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/raid1/www/Hosts/bankrupt/TCR_Public/990324.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 24, 1999, Vol. 3, No. 57 Headlines ABLE TELECOM: Quarterly Report - Period Ended Jan. 31, 1999 AHERF: AGH To Consider Layoffs BLOWOUT ENTERTAINMENT: Case Summary & 20 Largest Creditors BREED: Offer To Exchange Outstanding 9 1/4% Notes CINEMA GRILL: Files Chapter 11 COMMERCIAL FINANCIAL: Judge Halts Spending By Exec COMPASS PLASTICS: Quarter Report-Period Ended Jan. 24,1999 CORDEX: No Deal With Bankers Trust - Files Bankruptcy DANKA: Outsourcing Unit To Be Sold To Schroders FACTORY CARD: To Voluntarily Reorganize Under Chapter 11 FOAMEX INTERNATIONAL: Amends Credit Agreements FORCENERGY: Files Voluntary Chapter 11 Petitions FORSTMANN: Quarterly Report - Period Ended January 31, 1999 GENESIS HEALTH: Proposed Amendment To Registration Stmt. MEDPARTNERS: Amends Credit Agreement MOBILEMEDIA: Reaches Agreement on Stipulation MOIIBUS RESOURCE: TransGlobe Energy to Acquire Moiibus NIAGRA MOHAWK: Reorganizes Into Holding Company Structure NORTHWESTERN STEEL: Quarter Report for Period Ended 1/31/99 PARAGON TRADE: Announces Settlement With Kimberly-Clark SAMSUNG MOTORS: Daewoo Group To Take Over Samsung Unit SOLV-EX CORP: Plan Update SUN HEALTHCARE: Rumblings About Possible Bankruptcy SYNCRONYS: Files Plan of Reorganization WASTEMASTERS: Hearing On Dismissal of Case WET SEAL: Registration Statement Amended To Increase Shares ********* ABLE TELECOM: Quarterly Report - Period Ended Jan. 31, 1999 ----------------------------------------------------------- ABLE TELCOM Holding Corp. and subsidiaries report to the SEC that for the quarter ended January 31, 1999, revenues increased $69.5 million over the same period in the prior year from $22.3 million to $91.8 million. These increases in revenue are due primarily to growth of the Company's operations through the acquisition of MFSNT in the third quarter of fiscal 1998, the acquisition of certain contracts from COMSAT RSI JEFA Wireless Systems ("COMSAT") and the acquisition of Patton Management Corporation ("Patton") in the second quarter of fiscal 1998, as well as increased demands for services in the traffic management and telecommunications industry. For the quarter ended January 31, 1999 income from operations for the Company was $5.4 million compared to loss of $(1.2) million in the quarter ended January 31, 1998. Net loss for the three months ended January 31, 1999 decreased $0.3 million from $(0.9) million in 1998 to $(0.6) million in 1999. Loss applicable to common stock was $(0.8) million for the three months ending January 31, 1999 as compared to $(1.1) million for the three months ended January 31, 1998, respectively. On a diluted basis, income per share was $(.06) per share for the three months ended January 31, 1999 as compared to $(.12) per share for the same period in 1998. AHERF: AGH To Consider Layoffs ------------------------------ Allegheny General Hospital, whose parent foundation has been in bankruptcy since July, is weighing the possibility of staff cuts, though the cuts may not be as deep as some employees fear. Rumors have circulated among hospital employees that AGH might be gearing up to eliminate as many as 250 jobs by the end of the week. AGH employs more than 4,200 people. "Much like other hospitals in the area, we face the possibility of staff reductions as a way to address the industry's increasing costs and declining reimbursements," AGH spokesman Tom Chakurda said. However, he added, "our current assessment is that any layoff, if enacted, would be well below any rumors of 250." Chakurda did confirm that AGH is transferring patients from the hospital's 47-bed medical and surgical unit on the 11th floor to other smaller units. He said nearly all of the employees in the unit would be placed in other positions. Chakurda also said it was too early to say what would be done with the unit, which some employees have heard may be closed. BLOWOUT ENTERTAINMENT: Case Summary & 20 Largest Creditors ---------------------------------------------------------- Debtor: Blowout Entertainment, Inc. 7700 NE Ambassador Place One Airport Center, 2nd Floor Portland, Oregon 97220 Type of business: Operates retail store within a store; videocassette and video game sale and rental outlets located in large mass merchant supercenters and grocery store chains. Court: District of Delaware Case No.: 99-681 Filed: 00/00/99 Chapter: 11 Debtor's Counsel: John D. Demmy Morris James, Hitchens & Williams 222 Delaware Avenue, PO Box 2306 Wilmington, Delaware 19899 (302)888-6800 Total Assets: $18,413,918 Total Liabilities: $17,233,118 No. of shares of common stock 2,433,330- 388 holders 20 Largest Unsecured Creditors: Name Amount ---- ------ Valley Media 1,964,697 Wal-Mart Stores, Inc. 1,348,803 Rentrak Corporation 1,189,182 Universal/MCA 196,286 Movies & Games 4 Sale, LP 83,711 Re al Entertainment 50,000 Southern Door Lite Co. 43,860 Madacy Entertainment Group 34,852 Electro Source, Inc. 27,678 Diamond Entertainment Corp. 24,000 Passport Int'l. Production 23,000 Endgame Entertainment Inc. 20,521 Sight and Sound (Debt) 18,865 Kmart Corporation 12,000 Unicorn Video, Inc. 9,000 Jack of All Games 8,905 Universal Games 8,307 Gametech Marketing 6,865 Rich & Rhine Distributors 6,510 Drivesafe Defensive Driving 5,923 Ideal Enterprises, Inc. 5,034 BREED: Offer To Exchange Outstanding 9 1/4% Notes ------------------------------------------------- BREED Technologies, Inc. reports to the SEC an Offer to Exchange all of its Outstanding 9 1/4% Senior Subordinated Notes due 2008 for 9 1/4% Senior Subordinated Notes. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000940180-99- 000291.txt CINEMA GRILL: Files Chapter 11 ------------------------------ Fox Bay Entertainment Inc., which owns the Cinema Grill in the Fox Bay Theater building in Whitefish Bay, Wis., has filed for chapter 11 protection in Milwaukee, The Business Journal reported. In a prepared statement, the company said it was forced to file for bankruptcy because of continuing disputes with landlord Daniel J. Katz. The company expects to pay all creditors and suppliers in full, and believes the dispute with the landlord over the delayed opening of Cinema Grill will be "ultimately resolved." (ABI 23-Mar-99) COMMERCIAL FINANCIAL: Judge Halts Spending By Exec -------------------------------------------------- The Journal Record reports on March 19, 1999, that a former Commercial Financial Services executive cannot spend any of the $500,000 she received when she left the company in January, a bankruptcy judge says.U.S. Bankruptcy Judge Dana Rasure issued a temporary restraining order against Gertrude Brady. The company sought the order to keep Brady, former managing director of investor relations, from spending the money she received under a management retention agreement. CFS lawyers said she was not entitled to make the $500,000 draw on a line of credit and that without the order the money could vanish. Brady's lawyer, Thomas Seymour, said the company failed to prove that the $500,000 draw did extraordinary harm to the company or that Brady would have been unable to repay the money later if required. He also said that she had been "constructively terminated" when her salary was reduced and was entitled to the money. The temporary restraining order is in place until a March 29 hearing on the company's bankruptcy filing. CFS also accused Brady of committing fraud to get a company founder's computer equipment and records removed from the firm's Tulsa offices after it filed for bankruptcy protection in December. They alleged she lied to co-workers and underlings by directing them to take Jay L. Jones' computer equipment to a loading dock. New company president Fred Caruso has told employees to box up the equipment and move it to a locked room. Jones, who founded the debt collection company with Bill and Kathryn Bartmann, resigned Oct. 27. His resignation came at the start of an investigation into accusations contained in an anonymous letter. The letter, among other things, accused a company supposedly tied to Jones of buying accounts from CFS at inflated prices. CFS said that Brady was fired for "cause" for her alleged role in the equipment disappearance. The firing voided the part of the retention agreement that would have entitled her to draw the $500,000, the company said. Seymour denies the allegations. He said Brady had permission to remove the equipment and received the funds under the conditions of the retention plan. Prior to her firing, Brady was one of CFS' highest paid employees, receiving $509,427 in wages and expenses during the year leading up to the bankruptcy filing. COMPASS PLASTICS: Quarter Report-Period Ended Jan. 24,1999 ---------------------------------------------------------- Compass Plastics & Technologies, Inc. filed its quarterly report with the SEC for the quarterly period Ended January 24, 1999. The Company is a leading manufacturer and assembler of custom injection molded plastic components for leading computer, medical and consumer electronics OEM's located in California and Mexico. The Company supplies its customer requirements from its manufacturing facilities in Gardena and San Jose, California, and Tijuana, Mexico. For its fiscal year ended October 25, 1998, the Company incurred a net loss of approximately ($2.4 million) on consolidated net sales of $50.1 million, as compared to net income of $2.1 million on consolidated net sales of $44.0 million in the fiscal year ended October 26, 1997. As a result of these adverse developments, the Company defaulted in a number of its obligations to the Senior Lenders under the February 27, 1998credit agreement, including (i) defaults in maintenance of certain financial ratios, including minimum tangible net worth, minimum senior funded debt to EBITDA and minimum fixed charge coverage ratio, and (ii) failure to make a total $2.75 million of installment payments due under the term loan in December 1998and January 1999. Accordingly, on February 2, 1999, the Senior Lenders accelerated all indebtedness under the credit agreement, aggregating approximately $16.0 million. Since February 1999, the Senior Lenders have provisionally agreed to forebear from foreclosing on the Company's assets and properties, subject to completion of an agreement between the Company and the Senior Lenders to restructure the Company in a manner designed to repay the indebtedness to the Senior Lenders. Pending resolution of such restructuring plan, all payments tothe Subordinated Lenders have been suspended. A key element of the restructuring plan includes the sale of M.O.S. Plastics by June 30, 1999 and using substantially all of the net proceeds of such sale to reduce the indebtedness to the Senior Lenders. On March 5, 1999, the Company reached agreement in principal with CHF Capital Partners to sell 100% of the stock of M.O.S. Plastics to an affiliate of CHF for approximately $10.5 million in cash. Even if the Company is successful in selling M.O.S. Plastics and restructuring its senior banking facility, it will remain in default to the Subordinated Lenders holding $9.0 million of the Company's Subordinated Debt. Net cash provided by operations for the 13 weeks ended January 24,1999 was $840,000 compared to $3.9 million used for the comparable 1998 period. The difference between the Company's net loss of $1.1 million and operating cash flow of $840,000 million was approximately $908,000 in depreciation and amortization, an increase in accrued payables of $980,000, and a reduction in inventory of $578,000, offset by a $574,000 reduction in deferred income taxes. CORDEX: No Deal With Bankers Trust - Files Bankruptcy ----------------------------------------------------- Petroleum Finance reports on March 22, 1999 that Cordex Petroleums Inc. (TSE: CZX) was not able to reach a mutually acceptable arrangement with Bankers Trust Co. of New York with regard to the disbursement of approximately U.S.$13.6 million in net proceeds from the sale of the Calgary independent producer's oil and gas assets in Chile and Argentina to Genera S.A. The purchaser withheld an additional U.S.$1.1 million when the sale closed on Dec. 7, 1998. Cordex said that it requested a written accounting from Bankers Trust with regard to its claims which relate to various cash advances of approximately U.S.$11 million, not including interest, dividends, "lump sum" or profit claims. Bankers Trust's claims include advances by a third party, Cordex said. It also identified approximately U.S.$2.6 million in claims by creditors. In the absence of an acceptable arrangement, Cordex applied for court protection under both Canadian and American bankruptcy law. DANKA: Outsourcing Unit To Be Sold To Schroders ----------------------------------------------- According to an article the Wall Street Journal, March 23, 1999, Danka Business Systems PLC entered into a nonbinding letter of intent to sell the majority of its outsourcing unit, Danka Services International to Schroder Venutres International Investment Trust PLC. Danka agreed to sign a long-term pact to provide Dank Services with equipment, parts, supplies and services. Schroder Ventures is an affiliate of Schroders PLC, a London specialized asset-management bank. FACTORY CARD: To Voluntarily Reorganize Under Chapter 11 -------------------------------------------------------- Factory Card Outlet Corp. (Nasdaq: FCPY) announced today it and its subsidiary have filed voluntary petitions for protection under Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Stewart M. Kasen, the Company's Chairman, President and Chief Executive Officer, said, "As we previously disclosed, we had entered into a letter of intent with Catalyst Equity Partners concerning a potential preferred stock investment. This investment would have allowed the Company to restructure out of court and pursue its business strategy. Unfortunately, the discussions with Catalyst have terminated and we now realize that an out of court restructuring will not be able to be completed in a timely fashion." The Company also announced that it has received a commitment from a group of lenders led by Foothill Capital Corporation for up to $50 million in Debtor in Possession financing to provide the Company with adequate working capital to continue its daily operation. FOAMEX INTERNATIONAL: Amends Credit Agreements ---------------------------------------------- On March 11 and March 12, 1999, respectively, Foamex L.P., and Foamex Carpet Cushion, Inc., subsidiaries of Foamex International Inc., amended aspects of their respective Credit Agreements. The Company also amended its respective guarantees of such credit agreements. On March 15, 1999, Foamex Carpet Cushion, Inc. amended its promissory note in the original aggregate principal amount of $70.2 million made by Foamex Carpet Cushion, Inc. in favor of Foam Funding LLC. On March 16, 1999, the Company announced that the Board of Directors had appointed John G. Johnson, Jr. as President, Chief Executive Officer and a Director of the Company. John Johnson succeeded Andrea Farace, the Company's former Chairman and Chief Executive Officer who resigned to pursue other opportunities. The Board of Directors also named Marshall S. Cogan as Chairman of the Company. On March 16, 1999, the Company also announced preliminary results for the fourth quarter ended December 31, 1998. The Company additionally announced that it hired JP Morgan Securities Inc. to explore strategic alternatives to maximize shareholder value. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950146-99- 000532.txt FORCENERGY: Files Voluntary Chapter 11 Petitions ------------------------------------------------ On March 21, 1999 Forcenergy Inc (NYSE:FEN) and its subsidiary Forcenergy Resources, Inc. filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. This voluntary action by the Company was precipitated by the prolonged impact of severely reduced oil and gas prices. Concurrent with this action, the management of Forcenergy is initiating efforts to achieve a comprehensive restructuring with all creditors. The objective of the restructuring will be to position the Company to emerge from Chapter 11 with an improved capital structure and adequate resources to realize maximum value for all stakeholders. Based on conversations with the Company's agent bank, Forcenergy anticipates that it will have adequate capital and liquidity to fund operating activities during this restructuring period. Forcenergy Inc is an independent oil and gas company engaged in the exploration, acquisition, development, exploitation and production of oil and natural gas. Forcenergy's primary areas of operations are the Gulf of Mexico and Cook Inlet, Alaska. FORSTMANN: Quarterly Report - Period Ended January 31, 1999 ----------------------------------------------------------- Forstmann & Co., Inc. reports net sales for the 1999 First Quarter were $18.5 million, a decrease of 36.3% from the 1998 First Quarter. During the thirteen-week period ended January 31, 1999 operations provided $3.9 million of cash, whereas $9.5 million was used by operations during the thirteen-week period ended February 1, 1998. This $13.4 million increase in cash provided by operations in the 1999 First Quarter was primarily due to a $13.4 million decrease in cash used by inventory during the 1999 First Quarter as compared to the 1998 First Quarter. Cost of goods sold decreased $6.7 million to $19.1 million during the 1999 First Quarter primarily as a result of the decline in sales and change in product mix. Gross profit decreased $3.9 million from a profit of $3.3 million in the 1998 First Quarter compared to a loss of $0.6 million in the 1999 First Quarter, and gross profit margin for the 1999 First Quarter was (3.0%) compared to 11.4% for the 1998 First Quarter. Net loss for the 1999 First Quarter was $6.7 million as compared to a net loss of $1.3 million in the 1998 First Quarter. GENESIS HEALTH: Proposed Amendment To Registration Stmt. -------------------------------------------------------- Genesis Health Venutures Inc. reports to the SEC a proposed Offer to Exchange all existing 97/8% Senior Subordinated Notes due 2009($125,000,000 aggregate principal amount outstanding) for 97/8% Senior Subordinated Notes due 2009 of Genesis Health Ventures, Inc. On December 23, 1998 Genesis Health Ventures Inc. completed the private offering of $125,000,000 of 97/8% Senior Subordinated Notes due 2009. The company entered into a registration rights agreement with the initial purchasers in the private offering in which the company agreed, among other things, to deliver a prospectus by February 6,1999 and to complete this exchange offer by May 22, 1999. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000950116-99- 000449.txt MEDPARTNERS: Amends Credit Agreement ------------------------------------ MedPartners, Inc. (NYSE: MDM) announced it has reached agreement with its bank creditors modifying the terms of its credit agreement concerning its MedPartners Provider Network Limited Knox-Keene entity. Terms of the agreement were modified to remove any negative impact upon MedPartners, Inc. resulting from the Chapter 11 bankruptcy filing of MedPartners Provider Network. Additionally, MedPartners reduced its term loans to $307 million, representing a 49-percent reduction form its original amount and a 45-percent reduction from 12/31/98. Further, from the $150 million sale of MedPartners' Kelsey-Seybold Medical Group, P.A. which closes in April, term loans will be reduced to below $200 million. This represents a reduction of more than 65-percent from the original amount. The Kelsey-Seybold sale will enable MedPartners, Inc. to reduce its revolving line of credit by approximately $40 million. "We continue to receive full support from our banks as MedPartners, Inc. moves forward in the execution of our plans," said Mac Crawford, Chairman, President and CEO. "The banks recognize the importance of our orderly and timely exit from the physician services business and continue to support credit agreement modifications necessary to achieve this result." MOBILEMEDIA: Reaches Agreement on Stipulation --------------------------------------------- MobileMedia Corporation announced that it has reached an agreement, reflected in a stipulation, which, if approved by the Bankruptcy Court, would resolve pending objections to MobileMedia's Third Amended Joint Plan of Reorganization (the "Plan") and result in the Plan being either confirmed or denied by the Bankruptcy Court. The Plan provides for the merger of MobileMedia into Arch Communications Group Inc. ("Arch") (Nasdaq:APGR). The Stipulation, which was initially filed with the Bankruptcy Court on March 12, 1999, in unsigned form, now has been signed by all the parties thereto, including (i) Arch, (ii) MobileMedia, (iii) the Debtors' unsecured creditors committee, (iv) the agent for the Debtors' pre- petition secured lenders, (v) the unsecured creditors that have filed certain objections to confirmation of the Plan (the "Objectors") and (vi) two members of the unsecured creditors committee and two other unsecured creditors that have agreed, as "standby purchasers," to purchase certain shares of Arch common stock to the extent the shares are not purchased by other unsecured creditors through the exercise of rights being issued to them by Arch pursuant to the Plan. The Stipulation still requires approval of the Bankruptcy Court in order to be effective. MobileMedia Monday submitted the Stipulation to the Court for approval. Under the Stipulation, the confirmation hearing, which had been continued to March 26, 1999, will be further continued until April 12, 1999 (the "Continued Confirmation Hearing") if the Objectors provide notice to the Debtors by March 23, 1999, that the Objectors intend to deliver an alternative proposal for reorganization of the Debtors (the "Objectors Proposal") on or before April 1, 1999. If the Objectors Proposal is delivered by April 1, 1999 (and not thereafter withdrawn), the Bankruptcy Court will determine at the Continued Confirmation Hearing whether the Objectors Proposal meets the requirements set forth in the Stipulation (the "Requirements"), including requirements that the Objectors Proposal (A) be capable of confirmation and consummation within a reasonable period of time, (B) provide (x) for payment in full in cash of (i) all administrative claims, including the breakup fee in the amount of $25 million that may be payable to Arch under the merger agreement with Arch, and (ii) the Allowed Claims of Classes 4 and 5 (except for default interest) under the Plan (approximately $485 million), and (y) for a distribution to Class 6 (general unsecured creditors) that is materially greater in value than the distribution to Class 6 under the Plan, (C) have financing committed or reasonably capable of being obtained, and (D) after taking into account all relevant business factors (including, without limitation, any conditions and contingencies), be superior to the Plan. If the Objectors do not deliver the Objectors Proposal by April 1, 1999 (or, if it is delivered, but thereafter withdrawn), then, subject to a determination by the Court that the Plan meets the requirements of the Bankruptcy Code, the Plan would be confirmed. Under the Stipulation and subject to the terms and conditions thereof, the Objectors would withdraw their objections to confirmation of the Plan and waive their rights to appeal confirmation of the Plan. Also, under certain circumstances, the Objectors would be deemed to have voted in favor of the Plan. In addition, the Stipulation (A) provides that, if the Plan is confirmed on March 26, 1999, the rights offering period contemplated by the Plan would expire 45 days after confirmation, or that, if the Plan is confirmed on or after April 12, 1999, such rights offering period would expire on the later of May 14, 1999 or 20 days after confirmation, (B) provides for the reimbursement by the Debtors of certain fees and expenses incurred by the Objectors, (C) provides for the exchange of certain releases among various parties, and (D)contains certain provisions relating to the possible payment by the Debtors to Arch of a breakup fee. MOIIBUS RESOURCE: TransGlobe Energy to Acquire Moiibus ------------------------------------------------------ TransGlobe Energy Corporation and Moiibus Resource Corporation are pleased to announce that they have entered into an agreement whereby Moiibus would become a wholly- owned subsidiary of TransGlobe as a result of a Plan of Arrangement. Subject to the acceptance of the Toronto and Alberta Stock Exchanges, the approval of the Alberta Court of Queen's Bench, certain other customary closing conditions, and the approval by special resolution of Moiibus' shareholders at an annual and special general meeting of Moiibus scheduled for April 26, 1999, the holders of Moiibus' common shares will acquire 0.615 common shares of TransGlobe for each one common share of Moiibus, for a total of approximately 5.4 million common shares of TransGlobe, which will increase its issued and outstanding shares from approximately 23.4 million to approximately 28.8 million. Moiibus and TransGlobe expect the transaction to close at the end of April 1999. The officers and directors of Moiibus unanimously support the arrangement and control directly, or indirectly, approximately 59.1 percent of the Moiibus common shares. This transaction will benefit the shareholders of both companies, by creating a larger production and reserve base, immediate access to Moiibus' low cost gas exploration opportunities currently available in Western Canada to compliment TransGlobe's highly prospective international oil prospects in Yemen, a strengthened technical and management team, and a reduction in overall general and administrative expenses. The combined companies will have a production base of approximately 290 BOED(TransGlobe's 110 BOED of US production, and Moiibus' 180 BOED (50 percent gas) of Canadian production). In addition, Moiibus provides a positive year end cash and working capital position as of December 31, 1998 of $346,000 Cdn and no debt. If the transaction is approved, Lloyd Herrick will become Vice President and COO of TransGlobe, Mary Chandler will become Vice President, Finance and CFO of TransGlobe and James (Jim) Dowhaniuk will become Manager of Domestic Exploration of TransGlobe. Also Moiibus Board members, Tom Kusumoto and Lloyd Herrick will become Directors of TransGlobe. TransGlobe's current CFO, Mr. Juneyt Tirmandi will continue in a consulting advisor's capacity. The TransGlobe common shares to be issued to the Moiibus shareholders pursuant to the Plan of Arrangement will not be registered under the US Securities Act of 1933 but will be issued to Moiibus' US shareholders pursuant to an applicable exemption from registration requirements. No shares may be offered or sold in the United States absent registration or an applicable exemption from registration requirements. NIAGRA MOHAWK: Reorganizes Into Holding Company Structure --------------------------------------------------------- On March 18, 1999, Niagara Mohawk Power Corporation was reorganized into a holding company structure pursuant to an Agreement and Plan of Exchange between Niagara Mohawk and Niagara Mohawk Holdings, Inc. The Plan of Exchange was approved on June 29, 1998, by more than two-thirds of the outstanding Niagara Mohawk Common Stock entitled to vote. As part of the reorganization, all of the outstanding shares of Niagara Mohawk Common Stock, $1.00 par value per share, were exchanged on a share-for-share basis for shares of Common Stock, par value $.01 per share, of the Company, and Niagara Mohawk became a subsidiary of the Company. The preferred stock and debt of Niagara Mohawk were not exchanged and remain securities of Niagara Mohawk. NORTHWESTERN STEEL: Quarter Report for Period Ended 1/31/99 ----------------------------------------------------------- Northwestern Steel and Wire Company reports to the SEC that net sales for the Company were $77.0 million on shipments of 223,526 net tons for the three months ended January 31, 1999, compared to $140.4 million on shipments of 376,753 net tons for the three months ended January 31, 1998. For the second quarter ended January 31, 1999, net loss for the period of $5.2 million, or $0.21 per share, compared to net income of $7.4 million or $0.30 per share, in the prior year period. Tons shipped in the quarter decreased almost 41% compared to the prior year period. Tons shipped decreased across all product lines in a large part due to the dramatic influx of foreign steel in its rod and structural markets, which significantly impacted volume shipped during the three months ended January 31, 1999. End-use demand for the Company's products remains good, however. For the six-month period ended January 31, 1999, net sales were $190.5 million compared to $279.3 in the prior year period. Tons shipped decreased from 743,392 net tons for the six months ended January 31, 1998 to 518,585 net tons for the comparable six months in the current year. For the six months ended January 31, 1999, the Company recognized a net loss of $29.8 million, or $1.21per share which included a one-time after tax charge of $27.1 or $1.10 per share, due to the exit from a significant portion of our wire business in the first quarter. This compared to net income of $15.2 million or $0.62 per share, in the prior year period, which included $3.1million, or $0.12 per share, for recovery of previously disputed property tax payments made in prior years. PARAGON TRADE: Announces Settlement With Kimberly-Clark ------------------------------------------------------- Paragon Trade Brands, Inc. (NYSE: PTB) announced that it has finalized a settlement agreement with Kimberly- Clark Corporation and will shortly file a motion with the United States Bankruptcy Court for the Northern District of Georgia seeking approval of the settlement. The agreement provides for resolution of all of K-C's claims pending in Paragon's bankruptcy proceeding, including issues surrounding a patent dispute that was the subject of litigation in the United States District Court for the Northern District of Texas. On February 2, 1999, Paragon filed a motion with the Bankruptcy Court to approve a similar settlement with The Procter & Gamble Company. A hearing to consider the proposed P&G settlement is scheduled to take place today. The K-C agreement, coupled with the previously announced P&G agreement, will serve as the cornerstone for a consensual plan of reorganization for Paragon. Paragon reiterated that its goal is to emerge from chapter 11 quickly, positioned to produce the highest quality store brand absorbent products and poised to achieve its long- range strategic goals. Under the K-C agreement, Paragon grants K-C a prepetition unsecured claim in the amount of $110 million and an administrative claim in the amount of $5 million. K-C had previously filed a proof of claim in Paragon's bankruptcy proceedings listing claims ranging from approximately $893 million to $2.4 billion. The parties have agreed that payments of the agreed-upon amounts pursuant to a plan of reorganization will be in full settlement of any and all claims K-C and Paragon have asserted against each other through the date of the settlement agreement. The parties will exchange mutual general releases to that effect. As part of the agreement, K-C is granting licenses to Paragon in the U.S. and Canada which give Paragon the freedom under enumerated K-C patents to market its dual cuff diaper and training pant products which enjoy wide consumer acceptance. In exchange for this right, Paragon has agreed to pay K-C running royalties on net sales of the licensed products equal to: 2.5% of the first $200 million of net sales of the covered diaper products and 1.5% of such net sales in excess of $200 million in each calendar year commencing January 1999 through November 2004. In addition, Paragon has agreed to pay K-C running royalties of 5% of net sales of the covered training pant products for the same period. The parties have agreed that, once the K-C settlement is approved by an unstayed order of the Bankruptcy Court, K-C will dismiss with prejudice its complaint in the Texas Action, as well as its related filings in the Federal District Court in Georgia. Simultaneously, Paragon will dismiss with prejudice its counterclaims in the Texas Action. Paragon further disclosed that the K-C settlement will result in a material net loss for the fiscal year ending December 27, 1998. Commenting on the agreement with K-C, Bobby Abraham, Chief Executive Officer of Paragon, stated, "While the royalties are a significant added cost, we believe Paragon's store brand competitors will pay similar royalties for equivalent patent rights. Thanks to our scale and consistent investments in productivity, we believe Paragon is the most efficient store brand manufacturer." SAMSUNG MOTORS: Daewoo Group To Take Over Samsung Unit ------------------------------------------------------ South Korea's Daewoo Group said it has tentatively agreed to take over Samsung Motors Inc., a unit of Samsung Group. Under the agreement, Daewoo will continue production of a line of Samsung cars at a rate of at least 30,000 units a year for the next two years. Daewoo said that its target will be 50,000 units a year. There is no agreement yet on the purchase price or the amount of debt that Daewoo will assume. (Wall Street Journal 23-Mar-99) SOLV-EX CORP: Reorganization Plan Update ---------------------------------------- On or about July 31, 1998, the Plans of Reorganization and Arrangement, respectively, of the debtor, Solv-Ex Corporation were confirmed by Orders of the U.S. and Canadian Courts. The effective date of the Plans was August 31, 1998. Under the confirmed Plans, a portion of the Company's indebtedness to allowed non-insider convertible debentureholders in the pre-Chapter 11 amount of US $7.5 million was extended on terms similar to existing debentures and secured by a pledge of a collateral interest in certain of the Company's tangible and intangible assets. At August 31, 1988, the balance owing under the allowed convertible debentures was US $3,511,016, maturing on June 30, 1999 and US $375,000 maturing on November 30, 1999. In addition, the convertible debenture claim of Phemex Establishment in the amount of US $33 million was disallowed and extinguished. Finally, the allowed convertible debenture claim, in the amount of US $2 million held by the Company's Chairman and CEO, John S. Rendall, was allowed but satisfied by the issuance and delivery of shares of new Solv-Ex common stock, together with warrants, authorized under the confirmed plan of reorganization. As a result of the exchange of "old" Solv-Ex common stock for "new" Solv-Ex common stock, as of December 1, 1998, there were 29,211,157 shares of "new" common stock outstanding and 9,238,109 warrants to be issued under the confirmed Chapter 11 plan. Following confirmation of the Plan of Reorganization, a pool of shares of new Solv-Ex common stock, together with attendant warrants, was regarded as reserved for future issuance and delivery on account of either disputed claims to be determined and allowed or in respect of claims and interests filed and allowed, but not yet satisfied, under the plan. As of August 31, 1988, inasmuch as certain claims remained either disputed or unsatisfied, the size of such pool of shares likewise remained undetermined. SUN HEALTHCARE: Rumblings About Possible Bankruptcy --------------------------------------------------- Since the new federal Medicare reimbursement system went into effect on January 1, stock in Sun Healthcare has tumbled, thousands of employees have been laid off and losses in revenue have mushroomed. Sun Healthcare's CFO predicts revenue losses for 1998 to reach $250 million. However, he states that rumors of bankruptcy apply to most of Sun's competitors as well. Sun Healthcare's daily Medicare reimbursement has been cut by about a third from $500 per patient per day least year to $325 this year. Sun Healthcare was among four nursing- home operators placed on a credit watch in February by Standard and Poor's. Sun healthcare is selling off less profitable facilites, like those that specialize in outpatient, rehabilitation therapy. Sun anticipated taking a $2.4 million loss on the Columbia sale, according to its third quarter report. SYNCRONYS: Files Plan of Reorganization --------------------------------------- Syncronys Softcorp (OTC BB:SYCR) Tuesday announced that the company has filed its Plan of Reorganization and Disclosure Statement on March 17, 1999. Syncronys's previous management filed a bankruptcy petition under Chapter 11 of the Federal Bankruptcy Code on July 15, 1998. Syncronys's new management has proposed a Plan to treat the claims of creditors and the interests of Syncronys's shareholders. Walter Doyle, the interim president and chief executive officer of Syncronys for the past eight months, stated: "We are extremely pleased with the teamwork and progress that has stabilized Syncronys so that our Plan could be filed. We have worked very hard to change Syncronys's business profile from that of a software utility development company into an expanding successful Web-Internet company." Carl Kosnar, currently a senior management consultant to the company and its future president and CEO, emphasized the importance of the company's new product sales and services profile: "We have transformed SYCR into a Web- Internet company through a very specific strategy of company acquisitions and product purchases and licensing." SYCR's new products will enable it to emerge from Chapter 11 (with court approval) selling Internet services and products that will produce profits for its shareholders and the company in the first year after its emergence out of bankruptcy. The new products fall into three distinct groups: (1) Web- Interactive Niche Content; (2) Web management and monitoring applications; and (3) Internet Connectivity. SYCR will continue to market and sell four of its previously developed software utilities products: (1) Upgrade AID 98; (2) Big Disk 1.5; (3) Eyecatcher; and (4) Rewind. These products continue to have a good market value and will contribute to the company's sales and bottom-line profitability. SYCR's new services and products will enable SYCR to emerge from Chapter 11 Bankruptcy (with court approval) selling Web services and products that are expected to produce profits, in the first year after its emergence, over $500,000. These services and products will provide SYCR with new diversified customers and strong revenue performance. This combined with the company's debt-free balance sheet and tax-loss carry-forwards will provide SYCR a solid foundation for its future. WASTEMASTERS: Hearing On Dismissal of Case ------------------------------------------ WasteMasters, Inc. (Nasdaq: WAST) announced that on March 19, 1999, the Texas bankruptcy court held a hearing on the motion of WasteMasters, Inc. to dismiss the involuntary bankruptcy proceeding filed against the company on Feb. 10, 1999. The bankruptcy court will issue a report and recommendation to the federal district court that the bankruptcy proceeding should be dismissed by the district court. The company believes the district court will follow the report and recommendation and dismiss the bankruptcy. WET SEAL: Registration Statement Amended To Increase Shares ----------------------------------------------------------- On July 22, 1997, The Wet Seal, Inc., a Delaware Corporation filed with the SEC in order to register 700,000 shares of its Class A Common Stock, $.10 par value per share reserved for issuance pursuant to options granted under The Wet Seal, Inc. 1996 Long-Term Incentive Plan. The Plan was amended on October 26, 1998 to authorize the issuance under the Plan of an additional 950,000 shares of Common Stock. A Registration Statement is being filed with the SEC in order to register the additional 950,000 shares of Common Stock issuable under the Plan. ********* 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 in each Friday edition of the TCR, is provided 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 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. 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