/raid1/www/Hosts/bankrupt/TCR_Public/971121.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, November 21, 1997, Vol. 1, No. 64
Headlines
BRADLEES: Reports Third Quarter Results
BRADLEES: Sears Development Seeks Relief from Stay
DOEHLER-JARVIS: Hearing On Extension of Exclusivity
ELI WITT: Seeks to Sell Property and Settle Claims
FLAGSTAR: Amended Plan
MARVEL: Reports Third Quarter Results
MOBILEMEDIA: Seeks Order to Advance Fees to Employees
MONTGOMERY WARD: Seeks Loan from Lechmere
MONTGOMERY WARD: Seeks to Defend and Indemnify Employees
SUN TELEVISION: Aggressive Expansion Plan
TODAY'S MAN: Seeks Court Designation for Alleged Insider
US ONE COMMUNICATIONS: Hearing on Extension of Exclusivity
WESTERN PACIFIC: Reports Debts
WESTERN PACIFIC: Sunrock Wants Remedy
BOND PRICING: Week of November 17, 1997
----------
BRADLEES: Reports Third Quarter Results
---------------------------------------
Bradlees, Inc. reported a significantly reduced operating
loss for the third quarter (13 weeks) ended November 1,
1997, compared with the third quarter (13 weeks) ended
November 2, 1996. The company also reported a modest net
income for the quarter, its first profitable quarter since
the fourth quarter of fiscal 1994.
Bradlees reported a third-quarter loss before interest and
reorganization items of $1.9 million, compared with a loss
of $12.1 million last year. Earnings before interest,
taxes, depreciation and amortization (EBITDA) was $8.2
million, compared with an EBITDA loss of $1.5 million last
year. The net income was $0.4 million, or $0.03 per
share, compared with a net loss of $23.1 million, or $2.02
per share, in the prior year.
This year's quarterly net income included a net credit in
reorganization items of $7.0 million that included a
reversal of a rejected lease provision for a closed store
lease that was sold and a favorable severance settlement.
Last year's third-quarter results included a property gain
of $1.7 million.
The year-to-date loss before interest and reorganization
items of $39.0 million for the 39 weeks ended November 1,
1997 was also substantially better than the loss before
interest and reorganization items of $95.2 million last
year. The year-to-date EBITDA loss was $10.4 million,
compared with an EBITDA loss of $57.3 million last year.
The year-to-date net loss was $48.5 million, or $4.26 per
share, compared with a net loss of $159.6 million, or
$13.99 per share, last year.
Total sales for the third quarter were $342.3 million,
compared with $420.3 million, reflecting the closing of 15
stores since the beginning of last year's third quarter, as
well as a comparable-store sales decline of 8.7 percent,
reflecting, in part, the continued de-emphasis of the
aggressive promotional activity of last year. Total sales
for the year-to-date period were $930.7 million, compared
with $1,156.4 million last year, reflecting the impact of
27 store closings since June 1996 and a comparable-store
sales decline of 7.6 percent.
Peter Thorner, Chairman and Chief Executive Officer, said,
"As a result of our intensive merchandising and marketing
focus, we have entered the fourth quarter well-positioned
to satisfy customers' holiday shopping needs. Our year-to-
date EBITDA is approximately $47 million better than
last year. The significant improvement in operational
results is due to our effort to improve gross margin while
we reduce the company's operating expenses.
BRADLEES: Sears Development Seeks Relief from Stay
--------------------------------------------------
Sears Development Co. and Shoppers World Community Center,
L.P., move the Court for relief from the automatic stay in
order continue defending themselves and assert
counterclaims and affirmative defenses in on-going
litigation before the United States District Court for the
District of Massachusetts.
Sears and Shoppers World explain that, prior to the
Petition Date, Bradlees sued Sears and Shoppers World for
alleged breaches of their lease relating to the Framingham
Store. Since the Petition Date, Bradlees has requested the
production of documents and deposed various individuals.
Bradlees asserts, however, that any continuation of the
litigation by Sears and Shoppers World constitutes a
violation of the automatic stay.
Accordingly, Sears and Shoppers World request relief from
the automatic stay to the extent necessary to continue
defending themselves in the Massachusetts Litigation.
Judge Lifland has directed that this matter be mediated and
that Sears, Shoppers World and the Debtors confer to select
a mutually acceptable mediator.
DOEHLER-JARVIS: Hearing On Extension of Exclusivity
---------------------------------------------------
A hearing will be held on December 18, 1997 on the motion
of Doehler-Jarvis, Inc., Harvard Industries, Inc. et al.,
to extend their exclusive periods in which to file a plan
or plans of reorganization and solicit acceptances thereto.
The debtors seek to extend the exclusive periods for a
further period of 180 days. If approved by the court, the
Exclusive Proposal period will be extended from December 4,
1997 through June 2, 1998 and the Exclusive Solicitation
Period will be extended from February 2, 1998 through
August 1, 1998.
The debtors claim that they have not yet, and could not
reasonably be expected to have, formulated a plan or plans
of reorganization. The debtors are in the process of
disposing of their non-core businesses and restructuring
their core operations and require additional time to
complete this process. The debtors need time to evaluate
the options for the disposition of Doehler-Jarvis and its
four subsidiaries.
The debtors state that creditors will not be prejudiced by
an extension of the exclusive periods and if there were
competing plans, there would be increased costs to the
debtors and reduced distributions to creditors.
ELI WITT: Seeks to Sell Property and Settle Claims
--------------------------------------------------
The debtor, The Eli Witt Company, Inc. entered into a
Purchase and Sale agreement to sell an improved parcel of
property in Ocala, Florida that used to be the debtor's
distribution center. The sale price is $10,300,000 and the
purchaser is Cohen Asset Management, Inc. and Black
Equities, Inc. The facility is encumbered by tax liens
totaling over $600,000, a mortgage in the amount of $7.8
million and a second mortgage held by Culbro Corporation in
the sum of $2 million.
Culbro is willing to waive all of its claims against the
debtor's estates for any part of the sales price in return
for a release of any claims the debtor had against Culbro
The debtor requests that a break-up fee arrangement be
approved, that any competing offer be $500,000 more than
the sale price offered by the purchasers, and that the
court enter an order setting a hearing date on the Motion
to Sell as soon as possible.
FLAGSTAR: Amended Plan
----------------------
In the course of the parties' litigation concerning the
rights of the 10% Noteholders, the adequacy of the Debtors'
Disclosure Statement, and the confirmability of the
Debtors' Prepackaged Plan, the Debtors negotiated and
amended their Plan to provide the following treatment of
creditors' claims:
Class Description Treatment
----- ----------- ---------
- Administrative Claims Paid in full, in Cash
1 Bank Claims Reinstated
2 Other Secured Claims Reinstated
3 Priority Claims Paid in full, in Cash
4 Senior Unsecured Claims New Senior Notes, paying
(10-3/4% & 10-7/8% Notes)
all principal and accrued
interest
5 Senior Subordinated Claims 95.5% of New Common Stock,
representing 44.986
shares of New Common
Stock for
each $1,000 11-1/4%
Debenture and 45.614
shares of New Common
Stock for each $1,000
11-3/8% Senior
Debenture
6 10% Convertible Claims 4.50% of New Common Stock,
representing 18.134
shares of New Common
Stock for each $1,000
10% Note, plus New
Warrants to purchase
4,000,000 shares of New
Common Stock at $14.60
per share until the 7th
anniversary of the
Effective Date
7 General Unsecured Claims Unimpaired
8 Equity Interests No distribution
LEVITZ: Motion for Approval of Severance Agreement
--------------------------------------------------
The Debtors are seeking approval to enter into a severance
and assistance agreement with Mr. Patrick J. Nolan, who has
been the Debtors' Chief Financial Officer and employed by
the Debtor for over 27 years.
Under the terms of the proposed Nolan Agreement, Mr. Nolan
agrees to provide the Debtors with ongoing reasonable
assistance in connection with the Debtors' business. In
turn, the Debtors will provide severance pay to
Mr. Nolan.
The salient terms of the Nolan Agreement are:
TERMINATION OF EMPLOYMENT AS CHIEF FINANCIAL OFFICER:
As of October 31, 1997.
RELEASES:
Mr. Nolan releases the Debtors from any and all claims
he may have had arising on or prior to the date of the
Nolan Agreement. Such release includes, among other
things, any claim under Mr. Nolan's prepetition employment
agreement, which provided for roughly 2 2/3 years severance
pay.
ASSISTANCE:
Mr. Nolan will provide the Debtors with reasonable
assistance in connection with the Debtors' business,
including, but not limited to, participation in
telephone conferences and meetings, reviewing the Debtors'
financial and other materials, and other related work.
COMPENSATION:
Until April 30, 1999, the Debtors will continue to pay Mr.
Nolan's salary and he will continue his employee
benefits.
Although Mr. Nolan will no longer be performing the
functions of Chief Financial Officer, the continuing
availability of his skills and unique knowledge of the
Debtors' business will ensure continuity and a smooth
transition in the vital office of Chief Financial Officer.
The settlement with Mr. Nolan provides great benefits to
the estate, since Mr. Nolan is waiving a claim for roughly
2 2/3 years severance for 18 months severance,
during which he will have to be available for assistance.
MARVEL: Reports Third Quarter Results
--------------------------------------
Marvel Entertainment Group, Inc. reported results for the
third quarter ended September 30, 1997. As a result of the
failure of Toy Biz, Inc. to report its financial
information to Marvel, the Company did not include Toy Biz
results for the quarter ended September 30, 1997.
For the third quarter ended September 30, 1997 net revenues
were $91.9 million compared to $126.0 million for the same
period in 1996. The net loss for the third quarter of 1997
was $30.6 million or $.30 per share vs. $15.2 million or
$.15 per share for the same period in 1996.
Losses for the third quarter can be primarily attributed to
the continued decline in demand for trading cards sold by
Fleer/SkyBox, general market softness in sticker products
sold by the Company's Italian subsidiary Panini S.p.A, and
a decrease in licensing revenues. Operations continued to
be hampered by the Chapter 11 proceedings.
Through June 30, 1997 Marvel had borrowed approximately
$94.2 million under its now expired DIP loan. Since then,
Marvel has repaid $3 million in principal, the proceeds
from the sale of a portion of its confectionery business,
and has paid interest through December 31, 1997 as required
by the DIP lenders. The Company believes it has sufficient
cash to meet its near term operational requirements, and
continues to pursue additional DIP (debtor- in-possession)
financing. During the third quarter the Company arranged
for a separate credit facility for Panini S.p.A. in the
amount of 27 billion lire (approximately $15.0 million) for
Panini's working capital purposes.
"Reducing overhead and streamlining operations continues to
be the Company's focus," said Mr. Joseph Calamari,
President of Marvel Entertainment Group. "The Company is
evaluating various restructuring activities to further
improve its operating efficiency throughout all of its
businesses. We are also reviewing and, where necessary,
renegotiating television and movie contracts to
assure that these agreements provide sound economic
benefits to Marvel. In addition, we have initiated new
marketing programs in publishing, promotions
and advertising and early indications from these activities
suggest that they are beginning to take effect."
Mr. Calamari further said, "the Company is in the process
of rebuilding its licensing programs and is currently
working closely with its theme park, restaurant and movie
and television partners to take advantage of such media
exposure. To this effect, the Company has recently
appointed Gary Gittelsohn as President of Marvel Studios.
Mr. Gittelsohn replaces Mr. Avi Arad who was terminated by
Marvel last month. The Company continues to invest in its
internet and electronic business and remains one of the
most frequented sites on AOL. The Company's first theme
restaurant at Universal Studios - Hollywood
in Los Angeles County is completed and expected to open in
December."
MOBILEMEDIA: Seeks Order to Advance Fees to Employees
-----------------------------------------------------
MobileMedia Communications,Inc., et al., seeks an order
authorizing the debtors to advance and/or reimburse certain
employee expenses for legal fees incurred in connection
with a proceeding pending before the FCC.
The FCC has stated that no pending FCC application could be
granted as to any entity in which any of the MobileMedia
suspected wrongdoers have an "attributable interest" unless
and until the status of the individuals as suspected
wrongdoers is resolved. This order presented serious
difficulties for the debtors in light of its apparent
requirement that all of the debtors officers, directors and
senior managers leave the debtors' employ prior to
reorganization.
The debtors state that they need the support and efforts of
senior management successfully to reorganize. Morale would
be hurt if the debtors could not reimburse their employees
for attorneys fees incurred in connection with a proceeding
that arose from the ordinary course of their work as
employees and that threatened severe consequences for these
individuals and for the debtors. Furthermore, the debtors
state that the attorneys have continued their work on
behalf of the employees with the expectation that they
would be paid.
The debtors are seeking $80,000 in payment of the current
attorney fees for said employee actions.
MONTGOMERY WARD: Seeks Loan From Lechmere
-----------------------------------------
Montgomery Ward Holding Corp. et al., seeks authority to
borrow money from Lechmere Inc. and to grant superpriority
status in the amount of the loan to Lechmere, Inc.
subordinate only to the liens granted to the reclamation
creditors under the reclamation program.
Montgomery Ward is not able to borrow the money at a
comparable rate from any other lender. Montgomery Ward
will borrow the money from Lechmere at LIBOR (The LIBOR
rate was 5.68% as of November 12, 1997). By using the
money borrowed from Lechmere to decrease its borrowing
under the Postpetition Financing Agreement, Montgomery Ward
will decrease its cost of borrowing. According to the
debtor the loan is a "win/win" situation.
Lechmere, in turn, will earn a higher return on the money
that it loans to Montgomery Ward than it is currently
earning. In addition, the loan will create no risk of loss
to Lechmere because of the superpriority status.
A hearing will be held on December 4, 1997.
MONTGOMERY WARD: Seeks to Defend and Indemnify Employees
--------------------------------------------------------
Montgomery Ward Holding Corp., et al., filed a motion for
an order granting authority to defend and indemnify
employees in actions and proceedings regarding claims
arising within the scope of employment.
If objections are filed, a hearing will be held on December
4, 1997.
The debtor states that from time to time, employees, such
as truck drivers and store managers are sued within the
scope of their employment and in connection with the sale
of goods in the ordinary course of the debtor's business.
These are cases where the employees acted in good faith and
in a manner reasonably believed to be in or not opposed to
the best interests of the debtor. The debtor, as a measure
of extreme caution, seeks court authority to continue the
practice of defending and indemnifying such employees
during the pendency of the bankruptcy.
SUN TELEVISION: Aggressive Expansion Plan
-----------------------------------------
Sun Television and Appliances, Inc. announced that it plans
to open as many as 20 additional new stores in 1998, in
addition to five stores it will open by mid-December.
Sun said that it would continue to target rural markets in
Ohio, Indiana, Pennsylvania, West Virginia, Virginia and
Kentucky.
As part of its turnaround strategy, the Company said that
it had entered into an agreement to refinance its existing
$100 million credit facility and obtain an additional $25
million term loan. The Company said the refinancing
when consummated will provide in excess of $30 million of
borrowing availability to continue its rural market
expansion plan and for general operating purposes.
The new three-year agreement, reached with a bank group led
by Bank Boston Retail Finance, Inc., includes a $100
million revolving loan, subject to certain borrowing
conditions, and a $25 million term loan, both due in 2000
and securitized with inventory, account receivables and
company owned properties.
As previously reported, the Company said that it had
reached agreement late last week to assume the store leases
for six locations being vacated by Steinberg's Stores,
Inc., a consumer electronics retailer that filed voluntary
bankruptcy proceedings in September 1997.
"As we've said before, we're not just going to sit around
and wait for things to get better we're taking aggressive
steps now to ensure Sun's long term health," said R. Carter
Pate, Sun Chairman and CEO, and a Managing Partner
with Price Waterhouse Business Turnaround Services.
Pate said, "The increased borrowing availability and new
store openings dramatically increases our flexibility in
repositioning Sun as the preeminent consumer electronics
retailer in its markets and sends a strong message that we
are aggressively executing a strategy to return Sun to
profitability."
Pate continued, "With the increased borrowing capacity now
in place, we can continue to aggressively implement our
rural market expansion strategy with the firm belief that
this is the right course to return Sun to profitability.
We have identified and are now evaluating a number of
viable rural markets and expect to announce more store
openings after the holiday selling season and
throughout 1998."
TODAY'S MAN: Seeks Court Designation for Alleged Insider
--------------------------------------------------------
The debtors, Feld & Feld, Benmol, Inc., D&L, Inc., F&S
International, Inc., Today's Man, Inc. and Today's Man
Outlet, Inc. claim that Leon Frenkel, acting by and through
OTA Limited Partnership (OTA) has "abused the bankruptcy
process that Congress carefully structured to maximize the
likelihood of achieving a consensual plan of
reorganization." They claim that Frenkel acted in bad
faith, to foster his own hidden agenda, and now, because he
did not accomplish all his goals, is attempting to derail
the confirmation of the debtors' plan.
Frenkel, an informal Committee member or invitee was also,
according to the debtors, a "market maker" in TMI common
stock. They claim that Frenkel gained material non-public
Plan information without disclosing that he or OTA was
making a market in the stock. Frenkel then solicited
rejections of the plan. The debtor states that Frenkel and
OTA have continually asserted that the debtors are being
overvalued by $40 million, but at the same time has been
unrelenting in seeking to maximize his equity distribution
in respect of this supposedly over-valued company.
The debtors now want the Court to designate Frenkel and OTA
as insiders, to establish that their rejection of the plan
was not in good faith, and to order that the votes of
Frenkel and OTA against the plan not be counted.
US ONE COMMUNICATIONS: Hearing on Extension of Exclusivity
----------------------------------------------------------
On December 2, 1997 the Court will consider the entry of an
order granting an extension of the exclusive periods in
which to file a plan or plans of reorganization and to
solicit acceptances thereof, on the motion of the debtor,
US One Communications Corp., et al.
The debtors claim that they have made substantial progress
toward completion of the cases. While the cases are large
and complex, the debtors have sold substantially all of
their assets, and established a bar date which resulted in
the filing of approximately 300 claims in an amount
exceeding $106 million. While the liquidation of the
debtors is nearing completion, it will take several months
to complete. WinStar contemplates a deadline of March 20,
1998 to assume executory contracts and leases, and a plan
will not be confirmed prior to that date.
The debtors are seeking an additional 101 day extension,
from November 21, 1997 to March 2, 1998 for the Plan period
and from January 20, 1998 to May 1, 1998 for the
Solicitation Period.
WESTERN PACIFIC: Reports Debts
------------------------------
As reported in the Colorado Springs Gazette, on November
20, 1997, Western Pacific Airlines had more than $80
million in unpaid bills, including a $10 million bank
loan and $40.66 to the Sundance Deli in Colorado Springs.
Together, it adds up to $80 million in liabilities for the
airline - whose creditors include 83 Colorado Springs
businesses.
But offsetting that is an estimated $116 million in assets
- ranging from cash and multimillion-dollar deposits made
on airplanes, to fixed assets such as office furniture and
employee uniforms.
That's some of the information WestPac released late
Tuesday as required by U.S. Bankruptcy Court. Officially
called the Statement of Financial Affairs and the Summary
of Schedules, the documents - about as thick as the
Colorado Springs phonebook - provides an up-to-date look at
WestPac's pre- and post-bankruptcy filing financial
picture.
Nearly one-quarter of WestPac's assets are in receivable
accounts. Visa, for example, owes WestPac $7.2 million for
ticket sales. Another $9.4 million is owed from the Airline
Clearinghouse, which sorts through much of the money owed
between airlines.
The documents show WestPac has $7.6 million in its main
operating account. Various sums are also tucked in other
places, such as $18,040 in petty cash scattered around
various airport gates.
The documents also list each piece of equipment owned by
the airline, from software to folding chairs. The list
includes both the purchase price and what the airline
believes the object is worth minus depreciation. The
airline claims, for example, to have about $456,000 worth
of furniture and fixtures, $461,000 of computer equipment,
and $1.3 million in software.
Much of WestPac's debt lies in fees the airline allowed to
accrue in the months preceding its Chapter 11 bankruptcy
filing Oct. 5. About $2.4 million is owed for landing and
ground service fees at airports. Another $15.5 million is
owed for aircraft leases, maintenance reserves on those
jets, and rent at airports.
WestPac's 1,500 employees have also accrued about $854,000
worth of vacation time, the airline reports. It also owes
about $1 million each for taxes and for passenger-fee
charges.
Perhaps most interesting is a list of nearly 1,000
companies - and a few individuals - that have not been paid
for services rendered to WestPac. Many of the creditors are
companies that handle customer-relations issues: hotels,
restaurants, baggage-delivery firms, and so on. All told,
the list accounts for more than $26 million of WestPac's
debt.
WESTERN PACIFIC: Sunrock Wants Remedy
-------------------------------------
A hearing will be held on December 1, 1997 at which time
Sunrock Aircraft Corporation Limited and Wilmington Trust
Company, as Trustee, are seeking an order either directing
the turnover of aircraft and equipment or alternatively
compelling assumption or rejection of lease.
The debtor is leasing an aircraft from Sunrock. The debtor
is delinquent and in default of lease payments. By
December 5, 1997, the 60th day after the petition Date,
Sunrock claims that payments due under the lease will
likely exceed $740,236.
Sunrock claims that it is entitled to repossession of the
aircraft unless, on or before the deadline, the Debtor
cures all defaults as provided in the code occurring and
continuing with respect to the lease, and agrees to perform
all obligations that become due under the lease after
December 4, 1997.
Further, Sunrock states that given the debtor's precarious
financial condition, Sunrock has no evidence or assurance
that the debtor is or will be able to comply with the
provisions of the leases, and that a period of time will be
necessary to market the lease, therefore, Sunrock is asking
the court to make the debtor either assume or reject the
lease.
BOND PRICING: Week of November 17, 1997
---------------------------------------
The following are indicated prices for selected bankrupt
and distressed issues:
Alliance Entertainment 11 1/4 '05 6 - 9 (f)
Amer Telecasting 0/14 1/2 '04 30 - 32
APS 11 7/8 '06 67 - 70
Bradlees 11 '02 6 - 7 (f)
Bruno's 10 1/2 '05 53 - 54 1/2
CAI Wireless 12 1/4 '02 30 - 32
Cityscape 12 3/4 '04 68 - 71
Flagstar 11 1/4 '04 45 - 46 (f)
Harrah's Jazz 14 1/4 '01 33 - 35 (f)
Hechinger 9.45 '12 76 - 77
Grand Union 12 '04 46 - 47
Levitz 9 5/8 '03 35 - 37 (f)
Liggett 11 1/2 '99 67 - 70
Marvel 0 '98 6 - 7
Mobilemedia 9 3/8 '07 14 - 16 (f)
Mosler 11 '03 72 - 74
Musicland 9 '03 90 1/2 - 92 1/2
Payless Cashways 9 1/8 '03 16 - 17 (f)
Speedy Muffler 10 7/8 '06 64 - 66
Stratosphere 14 1/4 '02 57 - 65 (f)
Trump Castle 11 3/4 '03 92 1/2 - 93 1/2
Wickes 11 5/8 '03 94 1/2 - 95 1/2
Volume was light and weak across the spectrum as we head
into the year-end. Cityscape continued to improve after a
conference call reporting quarterly results.
Speedy muffler was in 6 points following an operational
restructuring announcement.
-------------
The Meetings, Conferences and Seminars column appears
in the TCR each Tuesday. Submissions via e-mail to
conferences@bankrupt.com are encouraged.
Bond pricing, appearing each Friday, is supplied by DLS
Capital Partners, Dallas, Texas.
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.,
Princeton, NJ, and Beard Group, Inc., Washington DC.
Debra Brennan and Rebecca A. Porter, Editors.
Copyright 1997. All rights reserved. This material is
copyrighted and any commercial use, resale or publication
in any form (including e-mail forwarding, electronic re-
mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $575 for six months delivered
via e-mail. Additional e-mail subscriptions for members of
the same firm for the term of the initial subscription or
balance thereof are $25 each. For subscription
information, contact Christopher Beard at 301/951-6400.
* * * End of Transmission * * *