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/raid1/www/Hosts/bankrupt/TCR_Public/980720.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, July 20, 1998, Vol. 2, No. 140 Headlines 2CONNECT EXPRESS: Significant Developments During June ANDOVER APPAREL: Reports Results of Operations APRIA HEALTHCARE: Taps Deloitte & Touche ARIZONA CHARLIE'S: Plan Confirmed On June 25, 1998 AUSTRALIS HOLDINGS: Keeping the Court Informed BUILDERS TRANSPORT: Arthur Andersen Okayed for Committee BUSTER BROWN: Expects $27M Exit Facility From Foothill BUSTER BROWN: Second Amended Plan Confirmed DOW CORNING: Claims Foreign Women Will Be Treated Fairly ERNST HOME CENTER: Seeks Extension of Exclusivity FORSTMANN: Notice of Annual Meeting of Shareholders FRUEHAUF TRAILER: Seeks Exclusivity Extension To October 17 GOLF TRAINING: Director Resigns GUY F. ATKINSON: Seeks OK To Sell ADCO To Pacific Networks HAROLD'S FURNITURE: Judge OKs Credit For Customers IOMEGA: Posts Second Quarter Loss; Signs Credit LONG JOHN SILVER'S: Trustee Names Franchisee Panel MAIDENFORM: Seeks Investment in Mexican Sewing Plant MATEC CORPORATION: Announces Merger MEGO MORTGAGE: Transactions Completed for Recapitalization MEGO MORTGAGE: Filing a Late Quarterly Report SIZZLER INTERNATIONAL: Annual Meeting Set for August 18 ********* 2CONNECT EXPRESS: Significant Developments During June ------------------------------------------------------ For the Period Beginning May 31, 1998 and Ending July 4, 1998, 2Connect Express Inc. reports: 1. On June 16, 1998 the Company reached a settlement with its primary cellular service provider to compensate for early termination of its contract. Under the settlement agreement, all prepetition amounts owed (claim filed) the service provider of approximately $148,000 were forgiven by the creditor and an additional amount of $66,000 cash was paid to the Company. 2. Pursuant to a management agreement with Bobby Allison Cellular Systems of Florida, Inc. (BAC). BAC assumed control of the Company's last remaining store on June 18, 1998. All employees of this store except for one direct salesperson were terminated by the Company and were hired by BAC. 3. Subsequent to the period closing, the Company reached agreement with Ericsson, a hardware supplier, to settle and remit debit balances totaling over $21,000 and, in an unrelated matter, has enforced the "automatic stay" to preserve the Company's Nextel contract, thereby permitting continued direct sales of Nextel phones. A full-text copy of the debtor's monthly financial report is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950144-98- 008401.txt ANDOVER APPAREL: Reports Results of Operations ---------------------------------------------- Andover Apparel Group Inc., formerly Andover Togs, Inc., filed a Form 10-Q quarterly report with the SEC. Net sales for the three months ended May 31, 1998 were $4,742,000, an increase of $452,000 or 10.5% from 1997 net sales of $4,290,000 in the comparable period in 1997. The increase is primarily attributable to additional sales to the Company's largest customer. Gross profit as a percentage of net sales increased to 18.3% from 18.0% in the `97 Quarter. The increase was primarily due to the effect of unabsorbed overhead in the `97 Quarter. Net sales for the six months ended May 31, 1998 (the "98 Period") were $7,712,000, a decrease of $584,000 or 7.0% from $8,296,000 in the comparable period in 1997 (the "97 Period"). The decrease is attributable to a decline in net sales during the first quarter resulting from a deterioration of the Company's customer base. Gross profit as a percentage of net sales decreased to 17.6% from 17.9% in the `97 Period, as a result of the Company's current customer base producing a lower gross profit percentage than the customer base existing during the '97 Period. The Company hired Steven A. Schwartz as its new President and Chief Operating Officer at the beginning of fiscal 1998. APRIA HEALTHCARE: Taps Deloitte & Touche ---------------------------------------- Effective on July 15, 1998, Apria Healthcare Group Inc. has engaged Deloitte & Touche LLP as the principal accountants to audit the Company's financial statements for the fiscal year ending December 31, 1998. ARIZONA CHARLIE'S: Plan Confirmed On June 25, 1998 -------------------------------------------------- On November 14, 1997, Arizona Charlie's, Inc. an affiliate of Capitol Queen & Casino, Inc. and a wholly owned subsidiary of Becker Gaming, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code with the United States Bankruptcy Court for the District of Nevada. At a confirmation hearing on June 25, 1998, the Bankruptcy Court confirmed the "Consensual Plan of Reorganization Proposed by the Debtor and High River" dated June 24, 1998, which was proposed by both AC and High River Limited Partnership. High River is the holder of over 50% of the outstanding 12% First Mortgage Notes issued by AC in the original amount of $55,000,000 on or about November 15, 1993. The Consensual Plan allows AC to reorganize its business affairs and continue as a going concern. AC has through July 31, 1998 to close the proposed new financing that will fund payments to creditors under the Financing Option of the Plan. AC has retained a financing commitment from United Healthcare Financial Services, LLC that would provide AC the financing it needs to fund the Financing Option. (States SEC - 07/16/98) AUSTRALIS HOLDINGS: Keeping the Court Informed --------------------------------------------------------- Attorney David S. Heller, of Latham & Watkins, filed an Affadavit in the case of Australis Holdings Pty Limited, to confirm to the court certain information regarding the debtor's changed circumstances. Following a liquidation order initiated by Telstra, all of the debtor's officers resigned and the business of the Australis Group has effectively ceased. A Receiver was appointed by the bondholders represent by the Ad Hoc Committee, and the Receiver is actively engaged in the liquidation of "hard" assets located in Australia. Latham & Watkins has urged the Receiver, as the debtor's sole shareholder, to make arrangements for the appointment of a responsible officer or other disinterested person to act on the debtor's behalf, subject to approval of the bankruptcy court. BUILDERS TRANSPORT: Arthur Andersen Okayed for Committee -------------------------------------------------------- The Official Committee of Unsecured Creditors of Builders Transport, Inc. and its affiliates received court authorization to retain Arthur Anders LLP as its accounting and financial advisors. BUSTER BROWN: Expects $27M Exit Facility From Foothill ------------------------------------------------------ Buster Brown Apparel Inc. has signed a commitment letter for a $27 million exit financing facility from Foothill Capital Corp., the company's debtor-in-possession lender. The children's apparel maker, which must close on the proposed facility in order for its reorganization plan to go effective, is shooting for a July 29 closing date. The three-year facility would include a revolver of up to $20 million as well as two term loans of $5 million and $2 million. ( The Daily Bankruptcy Review Copyright c July 17, 1998 - ABI 17-July-98) BUSTER BROWN: Second Amended Plan Confirmed ------------------------------------------- The court Tuesday confirmed Buster Brown Apparel Inc.'s second amended reorganization plan. The modified plan, which resolved the objection of prepetition lender NationsBank N.A., gives 95% of reorganized Buster Brown's equity to the bank group and 5% to the junior lenders (who are also the current equity holders). The original plan proposed by the apparel maker and the other three members of the bank group offered 80.1% of the equity to the bank group and 19.9% to junior lenders Apollo BBA Partners L.P. and CB Capital Investors Inc. (Federal Filings, Inc. 17- July-98) DOW CORNING: Claims Foreign Women Will Be Treated Fairly -------------------------------------------------------- Dow Corning Corp. said Thursday it will treat non-U.S. women fairly in its $3.2 billion deal to settle breast implant claims, but declined to confirm reports that they will receive substantially less than their American counterparts. According to reports in Australia, women there would receive only 60 percent of the compensation paid to U.S. women, which is expected to average about $31,000. Under previous proposals from Dow Corning, the approximately 50,000 foreign claimants would have received 30 percent to 40 percent less than U.S. women. The company said the previous differences were due to more generous public health care systems in other countries that would have covered more of the costs for removal and other medical treatments. Dow Corning spokesman Kevin Wiggins said neither the company nor plaintiffs attorneys were allowed to discuss details of the latest settlement agreement before a disclosure statement on the plan is filed with the U.S. Bankruptcy Court in Bay City, Mich., on Aug. 20. "Dow Corning expects that foreign claims will be treated fairly and equitably," Wiggins said, adding the plan follows precedents set in other recent global health care settlements.(Reuters: Financial - 07/16/98) ERNST HOME CENTER: Seeks Extension of Exclusivity ------------------------------------------------- Debtors, Ernst Home Center Inc. and EDC, Inc. are seeking an order extending through and including September 30, 1998 the debtors' exclusive period within which to file a plan or plans and extending through and including November 30, 1998, the debtors' exclusive period for soliciting acceptances to their plan or plans. A critical component of the debtors' Lease Agreement is the extension of time to assume or reject the Sold Leases. It would be fundamentally unfair to attempt to compel assumption or rejection through confirmation of a plan prior to the expiration of the time to assume or reject the Sold Leases. The current deadline for the Sold Leases is June 29, 1998. A hearing has been scheduled seeking an extension until August 31, 1998. The debtors state that they have been diligent in liquidating their assets and managing their bankruptcy cases. The debtors also state that the size and complexity of the cases justifies an extension of the exclusive periods, and that such an extension will benefit the debtors' creditors. FORSTMANN: Notice of Annual Meeting of Shareholders --------------------------------------------------- The Annual Meeting of Shareholders of Forstmann & Company, Inc., a Georgia corporation, will be held on Friday, August 14, 1998, at 10:00 a.m. local time, at the offices of Christy & Viener, 620 Fifth Avenue, 5th Floor, New York, New York 10020, for the following purposes: 1. To elect two directors, each to serve for a term of one year; 2. To approve the adoption of the Company's 1997 Directors Compensation Plan; 3. To consider and vote on an amendment to the Company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock from 10,000,000 shares to 35,000,000 shares; 4. To consider and vote on an amendment to the Articles to authorize a class of 1,000,000 shares of Preferred Stock and to authorize the Company's Board of Directors to issue such Preferred Stock in one or more series and to fix the rights, powers, preferences and other terms of such series; 5. To consider and vote on an amendment to the Articles to reduce the minimum number of directors that the Company may have from five to two; 6. To vote on the ratification of the selection of Deloitte & Touche LLP as the Company's independent auditors for the 1998 fiscal year. A full-text copy of the filing, including the proxy statement is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000798246-98- 000026.txt FRUEHAUF TRAILER: Seeks Exclusivity Extension To October 17 ----------------------------------------------------------- Fruehauf Trailer Corp. is seeking an extension of its exclusive period to solicit reorganization plan acceptances from June 19 to Oct. 17. "Despite the efforts of the Debtors and their professionals, the actions necessary to solicit acceptance of the Debtors' proposed Joint Plan of Reorganization cannot be completed prior to the June 19, 1998 deadline. Nevertheless, the Debtors believe that the completion of this task is possible within the time necessitated by the confirmation hearing scheduled for September 16, 1998," the company said. (Federal Filings Inc. 17-July-98) GOLF TRAINING: Director Resigns ------------------------------- Golf Training Systems Inc. reported to the SEC that Thomas W. Tripp resigned as a director on June 5, 1998. There were no disagreements on any matter. GUY F. ATKINSON: Seeks OK To Sell ADCO To Pacific Networks ---------------------------------------------------------- Guy F. Atkinson Co. of California is seeking approval to sell its Atkinson Dynamics Co. (ADCO) division, which makes heavy-duty industrial intercoms, to Pacific Networks & Co. for an estimated $1.86 million. "As a result of the transfer of most of the business operations of the Debtors to The Clark Construction Group Inc. and VECO Corp., the Debtors believe that it would be in the best interests of the Debtors and the parties in interest to sell ADCO as a going concern," the construction company said. (Federal Filings Inc. 17-July-98) HAROLD'S FURNITURE: Judge OKs Credit For Customers -------------------------------------------------- Federal Bankruptcy Judge Arthur N. Votolato approved a plan that allows Cardi's Furniture to give credit to retail customers who lost deposits when Harold's Furniture entered liquidation proceedings without making good on its final furniture sales. By yesterday's count, the order would cover $235,000 worth of sales to 157 customers - all of whom will soon be eligible to pick out merchandise at Cardi's with a retail value equivalent to the amount of money they lost at Harold's. The order covers all customers who paid deposits by cash or check. Hundreds of other customers who paid by credit card have already been compensated a total of $382,000 by Citizens Bank, which had a merchant agreement at Harold's. Once notified, the customers who paid deposits by cash or check will have until early next month to contact the attorney general or the federal bankruptcy trustee and declare their claims. When the claims are approved, the customer will get a gift certificate for either Cardi's store or at the Thomasville Home Furnishings, which the Cardis also own. The order also allows Cardi's to liquidate Harold's stock. Roland Cardi said that the brothers will convene a storewide auction at Harold's now darkened showrooms July 24. Events yesterday were both a break for the customers and a public relations masterstroke for Cardi's, which is locked in a battle with rival Alperts for preeminence in the local retail furniture business. After the hearing, the brothers - known through their advertising as "NiRoPe," or Nick, Ron and Pete - said they had two motives: to help customers and to prevent a long- running "Going Out of Business" sale at Harold's. The Cardis also said their company will lose a significant sum from the deal, which requires them to issue an estimated $235,000 in merchandise credit, pay the City of Providence $125,000 to cover roughly half of Harold's public debt, and to pay for lawyers, the auction and advertising. Cardi's reportedly stands to collect about $200,000 from the auction. It is yet unknown how the secured creditors - including Citizens Bank of Rhode Island, the City of Providence, and the family trust that had lent Harold's more than $1.1 million - will attempt to recoup their loss. (ProvidenceJournal-07/14/98) IOMEGA: Posts Second Quarter Loss; Signs Credit ----------------------------------------------- Data storage maker Iomega Corp. said Thursday it posted an after tax second quarter net loss, slightly wider than analysts' expectations, amid restructuring efforts to bring the company out of its recent financial troubles. Iomega, the Roy, Utah maker of the high-capacity computer storage device Zip, posted a net loss of $39.9 million, or $0.15 per diluted share, including a $9.4 million pretax charge related to cost reduction efforts. In the year- earlier period, Iomega earned $26.2 million, or $0.09 per diluted share. Second quarter revenue slipped to $394 million from the year ago's $400 million. Analysts had expected a loss of $0.07 per share. The company's stock closed Thursday at 6-1/16, up 6/16 on the day. Chief Executive James Sierk anticipates a 12 percent workforce cut. Liquidity concerns have also been allayed, Sierk said. The company also signed an amended $150 million senior secured credit facility with a syndicate of 12 banks led by J.P. Morgan and Citicorp. Iomega said that it expected to see positive cash flow for the second half of the year, excluding the costs related to its acquisition of rival Nomai S.A., a French-based manufacturer of removable computer storage systems. However, it said it would remain negative for year-end. {Reuters: Business - 07/16/98) LONG JOHN SILVER'S: Trustee Names Franchisee Panel -------------------------------------------------- The U.S. Trustee acting in Long John Silver Inc.'s Chapter 11 proceedings has appointed an official franchisee committee: BR Associates Inc. of Jasper, Ind.; Treasure Isles Inc. of Lexington, Ky.; American Seafood Partners L.P. of Wichita, Kan.; Maggard Enterprises Inc. of Riverside, Calif.; D-Sea Inc. of Lexington; LoJo II Inc. of Lexington; and Performance Foods Corp. of Mansfield, Ohio. (The Daily Bankruptcy Review Copyright c July 17, 1998 - ABI 17-July-98) MAIDENFORM: Seeks Investment in Mexican Sewing Plant ---------------------------------------------------- The debtors, Maidenform Worldwide, Inc. seek authority to make further investments in a swing plant located in Valladolid, Mexico. The debtors propose to undertake a construction project that will more than double the plant's size allowing for significantly greater production of sewn goods. It is anticipated that the costs associated with the construction and the expansion will be approximately $1.1 million. The debtors estimate that utilizing the expanded plant will result in substantial savings in operating costs, taxes and duties and will contribute significantly to the debtors' rehabilitation efforts. In March, a fire destroyed the debtors' swing operation in Higuey, Dominican Republic and the debtors decided to expand their operations at the plant in Valladolid, Mexico, which is the debtors' most efficient/lowest cost facility. MATEC CORPORATION: Announces Merger ----------------------------------- The merger of MATEC Corporation, a Delaware corporation, into a newly formed Maryland corporation, also named MATEC Corporation, changing the state of incorporation of Registrant from Delaware to Maryland was effective July 2, 1998. The reincorporation does not result in any change of business, management, policies, assets, liabilities or result in any changes in ownership of the Common Stock of the company except that holders of records of less than 100 shares of the Common Stock of the company at the effective date ceased to be stockholders of Registrant. Such holders received cash equal to $4.03 per share (the average daily closing price per share of the Common Stock of Matec Corporation on the American Stock Exchange for the ten trading days immediately preceding the effective date of the merger). At July 2, 1998 there were 1690 shareholders of Registrant owning of record less than 100 shares holding an aggregate of 35,705 shares of Common Stock of Matec Corporation representing 1.3% of the Common Stock outstanding. MEGO MORTGAGE: Transactions Completed for Recapitalization ---------------------------------------------------------- On July 1, 1998, Mego Mortgage Corporation, a Delaware corporation completed a series of transactions intended to recapitalize the Company pursuant to which the Company generated approximately $87.5 million of new equity and which resulted in a change in control of the Company. Pursuant to the Recapitalization, the Company consummated (i) a private offering of 16,666,667 shares of common stock, par value $.01 per share of the Company for an aggregate purchase price of $25.0 million ($1.50 per share) and (ii) a private offering of an aggregate of 25,000 shares of new Series A Convertible Preferred Stock, par value $.01 per share for an aggregate purchase price of $25.0 million As part of the Recapitalization the Company also completed its offer to exchange new 12 1/2% Subordinated Notes due 2001 and shares of Series A Preferred Stock or a combination thereof, subject to certain limitations, for any and all of the $80.0 million aggregate principal amount of outstanding 12 1/2% Senior Subordinated Notes due 2001 of the Company, pursuant to which the Company issued an aggregate of $41.5 million of New Notes and 37,513 shares of Series A Preferred Stock. Approximately $992,000 of Old Notes remain outstanding. As part of the Exchange Offer, holders of New Notes collectively were granted the right to appoint one member to the Company's Board of Directors. In connection with the Recapitalization, Edward B. "Champ" Meyercord was elected as the Company's Chairman of the Board and Chief Executive Officer. Jerome Cohen, Don Mayerson, Robert Nederlander and Herbert Hirsch, directors of the Company, resigned effective upon consummation of the Recapitalization. Mr. Meyercord and the Company's then remaining directors appointed David J. Vida, Jr., Hubert M. Stiles, Jr. and Wm. Paul Ralser as directors in order to fill the vacancies existing on the Board of Directors following the consummation of the Recapitalization. MEGO MORTGAGE: Filing a Late Quarterly Report --------------------------------------------- Mego Mortgage filed a form with the SEC reporting that its quarterly report would be filed late because the company is experiencing delays in the collection and compilation of certain financial information required to be included in the report. The company anticipates that it will report a significant and adverse material change in its results of operations for the quarter ended May 31, 1998 from the corresponding period for the last fiscal year. The company estimates that it will report a loss of approximately $55.2 million for the quarter ended May 31, 1998 compared to net income of $4.3 million for the quarter ended May 31, 1997. SIZZLER INTERNATIONAL: Annual Meeting Set for August 18 ------------------------------------------------------- The Annual Meeting of Stockholders of Sizzler International, Inc. will be held at the Radisson Hotel at 6161 West Centinela Avenue, Culver City, California, on Tuesday, August 18, 1998 at 3:30 p.m. The meeting will be held for the following purposes: 1. To elect three directors to serve until the 2001 Annual Meeting of Stockholders and until their successors are elected and qualified. 2. To approve an amendment to the Company's 1997 Employee Stock Incentive Plan, under which the number of the Company's Common Stock available for issuance will be increased from 1,000,000 to 2,800,000. A full-text copy of the Proxy Statement is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950148-98- 001693.txt ********* 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 * * *