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/raid1/www/Hosts/bankrupt/TCR_Public/990503.MBXT R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 4, 1999, Vol. 3, No. 85 Headlines BN1 TELECOMMUNICATIONS: Disclosure Statement Hearing Set BRAZOS SPORTSWEAR: Gulf Coast Sportswear Division Sale CFS: Earnings and Expenses For First Quarter CITYSCAPE: Disclosure Statement Ok'd After Plan Amended CORNUCOPIA: Reports Agreement To Acquire Stockscape COVENTRY HEALTH CARE: Annual Meeting of Shareholders DEGEORGE HOME: Blames Lender DOW CORNING: Committee Re-Constituted ELDER BEERMAN: Earnings Outlook Up FACTORY CARD: Reports Year-End Results FAVORITE BRANDS: Final Approval of $100 M Financing FPA MEDICAL: Hearing on Confirmation Adjourned IMAGYN MEDICAL: Comments on Outstanding Interest Payments INTEGRATED PACKAGING: Files Annual Report INTERACTIVE NETWORK: Reports Exchange Agreement MONTGOMERY WARD: Files Plan of Reorganization MONTGOMERY WARD: Restructuring Transactions Under Plan OXFORD HEALTH PLANS: Quarter Results PHP HEALTHCARE: Taps Shulman, Rogers To Collect on Debt PHYSICIANS RESOURCE: Stockholder Files Derivative Suit PITTSBURGH PENGUINS: Judge Appoints Mediator PONDEROSA FIBRES: Seeks Approval of Settlement STORMEDIA: Taps Dove Brothers as Auctioneers SUN HEALTHCARE: Reports on Operations SYSTEMSOFT CORP: Committee Taps Counsel THE LOEWEN GROUP: Notice of Annual Meeting USTEL, INC: Sale of Substantially All Assets VENCOR: Elects Not To Make Interest Payment WILSHIRE FINANCIAL: Still Looking For Business WORLDCORP INC: Seeks Authority To Sell Shares of InteliData ZENITH: Extends Credit Agreement Meetings, Conferences and Seminars ********* BN1 TELECOMMUNICATIONS: Disclosure Statement Hearing Set -------------------------------------------------------- A hearing to consider approval of the Disclosure Statement of BN1 Telecommunications, Inc. is set for May 14, 1999 at 10:30 AM before the Honorable Marilyn Shea-Stonum, Room 250, US Courthouse, 2 South Main Street, Akron, Ohio. BRAZOS SPORTSWEAR: Gulf Coast Sportswear Division Sale ------------------------------------------------------ The debtors, Brazos Sportswear, Inc., Brazos Sportswear, LLC , Brazos Embroidery, Inc. and Morning Sun, Inc. seek entry of an order authorizing the sale of substantially all of the operating assets of the debtors' Gulf Coast Sportswear Division ("GCS Assets"). To date, the debtors state that the offer of G.C. Sportswear, LLC for a price of approximately $8.25 million in cash plus the assumption of certain liabilities constitutes the highest and best offer for the GCS Assets. Any higher bid must provide for cash consideration of at least $250,000 higher than the cash consideration set forth in the Purchase Agreement. CFS: Earnings and Expenses For First Quarter -------------------------------------------- The Daily Oklahoman reports on April 28, 1999 that in a filing with the U.S. Bankruptcy Court for the Northern District of Oklahoma, Commercial Financial Services reported the following earnings and expenses for the first quarter of 1999: Revenue $17.29 million Restructuring Charges $16 million Operating Expenses $31.2 million Net Loss $42.54 million CITYSCAPE: Disclosure Statement Ok'd After Plan Amended ------------------------------------------------------- The court in White Plains, N.Y., approved Cityscape Financial Corp.'s disclosure statement for its first amended reorganization plan and scheduled a confirmation hearing for June 9. According to the April 27 order, copies of the plan and plan ballots will be sent to all interested parties within the week, with votes due back by June 1, the same day as the objection deadline. The consumer finance company filed an amended plan on March 26 that slashed the treatment afforded to the holders of senior note claims, general unsecured claims and subordinated debenture claims after failing to line up exit financing. Subsequently, Cityscape filed further amendments to the plan on April 27. The company made the revisions "in light of the fact that they have completed the preparation of their 1998 year-end financial information and are in the process of completing the preparation of their financial information for the first quarter of 1999." (The Daily Bankruptcy Review and ABI Copyright c May 3, 1999) CORNUCOPIA: Reports Agreement To Acquire Stockscape --------------------------------------------------- On March 2, 1999, the Company announced that it had reached an agreement in principle for the acquisition of a privately-held Internet investment research provider, Stockscape Technologies Ltd. which was subject to completion of due diligence by both companies and the execution and delivery of definitive documentation. On April 26, 1999, the Company and Stockscape signed a definitive agreement to proceed with the acquisition of Stockscape and the reorganization of the Company. The acquisition will be accomplished by the issuance of 10,000,000 post-consolidation shares of Cornucopia Resources Ltd., at a deemed price of C$0.50 per share for aggregate consideration of C$5,000,000. Further conditions precedent to the acquisition are: the consolidation of the Company's common share capital on the basis of ten (10) old shares for one (1) new share, a change of name of the Company from Cornucopia Resources Ltd. to Stockscape Technologies Ltd.; restructuring of the Board of Directors; and commitments for a 4,000,000 unit financing on a post- consolidation basis at C$0.50 per unit to raise maximum proceeds of C$2,000,000. COVENTRY HEALTH CARE: Annual Meeting of Shareholders ---------------------------------------------------- The Annual Meeting of Shareholders of Coventry Health Care, Inc., a Delaware corporation, will be held on Thursday, June 17, 1999, at 9:30 a.m., Eastern Daylight Savings Time, at the offices of Epstein Becker & Green, P.C., Seventh Floor, 1227 25th Street, N.W., Washington, D.C. 20037-1156, for the following purposes: 1. To elect four Class II Directors to serve until the annual meeting of shareholders in 2002; 2. To ratify the selection of Arthur Andersen LLP, certified public accountants, as the Company's independent auditors for the year ending December 31, 1999. DEGEORGE HOME: Blames Lender ---------------------------- The Hartford Courant reports on April 29, 1999 that DeGeorge Home Alliance touted itself as a runaway success. Backed by a national lender, the company took an unusual concept in home financing and increased its sales nearly sevenfold in the past 18 months. But Peter R. DeGeorge, the company's chairman and chief executive officer, confirmed Wednesday what had been rumored in recent weeks: The growth is over, the company is closed and a bankruptcy filing is no more than a week or two away. DeGeorge angrily blamed his primary lender, Residential Funding Corp., for cutting off his financing last year and then poisoning his reputation among other lenders with a damaging lawsuit filed in January. "They acted like a bunch of thugs," said DeGeorge, a local entrepeneur and majority stockholder in DeGeorge Financial Corp., a publicly traded company that owns DeGeorge Home Alliance and some other real estate subsidiaries. "It's basically over," DeGeorge said. DeGeorge said that a stream of lies and misinformation were spread about his company by Residential Funding, a subsidiary of General Motors Acceptance Corporation. Residential Funding filed suit in January, accusing DeGeorge of failing to meet financial goals and of abandoning more than 2,100 construction mortgage clients. Residential, which is making good on the loans, says it is seeking $88 million in damages to cover the residential loans that DeGeorge approved but did not fully fund. DeGeorge has countersued, basically accusing the giant lender of destroying his company, by cutting off credit in violation of their contract. He said the damages caused by Residential could top $1 billion. Lorna Gleason, the general counsel of Residential, said Wednesday her company stood by the claims in its lawsuit: Her company gave DeGeorge notice in September it would not extend credit beyond its $300 million credit limit or the June 1 end of the contract, whichever came first. It cut off funding in December, when DeGeorge exceeded the $300 million limit of its revolving credit line, she said. The reason for the cutoff was the oldest story in the lending trade -- the lender no longer had faith in the borrower, she said. "The financial performance of the company was not meeting their representations or our expectations," she said. "We told them we were not comfortable with extending more credit. We told them we wanted out." Residential Funding contends that DeGeorge abruptly stopped servicing 2,100 of its construction loans the day after Christmas, trying to pressure Residential into continuing DeGeorge's credit. "They literally abandoned those customers on our doorstep," she said. DeGeorge reported a $17.7 million loss in 1997 and a $20 million loss in the first nine months of 1998. Residential Funding panicked, even though the losses were attributable to a massive expansion, DeGeorge said. The lender ignored the fact that DeGeorge exceeded its business goals: its sales force grew from 70 to 700; sales increased from 150 to 1,000 a month, he said. DeGeorge hired Lehman Brothers, the investment banking firm, to find a new equity investor and source of credit, but Residential Funding had effectively choked off credit by its allegations, said Gregory J. Hendel, DeGeorge's president and chief operating officer. (Hartford Courant-04/29/99) DOW CORNING: Committee Re-Constituted ------------------------------------- For a third time, the United States Trustee for Region IX has reconstituted the Official Committee of Unsecured Creditors appointed in the Debtor's chapter 11 case. The current members are: Ronald M. Goldstein Appaloosa Management, L.P. 26 Main St., 1st Floor Chatham, NJ 07928 Peter A. Langerman Franklin Mutual Advisers, Inc. 51 John F. Kennedy Parkway Short Hills, NJ 07078 Jeffrey H. Aronson Angelo, Gordon & Co. 245 Park Avenue New York, NY 10167 Janice M. Stanton Contrarian Capital Management, LLC 411 West Putnam Ave., Suite 225 Greenwich, CT 06830 Paul J. Coughlin, III Comac Partners, LP Comac International, N.V. One Greenwich Office Park Greenwich, CT 06831 John W. Stevenson The Bank of New York 101 Barclay Street New York, NY 10286 ELDER BEERMAN: Earnings Outlook Up ---------------------------------- The Cincinnati Enquirer reports on April 21, 1999 that Elder-Beerman Stores Corp. Tuesday posted higher earnings for fiscal 1998 - its first full year out of bankruptcy - and said it is positioning itself for years of steadier expansion. "1998, if you put a headline on it, was a year of big growth," said Scott Davido, executive vice president and chief financial officer at Elder. "This is a year when we step back, we take a breath, and we make sure our execution is as good and sharp as it can be." The Dayton, Ohio-based retailer, which emerged from Chapter 11 bankruptcy protection in December 1997, said earnings after factoring in gains and charges rose to $25.5 million, or $1.76 a diluted share. That compares with a net loss of $29 million for fiscal year 1997. Earnings before gains and charges rose to $13.8 million, or 95 cents a diluted share. The charge relates to integration costs of Elder's Stone & Thomas acquisition last year. Gains are related to the sale of real estate, reorganization income and tax benefits. The $13.8 million figure excludes those items and is based on a 38 percent income tax rate. Sales, which include receipts from the 11 Stone & Thomas stores, advanced 8.8 percent, to $632.4 million from $581.4 million in 1997. Analysts said the performance is in line with expectations for an extremely active year. Since emerging from Chapter 11 bankruptcy, Elder posted a secondary stock offering and opened 14 new department stores, which include Stone & Thomas. It runs 60 department stores. Elder-Beerman plans to open three stores in 1999, each following a prototype that involves a smaller format but equal volume. Elder also is developing a process to closely track sales and replenishment at each store. FACTORY CARD: Reports Year-End Results -------------------------------------- Factory Card Outlet Corp. (Nasdaq: FCPYQ) announced today results for its fiscal year ended January 30, 1999. Net loss for the 52-weeks ended January 30, 1999 was $28.4 million or $3.82 per fully diluted share compared to net income of $2.2 million or $0.28 per fully diluted share for the 53-weeks ended January 31, 1998. The Company's results for the latest fiscal year include a provision of $11.3 million or $1.52 per share (diluted) for merchandise which is to be discontinued from the Company's ongoing assortment, as well as inventory with excess quantities on hand and certain seasonal inventory remaining from past holidays; and a charge of $3.6 million or $0.49 per share (diluted) for lease termination costs related to executed leases for new stores which the Company no longer plans to operate, employee severance and the write-off of new store closing costs and additional depreciation expense resulting from the change in the depreciable lives of certain technology equipment. Sales for the 52-weeks ended January 30, 1999 rose approximately 30% to $226.5 million from $174.5 million for the 53-weeks ended January 31, 1998. On a comparable store basis, sales for the fiscal year rose 0.8%. Comparable store sales were adversely impacted during the Spring of 1998 by an uneven flow of merchandise resulting from the Company's conversion to a new distribution facility and during the Fall of 1998 by lower seasonal sales partially resulting from significant levels of carryover merchandise from prior years. Stewart M. Kasen, the Company's Chairman, President and Chief Executive Officer, said, "We have taken several steps since the commencement of the Company's chapter 11 case on March 23, 1999 to improve our financial and operating position. These steps include our previously announced $50 million debtor-in-possession financing facility and the closing of 27 stores beginning in May 1999. The repayment of the previous credit facilities with the debtor-in- possession financing will result in an extraordinary charge of $1.3 million and the closing of the 27 stores will result in a charge of approximately $7.0 million in the first quarter of fiscal 1999. In addition, landlord claims arising from the rejection of leases for these closed stores may aggregate, but not exceed, $5.0 million. Factory Card Outlet is a chain of company owned stores offering a vast assortment of party supplies, greeting cards, gift wrap and other special occasion merchandise at everyday value prices. FAVORITE BRANDS: Final Approval of $100 M Financing --------------------------------------------------- Favorite Brands International Inc., the nation's fourth largest confectionery company, today announced it was granted final court approval for $100 million debtor-in- possession (DIP) financing. The company filed for Chapter 11 protection on March 30, 1999 and an interim order approving the facility was issued the following day. The financing is being led by Chase Manhattan Bank. The company said that it is experiencing strong sales of its newly licensed Fruit Snacks products, which are sold in grocery and mass merchandising stores nationwide. Additionally, the company's Trolli branded gummies achieved record sales in March, led by its new novelty items Trolli Mini Burger and Brite Crawlers. Favorite Brands' products include Jet-Puffed(R) Marshmallows, Farley's(R) Fruit Snacks and Fruit Rolls, Trolli(R) Gummies, Farley's(R) General Line Candy, Sather's(R) Packaged Candy and Snacks, a variety of seasonal confections and Favorite Brands Ingredients. The company is based outside Chicago, in Bannockburn, Illinois, and operates 13 facilities in 9 states with approximately 4,000 employees. In fiscal 1998, the company's revenues exceeded $750 million. FPA MEDICAL: Hearing on Confirmation Adjourned ---------------------------------------------- FPA Medical Management Inc., et al., adjourned the hearing on confirmation of the Second Amended Joint Plan of Reorganization scheduled for May 11, 1999 until May 13, 1999 at 6:00 PM before the Honorable Peter J. Walsh, Chief US Bankruptcy Court, 824 market Street, 6th Floor, Wilmington, Delaware. IMAGYN MEDICAL: Comments on Outstanding Interest Payments --------------------------------------------------------- IMAGYN Medical Technologies, Inc. (OTC Bulletin Board: IMTI) commented that it did not pay before the end of the April 30th grace period, the scheduled April 1, 1999 interest payment on its $110 million 12 1/2% Senior Subordinated Notes. In addition, the Company stated that it also did not pay the approximately $2.1 million of accrued interest on the Company's $50 million Convertible Subordinated Debentures also due as a result of an extension, on April 30, 1999. IMAGYN continues to work with its financial advisor BT Alex. Brown Inc. to explore available alternatives with respect to a possible reorganization, restructuring or recapitalization of the Company. The Company is in discussions with its current lenders to find other liquidity solutions. The Company stated that under the terms of the governing indenture and the Company's Senior Secured credit agreement, the indenture trustees, the holders of the Notes and Debentures, and the Company's senior debt lenders will have the right to declare the $110 million principle amount of the Notes, the $50 million principle amount of the Convertible Subordinated Debentures and approximately $47.5 million principal amount of the senior debt together with accrued and unpaid interest, immediately due and payable. If the above obligations are accelerated, the Company's business will be materially and adversely impacted, and as a result, it may be forced to seek protection under federal bankruptcy laws. IMAGYN Medical Technologies, Inc. is a designer, manufacturer and marketer of urological, gynecological and general surgery medical products for the health care market. INTEGRATED PACKAGING: Files Annual Report ----------------------------------------- Integrated Packaging Assembly Corporation is an independent North American semiconductor packaging foundry. The Company receives wafers from its customers and assembles each integrated circuit in a protective plastic package. Revenues increased 18% to $23.3 million in 1998, from $19.7 million in 1997. The company reports a net loss of $29.7 million for 1998 compared to a net loss of $15 million in the previous year. In December 1998, the Company obtained an additional $7 million bank line of credit. This line, which is guaranteed by a third party, is available to finance operations and working capital needs through May 31, 1999. The line provides for monthly borrowings and interest acquired at the bank's prime rate, (7 3/4% per annum at December 31, 1998). INTERACTIVE NETWORK: Reports Exchange Agreement ----------------------------------------------- On April 23, 1999, Interactive Network Inc. consummated the transactions contemplated by the Exchange Agreement entered into between the Registrant, TCI Programming Holding Company, III, TCI Development LLC, National Broadcasting Company, Inc., Sprint Corporation and Motorola, Inc. dated as of April 15, 1999. MONTGOMERY WARD: Files Plan of Reorganization --------------------------------------------- Montgomery Ward & Co., Incorporated announced on April 30, 1999 that it filed a Plan of Reorganization and Disclosure Statement with the United States Bankruptcy Court in Delaware which, if approved, will allow the company to emerge from bankruptcy in August 1999. The Plan is in the furtherance of the agreement in principle announced earlier this year between the Creditors' Committee, GE Capital and Wards. GE Capital, Wards' majority shareholder and substantial creditor, is a co-proponent of the Plan along with Wards. The Plan provides for fair and equitable treatment of all stakeholders and will allow Wards to successfully reorganize and emerge from Chapter 11, as previously announced. The Bankruptcy Court has scheduled a confirmation hearing for July 15, 1999. If the Plan as filed is confirmed, funding for the distribution to unsecured creditors will be provided through a $650 million deposit in an escrow account on April 30, 1999. When Wards emerges from bankruptcy, this money and the interest it earns will be distributed to those creditors as specified in the Plan. As part of the restructuring provided for in the Plan, GE Capital will acquire The Signature Group, the direct marketing arm of Wards. Signature, which was not part of Wards' Chapter 11 case, will continue to have the right to market to Wards' customers. In the Plan, GE Capital will obtain rights to all the equity in the reorganized retailer in exchange for its claims against Wards. Key accomplishments which have contributed to the Company's turnaround include: -- Focusing on one core strategy -- Wards full line retail stores; -- Closing more than 100 under-performing locations; -- Developing and successfully introducing a new store prototype; -- Upgrading merchandise offerings and focusing on customer service; -- Introducing a new marketing strategy targeted at core customers; -- Enhancing operations and technology infrastructure; and -- Cutting costs on a company-wide basis. The Company's three initial prototype stores have reflected sales increases over the prior year in excess of 40 percentage points above the combined performance of the entire chain since their opening in September 1998. Wards will convert 40 additional stores to the new prototype in 1999 and intends to remodel half the chain in the next two years. In 1998, Wards dramatically reduced its losses from continuing operations (before taxes and reorganization costs and Signature earnings) and showed an improvement of $585 million in earnings from continuing operations over 1997. Gross margin dollars, a major focus of the Company, were up 18% over 1997 with increased margins in nearly every merchandise category. The Company anticipates a positive EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) in Fall 1999 and for the year 2000, and profitability in 2001. MONTGOMERY WARD: Restructuring Transactions Under Plan ------------------------------------------------------ The Joint Plan of Montgomery Ward is premised on the formation of a new Limited Liability Corporation, known as the New Retailer. The New Retailer will receive all of Montgomery Ward's retail assets designated by the Proponents, excluding Signature and other Retained Assets, including the excess funds from the Pension Plan. Montgomery Ward will issue a New Note to the New Retailer for the fair market value of the assets it gives up less $10,000,000. Montgomery Ward will distribute the LLC interests in the New Retailer in compromise the GE Capital Non-Trade Claims, leaving GE Capital as the owner of the New Retailer. Montgomery Ward, as the owner of Signature and the holder of roughly $233,000,000 (before payment of approximately $89,000,000 in Federal taxes) of excess funds from the Pension Plan, will sell Signature to GE Capital for $885,000,000 in a separate transaction. The $650,000,000 escrowed by GE Capital on April 30, 1999, is a set-off to the $885,000,000 purchase price. Montgomery Ward will satisfy creditors' claims (excluding the GE Capital Non- Trade Claims) from the cash to which its estate has been reduced, and any residual amounts will revert to GE Capital. The Debtors indicate that they intend to seek substantive consolidation of their estates (excluding Lechmere) with MW Holding for all purposes related to the Joint Plan, including voting, confirmation and distribution. Confirmation of the Joint Plan is predicated on the Debtors' obtaining entry of an order permitting substantive consolidation. The Joint Plan proposes a compromise of Montgomery Ward's $423,024,780 Intercompany Claim against Lechmere to the extent necessary to permit distribution of a 14% to 14.5% dividend to Lechmere creditors. The Debtors insist that Montgomery Ward's claim against Lechmere is fully secured and would withstand any attack under theories attempting to recharacterize the loan as an equity contribution or otherwise equitably subordinate the Intercompany Claim, and believe that any litigation would wind-up with (i) Montgomery Ward holding an allowed, albeit significantly undersecured, $113,000,000 claim and (ii) unsecured Lechmere creditors still out of the money. This compromise pays out roughly up to $10,000,000 to Lechmere creditors in exchange for a complete settlement of all contests concerning the Intercompany Claim. The Joint Plan grants broad releases to the Creditors' Committee, the Post-Effective Date Claims Resolution Committee, the GE Capital Entities, the DIP Lenders, and all of these parties' agents, advisors, accountants, investment bankers, consultants, attorneys and other representatives of any of the foregoing or of the Debtors, and operates as an injunction against Class 3 Creditors who accept distributions under the Joint Plan. To fund payment of all administrative claims (including payment of all DIP Facility borrowings) as required under the Plan, GE Capital says that it will arrange any Borrowing Facility that may be required. Montgomery Ward says that, based on preliminary discussions with potential lenders, the Debtors believe they will be able to negotiate and effectuate an Exit Financing Facility to fund the New Retailer's on-going working capital needs. The Debtors believe, based on their ability to meet certain borrowing base criteria and GE Capital's guarantee of a portion of the facility, they will obtain an Exit Financing Facility in the form of revolving credit with a maturity date of March 31, 2003, in the aggregate principal amount of $1,300,000,000. All Montgomery Ward officers currently employed will retain their positions with the New Retailer, at the same rate of pay. The consummation of the Joint Plan is not deemed to be a change in control as that concept may be used in any employment agreement to which the Debtors or GE Capital are a party. GE Capital will designate the individuals who will serve as New Directors for the New Retailer. Further, the Joint Plan amends the Employee Retention and Incentive Program to provide that, notwithstanding the occurrence of the Confirmation Date, no Emergence Incentive Bonus Payments will be made to Executives. The Proponents tell creditors that the Joint Plan is the product of extensive negotiation among the Debtors, GE Capital and the Creditors' Committee. The Proponents are convinced there is no better plan for the reorganization of the Debtors. (Montgomery Ward Bankruptcy News Issue 39 5/1/99; Bankruptcy Creditors' Services) OXFORD HEALTH PLANS: Quarter Results ------------------------------------ Oxford Health Plans, Inc. (NASDAQ:OXHP) announced net earnings of $3.2 million, or $0.04 per common share, for the quarter ended March 31, 1999. The first quarter results were favorably affected by a one-time after tax gain of $7.8 million associated with the disposition of its New York Medicaid business. Excluding the impact of the one-time gain, Oxford posted a loss of $4.6 million, or $0.06 per common share. "The Company's first quarter operating results are better than previously expected and reflect Oxford's improved premium pricing and initiatives to control medical and administrative spending," said Oxford Health Plans' Chief Executive Officer, Norman C. Payson, M.D. "Based on our first quarter results, we now believe Oxford can report positive earnings per share for 1999, although we continue to expect losses in the second quarter, principally due to seasonal increases in health care costs and small increases in administrative spending as a percentage of operating revenue," stated Dr. Payson. Revenues for the quarter ended March 31, 1999 were $1.06 billion, down 6.0% from the fourth quarter of 1998. As of March 31, 1999, Oxford's total membership was approximately 1,691,000 compared to 1,881,400 at December 31, 1998. This reduction resulted from withdrawals from the New York and Pennsylvania Medicaid programs (97,800 members), decreases in Medicare membership (42,700 members) and reductions in commercial membership (49,900 members). Founded in 1984, Oxford Health Plans, Inc. provides health plans to employers and individuals in New York, New Jersey and Connecticut, through its direct sales force, independent insurance agents and brokers. Oxford's services include traditional health maintenance organizations, point-of-service plans, third-party administration of employer-funded benefits plans and Medicare plans. PHP HEALTHCARE: Taps Shulman, Rogers To Collect on Debt ------------------------------------------------------- The debtor, PHP Healthcare Corporation, seeks court authority to employ Shulman, Rogers, Gandal, Pordy & Ecker, PA as special counsel for the debtor to pursue Jack M. Mazur, the debtor's former CEO, who allegedly owes the debtor more than $4.8 million in outstanding and unrepaid loans. PHYSICIANS RESOURCE: Stockholder Files Derivative Suit ------------------------------------------------------ On April 20, 1999, Robert Alpert, a stockholder of Physicians Resource Group, Inc. filed in the state district court of Harris County, Texas a derivative lawsuit on behalf of the Company. The Suit names David Meyer, M.D. and Lucius E. Burch, III as defendants. Claims set forth in the pleadings include claims that the Company's Board of Directors is improperly constituted and claims that the Company's previously announced restructuring activities are not in the best interests of the Company and its stockholders. Relief sought includes (i) a request that the Court compel a special meeting of stockholders to allow the election of new directors of the Company, (ii) a request for an injunction seeking to enjoin the Company from pursuing its previously announced restructuring activities and (iii) payment of damages by Dr. Meyer and Mr. Burch to the Company. PITTSBURGH PENGUINS: Judge Appoints Mediator -------------------------------------------- U.S. Bankruptcy Judge Bernard Markovitz on Friday appointed a mediator, U.S. Bankruptcy Judge Bruce McCullough, to be available to both sides of the Penguins-SMG conflict outside of court. One side, headed by retired hockey star Mario Lemieux, wants to renegotiate the Penguins' Civic Arena lease and get a new arena by the 2003 season. Daniel Shapira, attorney for landlord SMG, said the company has a number of concerns about Lemieux's reorganization plan, which includes the potential for a government takeover of the lease. He said the team is obligated to play at the Civic Arena until 2012. "There is a clear and distinct possibility that the lease will remain in effect as it currently stands,'' Shapira said. Lemieux on Friday introduced his 10 business partners in his bid to purchase the Pittsburgh Penguins team: Ronald Burkle, Robert Brooks, Angelo Falconi, Mark Hofmann, Robert Hofmann II, Anthony Liberati, William Kassling, Madison Realty Group, Millstein Industries and Bruce Zoldan. Markovitz said the creditors can vote on the Lemieux plan; no vote has been scheduled as yet, according to the Associated Press. The National Hockey League has set a deadline of May 31; if no reorganization plan has been approved, the league has threatened to dissolve the franchise. (ABI 03-May-99) PONDEROSA FIBRES: Seeks Approval of Settlement ---------------------------------------------- The debtor, Ponderosa Fibres of Washington, LP seeks court approval of a settlement among, the debtor, Ponderosa Fibres of America, Inc., Parson's Corporation, Parson's Main, Inc., St. John's Place Consultant's Inc. and the unofficial Bondholders' Committee. The original claim filed by Parson's Main Inc. (PMI) was in the amount of $22.9 million and arose from a certain contract for the engineering , procurement, construction and commissioning of a mixed office waste chemical fiber deinking mill (the "EPC Contract") Pursuant to the terms of the settlement the Parsons Parties shall be obligated to pay the debtor the sum of $26.6 million in immediately available funds in settlement of the debtor's claims for liquidated damages under the EPC Contract. PMS's claim shall be allowed as a Class 4 claim under the amended plan in the amount of $13.6 million; and any secured claim shall be withdrawn. The PMI debt and the Ponderosa Debt shall be offset, and PMI shall pay to the debtor $13 million in immediately available funds, which sum the debtor shall distribute under the plan as litigation proceeds. STORMEDIA: Taps Dove Brothers as Auctioneers -------------------------------------------- The debtors, StorMedia Incorporated and debtor affiliates seek authority to employ Dove Brothers, LLC as their auctioneers. The firm will conduct several piecemeal auctions of certain of debtors' domestic and foreign assets. The debtors tell the court that it is necessary for the debtors to employ an auctioneer because it is the most efficient manner in which to dispose of certain assets which are no longer of use to the debtors. Dove shall charge a 10% Buyer's Premium at the auction for its own account as its compensation for auction services. Debtors have authorized an expense budget not to exceed $100,000 for actual and reasonable costs of the auction. SUN HEALTHCARE: Reports on Operations ------------------------------------- Sun Healthcare Group, Inc. amended its Annual Report on Form 10-K for the fiscal year ended December 31, 1998 by attaching an exhibit, the financial data schedule. The company reports total revenues of $3,088,460 and a net loss of $753,693. SYSTEMSOFT CORP: Committee Taps Counsel --------------------------------------- The Official Committee of Unsecured Creditors request that the court enter an order authorizing the employment of the law firm of Hanify and King, PC as counsel to the Committee. The firm will assist in the investigation of the acts and financial condition of the debtor, give advice with respect to any offers to purchase debtor's assets; give advice with respect to any proposed plan; assist in preparing pleadings and documents; determine the existence of causes of action; analyze the status and priority of claims; and direct activities of accountants or other professionals. THE LOEWEN GROUP: Notice of Annual Meeting ------------------------------------------ The Annual General Meeting of the holders of Common shares without par value of The Loewen Group Inc. will be held at the Radisson Hotel Burnaby, 4331 Dominion Street, Burnaby, British Columbia, Canada, at 10:30 a.m. on Friday, the 4th day of June, 1999, for the following purposes: 1. To receive the report of the Directors to the shareholders and the financial statements of the Company for the year ended December 31, 1998, together with the report of the auditors thereon; 2. To elect two Directors for terms of office as more particularly described in the accompanying Proxy Statement and Information Circular; 3. To appoint auditors for the ensuing year; 4. To authorize the Directors to fix the remuneration to be paid to the auditors; 5. To consider and, if thought advisable, to approve an amendment to the 1994 Outside Director Plan to increase the number of Common Shares issuable thereunder by 200,000 Common Shares. USTEL, INC: Sale of Substantially All Assets -------------------------------------------- The debtors, USTEL, Inc. and Arcada Communications Inc. are seeking approval of a sale of substantially all of the assets of the debtors to Rocky Mountain Internet, Inc. The consideration offered by Rocky Mountain Internet is $17 million cash with an adjustment up or down based on a comparison of the debtors' February revenues with revenues in the month prior to closing of a sale. The assets include equipment and other tangible personal property, customer accounts, intellectual property, including licenses and sublicenses; certain leases and executory contracts, deposits and prepayments , franchises and rights from government agencies and state PUC Authorizations and FCC registrations. VENCOR: Elects Not To Make Interest Payment -------------------------------------------- Vencor, Inc. (NYSE: VC) announced that it has elected not to make the interest payment of approximately $14.8 million due today on the Company's $300 million 9 7/8% Guaranteed Senior Subordinated Notes due 2005 (the "Notes"). The indenture under which the Notes were issued provides for a 30-day grace period before an Event of Default will occur due to the nonpayment of interest. If the interest payment is not made within the 30-day grace period, the Notes may be declared immediately due and payable. However, if the Company's senior bank debt has not been accelerated, the Notes may not be accelerated until five days after notice is given to the Company's senior bank lenders. The Notes are a general unsecured obligation of the Company and rank subordinate in right of payment to the Company's senior bank debt and lease obligations. As previously announced, the Company continues to negotiate with its senior bank lenders and with Ventas, Inc. (NYSE: VTR) in an effort to obtain a sustainable capital structure for the Company and a reduction in the rents paid by the Company to Ventas. The Company also intends to negotiate with the holders of the Notes as part of this effort. Vencor is a long-term healthcare provider operating hospitals, nursing centers and contract ancillary services in 46 states. WILSHIRE FINANCIAL: Still Looking For Business ---------------------------------------------- The National Mortgage News reports on April 26, 1999 that Wilshire Financial Services Group announced that courts in Delaware had approved its bankruptcy reorganization plan. Less than a week later, Wilshire senior vice president Zan Hamilton was at the MBA National Secondary Market conference, looking for new business. Bankruptcy filing is the beginning of the end for most firms, but for Wilshire, it represents a new beginning after volatility in the capital markets wiped out the firm's equity last fall and forced a restructuring of long- term debt. Unlike other firms that securitize subprime mortgages, Wilshire's trouble did not disrupt its access to warehouse credit and Wall Street financing. And Wilshire's subsidiaries continued to originate, buy and service subprime and distressed mortgage loans. "You have the stigma of a bankruptcy, but what kind of bankruptcy is it where you have no creditors and no lenders impaired?" Mr. Hamilton asked. Today, $184 million of long-term debt affected by the bankruptcy has been converted to 100% of the common stock of the reorganized company, with nearly unanimous support from bondholders and approval of the bankruptcy courts. And the firm is once again looking to grow. While most subprime firms that filed bankruptcy plans were headed for the exits, some distinct features about Wilshire created a viable restructuring opportunity. The firm's subsidiaries, which include a bank and divisions that acquire and service "scratch and dent" mortgage loans both in the United States and abroad, remained in operation throughout the process. Mr. Wiederhorn points out that Wilshire has not defaulted on any of its credit lines. It continues to have access to warehouse lines of credit and other funding sources. By converting debt to equity, The restructuring plan has a tax advantage for the firm, because the debt exchanged for equity in a restructuring does not create the tax liability that ordinary debt forgiveness would create. Mr. Wiederhorn said the tax issue was a major reason the firm was forced to seek a restructuring through bankruptcy courts. Wilshire Financial and Wilshire's REIT were forced to shed assets in the third and fourth quarters, and for a time the company was not purchasing assets. The company's servicing portfolio, which stood at $4.5 billion last September, today totals $3 billion. Wilshire owns about $1.3 billion of the servicing and provides third-party servicing on the rest. The company is now eager to reverse the trend and start growing again. Mr. Hamilton said the company expects to grow its third party servicing business, capitalizing on the firm's expertise in managing distressed loans. First Bank of Beverly Hills, one of Wilshire's subsidiaries, is actually overcapitalized. Wilshire hopes to grow the bank's asset size from $600 million to about $1 billion this year. Already, the company is focused on growth opportunities in the business of buying distressed commercial real estate loans and providing default servicing overseas. Currently, Wilshire has some $200 million in distressed assets in Europe. Mr. Wiederhorn expects to see growth in both the overseas and commercial businesses. Wilshire also expects to grow its business of acquiring charged off consumer and real estate debt. As for the restructuring in bankruptcy courts, both Mr. Hamilton and Mr. Wiederhorn credit the firm's lenders and Wall Street partners for being supportive during the restructuring. But Mr. Wiederhorn sees the bankruptcy issue in the past tense. "We finished that. It's over with." Going forward, he said the firm will still rely on deposits at its bank subsidiary, credit lines and securitization as means of funding its businesses. While the securitization market for subprime mortgage loans has not returned to the favorable spreads and subordination levels that prevailed last summer, Mr. Wiederhorn said he has seen improvement, and investors are interested in buying the senior parts of deals. "Our difference today is that we are much more focused on the different financial strategies on the securitization side," he said.(Copyright 1999) (National Mortgage News- 04/26/99) WORLDCORP INC: Seeks Authority To Sell Shares of InteliData ----------------------------------------------------------- The debtor, WorldCorp, Inc. seeks authorization to sell shares of InteliData Technologies Corp., a Delaware corporation, from time to time and to substitute the net proceeds of sale as collateral for the obligations currently secured by the InteliData shares - the world airways Loan or the Atlas Stockholder Notes, as applicable. Given a recent change in the market price of InteliData shares, the debtor believes it makes good business sense to be in a position to sell shares into the market so long as market prices remain favorable. ZENITH: Extends Credit Agreement -------------------------------- Zenith Electronics Corp. has extended its credit agreement with a lending group led by Citicorp through Aug. 31, 1999. The Citicorp facility, which previously had been extended through April 30, provides for up to $125 million in revolving loans. The facility must be repaid by the earlier of the company's court filing for its prepackaged plan of reorganization and Aug. 31. Meetings, Conferences and Seminars ---------------------------------- May 13-15, 1999 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUING PROFESSIONAL EDUCATION Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Securities, and Bankruptcy Conference Savannah, Georgia Contact: 1-800-CLE-NEWS May 28-31, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 51st Annual New England District Meeting Equinox Resort, Manchester Village, Vermont Contact: 1-413-734-6411 June 3-6, 1999 AMERICAN BANRKUTPCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800 June 17-19, 1999 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUING PROFESSIONAL EDUCATION Fundamentals of Bankruptcy Law Conference Crowne Plaza Hotel, Seattle, Washington Contact: 1-800-CLE-NEWS July 1-4, 1999 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 July 10-15, 1999 COMMERCIAL LAW LEAGUE OF AMERICA 105th Annual Convention Chateau Mont Tremblant, Mont Tremblant, Quebec Contact: 1-312-781-2000 or clla@clla.org July 15-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Northeast Bankruptcy Conference Mount Washington Hotel & Resort Bretton Woods, New Hampshire Contact: 1-703-739-0800 August 4-7, 1999 AMERICAN BANRKUTPCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton, Amelia Island, Florida Contact: 1-703-739-0800 August 26-28, 1999 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUING PROFESSIONAL EDUCATION Real Estate Defaults, Workouts and Reorganizations San Francisco, California Contact: 1-800-CLE-NEWS August 29-September 1, 1999 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 1999 Convention Grove Park Inn, Asheville, North Carolina Contact: 1-803-252-5646 or info@nabt.com September 16-18, 1999 AMERICAN BANRKUTPCY INSTITUTE Southwest Bankruptcy Conference The Hotel Loretto, Santa Fe, New Mexico Contact: 1-703-739-0800 September 27-28, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Conference on Corporate Reorganizations Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com October 6-9, 1999 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES 73rd Annual Meeting San Francisco Marriott, San Francisco, California Contact: 1-803-957-6225 November 29-30, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Distressed Investing '99 The Plaza Hotel, New York, New York Contact: 1-903-592-5169 or ram@ballistic.com December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 ********* 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 * * *