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/raid1/www/Hosts/bankrupt/TCR_Public/990407.MBXT R O U B L E D C O M P A N Y R E P O R T E R Wednesday, April 7, 1999, Vol. 3, No. 67 Headlines APROGENEX: Files for Bankruptcy to Prevent Lawsuits BIRRAPORETTI'S: Investor Group Buys Out of Bankruptcy BRAZOS SPORTSWEAR: Notice of Bar Date BRUNO'S: Court Grants Exclusivity Extension BRUNO'S: Seeks To Market and Sell Four Properties CAMPO ELECTRONICS: Trustee Applies To Employ Accountant DOW CORNING: Arguments Over Interest Rates Continue ELSINORE CORP: Notice of Final Decree; Case Closed ERNST HOME CENTER: Hearing on Disclosure Statement FIRSTPLUS FINANCIAL: Committee Taps Attorneys JOTAN: Order Converts Case To Chapter 7 JUMBOSPORTS: Order Grants Motion to Sell Property KIWI: Deadline to File a Proof of Claim KIWI: Stanziale Appointed To Oversee Assets KOO KOO ROO: Files Annual Report With SEC LIBERTY HOUSE: Court Gives Three More Months On Plan LIBERTY HOUSE: Order Authorizes D&O Insurance LOTTOWORLD: Hearing on Disclosure Statement MCGINNIS GLOBAL: Hearing on Disclosure Statement MOBILE ENERGY: Seeks To Retain Blackburn as Expert Witness PLANET HOLLYWOOD: Files Annual Report With SEC RAYTECH CORP: Announces 1998 Results SABACOL INC: Order Extends Time To Assume/Reject Leases SERVICE MERCHANDISE: Court Grants Requests SERVICE MERCHANDISE: Report on DIP Financing TCC INDUSTRIES: Files Notification of Late Filing THE PENN TRAFFIC: Disclosure Statement; $300M DIP Approved THOMSON RECOVERY: Double Day Announces Sale Approval UNITED COMPANIES: Meeting of Creditors WESTMORELAND COAL: Files Annual Report With SEC WHITE ROSE: Reports Improved Operating Results ********* APROGENEX: Files for Bankruptcy to Prevent Lawsuits --------------------------------------------------- Aprogenex Inc. filed chapter 11 two weeks ago in an effort to overcome objections to the sale of its intellectual property and to hold off lawsuits filed by some of its creditors, The Houston Business Journal reported. The defunct Houston company has had no business operations for the last two years and has been trying to sell its intellectual property to a Chicago company, Vysys Inc., for more than a year. Attorney Joseph Epstein of Kirkendall & Igsur said a bankruptcy filing became one of the few options to facilitate the sale. He said shareholders blocked previous attempts to sell a probe to test pregnant women's blood for fetal abnormalities-an alternative to amniocentesis. Epstein said the company filed two weeks ago with a plan to facilitate the liquidation process quickly. He said the proposal includes a sale of all the intellectual property for $250,000 in cash and about 80,000 shares of Vysis. (ABI 06-Apr-99) BIRRAPORETTI'S: Investor Group Buys Out of Bankruptcy ----------------------------------------------------- Birraporetti's, a Houston-area chain known as an Italian restaurant and an Irish bar, was bought out of bankruptcy by a group of investors that includes original founder Michael D. Horan, according to The Houston Business Journal. The chain expanded rapidly between 1986 and 1988, but it held a high debt service when the Texas economy was depressed. Horan has not been involved with the chain for eight years. In 1991, he sold his group of restaurants to outside investors under a court-approved bankruptcy reorganization plan; his idea was that he and his parents would retain an interest in the chain. The deal soured and he filed a lawsuit against BP Acquisition Corp., owners Philip S. and Hermann Sassower and two attorneys representing Horan at the time. He said that his attorneys had advised him to file for chapter 11 protection and then sell to the Sassowers, but he said once the sale was completed, the Sassowers and his attorneys removed him from the company. The Sassowers made major changes and took away the bar and pub-style motif that had made it so popular. Today, the new owners plan to refocus on the Irish bar concept. (ABI 06-Apr-99) BRAZOS SPORTSWEAR: Notice of Bar Date ------------------------------------- Brazos Sportswear, Inc. and its debtor affiliates provided notice that the U.S. Bankruptcy Court for the District of Delaware entered an order fixing May 17, 1999 as the last date for all persons and entities, with certain exceptions to file proofs of claim against one or more of the debtors. BRUNO'S: Court Grants Exclusivity Extension ------------------------------------------- Judge Walrath granted the Debtors an extension of their exclusive period during which to file a plan of reorganization through May 14, 1999, and granted a concomitant extension of the exclusive period during which to solicit acceptances of such plan through July 15, 1999. (Bruno's Bankruptcy News Issue 16 31-Mar-99; Bankruptcy Creditors' Service Phone 609-392-0900 FAX 609-392-0040) BRUNO'S: Seeks To Market and Sell Four Properties ------------------------------------------------- The Debtors seek to market and sell, through an auction, four nonresidential real properties that they own in fee and three leases associated with one such property. The properties have little value to the Debtors as part of their ongoing business operations and may be of value to third parties. The five properties are located in Alabama. Of the four, three include a parcel of land and the vacant grocery store located thereon. The fourth property is a shopping center located thereon, consisting of a vacant grocery store and small shopping spaces subject to three leases under which the Debtors are the lessors. The auction is to be conducted on-site at each of the properties on April 12 and 13, 1999 by Higgenbotham Auctioneers International Ltd., Inc. The Debtors have agreed to pay Higgenbotham a fee equal to 10% of the contract purchase price. The properties to be auction are: Store Location Auction No. in Alabama Address Date/Time ----- ---------- ------- --------- 64 Opelika 804 Columbus Parkway Apr. 27 2:30 p.m. 66 Tallaedga 210 Hayes Street Apr. 26 5:00 p.m. 110 Valley 3300 20th Avenue Apr. 27 5:30 p.m. 135 Prattville 1714 East Main St. Apr. 27 10:00 a.m. Approximately two weeks subsequent to the auction, at a hearing to be held on May 13, 1999 at 3:00 p.m., the Debtors will request approval from the Court. (Bruno's Bankruptcy News Issue 16 31-Mar-99; Bankruptcy Creditors' Service Phone 609-392-0900 FAX 609-392-0040) CAMPO ELECTRONICS: Trustee Applies To Employ Accountant ------------------------------------------------------- Wilbur R. Babin, the trustee appointed to administer the estate of the debtor, Campo Electronics, Appliances, and Computers Inc., seeks authority to employ the accounting firm of PricewaterhouseCoopers LLP as the accountant for the estate. The firm's hourly rates range from $325 for partners to $75 for para-professionals. DOW CORNING: Arguments Over Interest Rates Continue --------------------------------------------------- The Debtor's Amended Plan of Reorganization proposes that Class 4 Claims held by Commercial Creditors will be honored at par with interest at the 6.28% Federal judgment rate, compounded annual on each anniversary of the Petition Date. The Case Interest Rate, according to the Plan, supersedes any rate of interest specified in a pre-petition contract to which the Debtor is a party. The Debtor asserts that "interest at the legal rate" means the Federal judgment rate provided for in 28 U.S.C. Sec. 1961 in effect on the Petition Date, meaning 6.28%. In connection with the Court's approval of the Amended Disclosure Statement, the Unsecured Creditors' Committee urged Judge Spector to withhold his approval because, by paying interest at the Federal judgment rate rather than the contract rate or the applicable state statutory rate, the Amended Disclosure Statement describes a plan that cannot be confirmed as a matter of law. Judge Spector declined to send the parties back to the drafting table and, instead, because this is a discrete issue in dispute which is disclosed in the Amended Disclosure Statement, directed the parties to brief the issue well in advance of the June 28 confirmation hearing. In a thirty-plus page Memorandum of Law, the Committee outlines its case to Judge Spector that payment of the Federal judgment rate is wrong. In conversations with the Committee, the Debtor has expressed its concern about the administrative nightmare the estate will face if required to calculate 50 or more different interest rates on claims. The Committee dismisses the Debtor's irrational fear. Dow Corning has had no trouble dealing with a variety of contractual interest rates for the past 50 years, the Committee says, and its finance professionals know how to calculate interest payments. "It did so in the past and can do so again It just does not want to," the Committee complains. Instead of doing the number crunching, the Committee charges, Dow Corning would rather give its shareholders a nine-figure windfall. For these reasons, the Commercial Committee submits that the Amended Plan fails to satisfy the "best interest of creditors" test embodied in 11 U.S.C. Sec. 1129(a)(7) and cannot be confirmed as a matter of law. In a Supplemental Memorandum, Bank of America NT&SA leaves a door open for further negotiation, pointing to In re Carter, 220 B.R. 411, 415 (Bankr. D.N.M. 1998), for the proposition that the "legal rate" can be (x) the contract rate, (y) the State statutory rate, or (z) any rate to which the Debtor and its creditors agree. If there were to be any doubt, of course, BofA makes it clear that it did not and does not agree to a 6.28% interest rate under its pre-petition loan agreement with the Debtor. Angelo Gordon & Co., L.P., Franklin Mutual Advisors and Appaloosa Management, L.P., holding $300,000,000 in principal amount of commercial claims against Dow Corning, finds the Debtor to be rigid, mean-spirited and its behavior entirely reprehensible. The Debtor has steadfastly maintained that it is solvent throughout this case. Now, when payment is finally coming due, it abrogates its contractual obligations in order to provide its shareholders with a windfall. The bankruptcy code does not permit, and as a matter of policy could not permit, solvent debtors to borrow money at 9% and pay it back at 6%. Angelo, Franklin and Appaloosa urge the Court to direct payment of 12% interest on Class 4 Claims. They reason that, in the absence of a bankruptcy filing, creditors would have sued Dow Corning in Michigan state court. State court judgments in Michigan accrue 12% interest from the date of judgment, compounded annually. Mich. Comp. L. Sec. 600-6013(5). "Interest at the legal rate," Angelo, Franklin and Appaloosa argue, means interest at 12% afforded by applicable Michigan law. The Bank of New York, as Indenture Trustee for $75,000,000 of 9.375% Debentures due 2008, $50,000,000 of 8.15% Debentures due 2029, and $34,500,000 of Variable Rate Series A Medium Term Notes, expresses its displeasure with the proposed 6.28% Case Interest Rate and lends its full support to the Committee's position. The Chase Manhattan Bank, as nominee and holder of $150 million in bank debt under five pre-petition loan agreements, cautions Judge Spector that denying debt holders their negotiated interest rates will have a significantly adverse impact on the debt markets. A primary component of the capital markets system is the primacy of debt over equity in the scheme of recoveries. Debt claims rank senior to equity interests. Allowing the Debtor to leap frog equity interests ahead of debt claims will have a potentially dramatic and negative impact on the credit markets, Chase says, while reminding Judge Spector that it is one of the country's leading lenders. The elimination of contract rates of interest in a bankruptcy will impair the liquidity of lenders' debt positions, Chase cautions, explaining that liquidity impairment will reduce credit availability and will increase financing costs in the capital markets. (DOW CORNING BANKRUPTCY NEWS Issue Number 64; Bankruptcy Creditors' Service, Inc. Phone 609- 392-0900 FAX 609-392-0040) ELSINORE CORP: Notice of Final Decree; Case Closed -------------------------------------------------- In the case of Elsinore Corporation, Elsub Management Corporation, Palm Springs East Limited Partnership and Four Queens, Inc., debtors, the Final Decree and Order Closing the case was entered on March 25, 1999. ERNST HOME CENTER: Hearing on Disclosure Statement -------------------------------------------------- On March 31, 1999, Ernst Home Center, Inc. and EDC, Inc. filed the debtors' joint Disclosure Statement and the debtors' joint liquidation plan. The hearing to consider approval of the Disclosure Statement has been scheduled for May 14, 1999, U.S. Bankruptcy Court, 1200 Sixth Avenue, Room 427, Seattle, Washington 98101 FIRSTPLUS FINANCIAL: Committee Taps Attorneys --------------------------------------------- The Official Unsecured Creditors Committee filed an application authorizing the employment and retention of Kane, Russell, Cleman & Logan PC as attorneys for the Official Unsecured Creditors' Committee. A hearing to consider the application has been set for April 19, 1999. JOTAN: Order Converts Case To Chapter 7 --------------------------------------- The Honorable Jerry A. Funk, U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division entered an order converting the case of Jotan, Inc. and Southland Container Packaging, Co., debtors to Chapter 7. All orders authorizing the debtor to continue business are rescinded and the creditors committee is dissolved. An additional meeting of creditors is scheduled for April 28, 1999 at 9:00 AM at 311 West Monroe Street, Room 143C, Jacksonville, Florida. The Chapter 7 trustee is Gordon P. Jones. JUMBOSPORTS: Order Grants Motion to Sell Property ------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division entered an order authorizing the debtors, Jumbosports Inc., and its affiliates to sell certain real property located in Colonie, New York to NYSUT Building Corporation for a purchase price of $2.450 million. KIWI: Deadline to File a Proof of Claim --------------------------------------- In the case of Kiwi International Air Lines, Inc., the Bankruptcy Court issued a notice of deadline to file a proof of claim on March 30, 1999, providing that the deadline to file a poof of claim for all creditors in the case (except a governmental unit) is July 19, 1999. KIWI: Stanziale Appointed To Oversee Assets ------------------------------------------- The Record Northern New Jersey reports on April 3, 1999 that a former board member of Kiwi International Air Lines has been appointed to oversee the grounded airline's assets, and said Friday he would work to keep the tiny discount carrier alive. Stanziale was appointed by U.S. Bankruptcy Trustee Patricia A. Staiano and approved as the overseer of the airline's assets late Thursday by U.S. Bankruptcy Judge Rosemary Gambardella. Gambardella said on Thursday that the trustee must examine whether it is worthwhile to keep the company alive until mid-April, when Kiwi is appealing the Federal Aviation Administration's revocation of its operating certificate to the National Transportation Safety Board. Stanziale on Friday said he plans to pursue the appeal and "other legal options" to save the seven-year-old airline. "Right now, liquidation is not an option," Stanziale said. "The goal is to get the company back on its feet." Kiwi filed for bankruptcy on March 23, the same day the U.S. Department of Transportation threatened to shut down the airline for inadequate financing and management. The FAA stunned the airline a day later by revoking its license to fly, saying the carrier was unable to fly its six-city schedule safely. Last week, Kiwi surrendered the last of its four leased jets. Pan Am Airways, a former commercial airliner that flies charters out of Portsmouth, N.H., initially offered to bail out Kiwi with $3 million and a planned buyout. But Pan Am attorneys told Gambardella this week that Pan Am is interested in buying Kiwi only if the airline regains its flight certificate. KOO KOO ROO: Files Annual Report With SEC ----------------------------------------- Koo Koo Roo Enterprises Inc. filed its annual report for the fiscal year ended December 27, 1998 with the SEC. The Company operated 314 restaurants primarily under the Chi-Chi's, El Torito, Casa Gallardo, Koo Koo Roo and Hamburger Hamlet concepts at December 27, 1998. The company reports total debt of $239 million for 1998 compared to $202 million for 1997. The Company's ability to make payments on and to refinance its indebtedness and to fund planned capital expenditures will depend on its ability to generate cash in the future. For the years ended December 27, 1998 and December 28, 1997, the Company recorded net losses of $63.1 million and $31.6 million, respectively. For the same periods, the Company recorded operating losses of $38.1 million and $11.6 million, respectively. The company reports sales of $472 million for 1998 compared to $463 million for 1997. LIBERTY HOUSE: Court Gives Three More Months On Plan ---------------------------------------------------- At a bankruptcy court hearing, Hon. Lloyd King gave Liberty House and its creditors three more months to reach an agreement on a reorganization plan, free from distractions of lawsuits from two competing Liberty House boards of directors; they have until June 24 to develop a plan with his extension on a freeze on the legal battle, The Honolulu Star-Bulletin reported. Each of the boards filed the lawsuits last year, with each claiming to be in control of the company. The battle began with the appointment of a "new" board by major creditors last March, which then triggered the chapter 11 filing. Judge King praised the negotiating parties, including Liberty House, its owner, JMP Realty Corp.; major creditors led by Bank of America and the creditors' committee, representing about 2,000 small creditors, for their continued efforts to agree on a single plan. Attorneys for the negotiators have obtained a May 26 hearing date for a reorganization plan, which is the first indication that there is progress in the ongoing negotiations. (ABI 06-Apr-99) LIBERTY HOUSE: Order Authorizes D&O Insurance --------------------------------------------- By order entered March 25, 1999, The Honorable Lloyd King authorizes the debtor to purchase Directors and Officers Liability Insurance from National Union Fire Insurance Company of Pittsburgh, Pa. and allows postpetition indemnification claims of Officers and Directors as administrative expense claims. LOTTOWORLD: Hearing on Disclosure Statement ------------------------------------------- The hearing to consider the approval of the disclosure statement of Lottoworld, Inc. d/b/a Lottoworld Magazine will be held on May 13, 1999 at U.S. Bankruptcy Courthouse, Fort Myers Federal Building and Federal Courthouse, Room 4- 117, Courtroom D, 2110 First Street, Fort Myers, Florida. May 6, 1999 is fixed as the last day for filing and serving written objections to the disclosure statement. MCGINNIS GLOBAL: Hearing on Disclosure Statement ------------------------------------------------ In the case of McGinnis Global Fund, Ltd. and McGinnis Partners Focus Fund, LP, debtors, a hearing will be held on May 12, 1999 to consider the adequacy of the information contained in the Disclosure Statement. A hearing will be held at S.A. Courtroom #3, U.S. Post Office Bldg., 615 E. Houston St., San Antonio, Texas 78205. MOBILE ENERGY: Seeks To Retain Blackburn as Expert Witness ---------------------------------------------------------- Mobile Energy Services Company, LLC and Mobile Energy Services Holdings, Inc. seek authorization to employ and retain Thomas Blackburn, as litigation support/expert witness. The debtors believe that the employment of Blackburn will be beneficial to the estates given Blackburn's substantial expertise and experience with respect to pulp and/or paper manufacturing and processing. Blackburn will review the various Project Contracts and site issure related to agreements between the debtors and Kimberly-Clark. He will provide operational analyses of the agreement and with respect to operational issues. He will provide expert testimony as needed. Blackburn's current hourly rate is $175. Blackburn's services will not duplicate the professional services to be rendered by Forcap International, Inc., financial advisor to the debtors. PLANET HOLLYWOOD: Files Annual Report With SEC ---------------------------------------------- Planet Hollywood International Inc. filed its annual report for the fiscal year ended December 27, 1998 with the SEC. In 1998, the Company experienced declines in same unit revenues and disappointing operating results at its restaurants. As a result, the Company re-evaluated its long term growth strategy. As of December 27, 1998, the Company, together with its franchisees and licensees, operated 95 units, including 14 retail units only, located in 31 countries throughout the world, of which 60 are Company- owned. For the fiscal year 1998, the company reports a loss from operations of over $200 million compared to income of $4.9 million in 1997. Total revenues decreased to $387.0 million for fiscal 1998 from $475.1 million for fiscal 1997, a decrease of $88.1 million or 18.5% RAYTECH CORP: Announces 1998 Results ------------------------------------ Raytech Corporation (NYSE: RAY) reported record worldwide sales and earnings for the year ended January 3, 1999. The reported worldwide sales of $247.5 million exceeded 1997 sales of $234.5 million by $13 million or 5.5%. The increased sales were driven by increased penetration of the automobile original equipment market through the wet friction segment which accounted for $10 million of the increased sales. Inclusive in the overall wet friction growth was the acquisition of the outstanding shares of Advanced Friction Materials Company in April 1998 which positively increased revenues in the wet friction segment by $3.6 million. The favorable growth in the automobile OE market was offset by reduced sales in the heavy duty and agricultural markets due to the economic setbacks in South America, Europe and Asia. The aftermarket segment continued to improve sales performance in 1998 reporting increased sales of $5.2 million over 1997 results. The improved results are due to increased sales of this segment's filtration products. The dry friction operation, serving primarily the European market reported a sales decline of $2.2 million as compared to 1997. This decline is caused by a variety of factors, including negative foreign currency fluctuation and reduced sales due to weak economic conditions. Net income for the period increased 5.3% over 1997 with recorded net income of $16.4 million as compared to $15.5 million in the prior year. "Our record sales and record profits combined with continued commitment to world-class manufacturing quality and productivity, as demonstrated by our QS9000 and ISO 9001 achievements, made 1998 an excellent year," said Albert A. Canosa, President and Chief Executive Officer of Raytech Corporation. The dry friction segment opened a new manufacturing facility in Suzhou, China, Raybestos Friction Products (Suzhou) Co., Ltd. The facility was officially opened in September 1998 and will be fully operational in 1999. The plant will primarily supply Volkswagen's China operations. SABACOL INC: Order Extends Time To Assume/Reject Leases ------------------------------------------------------- By order entered on April 1, 1999, the U.S. Bankruptcy Court for the Central District of California, Northern Division, the debtor, the time in which the debtor, Sabacol, Inc. shall assume and assign or reject leases of nonresidential real property is extended to an including the date the debtor confirms a plan of reorganization. SERVICE MERCHANDISE: Court Grants Requests ------------------------------------------ The Tennessean reports on March 31, 1999 that the bankruptcy court has approved a host of initial Chapter 11 moves by Service Merchandise Co. Inc., including requests to pay operational wages and bills and to break certain lease agreements. The company continues to make changes to its upper-level management with two promotions, including one to fill its chief financial officer post. The jewelry and home products chain said yesterday it had received court approval to pay pre-and post-bankruptcy petition wages, salaries, commissions, workers' compensation, health benefits, life and disability insurance and other employee obligations. The court also authorized it to pay vendors and other providers in the ordinary course of business since March 15, and to honor service programs, including warranties, layaways and gift certificates. Requests by the company to reject, or break, certain leases, including real estate and aircraft, also were granted. "One aircraft has been returned to the lessor," said spokeswoman Ann Julsen of Sitrick and Company. The company also announced the appointment of Thomas L. Garrett Jr. to senior vice president and chief financial officer, succeeding Sam Cusano, who last week was named chief executive officer. Eric Kovats, 44, was appointed vice president of hardlines stores organization, assuming responsibility for the operations of the company's stores and replacing Harold Mulet, who has left the company. SERVICE MERCHANDISE: Report on DIP Financing -------------------------------------------- Bank Loan Report states on April 5, 1999 that according to documents filed with the Securities & Exchange Commission, Citibank as administrative agent and BankBoston as documentation agent have committed to $175 million each for Service Merchandise Co. while National City, Heller Financial and Jackson National Life Insurance Co. have each accepted $100 million commitments. Foothill Capital will provide $50 million. The new deal, which will be syndicated further, comprises a $100 million term loan and a $650 million revolver both of which mature June 30, 2001. A sublimit of $200 million is available for letters- of-credit. Pricing is set initially at Libor plus 225 basis points. The rate is adjustable to a low of Libor plus 175 basis points and to a high of Libor plus 250 basis points based on the company's average excess availability. Fees include a 50 basis points closing fee and a commitment fee of 37.5 basis points on the available revolving credit commitment. Back in January, with the company in violation of covenant agreements on an outstanding $900 million facility, the Service Merchandise board of directors gave embattled CEO Gary Wittkin and lead banker Chase the boot after the two set in motion a DIP facility, the same type of loan Citi is filing now. The rebel board then named turnaround specialist Bettina Whyte, a principal of Jay Alix & Associates, as interim CEO and approved Citi's first loan to keep the company afloat. Under Whyte, Service Merchandise announced it would close 134 of its 347 stores and said it would trim 270 jobs by cutting the work force at its headquarters in Brentwood and closing its Dallas distribution center. News of the move came as no great surprise to Citi bankers, who at the time of the January deal conceded that there was only a 50-50 chance that the company would survive the next year and are now granting the company a waiver on some of its covenants. But with the January facility secured by the same assets that backed the previous $900 million transaction, lenders insisted they could still collect the collateral or file a DIP facility at a later date. TCC INDUSTRIES: Files Notification of Late Filing ------------------------------------------------- TCC Industries, Inc. (TCC) (OTC Bulletin Board: TELC) announced that it has filed a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission requesting a 15-day extension for the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 1998. It is unlikely, however, that the Form 10-K will be filed by the extended date. The reasons for the request for extension were as follows: On January 8, 1999, TCC terminated most of the staff of its wholly owned subsidiary, Barton Creek Capital Corporation (BCC), and in March 1999, filed to withdraw BCC as a National Association of Securities Dealers broker dealer. The business ceased operations effective as of December 31, 1998, and as a result, TCC must revise its financial statements for the fiscal year ended December 31, 1998. In addition, as previously announced, TCC's wholly owned subsidiary, TeleCom Industrial Group, Inc. (TIG), sold the stock of its wholly owned subsidiary, Paladin Financial, Inc., in January 1999. TIG retained ownership of approximately $7.5 million of real estate loans and an approximately $2.4 million interest-only strip receivable, and their related bank debt. The bank has claimed a deficiency and default and has demanded that TIG purchase the Loans. TIG disputes the claim that any amount is owing to the bank and has so advised the bank and requested a calculation of its claim. TCC's financial statements for the fiscal year ended December 31, 1998 may need to be revised to reflect the amounts realized for the loans. Those amounts and the amount owed by the bank to TCC or by TCC to the bank cannot be ascertained at this time. In addition, the bank has claimed a default under a credit agreement secured by the $2.4 million interest-only strip and has demanded $1,548,000 as payment in full. The Company believes that the value of this strip is more than the debt and there is no deficiency. The staff of TCC's other wholly owned subsidiary, Allen- Lewis Manufacturing Company, has been reduced. The company's buildings have been listed for sale and alternate rental space is being investigated. THE PENN TRAFFIC: Disclosure Statement; $300M DIP Approved ---------------------------------------------------------- The Penn Traffic Company (OTC: PNFT) announced today that the Bankruptcy Court for the District of Delaware approved the Disclosure Statement for the Company's Joint Plan of Reorganization. Penn Traffic plans to mail the Disclosure Statement within the next two weeks to all of its creditors and interest holders impaired by the Joint Plan of Reorganization, to solicit votes for a confirmation hearing on the Joint Plan of Reorganization currently scheduled for May 27, 1999. Penn Traffic's Joint Plan of Reorganization implements the prenegotiated financial restructuring of the Company and will result in the substantial deleveraging of the Company by canceling its existing $1.13 billion of senior and subordinated notes and (i) distributing $100 million of new senior notes and 19,000,000 shares of new common stock to the holders of existing senior notes and (ii) distributing 1, 000,000 shares of new common stock and 6-year warrants to purchase 1,000,000 shares of new common stock having an exercise price of $18.30 per share to the holders of the existing senior subordinated notes. In addition, the restructuring provides that each 100 shares of Penn Traffic common stock outstanding, immediately prior to the restructuring, will be converted into one share of new common stock for a total of approximately 107,000 shares of additional new common stock. Penn Traffic also announced that the Bankruptcy Court had approved today its $300 million Debtor-In-Possession (DIP) credit facility with a bank group lead by Fleet Capital Corporation as agent. The DIP facility currently has more than $100 million in unused borrowing capacity. As previously announced, Penn Traffic has obtained Bankruptcy Court permission to continue during its Chapter 11 case to provide for payment in full of all obligations as they become due to its trade creditors that continue to support Penn Traffic with customary credit and terms. Penn Traffic has been making these payments since the commencement of the Chapter 11 case in early March 1999. Implementation of the restructuring remains subject to consummation of Penn Traffic's Joint Plan of Reorganization, which requires, among other things, Bankruptcy Court approval; and no assurance of such approval can be given. THOMSON RECOVERY: Double Day Announces Sale Approval ---------------------------------------------------- Double Day Inc. (OTC BB:DBDY), the parent and trading company of Thomson Recovery, announced Tuesday that Thomson's contract to sell $ 1.3 million of coke inventory to Brunswick Metals Co. has been approved by the Federal Bankruptcy Court March 30, 1999. According to Edward Kane, interim president and chief executive officer: "While this sale only slightly diminishes the high grade inventory at Thomson's Union Town facility, it provides a needed cash flow boost and guarantees the company's creditor payment plan and the ultimate emergence of Thomson from further Bankruptcy court proceedings." The terms of the sale are part of the public record and Kane did not elaborate any further on specifics. Kane did add, however, that the original terms had been enhanced at the last minute by an actual bidding session during the court proceedings. Further, in reference to the bidding, Kane said he was encouraged by demand for the company's product at the proceedings. Kane believes that this has created a greater opportunity in future coke sales of greater magnitude and profit. Double Day Inc. is a resource recycling firm that specializes in the conversion of non-hazardous industrial wastes and by-products into usable products, such as ferrous scrap briquettes, met coke pellets, metal free sand and coal briquettes which are marketed in the steel, foundry, cement and other energy intensive industrie UNITED COMPANIES: Meeting of Creditors -------------------------------------- In the case of United Companies Financial Corporation, et al., debtors, a meeting of creditors will take place on Friday April 23, 1999, 3:00 PM, 844 King Street, Room 2313, Wilmington, Delaware 19801. WESTMORELAND COAL: Files Annual Report With SEC ----------------------------------------------- Westmoreland Coal Co. filed its annual report for the fiscal year ended December 31, 1998. By order of the Bankruptcy Court entered on December 23, 1998, the Chapter 11 Cases were dismissed. The company reports cash provided by operating activities was $55 million and $19 million in 1998 and 1997, respectively. The company reports coal revenue in 1998 of $44 million compared to $47 million for 1997. The company reports a net loss of $6 million for 1998 compared to income of $14 million for 1997. In dismissing its bankruptcy, the company entered into a Master Agreement with the Funds, the UMWA, and the Equity Committee. The Company paid approximately $5.7 million to holders of undisputed claims in early January, 1999. The Company agreed to pay in full all arrearages, with interest, under the Coal Industry Retirement Health Benefit Act of 1992 ("Coal Act"). Pursuant to this commitment, the Company paid approximately $18.1 million to the UMWA 1992 Benefit Plan and approximately $19.4 million to the UMWA Combined Fund and together with the 1992 Plan, the in early January, 1999. The Company agreed to pay $4 million to the Funds in full satisfaction of all other asserted claims for damages, liquidated damages, penalties, charges, fees and costs. The Company made this payment on February 1, 1999. The Company agreed to pay its future obligations to the Funds as and when due. The UMWA 1974 Pension Trust ("1974 Plan") had asserted a claim for withdrawal liability in the amount of approximately $13.8 million against the Company to which the Company objects. The Company and the 1974 Plan agreed to resolve this dispute through arbitration, as provided by law. As required under the Coal Act, the Company agreed to secure its obligation to provide retiree health benefits under the 1992 Plan by posting a bond, letter of credit, or cash collateral in the amount of three years benefits (or $20.8 million). The Company has 60 days from January 4, 1999 to provide this security. In addition, the Company agreed to secure its obligations to the Funds by providing the Funds with a Contingent Promissory Note. The original principal amount of the Note is $12 million; the principal amount of the Note decreases to $6 million in 2002. The Note is payable only in the event the Company does not meet its Coal Act obligations, fails to meet certain ongoing financial tests specified in the Note, fails to maintain the required balance in the escrow account established under an escrow agreement, or fails to comply with certain covenants set forth in a security agreement. WHITE ROSE: Reports Improved Operating Results ----------------------------------------------- The Canada Newswire reports on April 5, 1999 that White Rose Crafts and Nursery Sales Limited announced a significant increase in income before restructuring charges for the 13 week period ended January 31, 1999. Operating profit totaled $3.5 million during the latest period, up from $640,000 for the year earlier period. The higher operating profit, resulting primarily from improved margins and a lower cost structure for the business, occurred despite a 12% decline in revenue. Revenue for the second quarter decreased to $50.3 million from $57.0 million the prior year. Same store sales decreased 10.9% during this period. This decrease is due primarily to lower inventory levels maintained during the peak Christmas season as a result of the Company's status under the Companies' Creditors Arrangement Act. Revenue for the 26-week period ended January 31, 1999 was $88.7 million, down 8.7% from $97.1 million for the 26-week period ended January 25, 1998. For the 13-week period ended January 31, 1999, the Company incurred a loss of $15.7 million compared to net income of $640,000 reported in second quarter of 1998. Included in the loss for the current quarter are restructuring charges of $17.6 million and a writedown of capital assets by $1.6 million. For the 26-week period ended January 31,1999, the Company incurred a loss of $20.7 million compared to a loss of $4.3 million for the 26-week period ended January 25, 1998. ********* 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 * * *