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/raid1/www/Hosts/bankrupt/TCR_Public/980114.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, January 14, 1998, Vol. 2, No. 9 Headlines AVATEX: Subsidiary Pays $3 Million for 14% Interest BRADLEES: Company plans to end bankruptcy case in April C & R CLOTHIERS: Seeks Final Decree and Closing of Case CAJUN ELECTRIC: Court Revokes Approval Trustee/RUS Pact CHERRY COMMUNICATIONS: Seeks Ok To Pay $10M For Switches CRAIG ELECTRONICS: Closes CRAZY EDDIE: They're Coming Back EVANSVILLE BREWERY: Buyer's Financing Called Iffy EXPRESS ONE: Troubled Texas-based Carrier FONE AMERICA: 80% Revenue Loss in Dispute with DAT GULF RESOURCES: Files Chapter 11 With Mustang Oil GUY F. ATKINSON: Court OKs Interim Procedures With Clark KIDDIE ACADEMY: Files for Bankruptcy MAX: Cuts Springs-DIA Flights to Eight Daily NYTEST ENVIRONMENTAL: Files for Bankruptcy OWENS CORNING: Trims Jobs SUNSHINE REHAB: Motion for Extension of Exclusivity TAL WIRELESS: Court Orders Rejection of Executory Contracts THE WIZ: Seeks To Sell Out-Of-Season Goods Worth $8M TOWN & COUNTRY: Unable to Meet 10-Q Filing Date WESTERN PACIFIC: Board Ousts Beauvais as Chairman WESTERN PACIFIC: City to Purchase 6-Gate Concourse WESTERN PACIFIC: Fills More Seats in '97 WESTMORELAND COAL: Continued Houlihan Engagement Questioned --------- AVATEX: Subsidiary Pays $3 Million for 14% Interest --------------------------------------------------- A Schedule 13D was filed with the SEC, by M & A Investments, Inc., a Delaware corporation ("M&A"), and NII Health Care Corporation, a Delaware corporation ("NIIHCC"; collectively, the "Reporting Persons"). The Reporting Persons are both wholly-owned subsidiaries of Avatex Corporation. M&A paid $3,000,000 for an approximate 14% limited partnership interest in DNL Partners, Limited Partnership (the "Partnership"). The Partnership beneficially owns 5,798,700 shares of Common Stock of Carson (exclusive of 818,640 shares that are deemed to be beneficially owned because of a Voting Trust Agreement). The 5,798,700 shares of Class A Common Stock beneficially owned by the Partnership represent shares that the Partnership has a right to acquire, at its option, at any time, upon the conversion in accordance with its terms of 5,798,700 shares of Class C Common Stock, par value $.01 per share, of Carson. The Reporting Persons are each wholly-owned subsidiaries of Avatex. Abbey J. Butler and Melvyn J. Estrin are Co-Chief Executive Officers, Co-Chairman of the Board of Directors and shareholders of Avatex, and are Co-Chief Executive Officers and Co-Chairman of the Board of Directors of each of the Reporting Persons. Messrs. Butler and Estrin are also members of the Board of Directors of Carson and, in such capacity, receive options to purchase Common Stock of Carson. BRADLEES: Company plans to end bankruptcy case in April ------------------------------------------------------- The Patriot Ledger, Quincy MA reported on 01/06/98 that Bradlees Inc. isn't meeting several of its financial goals, but the company says it's still on track to emerge from bankruptcy this year. The Braintree-based retailer's sales and operating earnings fell short of the company's recovery plan during the third fiscal quarter, ended Nov. 1, it said in a quarterly report to the Securities and Exchange Commission. The real measure of Bradlees' performance lies elsewhere, spokesman William Roberts said. "Look less to the third quarter and more to what happened at the end of the year," Roberts said. Last month, Bradlees obtained a new $250 million loan from banks led by BankBoston, $50 million more than its previous loan, Roberts said. The interest rate is lower, he said. That's a sign the company is doing well, Roberts said. Bradlees has been telling its bankruptcy creditors regularly how it measures up against its financial recovery plan. It included the third-quarter comparison in the SEC report. Sales were off by $20 million, while operating profit fell $1.2 million below the company's goal, Bradlees said. The retail chain blamed weak sales of denim clothing, warm weather that sapped outerwear sales and lower-than-expected toy sales. The chain's new strategy of keeping everyday prices low rather than trying to attract shoppers with deep-discount promotions hasn't paid off as quickly as expected, the company said. Despite the shortfalls, Bradlees' quarterly gross margin was just about what its plan called for: 29.5 percent actual versus 29.4 percent planned, the report said. Administrative and selling expenses were $3 million less than planned, another plus. But one reason for the improvement was a technical change that reduced the company's reserves, Bradlees said. The company ended up in the black in the third quarter for the first time in almost four years. A major reason for the $400,000 profit, however, was the better severance deal Bradlees struck with former chief executive Mark Cohen. Cohen agreed to accept $5.1 million instead of the $7.5 million package Bradlees originally negotiated. Bradlees won't report results for the holiday season until March, when it files its fourth-quarter financial report, spokesman Roberts said. The company intends to file a plan to emerge from bankruptcy by mid-April and expects to accomplish the reorganization by summer, he said. Although Bradlees has talked "on and off" about merging with Caldor Corp., another discount chain in bankruptcy court, no discussions are going on now, he said. Bradlees intends to emerge from bankruptcy without any merger, Roberts said. One mystery in the bankruptcy case: A committee representing creditors recently filed a motion under wraps. The committee, a major player in the case, would not disclose the subject of the motion or the reason for the secrecy. The judge in the case agreed to keep the filings confidential. C & R CLOTHIERS: Seeks Final Decree and Closing of Case ------------------------------------------------------- C& R Clothiers, Inc., reorganized debtor is seeking an order granting a final decree and closing the Chapter 11 case at a hearing to be held on January 27, 1998. The debtor sold substantially all of its assets at a court approved sale on December 18, 1996. The reorganized debtor has distributed $1,8882,207.87 to creditors and certain funds have been held in reserve pending fee applications. The plan was confirmed on August 29, 1997. The reorganized debtor has proceeded to liquidate all remaining assets of the estate. And according to the debtors there is no further basis for this case to remain open. CAJUN ELECTRIC: Court Revokes Approval Trustee/RUS Pact ------------------------------------------------------- Reported by Federal Filings Inc., on January 12, 1998, Cajun Power Cooperative Inc. (X.CEP) - U.S. Bankruptcy Judge Gerald Schiff, overseeing Cajun's case, surprised the parties in the case when he revoked his prior approval of Chapter 11 Trustee Ralph Mabey's settlement with the Rural Utilities Service on Dec. 15. The court ruled that it would neither hear nor determine proposed settlements outside of the confirmation process and directed the competing plan proponents to file amended reorganization plans that encompass all proposed settlements by Jan. 15. CHERRY COMMUNICATIONS: Seeks Ok To Pay $10M For Switches -------------------------------------------------------- Reported by Federal Filings, Inc. on January 12, 1998, Cherry Communications, Inc. is seeking court approval to purchase two refurbished and upgraded Northern Telecom switches from World Access Inc. for about $10.2 milllion, a discount from the more than $16 million price tag usually associated with new switches. The U.S. Bankruptcy Court in Chicago has rescheduled a hearing on the request from Jan. 8 to Jan. 15. CRAIG ELECTRONICS: Closes ------------------------- Consumer Electronics reported on 01/12/98 that Craig Electronics shut down after lenders received bankruptcy court approval to foreclose and sell off its inventory and remaining assets including its trade name. Craig, which battled throughout 1997 to stay afloat after being forced to restate its earnings and later seek bankruptcy protection is likely to convert its Chapter 11 bankruptcy to a Chapter 7 liquidation. Craig listed $24.1 million liabilities and $21.7 million assets. The top unsecured creditor is Nationsbank Commercial Corp. at $1.2 million, but the company's death blow was its failure to obtain a new credit agreement to replace the one that expired in August with a syndicate of banks led by Bankers Trust Commercial Corp. Craig fired top executives including Pres. Richard Berger in Sept. following disclosure of SEC investigation and suffered setbacks earlier in year when it was forced to switch its product reconditioning joint ventures in China after failing to gain govternmental approvals. In 1996, it had dropped video products, including VCRs that once were its low-end staple to focus on audio products including personal CD players and boomboxes. CRAZY EDDIE: They're Coming Back -------------------------------- Relatives of convicted felon Eddie Antar said they plan to bring back the chain of electronic stores he founded that went bankrupt years ago after a massive stock fraud. The first of the new Crazy Eddie stores is scheduled to open next month in Wayne, N.J. (Associated Press) EVANSVILLE BREWERY: Buyer's Financing Called Iffy ------------------------------------------------- The Evansville Courier reported on 01/07/98 that Michigan Avenue Partners could start up Evansville's 147- year-old brewery almost immediately if it can close a deal on it, but the prospective buyer's financing was in doubt Tuesday. Evansville Brewing Co. bankruptcy attorney Arend Abel confirmed that Michigan Avenue's lender had not agreed to back the deal under terms set at a Dec. 16 hearing in U.S. Bankruptcy Court in Evansville. Abel said he had discussed the setback by phone Tuesday with Michigan Avenue CEO Michael Lynch and his attorneys. But he declined to discuss details. "Those discussions are between (Lynch) and his lender. I'd prefer not to speculate," Abel said. Asked late Tuesday afternoon whether the deal with Michigan Avenue -- the only bidder that pledged to keep the brewery in operation -- could be salvaged, Abel replied: "That's so tough, because it changes from day to day. If you'd asked me at noon, I'd have said unlikely; if you asked me now, I'd say reasonably likely. But it's really a guess." What isn't a guess is that time is running out. "It's got to happen in the next few days, or it won't happen at all,' Abel said. To that end, a meeting of all "interested parties" -- Lynch, the creditors committee, Evansville Brewing officials, possibly National Bank of Canada officials and attorneys for all involved -- is set for two hours in advance of today's U.S. Bankruptcy Court hearing in Indianapolis. Lynch, the only bidder who pledged to keep the brewery in production, was ruled best bidder by federal bankruptcy Judge Basil H. Lorch III. Lynch bid $3 million and paid $250,000 in earnest money, which he could forfeit if he fails to complete the deal. Meanwhile, the Indiana Alcoholic Beverage Commission as of Tuesday afternoon still did not have Michigan Avenue's application for a brewer's license on file. But commission attorney Dan Steiner said Lynch's investor group could start brewing immediately if it is designated manager of the facility by current brewery owners. A "two- to three-week turnaround" was possible on a transfer of Evansville Brewing's existing license to Michigan Avenue. Evansville Brewing President Stephen W. Cook said he has already signed a form to effect the transfer, but hasn't submitted it because Lynch hasn't made application with the beverage commission. The application must be signed by Lynch, Steiner said. Evansville Brewing filed in October for reorganization under federal bankruptcy law. National Bank of Canada, its chief creditor, froze the company's accounts Oct. 1. Lynch attempted to buy the brewery in October, but missed a deadline for paying earnest money, prompting the bankruptcy filing. Lynch has been commanded by the court to close the deal, but missed the deadline. He said he was holding back because brewery officials hadn't taken care of license transfers and demanded to have complete say-so on how $100,000 in interim operating funds would be spent. Lynch said since he was putting up the money, his financial officer should co-sign the checks. EXPRESS ONE: Troubled Texas-based Carrier ----------------------------------------- The Gazette reported on 01/07/98 that mechanical problems in Durango have added to the woes of Express One. Express One, a troubled Texas-based carrier which has had ties to Western Pacific Airlines, is having more operational problems. A charter ski flight with 182 people on board from Texas aborted its landing at La Plata County Airport on Sunday night because of bad weather and an unspecified mechanical emergency. Express One Chief Executive James Wikert was a WestPac director from 1995 until October, when he and three others resigned from the board just before WestPac filed for bankruptcy. Wikert, who married into the Hunt oil family, represented the interests of Hunt Petroleum of Texas Inc., one of two major WestPac backers. WestPac leased two jets from Express One during the summer of 1996 to help WestPac expand its schedule. Because of safety problems, Express One temporarily lost its Federal Aviation Administration certification in 1996. On Sunday night, the charter "was on a landing approach to Durango airport, and forward visibility at that time was a quarter mile in freezing fog," said airport director Ron Dent. "The pilot elected to abort the approach due to visibility, and as he was executing a normal missed approach procedure he was overheard by airport operations declaring an emergency," said a spokeswoman for the Albuquerque airport,where the plane landed. The ski- charter aircraft carried 10 crew members and 172 passengers. FONE AMERICA: 80% Revenue Loss in Dispute with DAT -------------------------------------------------- The Mobile Communication Report stated on January 12, 1998 that Fone America (FA) sought Chapter 11 bankruptcy protection in U.S. Bankruptcy Court, Portland, Ore., citing an 80% revenue loss in a dispute with its major sales agent, DAT Services. The Company said it sued DAT seeking $20 million in damages. FA Pres. Peter Jacobs said it also suffered when Electric Lightwave competitive LEC attached accounts receivables and bank accounts on a "hit-and-run" basis, "making it impossible to plan the cash flow or attract additional investment capital." He said the introduction of prepaid cellular phones and wireless messaging products have been successful, although "we could not recover from the loss" of DAT's revenue. GULF RESOURCES: Files Chapter 11 With Mustang Oil ------------------------------------------------- The San Antonio Business Journal reported on January 9, 1998 that Gulf Resources Corp. filed a voluntary Chapter 11. Gulf Resources Corp. Address: 10000 IH-10 W., Suite 200, 78230 Chapter 11, Voluntary Liabilities: Over $100,000,000 Assets: Over $100,000,000 Business type: Holding company; 97-56619C Mustang Oil & Gas Corp. Address: 10000 IH-10 W., Suite 200, 78230 Chapter 11, Voluntary Liabilities: Over $100,000,000 Assets: Over $100,000,000 Business type: Oil & gas producer; 97-56620K GUY F. ATKINSON: Court OKs Interim Procedures With Clark -------------------------------------------------------- On Jan. 13, 1998--Atkinson (NASDAQ/NMS:ATKNQ) announced today that the U.S. Bankruptcy Court has approved its Interim Procedures Agreement with The Clark Construction Group Inc. Intended as a bridge to a Jan. 31, 1998 asset sale to Clark, the agreement allows Clark to assume immediate management of all of Atkinson's current backlog of bonded projects and to hire Atkinson employees for the creation of a "New Atkinson" subsidiary. "New Atkinson" will have the financing and bonding capacity to complete this Atkinson backlog and to pursue new projects using the Atkinson name and expertise. Atkinson employees hired by Clark shall continue to be available to Atkinson on a "lease back" basis for the completion of other Atkinson business. The Interim Procedures Agreement contemplates an eventual sale of Atkinson's assets to Clark, on terms similar to those in a term sheet submitted by Atkinson and Clark to the U.S. Bankruptcy Court on Dec. 29, 1997. Under the terms of the sale, which are subject to final negotiations, Clark would purchase the Atkinson name and good will and pay an additional sum for any equipment and other fixed assets it acquires. In addition, Clark would pay the Atkinson Chapter 11 estate a portion of the profits generated by "New Atkinson" over the next four years. Management of unbonded and joint venture projects may be transferred to Clark or retained by Atkinson. In either case, any net profits from those projects and collections on outstanding receivables will be for the account of Atkinson's Chapter 11 estate. The final details of the asset purchase agreement are expected to be negotiated and submitted to the Court prior to Jan. 31, 1998. Speaking for the Office of the Chairman, Atkinson President Jack Agresti said, "This course of action creates a solid opportunity for many of our employees and provides for the orderly completion of our contracts in a manner that will maximize value to stakeholders while preserving the Atkinson name." Atkinson operates both domestically and internationally providing full service construction to markets for power, infrastructure, industrial process, pulp and paper, mining, transportation, and water and wastewater treatment. Clark, a privately held company, is one of the nation's largest general building contractors and is headquartered in the Washington, D.C. area with regional offices and job sites throughout the country. KIDDIE ACADEMY: Files for Bankruptcy ------------------------------------ Kiddie Academy International said yesterday that it filed for protection under Chapter 11 of the federal bankruptcy code, citing significant debt obligations after closing certain premises. The child care services company's subsidiaries, including Kiddie Academy Child Care Learning Centers; Kid's Craft; and Kiddie Academy Franchising Systems. also filed for bankruptcy protection. Baltimore- based Kiddie Academy filed in the U.S. Bankruptcy Court for the District of Maryland. MAX: Cuts Springs-DIA Flights to Eight Daily -------------------------------------------- The Gazette reported on 01/08/98 that the thread connecting Western Pacific Airlines' passengers with Colorado Springs is getting thinner. Mountain Air Express today will cut the number of daily flights it offers between Colorado Springs and Denver International Airport from 14 to eight. The flights are operated in part out of an agreement with WestPac to connect Springs travelers to WestPac's Denver flights. WestPac serves 12 cities from Denver, but retains its corporate headquarters and reservations center in Colorado Springs. The reduction is in response to Dornier Aviation's repossession of one of the five aircraft in MAX's fleet. Dornier is the manufacturer and lessor of the airline's planes. A lack of passenger demand for the 14 daily flights led to the decision to pull one of two planes MAX has used to link Colorado Springs and Denver. Passengers booked on any of the discontinued MAX flights have been notified and booked onto another flight, MAX officials said Wednesday. A judge ruled last month that MAX, which filed for bankruptcy Nov. 6, must return the airplane no later than today because a lease agreement with Dornier had expired. MAX and Dornier were unable to reach an agreement extending the lease, although MAX officials say they hope to negotiate the use of a fifth aircraft with Dornier in the coming weeks. The other four planes in the airline's fleet are part of a separate, ongoing agreement. Because of the seasonal swings in the airline industry - January and February being among the slowest months - WestPac had been planning to reduce its use of MAX flights from the Springs regardless of the fate of the fifth airplane. But the loss of the plane puts an agreement between MAX and WestPac in jeopardy. A deal between the two carriers, signed in October, calls for MAX to dedicate two planes to the Denver-Colorado Springs shuttle, and another three to other routes WestPac dictates. In exchange, MAX has been receiving $200,000 per week from WestPac for the Springs service - an amount most likely to be reduced proportionately to the service reduction, although details have not been worked out. MAX also receives a portion of the ticket revenue from the other routes. Losing the plane has WestPac worried about how well MAX can fulfill its obligations under the contract. A hearing before the U.S. Bankruptcy Court in Denver on Wednesday to discuss the issue didn't provide a resolution, but the two sides continue to negotiate an updated agreement. If no agreement is reached before Tuesday, a final hearing on the matter will be held before the bankruptcy judge in Denver. MAX also has a tentative deal to fly routes for Denver- based Frontier Airlines, but the loss of the fifth airplane could leave parts of that deal in the air. For now, the rest of MAX's current schedule, including flights from Denver to Tulsa, Oklahoma City and Kansas City and a handful of ski resorts, remain unaffected. NYTEST ENVIRONMENTAL: Files for Bankruptcy ------------------------------------------ Nytest Environmental Inc. (OTC-Bulletin Board: NYTS) today announced that on January 9, 1998 it filed for protection under Chapter XI of the United States Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court in the Eastern District of New York, Case .198-10337-352. Nytest Environmental Inc. further announced: On September 26, 1997 Nytest closed its wholly owned subsidiary the NEI/GTEL Environmental Laboratories, Inc. Milford, NH laboratory. On December 8, 1997 Nytest gave peaceful possession of its wholly owned subsidiary the NEI/GTEL Environmental Laboratories, Inc. in Wichita, KS and Tampa, FL to its lender The CIT Group/Credit Finance. OWENS CORNING: Trims Jobs ------------------------- The Roanoke Times & World News reported on 01/10/98 that Owens Corning, Toledo, Ohio plans to cut 2,200 jobs, or 9 percent of its work force, and shutter a Canadian plant because of falling insulation prices. The cost-cutting will occur in the next year and provide money needed to invest in the business, said William Hamilton, spokesman for the building materials maker. "Our sales, general and administrative costs are higher than our competitors, and we need to reduce that," Hamilton said Friday. The company, which has about 24,000 employees, hopes to save $175 million a year by 1999. James Kelleher, an analyst at Argus Research in New York, said Owens Corning was making the right move. "I think there is recognition that they need to have a lean cost structure in place," he said. "To compete ... in all the different places in the world they want to compete, they have to have a lower cost structure for all the time."As part of the restructuring, a fiberglass insulation plant employing 225 people in Candiac, Quebec, will be shut down. About half the 2,200 layoffs will be in the United States, including 175 at the Toledo headquarters. The company had not identified other locations for the cuts. It has more than 100 factories in the United States, including four each in Texas, Georgia and Ohio. SUNSHINE REHAB: Motion for Extension of Exclusivity --------------------------------------------------- Sunshine Rehab, Inc. is requesting that the court enter an order for a 120 day extension of the exclusivity period within which the debtor has the exclusive right to file a plan. A hearing is scheduled for January 22, 1998. The debtor claims that it is unable to formulate a plan until there is a resolution of the jurisdictional issue in Florida Sunshine Rehab Limited Partnership's adversary proceedings. In addition, the law firm of Reed, Smith, Shaw & McCloy, lead counsel tin this case, has filed a motion to withdraw, which has caused some delay. The debtors, as the general partner of FSR is tied to FSR's plan and FSR has had to rapidly downsize, is negotiation in the adversary proceeding, and is exploring methods to create new revenue. TAL WIRELESS: Court Orders Rejection of Executory Contracts ----------------------------------------------------------- The debtor is authorized to reject executory contracts with the following entities: 1. The Irvine company 2. AVIVA Corporation Ltd. 3. Investor Associates Incorporated 4. Millennium Securities corp. 5. Comprehensive Capital Corporation 6. Dan France 7. Keith Corbin 8. Allan thompson 9. John Vargo THE WIZ: Seeks To Sell Out-Of-Season Goods Worth $8M ---------------------------------------------------- WIZ INC. (X.WIZ) - Wiz is seeking court authorization to sell certain excess, out-of-season inventory, consisting primarily of room air conditioners with an aggregate value, at cost, of approximately $8 million. The retailer asserted that the sale would "quickly raise much needed cash during a traditionally slow period of the year for retailers and minimize the need to borrow under the Debtors' post-petition credit facility and incur the additional interest expense attendant to such borrowings." TOWN & COUNTRY: Unable to Meet 10-Q Filing Date ----------------------------------------------- Town & Country Corporation (the "Company") is unable to meet its filing date for the Form 10-Q for the period ended November 23, 1997, without unreasonable effort or expense. The Company's Chapter 11 bankruptcy filing and attendant operational and managerial issues have made it unusually difficult to complete the Form 10-Q. Accordingly, the Company is requesting an extension. The Company currently anticipates that its operating loss will be approximately $4.9 million for the nine months ended November 23, 1997 as compared to loss from operations of approximately $36.0 million for the nine months ended November 24, 1996. The Company also currently anticipates that it will have a net loss of approximately $25.6 million for the nine months ended November 23, 1997, as compared to a net loss of approximately $48.5 million for the nine months ended November 24, 1996. WESTERN PACIFIC: Board Ousts Beauvais as Chairman ------------------------------------------------- The Gazette reported on 01/08/98 that Edward Beauvais, the founder of Western Pacific Airlines, has been removed as chairman of the company. WestPac's board of directors voted to reject Beauvais' employment contract, a deal signed in November 1996 when the airline's major shareholders pulled the day-to-day operations away from Beauvais. Under Chapter 11 bankruptcy rules, any contract can be rejected by the company in an effort to reorganize finances. WestPac filed for bankruptcy in October. Beauvais' three-year contract paid him $350,000 per year and a monthly allowance of $550 for a car, travel and entertainment. While losing that compensation and the title of chairman, Beauvais will remain, for now, a member of the board. That's because it would take a shareholder vote to remove him. But Beauvais fully expects to be removed if WestPac emerges from bankruptcy. Beauvais has been publicly silent since he was removed as president and chief executive of the company and replaced by Robert Peiser. But reached at his home Wednesday night, Beauvais said the airline's overhaul has been hard to take. "I don't agree with anything that happened in 1997, but I have no hard feelings," Beauvais said. "That's called risk." "This airline wouldn't be here without him," said WestPac spokeswoman Elise Eberwein. "Market conditions dictated something changing, but that doesn't make him any less of a contributor to the Western Pacific story." Sources close to WestPac said there has been no love loss between Peiser and Beauvais. Beauvais is said to have generally opposed most major changes Peiser suggested. Much of that disagreement stemmed from Peiser's decision to move most of WestPac's flight operations to Denver in June. The remainder of WestPac's service in the Springs moved north soon after the airline declared bankruptcy. "I am very proud of what WestPac did for Colorado Springs and what Colorado Springs did for WestPac," Beauvais said. "Colorado Springs was the perfect place for WestPac." Is it still? "Of course." Beauvais will remain chairman of Mountain Air Express, which he started as a commuter operation for WestPac but which now operates almost independently. With no plans to move from the area, he doesn't discount the idea of trying to build another Springs-based airline - either an expanded MAX or another airline. A Pueblo native, Beauvais founded WestPac in 1994 on the premise that Colorado Springs was underserved by major airlines. When the airline began flight operations in April 1995, it used low fares, promotions and anti-Denver International Airport sentiment to attract travelers. Within a year, WestPac had 14 Boeing 737s in its fleet and served 20 cities. A public stock offering in December 1995 netted about $48 million. But unforeseen losses in 1996 fed skepticism among the Hunt and Gaylord families, WestPac's largest shareholders and controllers of the board. Unexpectedly, Beauvais was removed from his position as president and chief executive, replaced by Peiser. WESTERN PACIFIC: City to Purchase 6-Gate Concourse -------------------------------------------------- The Gazette reported on 01/08/98 that the city of Colorado Springs has agreed to buy Western Pacific Airlines' $4 million satellite concourse at the Colorado Springs Airport for $115,000 and the waiver of about $200,000 in debts the airline owes the city. The airline's debts are mostly from missed lease payments and landing fees from before WestPac's Oct. 5 bankruptcy filing. The two parties filed a joint motion in U.S. Bankruptcy Court in Denver late Friday detailing the agreement. If the deal is approved by the court, the city will receive the six-gate concourse east of the airport's main terminal plus two escalators WestPac had planned to use when a connector was built to the main building. WestPac also will be permitted to walk away from several lease agreements it had for gates, office space and a maintenance hangar at the airport. WestPac and its subsidiary, Mountain Air Express, used the terminal for about six months until WestPac moved most of its flights to Denver in June. Neither airline has used the terminal since then. Joint plans with the city to connect the building with the main terminal were then put on hold. The city is undecided about whether to proceed with that connection or how it will use the temporary concourse. The motion was one of several WestPac-related news items this week: The leasing company that supplies WestPac with three of its 18 Boeing 737 jets is asking for its planes back. Boullioun Aircraft Holdings Co. is appealing a decision in bankruptcy court last month that opened the door for the airline to receive up to $50 million in financing - essentially to recover from bankruptcy. Part of that deal gave WestPac's new financier, Smith Management, the ability to sublease any part of the airline's fleet, pending court approval. But subleasing is generally not permitted under the lease agreements WestPac has with various aircraft owners. Boullioun argued before a judge in U.S. District Court in Denver the lease agreement should be ruled in default, giving Boullioun the ability to take the planes back. A ruling could come as early as Monday, but WestPac officials hope for a settlement with Boullioun outside court. The airline also said Friday that Smith Management will buy out the $10 million loan offered WestPac by the airline's former backers, the Hunt and Gaylord families, in September. That will provide up to $7 million that had been part of a collateral account tied to the original loan. The Hunts and Gaylords provided much of WestPac's backing before the airline's bankruptcy filing. WestPac inspected four of its 18 Boeing 737s, reporting no problems with hinge fasteners on the planes' horizontal stabilizers. The Federal Aviation Administration ordered the inspections for 211 recently built 737s - including four planes WestPac received from Boeing last summer - because the fasteners were missing from a SilkAir 737 that crashed in Indonesia last month. The horizontal stabilizer is the winglike structure on both sides of a plane's tail. WestPac said Friday its planes were 56.9 percent full in 1997, a drop from the 58.2 percent reported in 1996, its first full year of operations. In December, WestPac filled 56.6 percent of its seats, down from the 63.4 percent it filled in December 1996. WESTERN PACIFIC: Fills More Seats in '97 ---------------------------------------- The Denver Post reported on 01/10/98 that Western Pacific Airlines said it filled 56.9 percent of its seats in 1997, down 1.3 points from 1996. WestPac's passenger traffic in 1997 was actually up 31.3 percent from the previous year, but it filled a smaller percentage of seats because its capacity, measured as the number of available seat miles, grew at a slightly faster pace in 1997 - 34.2 percent. Capacity was up because the airline added new aircraft last year. Passenger traffic is measured in revenue passenger miles, or one passenger carried one mile. WestPac filed for Chapter 11 bankruptcy in early October and the airline's passenger traffic levels for December and the entire fourth quarter apparently showed the effects of some consumer skittishness about booking flights on the carrier. Last month, WestPac filled 56.6 percent of its seats, down from 63.7 percent in December 1996. Passenger traffic was depressed in early December "when there was considerable uncertainty about investor interest" in the airline, said WestPac Senior Vice President Mark Coleman. But traffic picked up later in the month after bankruptcy court approval of Smith Management Co.'s plan to pump $30 million in fresh capital into WestPac, the airline said. The airline hopes to emerge from Chapter 11 in March. On Friday, WestPac's lawyers filed a motion in bankruptcy court that details Smith Management's buyout of a $10 million loan that the Gaylord family and Hunt Petroleum made to WestPac in September. The Gaylord and Hunt interests were major shareholders in the airline. Smith's action "puts the note into the hands of a party" with the incentive to maximize the value of the airline, and it makes another $6.9 million in cash available to WestPac, the document said. "The result gives Western Pacific an added measure of both security and flexibility." WESTMORELAND COAL: Continued Houlihan Engagement Questioned ----------------------------------------------------------- The UMWA 1992 Benefit Plan and the UMWA Combined Benefit fund objects to Westmoreland Coal Company's third motion to extend the employment of Houlihan, Lokey, Howard & Zukin. The chief objection of the Benfit Plan and Fund is that despite nearly a full year of employment, Houlihan has failed to prepare a non-consensual plan. If a non- consensual plan already has been prepared, then Houlihan's services are no longer needed. At least, the objectors argue Houlihan should be hired to perform specific work. In a separate matter, the court approved the settlement of unmined mineral tax appeal and settlement under Hold-Back agreement filed by Westmoreland Coal Company. The court approved the settlement agreement and mutual release between Kentucky Criterion Coal Company, a non-debtor subsidiary of Westmoreland and certain Kentucky governmental taxing agencies and authorities and the related agreement dated 12/15/97 between Westmoreland, Kentucky Criterion, Criterion Coal Company, and Deane Processing Company and Consol of Kentucky, Inc. --------- A listing of meetings, conferences and seminars appears every Tuesday. 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, Editor. Copyright 1998. 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 * * *