/raid1/www/Hosts/bankrupt/TCR_Public/990225.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 25, 1999, Vol. 3, No. 38
Headlines
AAMES FINANCIAL: Notification of Late Filing
ABLE TELECOM: Asensio Claims Able Is Insolvent
ADMOR MEMORY CORP: Lender Serves Notice of Default
BENNETT FUNDING: Jury Told To Keep Deliberating
BOREALIS: Special Meeting of Stockholders Set For 3/15
CHANNELMATIC: Case Summary & 20 Largest Creditors
COLUUMBIA/HCA: Reports $42 Million Loss
DANKA BUSINESS SYSTEMS: Notification of Late Filing
DISCOVERY ZONE: Ladenburg Thalmann To Help Raise Capital
EQUALNET COMMUNICATIONS: Notification of Late Filing
GOLDEN BOOKS: Terms Agreed to for Pre-Packaged Chapter 11
GORGES/QUICK-TO-FIX: Files Quarterly Report With SEC
GRAND UNION: Files Quarterly Report With SEC
HARVARD INDUSTRIES: Notification of Late Filing
JAYHAWK ACCEPTANCE: Ernst & Young Resigns
MEDIA LOGIC: Requests Chapter 11 Trustee
MOTOTECHNA: Czech Car And Spare Part Seller In Bankruptcy
NATIONAL ENERGY: Involuntary Petition Well Grounded
PANGBURN CANDY: Russell Stover Leads Race
RAYROCK: Shareholders Approve Glamis Arrangement
SOLO SERVE CORP: Applies To Employ Conway, Del Genio
STARMET CORP: Notification of Late Filing
UNITED COMPANIES: Step Closer To Bankruptcy
UNITED COMPANIES: Downgrade of $225M of Sr Unsecured Debt
VERTEX COMPUTER: Files Quarterly Report With SEC
WESTMORELAND COAL: Reports 1998 Year-End Results
*********
AAMES FINANCIAL: Notification of Late Filing
--------------------------------------------
The Company has not been able to complete the compilation
of the requisite financial data and other narrative
information necessary to enable it to have sufficient time
to complete the Company's Quarterly Report on Form 10-Q
by February 16, 1999, the required filing date, without
unreasonable effort and expense.
The results for the quarter ended December 31, 1998 are
significantly impacted by the factors described in the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998 and the Company's Current Reports
on Form 8-K filed with the Commission on November 19, 1998,
December 16, 1998, December 31, 1998, February 1, 1999,
February 4, 1999 and February 16, 1999.
ABLE TELECOM: Asensio Claims Able Is Insolvent
----------------------------------------------
The following is being issued by Asensio & Company, a
member of the National Association of Securities Dealers:
On February 23, 1999, one day before its delayed Form 10K
filing, Able Telcom Holding Corp. (Nasdaq: ABTEE) issued a
release containing selected data concerning its financial
condition. All of this selected data will be included
in complete form in today's Form 10K, which will also
contain Able's first audited statement since the company
defaulted and failed to meet its financial obligations. We
believe that Able issued this selected data in an attempt
to mislead investors into believing it is a viable going
concern, as opposed to admitting it is insolvent. However,
even its very limited disclosures clearly establish Able's
insolvency as a plain, simple fact.
The extent of Able's willingness to deceive investors is
apparent from its attempt to show increasing revenues.
Able's own third quarter Form 10Q shows that, adjusted for
acquisitions, revenues actually declined in both the most
recent quarter and for the entire year.
Yesterday's release revealed that Able's liabilities had
increased $51.1 million in the fourth quarter to over $250
million. This increase in liabilities is mostly
attributable to an increase in unpaid bills. A comparison
of Able's fourth quarter sales of $103 million to this
single quarter's $51.1 million increase in liabilities
reveals its rapid financial deterioration and the severity
of its insolvency. Management had not previously disclosed
this deterioration or insolvency. We believe that Able's
current stock price does not reflect its unsustainable
losses and the strong likelihood that Able will have to
declare bankruptcy. As a result, we continue to hold our
short position, Strong Sell and Short Sell recommendations.
ADMOR MEMORY CORP: Lender Serves Notice of Default
--------------------------------------------------
Admor Memory Corp. (OTC Bulletin Board: ADMR), announced
today that Coast Business Credit, its lender, has served
the Company with a Notice of Default under its Loan and
Security Agreement dated October 7, 1998. Coast stated, it
"has determined that Borrower has experienced material
losses which have resulted in a Material Adverse Effect on
the Borrower." The Coast line of credit is secured by all
of the assets of the Company.
Admor Memory had recently been negotiating for an infusion
of $5 million in new capital, however the Company was not
able to structure a deal satisfactory to the Investor.
Coast's actions are the result of the Company not being
able to raise the much-needed new capital. Admor has been
trying to raise new capital to sustain its existence since
the announcement by NetGateway in October 1998
that it was withdrawing from its Merger with Admor Corp.
The ability for the Admor Memory Corporation to go forward
as a going concern is subject to the Company's ability to
raise additional capital and cure its default with
Coast. The Company does not currently have any active,
new capital options.
BENNETT FUNDING: Jury Told To Keep Deliberating
-----------------------------------------------
A federal court jury on Tuesday was asked to
continue deliberating in the case against Bennett Funding
Group's former chief financial officer, who is accused of
orchestrating one of the biggest financial frauds in U.S.
history.
The jury hearing the case against Patrick Bennett, 46, said
it had reached an impasse, but U.S. District Judge Thomas
Griesa asked them to return to deliberations.
He told them they had heard sufficient evidence to reach a
verdict. "My duty is to request you to keep working," he
said. Bennett faces 64 counts of securities, bank and mail
fraud, money laundering, obstruction of justice and other
charges in what federal prosecutors say was one of the
biggest Ponzi, or pyramid, schemes in U.S. history. In a
Ponzi scheme, early investors are paid off with funds
invested by later investors.
Prosecutors allege that Bennett turned a staid equipment-
leasing family business into a sham operation that bilked
more than 10,000 investors -- most of them retirees -- out
of some $700 million. Bennett Funding of Syracuse, N.Y.,
founded by the defendant's father, filed for bankruptcy in
1996 after being sued by securities regulators.
The fraud extended to 46 states, with most of the victims
living in New York, New Jersey and Florida; many of the
elderly victims lost their life savings in the scheme,
according to prosecutors.
BOREALIS: Special Meeting of Stockholders Set For 3/15
------------------------------------------------------
A Special Meeting of Stockholders of BOREALIS TECHNOLOGY
CORPORATION, a Delaware corporation will be held at the
Company's principal executive offices, 9790 Gateway Drive,
Suite 200, Reno, Nevada 89511 at 10:00 a.m. Pacific
Standard Time on March 15, 1999. The purpose of the meeting
is to:
(1) approve an amendment to the Company's Certificate of
Incorporation changing the name of the Company to
"Portivity, Inc."
(2) act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has authorized the amendment to the
Certificate of Incorporation changing the name of the
Company to "Portivity, Inc." The Company is seeking
stockholder approval for the amendment to comply with
Section 242 of the Delaware General Corporation Law.
The Board of Directors has fixed the close of business on
February 16, 1999 as the record date for determining those
stockholders who will be entitled to vote at the meeting.
The stock transfer books will not be closed between the
record date and the date of the meeting.
CHANNELMATIC: Case Summary & 20 Largest Creditors
--------------------------------------------------
Debtor: Channelmatic, Inc.
1700 Gillespie Way
El Cajon, California 92020
Danbury, CT 06810
Court: District of Delaware
Case No.: 99-400 Filed: 02/19/98 Chapter: 11
Debtor's Counsel: Mark B. Collins
Richards, Layton & Finger, PA
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
20 Largest Unsecured Creditors:
Name Amount
---- ------
LIMIT, Inc. 644,486
Silicon Graphics 168,708
Sony Electronics, Inc. 100,530
Nevada Department of Revenue 85,954
Optivision, Inc. 74,069
Computer Parts Plus 38,677
Vela Research 33,699
California Franchise Tax Board 27,000
Alabama Department of Revenue 21,112
West Virginia Department of Tax & Revenue 19,463
State of South Carolina 19,322
Michigan Department of Treasury 18,673
State of Louisiana 17,042
Arkansas Department of Revenue 15,464
System Development Consulting, Inc. 14,875
Department of Revenue 13,689
Arizona Department of Revenue 13,308
Technetics, Inc. 12,995
South Dakota 12,345
Utah State Tax Commission 10,593
COLUUMBIA/HCA: Reports $42 Million Loss
---------------------------------------
Columbia/HCA HealthCare continued to lose money in the
fourth quarter, due partly to declining admissions and
costs related to a long-running federal fraud
investigation, the company said Tuesday.
Even if expenses related to the probe and other
restructuring efforts are excluded, the company's profits
from continuing operations missed Wall Street predictions
badly.
Nonetheless, the beleaguered hospital chain's stock rose
slightly Tuesday as investor hopes rose for an end to the
18-month investigation. Columbia lost $42 million, or 6
cents a share in the quarter, well below the loss of $1.2
billion, or $1.92 per share, in the fourth quarter of 1997.
Profits from continuing operations, which are based on the
company's regular businesses, were $27 million, or 4 cents
per share. Analysts had expected profits from operations of
23 cents per share, according to survey by the research
firm First Call.
Columbia shares rose 37 1/2 cents to $18.75 on the New York
Stock Exchange. That's still half the price of its 52-week
high. Columbia has also recently completed a $1 billion
stock buyback and announced plans Tuesday to buy back $1
billion more. The buybacks also may have contributed to the
stock price gain, analysts said.
Columbia listed a number of reasons beyond the fraud probe
for its weak performance. Among them were cuts in federal
reimbursements for Medicare patients, higher medical costs,
particularly for drugs, fewer admissions, due in part to
the mild flu season and problems collecting payments from
insurers.
Columbia followed several competitors in reporting lower-
than-expected earnings, but its results still shocked
analysts, who expected the company to make more progress on
a restructuring plan.
"Their operations have been eroding in every quarter and we
don't see any turnaround," said Sheryl Skolnick, an analyst
with BancBoston/Robertson Stephens. "Hospitals are a volume
driven business, and if you do not have patients in the
beds, this is clearly the (profit) margin pressure you
would expect to see."
Columbia officials refused Tuesday to predict just when the
fraud probe will end. In a move that will further delay any
settlement, a federal court administrative committee on
Monday denied a Justice Department request to consolidate a
number of lawsuits filed against Columbia by
whistleblowers.
Columbia's fourth-quarter revenue was up slightly, from
$4.37 billion to $4.42 billion. But admissions to
facilities open at least one year a key measure of the
company's vitality were off 1 percent.
For more than 18 months, the federal government and at
least 11 states have been looking into whether Columbia
committed fraud by overcharging Medicare, Medicaid and
other government health programs. Four Columbia middle
managers were indicted in Florida. After the investigation
began, Columbia cut short an aggressive hospital
acquisition program and began a major downsizing.
Columbia sold 14 hospitals during the fourth quarter,
leaving it with 305 hospitals nationwide, down from 336 a
year ago. It expects to have about 217 hospitals after
completing plans to sell or spin off hospitals to two
separate companies.
Prior to the investigation, Columbia owned 345 hospitals.
For the year, Columbia reported a profit of $379 million,
or 59 cents per share, compared with a loss of $305 million
or 46 cents per share for 1997. Revenue was down slightly,
from $18.8 billion to $18.7 billion. Part of the
earnings boost came from the sale of hospitals and other
assets.
DANKA BUSINESS SYSTEMS: Notification of Late Filing
---------------------------------------------------
Danka Business Systems PLC reports to the SEC that
the company has been granted by a consortium of
international banks party to the company's multi currency
credit agreement, a waiver of certain financial
covenants and the consequences of failure to comply with
such covenants for the period beginning on September 30,
1998 and ending on February 28, 1999. Due to
the operational and administrative pressures on the
company's staff which has resulted from: (i) the company's
current financial situation and the negotiation and
execution of an extension of the waiver; (ii) the
preparation of reports required by the Lenders pursuant to
the waiver and required by the Lenders to obtain an
extension of the waiver; (iii) the updating of a business
plan and other matters required to satisfy the
requirements for advances during the period the waiver is
in effect; (iv) the other consequences of the company's
entry into the waiver and the extension of the waiver and
of the granting of security interests in the company's
assets as prescribed therein; (v) ongoing activities
necessary to maintain the company's relationships with and
access to other sources of funding; and (vi) ongoing
activities necessary to maintain the company's
relationships with and access to suppliers and vendors, the
company has been unable to assemble the required
information and has been unable to prepare its Form 10-Q,
and the related financial statements, within the prescribed
time period.
The company anticipates that the Quarterly Report on Form
10-Q for the period ended December 31, 1998 will reflect
revenue, operating loss, net loss and net loss per American
Depositary Share ("ADS") after restructuring and other
special charges totaling $236.2 million for the quarter
ended December 31, 1998 of $723.9 million, $298.9 million,
$274.0 million and $4.82, respectively, compared to revenue
of $834.2 million, operating earnings of $14.6 million, net
loss of $0.4 million and net loss per ADS of $0.01 for the
quarter ended December 31, 1997.
The company anticipates that, for the nine month period
ended December 31, 1998, the Form 10-Q will reflect
revenue, loss from operations, net loss and net loss per
ADS of $2.2 billion, $278.3 million, $282.2 million and
$4.96, respectively, compared to revenue of $2.5 billion,
earnings from operations of $107.2 million, net earnings of
$37.8 million and net earnings per ADS of $0.67 for the
nine month period ended December 31, 1997.
DISCOVERY ZONE: Ladenburg Thalmann To Help Raise Capital
--------------------------------------------------------
On February 8, 1999, Discovery Zone, Inc. entered into an
agreement with Ladenburg Thalmann & Co. Inc. pursuant to
which Ladenburg will assist the Company in raising
additional capital and exploring strategic alternatives,
including investment by a strategic partner or other
investor, which may result in the sale of the Company by
means of a merger, joint venture, business combination,
sale of assets or other similar transaction. The Company's
engagement of Ladenburg's services will end one year after
the date of the agreement unless extended by the parties.
EQUALNET COMMUNICATIONS: Notification of Late Filing
-----------------------------------------------------
Equalnet Communications Corp. reports to the SEC that it
has not been able to complete its Quarterly Report on
Form 10-Q because the individuals responsible for preparing
the Form 10-Q have been engaged in the following matters
during the last 45 days and could not dedicate sufficient
time to complete the Form 10-Q prior to February 16, 1999:
(1) The negotiation and execution of an Asset Purchase
Agreement to purchase the assets of Limit LLC (d/b/a ACMI);
(2) The negotiation and completion of the purchase of
certain assets from Brittan Communications International
Corporation; and
(3) The negotiation and preparation of a disclosure
statement and plan of reorganization in connection with the
Chapter 11 reorganization of the
Registrant's wholly owned subsidiary, EqualNet Corporation.
The Quarterly Report on Form 10-Q will be filed on or
before February 19, 1999.
GOLDEN BOOKS: Terms Agreed to for Pre-Packaged Chapter 11
---------------------------------------------------------
Golden Books Family Entertainment, Inc. (Nasdaq:GBFE) announced
yesterday that it reached an agreement with its major creditors
pursuant to which it expects to significantly reduce its
existing long-term debt, pay all trade creditors in full and,
under the direction of its current management team, proceed with
its publishing and entertainment operations.
Richard E. Snyder, the Chairman and CEO of the Company said,
"We are extremely pleased to announce this restructuring and
a new financing which will allow the Company to continue the
revitalization of our operations, more soundly capitalized and
in a manner which will allow all of our trade vendors to be
satisfied in full. We believe this consensual reorganization
will allow Golden Books to become a company that is healthy,
vital and whose opportunities for success in the future
abound."
The agreement announced today was reached with the steering
committee representing certain holders of the Company's
7.65% Senior Notes due 2002 in the aggregate principal
amount of $150 million (the "Senior Notes"), and the steering
committee representing certain holders of its 8.75%
Convertible Trust Originated Preferred Securities due 2016 in
the aggregate principal amount of $110 million (the "TOPrS").
The restructuring of the Company's indebtedness provides as
follows:
* The Senior Notes will be converted into:
(i) a new secured note in the principal amount of
$87,000,000, due 2004, with interest at the
rate of 10%, if paid in cash, or, at the
Company's option for the first three years,
13.5% payable in kind, and
(ii) 42.5% of the Company's new common stock to be
issued post recapitalization, prior to dilution.
* The note will be secured by the existing collateral
already granted to the senior noteholders as well as
certain additional collateral.
* The TOPrS indebtedness will be converted into 50% of
the Company's new common stock to be issued post
recapitalization, prior to dilution.
Also, pursuant to the restructuring agreement, the Golden
Press Holdings, L.L.C. bridge loan in the amount of $10
million will be converted into 5% of the Company's new common
stock to be issued post recapitalization, prior to dilution.
The restructuring will provide that all of the Company's
trade obligations be paid in full.
Existing preferred and common shareholders will surrender
their stock for out-of-the money warrants to purchase 5% of
the new company stock to be allocated two-thirds to the
preferred and one-third to the common shareholders, to be
issued post recapitalization, prior to dilution. The
restructuring also provides for a management stock incentive
program.
The foregoing recapitalization is to be effectuated pursuant
to a "pre-arranged" Chapter 11 plan which the Company expects
to file shortly. In connection therewith, the Company has
arranged for a loan to be provided by the CIT Group in the
amount of $55 million. The recapitalization and the CIT loan
are subject to requisite court approval.
GORGES/QUICK-TO-FIX: Files Quarterly Report With SEC
----------------------------------------------------
GORGES\QUIK-TO-FIX FOODS, INC. filed its quarterly report
with the SEC for the quarterly period ended JANUARY 2,
1999. Total sales decreased $4.2 million, or 2.1%, from
$51.0 million in the three months ended December 27, 1997
to $46.8 million in the three months ended January 2, 1999.
This decrease was primarily due to decreases in the sales
of ground beef and the sales to national account customers
of value added products, partially offset by increased
sales of co-packed, value added products (products packed
for other manufacturers under their label). Gross profit
decreased $2.0 million, or 19.8%, from $10.1 million in the
three months ended December 27, 1997 to $8.1 million in the
three months ended January 2, 1999. As a percentage of
sales, gross profit decreased from 19.7% in the three
months ended December 27, 1997 to 17.2% in the three
months ended January 2, 1999. Net income (loss) increased
$25.8 million, or 105%, from ($1.4) million in the three
months ended December 27, 1997 to $24.5 million
in the three months ended January 2, 1999.
GRAND UNION: Files Quarterly Report With SEC
--------------------------------------------
The Grand Union Company reports to the SEC in its quarterly
report for the quarterly period ended January 2, 1999 that
sales for the 12 weeks ended January 2, 1999 decreased $6.6
million, or 1.2% as compared to the 12 weeks ended January
3,1998. Comparable store sales, including replacement
stores, decreased 0.93% during the 1999 third quarter.
HARVARD INDUSTRIES: Notification of Late Filing
-----------------------------------------------
On November 24, 1998, Harvard Industries, Inc. ("Harvard")
and its nine domestic subsidiaries substantially
consummated their First Amended and Modified Consolidated
Plan Under Chapter 11 of the Bankruptcy Code, dated
August 19, 1998 (the "Plan of Reorganization"). The debtor
reported to the SEC that as a result of the demands on
management resources relating to court filings, new banking
arrangements and additional disclosure requirements,
preparation of the Form 10-Q has taken longer than
anticipated.
Harvard reported a loss of $5,519,000 for the 3 months
ended December 31, 1997. On November 24, 1998, Harvard
substantially consummated the Plan of Reorganization, and
emerged from bankruptcy. In connection with its emergence
from Chapter 11 bankruptcy, Harvard implemented "Fresh
Start Reporting" as of November 29, 1998. Accordingly, all
assets and liabilities were restated to reflect respective
fair values at that date and Harvard incurred a
non-recurring loss of approximately $50.4 million. As a
result of the consummation of the Plan of Reorganization,
certain debts of Harvard were discharged and Harvard
realized an extraordinary gain of $206.4 million.
Together these non-recurring items will result in income
for the period ending December 31, 1998.
JAYHAWK ACCEPTANCE: Ernst & Young Resigns
-----------------------------------------
Jayhawk Acceptance Corporation reports on February 16,
1999, Ernst & Young LLP resigned as auditors of the
Company.
The reports of Ernst & Young LLP on the Company's financial
statements for the past two fiscal years did not contain an
adverse opinion or disclaimer of opinion and were not
qualified or modified as to audit scope or accounting
principles. The reports of Ernst & Young LLP for each of
the last two years were modified as to uncertainty
regarding the ability of the Company to continue as a
going concern.
At the Company's February 4, 1999 Audit Committee meeting,
Ernst & Young LLP advised the Company of the need to expand
the scope of its audit of the 1998 financial statements of
the Company as a result of the cooperative advertising
program the Company adopted in 1998. The Audit Committee
concurred but questioned the estimated audit fee presented
by Ernst & Young LLP. Ernst & Young LLP's resignation
occurred prior to their commencement of any substantive
audit procedures with respect to the Company's 1998 year
end financial statements.
The Company is currently in the process of searching for a
new independent public accountant.
MEDIA LOGIC: Requests Chapter 11 Trustee
----------------------------------------
The debtor, Media Logic, Inc. requests that a Chapter 11
Trustee be appointed on an emergency basis.
A sale of the assets was proposed with a closing
anticipated at the end of March. On February 22, 1999 all
members of the debtor's Board of Directors resigned.
Without a Chapter 11 Trustee, the case will likely be
converted to a Chapter 7. The Committee has assented to
the appointment of the Trustee.
MOTOTECHNA: Czech Car And Spare Part Seller In Bankruptcy
---------------------------------------------------------
Mototechna (Prague, Czech Republic), car and spare part
seller, will go into bankruptcy proceedings in 1999 due
to high debts. The bankruptcy was declared by the Regional
Business Court in Prague in February 1999. Mototechna had
assets of 2.11 bil Kc and payables of 3.771 bil Kc at the
end of October 1998. The company has a stock of 1.043 bil
Kc.
NATIONAL ENERGY: Involuntary Petition Well Grounded
---------------------------------------------------
In the case of National Energy Group Inc., Judge Harold C.
Abramson considered the Involuntary Petition and the
Answer of National Energy Group, Inc. to the Amended
Petition for an Order for Relief Under Chapter 11 of Title
11 of the United States Code and Motion to Dismiss.
The Court found that the Involuntary Petition is well-
grounded; the motion to dismiss was denied, and an order
for relief under Chapter 11 of the Bankruptcy Code was
granted against National Energy Group, Inc. effective as of
February 8, 1999.
PANGBURN CANDY: Russell Stover Leads Race
-----------------------------------------
Pangburn Candy Co., Fort Worth, Texas, believes an offer
from Russell Stover Candies, Kansas City, Mo., is the best
offer so far for the company, which filed chapter 11 on
Feb. 1, The Star-Telegram reported. The exact bid was not
disclosed, but it is believed to be about $4 million for
trademarks, brand names, recipes and existing packaging.
Other companies are also interested, but Pangburn has asked
Bankruptcy Judge Massie Tillman to set a hearing on the
bids for today, while unsecured creditors are asking for a
hearing no earlier than next Tuesday. DFG Confectionary of
Fort Worth offered a bid, and Salt Lake City-based Maxfield
Candy Co. is reportedly considering a bid. Attorney John D.
Penn of Haynes and Boone LLP, which represents NationsBank
Dallas, the largest secured creditor, said that it is
unclear whether the bank will recover all of the nearly $7
million it is owed. According to the National Confectioner
Association, Stover is the No. 1 brand in boxed chocolates,
with Whitman's following in second place. Maxfield is the
sixth largest brand. (ABI 24-Feb-99)
RAYROCK: Shareholders Approve Glamis Arrangement
------------------------------------------------
Rayrock Resources Inc. announced that at a special meeting
of shareholders, the proposed statutory arrangement with
Glamis Gold Ltd. received the overwhelming approval of its
shareholders.
Rayrock intends to make an application to the Ontario Court
of Justice on February 25, 1999, for court approval of the
arrangement. Following the effective date of the
arrangement, Rayrock will become a wholly owned
subsidiary of Glamis.
SOLO SERVE CORP: Applies To Employ Conway, Del Genio
----------------------------------------------------
The debtor, Solo Serve Corporation files an application to
employ Conway, Del Genio, Gries & Co., LLC as financial
adviser to the debtor. The firm will analyze and recommend
a basic transaction strategy, assist management in the
revision of existing confidential memorandum to present to
interested third parties, analyze and make recommendations
as to the advisability of possible transactions, contact
thrid parties to determine interest, and consult with
respect to negotiations on proposed transactions. The firm
will charge a monthly fee of $50,000.
STARMET CORP: Notification of Late Filing
-----------------------------------------
Starmet Corporation reports to the SEC that it is unable to
file its Quarterly Report on Form 10-Q for the quarter
ended December 31, 1998 within 45 days after the end of
such period without unreasonable effort or expense because
of delays in finalizing the Registrant's financial
statements for such period occasioned by the need to
properly evaluate waste accruals.
UNITED COMPANIES: Step Closer To Bankruptcy
-------------------------------------------
The National Mortgage News reports on 02/08/99
that Baton Rogue-United Companies Financial Corp. here, the
nation's 14th largest subprime lender, moved a step closer
to bankruptcy last week by announcing it will fail to be in
compliance with covenants of a $850 million bank
facility.
Investment banking and warehouse sources told National
Mortgage News that United is "fully drawn" on the $850
million line and that its commercial bank lenders are in a
panic because the line is unsecured. One bank lender said
some banks that participated in the line have already
taken hits because of the facility. One institution
reportedly sold a large piece of its debt to a speculator
for 60 cents on the dollar.
An investment banking source noted that speculators who
have shorted the stock think a Chapter 11 bankruptcy filing
is one option the company is considering.
One source familiar with its balance sheet noted that
United (symbol: UC) has residual securities of close to $1
billion (book value). "But the true value is less than that
- maybe $400 million," the source said. But another source
said the residuals have a value that could be much
higher. "It's all up to their accountants at this point,"
said the source.
If United does file for bankruptcy protection it likely
will be broken up and sold in pieces. Late last year
United closed its broker and correspondent divisions and
became a mostly retail shop. Through the first nine months
of last year it had produced $2.3 billion in subprime
loans, ranking 14th overall, according to the Database
Products Group. It is the nation's 10th largest subprime
servicer with $6.4 billion in servicing rights.
United has been looking for a buyer or a capital partner
for eight months with no luck. Norwest Bank, Minneapolis,
and G.E. Capital, Stamford, Conn., reportedly looked at the
company and passed. United has been a major securitizer of
subprime loans through Wall Street and in the view of some
analysts has been very unrealistic about its "gain-on-
sale" accounting assumptions. The U.S. Department of
Justice and the Department of Housing and Urban
Development are investigating UCFC lending practices in the
Philadelphia metropolitan area. And a U.S. District Court
recently found that United Cos. violated the Home Owners
and Equity Protection Act (HOEPA) and ordered the
rescission of four mortgages and awarded each plaintiff
$2,000 in damages. Legal services attorneys who brought
the case are currently negotiating settlements for other
United Cos. borrowers facing foreclosure.
UNITED COMPANIES: Downgrade of $225M of Sr Unsecured Debt
---------------------------------------------------------
The National Mortgage News reports on February 15, 1999
that New York-United Companies Financial Corp.'s $225
million of senior unsecured debt has been downgraded from B
to CCC-minus by Fitch IBCA Inc., indicating that default is
a possibility. NMN reported last week that bank lenders are
extremely concerned about the line of credit.
In addition, the rating on the company's $150 million of
8.375% subordinated notes due July 2005 has been lowered
from B-minus to CC. The ratings remain on RatingAlert
Negative.
The rating agency noted that a rating in the CCC category
indicates that "default is a real possibility and the
capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic
developments." The rating actions reflect UCFC's "inability
to negotiate favorable terms under its $850 million credit
facility with First Union Corp., which is currently
completely drawn upon," Fitch IBCA said. "In addition,
Fitch IBCA anticipates that the company will not be in
compliance with financial covenants under its bank and debt
agreements at Dec. 31, 1998, signifying an event of
default." The rating agency said it will be difficult for
UCFC to cure or waive the violation. The company "is
unlikely to effectuate a business combination or receive
other forms of financial support in the near future,"
Fitch IBCA said.
Three manufactured housing securities enhanced by a limited
guarantee from United Companies Financial Corp. have been
downgraded from B to B-minus by Fitch IBCA Inc. The rating
action follows Fitch IBCA's recent downgrade of
UCFC's senior unsecured debt from B to CCC-minus.
The rating agency said the securities - the class B-2
tranches of United Companies Financial Corp. manufactured
housing contract pass-through securities Series 1997-1,
1997-2, and 1997-3 - would also have been downgraded to
CCC-minus if not for additional credit enhancement from the
application of monthly excess interest to loss coverage.
The ratings remain on RatingAlert Negative.
Prepayment rates for Fannie Mae and Ginnie Mae mortgage-
backed securities declined across the board in the January
reporting period, according to the Bear Stearns Prepayment
Commentary.
Speeds fell 20%-25% on average for Fannie Mae 30-year 7.5%
coupons and above, with slightly bigger declines in lower
coupons, said analysts Dale Westhoff and Bruce Kramer.
Declines for Ginnie Mae MBS were similar except in higher
coupons, where they averaged 10%-15%, they said. "After a
longer than expected plateau at high speeds, today's
numbers define the beginning of the downslope of the late
1998 refinancing wave," the analysts said. "Unlike the
runup in speeds, which was seen more quickly in newer
vintages, the downturn is affecting all vintages in
equal fashion."
Messrs. Westhoff and Kramer predicted that speeds on newer
cusp coupons will continue to fall at "a relatively fast
pace," but that the decline on more seasoned cusp coupons
will be slower. The analysts said the numbers should
provide comfort to mortgage investors and "will likely
contribute to the tightening trend in mortgage product."
Prepayment risk is now at its lowest level in months, they
said.
"We feel the huge prepayment surge in October triggered by
the record low in mortgage rates of 6.70%, satiated
refinancing demand for mortgage rates above this level,"
the Bear Stearns analysts said. "With the current effective
conforming mortgage rate at now over 7.0%, a comfortable
distance away from our next prepayment trigger of 6.60% to
6.70%, we expect the mortgage market to enter a period of
relative prepayment stability."
VERTEX COMPUTER: Files Quarterly Report With SEC
------------------------------------------------
VERTEX COMPUTER CABLE & PRODUCTS, INC. filed its Quarterly
Report with the SEC for the quarter ended September 30,
1998.
On December 17, 1998, the Company entered into an agreement
with DataWorld Solutions, Inc. ("DataWorld"), a distributor
of connectivity products, DataWorld's principal
shareholders, Daniel McPhee and Christopher Francis, TW
Cable, LLC. and Edward Goodstein, the Company's then
Chairman and principal shareholder. Pursuant to the
agreement, (i) Vertex acquired all the outstanding shares
of DataWorld in exchange for the issuance of 1,500,000
shares of the Company's common stock (ii) TW forgave
approximately $2,300,000 in principal face amount of
secured subordinated debt and all accrued interest
relating thereto, (iii) TW forgave $280,000 of
indebtedness, contributed $400,000 cash and arranged for
approximately $400,000 of TW funds held in escrow
for the benefit of Vertex's creditors to be released to
such creditors as payment on behalf of Vertex in exchange
for Convertible Preferred Stock having a stated value of
$100 per share, and (iv) Messrs. McPhee and Francis
purchased 17,000,000 shares of the Company's common stock
from TW for $200,000. As a result of the above, Messrs.
McPhee and Francis collectively own approximately 69% of
the Company's common stock and effective December 18, 1998
Messrs. McPhee and Francis became the Company's Chief
Executive Officer and Chief Operating Officer,
respectively.
Net sales for the quarter ended September 30, 1998
decreased $649,000 or 28.2% to $1,655,000 compared to
$2,304,000 for the quarter ended September
30, 1998. The decrease is primarily a result of the
Company's inability to purchase product, due to the
Company's lack of working capital and available financing.
Gross profit for the quarter ended September 30, 1998
decreased $33,000 or 15.1% to $186,000 from $219,000 for
the quarter ended September 30, 1997. For the three months
ended Seeptember 30, 1998, net loss attributable to common
stock was $631,861 compared to a net loss of $636,588 for
the same period one year earlier.
WESTMORELAND COAL: Reports 1998 Year-End Results
------------------------------------------------
Westmoreland Coal Company (OTC Bulletin Board: WMCL)
reported its financial results for the full year ended
December 31, 1998. Operating income for 1998 was $17.1
million compared to operating income of $33.6 million for
1997.
Positively affecting operating income was the strong
performance of the Company's independent power and coal
operations, including production of 6.5 million tons at
Westmoreland Resources, Inc. ("WRI").
As of December 31, 1998, the Company had shareholders'
equity of $21.8 million compared to shareholders' equity of
$28.4 million as of December 31, 1997.
Cash provided by operating activities increased to $55.9
million in 1998 from $19.9 million in 1997 driven by
approximately $30.0 million in proceeds from
the Rensselaer transaction, termination of the over-funded
salaried pension plan, increased operating revenues at WRI,
and increased cash distributions from WEI's independent
power projects.
On December 23, 1996, Westmoreland and four subsidiaries
sought judicial protection under Chapter 11 of the U.S.
Bankruptcy Code from UMWA related health and retirement
benefit funds. Due to the ongoing and significant
improvement in the Company's financial condition, pursuant
to continued implementation of its strategic business plan,
the Company was able to reach a settlement agreement
("Master Agreement") among the UMWA, several UMWA Benefit
Funds, ("Funds") and the Equity Committee which facilitated
a consensual dismissal of the Chapter 11 cases after only
two years. The cases were dismissed on December 23, 1998,
and the dismissal became final on January 4, 1999.
Under certain provisions of the Master Agreement, the
Company agreed to pay a total of $5.7 million representing
payment in full of all undisputed creditor claims, with
interest; all arrearages with interest under the Coal
Industry Retiree Health Benefit Act of 1992 ("Coal Act")
including approximately $18.1 million to the UMWA 1992
Benefit Plan and approximately $19.4 million to the UMWA
Combined Fund; and an additional $4 million to the Funds in
full satisfaction of all other asserted claims for costs,
fees, and other items. These amounts were paid during
January and February 1999. Additional terms and details of
the Company's cash payments and on-going obligations with
respect to the Master Agreement are reported in the Form 8-
K filed by the Company on February 4, 1999 and the 1998
Form 10-K.
Pursuant to the terms of the Master Agreement, the Company
may also conduct a public tender in an amount up to $20
million in cash for 1,052,631 depository shares (OTC
Bulletin Board: WMCLP) at $19 per share following the
completion of the pending sale of the Company's remaining
interest in the Rensselaer Project. Subsequent to the
completion of this tender, a shareholders' meeting will be
held. It is presently anticipated that the meeting will
take place on or about May 11, 1999.
*********
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