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/raid1/www/Hosts/bankrupt/TCR_Public/980618.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, June 18, 1998, Vol. 2, No. 119 Headlines BARNEY'S: The Pressman's Step Down BRAUN'S FASHIONS: Annual Meeting of Shareholders July 22 BRODERBUND: Stock Falls After $3.3 Million Loss Announced BUILDERS TRANSPORT: Enters Agreement with CIT Group CHINA PACIFIC: Nasdaq Decides Not to De-list Common Stock COUNTY SEAT: Reports Sales for 13 Weeks Ended May 2, 1998 EDISON BROTHERS: Reports Sales for First Quarter of 1998 GOLDEN BOOKS: Obtains $30 Million Working Capital Credit HEILIG-MEYERS: Optimism Over Improved Results HOME HOLDINGS: Proposes to Issue Senior Notes HOMEPLACE: Nassi Venture Tops Hilco In GOB Auction INTERMET: Joint Venutre Company Enters Bankruptcy KIA: Workers Near Accord LEVITZ: Study Results in Closing 13 Stores and Opening 7 MARUSHO KOSAN: Judged Bankrupt in Tokyo MOBILEMEDIA : Seeks Exclusivity Extension To Sept. 30 PETRIE RETAIL: Wins Approval To Terminate Pension Plan PREMIER LASER SYSTEMS: Ernst & Young Advises SEC R&S/STRAUSS: Wins Approval For Interim Cash Collateral Use RIVATEX: Kenya's Local Textile Industry Looks Bleak STEELTECH: Uncertain Future - Still Denying Bankruptcy UNISON HEALTHCARE: Sees EBITDAR Of $26M After Restructuring WASTEMASTERS INC: Acquires Holsted Enterprises WESTMORELAND: To Appeal Court Decision on Health Benefits ZENITH: Zenith Names New CFO ********* BARNEY'S: The Pressman's Step Down ---------------------------------- The New York Times reports on June 17, 1998 that Bob and Gene Pressman, the grandsons of the founder of Barney's Inc. will step down as co-chief executives as early as this week as part of the company's plan to emerge from bankruptcy. The two brothers will receive consulting contracts. Thomas C. Shull, who was named president of the company in September is viewed as responsible for the improvements in operating income over the last year. He will become the chief executive officer. According to the article, who will get seats on the new board of directors, a choice spot, is a big question in the retail industry. Interestingly, Bonnie Pressman, Gene's wife, will remain the retailers' fashion director, and perhaps gain more responsibilities in the reorganization. BRAUN'S FASHIONS: Annual Meeting of Shareholders July 22 -------------------------------------------------------- The Annual Meeting of Shareholders of Braun's Fashions Corporation will be held on July 22, 1998 for the following purposes: 1. To elect two Class 1 directors to serve on the Board of Directors for a term of three years; 2. To increase the number of shares of Common Stock reserved for issuance under the Company's 1997 Stock Incentive Plan from 300,000 to 450,000 shares; 3. To adopt a 1998 Director Option Plan; 4. To consider and act upon a proposal to approve stock options granted to the Company's non-employee directors; 5. To ratify the appointment of Price Waterhouse LLP as the Company's independent auditors for the fiscal year ending February 27, 1999. BRODERBUND: Stock Falls After $3.3 Million Loss Announced --------------------------------------------------------- The stock of Broderbund Software Inc. fell 15 percent today after the producer of software for homes and small business said it could lose as much as $3.3 million in its third quarter. The Novato, Calif.-based company said it expects to report a loss of 12 cents to 15 cents a share for its third quarter ended May 31, primarily caused by high product returns and customer rebates. A First Call Corp. survey of analysts had estimated earnings of 1 cent per share for the quarter. Broderbund said it expects revenue of $52 million. In the year-earlier quarter, it earned $11,000 on revenue of $39 million. Broderbund also announced that it had retained the investment banking firm of Donaldson, Lufkin & Jenrette in order to explore "strategic alternatives," but declined to comment further. (Chicago Sun Times - 06/15/98) BUILDERS TRANSPORT: Enters Agreement with CIT Group --------------------------------------------------- Builders Transport, Incorporated announces in a form 8-K filed with the SEC, that the Company has entered into an agreement with CIT Group/Business Credit, Inc., the lead lender under the Company's existing working capital credit facility for use of cash collateral to fund on-going operations. This agreement is limited in duration to 35 days from the date of the petition. Based in Camden, S.C., Builders Transport is a truckload carrier that transports a wide range of commodities in both intrastate and interstate commerce. The company provides dedicated contract carriage, dry van and flatbed service for shippers of a variety of products in medium, short-haul and regional markets. The company's stock is traded over the counter under symbol TRUK. CHINA PACIFIC: Nasdaq Decides Not to Delist Common Stock -------------------------------------------------------- A hearing was held before the Nasdaq Stock Market Inc. Listing Qualifications to consider whether the common stock of China Pacific Inc. should be delisted from the Nasdaq SmallCap Market due to the company's failure to file its Form 10-K for the period ended Dec. 31,1997, and its Form 10-Q for the quarter ended March 31, 1998, on a timely basis. It was determined in a hearing that China Pacific may continue to be listed on Nasdaq pursuant to certain exceptions, including the following: The company must file its Form 10- K for the fiscal year ended Dec. 31, 1997, with the Securities and Exchange Commission and Nasdaq on or before June 15, 1998; and the company must also file its Form 10-Q for the quarterly period ended March 31, 1998, by June 22, 1998. On June 15, 1998, China Pacific filed with the SEC and Nasdaq its form 10- K for the fiscal year ended Dec. 31, 1997 confirming a substantial loss for 1997 of $15.1 million, compared with a net income of $10.1 million during 1996. The company's unaudited management accounts for the three months ended March 31, 1998, indicate that the company continues to incur losses. The downturn in 1997 is attributable both to the general economic conditions prevailing in Asia and to specific management problems at the company's joint-venture partner, Chengdu Iron and Steel Plant (CISP), and the company's 60 percent owned joint-venture subsidiary, Chengdu Chengkang Iron and Steel Co. Ltd. (Chengdu Steel). Chengdu Steel and CISP have entered into an agreement recognizing that CISP, and not Chengdu Steel, is responsible for repayment of the Rmb211 million bank loans but it is unclear when, or whether, the bankloans will be transferred back to CISP. As a condition to request a transfer of the loans back to CISP, CISP has to obtain permission from the relevant Chinese governmental authorities to use its real property as collateral for the loans. CISP has made an application for such use of its real property to the relevant Chinese governmental authorities and is awaiting their approval. If such short-term bank loans are not transferred back to CISP, and the company is required to repay such loans during 1998, it is unclear whether the company will have the necessary cash resources to pay back the loans. This is due to the substantial losses the company incurred during 1997, and the fact that its current liabilities exceeded its current net assets as of Dec. 31, 1997, by approximately Rmb290.9 million. The company's operating loss, coupled with the uncertainties surrounding the Open View Properties and CISP receivables, has caused some uncertainty as to whether the company will be able to repay the approximately $15 million in 9 percent convertible debentures it currently has outstanding when due. The foregoing matters resulted in the inability of the company's auditors to express an opinion on the company's financial statements for 1997. At Dec. 31, 1997, the company's current liabilities exceeded its current assets by approximately Rmb290.9 million. The company's unaudited management accounts for the three months ended March 31, 1998, indicate that the company has continued to incur losses. COUNTY SEAT: Reports Sales for 13 Weeks Ended May 2, 1998 --------------------------------------------------------- May 2,1998 May 3,1997 ----------- ----------- Net sales $63,232 $93,158 Cost of sales 47,259 77,729 Gross profit 15,973 15,429 Selling, general and administrative expenses 22,677 23,290 Depreciation and amortization 2,782 2,200 Reorganization costs 4,179 Interest expense, net 3,279 1,243 Loss before income tax (benefit) (12,765) (15,483) Income tax (benefit) (3,650) Net loss $(9,115) $(15,483) EDISON BROTHERS: Reports Sales for First Quarter of 1998 ------------------------------------------------------- For the first quarter of 1998, Edison Brothers Stores Inc. reported a net loss of $22.3 million on net sales of $206.2 million. The net sales were a decrease of 7.9% from the comparable period of 1997. The decrease reflected an 8.8% decrease in the average number of stores in operation between the first quarter of 1997 and first quarter of 1998. Same-store sales declined 2.4%. GOLDEN BOOKS: Obtains $30 Million Working Capital Credit -------------------------------------------------------- On June 3, 1998, Golden Books Family Entertainment, Inc. announced that it had obtained a previously disclosed $30 million, three-year working capital credit agreement with NationsCredit Commercial Corporation, through its NationsCredit Commercial Funding division. In conjunction with the New Credit Facility, the indenture relating to the 7.65% Senior Notes due 2002 of Golden Books Publishing Company, Inc. was amended. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950162-98- 000700.txt HEILIG-MEYERS: Optimism Over Improved Results --------------------------------------------- Heilig-Meyers Company today reported consolidated results for the first quarter ended May 31, 1998. Net earnings were $10.2 million or $0.17 per share, compared to $13.8 million or $0.25 per share in the prior year. Total revenues for the quarter increased 18.1% to $668.9 million, compared to $566.3 million for the quarter ended May 31, 1997. Troy A. Peery, Jr., President and Chief Operating Officer, commented that the first quarter results showed considerable improvement from that of recent periods. He attributed these results to better performance in the Heilig-Meyers Furniture division, resulting from initiatives associated with the Company's "Profit Improvement Plan," as well as strong performance in the Mattress Discounters and The RoomStore divisions. Mr. Peery added that operating results for stores closed during the quarter, pursuant to the Profit Improvement Plan, negatively impacted results by approximately $0.05 per share as anticipated. William C. DeRusha, Chairman and Chief Executive Officer, commented that during the quarter the Company made significant progress with respect to its strategic initiatives and based on operating results, it appears that the Company is on track to accomplish the objectives outlined in the Profit Improvement Plan for the Heilig-Meyers Furniture division. He commented that the Company successfully implemented a number of cost control measures which had a favorable impact on the quarter. HOME HOLDINGS: Proposes to Issue Senior Notes --------------------------------------------- In a Form T3 filed with the SEC, Home Holdings Inc. proposes to issue under the Plan, Senior Notes due 2006 under an indenture and up to 315,000 Units of Earn Out Notes, Series I under an indenture. The Notes will be issued to discharge in part claims of existing creditors in the Bankruptcy Case. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0001005477-98- 001984.txt HOMEPLACE: Nassi Venture Tops Hilco In GOB Auction -------------------------------------------------- A joint venture of Nassi Group L.L.C., Gordon Brothers Retail Partners L.L.C., and Alco Capital Group won Monday's auction over Hilco/Great American Group to serve as HomePlace Stores Inc.'s liquidation agent for store closing sales at 10 locations. The group's winning bid guarantees the retailer 81.75 percent of the $30 million of store inventory at retail, compared with Hilco's stalking horse bid of 80 percent. The closing sales were scheduled to begin June 16. (The Daily Bankruptcy Review Copyright c June 17, 1998 - ABI 17-June -98) INTERMET: Joint Venutre Company Enters Bankruptcy ------------------------------------------------ Intermet Corporation (Nasdaq: INMT) announced that IWESA GmbH, an Intermet joint venture company, has entered bankruptcy proceedings. IWESA GmbH is a machining company located in Saarbrucken, Germany and machines precision parts including Intermet's castings, principally for the vehicular industry. IWESA continues to operate under the protection of a bankruptcy referee. Intermet also announced the sale of its Industrial Powder Coatings, Inc. (IPC) subsidiary to Industrial Powder Coatings Acquisition Corp., a group of investors led by M.G. Capital, L.L.C. of Chicago, Illinois. Industrial Powder Coatings, Inc. was purchased by Intermet as part of the Sudbury acquisition in December 1996. 1997 sales of IPC were $62 million. Doretha Christoph, Vice President-Finance and Chief Financial Officer, said that, "The net impact of the two above-mentioned events is expected to have little, if any, impact on Intermet's income statement for the second quarter. The sale of IPC created nominal gain, and losses from the IWESA bankruptcy are expected to be primarily attributable to the write-off of IWESA receivables to Intermet's Neunkirchen foundry, most of which was reserved in 1997." KIA: Workers Near Accord ------------------------ Management and labor unions at South Korea's ailing Kia Motors Corp. have struck a temporary accord to end a 16-day-old strike by 14,000 workers, a union spokesman said Tuesday. The tentative agreement came after Kia agreed to pay half of back wages or four months of salaries during marathon talks involving representatives from the management, labor union and the government. (Agence France Presse - 06/17/98) LEVITZ: Study Results in Closing 13 Stores and Opening 7 -------------------------------------------------------- Levitz Furniture Corporation announced the conclusions of a major study of regional markets across the country that has been ongoing for several months. The study weighed current and future competitive strength and current realizable real estate values. Consequently, the company has decided to close 13 stores in 5 markets where it lacks market dominance and expects to open stores in 7 markets where its competitive position is already strong. The company will seek court approval in its reorganization case for these actions. Markets affected by closures are Orlando and Tampa, FL, St. Louis, MO, San Diego, CA, and Denver, CO. Levitz will seek to open approximately 15 new leased sites in the next eighteen-month period, primarily in the New York, Los Angeles, Seattle and Philadelphia metropolitan areas. New sites would be serviced from existing distribution facilities for maximum efficiency. The company is actively reviewing several sites in the referenced markets and will aggressively pursue opening stores in these areas. Additionally, negotiations are close to conclusion for the relocation of the main Phoenix store, which opened in 1963. MARUSHO KOSAN: Judged Bankrupt in Tokyo --------------------------------------- Marusho Kosan, a member of the real estate industry, has been judged bankrupt by the Tokyo District Court, says Tokyo Shoko Research, a private credit-investigation agency. This marks the fourth major business failure of the year. Marusho Kosan is thought to carry a liabilities burden totaling 167.0 billion yen. Worsening conditions in the real estate industry were compounded by the burden of borrowings, generating massive losses on the company's books. Riding the heady wave of land prices in the bubble era, the company got involved in large- scale properties. Performance was steady, substantiated by revenues of about 45.2 billion yen for the November-end 1989 fiscal year. The company set up a stream of businesses, diversified into brand-name clothing manufacture and sales, and even sponsored a racing car team. But when top management were embroiled in an illegal financing scandal, the company's credibility faltered. The poor operating environment did nothing to help the company's situation. (Tokyo Financial Wire; 06/17/98) MOBILEMEDIA : Seeks Exclusivity Extension To Sept. 30 ----------------------------------------------------- Still in talks concerning "material amendments" to its reorganization plan, MobileMedia is seeking an extension of the exclusive period for soliciting plan acceptances to Sept. 30. The plan amendments "could involve the Debtors' emerging from Chapter 11 either as a stand-alone company or as part of a third-party business combination," the paging concern said. (Federal Filings Inc. 17-June-98) PETRIE RETAIL: Wins Approval To Terminate Pension Plan ------------------------------------------------------ Petrie Retail Inc. won approval to terminate its pension plan pursuant to an agreement with the Pension Benefit Guaranty Corp. The U.S. Bankruptcy Court in Manhattan approved an agreement under which Petrie will provide the PBGC with a $1.4 million allowed administrative claim in settlement of three claims against the company totaling at least $13.5 million. The apparel retailer has said junior lender Warburg Pincus Ventures L.P. would not agree to a reorganization plan that includes the continued existence of the pension plan after confirmation. ( The Daily Bankruptcy Review Copyright c June 17, 1998 ABI - 17-June- 98) PREMIER LASER SYSTEMS: Ernst & Young Advises SEC ------------------------------------------------ A letter sent by Ernst & Young to the SEC was filed in a form 8-KA with the SEC. The letter states that the disclosures of Premier Laser Systems, Inc. do not adequately describe revenue recognized in December, 1997. Ernst & Young LLP had concluded and reported to the company that the recognition of $2.4 million of revenue from a recorded transaction with a new distributor was inappropriate and that the company's third quarter financial statements must be restated. E&Y had concluded the $2.4 million transaction, which involved the movement of dental lasers and related products to the warehouse of a freight forwarder located in Irvine, California, represented a bill and hold transaction for which revenue recognition was not appropriate at December 31, 1997. Ernst & Young also stated that it does not believe the scope of the investigation by the special committee and special counsel complied with their recommendations. R&S/STRAUSS: Wins Approval For Interim Cash Collateral Use ---------------------------------------------------------- R&S/ Strauss Inc. has court authorization to use its lender's cash collateral on an interim basis consistent with a budget, pending a June 26 final hearing. The auto parts retailer may use National Canada Financial Corp.'s (NCFC) cash collateral through the earlier of July 1 or the date the company's $25 million debtor-in-possession financing agreement wins interim approval and NCFC's line of credit is paid in full. (Federal Filings Inc. 17-June- 98) RIVATEX: Kenya's Local Textile Industry Looks Bleak --------------------------------------------------- The future of the local textile industry looks bleak following the collapse of Kenya's only remaining Government-owned textile company the Rift Valley Textile. The fate of the company would have been sealed last week had the Government not moved to place it in receivership. The decision was supported by the various debenture holders who have a charge over the assets of the company. Rivatex was unable to service loans from the debenture holders who include the Industrial and Commercial Development Corporation, the Industrial Development Bank and the Development Bank of Kenya. The company is also indebted to other corporations including the Kenya Posts and Telecommunication Corporation, Kenya Power and Lighting Company and the Municipal Council of Eldoret. By putting the company in receivership, the government plans to save the assets from being auctioned by creditors through court action. (Africa News Service - 06/09/98) STEELTECH: Uncertain Future - Still Denying Bankruptcy ------------------------------------------------------ Steeltech Manufacturing Inc. may soon lay off workers and could face bankruptcy as its two major contracts run out. With just weeks to go on the deals, Steeltech has been unable to land new business. The metal fabricating and painting firm is in its third year of a contract to paint underbody frames of the Dodge Ram for Tower Automotive Corp. That contract expires June 30. The company also has a $68 million subcontract to build flat racks, or cargo beds, for U.S. Army trucks being built by Oshkosh Truck Corp. That contract will end in mid-July. Together, the contracts represent about 80% of Steeltech's sales. Steeltech President Chuck Wallace has acknowledged layoffs are possible, but the company's executives remain optimistic. Hugh Nelson, Steeltech's vice president of marketing, noted that the company reported its first operating profit in 1997. And for the first quarter of 1998, he said, the company reported a net profit. "The months of April and May have been very good for Steeltech, and we anticipate having a net profit for the second quarter of 1998," he said. "We have been able to turn the corner and report net profits because we have been able to increase production and productivity, as well as reduce and control costs," Nelson said. One creditor, Super Steel Products, retained Milwaukee bankruptcy attorney David A. Erne in April to find a buyer for Steeltech's equipment and facilities. Super Steel is trying to recover $2 million from Steeltech for equipment it leased to the company. Moreover, Steeltech owes millions to the city, state and other secured creditors and is months behind in its payments. The company said last week it continues to negotiate with the creditors. The creative public-private financing package designed by Steve Kent, of Robert W. Baird & Co., "was probably one of the most complex financing plans of any start-up in the history of North America," said Steve Anderson, executive vice president of Witech Corp., the venture capital arm of Wisconsin Energy Corp., which owns 1.47% of Steeltech. Steeltech was caught off guard when its disadvantaged status was challenged by a competitor, and the company's executives were unable to verify its status within the 10-day period the SBA required. The company eventually proved its minority status but by then had lost the contract. Wallace blamed some of the company's problems on delays in its $68 million subcontract to build cargo beds for Army trucks. Among other things, the work had been delayed by design changes the Army ordered. (Milwaukee Sentinel Journal - 05/31/98) UNISON HEALTHCARE: Sees EBITDAR Of $26M After Restructuring ----------------------------------------------------------- Unison Healthcare Corp. estimated that its annual revenues and EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent) would total about $156 million and $26 million, respectively, if the company's proposed restructuring goes as planned. After the restructuring, the nursing home operator, which had 1997 revenues of $224.2 million, expects to have approximately $30 million to $40 million of debt. (Federal Filings Inc. 17-June-98) WASTEMASTERS INC: Acquires Holsted Enterprises ---------------------------------------------- Effective March 31, 1998, WasteMasters, Inc. reports to the SEC that it acquired Holsted Enterprises, Inc. and its wholly-owned subsidiary, Sales Equipment Company, Inc. in exchange for 7,600,000 restricted shares of the Company's Common Stock and warrants to purchase an additional 3,000,000 restricted shares of its Common Stock until specified time periods at an exercise price of $4.17 per share. The consideration given for the transaction will be valued, for accounting purposes at approximately $ 6.5 million. Holsted generated revenues in 1997 of over $7.6 million through its subsidiary. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/[filename].txt 0001010549-98-000180.txt WESTMORELAND: To Appeal Court Decision on Health Benefits --------------------------------------------------------- Westmoreland Coal Co. plans to appeal a recent bankruptcy court ruling that set lifetime health benefits for one retired coal miners' pension plan at $146.1 million, a figure the company says it is unable to pay. In the reorganization plan, the company hoped to satisfy the obligations of three pension plans with about $75 million in cash and 10 percent equity stake in the company, which would have put the entire package at around $95 million. The pension benefits are claimed under the Coal Act, which guarantees lifetime health benefits to retired miners and their dependents. Under the Coal Act Westmoreland is obliged to pay health benefits for retired workers from other coal companies that are no longer doing business. (ABI 17-June-98) ZENITH: Zenith Names New CFO ---------------------------- Zenith Electronics Corp., the financially troubled maker of consumer electronics, said Monday that Edward J. McNulty has been named chief financial officer and executive vice president. McNulty had been CFO of General Binding Corp. since 1984. Zenith, based in Glenview, said in May that it planned to file for bankruptcy-court protection and become a closely held unit of its largest shareholder, LG Electronics Inc. of South Korea. Under a reorganization plan, Zenith plans to convert $200 million owed to LG Electronics into 100 percent equity in the restructured company. Unable to keep up with competitors in the face of ferocious price cutting in consumer electronics, the company had reported just one profitable quarter since 1985. McNulty replaces Robert N. Dangremond, who had been acting CFO since January. (Chicago Sun Times - 06/15/98) ********* 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 Lexy Mueller, Editors. 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 * * *