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/raid1/www/Hosts/bankrupt/TCR_Public/981125.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 25, 1998, Vol. 2, No. 231 Headlines AHERF: Executives Spent Lots of Time and Money on Trips AUSTIN FOREX: Bankruptcy Bid Rejected By Judge BENNETT FUNDING: Brothers Plead Guilty BOSTON CHICKEN: Nasdaq To Discuss Convertible Listing BREWBAKER'S PUB: University and City May Lose Investment CAMBEX CORP: Files Quarterly Report CENTENNIAL COAL: Committee Taps Richards, Layton & Finger CRIIMI MAE: Reports Morgan Stanley Law Suit to SEC EQUALNET CORP: Court Postpones Final Hearing on DIP EQUALNET: Signs Agreement to Purchase S4 Communications GENESIS MANUFACTURING: Case Summary & 20 Largest Creditors GEOTEK COMMUNICATIONS: Nextel Seeks 900 MHz Spectrum HAYES CORP: Alters Fee Structure For Volpe Brown INTERNATIONAL TESTING: Case Summary & 20 Largest Creditors KENNY ROGERS: Franchise Management to Buy 83 Restaurants LAURIAT'S: Bookstore To Emerge From Bankruptcy MOLTEN METAL TECHNOLOGY: To Auction Operating Assets PHP HEALTHCARE: Units Convert to Chapter 7 to Liquidate PRESLEY COMPANIES: WL Homes Submits Revised Proposal SYQUEST TECHNOLOGY: Petition Lists Debts Of $85 Million VITALE ENTERPRISES: Committee Seeks Consent Order WILSHIRE FINANCIAL: Reports Net Loss of $119 Million ********* AHERF: Executives Spent Lots of Time and Money on Trips ------------------------------------------------------- The Pittsburgh Post-Gazette reports on November 23, 1998 that even as its money problems grew, the Allegheny health system spent hundreds of thousands of dollars to send executives to the Cayman Islands, Paris, Copenhagen and other exotic locales to review malpractice cases in Philadelphia hospitals, a newspaper reported. Allegheny executives convened at a distant location four times a year. Each January they went to the Cayman Islands, where Allegheny's offshore insurance agency is located, to discuss whether to fight or settle malpractice claims against Allegheny hospitals and doctors. Then 15 to 20 executives would fly to a different country every three months to discuss malpractice cases, records show. In all, Allegheny spent $364,000 in travel expenses last year for its malpractice meetings, the newspaper reported. Allegheny recently revised its travel policy. Spokesman Thomas G. Chakurda said the current chief executive, Anthony Sanzo, would allow only the most essential travel to Canada and the Caymans. The newspaper also reported the Allegheny system paid malpractice premiums to its subsidiary that were far higher than rates available from commercial insurers. AUSTIN FOREX: Bankruptcy Bid Rejected By Judge ---------------------------------------------- Bankruptcy petitions for Austin Forex International Inc. and an affiliate were dismissed Wednesday by a federal bankruptcy judge. Presented as evidence during the hearing was a letter from Roy Mouer, a former state securities commissioner hired as special counsel to Austin Forex, warning the company's founder, Russell Erxleben, that Austin Forex was misleading investors and possibly violating the law. On Thursday, Steve Orr, one of Erxleben's attorneys, said the former football kicker claims he never saw the critical letter. Erxleben and his attorneys have denied any wrongdoing. With the dismissal of the bankruptcy petitions, a court-appointed receiver continues to run the companies and is trying to determine what happened to investors' money. (Austin American Statesman-11/21/98) BENNETT FUNDING: Brothers Plead Guilty -------------------------------------- Michael Bennett, brother of the man who prosecutors believe perpetrated the largest securities fraud in recent history, pleaded guilty to three counts of conspiracy, perjury and obstruction of justice on Tuesday in U.S. District Court in Manhattan. Michael Bennett, appearing before Judge Thomas Griesa, admitted that he had conspired with his brother to cover up the fraud and obstruct a U.S. Securities and Exchange Commission investigation into the matter. He is to be sentenced Feb. 11. His brother, Patrick Bennett, former chief financial officer of the now-bankrupt Bennett Funding Group, is scheduled to go on trial Dec. 7 in Judge Griesa's courtroom, charged with 106 counts of securities fraud, mail fraud, bank fraud, money laundering and concealment of assets stemming from an alleged nationwide Ponzi scheme in which 12,000 investors lost more than $700 million from 1990 to 1996. Bennett Funding's business was the purchasing and financing of office equipment leases. According to the indictment, the company reported false year-end results and used those financial statements to get bank loans and individual investments and make a securities offering that raised $40 million. His attorney, Martin Auerbach, told reporters that Bennett had entered the plea "to accept responsibility for his acts," but he did not intend to testify against his brother. He faces a maximum sentence of 15 years and a $750,000 fine. BOSTON CHICKEN: Nasdaq To Discuss Convertible Listing ----------------------------------------------------- Boston Chicken Inc. said it will meet with Nasdaq officials on Dec. 2 to discuss the continued listing of the company's convertible notes on the Nasdaq exchange. On Nov. 19, Boston Chicken had a meeting with Nasdaq officials for what the company believed would be a discussion of the company's non-compliance with listing requirements for its common shares. At the hearing, Nasdaq officials informed the fast- food chain that they also planned to discuss the advisability of continued listing of the convertible notes on the exchange. The hearing on the convertible notes was delayed until Dec. 2 as Nasdaq officials agreed with Boston Chicken's interpretation of the scope of the hearing.(The Daily Bankruptcy Review and ABI Copyright c November 24, 1998) BREWBAKER'S PUB: University and City May Lose Investment -------------------------------------------------------- The Charleston Daily Mail reports on November 21, 1998 that Marshall University and the city of Huntington stand to lose more than half a million dollars they invested in a downtown brewpub that filed for bankruptcy earlier this year, court records indicate. A Dec. 15 auction at the former Brewbakers Inc. restaurant in downtown Huntington will be used to repay debts run up by the microbrewery before it closed, according to a hearing in federal bankruptcy court. But the sale is not expected to bring in enough money to satisfy all the debts, according to statements made during a Nov. 10 hearing. Bank One, West Virginia, was the single largest creditor of Brewbakers Inc., and filed four separate claims totaling $864,747.79 when the restaurant filed for Chapter 11 bankruptcy earlier this year. According to the list of creditors' claims filed with the court, the restaurant owes Huntington's Department of Development and Planning $215,609.53. Marshall University has two separate claims against the restaurant, each amounting to $147,794.31 for a total of $295,588.62. The sale of the restaurant's assets is not expected to raise any more than $860,000, said lawyer Ann Starcher, representing Brewbakers Inc. Besides the debts to Marshall and Huntington, the restaurant owes $399,257.73 to the Internal Revenue Service, $64,025.67 to the West Virginia Bureau of Employment Programs and $75,147.34 to the state Tax Division. CAMBEX CORP: Files Quarterly Report ----------------------------------- Cambex Corp. filed its quarterly report with the SEC, for the Quarter Ended: October 3, 1998. A complete text filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000016590-98- 000021.txt CENTENNIAL COAL: Committee Taps Richards, Layton & Finger -------------------------------------------------------- The Official Committee of Unsecured Creditors in the case of Centennial Coal, Inc. and its affiliated debtors, seeks to retain Richards, Layton & Finger, PA as counsel to the Official Unsecured Creditors' Committee. The firm will advise the Committee as to its rights and duties; advise the Committee in connection with proposals and pleadings submitted by the debtors or others to the Court; investigate the actions of the debtors,; advise the Committee in co0nnection with any plan formulation or negotiations; consult with the debtor and the debtors' professionals regarding the case; advocate positions that further the interests of the unsecured creditors represented by the Committee. The firm's professionals' hourly rates range from $340 per hour to $82 per hour. CRIIMI MAE: Reports Morgan Stanley Law Suit to SEC -------------------------------------------------- On October 21, 1998, CRIIMI MAE Inc. issued a press release announcing that it has filed suit against one of its six secured creditors, Morgan Stanley & Co. International, Inc., to retain control of more than $286.8 million face amount of the assets in its estate, currently protected under Chapter 11 reorganization. In a press release dated October 22, 1998, the company announced that, in its third lawsuit in one week charging improper actions by a large secured creditor, CRIIMI MAE Inc. filed suit in the U.S. Bankruptcy Court for the District of Maryland, against Merrill Lynch Mortgage Capital Inc., demanding that Merrill turnover $3.3 million in earnings from eight classes of CRIIMI MAE's commercial mortgage-backed securities that are collateral for CRIIMI MAE's borrowings. The company issued a press release on November 5, 1998, announced the designation of Banc One Mortgage Capital Markets, LLC as special servicer on approximately $28 billion of CMBS representing 32 commercial mortgage pools, subject to the consent and other procedural requirements contained within the respective servicing agreements. (States SEC-11/23/98) EQUALNET CORP: Court Postpones Final Hearing on DIP --------------------------------------------------- On November 23, 1998 Judge Karen K. Brown entered an order on the debtor's third motion to postpone the final hearing on DIP financing, postponing the final hearing authorizing the sale of post-petition accounts; use of cash collateral; the granting of security interests; the granting of adequate protection and procedures and hearing dates to December 16, 1998 at 11:30 am, Courtroom 10-A in the U.S. Courthouse, 515 Rusk Ave., Houston, Texas. Pending the conclusion of the hearing the debtor is authorized to continue to incur debt, use cash collateral and sell receivables under the terms of the court order of September 17, 1998. EQUALNET: Signs Agreement to Purchase S4 Communications ------------------------------------------------------- Equalnet Communications Corp.(Nasdaq:ENET) has signed a definitive agreement to acquire S4 Communications Corporation. S4, headquartered in Chicago, Ill., with sales offices in Illinois and Wisconsin, is projected to have annual revenue of approximately $3 million in calendar 1998. S4, an Ameritech reseller, derives approximately 40% of its revenue from local resale and 50% from long distance resale, with the balance of its revenue attributable to value added telecom product offerings. Mitchell Bodian, Equalnet's president and CEO, said, "The agreement to acquire S4 provides evidence of Equalnet's strategy to provide its customers with a bundled telecommunications service offering, comprising local, long distance, internet, data, wireless, paging, voice mail, and conference calling. S4's customers receive a single invoice and have a single point of contact to handle all their telecommunications needs. This acquisition will fit well with our strategy of focusing our efforts geographically and building concentrations of customer traffic in targeted geographic locations." Scott Wilson, president of S4 Communications, remarked, "We are excited about joining the Equalnet team and participating in the turn-around that is well under way. We are establishing a solid platform for integrating other companies such as ours into the Equalnet family and are confident that Equalnet can play a significant role in the continuing consolidation in the telecom marketplace." Equalnet will initially issue 642,666 shares of Common Stock and issue a $.24 million note in exchange for the stock of S4. The parties anticipate closing the transaction within the next 60 to 90 days. The transaction is subject to the completion of due diligence and other closing conditions. S4 shareholders will have the opportunity to receive another 400,000 shares of Common Stock if certain events occur during the six month period following the closing date. The number of shares to be issued in this transaction will be adjusted upward if the average daily closing price of the Company's Common Stock for the three month period ending on December 31, 1998 is less than $1 per share. In other matters, Equalnet Communications Corp. announced results for its first fiscal quarter ended September 30, 1998. In the first quarter, the Company's net loss was $6.2 million, or $0.30 per share, on revenues of $8.4 million. This compares to a net loss of $2.1 million, or $0.33 per share, on revenues of $8.3 million for the same quarter last year. The results for the most recent quarter included non-cash depreciation and amortization charges of approximately $2.2 million, in comparison with $1.1 million for the same quarter in the prior year. GENESIS MANUFACTURING: Case Summary & 20 Largest Creditors ---------------------------------------------------------- Debtor: Genesis Manufacturing Limited LC 50925 Richard W. Blvd. Chesterfield, MI 48051 Court: Eastern District of Michigan Case No.: 98-58965 Filed: 10/30/98 Chapter: 11 Debtor's Counsel: William E. Schonberg Benesch, Friedlander, Coplan & Aronoff 2300 BP Tower, 200 Public Square Cleveland, Ohio 44114 216/363-4500 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Societe Bretone De Fonderie et de Mecanique Trade Debt 2,258,800 CI-South Inc. Trade Debt 1,430,400 Funfrap Trade Debt 643,700 Paragon Metals Trade Debt 295,500 Mansfield Foundry Corporation Trade Debt 151,800 Wagner Casting Co. Trade Debt 145,900 Marks Management Services Inc. Trade Debt 138,800 Wescast Industries Trade Debt 132,500 Klockner Steel Trade Corp Trade Debt 116,300 Kilian Manufacturing Corp Trade Debt 105,100 Southern Ductile Casting Co. Trade Debt 99,100 J. Pitt Steel, Inc. Trade Debt 80,000 Huron Castings, Inc. Trade Debt 79,600 American First Aid Trade Debt 70,900 Aerotek, Inc. Trade Debt 67,600 Horizon Technology Group Trade Debt 63,800 C&J Tool & Gage Co. Trade Debt 63,300 Spartan Carbide, Inc. Trade Debt 37,700 Norton Performance Plastics Trade Debt 37,600 Houghton International Inc. Trade Debt 35,300 GEOTEK COMMUNICATIONS: Nextel Seeks 900 MHz Spectrum ---------------------------------------------------- With the demise of Geotek Communications Inc. [GOTK], questions arise regarding the fate of its 900 MHz spectrum. Nextel Communications Inc. [NXTL], it turns out, has its eye on the frequencies to augment its already considerable licensed SMR bandwidth, industry sources said. Nextel recently requested that the U.S. Department of Justice lift a consent decree entered against Nextel in the mid-1990s after concerns were raised that Nextel (previously known as Fleet Call) and its supplier Motorola Inc. [MOT] would exercise monopoly control over the frequency band. Alan Shark, president and CEO of the American Mobile Telecommunications Association, noted that Geotek continues to incur charges for its systems, tower sites and base stations, and would probably like to resolve the sale of its spectrum as quickly as possible. Geotek decided to close down operations recently after filing for Chapter 11 federal bankruptcy protection from creditors earlier this year. The company was unable to come up with a workable restructuring plan while in Chapter 11. Nextel was tight-lipped on the subject of the Geotek licenses. For Nextel, the question of obtaining the licenses may be complicated by the 45 MHz "spectrum cap" currently imposed by the FCC on all commercial mobile radio service operators. But according to an industry insider, Nextel is "not even near that" amount of spectrum -- a factor that would augur well for the company's chances of getting the consent decree lifted. Capacity-enhancing technological innovations could be making the company concerned about wireless competition from PCS or other sources. "If Nextel uses the spectrum to relocate people and they get relocated on good spectrum, then the industry wins," said Sharpe Smith, spokesman for the Industrial Telecommunications Association. "On the other hand, it could take away spectrum to be used for dispatch service and put it in the hands of people who only use 10 percent of the spectrum for dispatch services" and the rest for PCS, he said. The frequencies could prove attractive to paging carriers as well, although Paging Network Inc. [PAGE] said it was not interested in seeking to purchase Geotek's spectrum. Copyright Phillips Publishing, Inc. Communications Today- 11/23/98 HAYES CORP: Alters Fee Structure For Volpe Brown ------------------------------------------------ The fee structure Hayes proposed for financial advisor and investment banker Volpe Brown Whelan & Co., which met with opposition from the official unsecured creditors' committee, has been altered and the hire of Volpe Brown approved. The objection sought limitations for certain transaction fees Volpe Brown was entitled to under the contract. Volpe Brown has subsequently agreed that no fees will be paid for equity raised from current preferred shareholders. Additionally, the financial advisor will not receive a fee for any money that comes from debtor-in- possession lender NationsCredit Commercial Corp. The committee withdrew its objection to paying a fee for money that exceeded funds already available to Hayes through NationsCredit. The committee did not object to the monthly $75,000 retainer contracted for Volpe Brown. (Federal Filings Inc. 24-Nov-98) INTERNATIONAL TESTING: Case Summary & 20 Largest Creditors ---------------------------------------------------------- Debtor: International Testing Services, Inc. 2815 Lilac Pasadena, Texas 77503 Court: Southern District of Texas Case No.: 98-41871-H5-11 Filed: 11/09/98 Chapter: 11 Debtor's Counsel: Tony M. Davis Baker & Botts LLP 558 Clinton Avenue One Shell Plaza, 910 Louisiana Houston, Texas 77002-4995 (713) 229-1234 Total Assets: $2,435,278 Total Liabilities: $6,742,308 No. of shares of common stock: 9,377,840 - 150 holders 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Nuevo Energy Co. Unsecured Noteholder $597,193 O'Quinn, John M. Unsecured Noteholder $562,851 DeJoria, John Paul Unsecured Noteholder $366,097 Cooney, John Unsecured Noteholder $366,096 Cooney, Robert Unsecured Noteholder $366,096 Willowfield Limited Unsecured Noteholder $277,597 Mecom, John W.Jr. Unsecured Noteholder $272,758 Snadon, Daryl Unsecured Noteholder $272,758 Wray, Marcus Unsecured Noteholder $256,926 Roten, Bob Unsecured Noteholder $181,838 Elwan, Ibrahim Unsecured Noteholder $138,798 Walker, Ed Unsecured Noteholder $138,798 Marra, Richard Unsecured Noteholder $136,379 Ryan, Thad J. Jr Unsecured Noteholder $92,532 Frame, Paul A. Unsecured Noteholder $92,532 Calver, Horace A. Unsecured Noteholder $92,532 Cone, Michael M. Unsecured Noteholder $90,919 Floyd, Robert C. Unsecured Noteholder $90,919 Moon, Warren Unsecured Noteholder $90,919 Dejoria, Eloise Unsecured Noteholder $90,919 Interfin Corporation Unsecured Noteholder $90,919 Klass, Mark E. Unsecured Noteholder $90,919 KENNY ROGERS: Franchise Management to Buy 83 Restaurants -------------------------------------------------------- Franchise Management Inc. announced yesterday that it plans to buy 83 Kenny Rogers Roasters restaurants for an undisclosed amount, subject to bankruptcy court approval, according to Reuters. Kenny Rogers is operating under chapter 11 protection. Franchise Management, which is the parent of the South Florida hamburger chain Juicy Lucy's, said the acquisition is a major step toward it becoming a multi-concept franchiser. (ABI 24-Nov-98) LAURIAT'S: Bookstore To Emerge From Bankruptcy ---------------------------------------------- Lauriat's, a Boston-bred bookstore chain now based in Canton, was one of the largest customers of Bryant Altman, a wholesaler in Norwood. The top three executives at Bryant Altman took a 25 percent pay cut in the wake of Lauriat's Chapter 11 filing. Said Mark Linnane, a vice president of Bryant Altman who sits on Lauriat's creditors committee: "People on the creditors committee were very angry at first. They all got stiffed." Nine months later, though, cautious optimism appears to have replaced anger. Creditors are continuing to work with Lauriat's. The retailer (it's owned by CMI Holdings, a company controlled by ING Equity Partners) is seeking to emerge from bankruptcy, as soon as March. But it wants to have fewer stores and a sharper focus. Lauriat's is positioning itself as a superstore alternative. It aims to be a "neighborhood" bookstore, catering to well-read customers who prefer good service and a knowledgeable staff to endless selection. Creditors' support for Lauriat's stems partly from self- preservation, at a time when the $8 billion consumer book industry is consolidating. Boston Herald-11/23/98 MOLTEN METAL TECHNOLOGY: To Auction Operating Assets ---------------------------------------------------- After months of marketing the business, Molten Metal Technology Inc. is poised to sell its operating assets at a court-administered auction today. Specifically on the block are Molten Metal's "wet waste" business, which specializes in the packaging and transporting of low-level radioactive liquid byproducts of nuclear energy facilities, and its Q-CEP assets, including equipment and patents. Q- CEP (quantum catalytic extraction processing) technology involves treating and disposing of nuclear and mixed wastes to reduce volume and contain the radioactive material. As of yesterday, there were five bids on the table, all of which took into consideration a $100,000 overbid component. (Federal Filings Inc. 24-Nov-98) PHP HEALTHCARE: Units Convert to Chapter 7 to Liquidate ------------------------------------------------------- PHP Healthcare Corp. announced yesterday that it converted the chapter 11 cases of two of its subsidiaries, Pinnacle Health Enterprises LLCand PHP NJ MSO, to chapter 7 while the parent continues under chapter 11 protection, according to Reuters. The conversion, approved by the bankruptcy court, follows a ruling on Friday from a New Jersey judge that the state seize the assets of the two subsidiaries to ensure that 190,000 members would not be denied health care. The two subsidiaries are controlled by New Jersey regulators as a result of the judge's order. Pinnacle is a medical management company for HMOs in New Jersey, while NJ MSO employed the personnel who managed operations for Pinnacle. PHP, based in Reston, Va., listed assets of $252.4 million and liabilities of $279.1 million in its Oct. 19 bankruptcy petition filed in the District of Delaware.(ABI 24-Nov-98) PRESLEY COMPANIES: WL Homes Submits Revised Proposal ---------------------------------------------------- The Presley Companies report to the SEC on a Schedule 13-D that on November 13, 1998, General William Lyon, through his wholly-owned corporation, William Lyon Homes, Inc. ("WL Homes"), submitted a revised non-binding proposal to a special committee of the board of directors of the Company containing the following terms. A wholly-owned subsidiary of the Company would purchase all or substantially all of the assets of WL Homes for a cash purchase price of two times (2x) book value and the assumption of all or substantially all of the liabilities of WL Homes, subject to the completion of the Offer (as defined in the next sentence). WL Homes would make a tender offer (the "Offer") to purchase between 40% and 49% of the outstanding Common Stock of the Company for a purchase price of $0.62 per share. In the event that more than 49% of the outstanding Common Stock of the Company is tendered, WL Homes would purchase a pro rata share from each tendering stockholder. The Offer is conditioned on the consent of the material creditors of the Company and WL Homes and the approval and consent of other third parties. Consummation of the transaction is conditioned upon regulatory approval and the satisfaction of other customary conditions. SYQUEST TECHNOLOGY: Petition Lists Debts Of $85 Million ------------------------------------------------------- SyQuest Technology Inc.'s Chapter 11 petition, filed on Nov. 17 in California, lists assets and liabilities of about $37 million and $85 million, respectively. The petition also estimates that there will be funds available for distribution to the disk drive maker's unsecured creditors. SyQuest signed a letter of intent for the sale of "substantial assets" to a strategic buyer that is subject to the parties reaching definitive agreements by Nov. 25. Under the agreement, the unnamed buyer would acquire SyQuest's patents and other intellectual property, manufacturing and development equipment, finished goods, work in process and raw material inventory for disk drives and cartridges while SyQuest would retain all of its accounts receivable and ownership of its building in Penang, Malaysia. (Federal Filings Inc. 24-Nov-98) VITALE ENTERPRISES: Committee Seeks Consent Order ------------------------------------------------- The Official Committee of Unsecured Creditors applies to the court for an order resolving all claims of and against Twin County Grocers, inc. and/or its affiliates. Twin County Grocers, Inc. ("Twin") filed proofs of claim totaling $64,274,420. Twin has also asserted postpetition secured claims which it alleges are due to it under a financing order. The debtors, through the Responsible Officer and the Committee have filed a Disclosure Statement and a joint consolidated Chapter 11 plan of orderly liquidation. Creditors holding allowed general unsecured claims shall receive 28% of the Unsecured Distribution Fund. Twin shall receive $750,000. With the balance of the Twin Payment to be paid by the estate as the balance of the fund is paid to all holders of unsecured claims. Twin shall not receiv emore than 72% of the Unsecured Distribution Fund. WILSHIRE FINANCIAL: Reports Net Loss of $119 Million ---------------------------------------------------- Wilshire Financial Services Group Inc. (NASDAQ: WFSG) reports a net loss of $119.0 million or $10.82 per share (diluted) for its third quarter ended September 30, 1998. The loss was primarily the result of adverse market conditions, which caused a charge due to market value adjustments and other provisions totaling $104.5 million to securities and loans held by the Company and interest rate hedges as of September 30, 1998. The Company also announced that it has reached agreement with a majority of its 13% and 13% Series B noteholders to exchange their publicly traded debt of $184.2 million for equity. The results for the quarter compare with net income of $7.1 million or $0.80 per share (diluted) for the same period in 1997. For the nine months ended September 30, 1998, the Company reported a net loss of $111.8 million or $10.58 per share (diluted), compared to net income of $12.2 million or $1.47 per share (diluted) during the same period in 1997. "Since August, and more significantly since October 12, 1998, the Company has been significantly and negatively impacted by various market factors," said Andrew A. Wiederhorn, Chairman and Chief Executive Officer of Wilshire Financial Services Group. "These factors resulted in a dramatic reduction in market valuations and liquidity for certain of the Company's mortgage-backed securities and loans, as well as a reduced availability of borrowings for those assets, thereby significantly reducing the Company's liquidity." Mr. Wiederhorn continued, "As a result of these market conditions, and the consequent `flight to quality' the Company was compelled to initiate the disposition of a significant amount of assets to meet equity calls by lenders and to increase liquidity. The downward pressure on prices and the Company's need to sell assets to meet these equity calls resulted in the Company disposing of certain assets at prices that resulted in significant losses for the quarter and the nine months ended September 30, 1998." Subsequent to September 30, 1998 and beginning the week of October 12, 1998, the Company sold a significant amount of its assets to meet collateral calls, primarily from certain affiliates of Salomon Smith Barney Inc., and to reduce outstanding debt. Management believes that had the Company not been forced to sell these assets, but rather held these assets until market conditions stabilized, the Company's losses would have been far less severe. In order to address the liquidity concerns and improve the Company's financial condition, management entered into discussions with an unofficial committee of holders of a majority of the Company's $184.2 million in outstanding publicly issued notes and its financial advisors, Houlihan Lokey Howard & Zukin, and legal counselors, Latham and Watkins, concerning a restructuring of the Company's obligations under the notes. Following extensive discussions, the Company and the unofficial committee agreed today to a restructuring of the Company whereby (i) the noteholders would exchange their notes for common stock in the Company; (ii) existing holders of common stock would receive warrants or highly diluted new common stock in exchange for their holdings; and (iii) pending consummation of the restructure, the noteholders would forbear from declaring certain defaults which resulted from the net losses incurred by the Company and actions taken by the Company to meet these calls. *********** 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. ISSN 1520-9474. 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 * * *