
elastomer volumes. North American original equipment revenue was
$322 million, including $56 million in pass-through revenue from
catalytic converter sales, compared with $301 million in revenue
for the fourth quarter of 1999, which did not include passed-
through revenue for catalytic converter sales.
Fourth quarter revenue for the North American aftermarket was
$123 million, compared with fourth quarter 1999 revenue of $138
million. Revenues were down as a result of further deterioration
in the replacement parts market.
Fourth quarter EBIT, before charges, for North American
operations was $9 million, compared with $33 million, before
charges, the previous year. In the original equipment business,
the decrease was largely due to light vehicle production
cutbacks, especially in December, and continued depressed heavy-
duty ride control and elastomer volumes. On the aftermarket side,
depressed industry conditions and higher promotional expenses
impacted profitability.
Europe
The company reported fourth quarter 2000 revenue for the European
original equipment business of $249 million, a 22 percent
increase compared with fourth quarter 1999 revenue of $204
million. Revenue would have increased by 28 percent if exchange
rates had been the same in the fourth quarter 2000 as in the
fourth quarter of 1999. The increase in revenue was the result of
very strong exhaust volumes.
Continued weakness in both ride control and exhaust product lines
continued to affect revenue from the European aftermarket
business. Revenue for the fourth quarter 2000 was $71 million, a
17 percent decline compared with $86 million in the fourth
quarter of 1999. Excluding the currency impact, revenue would
have declined by 13 percent.
European EBIT, before charges, for the fourth quarter was $5
million, even with the previous year. The erosion in the
aftermarket was offset by strong volumes on the exhaust original
equipment side of the business.
Combined EBIT, before charges, for South America, Australia, and
Asia in the fourth quarter was $5 million, even with EBIT before
charges in fourth quarter 1999. Unit volume growth in Brazil,
India, and China offset the currency impact and original
equipment production cutbacks in Australia.
Full Year Results
For full-year 2000, the company reported an 8 percent increase in
revenue to $3.55 billion from $3.28 billion in 1999. Excluding
$206 million in pass-through sales for catalytic converters,
revenue would have increased by 2 percent.
The company reported EBITDA of $271 million for 2000, compared
with $292 million in 1999. Excluding one-time items, EBITDA was
$336 in 2000. Excluding one-time items and assuming the company
had incurred the same level of stand-alone costs in 1999, EBITDA
for 1999 would have been $374 million. Full-year EBIT was $120
million compared with $148 million in 1999. Excluding one-time
items, 2000 EBIT was $185 million. EBIT would have been $230
million in 1999 excluding one-time items and assuming the company
had incurred the same level of stand-alone costs.
"We are pleased with stronger performances in our European
original equipment and emerging markets businesses. Combined, we
saw a 72 percent earnings (before-interest and tax) improvement
year-over-year," said Frissora.
The attached exhibits provide additional information on Tenneco
Automotive's 2000 and 1999 operating results.
VENCOR INC.: Wants To Transfer Operations Of Hillhaven Facilities
-----------------------------------------------------------------
A new operator, Pinnacle Services Winchester, Inc. has now been
located for the operations of the Facility known as the MontVue
Nursing Home in Luray, Virginia. Accordingly, Vencor, Inc. move
the Court for authority to transfer the operations of MontVue to
Pinnacle pursuant to the terms of the Operations Transfer
Agreement dated December 21, 2000, and for the assumption and
assignment of related executory contracts.
As previously reported, Vencor acquired its right to MontVue
through its merger with Hillhaven, Inc. in 1995. Through a lease
agreement dated April 24, 1985, Vencor, as successor-in-interest
to Hillhaven, Inc., leased the Facility from Excelsior Care
Centers, Inc. That lease expired on August 31, 2000, and after
that Vencor operated the Facility on a month-to-month basis.
In accordance with the Court's Order Establishing Procedures for
the Debtors' Sale of Certain Surplus Personal Property, the
Debtors will sell the Inventory and the name of the Facility to
the new operator at a cost of $10. Any rights the Debtors may
have in the name of the Facility will be transferred to the new
operator for no additional consideration. The Debtors determined
in their business judgment selling the inventory to Pinnacle
would be less costly than to ship it to another Vencor Facility.
The Debtors also note that the name of the Facility would have no
value to them after the transfer of operations.
Pursuant to the Transfer Agreement, Vencor will assign its
Medicare and Medicaid Provider Agreements for the Facility to
Pinnacle, and Vencor is to receive all payments due from the
Medicare and Medicaid programs for the period in which Vencor
operated MontVue, under the Provider Agreements.
It is Vencor's understanding that neither Vencor nor the new
operators will be required to cure Medicare overpayments. Vencor
estimates that it is owed $40,658 from Medicare with respect to
this Facility, accrued Pre-Petition.
Vencor agreed to indemnify Pinnacle for any Medicaid overpayment
claim by the state of Virginia. The Debtors do not believe that
they were overpaid by Virginia Medicaid. Rather, they believe
that pre-petition, Vencor owes $157 to Virginia Medicaid and is
owed $64,664 by Virginia Medicaid, resulting in a net amount owed
to Vencor of $64,507 pre-petition.
Pursuant to the Transfer Agreement, Vencor is to provide Pinnacle
with an accounting of the Patient Trust Funds (residents' money
held by the operator of the facility) and to transfer those funds
to Pinnacle in accordance with the applicable statutory and
regulatory requirements.
Pinnacle, the Debtors and the Health Care Financing
Administration are currently negotiating the terms of a
Stipulation and Order in respect of the Montvue transfer and the
assumption and assignment of the Medicare Provider Agreement that
will clarify the obligations of the parties going forward. The
Debtors promise that such Stipulation and Order will be submitted
to the Court for approval as soon as its terms are finalized.
Pinnacle has agreed to hire at least sixty-eight percent of
Vencor's current employees at the Facility and Vencor is required
to make available COBRA and to pay earned health benefits through
the Effective Date as required by law.
Vencor will retain its right to all unpaid accounts receivable
with respect to the Facility which relates to the period prior to
the Effective Date. Utility charges, real and personal property
taxes and prepaid expenses shall be prorated as of the Effective
Date and all amounts owing from one party to the other party that
require adjustment after the Effective Date shall be settled
within thirty days. Vencor will remove its computer systems from
the Facility after a 120 day period from the Effective Date
The Debtors advised that Pinnacle has applied to the state
government for a new license, and they believe that the
application will be approved on the Effective Date, enabling
Pinnacle to assume operating responsibility.
The Debtors submitted that the proposed transfer, if approved,
will allow the Debtors to cease operations at the Facility while
providing for a non-disruptive transition of operations from the
Debtors to Pinnacle. Moreover, it provides employment for at
least sixty-eight percent of the employees working at the
Facility.
In the Debtors' business judgment, the assumption and assignment
of the MontVue Provider Agreements is less costly than the cost
to shutdown the facility, which Vencor believes is approximately
$435,377.
The Debtors further submitted that Pinnacle is not an insider of
the Debtors as that term is defined in Section 101(31) of the
Bankruptcy Code.
Response of the Virginia DMAS
The Virginia Department of Medical Assistance Services filed with
the Court their response to the motion to assert that the amount
of $157 that Vencor owes DMAS and the amount of $64,664 that DMAS
owes Vencor pre-petition, as alleged in the Debtors' motion are
not intended to be binding on DMAS or to establish the amounts
necessary to cure defaults under the Medicaid Agreement.
In addition, DMAS told the Court that it is DMAS's understanding
that the Department will be premitted to continue to recoup and
offset its claims for prior overpayments under the Medicaid
Agreement, both pre and post petition, as if Vencor had not filed
for bankruptcy. DMAS reminded the Court that in order to
effectuate this understanding, the order should specifically
provide that DMAS shall be entitled to reimbursement for any and
all prior overpayments pursuant to the terms of the Provider
Agreement and applicable law once a final cost report accounting
is completed.
DMAS indicated that it does not object to the assumption and
assignment of the Medicaid Agreement, but does not believe the
Medicaid amounts mentioned in the motion are correct. DMAS
believes that neither DMAS nor Vencor currently owe the other any
amounts under the Medicaid Agreement. (Vencor Bankruptcy News,
Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900)
VLASIC FOODS: Gets Interim Court Approval To Use Cash Collateral
----------------------------------------------------------------
Vlasic Foods International Inc. won interim approval from the
bankruptcy court to use the cash collateral of its lenders
pending a final hearing Feb. 22. Absent immediate access to the
cash, Vlasic won't be able to meet its payroll and other
operating expenses, will suffer "irreparable harm," and its
entire reorganization effort "will be jeopardized," the pickle
company said in a motion filed on Jan. 29, the first day of its
chapter 11 bankruptcy case. That day, Judge Sue L. Robinson of
the U.S. Bankruptcy Court in Wilmington, Del., granted Vlasic's
request for authorization to use the cash collateral for a 30-day
period, which will be automatically extended for 14-day periods
unless terminated by the lenders following seven days' notice.
(ABI World, February 6, 2001)
XATA CORPORATION: Won't Make SEC Filing On Time
-----------------------------------------------
XATA Corporation advised the SEC that it would not be filing its
financial information for the years ended September 30, 2000 in a
timely manner for the following reasons:
* resignation of the CFO two weeks prior to the end of the
fiscal year, with no replacement to date;
* new controller, who joined the company part-time in May
2000, started full-time on September 1, 2000;
* re-creation, post fiscal year end, of the detail
accounting for new types of software development projects which
were partially funded by outside sources;
* re-evaluation, post fiscal year end and continuing until
December 26, 2000, of various accounting issues, including the
write-off of certain amounts of software development costs that
had been capitalized in prior years and the recognition of
deferred tax assets that could not be recognized at the prior
year end.
*********
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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.
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