Barry's Announces Precedent-Setting Trade
DIP Financing Facility, Extension of Use of Cash Collateral
MONROVIA, Calif.--July 24, 1997--Barry's Jewelers Inc.
Thursday announced that it has reached a precedent- setting
agreement regarding the terms of a global trade debtor-in-
possession (DIP) financing agreement, believed to be the first
trade DIP ever to be implemented in a case of Barry's size.
Under a trade DIP, the company's merchandise vendors agree to
provide post-petition financing to enable the company to execute
its restructuring.
Pursuant to the agreement reached between Barry's and its
trade vendors, Barry's will be able to obtain all its merchandise
needs on extended trade terms.
According to Samuel Merksamer, the president and chief
executive officer of Barry's: ``The agreement will allow the
debtor to obtain critically needed merchandise in time for the
Christmas season and should allow management to implement its
business plan to return Barry's to profitability.
``The agreement provides a number of protections and
incentives to Barry's vendors and allows Barry's to obtain an
estimated $50 million of new merchandise on terms that are very
favorable.''
The vendors are protected from credit exposure through a $2
million trade trust and a $4 million subordination provided by
Barry's secured bondholders. Barry's banks agreed to extend the
use of cash collateral through at least Feb. 28, 1998.
``Management's goal was to create a safe environment for the
trade,'' said Pete Healey, the chief financial officer of
Barry's.
``The agreement provides comfort to our trade vendors that we
will be able to pay the vendors on a timely basis for goods they
provide. Moreover, this agreement represents significant
cooperation among all creditor groups on terms that are
practically unheard of, as we mark a critical juncture in our
restructuring process.''
In addition, the agreement allows Barry's to exchange
approximately $8 million of duplicative and slow-moving
merchandise for fresh inventory.
According to Randy McCullough, Barry's senior vice president-
merchandising: ``This agreement provides us the opportunity to
completely remerchandise our company with the latest in fashion
jewelry. This in turn allows us to reposition Barry's as a
mainstream jeweler, which is a cornerstone of our business
plan.''
The vendor return program is somewhat novel. The Bankruptcy
Code was only recently modified to permit a debtor in possession
to return goods shipped to the debtor before the Chapter 11
filing to a vendor as a credit against the vendor's prepetition
claim, and vendor return programs have been implemented only on
rare occasions.
The implementation of a trade DIP is also a novel concept in
bankruptcy. According to Healey: ``The trade DIP will allow
Barry's to obtain in excess of $50 million of credit in its
Chapter 11 case without having to pay the high fees and interest
charges that normally accompany a DIP loan.
``Because the success of Barry's reorganization depends in
large part on the cooperation of the trade, Barry's is extremely
pleased that the trade is taking such an active role at this time
in assisting Barry's reorganization efforts.''
The agreement is supported by Barry's, the Creditors'
Committee, the Bank Group and the Bondholders' Committee,
representing all of the major parties in Barry's Chapter 11 case.
``The fact that all of the major constituents in this case are
supporting the long-term use of cash collateral and the trade DIP
should provide enormous comfort to Barry's employees, customers,
landlords, vendors and other creditors, and should send a strong
message that Barry's is on the road to recovery,'' said
Merksamer.
The trade DIP agreement is subject to approval by the
Bankruptcy Court. However, in a hearing held on July 22, 1997,
regarding use of cash collateral, Vincent Zurzolo (who is
presiding over Barry's case), when informed that all parties with
an economic interest had signed the trade DIP agreement, noted
that ``signatures speak louder than words.''
The court set the hearing on shortened notice for the trade
DIP financing agreement on Aug. 6, 1997, at 10:30 a.m. At the
same hearing, the judge gave approval for the use of cash
collateral and final approval for Barry's to obtain merchandise
on consignment.
Barry's Jewelers filed a petition for Chapter 11 protection in
Los Angeles on May 11, 1997. The case was assigned to Zurzolo, of
the Central District of Los Angeles.
Barry's Jewelers, one of the largest retailers of specialty
jewelry in the United States, operates 130 retail jewelry stores
in 18 states, principally California, Texas, Arizona, North
Carolina, Utah, Indiana, Ohio, Colorado, Idaho and Montana.
Barry's stores are located in regional malls and offer fine
jewelry items in a wide range of styles and prices, with an
emphasis on diamond and gemstone jewelry.
CONTACT: Barry's Jewelers Inc., Monrovia E. Peter Healey,
818/303-4741
S&P Rts Bucyrus Intl's $100M Sr Nts
BB-, Bank Loan BB
NEW YORK, NY --S&P CreditWire 7/24/97--Standard &
Poor's today has assigned its double-'B'-minus rating to Bucyrus
International Inc.'s $100 million Rule 144A senior notes due 2007
and its double-'B' rating to the company's $75 million revolving
credit facility. The corporate credit rating is double-'B'-minus.
The ratings reflect an entrenched position in a cyclical niche
market, offset by high financial risk.
The bank facility rating of double-'B' is one notch higher
than the corporate credit rating, deriving strength from being
secured by substantially all assets. Based on Standard &
Poor's simulated default scenario, a distressed enterprise value
would be sufficient to cover the entire loan facility.
South Milwaukee, Wis.-based Bucyrus manufactures electric
mining shovels, blast hole drills, and draglines for the surface
mining industry. Demand for new equipment can vary sharply, tied
to capital expenditure programs for production of coal, copper,
and iron ore. However, over 60% of revenues come from the more
stable aftermarket for parts and service. There are very few
equipment suppliers, and Bucyrus enjoys substantial market shares
for its products. The large installed base of machines worldwide
supports ongoing aftermarket demand. Bucyrus has maintained
long-standing relationships because of a strong service
capability and the special design of many items. Pro forma for
the pending $40 million acquisition of some assets of competitor
Marion Power Shovel Co., at March 31, 1997 debt of $117 million
compared to $39 million equity. Debt to total capital at 75% is
very high. Nevertheless, funds from operations to total debt is
anticipated to be in the mid- teens range over the economic
cycle, appropriate for the ratings. Future acquisitions likely
would be technology or small product line extensions.
OUTLOOK: Stable. Stable aftermarket demand is expected to
mitigate cash flow declines during downturns in demand for new
equipment. A modest scale of operations and high debt leverage
precludes any improvement in credit quality over the next few
years, Standard & Poor's said.---CreditWire
CONTACT: Martin Knoblowitz, New York (1) 212-208-1614 Daniel R
Di Senso, New York (1) 212-208-1618
VTX Electronics Files Its Plan of
Reorganization with the Bankruptcy Court
FARMINGDALE, N.Y.---July 24, 1997--VTX Electronics Corp.
(OTC:VTXL), which filed a petition for reorganization relief
under Chapter 11 of the Bankruptcy Code on Jan. 10, 1997,
announced today the filing of its plan of reorganization and
disclosure statement with the United States Bankruptcy Court in
Westbury, N.Y.
The proposed plan calls for an initial distribution to all
unsecured creditors of 13.5% for each allowed claim and future
distributions based on cash flow over the next five years. Under
the proposed reorganization, the company's wholly owned
subsidiary, Vertex Technologies Inc. ("Vertex"), which
filed a petition for reorganization, simultaneously with the
company, will be merged into the company, and the company will
change its name to "Vertex Computer Cable and
Products."
Upon implementation of the proposed plan, 25.3 million of the
company's 40 million authorized shares of common stock will be
issued and outstanding. Each five shares of the company's common
stock currently outstanding will be exchanged for one share of
the surviving entity. As a result, holders of the company's
currently outstanding 12,652,000 shares will receive 2,530,000
post- reorganization shares. T.W. Cable LLC, which acquired the
distribution business of Vertex in June 1997, and financed the
bankruptcy proceedings, will receive 22.77 million shares,
representing 90% of the post-reorganization outstanding common
stock. The record date for the exchange will be Aug. 8, 1997.
Ed Goodstein of T.W. Cable LLC and CEO of Vertex, said,
"The company plans to limit its focus to the production of
cable assemblies." Howard Griffith, the newly appointed
president of the company, said, "I expect the reorganized
company to limit its business to producing cable assemblies,
including copper, fiber and other custom products."
The company anticipates that the plan will be confirmed by the
Bankruptcy Court by Sept. 30, 1997.
The company, founded over 25 years ago, is a manufacturer of
custom-made cable assemblies used in providing connectivity
solutions in networks, for customers operating a wide range of
data communication systems.
Certain statements contained in this release may be deemed
"forward looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. There are many
factors that could cause the events in such forward looking
statements not to occur, or to occur in a manner materially
different from that contemplated by such forward looking
statements, including the inability of the company to implement a
successful plan of reorganization. Accordingly, actual results
could differ materially from those contemplated in such forward
looking statements.
CONTACT: VTX Electronics Corp., Farmingdale Nick Hutzel,
516/293-1610 x343