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/raid1/www/Hosts/bankrupt/TCR_Public/990331.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 31, 1999, Vol. 3, No. 62 Headlines BOCA RESEARCH: Quarterly Report For Period Ended 9/30/98 BRADLEES: Reports Fiscal 1998 Financial Results BROTHERS GOURMET: P&G New Leader in Gourmet Taste COUNTY SEAT: Trustee Wins Okay To Liquidate Chain FLAGSTAR BANCORP: Files Annual Report With SEC GALILEO CORP: Financial Statement of Stock Purchase Plan GBC BANCORP BORROWER: Files Chapter 11 GENERAL CERAMICS: Files Chapter 11 HOME HEALTH CORP: Meeting of Creditors IRIDIUM: CFO Resigns; Two Month Extension From Lenders KIWI: Three Day Reprieve MEDPARTNERS: Seeks Dismissal Of Unit's Chapter 11 Case METROSTAFF: Files For Bankruptcy MOBILE ENERGY: Bar Date Set For May 3, 1999 MOBILEMEDIA: Asks To Extend Exclusive Solicitation Period MUSICLAND: Files Annual Report NEUROMEDICAL: Case Summary & 20 Largest Creditors ONCOR INC: Meeting of Creditors PERKINS FAMILY: Reports Strong Year-End Results PLANET HOLLYWOOD: Delays Interest Payment; Wider Losses RAND ENERGY: Order Grants Motion to Continue Hearing RECYCLING INDUSTRIES: Committee Taps CIBC Oppenheimer SABACOL: GREKA Announces Sale of Substantially All Assets SERVICE MERCHANDISE: DCR Downgrades Ratings TO 'DD' SERVICE MERCHANDISE: Receives Approval of 1st Day Orders THORN APPLE: Meeting of Creditors WASTEMASTERS: Subsidiary To Resume Operations ********* BOCA RESEARCH: Quarterly Report For Period Ended 9/30/98 -------------------------------------------------------- Boca Research Inc. reported to the SEC its operational results for the quarter ended September 30, 1998. The company reported a net loss of approximately $2 million for the three months ended September 30, 1998. The company's net sales increased by 22.9% to $22,789,000 in the three months ended September 30, 1998 from $18,549,000 in the three months ended September 30, 1997. For the nine months ended September 30, 1998, the company reported a net loss of approximately $15 million. The company's net sales decreased by 3.8% to $51,615,000 from $53,660,000 for the comparable period in 1997. International sales were approximately $5.1 million for the three months ended September 30, 1998 compared to $2.8 million for the three months ended September 30, 1997. For the nine months ended September 30, 1998international sales were $9.9 million compared to $11.3 million for the nine months ended September 30, 1997. Gross profit as a percentage of net sales decreased to 0.8% for the nine months ended September 30, 1998 from 4.4% for the nine months ended September30, 1997. BRADLEES: Reports Fiscal 1998 Financial Results ----------------------------------------------- Bradlees, Inc. reported its earnings for fiscal 1998 (52 weeks ended January 30, 1999), including EBITDA (earnings before property gains or losses, interest, taxes, depreciation and amortization) of $32.4 million compared to $25.6 million in fiscal 1997, an improvement of $6.8 million. In addition, comparable store sales increased 3.5% in fiscal 1998, the first positive annual comparable store sales performance for Bradlees since fiscal 1993 Peter Thorner, Chairman and Chief Executive Officer, said, "For the second straight year, Bradlees' EBITDA exceeded the amount set forth in our business plan, representing a 27% improvement over the prior year." The company reported net income for fiscal 1998 of $285.9 million, compared with a net loss of $22.6 million in the prior year. Fiscal 1998 net income included a one-time net gain of $311.3 million associated with the company's year-end emergence from Chapter 11 and adoption of fresh- start reporting. Bradlees also reported net income of $320.5 million for the fiscal 1998 fourth quarter (13 weeks) ended January 30, 1999, including the net one-time gain mentioned above, compared with net income of $25.9 million for the fourth quarter ended January 31, 1998. Comparable store sales increased 1.0% in the fourth quarter. Fourth-quarter sales were impacted by unseasonally warm weather during the holiday season that adversely affected sales of seasonal merchandise categories. Fourth-quarter EBITDA was $33.0 million, compared with EBITDA of $37.0 million in the prior year. Total sales for fiscal 1998 were $1.4 billion, approximately the same as in the prior year, as the annual increase in comparable store sales mostly offset the impact of operating six fewer stores. Total sales for the fourth quarter were $441.9 million, down from $461.6 million in the prior year, due primarily to fewer stores in operation. BROTHERS GOURMET: P&G New Leader in Gourmet Taste ------------------------------------------------- According to a Reuters Financial report of March 29, 1999, Procter & Gamble Co. brand is becoming one of the largest specialty coffee roasters, industry experts said. With the takeover of bankrupt Brothers Gourmet Coffee Inc. this month, P&G is poised to take on a leadership role in the fast-growing sector of pricey beans from specific producing countries, flavored coffees and top-quality blends. "P&G's deal with Brothers establishes Millstone as the clear No. 1 in terms of both the supermarket category and the entire specialty market in the U.S.," said Ted Lingle, executive director of the Specialty Coffee Association of America. "It is a deliberate part of their strategy to become the dominant specialty brand." Consumer products giant P&G, based in Cincinnati, already owns the largest U.S. coffee roaster, Folgers Coffee Co., known for its "regular" ground coffee in a red can. Retail sales of specialty coffee beans sold for home consumption are projected to reach an estimated $3 billion by 1999, double 1989 retail sales of $1.5 billion, according to the SCAA. P&G agreed to buy Brothers' assets for about $22.8 million, including debt assumption, in a deal announced March 9. The purchase is expected to close April 30. Brothers, based in Boca Raton, Fla., filed for Chapter 11 bankruptcy protection in August 1998. Last year, Brothers had gross sales of about $57 million, mainly in the Northeast, Southeast and Denver areas. "To put it in perspective, Brothers is a relatively small business, but it helps give us a national presence in the retail whole-bean market," P&G spokeswoman Lisa Hulse- Jester told Reuters. "It gives us distribution where Millstone has little presence, in the Northeast and Southeast." Or as Lingle put it, "I think the deal will allow P&G to rapidly expand in areas where they had thin distribution and prevent any competitor from getting there first." P&G also is keeping a close watch on one competitor in particular -- Starbucks -- industry experts say. A U.S. roaster, who requested anonymity, said, "Millstone is fighting Starbucks and their agreement with Kraft. P&G is going after the whole bean program. Their first step was buying Millstone and their second step was expanding that. They have to get into every supermarket they can." But the SCAA's Lingle downplayed the Millstone-Starbucks rivalry. He said P&G's delivery system to supermarkets put Millstone in the clear lead. "I'm sure they thought about Starbucks, but I doubt it was their (only) consideration," Lingle said. "There are some questions about Starbucks, now that Kraft is their execution arm. ... The Kraft system is so big it takes forever to go from the roaster to the supermarket shelf. "Second, Starbucks is noted for its dark roast, which has been its strength when it's served with milk. But for home consumption, the number of people who prefer dark roast is a limited segment of the population," said Lingle. He noted, however, that last October, Starbucks introduced four lighter roasted blends called Milder Dimensions. Still others in the industry saw P&G's purchase of Brothers as a solution to a nuisance. They said the bankrupt company had undercut wholesale prices, driving up slotting allowances, the price paid to grocers for shelf space. Although Brothers' sale to P&G is not typical of the consolidation seen in the specialty coffee industry because of Brothers' financial difficulties, Lingle and others worry expansion could someday hurt the gourmet sector. On Monday, Procter & Gamble's stock was up $1.875 at $101.125 in composite New York Stock Exchange trading. Brothers' stock ended Monday at 3 cents a share on Nasdaq's over-the-counter bulletin board. Starbucks' stock rose $1.00 to $29.375 on Nasdaq. And Philip Morris, parent of Starbucks' ally Kraft Foods, rose $1.125 to $41.1875, in composite NYSE trading. COUNTY SEAT: Trustee Wins Okay To Liquidate Chain ------------------------------------------------- The U.S. Bankruptcy Court in Manhattan authorized Nassi Capital Group LLC, Ozer Group LLC and Schottenstein Bernstein Capital Group LLC to conduct going-out-of- business sales at County Seat Stores Inc.'s remaining locations following an auction. The Chapter 11 Trustee estimated that GOB sales would result in about $24 million of proceeds from the Nassi/Ozer/Schottenstein venture, which also will assume virtually all of the costs of conducting the closing sales. The deal was bid up by a total of roughly $1.25 million during Friday's auction, which included participation from liquidators Gordon Brother Retail Partners LLC and Hilco/Great American Group. (The Daily Bankruptcy Review and ABI Copyright c March 30, 1999) FLAGSTAR BANCORP: Files Annual Report With SEC ---------------------------------------------- Flagstar Bancorp, Inc. filed its Annual Report for the year ended December 31, 1998 with the SEC. Flagstar is the holding company for Flagstar Bank, FSB, a federally chartered stock savings bank founded in 1987. With $3.0 billion in assets at December 31, 1998, Flagstar is the largest independent savings institution headquartered in Michigan. The filing is available via the internet at: http://www.sec.gov/Archives/edgar/data/0000950124-99- 002037.txt GALILEO CORP: Financial Statement of Stock Purchase Plan -------------------------------------------------------- Galileo Corporation filed with the SEC its Employee Stock Purchase Plan Financial Statements for the years ended December 31, 1998, 1997 and 1996. The filing is available via the internet at: http://www.sec.gov/Archives/edgar/data/0000950135-99- 001494.txt GBC BANCORP BORROWER: Files Chapter 11 --------------------------------------- GBC Bancorp reported yesterday that a borrower with an outstanding loan balance of $31 million has filed for bankruptcy protection; the filer was not named but the bank did say the loan was for construction of a commercial building in Las Vegas and is collateralized by a first trust deed on the building, according to a newswire report. The loan is also collateralized by second trust deeds on an associated hotel and on a park and by a first trust deed on undeveloped land, all of which are also in Las Vegas, GBC said. The bank anticipates an orderly sale of the collateral that will result in full recapture of principal, interest and estimated expenses. (ABI 30-Mar-99) GENERAL CERAMICS: Files Chapter 11 ---------------------------------- General Ceramics Inc., a New Jersey-based subsidiary of Tokuyama Corp., a Japanese chemical maker, has filed for chapter 11 protection, according to the Nikkei English News. Tokuyama bought the U.S. electronics parts maker in 1989, but the unit has suffered from a drop in orders from the U.S. defense industry. Tokuyama will report a special loss of Y2.2 billion for the fiscal year ending tomorrow, and has decided to boost reserves, anticipating loans it provided to General Ceramics will be uncollectible. (ABI 30-Mar-99) HOME HEALTH CORP: Meeting of Creditors -------------------------------------- Home Health Corporation of America, Inc., et al, debtor, commenced a Chapter 11 case on February 18, 1999. A meeting of creditors will be held on April 16, 1999 at 3:00 PM, 844 King Street, Room 2313, Wilmington, Delaware 19801. IRIDIUM: CFO Resigns; Two Month Extension From Lenders ------------------------------------------------------ Global satellite telecommunucations company Iridium LLC said Monday its chief financial officer resigned and it received a two-month extension from its lenders to prove it can meet certain revenue and subscriber targets. Shares of Iridium closed at $19.94, down $1.69 or 8 percent. Iridium's stock has fallen 73 percent since its 52-week high last May. Iridium said earlier this month its first-quarter financial results and subscriber levels would fall short of expectations due to slow production and distribution of phones by suppliers, quality problems with certain phone handsets, and poor marketing efforts by its regional affiliates. Under the waiver, Iridium must have $4 million in cash revenues, $30 million in cumulative accrued revenues and at least 52,000 customers by May 31. Iridium will default on its loans if it fails to meet those targets. Iridium, which had 3,000 subscribers at the end of 1998, said it is revising its revenue and customer targets and it plans to request a change in the terms of the loan requirements. Analysts said they expect Iridium's lenders will renegotiate the terms of the loans, but they may look for additional financial commitment from Motorola Inc., which owns 20 percent of Iridium. Motorola spokesman David Rudd declined to comment on whether it would provide Iridium with more financial support. Rudd, however, said the company stood by comments Motorola President Bob Growney made last week in an interview with the Financial Times newspaper. Growney told the FT "there's no chance of Iridium going under." Other members of the consortium behind Iridium include Sprint Corp., Raytheon Co., Lockheed Martin Corp. and Pacific Electric Wire & Cable Co. Ltd. Iridium, which has a network of 66 satellites that enable calls to be made virtually anywhere in the world, launched its service in November after a five-week delay. Iridium faces several challenges going forward, including renegotiating the terms of its credit agreement, improving its sales and distribution operations and simplifying its pricing plans, analysts said. Iridium also may land a contract with the U.S. government to provide phones to the Amry, Navy, Airforce and Marines, but the Defense Department still needs security features on the phone service before it can fully adopt it, analysts said. KIWI: Three Day Reprieve ------------------------ A bankruptcy judge on Monday gave grounded Kiwi International Air Lines three more days to show it could fly again before she considers whether to close Kiwi or appoint an overseer to run what is left of the carrier. Kiwi also surrendered the last of its leased jets to its leasing company, so it is now an airline with neither a jet nor permission to fly. It had four jets when it entered Chapter 11 bankruptcy protection last week, down from 15 in the mid-1990s. Also Monday, Peter R. Sarasohn, a lawyer for Kiwi's would- be rescuer, told the judge that Pan Am Airways remains interested in buying the airline, but only if federal regulators restore Kiwi's permit to fly. Despite Pan Am's cold feet, Kiwi president Eugene J. Gillespie Jr. said Monday that another white knight may be in the wings to save the company's 500 jobs. Kiwi lawyer John Drexel, who had obtained a six-day stay of execution last week, argued Monday for three more days, saying they still will not spend more than the $130,000 allowed last week by U.S. Bankruptcy Judge Rosemary Gambardella. By Thursday, he said, Kiwi hopes to persuade a federal official to tell the judge that Kiwi's right to fly would be restored. If not, Kiwi will consent to a court- appointed overseer, Drexel said. The overseer or liquidation was requested by a lawyer for the U.S. Bankruptcy Trustee Patricia A. Staiano, the public's watchdog on bankruptcy court. The company filed for bankruptcy protection on March 29, offering a rescue plan based on a $3 million sale to Pan Am, a former commercial airliner that now has seven jets and flies charters out of Portsmouth, N.H. Kiwi declared $30.3 million in assets and $41.1 million in liabilities. The next day, however, the Federal Aviation Administration stunned Kiwi by revoking its flight certificate, asserting the carrier was unable to fly its six-city schedule safely. Kiwi failed twice last week to convince the FAA to let it fly again, even with a limited schedule under close scrutiny. Kiwi has struggled for much of its life, and before Wednesday, served just Newark; Miami, Orlando and Palm Beach, Fla.; and San Juan and Aguadilla, Puerto Rico. It recently relinquished longtime routes to Atlanta and Chicago. MEDPARTNERS: Seeks Dismissal Of Unit's Chapter 11 Case ------------------------------------------------------ MedPartners Inc. is seeking, through an emergency motion, to either dismiss the chapter 11 bankruptcy proceeding of its wholly owned subsidiary MedPartners Provider Network Inc., or to achieve a turnover of its assets to MedPartners. In the alternative, MedPartners is asking the U.S. Bankruptcy Court in Los Angeles for authority to use cash and to expedite the assumption/rejection of a management contract between MedPartners and MedPartners Providers Network. According to the motion, the conservator who put the company into chapter 11 lacked the authority to do so. (The Daily Bankruptcy Review and ABI Copyright c March 30, 1999 METROSTAFF: Files For Bankruptcy -------------------------------- One of Michigan's largest providers of home health care and temporary employee staffing has filed for Chapter 11 bankruptcy protection. The Metrostaff Companies operates in Wayne, Oakland and Macomb counties. Metrostaff says it will offer a reorganization plan in bankruptcy court in hopes of restructuring debt and emerging as a profitable enterprise. The company says it plans to eventually pay all creditors. Metrostaff President and CEO Michael Callaway blames its financial troubles on congressionally approved Medicare cuts. MOBILE ENERGY: Bar Date Set For May 3, 1999 ------------------------------------------- All persons and entities which assert a claim against Mobile Energy Services Company, LLC file a proof of claim form so that it is actually received not later than 4:30 PM on May 3, 1999. MOBILEMEDIA: Asks To Extend Exclusive Solicitation Period --------------------------------------------------------- The debtors, Mobilemedia Communications, Inc. et al. seek an order extending the exclusive period during which the debtors may solicit acceptances of their third amended joint plan of reorganization. The debtors request an order extending the Exclusive Solicitation Period to and including June 30, 1999. The debtors claim that this extension is necessary in order to permit the debtors to conclude the plan process wihtout the unnecessary delay , disruption and confusion that would accompany the filing of any "competing" plans of reorganization. On March 23, 1999, the court entered a stipulation and order settling various objections that were filed to confirmation. The debtors agreed in the Stipulation that the exclusive periods will be deemed terminated as of May 15, 1999, pursuant to certain provisions in the Stipulation. The debtors say that the relief requested is not intended to conflict with the Stipulation MUSICLAND: Files Annual Report ------------------------------ Musicland Stores Corporation filed its annual report for the year ending December 31, 1998 with the SEC. For the year ended December 31, 1998, the Company had consolidatedrevenues of $1.8 billion and operating income, before depreciation and amortization, of $124.3 million, both of which were records for the Company. Net earnings in 1998 increased 172.2% to $38.0 million from $14.0 million in1997. Diluted earnings per share were $1.04 in 1998 compared with $0.41 in 1997, an increase of 153.7%. The strong performance resulted primarily from comparable store sales gains and gross margin improvements. Total comparable store sales increased 6.7% in 1998 while gross margin improved to 35.5% from b34.8% in 1997. In April 1998, the Company completed an offering of $150 million of 9 7/8% senior subordinated notes due in 2008, which, coupled with the significant improvements in results of operations, enabled the Company to repay all borrowings under its revolving credit and term loan facilities. Cash and cash equivalents, which are generally highest at the end of December following the Christmas season, reached $257.2 million by year end. A full-text copy of the filing is available via the Internet at: http://www.sec.gov/Archives/edgar/data/0000832995-99- 000007.txt NEUROMEDICAL: Case Summary & 20 Largest Creditors -------------------------------------------------- Debtor: Neuromediacal Systems Inc. 10 Mountain View Road Upper Saddle River, New Jersey 07458 Type of business: Operated as a healthcare technology company that supplied cytology screening and anatomic pathology diagnostic equipment and service to laboratories. Court: District of Delaware Case No.: 99-763 Filed: 03/26/99 Chapter: 11 Debtor's Counsel: Latham & Watkins 233 S. Wacker Drive Chicago, Illinois 60606 Total Assets: $34,755,000 Total Liabilities: $9,648,000 No. of Amount Holders ------ ------- Fixed, liquidated secured debt $6,416,164 5 Contingent secured debt undetermined 13 Disputed secured debt undetermined 0 Unliquidated secured debt undetermined 0 Fixed, liquidated unsecured debt $1,370,512 174 Contingent unsecured debt undetermined 26 Disputed unsecured debt undetermined 8 Unliquidated unsecured debt undetermined 168 No. of shares of preferred stock none No. of shares of common stock 31,055,846 312 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Medical Device Consultants Contract obligation 84,650 Alphanet Solutions Inc. Trade Debt 57,204 Carson Wagonlit Travel Guarantee 52,393 Associated Pathologists Lab Contract Obligation 45,116 Source Services Corporation Trade Debt 38,608 Schulte, Roth & Zabel Services performed 38,473 University of Washington Contract obligation 36,616 Montefiore Madical Center Contract obligation 31,443 Fried Frank, Harris Shriver & Jacobs services performed 30,201 Deloitte & Touche services performed 28,281 NETMED contract obligation 27,632 NASDAQ services performed 26,625 UPS trade debt 22,696 ERnst & Young services performed 22,000 Hyman, Phelps & McNamara services performed 18,235 Diagnostic Pathology Serv. contract obligation 15,750 The Logical Alternative services performed 14,000 Verse Data Products trade debt 13,628 Technology Workshop, Inc. services performed 12,775 William Frable, MD/Virginia contract obligation 12,500 ONCOR INC: Meeting of Creditors ------------------------------- On February 26, 1999, Oncor, Inc. and Codon Pharmaceuticals, Inc. filed voluntary petitions for relief under Chapter 11. A meeting of creditors is scheduled for April 30, 1999 at 1:00 PM at the J. Caleb Boggs Federal Building, 844 King Street, Room 2313, Wilmington, Delaware. PERKINS FAMILY: Reports Strong Year-End Results ----------------------------------------------- Perkins Family Restaurants, L.P. reported results for the year ended December 31, 1998. Revenues for the year increased 10.9% to $298,806,000 driven by strong comparable store sales and a record opening of 42 restaurants. Comparable sales in company-owned restaurants increased 7.8% for the year on top of increases of 6.6% and 2.6% in the two prior years. Comparable guest counts for the year increased a very strong 2.9%. Earnings before interest, taxes, depreciation and amortization (EBITDA) of $41,733,000 for the year increased 12.5% from $37,096,000 in 1997. Net income for the year was $2,984,000. As expected, increases in interest expense, depreciation and amortization as a result of the Going Private Transaction in December 1997 reduced current year earnings from 1997 levels. Net income in 1997 was $8,200,000. Year- to-date results for 1998 include a loss on disposition of assets of $422,000, an asset write down under SFAS 121 of $3,373,000 and a loss due to the bankruptcy of Perk Development Corporation of $475,000. The impact of the company's Going Private Transaction and certain tax reorganization expense, which total $7,850,000, are included in 1997 results. "As we reported earlier, thirty-one restaurants operated by the company's largest franchisee, Perk Development Corporation, left the Perkins system on February 28, 1999 after a court-supervised auction. While the loss of these restaurants will have an impact on the company's earnings going forward, the company does not expect the loss of these restaurants to interrupt its record of strong performance in revenues or EBITDA," said Steven R. McClellan, Executive Vice President and Chief Financial Officer. Perkins Family Restaurants, L.P. currently operates or franchises 466 full service restaurants in 35 states and 5 Canadian provinces. PLANET HOLLYWOOD: Delays Interest Payment; Wider Losses ------------------------------------------------------- Planet Hollywood International Inc. postponed a $15-million interest payment due Thursday to holders of $250 million of subordinated debt, while auditors express doubts about the theme-restaurant operator's future, The Wall Street Journal reported. The company also is negotiating with its lead bank, SunTrust Bank, about an extension of a $12.5 million payment due Wednesday. Auditor PricewaterhouseCoopers LLP, auditor for the company, filed a statement with the Securities and Exchange Commission indicating that ongoing losses and debt-related problems raise questions about Planet Hollywood's ability to continue as a going concern. The company is considering selling a restaurant under construction in Boston and a concert facility in New York, called Sound Republic, that was to open this summer. The company also reported it is taking a larger than expected charge for the fourth quarter ended Dec. 27; it reported a loss of $228.3 million for the period. (ABI 30-Mar-99) RAND ENERGY: Order Grants Motion to Continue Hearing ---------------------------------------------------- The Honorable Steven A. Felsenthal entered an order on March 24, 1999 continuing the hearing on the Disclosure Statement of Rand Energy Company to May 10, 1999. RECYCLING INDUSTRIES: Committee Taps CIBC Oppenheimer ----------------------------------------------------- The Official Committee of Unsecured Creditors of Recycling Industries, Inc. and affiliated debtors seeks to retain CIBC Oppenheimer Corp. to act as financial advisors for the Committee. The firm will analyze and review the acts, conduct, asswets, liabilities and financial condition of the debtor. The firm will advise the committee with respect ot proposed financial restructuring of the debtors, and perform valuation analysis on the debtor. The firm will provide testimony as necessary. The firm will be paid a financial advisory fee payable upon the consummation of the Restructuring equal to 5% of the Aggregate Consideration distribtuted to the class or classes of creditors represented by the committee. SABACOL: GREKA Announces Sale of Substantially All Assets --------------------------------------------------------- GREKA Energy Corporation (NASDAQ: GRKA) announced that its wholly-owned subsidiary, Sabacol, Inc. ("Sabacol"), has entered into an agreement to sell substantially all of its real and personal property assets to the operator of such assets. Further, Sabacol has filed a motion for an order authorizing the sale of the assets and, upon consummation of the sale, dismissing Sabacol's bankruptcy case. Sabacol's assets, located solely in Colombia, consist of a 50% interest in a 118-mile pipeline and varying interests in heavy oil producing properties. In exchange for the sale of its Colombian assets under the terms of the agreement, Sabacol shall receive consideration of at least $ 10 million consisting of cash, interests in oil and gas producing properties in California, and full release of the related debts. Additionally, subject to an adjustment in March 2000, the Company could receive up to $ 5 million in cash and have an option to re-purchase the Colombian assets for $ 12 million. Such payment or option would have to be exercised by May 31, 2000. Mr. Randeep S. Grewal, Chairman, CEO & President stated, "The initial step of placing Sabacol in Chapter 11 followed by this sale is a continued demonstration of the successful performance by management in expeditiously accomplishing its objectives. As established within our strategy, we focused on disposing our non-core assets in exchange for cash, debt reduction, and acquiring core assets in California. This transaction directly adds value to Greka in terms of cash flow and profits. Upon closing this transaction, the Company's daily production would be approximately 4500 BOE." The merger between Horizontal Ventures, Inc. and Saba Petroleum Company that was approved by their shareholders on March 19, 1999, became effective on March 24, 1999, and the surviving entity, Horizontal Ventures, changed its name to GREKA Energy Corporation. As a result of the merger, Saba's common stock traded under the symbol SAB has been delisted from the AMEX. An application is pending to list GREKA on the NASDAQ National Market. SERVICE MERCHANDISE: DCR Downgrades Ratings TO 'DD' --------------------------------------------------- Duff & Phelps Credit Rating Co. (DCR) has lowered its ratings on the senior and senior subordinated notes of Service Merchandise Company, Inc. (SME) to 'DD' (Double-D) from 'CCC' (Triple-C) following the company's announcement that it has filed Chapter 11 proceedings and obtained a commitment for debtor-in-possession financing. This action follows DCR`s March 17, 1999 announcement that a downgrade would take place once there was a formal Chapter 11 filing. Since January, SME has replaced its CEO, announced the closing of 134 stores, cut its workforce by 12 percent and announced the closing of its Dallas distribution center. The company is in the process of reinventing its retail format from catalog to self-service retail. However, as the company undergoes a financial restructuring, more operating changes are likely. SERVICE MERCHANDISE: Receives Approval of 1st Day Orders -------------------------------------------------------- Service Merchandise Company, Inc. (NYSE:SME) announced today it has received Bankruptcy Court approval to, among other things, pay pre-petition and post-petition employee wages, salaries, commissions, workers' compensation, health benefits, life and disability insurance and other employee obligations during its voluntary restructuring under Chapter 11, which commenced on March 27, 1999. The Court also authorized the Company to pay vendors and other providers in the ordinary course for goods and services received from March 15, and to honor customer service programs, including warranties, returns, layaways and gift certificates. In addition, the Court approved interim DIP financing for immediate use by the Company to continue operations, pay employees and purchase goods and services going forward. Service Merchandise has received a commitment for up to $750 million in DIP financing from the Company's current senior lenders led by Citicorp USA, Inc., as administrative agent, BankBoston, N.A., as documentation agent and collateral monitoring agent, and Salomon Smith Barney Inc., as sole arranger and book manager. The final hearing on the DIP agreement has been set for April 27. The Court also scheduled a hearing at that time on a motion the Company filed Saturday seeking approval of an employee retention program. In related decisions, the Court approved the Company's requests to continue various vendor-related programs, including payment of pre-petition consignment claims and acceptance of consignment procedures, as well as completing the final inventory clearances at stores previously announced to be closed. CEO Sam Cusano stated that Service Merchandise has already contacted a number of its major vendors, who have indicated their support. "With our first-day motions approved and our interim DIP financing in place, we can now renew our focus on the core operations of our business and concentrate on our key constituencies -- our customers, our vendors and our employees. We will continue our restructuring initiatives aimed at increasing operating efficiencies, reducing overhead and improving margins and profitability. Concentrating on these areas will enable Service Merchandise to maximize the value of the business for all of the Company's stakeholders," Mr. Cusano said. THORN APPLE: Meeting of Creditors --------------------------------- A chapter 11 case concerning the debtor Thorn Apple Valley, Incorporated and its affiliated debtors was filed on March 5, 1999. A meeting of creditors is set for April 14, 1999 at 10:30 AM at 211 West fort Street, Room 743, Detroit, Michigan 48226. WASTEMASTERS: Subsidiary To Resume Operations --------------------------------------------- WasteMasters, Inc. (Nasdaq: WAST), announced that under its continuing plan to revitalize the company, C.A.T. Recycling, Inc., a Florida subsidiary of the company, was removed from bankruptcy and will resume operations shortly. The company is also focused on restructuring the debt of other subsidiaries through its management consultant. The Ridgefield Group. This move continues Management's strategy to place emphasis in Florida, where the company maintains its primary waste-related assets. The Company also plans to sell certain non-strategic businesses. The proceeds will be used to pay off debt and help finance its next round of acquisitions. It is anticipated that other commitments necessary to complete the turn around will be made available from banks organized and led by The Ridgefield Group. David Fuselier, President of The Ridgefield Group, stated, "We believe the worst of the bleeding is over. We have an extended mature board, stabilized assets, good opportunities and a viable future." WasteMasters, Inc., based in Atlanta, is a growing leader in providing waste management services. The Company has operations throughout both the Northeastern and Southeastern United States, serving municipal, commercial, industrial and residential customers. ********* 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. 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 * * *