/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/980709.MBXT R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 9, 1998, Vol. 2, No. 133 Headlines ARIMETCO INC: Summo USA Signs Letter of Intent BEER ACROSS AMERICA: Files Chapter 11 - $7 Million in Debt BONNEVILLE PACIFIC: Disclosure Statement Approved CAI WIRELESS: Standard & Poor's Lowers its Rating CLARK REFINING: Standard & Poor's Ratings COMMAND SECURITY: Expects Net Loss of $4 Million CROWN BOOKS: Likely to Commence Bankruptcy Proceedings DOW CORNING: Agrees to Plan Paying $3.2 Billion to 177,000 FPA MEDICAL: Announces Closing 15 Locations GMD CONSTRUCTION: Practically Bankrupt GEOTEK: Asks for Israeli Court Protection GOLF TRAINING: Receives Notice of Default HAGERSTOWN FIBER: Hearing on Extension of Exclusivity HARVARD INDUSTRIES: Seeks Auctioneer For Sale of Harman INPHOMATION: Psychic Friends Network to Be Auctioned INTERNATIONAL MONETARY: Letter of Intent For Ponce Port MANHATTAN BAGEL: Warehouse Expansion MERCURY FINANCE: Reaffirms Intent to File Plan MONTGOMERY WARD: Seeks To Hire Contract Consultant MOTOROLA: Reports Second Quarter, First Half Results OLYMPIA & YORK MAIDEN LANE: Pre-Packaged Bankruptcy Plan NEXTWAVE TELECOM: $25M DIP Pact Faces Opposition PEREGRINE: Turnaround Plan Announced PRESLEY COMPANIES: Competes Extension of Loan Facility R&S/STRAUSS: Revised $25M DIP Pact Gets Final Nod SINOAMERICAN TELECOM: Urgent Attempt at Sale Fails TENNEY ENGINEERING: Note Repayment Not Made ********* ARIMETCO INC: Summo USA Signs Letter of Intent ---------------------------------------------- Summo Minerals Corporation is pleased to announce that its wholly-owned subsidiary, Summo USA Corporation, has signed a letter of intent with Arimetco, Inc. for the acquisition of the Johnson Camp Mine, located east of Benson in southeastern Arizona. The transaction is subject to completion of a definitive agreement and approval by the Bankruptcy Court, with subsequent purchase and closing subject only to successful completion of a due diligence review by Summo and its lenders for a period of up to 150 days after Court approval, and Arimetco's ability to deliver clear and unencumbered title to the property. The terms of the agreement call for an initial payment upon Court approval and monthly payments to Arimetco during the due diligence period, with the remaining payment upon closing for a total of US$1.85 million cash and payment of a US$0.02/lb. royalty on copper production at copper prices at or above $1.05/lb. The royalty obligation is capped at US$1 million. Also, upon closing Summo will assume current environmental obligations and other costs which go with ownership of the property, estimated at US$2 million. The Johnson Camp Mine is an open pit heap leach SX-EW operation, with a designed plant capacity of 14 million pounds of copper cathode annually. Mining was suspended in May, 1997; the operation is currently producing copper from inventory in the heap only, although additional reserves exist at the Copper Chief and Burro Pit deposits to allow resumption of operation at full capacity. Summo intends to complete a feasibility study to restart mining and increase copper production to full plant capacity upon closing of the transaction with Arimetco. BEER ACROSS AMERICA: Files Chapter 11 - $7 Million in Debt ---------------------------------------------------------- Lake Bluff-based Beer Across America has filed for Chapter 11 bankruptcy court protection from creditors, citing more than $7 million in debt. The company says it grew too fast and when the growth stopped, it was strapped with the increased cost of doing business. "We had four or five years of real fast expansion, then we got into a rough cash-flow situation," Louis Amoroso, president of the company, said Wednesday. With about 100,000 members or customers receiving shipments of microbrews monthly, Beer Across America found itself hemorrhaging $3.5 million in 1996. Liabilities eventually grew to $7.7 million, according to court filings, vs. $3.4 million in assets. Among major debtors are McCarthy Graphic Services Inc. in Sleepy Hollow, owed $191,478. Waterstone Consulting in Des Plaines is owed $128,450. The company has cut its work force from 80 full-time employees to 60. (Chicago Daily Herald; 07/02/98) BONNEVILLE PACIFIC: Disclosure Statement Approved ------------------------------------------------- In an order entered on July 2, 1998, the United States Bankruptcy Court for the District of Utah (the Honorable John H. Allen presiding) approved the Chapter 11 Bankruptcy Trustee's (Roger G. Segal) Amended Disclosure Statement for the Trustee's Amended Chapter 11 Plan for the Estate of Bonneville Pacific Corporation (BPCO) Dated April 22, 1998. With such approval the Trustee will mail his Disclosure Statement, Plan and Ballots to Bonneville Pacific Corporation's known creditors, shareholders and other parties-in-interest by no later than July 20, 1998. Ballots (and any objection to the confirmation of the Trustee's Plan) must be completed and returned to the Trustee by no later than August 17, 1998. The Bankruptcy Court has scheduled a hearing on the confirmation of the Trustee's Plan to begin on August 26, 1998. CAI WIRELESS: Standard & Poor's Lowers its Rating ------------------------------------------------- Standard & Poor's Lowered its senior unsecured rating on CAI Wireless Systems Inc. to 'D' from triple-'C'- plus. The downgrade is based on the company's announcement that it will likely seek a voluntary Chapter 11 filing around July 27, 1998, as well as the multiple extensions of interest payments on the 12.25% notes which was originally due June 1, 1998. Additionally, Standard & Poor's lowered its corporate credit and senior unsecured ratings of CS Wireless Systems Inc. to single-'C' from triple-'C'- plus and triple-'C'- minus respectively. The ratings are also placed on CreditWatch with negative implications. The ratings on CS Wireless reflect the 60% ownership by CAI Wireless Systems Inc. and the likelihood of consolidation in any bankruptcy filing. CS Wireless is also 36% owned by Heartland Wireless Communications Inc., which is also rated 'D'. Standard & Poor's continues to believe that the current business of analog transmission of multichannel television signals may not be viable over the near term and ratings on other wireless operators Wireless One Inc., American Telecasting Inc., and People's Choice TV Corp. face further potential downgrades in the near future. CLARK REFINING: Standard & Poor's Ratings ----------------------------------------- Standard & Poor's placed its ratings on Clark Refining and Marketing Inc. and Clark USA Inc. on CreditWatch with negative implications. About $1 billion in rated debt securities, bank loans, and preferred stock are affected. The placement follows Clark's announcement of a definitive agreement to acquire British Petroleum's Lima, Ohio, refinery for a purchase price of $175 million, plus about $60 million for inventory. The acquisition will give Clark a fourth refinery, including three in the Midwest, and total throughput capacity of 540,000 barrels per day. There are no retail assets associated with the transaction. The bulk of the acquisition funding is expected to be debt financed, raising outstanding debt about $1 billion. While the acquisition adds operating flexibility, financial risk will increase as a result of higher debt service requirements. Further, the midwest refining market is saddled with an oversupply of capacity and significant capital investments could be required to make the plant operate more profitably and encourage competitors to close. In 1996 British Petroleum announced the intention to close the Lima refinery based on weak industry fundamentals and its determination that without large capital investments, the plant cannot generate satisfactory profitability. The refinery is mid-sized has a throughput capacity of 161,000 barrels per day and processes primarily light sweet crude oil. About half the product slate is gasoline, and most of the remaining is jet fuel, diesel, and heating oil. The long-term economics of light sweet refinery such as Lima is poor since production of light, sweet crude oil is declining, while heavy sour production is increasing. COMMAND SECURITY: Expects Net Loss of $4 Million ------------------------------------------------ Command Security Corp. reported in its 10K filing extension that it expects a net loss of approximately $4 million for the fiscal year ended March 31, 1998. In addition to reductions in gross margins of approximately $1.1 million primarily due to increased reserves for general liability claims and increased labor costs, the company increased its provision for doubtful accounts by $1 million, primarily due to GFM, a large service agreement client that filed for bankruptcy in August 1997. The company also incurred a $750,000 charge for the write- down of the value of intangible assets, it incurred losses in connection with certain labor claims of approximately $350,000, it reversed income tax benefits of $260,000 recorded in previous years by increasing deferred tax asset valuation allowances and reported an approximately $600,000 increase in general and administrative expenses. William C. Vassell, chairman of the board said: "We are continuing our efforts to reduce expenses and improve margins. We are beginning to see results from our marketing efforts and expect to see continued growth in our revenues. I think it is important to note that although we expect to report a loss for fiscal 1999, due in substantial part to approximately $1.35 million in amortization of intangibles, we expect to continue to have positive cash flow from operations." Command Security Corp. provides security services to company owned offices in New York, New Jersey, California, Illinois, Connecticut, Florida and Pennsylvania and provide services to independent security companies nationwide. CROWN BOOKS: Likely to Commence Bankruptcy Proceedings ------------------------------------------------------ Crown Books Corporation (Nasdaq: CRWN) today announced that it is likely that the company will commence a voluntary reorganization proceeding under Chapter 11 of the United States Bankruptcy Code. The Company anticipates that the bankruptcy filing will occur within the next several days. The company has previously disclosed that it is exploring alternatives for maintaining adequate liquidity as a result of substantial declines in the Company's financial performance and deterioration of its business in recent years. While the company continues to explore such alternatives, it has determined that any alternative that it pursues is likely to include the reorganization of the Company through a bankruptcy filing. DOW CORNING: Agrees to Plan Paying $3.2 Billion to 177,000 ---------------------------------------------------------- Dow Corning Corp. has agreed to a plan that would pay $3.2 billion to at least 177,000 women for ailments related to ruptured silicone breast implants. U.S. Bankruptcy Judge Arthur Spector in Bay City announced late this morning that he had approved the settlement between Dow Corning and representatives for the women. The deal, which calls for Dow Corning to end its three-year stay in Chapter 11 bankruptcy protection, would open the way for women to be compensated for immune system illnesses allegedly caused by silicone and to receive payments for ruptured implants. Babara Houser, a lawyer for Dow Corning, confimed that the settlement had been reached. She said it would affect 177,000 women. Women could also choose to receive $5,000 to have the implants removed, The Wall Street Journal reported. The agreement is similar to a November 1995 deal signed by other corporate defendants, including Bristol-Myers Squibb Co., in which women have received an average of $26,000. The Dow Corning deal calls for women to receive an average of $31,000 for disease and disability compensation, the paper said. Women who prefer to litigate rather than accept the payments may do so, but amounts will be limited, the paper said. Studies of thousands of women have turned up no solid evidence that implants cause ailments, but the issue is still under debate among scientists and in the courts. Until today, the company's $4.4 billion plan to pay its debts and emerge from bankruptcy had included a $3 billion payment to the implant plaintiffs over 16 years. The women wanted $3.8 billion, paid out over three years. FPA MEDICAL: Announces Closing 15 Locations ------------------------------------------- FPA Medical Management continued to contract with the announcement that it planned to close 15 facilities in Tucson and Phoenix. The troubled managed health care company said the closure of the Thomas-Davis Medical Centers would be effective Aug. 31 and affect 800 employees. (San Diego Union And Tribune; 07/07/98) FPA Medical Management shut down operations in Texas, where it had overseen medical care to 130,000 people. The pullback from Texas marks the biggest public retreat for the San Diego company, which had grown rapidly from a small health care provider to include 8,000 doctors and 1.4 million patients. FPA notified its doctors in Texas that it would cease operations as of July 1 and told the physicians to contact their health maintenance organizations for instructions on how to continue to provide medical care to their patients. News of the shutdown in Texas overshadowed the announcement of a financing package that includes a $25 million cash infusion to FPA from its bankers. The package also defers payments that would have been due July 8. The health care company said it would use $22 million to pay doctors and other key vendors. The balance will be used for corporate purposes, the company said, including payments it needs to continue services it is contracted to provide. FPA did not say whether it will be able -- or intends -- to make a $2.6 million payment on nonbank debt that is due on July 15. If FPA misses that payment, the company could be plunged into bankruptcy. FPA last month failed to make the $2.6 million payment but avoided a default because of a 30-day grace period. The grace period expires July 15, at which time bondholders could declare default and demand immediate repayment of $80.5 million, the full value of their bonds. Dr. Stephen Dresnick, chief executive officer of FPA, said in a prepared statement: "We are confident that, in a reasonable period of time, we can preserve our core businesses and return this company to profitability." FPA, however, has never reported a yearly net profit, unless it excluded the impact of one-time charges.San Diego Union Tribune -07/03/98) GMD CONSTRUCTION: Practically Bankrupt -------------------------------------- Grupo Mexican de Desarrollo (GMD), one of the operators of highway concessions most affected by the government rescue program, which cost the company 700 million dollars, hopes to restructure its debts with a trust through which it would pay creditors. But analysts point out that the company is practically in a situation of "technical bankruptcy", despite the roughly 300 million dollars the government will pay it for its highways concessions, since its situation is "bad", with operational losses. The construction company originally invested one billion dollars in the highways projects, of which it will only recover 300 million. Meanwhile GMD's debts amount to more than 500 million dollars. (InfoLatina-07/07/98) GEOTEK: Asks for Israeli Court Protection ----------------------------------------- Geotek Technologies Israel and its US parent company, Geotek Communications filed an urgent motion with the Tel Aviv District Court for an order to stay all proceedings against the Israeli company for a period of three months. According to the application, the filing of the Chapter 11 petition in the US may cause the company's creditors to fear that Geotek is facing liquidation and the winding up of its businesses, and that their chances of collecting monies owed to them are receding. Such misgivings are liable to be translated into a flood of lawsuits, Geotek alleges. Accordingly, and to enable the company to work out a rehabilitation plan, the court was motioned for a stay of proceedings order, to enable Geotek to take steps to procure the additional financing necessary for it to continue operating as a going concern. The application also states that most of the company's staff are terminating their employment with it not later than July 15. The remaining 20 employees are the more senior ones, belonging to company management. (Jerusalem Post-07/01/98) GOLF TRAINING: Receives Notice of Default ----------------------------------------- Golf Training Systems, Inc. (Nasdaq: GTSX) (GTS) announced today that it has received a notification of default and demand for payment from Meadowcroft Golf Associates, Inc., the assignee of John H. Laeri, Jr., under the loan agreement between GTS and Mr. Laeri dated December 31, 1997. Payment of the $1 million principal plus accrued interest is due on or before July 10, 1998. The loan is secured by substantially all of the Company's operating assets. Daniel A. Gordon, Chief Executive Officer said, "We are in negotiations with Meadowcroft Golf Associates with respect to possible resolutions since we are unable to make this payment, but we can not determine what the final outcome will be at this time." GTS specializes in the manufacture, marketing and distribution of golf improvement, learning and performance- enhancement products professionally designed for golfers of all ages and all skill levels. These special products are offered primarily in the United States. HAGERSTOWN FIBER: Hearing on Extension of Exclusivity ----------------------------------------------------- The debtor, Hagerstown Fiber Limited Partnership is seeking an extension of the time periods during which the debtor shall have the exclusive right to file a plan of reorganization and to solicit acceptances to the plan. The debtor seeks to extend the periods by 120 days, to file a plan of reorganization, to and including November 17, 1998 and to solicit acceptances of such plan by 120 days, to and including January 18, 1999. A hearing will be held on July 16, 1998. The debtor claims that it has made some progress in its Chapter 11 case. The debtor has been engaged in substantive discussions with third parties concerning the potential funding of a plan of reorganization. The debtor also states that the first 100 days of its case has been marked by a tremendous amount of litigation, much of which has been initiated by Pencor First Fiber, Inc. To date, Pencor has moved to dismiss the case, moved for the appointment of a trustee, moved to vacate the automatic stay, moved to disqualify counsel, objected to the use of cash collateral , objected to the DIP financing, objected to the claims Bar Date and supported the General Contractor's motion to vacate the automatic stay. HARVARD INDUSTRIES: Seeks Auctioneer For Sale of Harman ------------------------------------------------------- Harvard Industries Inc. is seeking court approval to retain auctioneer National Industrial Services Inc. to sell the assets of subsidiary Harman Automotive Inc., after attempts to find a single buyer proved unsuccessful. The agreement with National guarantees Harvard a minimum of $1.95 million from the sale. Assets to be auctioned include high-performance tools from the auto parts maker's Bolivar, Tenn., plant, where production stopped March 31. (Federal Filings Inc. 8-July-98) INPHOMATION: Psychic Friends Network to Be Auctioned ---------------------------------------------------- Paul-Michael Sweeney (Linowes & Blocher; Greenbelt, Md.), trustee for Inphomation Communications Inc., announced that he plans to sell the company's most valuable assets, including the Psychic Friends Network trademark, its 800 and 900 telephone numbers and the company's entire psychic customer database, The Baltimore Business Journal reported. Gold Coast Media Inc., Fort Lauderdale, Fla., is offering $3 million for the assets, and Sweeney said that although no other bidders have come forward, other higher offers will be considered. Inphomation Communications Founder Michael W. Lasky has not decided if he will make a higher bid to keep control. Sweeney also said that if a deal to sell comes through, he will vacate the company's Pikesville, Md., headquarters by August 10. Bankruptcy Judge James F. Schneider ordered Sweeney to take control of the company in February after creditors argued that Lasky was directing funds to a new company called Friends to Friends. Lasky's latest project involving a Baltimore hotel may be brought into the Inphomation bankruptcy case. Sweeney said that more than $15 million from Inphomation's checking account has been used to fund other entities that Lasky owns, including the hotel. INTERNATIONAL MONETARY: Letter of Intent For Ponce Port ------------------------------------------------------- 21st Century Frontier Group Inc. (OTCBB:TCFG), a publicly traded company, announced that it has entered into a Letter of Intent dated June 30 with International Monetary Group Inc. (IMG Inc.) of Jupiter, Fla. to purchase and develop a property known as the Ponce Port Project located in Puerto Rico. Upon the plan proposal if approved from the U.S. Bankruptcy Court District of Puerto Rico, IMG will cause $3 million to be infused into a new company to be established. Under the terms of Letter of Intent, approximately $1.9 million will be paid for the removal of liens and encumbrances under the plan or reorganization. The Letter of Intent further provides that $1.1 million will be used to develop the first phase of the Ponce Port Project. This project will involve the development of approximately 200 acres of shore front property. The agreement contemplates the creation of a preferred class of stock in 21st Century Frontier Group to be issued to new company in exchange for the rights to the development of the project. 21st Century will provide management expertise to the project. During the first phase, 21st Century will supervise the extraction of sand, dredged from the site with approximately $15 million in potential revenues as determined by the estimates of Corrotek Corp., Consultant. 21st Century Frontier Group has also terminated the arrangement with Cycletech Inc. and all obligations thereunder, Laurence Zitkevitz, president of 21st Century, stated: "We are disappointed that we were not able to conclude this agreement." 21st Century has hired Thomas Miller as a board director who is to direct the special projects area. Miller brings a wealth of experience and will continue to seek out other possible tire recycling opportunities for the company in the future. MANHATTAN BAGEL: Warehouse Expansion ------------------------------------ Manhattan Bagel Company, Inc. (Nasdaq: BGLSQ) has more than doubled its storage, receiving and distribution capacity with a 30,000-square-foot warehouse expansion. With the increase in capacity, the Company also announced that it will close its manufacturing plant in Greenville, S.C. in early July, transferring production to the main plant in Eatontown and outsourcing distribution for the Southeastern U.S. region. Manhattan Bagel, which owns the 12,500-square-foot Greenville building, will retain the facility for possible future use. The expansion in Eatontown raises that facility's overall storage and distribution space to over 63,000 square feet. The new space also includes a 5,000-square-foot mezzanine linked to the ground floor by elevator, providing additional space for future expansion of the Company's manufacturing operations. The Eatontown building currently devotes 14,000 square feet to bagel dough and cheese spread manufacturing. "The expanded facilities give us greater flexibility, allowing us to schedule production in a more efficient manner," noted Manhattan Bagel president Jason Gennusa. "The increase in dry storage space may also allow us to take advantage of increased bulk purchase discounts by buying raw goods in larger quantities." "As a result of efficiency improvements realized through the expansion, we were able to absorb the production from Greenville at Eatontown," he continued. "The closing of Greenville and outsourcing of its distribution function to U.S. Foodservice Inc., are reflective of our commitment to reduce costs and improve profitability, while striving to provide low cost, high-quality products to our franchisees." The Company expects to record a charge of approximately $125,000 (pretax) for severance costs and asset write-downs associated with the Greenville closing. MERCURY FINANCE: Reaffirms Intent to File Plan ---------------------------------------------- Mercury Finance Company (OTC Bulletin Board: MFNNQ) said today that the Company is on track to file its restructured plan of reorganization in the Federal bankruptcy court in mid-July as previously announced. Mercury's statement comes after the Company was advised that several of the litigants in the pending securities lawsuits had resorted to the filing of a petition in the U.S. Bankruptcy Court for the Northern District of Illinois on July 6 asking the court to place the Company into a Chapter 11 proceeding. The Company has 20 days to file a response with the court. Mercury, which conducts its business operations through wholly owned subsidiaries, said that none of the subsidiaries were named in the petition. "The action of the securities litigants does not alter our intent to file the previously disclosed prestructured plan of reorganization," said William A. Brandt, Jr., Mercury's president and chief executive officer. "Mercury has remained current with its trade creditors and has complied with all payment obligations due under its forbearance arrangements with its lenders. We continue to believe that the prestructured plan, as earlier announced by Mercury, will provide the Company with a sound financial platform from which to operate its business and return to profitability." MONTGOMERY WARD: Seeks To Hire Contract Consultant -------------------------------------------------- Montgomery Ward & Co. is seeking court authorization to hire Yantek Enterprises as executory contract and unexpired lease consultant. The firm's assistance is needed, the retailer said, to determine the appropriate treatment of contracts in the case, minimize claims arising from the assumption and rejection of contracts, and renegotiate certain of the contracts on more favorable terms. Citing the need to resolve certain matters expeditiously, Montgomery Ward noted that Yantek has been assisting in analyzing the contracts and other related matters since May 30. Pursuant to its consulting agreement, Yantek will charge $150 per hour for services rendered by the firm's president, Frank Yantek, and $100 per hour for services rendered by the firm's other professionals. ( The Daily Bankruptcy Review Copyright c July 8, 1998 - ABI 8-July-98) MOTOROLA: Reports Second Quarter, First Half Results ---------------------------------------------------- Motorola, Inc. reported sales of $7.0 billion in the second quarter of 1998, down 7 percent from $7.5 billion a year earlier. In the first half, sales declined 2 percent to $13.9 billion from $14.2 billion in the first half of 1997. In the first six months of 1998, the loss, including special items was $1.15 billion, or $1.92 per share, compared with earnings of $593 million, or 97 cents per share, in last year's first half. Robert L. Growney, president and chief operating officer, said, "As we indicated last month, the second-quarter results reflect further slowing of demand and continuing global pricing pressure, principally in the Semiconductor Products and Messaging, Information and Media segments and driven primarily by economic conditions in Asia," he said. "The goal of our renewal plan," Growney continued, "is to generate annualized savings, once all actions have been implemented over the next 12 months, of more than $750 million. We expect to see the positive impact of these savings to steadily increase over the next several quarters." OLYMPIA & YORK MAIDEN LANE: Pre-Packaged Bankruptcy Plan -------------------------------------------------------- The Ad Hoc Committee of Noteholders of Olympia & York Maiden Lane Finance Corp. ("Finance Corp.") announced today that it had executed an agreement with Finance Corp., the issuer of $200 million face amount of 10-3/8% Secured Notes due 1995 and with Olympia & York Maiden Lane Company LLC the owner of 59 Maiden Lane in New York City, to file a "pre-packaged" Joint Plan of Reorganization. Copies of the Plan and the Disclosure Statement, together with ballots to accept or reject the Plan are being mailed this week to holders of the Notes and other impaired creditors under the Plan. Pursuant to the Plan, the Noteholders will receive for their Notes cash and "Litigation Trust Certificates". The cash to be received by the Noteholders is expected to consist of (i) the proceeds from the sale of 59 Maiden Lane, which are expected to equal at least $75 million; (ii) the amount of the funds received from The Home Insurance Company ("Home"), pursuant to the settlement with Home, which presently exceeds $60 million; and (iii) additional monies held in trust by Marine Midland Bank, as Indenture Trustee, which, as of the close of business on June 30, 1998, were approximately $16.3 million, minus certain administrative expenses and monies to be held in reserve accounts for various purposes. The Litigation Trust Certificates will evidence the right to any proceeds received from the litigation currently pending against Zurich Insurance Company, Home, and certain Zurich affiliates arising from a series of transactions which took place in 1995 pursuant to which Zurich purchased all of Home's assets. If the Plan is accepted by the requisite number of Noteholders, Finance Corp. and Maiden Lane intend to file petitions to reorganize under Chapter 11 of the Bankruptcy Code. NEXTWAVE TELECOM: $25M DIP Pact Faces Opposition ------------------------------------------------ NextWave Telecom Inc.'s $25 million debtor-in-possession credit agreement with Cellexis International Inc. "contains several key provisions that are both unusual and onerous to the estates and creditors," the creditors' committee charged. Among other things, the panel took issue with the proposed provision that gives Cellexis the right to convert each dollar lent under the DIP facility into two dollars of new high yield debt or equity if, as expected, NextWave's restructuring includes a debt or equity investment. Besides giving Cellexis a "tremendous windfall" at the expense of creditors, the committee asserted that the conversion rights improperly dictate a critical distribution term of a reorganization plan very early in the case. (Federal Filings Inc. 8-July-98) PEREGRINE: Turnaround Plan Announced ------------------------------------ Peregrine Incorporated (PI) will close two plants, sell a third one and rebuild a streamlined $350 million company with a net loss of only 150 jobs, according to a plan released today by Jay Alix, chairman of Peregrine Acquisition, Inc. (PAI), which bought the troubled automotive supplier in May. The turnaround plan, still subject to review with lenders, unions and others, would save Peregrine from bankruptcy by closing an unprofitable stamping and assembly plant in Flint and an unprofitable door trim facility in Livonia, while seeking a buyer for the profitable Windsor, Ont. seat assembly and injection molding plant. The Flint and Livonia plants are expected to close during the fourth quarter of 1998 and the target date for sale of the Windsor plant is Dec. 31. The plan should result in minimal unemployment and job loss as Peregrine has certain agreements with General Motors from when GM sold these plants to Peregrine in 1996. Those agreements involve GM taking back former GM employees under certain conditions. Alix said that the plan, which he had promised in 60-90 days from the date of his April 23 purchase, was the result of an intensive review process conducted by both Peregrine employees and turnaround professionals from the Jay Alix & Associates (JA&A) firm. "This plan not only keeps the company out of bankruptcy, but maximizes value to those suppliers who are owed money, minimizes transitional operating losses and assures an organized process by which we can rebuild a profitable company while minimizing the loss of jobs," said Jim Bonsall, president and CEO of Peregrine Incorporated. Alix and Bonsall met with employees, suppliers and union representatives to review the plan before it was publicly announced today. They revealed new financing commitments and asked suppliers for their continued support and cooperation during the transition. After the closings and sale, Peregrine will continue to operate five facilities: a bumper fascia and stamping plant in Oshawa, Ont., a metal forming plant in Battle Creek and three metal forming plants in Warren. In addition, the company will retain its headquarters in Southfield. The restructured company will employ more than 2,000 people and focus on providing automotive components to General Motors, Ford, Chrysler, Takata, TRW and Budd. Peregrine's five remaining facilities will be revamped and reorganized both to increase business from current customers and to seek new automotive customers, Bonsall said. "We will be in a position to make the necessary investments in our remaining plants and core businesses. The turnaround focus will now shift from a corporate-wide view to individual plant turnaround plans," he added. The Flint plant, with 684 employees and 150 temporary workers, would have required enormous capital investments in dies and presses as well as infrastructure improvements which could not be economically justified, according to the JA&A/Peregrine review teams. Additional problems with operating costs and power generation for the 2 million- square-foot building proved too serious to overcome, the turnaround team reported. The Livonia plant currently employs 531 employees and 144 temporaries, in a 1.2 million-square-foot building. A viability analysis showed that the plant could not effectively and profitably compete in a consolidating door trim market due to outmoded facilities and expensive, inefficient processes. General Motors, the plants' primary customer, is expected to re-source all Flint and Livonia products. Former GM hourly workers now employed at those two plants may have the opportunity to return to General Motors under terms of a previously existing agreement. Although the Windsor plant is profitable, the decision to sell was based on the increased competitiveness and industry consolidation of the seat assembly business and a desire to focus on the core businesses of painted bumper fascia and metal stamped assemblies. Until the divestiture, Peregrine will continue to seek additional contracts for the Windsor plant, Bonsall said. PRESLEY COMPANIES: Competes Extension of Loan Facility ---------------------------------------------------------- The Presley Companies (NYSE:PDC) announced that it had completed an agreement with the Agent for its existing lending group under its $72 million revolving line of credit to extend this loan facility to May 20, 2001. The agreement also provides for in increased loan commitment to $100 million as well as a decrease in the fees and costs compared to the prior revolving loan facility. This new loan facility improves the Company's liquidity which management believes will allow it to compete more favorably in its land acquisition activity as market conditions continue to improve in its primary markets in California. R&S/STRAUSS: Revised $25M DIP Pact Gets Final Nod ------------------------------------------------- R&S/Strauss Inc. won final court approval of a $25 million credit agreement with Congress Financial Corp. after the creditors' committee introduced another lender to the process, forcing Congress to sweeten the terms of its financing. The auto parts retailer agreed to allow the committee to shop for a lender after the panel opposed the original agreement with Congress and argued that it was not subjected to a competitive bidding process. The panel's marketing efforts resulted in a more attractive debtor-in- possession financing offer from The CIT Group/Business Credit Inc., however, Congress matched the CIT bid. (Federal Filings Inc. 8-July-98) SINOAMERICAN TELECOM: Urgent Attempt at Sale Fails -------------------------------------------------- An urgent bid to sell off the assets of insolvent Sinoamerican Telecom to aid its mainland pager venture was quashed at the High Court yesterday. Liquidators for the company had tried to overturn a previous ruling that Sinoamerican's assets could not be sold to Phoenix Telecommunication. Counsel for the liquidators Adrian Bell yesterday told the Court of Appeal judges that an entire pager network in the mainland was at stake - giving rise to a "core of urgency" in their appeal. Sinoamerican had networks in Hong Kong and the mainland - with a business carried out through Remoco (HK) which, through its Ligao Telecom holding, operated a mainland joint venture. A similar system is operated in Hong Kong by Rightone Telecom (HK), in which Sinoamerican has a stake. Cashflow difficulties caused by Sinoamerican's insolvency resulted in Ligao having problems paying staff, rent and suppliers, the court heard. "Unless such obligations are met, it will be impossible for the business of Rightone and Ligao to continue," counsel argued. Sinoamerica owes creditors US$17 million. Provisional liquidators were appointed by a court order dated May 14, this year. The liquidators failed in their bid to overturn the court's ruling that the Phoenix offer be declined. Mr Bell had argued: "The Judge erred in not making the order sought in that she took the view that the purchase of Sinoamerican's assets amounted to a scheme of arrangement." (South China Morning Post-07/08/98) TENNEY ENGINEERING: Note Repayment Not Made ------------------------------------------- Robert S. Schiffman, President and Chief Executive Officer of Tenney Engineering Inc., announced that the Note repayment due on July 2 to Summit Bank has not been made. The Company and the Bank, which has a lien on substantially all the assets of the Company, are in discussions to resolve this matter. If resolution or alternate financing is not found, this would have a material adverse effect that may cause insolvency proceedings. ********* 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 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 * * *