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/raid1/www/Hosts/bankrupt/TCR_Public/990208.MBXT R O U B L E D C O M P A N Y R E P O R T E R Monday, February 8, 1999, Vol. 3, No. 26 Headlines ALL AMERICAN FOOD: Notification of Late Filing AMERICAN SKIING: Ownership of Stock Reported AVATEX: Announces Third Quarter Results BIG BEAR: Grocery Owner To File Pre-packaged Chapter 11 BMJ MEDICAL: Class Action Commenced by Shareholders BOSTON BED: Liquidation Sales Begin BROTHERS GOURMET: Monthly Report CROWLEY'S: Files Chapter 11 FREEPORT MCMORAN: Stock Ownership Reported GIBSON GREETING: Stock Ownership Reported GRANT GEOPHYSICAL: Announces Management Change HAWAII THRIFTY: Franchise Sold for $450,000 KOO KOO ROO: NASDAQ To Delist Company's Stock LIVENT: Committee Objects To final Terms of DIP MAXICARE HEALTH PLANS: Stock Ownership Reported MCCULLOCH: Intended Sale of European Subsidiaries MEGO MORTGAGE: Amendment to Registration Statement MESA AIR GROUP: Announces Merger With CCAIR, Inc. MESA AIR GROUP: Stock Ownership Reported MJDESIGNS: No Plan to Close Stores - Considering Bids MOBILEMEDIA: Creditors Accept Plan FCC Grants Transfers MONTGOMERY WARD: Signature Group Cash To Hold Off Creditors NEWMONT MINING: Reports Significant Loss In 4th Quarter NORTH AMERICAN VACCINE: Annual Meeting of Shareholders PANGBURN: Receives Some Financing After Hearing PENN TRAFFIC: Announces Agreement in Principle PHP: Gets Cash Collateral Agreement To Sell Stock PHYSICIANS RESOURCE GROUP: Bank Agrees To Take No Action PRECISION AUTO CARE: Secures $5 Million Bridge Loan PRIMESTAR INC: Asset Purchase Agreement Filed With SEC RUTHERFORD MORAN: Chevron Reports Stock Ownership SALANT CORP: Agrees To Stop Joe Boxer Children's Wear USN COMMUNICATIONS: Stock Ownership Reported XATA CORP: Ownership of Stock Reported ZENITH ELECTRONICS: Amendment To SCHEDULE 13E-3 ********* ALL AMERICAN FOOD: Notification of Late Filing ---------------------------------------------- All American Food Group Inc. notified the SEC of a late filing of its Form 10-KSB. The company recently filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. Effective January 5, 1999, in response to its recent filing for protection from certain creditors under Chapter 11, the company filed amended unaudited pro forma condensed consolidated financial statements for the fiscal year ended October 31, 1997, and the nine month period ended July 31, 1998. However, the company has just been informed by its certified public account, DelSanto & DeFreitas, that because they are creditors of the company, they are not independent. As a result, the company requires approval from the Federal Bankruptcy Court for the reappointment of its prior accountants or to retain new accountants to complete its audit for the year ended October 31, 1998. AMERICAN SKIING: Ownership of Stock Reported -------------------------------------------- State of Wisconsin Investment Board reports beneficial ownership of 2,635,000 shares (16.97% of class) of common stock of American Skiing Co.Com AVATEX: Announces Third Quarter Results --------------------------------------- Avatex Corporation (OTC Bulletin Board: AVAX) announced financial results for the third quarter and the first nine months of fiscal 1999 ending December 31, 1998. Avatex reported revenues for the third quarter of $2.6 million compared to $3.0 million for the corresponding period of the previous year. The decrease was due primarily to the sale of one of the Company's real estate partnership interests during the fourth quarter of fiscal 1998 partially offset by the October 1998 opening of a new hotel by a real estate partnership in which the Company owns a fifty percent interest. After preferred stock dividends of $7.1 million, the Company recorded a net loss to common shareholders of $7.8 million, or $0.56 per share, compared to a net loss to common shareholders of $61.9 million, or $4.49 per share, in the previous. Avatex reported revenues for the nine months ended December 31, 1998 of $7.5 million compared to $9.8 million for the corresponding period of the previous year. After preferred stock dividends of $20.9 million, the Company recorded a net loss to common shareholders of $26.9 million, or $1.95 per share, compared with a net loss to common shareholders of $113.0 million, or $8.18 per share in the previous year. In a separate matter, the Company announced that it no longer meets the continued listing requirements of the New York Stock Exchange and effective February 1, 1999 the Company's common and Series A and convertible preferred stocks commenced trading on the NASD OTC Electronic Bulletin Board (OTC-BB) under the symbols AVAX, AVAXO, and AVAXP, respectively. Avatex is a holding company that, along with its subsidiaries, owns interests in hotels and an office building and in other corporations and partnerships. Through Phar-Mor, Inc., its 38% owned affiliate, Avatex is involved in operating a chain of discount retail drugstores. BIG BEAR: Grocery Owner To File Pre-packaged Chapter 11 -------------------------------------------------------- Penn Traffic Co., which owns the Big Bear Grocery chain, plans to file a pre-packaged chapter 11 in order to facilitate financial restructuring agreement with a committee of noteholders, according to Business First, The Greater Columbus Business Authority. Under the plan, the company will cancel $1.13 billion of existing senior and subordinated notes and distribute $100 million of new senior notes and 19 million shares of new common stock to the holders of existing senior notes. The company also will distribute 1 million shares of the new common stock to the holders of existing senior subordinated notes. (ABI 05-Feb-99) BMJ MEDICAL: Class Action Commenced by Shareholders --------------------------------------------------- Notice was given that a class action was filed on Feb. 2, 1999 by the law firm of Berger & Montague, P.C. and Beasley, Leacock & Hauser, P.A. in the United States District Court for the Southern District of Florida, Civil Action No. 99-8086-CIV-Zloch, seeking damages for alleged violation of the federal securities laws on behalf of all persons, excluding the defendants and their affiliates, who purchased or otherwise acquired the common stock of BMJ Medical Management, Inc. ("BMJ") pursuant or traceable to BMJ's February 4, 1998 initial public offering (the "IPO") at any time prior to December 17, 1998. The Complaint alleges that the defendants participated in, approved and/or permitted to be made misrepresentations of material fact in the Prospectus, and omitted to disclose material facts necessary to make the statements made to plaintiffs and the class not misleading, concerning BMJ's capitalization, accounting practices and management procedures in violation of sections 11, 12(a)(2) and 15 of the Securities Act of 1933, 15 U.S.C. sections 77k, 77(l)(a)(2) and 77o, and common law. The Complaint further alleges, among other things, that defendants' violations caused plaintiffs and the class damages; that on December 17, 1998, BMJ commenced bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code; and that BMJ's stock, which had been issued to the public at $7.00 per share, closed at approximately $0.08 per share on December 31, 1998. BOSTON BED: Liquidation Sales Begin ----------------------------------- Worcester Telegram & Gazette reports on February 4, 1999 that the 23-store Boston Bed & Bath chain, which fell on hard times, will start its going-out-of-business sale on February 5, 1999, including at its store in the Old Shrewsbury Village shopping center in Shrewsbury. The retail value of goods to be sold is about $15 million, according to Gordon Brothers Retail Partners LLC of Boston, a retail advisory firm and one of the companies involved in liquidating the inventory. The sale will continue until all merchandise is sold, which may take several weeks, according to a Gordon Brothers spokeswoman. The Boston Bed & Bath chain was founded 28 years ago and was credited with being the original bed and bath superstore in New England, introducing the concept of a greater selection of branded merchandise than found in department stores. It has stores in Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. Citing tough competition from department stores and larger chains, Leejay Inc., which does business as Boston Bed & Bath, filed for Chapter 11 bankruptcy protection in November. At the time it reported assets of $19.1 million and liabilities of $26.9 million. The company has since received U.S. Bankruptcy Court permission to retain a liquidator and a real estate agent to sell inventory and property. Merchandise to be sold includes bed sheets, towels, accessories, comforters, blankets, window curtains, fashion bedding and pillows. U.S. Bankruptcy Court, Boston, has appointed a joint venture between Gordon Brothers Retail Partners of Boston and Hilco Trading Co. Inc. of Northbrook, Ill., to manage the sale. BROTHERS GOURMET: Monthly Report -------------------------------- For the month ended December 25, 1998, Brothers Gourmet Coffees Inc. reports net income of $670,000 on sales of $6.064 million. CROWLEY'S: Files Chapter 11 --------------------------- Crowley's announced on February 5, 1999 that it and its wholly-owned subsidiary, Steinbach Stores, Inc. (collectively, the "Debtors"), filed voluntary petitions for relief under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Michigan. Under Chapter 11, subject to Bankruptcy Court approval, the Debtors will commence and/or continue the clearance sales at both Crowley's and Steinbach Stores and will continue to operate the stores as debtors-in-possession pending an orderly wind-down of operations under the protection of the Bankruptcy Court. The Debtors are optimistic that Congress Financial Corporation (Central) will agree to the Debtors' use of cash for an interim period pursuant to the terms of a consensual order submitted to the Bankruptcy Court by the Debtors and Congress Financial Corporation (Central). Crowley's also announced that, pending approval by the Bankruptcy Court and subject to higher and better bids at a sale of certain of its other assets, it has agreed to accept an offer from Value City Department Stores, Inc. to acquire five Crowley's stores and three Steinbach stores and the store-related assets deemed necessary by Value City to operate these locations for a purchase price of $5.335 million. Founded in 1914, Crowley's is the only Detroit-based specialty retail department store operator. FREEPORT MCMORAN: Stock Ownership Reported ------------------------------------------ The Prudential Insurance Company of America may have direct or indirect voting and/or investment discretion over 8,527,651 shares (11.75 % of class) of the common stock of Freeport-McMoran Copper & Gold Inc. which are held for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates. Prudential is reporting the combined holdings of these entities for the purpose of administrative convenience. GIBSON GREETING: Stock Ownership Reported ------------------------------------------ The Prudential Insurance Company of America may have direct or indirect voting and/or investment discretion over 3,018,160 shares (19% of class)of the common stock of Gibson Greetings, Inc. which are held for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates. Prudential is reporting the combined holdings of these entities for the purpose of administrative convenience. These shares were acquired in the ordinary course of business. GRANT GEOPHYSICAL: Announces Management Change ---------------------------------------------- On January 28, 1999 in Houston, Texas, Grant Geophysical, Inc. announced that Larry E. Lenig, Jr. has resigned as President, Chief Executive Officer and a director of the Company. Don W. Wilson, the Company's Chairman of the Board, will replace him on an interim basis as Chief Executive Officer. Wilson said, "We have a sound management team that is very capable of running the Company. I will serve as President and CEO on an interim basis, and we have already commenced a search for a new President and CEO and expect to announce our new CEO shortly." Grant Geophysical, Inc. and its subsidiaries and affiliates provide land and transition zone seismic services in the United States, Latin America, Central America and the Far East. The Company employs approximately 2,500 people in its worldwide operations. HAWAII THRIFTY: Franchise Sold for $450,000 ------------------------------------------- Cardinale Leasing Inc. of Seaside, Calif., this week acquired the Thrifty Car Rental franchise in Hawaii for $450,000, according to The Honolulu Star Bulletin. The deal, which includes the franchise, its leases, furniture and office equipment, nearly clears the company's $5 million in debts. The Thrifty franchise filed chapter 11 in October, listing about $1.7 million in assets and $5.4 million in liabilities. Proceeds from the sale were split among the franchisor, landlords, state and federal tax collectors, and company employees. (ABI 05-Feb-99) KOO KOO ROO: NASDAQ To Delist Company's Stock --------------------------------------------- Koo Koo Roo Enterprises, Inc., reported on February 1, 1999 that the NASDAQ Listing and Hearing Review Panel overturned an August 26, 1998 decision by the NASDAQ Listing Qualifications Panel, which granted the Company a waiver to the $5.00 minimum bid initial and continued listing requirements. This latest decision reverses the prior waiver with respect to continued listing. Consequently, NASDAQ will delist the Company's common stock from their National Market. The Company remains a reporting company under the SEC's rules. The Company's common stock is eligible for quotation on the OTC Bulletin Board to the extent that at least one of its market makers files for such quotation and is approved by the National Association of Securities Dealers ("NASD"). The Company believes it meets all the criteria for market makers to register to make a market in the Company's stock on the OTC bulletin board and is working with its numerous market makers to take the necessary steps to gain listing. Koo Koo Roo Enterprises, Inc. had sales of $416 million and EBITDA of approximately $18 million on a pro forma combined basis for the nine-month period ending September 27, 1998. LIVENT: Committee Objects To Final Terms of DIP ----------------------------------------------- Livent Inc.'s Official Committee of Unsecured Creditors has objected to the final terms of the company's $23.5 million DIP facility with Angelo Gordon & Co. L.P., claiming the financing contains "unreasonable and unfair" financial restrictions that leave Livent to operate "at the mercy and leave of Angelo Gordon." The Jan. 29 objection warned that the "combination of such remedies with such hair trigger default provisions presents these Debtors with a recipe for disaster." The live theater producer announced on Nov. 30 that Angelo Gordon agreed to provide DIP financing in two stages: $13 million during the first week of December and additional $10.5 million by mid-month, subject to court approval. (The Daily Bankruptcy Review and ABI Copyright c February 5, 1999) MAXICARE HEALTH PLANS: Stock Ownership Reported ----------------------------------------------- Heartland Advisors, Inc. reports beneficial ownership of 3,549,700 shares of Maxicare Health Plans, Inc. (19.8% of class). MCCULLOCH: Intended Sale of European Subsidiaries ------------------------------------------------- By notice published in The Wall Street Journal on February 5, 1999, McCulloch Corporation and McCulloch North America, Inc. seek to sell the debtors' ownership interest in certain European subsidiaries and related intellectual property rights pursuant to a purchase agreement with Castelgarden SpA, an Italian Corporation for the expected aggregate purchase price of approximately $10.5 million. McCulloch North America, Inc. is a leading international developer, manufacturer, marketer and distributor of a wide range of gasoline -powered and electric portable outdoor equipment. A hearing on the proposed sale shall be held on February 22, 1999 at 1:30 PM before the Honorable James M. Marlar, U.S. Bankruptcy Court for the District of Arizona, 110 South Church Avenue, Tucson, Arizona. The proposed sale is subject to higher and better offers. MEGO MORTGAGE: Amendment to Registration Statement -------------------------------------------------- Mego Mortgage Corporation filed pre-effective amendment #2 to its Registration Statement relating to 70,722,171 shares of common stock, par value $.01 per share. The prospectus dated February 23, 1999 describes Mego Mortgage Corporation and the sale of shares of common stock that: - are owned by certain of the company's stockholders or - may be acquired by certain of the company's stockholders, if they convert their shares of our Series A convertible preferred stock into shares of company common stock or - may be acquired by certain of our option holders upon exercise of their options to purchase common stock. Closing sale price on January 28, 1999: $0.50 A complete text filing of the prospectus is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950144-99- 000823.txt MESA AIR GROUP: Announces Merger With CCAIR, Inc. ------------------------------------------- Mesa Air Group, Inc. (NASDAQ:MESA) announced on February 1, 1999 that it has entered into a Merger Agreement with CCAIR, Inc., dated as of January 28, 1999, whereby CCAIR will become a wholly-owned subsidiary of Mesa Air Group. CCAIR is a Charlotte, North Carolina based regional airline operating 31 aircraft as US Airways Express. The transaction, valued at approximately $53 million, reflects a $4.35 per share purchase price, a reduction from the $5.40 share price referred to in the press release issued August 28, 1998, announcing the letter of intent. Under the terms of the Merger Agreement, upon consummation of the merger, each outstanding share of CCAIR common stock will be converted into the right to receive a fraction of a share of Mesa common stock, determined by dividing $4.35 by the average Mesa share price for a specified ten day trading period prior to the closing. The conversion is subject to a maximum exchange ratio of .6214 if the Mesa share price falls below $7.00 and a minimum exchange ratio of .435 if the Mesa share price exceeds $10. The consummation of the Merger is subject to the approval of the CCAIR stockholders and the Mesa shareholders, certain regulatory approvals and other conditions, as set forth in the Merger Agreement. The Merger is expected to be completed by mid May 1999 and is contemplated to be accounted for as a pooling of interests. MESA AIR GROUP: Stock Ownership Reported ---------------------------------------- State of Wisconsin Investment Board reports beneficial ownership of 3,190,000 shares (11.25% of class) of common stock of Mesa Air Group, Inc. MJDESIGNS: No Plan to Close Stores - Considering Bids ------------------------------------------------------ MJDesigns, Coppell, Texas, filed chapter 11 this week with $83 million in liabilities and $76 million in assets; the crafts retailer does not plan to close any stores and is seeking court approval for interim financing to meeting its upcoming $1.3 million payroll for 3,000 employees at 46 stores, The Fort Worth Star-Telegram reported. Vice President Todd Dupey said the company has received bids from investors interested in buying all or part of the company, and he said they are examining them to see what is the best opportunity. During the last 60 days, MJDesigns was forced to operate on a cash-on-delivery basis with suppliers, and it went through the holiday shopping season with less inventory than is typical. An industry analyst who follows rival Michaels Stores, said MJDesigns overextended itself in 1994 when it expanded on the East Coast and opened a new distribution center and corporate headquarters. (ABI 05-Feb-99) MOBILEMEDIA: Creditors Accept Plan FCC Grants Transfers ------------------------------------------------------- MobileMedia Corporation announced that its secured and unsecured creditor classes each voted to accept its Third Amended Plan of Reorganization. The Plan reflects the terms of MobileMedia's proposed merger with Arch Communications Group, Inc. (Nasdaq: APGR), which would create the nation's second largest paging and wireless messaging company with more than seven million units in service in all 50 states. The results of MobileMedia's creditor vote were presented yesterday in the U.S. Bankruptcy Court for the District of Delaware during the first day of the Plan's confirmation hearing, which will be continued on Tuesday, February 9th. MobileMedia said that 100% of its Class 4 secured creditors who voted, voted in favor of the Plan. Of its Class 5 unsecured creditors (holders of the Dial Page notes), 83.3% of those voting, representing 91% of the dollar value of the voted notes, voted in favor of the Plan. Of MobileMedia's Class 6 unsecured creditors, 94% of those voting, representing 69.5% of the dollar value of the claims being voted, voted in favor of the Plan. MobileMedia also announced that the Federal Communications Commission said yesterday it has granted the Applications for Transfer of Control and Petition to Terminate and for Special Relief filed by MobileMedia and Arch, and that it has terminated the license revocation hearing involving MobileMedia pursuant to the FCC's Second Thursday Doctrine, conditioned on approval and consummation of MobileMedia's Plan of Reorganization. The approval of the Plan by MobileMedia's creditors, and the FCC's approval of the license transfer applications and termination of the hearing proceedings, satisfy two of the conditions necessary for MobileMedia to complete its merger with Arch. Confirmation of the Plan by the Court would allow MobileMedia to emerge from Chapter 11 and clear the way for Arch and MobileMedia to consummate the merger transaction. MobileMedia and Arch announced their intention to merge on August 20, 1998, and MobileMedia filed its Third Amended Plan of Reorganization on December 2, 1998. On January 26, 1999, Arch received approval from its shareholders to acquire MobileMedia. MONTGOMERY WARD: Signature Group Cash To Hold Off Creditors ----------------------------------------------------------- The Chicago Daily Herald reported on February 3, 1999 that Montgomery Ward & Co. is selling its Schaumburg-based direct marketing unit Signature Group to stave off Chapter 11 bankruptcy creditors, but the handwriting may already be on the wall for one of Chicago's retail institutions. Signature Group, which also has offices in Itasca, has long been the lone bright line item in the Ward's financial portfolio. Yet Ward's announced this week that it is selling it to its major creditor, GE Capital, for an undisclosed amount. Although the sale could carry a billion dollar price tag, it leaves the flailing Ward's with one less ongoing profit center. While this sale will help, one estimate puts Ward's total debt at $2.5 billion. Ward's, has spent the last 18 months remaking itself; closing stores, re-modeling and changing its merchandising focus. Shuttering 150 under-performing stores, Ward's now has fewer than 40,000 employees. The company has in excess of $3 billion in sales, but analysts say sales have dropped an estimated one-third in the last year alone. Same-store sales rose about 3 percent last year despite the bad publicity of the bankruptcy proceedings. Its three prototype stores increased sales by more than 40 percent in five months during the holiday buying season. The chain plans to re-model more than 20 stores in the coming year. Focusing more on apparel and jewelry, rather than slow-selling consumer electronics, Ward's operating profit is increasing by some estimates. NEWMONT MINING: Reports Significant Loss In 4th Quarter ------------------------------------------------------- As reported in the Wall Street Journal on February 5, 1999, Newmont Mining Corp. reports a loss for the fourth quarter of $421.4 million, or $2.53 per share. That compares with net income of $38.6 million or 25 cents a diluted share in the same quarter of the previous year, after a charge of $3 million related to the acquisition of Santa Fe Gold Corp. Revenue slipped 14% to $356.5 million. The casue of the loss was a slump in gold prices. NORTH AMERICAN VACCINE: Annual Meeting of Shareholders ------------------------------------------------------ The 1999 Annual Meeting of Shareholders of North American Vaccine, Inc., a Canadian corporation will be held at 275 Armand-Frappier Boulevard, Laval, Quebec, Canada on Tuesday, February 23, 1999 commencing at 9:00 a.m., local time. The purposes of the Annual Meeting will be: 1. To elect the Board of Directors for the ensuing year; 2. To approve the Company's 1999 Non-Employee Director and Senior Executive Stock Option Plan; 3. To appoint Arthur Andersen LLP as independent public accountants of the Company; and PANGBURN: Receives Some Financing After Hearing ----------------------------------------------- Pangburn Candy Co., Fort Worth, yesterday received bankruptcy court approval to spend about $155,000 to meet payroll due today, The Fort Worth Star-Telegram reported. The judge delayed ruling until Tuesday on the company's request for $245,000 in financing to pay suppliers. Pangburn President Jim Phillips yesterday testified that in July NationsBank Dallas, which had lent the investor group $6.8 million in 1996 to buy the company, said it would not extend additional credit and gave Pangburn a Jan. 31 deadline to refinance its loan with another lender. Phillips said that on Monday NationsBank moved to freeze the money in its accounts, which forced the company to file chapter 11. Attorney Robin Phelan of Haynes and Boone, who represents NationsBank, said the bank gave Pangburn "plenty of warning" to find another source of financing and that the offer from Finova Capital Corp. is $1.6 million short of the amount in principal and interest owed to NationsBank. NationsBank refused to push back the Jan. 31 deadline to Feb. 15 to give Pangburn time to conclude the loan from Finova. The bank and Pangburn also disagree about the company's value. Phillips said that an appraisal by PricewaterhouseCoopers values the assets at $12 million, which is partially based on the sale of Whitman's chocolates brand to Russell Stover for $16 million. Phelan argued that the company's unprofitability has diminished its value. (ABI 05-Feb-99) PENN TRAFFIC: Announces Agreement in Principle ---------------------------------------------- The Penn Traffic Company (OTC:PNFT) announced today that it has reached an agreement in principle on the terms of a financial restructuring with an informal committee of noteholders, the members of which hold in excess of 50% of its senior notes and in excess of 50% of its subordinated notes. Under the agreement, these noteholders are committed to support the restructuring plan. The restructuring will result in the substantial deleveraging of the Company by canceling its existing $1.13 billion of senior and subordinated notes and (i) distributing $100 million of new senior notes and 19,000,000 shares of new common stock to the holders of the existing senior notes and (ii) distributing 1,000,000 shares of the new common stock and 6 year warrants to purchase 1,000,000 shares of new common stock having an exercise price of $18.30 per share to the holders of the existing senior subordinated notes. In addition, the restructuring contemplates that each 100 shares of Penn Traffic's common stock outstanding immediately prior to the restructuring shall be converted into 1 share of new common stock aggregating approximately 105,000 shares of new common stock. The Company expects that it will implement the restructuring through a prenegotiated Chapter 11 plan. Pursuant to the agreement in principle, Penn Traffic will provide for payment in full of all obligations as they come due to Penn Traffic's trade creditors that continue to support Penn Traffic with customary trade credit and terms. "The Company is very pleased that it was able to reach a mutually beneficial agreement with its noteholders and intends to expeditiously implement the restructuring. Attaining this milestone on such a rapid timetable demonstrates the commitment of all involved to achieving a restructuring promptly and efficiently," said Gary D. Hirsch, Chairman of The Penn Traffic Company. "As expected, the agreement provides for continued prompt payment in full in accordance with customary terms for all of our trade creditors that have supported the Company." "To provide further financial support to the Company and ensure our ability to meet our trade obligations, the Company has received from the Company's agent bank, Fleet Bank, a commitment for a $300 million Debtor-in-Possession credit facility," continued Mr. Hirsch. "It is expected that this facility will have initial undrawn availability in excess of $100 million at the time of the commencement of the Chapter 11 process. "The noteholders are satisfied that the restructuring described in the agreement in principle provides the Company with the financial flexibility needed to compete successfully in the foreseeable future," said Jeffrey Werbalowsky, of Houlihan, Lokey, Howard & Zukin Capital, financial advisor to the informal committee. The Penn Traffic Company operates 232 supermarkets in Pennsylvania, upstate New York, Ohio and West Virginia under the "Big Bear," "Big Bear Plus," "Bi-Lo Foods," "P&C Foods," and "Quality Markets" trade names. Penn Traffic also operates wholesale food distribution businesses serving 103 licensed franchises and 82 independent operators. PHP: Gets Cash Collateral Agreement To Sell Stock ------------------------------------------------- PHP Healthcare Corp. entered into a stipulation with its prepetition lender NationsBank N.A. which allows it to use about $6.8 million of the lender's cash collateral through the end of February, provided that it meets certain cash flow requirements. PHP initially sought approval to obtain a $12 million debtor-in-possession financing agreement with NationsBank but decided to negotiate the cash collateral stipulation after the DIP agreement drew opposition from the creditors' committee. The Jan. 8 stipulation provides that as a condition to PHP's use of cash collateral, the medical management company must not allow its total cash flow, calculated on a cumulative basis, to fall below specific points for certain periods. (The Daily Bankruptcy Review and ABI Copyright c February 5, 1999) PHYSICIANS RESOURCE GROUP: Bank Agrees To Take No Action -------------------------------------------------------- On January 28, 1999, Physicians Resource Group, Inc. (NYSE: PRG) announced that NationsBank has agreed not to take any action prior to February 28, 1999 with respect to its loan to the Company due December 31, 1998, subject to certain conditions. Additionally, the Company announced that it had reduced the outstanding principal balance of the NationsBank loan from $9.5 million to $6.9 million by applying the proceeds of sale of certain assets to retire principal. The Company continues to work with NationsBank and its bondholders to obtain an acceptable arrangement to permit the Company to pursue its restructuring. As a result of the continued default on the NationsBank loan, the Company is restricted under applicable subordination provisions from paying interest due on December 1, 1998 on its outstanding $125 million 6% Convertible Subordinated Debentures due 2001. As the result of such non-payment, the maturity of the Debentures could be accelerated by the Debenture Trustee or parties holding 25% or more of the aggregate principal amount of the Debentures. PRECISION AUTO CARE: Secures $5 Million Bridge Loan --------------------------------------------------- On January 26, 1999, Precision Auto Care, Inc. announced that it has received a $5,000,000 bridge loan from a member of its Board of Directors to help restructure its debt, according to Charles L. Dunlap, President and CEO. Precision Auto Care also has reached an agreement in principal with the Company's senior lender on a modification to its loan agreement, which provides for the restructuring of its repayment. The Bank has also agreed to the waiver of financial covenants through the quarter ending March 31, 1999. The proposed modification with the Bank calls for the Company to reduce its outstanding indebtedness with the Bank by $13,500,000 by April, 25, 1999. The Company will use $2,500,000 of the proceeds from the bridge financing as Bank repayment, and announced that it currently has approximately $11,000,000 in commitments from mortgage lenders and another $5,750,000 in signed purchase agreements for the sale of non-strategic Company car washes and auto care centers, said Dunlap. Dunlap said, "the restructuring which we began in November is having a positive impact on our operations, and we fully expect that future quarters, starting with the current third fiscal quarter, will show much improved performance. We are very appreciative of the financial support from our Board, as well as the willingness of our Bank to work with us as we continue to restructure and solidify our business." PRIMESTAR INC: Asset Purchase Agreement Filed With SEC ------------------------------------------------------ Pursuant to an Asset Purchase Agreement, dated as of January 22, 1999, among Primestar, Inc., PRIMESTAR Partners, L.P., a Delaware limited partnership which is a wholly-owned subsidiary of Primestar, Inc. ("PLP"), PRIMESTAR MDU,Inc., a wholly-owned subsidiary of Primestar, Inc., certain stockholders of Primestar, Inc. and Hughes Electronics Corporation, Primestar, Inc. has agreed to sell to Hughes its medium-power direct broadcast satellite business and assets for approximately $1.32 billion in cash and stock. Pursuant to the Medium Power Agreement, the aggregate purchase price for the medium power DBS assets will be comprised of $1.1 billion in cash and 4,871 million shares of General Motors Class H common stock. PRIMESTAR will be responsible for the payment of certain working capital obligations not assumed by Hughes, satisfaction of its funded indebtedness and costs currently estimated at $350 million associated with the termination of its high-power business strategy and sale of its medium- power assets to Hughes. The closing of the sale of the company's medium-power business and assets is subject to various consents from PRIMESTAR's lenders, regulatory approvals and other customary conditions. In addition, consummation of the sale to Hughes of the medium power business is subject to the successful restructuring of the Registrant's indebtedness. If the proposed transaction with Hughes is not consummated for any reason, PRIMESTAR currently intends to operate the medium-power business, which may require the restructuring or refinancing of certain of its liabilities. In a separate transaction and pursuant to an Asset Purchase Agreement, dated as of January 22, 1999, among Primestar, Inc., PLP, the Stockholders, Tempo Satellite, Inc. and Hughes, Primestar, Inc. has agreed to sell to Hughes its rights to acquire Tempo's high-power satellite assets in a transaction valued at $500 million (the "High Power Agreement"). The closing of the High Power Transaction is subject to regulatory approvals and other customary conditions. A complete text copy of the agreements via the internet is available at http://www.sec.gov/Archives/edgar/data/0000927356-99- 000083.txt RUTHERFORD MORAN: Chevron Reports Stock Ownership ------------------------------------------------- Chevron Corporation, Chevron Thailand Inc. reports beneficial ownership of 19,223,201 shares of common stock (75% of class) of Rutherford-Moran Oil Corporation. On December 23, 1998, Chevron Corporation, Chevron Thailand Inc., Chevron Sub and Rutherford-Moran entered into an Agreement and Plan of Merger whereby Chevron Sub will be merged with and into Rutherford-Moran. Portions of the Merger Agreement were subject to approval of the Board of Directors of Chevron. Such approval was obtained on January 27, 1999. In connection with the Merger, certain stockholders of Rutherford-Moran entered into an Option and Voting Agreement dated December 23, 1998 with the Reporting Person. Such holders own approximately 75.1% of the outstanding Common Stock of Rutherford-Moran. SALANT CORP: Agrees To Stop Joe Boxer Children's Wear ----------------------------------------------------- Salant Corporation (OTC Bulletin Board: SLNT) and Joe Boxer jointly announced today that they have agreed to terminate Salant's license to manufacture and distribute JOE BOXER children's wear. Salant intends to file papers immediately to seek Bankruptcy Court approval of the agreement. Under the agreement, Salant will continue to manufacture and distribute products under the JOE BOXER license for the spring 1999 season. Joe Boxer intends to continue its children's wear business with a new licensee which will manufacture and distribute the Fall 1999 product line that is currently being offered by Salant as well as subsequent lines in the future. The new licensee will be announced within the next two weeks. Salant has agreed to work with Joe Boxer and the new licensee to effect a smooth transition of the business. As previously announced, under Salant's pre-negotiated Chapter 11 restructuring plan, Salant intends to focus solely on its Perry Ellis men's apparel business and, as a result, exit its other businesses. USN COMMUNICATIONS: Stock Ownership Reported -------------------------------------------- Merrilly Lynch & Co., Inc. reports beneficial ownership of 4,829,747 shares (ownership disclaimed pursuant to Section 13d-4 of the 1934 Act) of common stock (17.01% of class) of USN Communications, Inc. XATA CORP: Ownership of Stock Reported -------------------------------------- William P. Flies and Linda Berg Flies, husband and wife report beneficial ownership of 1,119,152 shares (25.2% of class) of common stock of XATA Corporation. ZENITH ELECTRONICS: Amendment To SCHEDULE 13E-3 ----------------------------------------------- Zenith Electronics Corporation and LG Electronics Inc. filed a Transaction Statement with the SEC relating to a Disclosure Statement and Proxy Statement-Prospectus for the solicitation of votes for the Prepackaged Plan of Reorganization of Zenith Electronics Corporation. The purpose of the Prepackaged Plan is to reduce Zenith's debt service obligations, facilitate future borrowing to fund liquidity needs and permit Zenith to implement a restructuring of its operations. The Prepackaged Plan will reduce Zenith's overall debt and other obligations by approximately $300 million by exchanging (i) $200 million of debt and other liabilities owed to LG Electronics Inc. (the "Affiliate") for all of the newly issued common stock, par value $.01 per share, of the reorganized Zenith, (ii) the 6 1/4% Convertible Subordinated Debentures due 2011 in an aggregate principal amount of $103.5 million plus accrued interest thereon for the 6 1/4% Senior Subordinated Debentures due 2010 of the reorganized Zenith in an aggregate principal amount of $40 million and (iii) approximately $32.4 million of indebtedness to the Affiliate for certain property, plant and equipment owned by Zenith's subsidiaries located in Reynosa, Tamaulipas, Mexico, which have an appraised value equal to such amount. In addition, as a consequence of the Prepackaged Plan, the common stock, par value $1.00 par value, of the company, together with all outstanding options, warrants or rights to acquire shares of common stock, will be canceled and the holders of the Old Common Stock will receive no distributions and retain no property under the Prepackaged Plan in respect of their holdings of the Old Common Stock. A complete text filing is available via the Internet at http://www.sec.gov/Archives/edgar/data/0000950131-99- 000458.txt ********* 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 1999. 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 * * *