/raid1/www/Hosts/bankrupt/TCR_Public/990506.MBX
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 6, 1999, Vol. 3, No. 87
Headlines
ALTA GOLD: Appeals Nasdaq Delisting Notice
BARAMI ENTERPRISES: Case Summary & 20 Largest Creditors
BRADLEE'S INC: Prospectus Filed With SEC
BRAZOS SPORTSWEAR: Seeks Extension of Exclusive Periods
CALDOR: Objections To Key Employee Retention Program
CAJUN ELECTRIC: Trustee Files Reorganization Plan
CODON PHARMACEUTICALS: Committee Taps Anderson Kill
CONSUMER PORTFOLIO: Annual Meeting Set For May 26, 1999
COSMETIC CENTER: Delisted From Nasdaq SmallCap
EDISON BROS: Closing J. Riggings and Wild Pair
FOXMEYER: Judge Dismisses Suit Against Deloitte & Touche
GARDEN BOTANIKA: Notification of Late Filing
GOLDEN SKY: We Goofed in the March 12 Edition of the TCR
IMAGYN MEDICAL: Bondholders File Involuntary Petition
MAXXAM: Committee of Shareholders Begins Proxy Solicitation
MEDPARTNERS: Revenues Rise
MESA AIR: Intended Merger With CCAIR
MICROFLUIDICS: Retains PwC as Financial Advisor
MONTGOMERY WARD: $1.3 Billion Exit Facility
MORROW SNOWBOARDS: Delisted From Nasdaq
NEW CAP: Seeks Bankruptcy To Protect U.S. Assets
OKURA & CO: Seeks To Release Lien on MetalPro Property
PAL: U.S. Export-Import Bank Wants Planes Back
PEOPLE'S CHOICE: Shareholders To Receive More
PHILIP SERVICES: Preparing June 1999 Chapter 11 & CCAA Filings
PITTSBURGH PENGUINS: Unsecured Creditors Sue Owners
PRIMESTAR BONDHOLDERS: Obtain Enhanced Deal From Cable Guys
ROOM PLUS INC: Case Summary & 20 Largest Creditors
TRANSTEXAS GAS: Notification of Late Filing
WELCOME HOME: Presents Final Decree
WESTMORELAND COAL: Warns Shareholders of Dissidents
WILLCOX & GIBBS: Sells A U.K. Business
*********
ALTA GOLD: Appeals Nasdaq Delisting Notice
------------------------------------------
Alta Gold Co. (Nasdaq/NM:ALTAQ) announced that it has
appealed the decision of the staff of Nasdaq to delist the
company's common stock. The company's appeal was made to a
Nasdaq Listing Qualifications Panel, pursuant to the
procedures set forth in the Nasdaq Marketplace rules,
whereby the company submitted the appropriate fee and
requested an oral hearing.
Alta has been advised that the hearing will be held on June
17, 1999. At the hearing, the company expects that it will
be required to demonstrate its ability to sustain long-term
compliance with all applicable criteria for continued
listing on the Nasdaq National Market. In that regard,
Nasdaq may apply additional or more stringent criteria for
the continued listing of the company's common stock as a
result of the company's bankruptcy.
No assurance can be given that a hearing regarding Nasdaq's
determination will be successful. Management believes that
until the company's common stock is delisted, Nasdaq will
continue to halt any trading of the company's stock on
the Nasdaq National Market. If the company's common stock
is delisted, trading, if any, in the common stock would
thereafter have to be conducted in the so-called "pink
sheets" or, if available, the OTC Bulletin Board.
As a result, holders of common stock would find it more
difficult to dispose of, or to obtain accurate quotations
as to the market value of the company's common stock.
BARAMI ENTERPRISES: Case Summary & 20 Largest Creditors
-------------------------------------------------------
Debtor: Barami Enterprises, Inc.
152 West 36th Street
New York, NY 10018
aka
Transit Fashions, Inc.; Nora Industries, Inc.; Barami of
Eastview, Inc.; 41st Lex Retail Corporation; Barami Studio
of Westchester, Inc.; Barami of 57th Street, Inc.; Omid
Fashions, Inc.; Broadway & 62nd Fashions, Inc.; Ladan
Fashions, inc.; Barami of Madison Avenue, Inc.; Barami of
Boylston Street, Inc.; Liora Fashions, Inc.; Barami of
Tyson Corner, Inc.; Barami of Somerset, Inc.; Yara
Fashions, Inc.; Barami of Perimeter Mall Inc.; Barami of
Cumberland, Inc.; Barami of 900 North Michigan, Inc.;
Barami of K Street, Inc.; Pilot Fashions, Inc.; Barami of
Main Place, Inc.; Barami of Oakbrook, Inc.; Barami of
Woodfield, Inc.; Barami of Park Meadows, Inc.; Barami of
Bridgewater Comons, Inc.; Barami of King of Prussia, Inc.;
Barami of Liberty Place, Inc.; Barami of Circle Center,
Inc.; Barami of Denver Pavillions, Inc.
Type of business: The debtors operate 33 retail stores in
12 states and Washington DC under the trade name Barami.
Court: Southern District of New York
Case No.: 99-42801-jhg Filed: 04/30/99 Chapter: 11
Debtor's Counsel:
Alex Spizz, Arthur Goldstein
Todtman, Nachamie, Hendler & Spizz, PC
425 Park Avenue
New York, NY 10022
(212) 754-9400
Total Assets: $12,704,000
Total Liabilities: $12,704,000
20 Largest Unsecured Creditors:
Name Nature Amount
---- ------ ------
The CIT Group/Commercial Services Trade Debt 288,917
The Simon Group Landlord 199,817
Capital Factors, Inc. Trade Debt 162,206
BNY Financial Corp Trade Debt 153,319
Hudson United Bank Loan 150,510
Republic Factors Corp. Trade Debt 139,682
The Rouse Co. Landlord 132,926
NationsBank Commercial Trade Debt 123,994
GSI Exim America, Inc. Trade Debt 108,059
Ralsey Group Trade Debt 91,022
Prospect Resources, Inc. Landlord 78,289
Westfield Corporation Landlord 75,894
SAP II 62 Broadway Landlord 72,805
Woodfield Associates Landlord 71,758
Urban Properties Landlord 66,217
535 Fifth Avenue Owners Landlord 58,930
M.T. Packaging Inc. Trade Debt 49,655
Liberty Place Retail, Inc. Landlord 49,233
Best of all Clothing Trade Debt 49,111
GGP Limited Partnership Landlord 44,038
Bank Leumi USA L/C Note 4,478,300
Bank Leumi Leasing Corp. Equipment Lease 770,000
Charter Financial Inc. Equipment Lease 361,000
GE Capital Business Asset Equipment Lease 563,214
Merrill Lynch Business Financial Equipment Lease 479,000
Lyon Credit Corporation Equipment Lease 493,604
BRADLEE'S INC: Prospectus Filed With SEC
----------------------------------------
Bradlee's Inc. files with the SEC a Prospectus relating to:
* 7,267,424 shares of Common Stock of Bradlees, Inc.;
* $36,000,000 of 9% Convertible Notes issued by Bradlees
Stores, Inc. and the Common Stock issuable upon conversion
of the Convertible Notes; and
* The guarantee by Bradlees, Inc. and New Horizons of
Yonkers, Inc. of the 9% Convertible Notes.
A full-text copy of the filing is available via the Internet at
http://www.sec.gov/cgi-bin/srch-edgar?0000927016-99-001747at
no charge.
BRAZOS SPORTSWEAR: Seeks Extension of Exclusive Periods
-------------------------------------------------------
The debtors, Brazos Sportswear, Inc., et al. seeks an
extension of the exclusive periods during which the debtors
may file plans of reorganization and solicit acceptances of
such plans.
A hearing on the motion is currently scheduled to be held
on May 14, 1999.
The debtors request an extension of the plan proposal
period and the solicitation period for 120 days through and
including September 20, 1999 and November 29, 1999
respectively. This is the debtors' first request for such
an extension and the debtors assert that the cases are
large and complex, that they are in the process of
resolving claims that may have a substantial effect on a
plan, and that they have made significant progress in the
cases.
CALDOR: Objections To Key Employee Retention Program
----------------------------------------------------
Both the United States Trustee and the United Food &
Commercial Workers Union filed objections to the Debtors'
Key Employee Retention Program.
The United States Trustee was particularly alarmed by the
Program, which confers a disproportionate share of the
retention bonuses on a small number of top-level executives.
The thirteen top-level executives receive $3,200,000 under
the Severance Program.
The Trustee finds it inequitable that the Debtors propose
to spread $6,710,000 among 122 employees as "Fixed Stay
Bonuses," noting that of the $6,710,000, $1,730,000 will be
paid to 100 employees while $4,980,000 will be paid to 12
executives. Out of the 12 executives, $4,140,000 will
be paid to five executives. In fact, notes the Trustee,
two employees, which constitutes only 1.63% of the
employees entitled to receive these Fixed Stay Bonuses,
will receive $3,100,000. This constitutes 46.26% of
the bonuses. Astonishingly, the Trustee notes, this
excludes any performance incentive bonuses.
The Trustee also objects to the Debtors failure to disclose
the actual amounts of the bonuses to be paid to the
individual employees. The Trustee believes that this lack
of disclosure is an attempt by the Debtors to "misdirect
attention away from there generous compensation packages."
The Trustee also reminds Judge Garrity that with respect to
the executives, "the knowledge they have acquired while
presiding over the demise of this company is now being
leveraged into very generous severance and bonus packages
even as these administrative insolvent Debtors are expected
to pay less than fifty percent on their obligations
to their post-petition Operating Period creditors.
The Trustee also objects to the piecemeal manner in which
the compensation and benefits to top management is being
presented for approval. "Rather than being offered a
complete and detailed picture of top management's
compensation, severance, bonus, and benefits all at
once, fragments of top management's complete compensation
and benefits package are separately presented for Court
approval," the Trustee reminds Judge Garrity.
The Trustee believes she has "no assurance that even now
she has seen the complete picture of top management's
compensation, severance, bonus, and benefits package." She
notes that the "Subsequent Budget" attached to
the Wind-Down Order lists Payroll Taxes/Benefits of
$680,000, 401K Company Match of $650,000, "Go-Forward Med
Claims" of $5,000,000 and "Aetna Med Claims" of $1,200,000.
She thinks that it is unclear to what extent, if any, these
expenses insure to the benefit of top management.
The Trustee also asked Judge Garrity to take a close look
at the performance incentive bonus aspect of the Program.
Not only is it premature, she asserts, but the concept of a
performance bonus in an administratively insolvent case
appears to be inappropriate.
The Trustee believes these facts illustrate the lack of
unbiased oversight and that there is increasing evidence
that the "Virtual Chapter 7 approach to these cases means a
total evisceration of the Bankruptcy Code for the benefit
of top management of the failed Debtors."
The Trustee thus asks Judge Garrity to deny the Debtors'
Incentive Plan for Key Employees.
The UFCW set forth four objections to the Debtors Program.
They are:
1. the program is not a product of arms' length negotiation
with the principal creditor constituency effected by the
program. Rather, the retention program was designed by
senior management, which stands to receive approximately
$5,000,000 of the fixed payments plus some undisclosed
percentage of the Incentive Pool, without input from the
administrative creditors
2. the program does not take into account the actual result
for all creditors in these cases. The remaining
employees, unlike the cases the Debtors cite to support
their program, are not being rewarded for a successful
reorganization or any reorganization at all. Under these
circumstances, the UFCW believes that it is difficult to
justify paying remaining employees several multiples
of their annual salaries for less than a years' work.
3. it is an insult to the Debtors former employees who
stayed on through the going out of business sales and store
sales with no benefits, no promised retention and
"comparatively puny severance benefits," to describe this
Program as a reward
4. the application lacks sufficient detail to determine
whether the Program is either reasonable or well designed.
The Term Loan Holder Committee also filed a Response to the
Debtors' Program. The Term Loan Holder Committee holds
$20,000,000 of allowed operating period administrative
claims. The Committee states that it assess the proposed
Program from the viewpoint of whether the proposal
will increase or decrease the present value of distribution
on its $20,000,000 administrative claim. The Committee
believes that with its suggested changes, it is confident
the proposal will benefit operating period administrative
creditors.
The four changes the Committee suggests are as follows:
1. Streamlined Method to Liquidate Disputed Operating
Period Claims - Caldor shall propose an appropriate
mechanism to expedite resolution of disputed claims.
2. Time Value Incentive - to the extent operating period
claims are paid prior to December 31, 1999, payment of
incentive payments under the Stay Incentive Program shall
be accelerated in amounts equal to (2.5%) times (amount
paid) times (number of days prior to December 31, 1999)
divided by (365). This does not increase payments but only
accelerates the timing of the payment.
3. Caldor Shall Minimize Expenses - Caldor shall endeavor
to minimize administrative expenses and will work with the
term and real estate lenders in this regard.
4. Term Lender/Real Estate Lender Settlement Agreement -
the Committee believes its Court approved settlement with
Caldor provides for its professional fees to be paid by
Caldor from the Committee's collateral proceeds through the
final distribution on its $20,000,000 operating period
claim. The Committee says it would not have accepted a
$20,000,000 without the means to enforce it and maximize
its return.
If these Program is not supplemented as set forth by the
Committee, it objects to the Stay Incentive Program.
The Debtors filed a response to the Objections and noted
that neither the Trustee or the UFCW "questions the
efficiency with which the liquidation effort is being
undertaken, the results being obtained during the wind-
down period for the benefit of creditors, or, indeed the
role of the Debtors' management and other remaining
employees in bringing about those results." They also do
not seem to disagree that the Debtors are overstaffed or
incentives provided are more than necessary to induce the
remaining employees to stay.
The Debtors claim the Program was not formulated by senior
management free of input and oversight by the Debtors' key
constituencies, but rather was the product of candid and
open dialogue and negotiation with representatives of those
constituencies.
The Debtors say the Program is weighted heavily toward
senior management because these individuals have critical
roles in ensuring the success of the wind-down effort and
that their knowledge, experience, and skill as well as the
value of their lost opportunity costs, in forgoing
lucrative employment opportunities elsewhere, more than
warrant the Program's provisions. In sum, the Debtors
believe the issues raised by the Trustee and UFCW fail to
provide a basis for denial of the stay incentive program.
(Caldor Bankruptcy News, Issue No. 33, Bankruptcy Creditors'
Service, Inc.)
CAJUN ELECTRIC: Trustee Files Reorganization Plan
-------------------------------------------------
The trustee overseeing Cajun Electric Power Cooperative's
bankruptcy has filed a revised reorganization plan that
would sell the company's non-nuclear assets to Louisiana
Generating LLC, a company owned by NRG Energy Inc. and
Southern Energy Inc. The price tag is $960 million, which
could go as high $994 with adjustments. The plan also would
allow member cooperatives to decide whom to obtain power
from in the future without facing a penalty for switching
power sources from Cajun.
Southwestern Electric Power Co. has asked a U.S. bankruptcy
judge to disallow two amended bids for Cajun Electric
Power Co. submitted by Louisiana Generating LLC. If SWEPCO
succeeds, the bankruptcy court would consider only the bids
submitted by the companies April 16. SWEPCO said its
bid was worth $1.017 billion, while Louisiana Generating's
was worth $960 million. Both bids have been adjusted to
include interest.
The U.S. Bankruptcy Court called for amended plans after
rejecting both companies' reorganization plans on Feb. 11.
The two revised plans will be considered in hearings in
June. (Advocate Baton Rouge LA; 04/23/99 and 04/24/99)
CODON PHARMACEUTICALS: Committee Taps Anderson Kill
---------------------------------------------------
The Committee of Unsecured Creditors of Codon
Pharmaceuticals, Inc. and Oncor, Inc. seeks court approval
to employ and retain Anderson Kill & Olick PC as attorneys
for the Committee.
The firm will assist and advise the Committee in its
consultations with the debtors; represent the Committee at
hearings held before the court; assist and advise the
Committee in its examination and analysis of the conduct of
the debtors' affairs; review and analyze applications;
assist the Committee in preparing motions; apprise the
committee of the debtors' operations; confer with the
accountants, and assist the Committee in its consideration
of a plan.
Attorneys of the firm will charge hourly rates ranging from
$145-$500. Paraprofessionals charge between $85-$120. The
attorney who will be overseeing this case charges $395 per
hour, and the other attorney working on the case charges
$275 per hour.
CONSUMER PORTFOLIO: Annual Meeting Set For May 26, 1999
-------------------------------------------------------
The annual meeting of the shareholders of Consumer
Portfolio Services, Inc. will be held at 10:00 a.m., local
time, on Wednesday, May 26, 1999, at the Company's offices,
16355 Laguna Canyon Road, Irvine, California for the
following purposes:
To elect the Company's entire Board of Directors for a one-
year term.
To approve the issuance of a warrant initially exercisable
to purchase 1,335,000 shares of common stock, granted as a
condition to the issuance of $5 million of debt.
To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1999.
COSMETIC CENTER: Delisted From Nasdaq SmallCap
----------------------------------------------
The Cosmetic Center Inc., which sought Chapter 11
bankruptcy protection last month, said yesterday that its
common stock will no longer be listed on the Nasdaq
SmallCap Market.
The stock had been trading on the SmallCap Market with a
temporary exception from the minimum bid price requirement.
The company's April 16 bankruptcy filing came less than a
month after the struggling discount cosmetics and fragrance
chain began closing about half its retail and outlet
stores. The company also replaced its chief executive
with Kevin Regan, a director of PricewaterhouseCoopers and
former Jamesway Corp. executive.
EDISON BROS: Closing J. Riggings and Wild Pair
----------------------------------------------
The Fort Worth Star-Telegram reports on May 1, 1999 that
Edison Brothers Stores, now in its second Chapter 11
bankruptcy, said it will close all 295 of its J. Riggings
men's apparel stores and all 135 of its Wild Pair shoe
stores - a move that will end more than two decades of
J. Riggings retailing in the Metroplex.
The two chains' five stores in Tarrant County will close
along with all 38 others in Texas after an anticipated six-
to 10-week liquidation of merchandise, Edison Brothers,
which is based in St. Louis, announced.
The two chains have a combined 10 Metroplex stores,
including J. Riggings and Wild Pair outlets in The Parks at
Arlington, Grapevine Mills and Irving malls, and the J.
Riggings in Fort Worth's Hulen Mall.
About 70 employees, or the six to eight workers at each
store, will be affected by the closings, Edison Brothers
spokesman Tom Goyda said. J. Riggings was founded in Ohio
in 1969 and debuted in the Metroplex during the 1970s.
Edison Brothers, a specialty retailer, ran into rising
costs and substantial inventory shortages as its suppliers
refused to extend merchandise credit to its retail chains
during the second Chapter 11 proceeding, Goyda said. The
chains have been trying to survive by paying cash and using
bank credit to replenish inventories, "but that couldn't go
on forever," he said. The retailer told Bloomberg News last
month that it couldn't sustain the sales needed to survive
in the face of heavy competition. Edison Brothers has
also been wrestling with a $295.1 million debt load since
the March filing of its latest Chapter 11 reorganization
petition. Gordon Brothers Group of Boston is managing the
liquidation of about $167 million of merchandise.
Gordon Brothers spokeswoman Elizabeth Wicks said the
stores' liquidation discounts will start in the 20 percent
to 60 percent range. Edison Brothers will continue to
operate about 1,100 other retail stores in its Jeans West
or JW, Coda, Bakers, 5-7-9 junior apparel and Repp Ltd. Big
& Tall Menswear chains, Goyda said.
But Edison is considering offers to buy four of its
remaining chains. The company, after emerging from its
first Chapter 11 in September 1997, generated some sales
gains, including five consecutive months of strong same-
store sales growth, Goyda said.
FOXMEYER: Judge Dismisses Suit Against Deloitte & Touche
--------------------------------------------------------
U.S District Judge John Martin yesterday dismissed a
lawsuit brought on by FoxMeyer Corp.'s bankruptcy trustee
against Deloitte & Touche LLP, alleging that the company
acting as auditor was negligent in failing to stop a
transaction that harmed FoxMeyer. The lawsuit attempted to
recover $500 million in damages for FoxMeyer, which filed
chapter 11 in August 1996, according to The Wall St.
Journal. The transaction at issue is a $750 million credit
financing for FoxMeyer. Trustee Bart A. Brown Jr. argued
that Deloitte knew that the terms of the contract
would cripple the company but didn't do anything about it.
But the judge ruled that since the company's own management
initiated the refinancing, they participated in the harmful
conduct. "Whatever damages Deloitte's alleged negligence
may have caused the debtors, the damages are the result of
a financial transaction debtor management implemented
itself," Martin wrote. Brown is expected to appeal the
ruling. (ABI 05-May-99)
GARDEN BOTANIKA: Notification of Late Filing
--------------------------------------------
Garden Botanika Inc. notifies the SEC that it is
unable to file its report on Form 10-K for the year ended
January 30, 1999 without unreasonable effort and expense.
The company asserts that the bankruptcy filing has placed
an enormous strain on the company's accounting and
administrative staff. The company's staff has spent the
majority of its time during the past weeks preparing for
the filing of the bankruptcy petition and negotiating the
reorganization efforts. This has involved an enormous
amount of time and effort and daily court appearances for
the company's accounting staff, including the company's
Chief Financial Officer, who has primary responsibility for
preparation of the company's periodic reports. Moreover,
the company's current and future business plans and
management team is still in flux in connection with the
bankruptcy process. As a result, the company has had
insufficient resources to collect the information necessary
for, and prepare an accurate draft of, its Form 10-K.
Further, substantially all of the information necessary to
finalize the Form 10-K is still unavailable at this time as
a result of the bankruptcy filing.
In addition, in connection with its bankruptcy filing, the
company will seek authority to close 95 of its 245 retail
stores nationwide and liquidate the related inventory by
May 31, 1999. The closures and liquidation may require
additional adjustments to and disclosures in the company's
financial statements. At the company's recommendation, the
company's accounting staff and outside auditors elected to
not finalize the applicable financial statements until the
bankruptcy court approved the company's closure and
liquidation plans (which occurred on April 30, 1999). This
delay has precluded the company's auditors from timely
completing the audit of the financial statements to be
included in the Annual Report on Form 10-K.
GOLDEN SKY: We Goofed in the March 12 Edition of the TCR
--------------------------------------------------------
Please disregard the news item reported in the March 12, 1999,
edition of the Troubled Company Reporter concerning Golden Sky
Systems, Inc. Golden Sky Systems, Inc., does not meet any of
the criteria we've established for identifying a troubled
company. We confused Golden Sky Systems, Inc., with Golden
Systems, Inc., whose auditors have expressed doubt about
Golden Systems, Inc.'s ability to continue as a going concern.
IMAGYN MEDICAL: Bondholders File Involuntary Petition
-----------------------------------------------------
Imagyn Medical Technologies, Inc. (OTC/BB: IMTI) said today
that three creditors representing a minority of holders of
the 12-1/2% Senior Subordinated Notes have filed an
involuntary bankruptcy petition against the Company in the
U.S. Bankruptcy Court for the District of Delaware. The
filing followed a recent announcement that Imagyn had not
made certain scheduled interest payments on its 12-1/2%
Senior Subordinated Notes and Convertible Subordinated
Debentures due on April 30, 1999. The Company has 20 days
from the service of the summons to respond to the
involuntary petition. The Company plans to continue to
operate its business in the ordinary course.
Imagyn has been working with its financial advisors and its
principal creditors to reorganize the Company. At the time
of the filing, the Company was in the process of finalizing
terms of a consensual restructuring plan with its senior
lenders and with the holders of approximately 79% of the
12-1/2% Senior Subordinated bondholder class. The plan
includes liquidity financing and the conversion of a
substantial portion of the Company's debt into equity to
stabilize the Company's capital structure. The Company
indicated that it will continue to pursue these discussions
and, subject to the approval of its Board of Directors,
convert the involuntary case to one for reorganization
under Chapter 11 of the U.S. Bankruptcy Code as a means to
efficiently restructure the debt.
Charles A. Laverty, Chairman and Chief Executive Officer of
Imagyn, stated "We have been in active discussions with the
holders of a majority of the Company's debt. We believe
that this action by holders of a minority position
will not impair the constructive nature of those
discussions. Our intention, with the support of the
majority of our creditors, is to transform the
business into a stronger, more focused platform providing
specialized medical devices and products." Mr. Laverty
noted that the filing of this petition does not preclude
Imagyn from converting to its own voluntary case under
Chapter 11, which would permit the Company to implement a
viable plan of reorganization.
MAXXAM: Committee of Shareholders Begins Proxy Solicitation
-----------------------------------------------------------
The Committee of Concerned Maxxam Shareholders has begun
mailing its proxy statement, blue proxy voting card and
a letter to holders of Maxxam (Amex: MXM) common stock,
urging them to elect as directors former Sen. Howard
Metzenbaum and former federal Judge Abner Mikva.
Committee members and other shareholders have nominated
these candidates for the two director seats elected by
holders of Maxxam common stock.
In its proxy materials, the Committee also urges
shareholders to vote for shareholder proposals recommending
that Maxxam institute cumulative voting procedures for
directors and that the directors chosen by the holders of
common and preferred stock, voting together, be elected
each year.
Maxxam's annual meeting will be held at 8:30 a.m. on
Wednesday, May 19, 1999 at the Waterwood National Resort
and Conference Center in Huntsville, Texas.
Maxxam has a five-person board of directors. Holders of
common stock are entitled to elect two directors each year.
Holders of preferred stock and common stock, voting
together, elect three directors, each to a three year
term. Each Maxxam preferred share has 10 votes, while each
share of common stock has one vote.
Members of The Committee of Concerned Maxxam Shareholders
are the Rose Foundation for Communities and the
Environment, Jill Ratner and Thomas W. Little, the
Foundation's president and executive director, and the
United Steelworkers of America.
Several Committee members nominated Sen. Metzenbaum and
Judge Mikva for director. Other shareholders who also
nominated them, but who are notCommittee members, are the
New York State Common Retirement Fund, which holds
45,700 shares of Maxxam common stock, and Alan Kahn (of
Kahn Brothers & Co., Inc.) In its materials, the Committee
explains why it believes that Maxxam needs independent
directors and corporate governance reform.
The Committee thus notes that Business Week named Maxxam's
board as the 10th worst on its roster of "The Worst Boards
of Directors," calling it a "tiny board with little
business experience dominated by CEO" Charles Hurwitz (Dec.
8, 1997 -- consent of publication not obtained).
The Committee's letter to shareholders adds that according
to Barron's (Dec. 7, 1998) and Forbes (Apr. 5, 1999),
"industry analysts believe that Maxxam shares are
undervalued. From March 31, 1994 to March 31, 1999,
Maxxam's share value has lagged far behind the S&P 500
during the strongest bull run in stock market history.
While the S&P 500 gained 189%, Maxxam increased by only
40%."
The Committee's proxy materials state that Maxxam is a
company in trouble, noting that Maxxam recorded a net loss
of $57.2 million for 1998. The proxy materials note too
that federal banking agencies are litigating suits against
Maxxam and CEO Hurwitz that seek to recover over $810
million in restitution and penalties, based on allegations
that Maxxam controlled a failed savings and loan
association. The Committee also cites a 1997 ruling by a
Delaware trial court that Mr. Hurwitz had engaged in self-
dealing in connection with loans that were not found fair
to the company; the case then settled for $20 million.
The Committee's proxy materials note that in 1997-98,
California regulators twice suspended the timber operator
license of Pacific Lumber Co., a Maxxam subsidiary, during
a twelve month period, citing 128 violations of state
forest practice rules. No other major timber company in
California has previously been cited for so many violations
in such a period of time or had its license suspended as a
result. The proxy materials also note that Kaiser Aluminum
Corporation, 63% of whose stock is owned by Maxxam, has
since Sept. 30, 1998 been embroiled in a labor dispute and
then lockout of 2,900 workers represented by the United
Steelworkers of America. During the last two quarters,
Kaiser reported net losses of $77 million.
The following may be deemed to be "participants" in this
solicitation: The Rose Foundation for Communities and the
Environment, which owns 50 shares of Maxxam common stock;
Jill Ratner and Thomas W. Little, the Rose Foundation's
president and executive director, who own 90 shares of
Maxxam common stock as tenants in common; the United
Steelworkers of America, which owns 1,002 shares
of Maxxam common stock; As You Sow Foundation, which owns
100 shares of Maxxam common stock; Howard M. Metzenbaum,
who does not own any Maxxam common stock; and Abner J.
Mikva, who owns 50 shares of Maxxam common stock.
These participants (excluding As You Sow Foundation)
constitute the members of The Committee of Concerned Maxxam
Shareholders and the, two nominees for director.
MEDPARTNERS: Revenues Rise
--------------------------
As it continues its transformation into a manager of
pharmacy benefits, MedPartners Inc. announced yesterday
that revenue rose 27 percent to $785.1 million from $620.2
million last year, according to The Wall St. Journal. The
Birmingham, Ala.-based company expects to reach an
agreement with California regulators over the disposition
of its California health plan and clinics within a week,
allowing the company to then liquidate the health plan.
California officials forced the company to file chapter 11
in March. The company continues to divest its physician
practice management operations. (ABI 05-May-99)
MESA AIR: Intended Merger With CCAIR
------------------------------------
As you may know, the Boards of Directors of Mesa Air Group
and CCAIR have agreed on a merger intended on creating a
stronger competitor in the regional airline business. If
the merger is completed, CCAIR will become a wholly owned
subsidiary of Mesa Air. CCAIR stockholders will receive
between .435 and .6214 of Mesa Air common stock for each
share of CCAIR common stock they own. Mesa Air shareholders
will continue to own their existing shares after the
merger. The maximum number of shares of Mesa Air common
stock to be issued to CCAIR shareholders in the merger is
5,546,738, which will represent on a fully diluted
basis, approximately 16.4% of the outstanding common stock
of Mesa Air after the merger.
MICROFLUIDICS: Retains PwC as Financial Advisor
-----------------------------------------------
Microfluidics International Corporation (NasdaqOTCBB
Symbol:MFIC) announced that it had retained the
services of PricewaterhouseCoopers LLP ("PwC") through its
Business Regeneration Services unit to act as the Company's
financial advisor. PwC will assist the Company in analyzing
its business plan and projections and in attracting and in
repositioning the Company's debt capital structure.
As reported in previous releases, MFIC is in technical
default of its Bank loan covenants, and is negotiating a
Forbearance Agreement with its lender as an intermediate
solution. PwC has been retained to assist the Company in
restoring its financial health.
Irwin J. Gruverman, CEO and Chairman, stated, "Following
last August's acquisition of the Epworth Mill and
Morehouse-COWLES divisions, we have suffered substantial
shortfalls in revenue and posted large losses for multiple
quarters. In response, we have significantly reduced
operating overhead and expenses and are planning an
informal restructuring of our businesses as part of a
turnaround effort to achieve profitability. We believe that
PwC can help us to materially improve this program and
shorten the time period to achieve the projected
turnaround.
We believe that we are observing positive results in some
of our problem areas following implementation of specific
corrections in management and operating functions. It will
take several quarters to see the full effects of the
planned turnaround programs, and we are confident that we
can accomplish it with the help of PwC and other new
resources."
Microfluidics International Corporation, through its
Microfluidics Division, provides patented and proprietary,
high performance Microfluidizer(R) materials processing
equipment to the chemical, pharmaceutical, biotechnology,
cosmetic/personal care, and food processing industries.
Through its Epworth Mill and Morehouse-COWLES Divisions,
the Company provides leading equipment, and innovative
technology and solutions to the chemicals, paints, pigments
and coatings industries for milling, deagglomeration and
dissolving. The combined resources and capabilities of the
Company's equipment lines are used to provide
comprehensive solutions to materials processing.
MONTGOMERY WARD: $1.3 Billion Exit Facility
-------------------------------------------
Preliminary discussions with potential lenders has led
Montgomery Ward & Co. Inc. to conclude it can negotiate a
$1.3 billion exit facility, provided that investor GE
Capital Corp. guarantees a portion of the facility.
According to the retailer's disclosure statement, filed
Friday with its reorganization plan, the financing would be
in the form of a secured revolving credit facility with a
March 31, 2003 maturity date and contingent on the
achievement of certain borrowing base criteria. The plan
and disclosure statement embody an agreement in principle
on terms of the restructuring reached between Montgomery
Ward, the official creditors' committee and majority
shareholder GE Capital on Feb. 1. (The Daily Bankruptcy
Review and ABI 05-May-1999)
MORROW SNOWBOARDS: Delisted From Nasdaq
---------------------------------------
As of the close of business on April 26, 1999, Morrow
Snowboards, Inc. was delisted from the Nasdaq National
Market System. Because Morrow is not current in its filings
under the Securities Exchange Act of 1934, trading in
the Company's securities will be reported in the pink
sheets until the Company has filed its Annual Report on
Form 10-K for the 1998 fiscal year. The delay in
filing reflects the additional time needed to restate prior
years financials following the sale of Morrow's snowboard
assets in March 1999. Morrow anticipates it will file the
10-K on or about May 10, 1999 and be listed on the
OTC Bulletin Board shortly thereafter.
Morrow also reported an out-of-court settlement with
certain trade creditors who had previously filed an
involuntary petition for relief under Chapter 7 of the
United States Bankruptcy Code. Under the settlement,
Morrow's creditors' claims would be secured by a lien
against Morrow's real property in Salem, Oregon, subject to
the existing Foothill Capital Corporation loan ("Foothill
loan") and a limited senior lien to secure additional
financing. Under the settlement, at Morrow's option, such
creditors will receive payments of 85% of the amount of
their claims, in full satisfaction, if paid within 60 days
after an order dismissing the involuntary petition becomes
final. Morrow has listed the Salem real estate for sale.
Morrow's agreement to make such payments and to grant such
a lien is conditioned upon Bankruptcy Court approval and
approval of Morrow's creditors, including at least 90% in
dollar value of creditors holding claims in excess of
$10,000 agreeing to settle their claims on these terms.
To allow Morrow and the petitioning creditors time to
document the settlement, as well as to provide other
creditors time to review and agree to the settlement terms,
Morrow and the petitioning creditors filed a Stipulation
for Order Extending Time to Respond to Involuntary
Petition. The deadline for Morrow to respond to the
involuntary petition has been extended to July 2, 1999.
Once the settlement is finalized and submitted to the
Bankruptcy Court, obtaining the required approvals and the
passage of any appeal periods is expected to take
approximately 40 to 45 days.
Morrow also announced a binding Memorandum of Understanding
with Capitol Bay Management, Inc. to provide Morrow with
additional financing to be used as working capital. Under
the Memorandum, Capitol Bay will acquire the Foothill loan
and related security interests in Company assets. Capitol
Bay is also obligated to obtain and fund a loan to be
secured by Morrow's real estate. As outlined in the Form
8-K, Capital Bay's obligations and conversion rights
outlined below are subject to a number of conditions. Upon
the Chapter 7 dismissal of the involuntary bankruptcy
petition, and for a period of 12 months thereafter,
Capitol Bay may elect to convert $500, 000 of the Foothill
loan into 2,000,000 shares of Morrow Common Stock.
Morrow also reported that Marmot Mountain Ltd. has filed
suit against Morrow, alleging breach of a contract where
Marmot had agreed to provide Morrow with design,
manufacturing and merchandising services related to
snowboard apparel and seeking $130,000, plus interest and
attorney's fees. In general, all litigation against Morrow
is currently stayed pending resolution of the involuntary
bankruptcy petition. Should proceedings commence, Morrow
intends to negotiate a settlement on the basis that Morrow
believes its liability under the contract is limited to a
lesser amount.
NEW CAP: Seeks Bankruptcy To Protect U.S. Assets
----------------------------------------------
New Cap Reinsurance Corp. (Bermuda) Ltd. and its New Cap
Reinsurance Corp. Ltd. subsidiary filed chapter 11
petitions in the U.S. Bankruptcy Court in Manhattan on
April 27, with the parent estimating both assets and
liabilities at over $100 million. The parent company,
based in Hamilton, Bermuda, is engaged in the business of
insurance and reinsurance whereas the Sydney, Australia-
based subsidiary, founded in 1997, writes worldwide
casualty, catastrophe, marine, occupational, and personal
insurance policies. In conjunction with filing the
petitions, the companies also received a temporary
injunction preventing anyone from commencing any
proceedings against the estates or any property the estates
have in the U.S. as well as preventing the enforcement of
any judgments against the companies until a hearing
tomorrow on a permanent injunction. (The Daily
Bankruptcy Review and ABI 05-May-1999)
OKURA & CO: Seeks To Release Lien on MetalPro Property
------------------------------------------------------
MetalPro owns certain real property located in Carol
Stream, Illinois. The debtor owns approximately 18% of the
common stock of MetalPro. As of February 28, 1999, the
balance of the loans due from MetalPro to the debtor was
approximately $14.4 million. MetalPro has entered into a
Purchase Agreement to sell the MetalPro property to
Centerpoint Properties Trust for $2.4 million, subject to
a certain closing date. The debtor requests that the court
enter an order authorizing and approving the debtor to
release its lien on the MetalPro property and requiring the
payment to the debtor of the net proceeds from the sale of
the MetalPro property.
PAL: U.S. Export-Import Bank Wants Planes Back
----------------------------------------------
The U.S. Export-Import Bank has begun moves to
recover the four Boeing jumbo jets it helped Philippine
Airlines acquire, in a serious blow to the ailing carrier's
recovery plans.
In a letter Wednesday to Manila's Securities and Exchange
Commission, U.S. Ex-Im Bank vice president Robert Morin
said it started the recovery effort after deciding the
airline's rehabilitation process "lacks fundamental
attributes of transparency, fairness and predictability."
It advised the commission that it plans to ask the U.S.
Bankruptcy Court to reconsider its decision to yield to the
Philippine financial rehabilitation process.
Senior Philippine officials said Wednesday that the Ex-Im
Bank's move complicates their efforts to ensure that the
airline stays in operation. The four Boeing 747-400 jets
claimed by U.S. creditors run the carrier's long-
haul flights. "This is one problem piled on top of another.
Obviously, it's not going to be easy," said Presidential
Executive Secretary Ronaldo Zamora. The Ex-Im Bank had
sought the U.S. court's help in recovering the
aircraft after Philippine Airlines failed to make timely
debt payments. Last year, U.S. authorities seized two PAL
Boeing 747 planes in Los Angeles and Hong Kong but
returned them after airline officials appealed.
The Ex-Im Bank apparently urged the U.S. court not to take
any further action while PAL officials negotiated a debt
restructuring and made a partial interest payment early
this year. However, the Ex-Im Bank and other major PAL
creditors were displeased last week when businessman Lucio
Tan reassumed active management control. Tan, which holds
a 70 percent stake, has had a strained relationship with
PAL's unions, and the creditors say they want the airline
run by professional managers.
PAL, Asia's oldest airline, has been unable to service its
$2.2 billion debt, largely owed to U.S. and European
creditors, because of mounting losses which forced it to
temporarily shut down last year. PAL has been unable to
find investors to infuse $200 million into the airline, a
key element of its rehabilitation plan. The SEC has given
PAL until June 4 to find the money. Zamora said a group of
Kuwaiti investors has offered to provide the money if
they are allowed to manage the company.
Kuwaiti "aviation interests that appear to be serious
investors" sent the proposal directly to President Joseph
Estrada, he said. It was not clear whether the offer would
be acceptable to PAL or its creditors.
The rehabilitation plan also calls for a reduction of the
airline's fleet from 54 to 22 planes and its labor force
from 8,000 to about 3,000. Tan is also seeking management
help from Germany's Lufthansa, officials said.
PEOPLE'S CHOICE: Shareholders To Receive More
---------------------------------------------
People's Choice TV Corp. announced that, as a result of
recent transactions into which Sprint Corporation (NYSE:
FON) has entered into with certain stockholders of
PCTV, the consideration to be received by each common
stockholder of PCTV in Sprint's pending acquisition of PCTV
will be increased from $8.00 to $10.00 per share in cash.
In a public filing made today with the Securities and
Exchange Commission, Sprint Corporation disclosed that it
has recently entered into option agreements with certain
stockholders of PCTV to acquire from them an aggregate of
2,227,000 shares of PCTV common stock at a price of $10.00
per share. The definitive Agreement and Plan of Merger that
PCTV and Sprint signed on April 12, 1999 provides that if
Sprint acquires or obtains options to acquire
any additional shares of PCTV common stock at a price in
excess of $8.00 per share, the consideration to be paid by
Sprint in the merger would be increased to that higher
price. In its filing with the SEC, Sprint states it now
beneficially owns shares representing 49.997% of the
outstanding voting power of PCTV.
Consummation of Sprint's acquisition of PCTV is subject to
the receipt of PCTV stockholder and government regulatory
approvals.
PHILIP SERVICES: Preparing June 1999 Chapter 11 & CCAA Filings
--------------------------------------------------------------
In 1997, Philip Services Corp. implemented an acquisition
program designed to establish Philip as one of North
America's leading metals processing and industrial services
providers. During 1997, the Company acquired over 30
businesses at a cost of approximately $1.3 billion. The
Company commenced 1998 with the objective of integrating
the businesses it had acquired in 1997. The integration was
interrupted by a series of events which occurred in 1998
that had a devastating impact on the Company and resulted
in it recording a fiscal 1998 loss of $1.6 billion
including special charges of $1.2 billion.
The first event was the discovery and announcement in
January 1998 of a discrepancy between the book and physical
inventory values in the Company's yard copper business. The
announcement of the discrepancy raised serious questions
about the integrity of the Company's accounting and the
effectiveness of its control systems and had a significant
negative impact on the Company's business. After the
announcement, numerous class action lawsuits and related
claims were commenced against the Company in the United
States and Canada. An exhaustive examination of the
discrepancy was conducted by the Company, its auditors and
special counsel to a committee of independent directors of
the Company's Board of Directors. As a result of these
examinations, it was determined that, amongst other things,
unrecorded losses totalling $92 million arising from
unauthorized trading of copper outside the Company's normal
business practices had been incurred. The Company commenced
a civil action against the former president of its metals
division and others engaged in the trading in an effort to
recover its losses and reported the activities to criminal
and other appropriate authorities. As a result of the
Company's findings, Philip restated its previously reported
financial results for 1997, 1996 and 1995. In addition, the
staff of the Securities and Exchange Commission is
conducting a formal investigation of the circumstances
surrounding the 1997, 1996 and 1995 restatements of the
Company's financial statements.
To compound matters, starting in late 1997 and continuing
throughout 1998, there was a significant deterioration in
the Company's copper and ferrous processing businesses due
to the most significant decline in metals prices in over 20
years. The Company's Industrial Services Group failed to
achieve its cost reduction objectives and its by-products
business performed weakly, reflecting industry wide
competitive conditions. In addition, declining crude oil
prices, which resulted in deferred maintenance spending by
customers with petrochemical refinery operations,
negatively impacted the revenue and profitability of the
Industrial Services Group's operations. The Company
reported a first quarter 1998 loss of $565,000 and a second
quarter 1998 loss of $73 million. Various initiatives were
implemented throughout the year in an effort to improve the
Company's operating and financial performance. Management
changes were made, including the appointment of a new
Chairman, President and Chief Executive Officer, Chief
Financial Officer, Chief Administrative Officer and
Presidents of the Company's Metals Services and Industrial
Services Groups.
The deterioration in its principal business segments
impaired Philip's ability to comply with the terms of its
then $1.5 billion syndicated credit agreement. In June of
1998, the Company announced its intention to sell its
ferrous and non-ferrous operations and various non-core
assets in order to reduce and restructure its debt. The
Company sold its steel distribution business in July 1998
for $95 million. However, weak ferrous market conditions
lowered the value of the remaining assets and the Company
subsequently determined that it would not proceed with the
sale of its ferrous businesses.
By July of 1998, the Company was not in compliance with the
terms of its Credit Agreement and sought certain amendments
from its lending syndicate. Philip did not reach an
agreement with its lenders and accordingly, as at June 30,
1998, $1.04 billion of debt outstanding under the Credit
Agreement was classified as a current liability on the
Company's consolidated balance sheet.
As the Company's operating results deteriorated, questions
arose as to its ability to meet its obligations under the
Credit Agreement and whether the Company had sufficient
available cash to satisfy its working capital and capital
expenditure needs. In the third quarter of 1998, a number
of factors, including a continuing downturn in metal
markets, a permanent decline in the value of investments
held by the Company, and the decision to exit certain
activities or locations and to divest of the Company's
aluminum and US ferrous operations caused the Company to
take special charges of $357 million and report a net loss
of $645 million. The Company again made management changes
including the appointment in October 1998 of a new Interim
Chief Executive Officer and Chief Restructuring Officer.
In November 1998, the Company ceased making payments on
various debt obligations including the $1.02 billion
outstanding under the Credit Agreement. Thereafter, Carl
Icahn, the Company's largest shareholder and debt holder,
together with another lender, announced that they were
considering utilizing involuntary insolvency proceedings to
protect their interests unless the Company met with them to
formulate a pre-packaged plan to transfer the ownership and
control of the business to the Company's lending syndicate.
The Company commenced negotiations with Mr. Icahn and
entered into a standstill agreement with him and the other
lender on November 20, 1998. The agreement contemplated a
restructuring plan whereby the debt outstanding under the
Credit Agreement would be converted into $200 million of
new secured debt and the distribution of 90% of the equity
of the restructured entity to the syndicated debt holders.
In accordance with the terms of the standstill agreement,
the Company appointed two new directors nominated by Mr.
Icahn to the Company's Board of Directors. Also, in
November 1998, the Company replaced its then acting Interim
Chief Executive Officer and appointed its Executive Vice
Chairman, Allen Fracassi, as Interim Chief Executive
Officer.
After discussions with its lending syndicate, the Company
determined that the restructuring plan contemplated by the
November 20, 1998 standstill agreement would not be
approved by the required number of lenders. The Company
presented an alternative debt restructuring plan to its
lending syndicate on December 15, 1998 which provided for
the conversion of a smaller portion of the debt outstanding
under the Credit Agreement into equity in an amount to be
negotiated with its lending syndicate.
RECENT DEVELOPMENTS
On January 11, 1999, the Company announced that it had
negotiated a term sheet with a sub-committee of the
steering committee of its syndicated lenders. The term
sheet set forth the principal terms of restructuring the
Company under a pre-packaged plan of reorganization. Under
the January 11, 1999 term sheet, $550 million of debt
outstanding under the Credit Agreement would be
restructured into $350 million of senior secured term debt
and $200 million of secured payment in-kind notes. The
balance of the debt outstanding under the Credit Agreement
of approximately $550 million would be exchanged for 90% of
the common shares of the restructured Company. Throughout
January and February and into early March 1999, the Company
continued negotiations with its lending syndicate in an
effort to obtain an agreement on a plan to restructure the
Company.
On January 12, 1999, the Company announced that it had
closed the sale of certain of its aluminum operations for
$69.5 million.
On March 8, 1999, the Company announced that it had
concluded negotiations with the steering committee of its
syndicated lenders on the terms of a lock-up agreement.
Members of the steering committee, who held in excess of
50% of the outstanding syndicated debt, agreed to the form
of Lock-Up Agreement. The agreement provided for the
conversion of approximately $1.02 billion of secured debt
outstanding under the Credit Agreement into $300 million of
senior secured debt, $100 million in convertible secured
payment in-kind notes and 90% of the common shares of the
restructured Company.
On March 26, 1999, the Company announced that it had
entered into a definitive agreement to sell its 68%
interest in Philip Utilities Management Corporation for net
proceeds of approximately $67 million in cash. The
proceeds of the disposition will be used to pay down the
Company's outstanding debt under the Credit Agreement.
Under the terms of the Lock-Up Agreement, if the Company
completes the sale of Philip Utilities Management
Corporation, the senior secured debt of the restructured
Company will be reduced from $300 million to $250 million.
On April 26, 1999, the Company announced that the terms of
the Lock-Up Agreement had been approved by its lending
syndicate. The Company will now prepare, in conjunction
with its lending syndicate, a pre-packaged plan of
reorganization. The Company expects to file the Plan in
June 1999 under Chapter 11 of the United States Bankruptcy
Code and in Canada under the Companies Creditors
Arrangement Act, and to emerge from the restructuring
process within 60 to 90 days thereafter. Key to the Plan
is the preservation of the value of the Company's
business through the protection of its employees, customers
and ongoing trade suppliers. There can be no assurance that
the Plan will be filed and if filed, that it will be
approved by the required stakeholders and the courts having
jurisdiction over such matters. If the Plan is not
approved, there can be no assurance that the Company will
continue as a going concern.
PITTSBURGH PENGUINS: Unsecured Creditors Sue Owners
---------------------------------------------------
The unsecured creditors committee of the Pittsburgh
Penguins chapter 11 filing is suing the team's owners,
Roger Marino, Howard Baldwin and Morris Belzberg to recover
$16 million, according to the Pittsburgh Post-Gazette. The
committee says the three owners took that sum from the team
in the year leading up to its bankruptcy filing. The action
seeks to recover the money as well as a minor league hockey
franchise signed over to Baldwin, worth about $2 million.
Baldwin's attorney, Michael Tuchin, said he hoped the
complaint against Baldwin could be resolved through
mediation. Bankruptcy court deliberations are expected to
continue today. (ABI 05-May-99)
PRIMESTAR BONDHOLDERS: Obtain Enhanced Deal From Cable Guys
-----------------------------------------------------------
Satellite News (Phillips Publishing Inc.) reports on May 4,
1999 that Primestar [TSATA] bondholders won big in their
three-month battle to wrest a sweetened payout in Hughes
Electronics' [GMH] purchase of Primestar's medium-powered
satellite TV service and high-power Tempo satellite assets.
The bondholders snagged cash and stock appreciation rights
(SARs) worth 97 cents for each $1 in bonds they own,
compared with the original offer of 67 cents for each $1 in
debt held. The additional $250 million that needed to be
offered to satisfy the bondholders will be paid by
Primestar's cable TV-led owners that struck the deal with
Hughes, the parent company of the nation's No. 1 satellite
TV provider DirecTv Inc.
Mitchell Harwood, a vice president with New York-based P.
Schoenfeld Asset Management LLC who headed the Primestar
bondholders' committee, said, "It was really very touch and
go. We threatened to sue to enjoin the Tempo sale. We
were in court ready to file it when Primestar agreed to
escrow the proceeds on the Tempo transaction for three
days to see if we could make progress on negotiations. We
obtained revolving three-day extensions until we were able
to reach a deal." The deal offered last January was blocked
because the payout for bondholders was "inadequate" and
Primestar's ownership had arranged to be paid first,
Harwood said.
"A compromise was difficult to achieve because some
creditors were already so angered by what they felt was
self-enrichment by the cable partners that those creditors
were in no mood for compromise," Harwood said. Bondholders
were angered when Primestar converted from a partnership
into a corporate structure and let some of the cable
owners effectively pull $460 million out of the company
during April 1998, he added.
Primestar's value tanked months later when the Justice
Department blocked the company's plans to acquire a
proposed high- power service, ASkyB, from News
Corp. [NWC] that would use small, 18- inch satellite
dishes. Instead, Primestar was left with its slow- growing
medium-power service that uses bigger dishes that consumers
increasingly have been shunning. Industry analysts
speculated that Primestar would muddle along while high-
power rivals DirecTv and Echostar Communications Corp.
[DISH] flourished. The value of Primestar's debt traded as
low as 20 cents on the dollar last December when concerns
arose that the company might go bankrupt, Harwood said.
The completion of the Hughes buyout effectively adds
Primestar's 2.3 million subscribers to the 4.8 million
subscribers of Hughes' DirecTv unit. Hughes paid a
purchase price of $1.1 billion in cash and 4.87 million
shares of Hughes stock. Hughes officials remained patient
and avoided the need to pump any additional money into the
deal to close it. Primestar, meanwhile, haggled with its
bondholders for the past three months until reaching an
acceptable compromise for both sides. Ultimately,
Primestar agreed to pay its bondholders and bridge note
holders 97 cents on the dollar - 85 cents in cash
and the remainder in SARs tied to the price of Hughes stock
at this time next year.
"I think all the bondholders are very happy with their
recovery," Harwood said. The bondholders include Echostar,
which bought between 10 percent and 15 percent of
Primestar's bonds in an attempt to block the DirecTv deal
in a belated bid to buy the Primestar business for itself.
Despite failing to stop the sale, Echostar still profited
on its investment in Primestar bonds.
Michael Smith, chairman and CEO of Hughes, said, "DirecTv
is a significant growth driver for Hughes and our
acquisition of Primestar will increase DirecTv's market
share, and create value for all GMH stockholders."
ROOM PLUS INC: Case Summary & 20 Largest Creditors
--------------------------------------------------
Debtor: Room Plus, Inc.
91 Michigan Avenue
Paterson, New Jersey 07503
Type of business: Manufacturer and retailer of
mica-laminated furniture
Court: District of New Jersey
Case No.: 99-34651 Filed: 05/05/99 Chapter: 11
Debtor's Counsel:
Kenneth A. Rosen
Ravin Sarasohn Cook Baumgarten Floch & Rosen PC
103 Eisenhower Parkway]
Roseland NJ 07088
(973) 228-9800
Total Assets: $4,489,000
Total Liabilities: $4,651,000
No. of
No. of shares of preferred stock 0 0
No. of shares of common stock 4,385,000 1,000
20 Largest Unsecured Creditors:
Name Amount
---- ------
WPIX-TV, Inc. 98,773
Formica Corporation 88,593
Therapedic Sleep Products 87,291
Wilentz Boldman & Spitzer 86,630
Wilsonart International 82,239
Merchants Home Delivery 81,626
Butlers Woodcrafters 50,913
Sid Paterson Advertising 47,524
Ehrenkrantz Sterling & Co 45,889
WCBS-TV 44,646
WPVI-TV 66 39,291
Tafisa 38,880
Panolam Industries 34,642
Tam-mex 33,000
Advo, Inc. 31,897
WWOR-TV 30,940
United Furniture Workers 30,640
AP Industries 29,723
Cargo Furniture 29,171
Fort Productions, Inc 27,865
TRANSTEXAS GAS: Notification of Late Filing
-------------------------------------------
TransTexas Gas Corporation notified the SEC that it would
be late in filing its Form 10-K. On April 19, 1999,
TransTexas Gas Corporation filed a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code. The
Company stated that its financial statements have not yet
been completed because of the Company's financial situation
and limited resources.
WELCOME HOME: Presents Final Decree
-----------------------------------
The debtor, Welcome Home Inc. will present for approval the
Final Decree and Order Closing the Chapter 11 case to the
Honorable Cornelius Blackshear, US Bankruptcy Judge on may
19, 1999 at 10:00 AM.
WESTMORELAND COAL: Warns Shareholders of Dissidents
---------------------------------------------------
In a letter to its shareholders, Westmoreland Coal warns
its shareholders of a committee attempting to seize control
of the Board of Directors of Westmoreland. The company
states that the committee is called "The Westmoreland
Committee to Enhance Share Value." The company goes on to
say that "We believe a better name would be "The Committee
to Destroy Share Value."
The company reviews all of the contributions of the current
Board, and warns that, "One element of their "plan" is the
sale of all the Company's IPPs "as soon as practicable"
(by the end of 1999 according to their initial proxy
filing) "consistent with obtaining fair market value for
the assets". But the Committee fails to disclose critical
information that makes the proposed sale of the IPPs
at attractive prices difficult in any time frame. And
ask yourself: if you wanted to maximize the value of an
asset, would you have announced your absolute intention to
sell "as soon as practicable"?
WILLCOX & GIBBS: Sells A U.K. Business
--------------------------------------
Willcox & Gibbs, Inc. announced that it had today sold the
M.E.C.-Willcox division of its Willcox & Gibbs, Ltd.
subsidiary to Bogod Group PLC for a cash of 1.3 million
pounds sterling, subject to adjustment, or approximately $2
million. The proceeds will be used to repay approximately
$1.1 million of secured debt of Willcox & Gibbs, Ltd.,
and the balance will be used for general corporate
purposes.
Willcox & Gibbs is the largest distributor in North America
of replacement parts, supplies and ancillary equipment to
manufacturers of apparel and other sewn products. Willcox
& Gibbs is currently operating as a debtor and debtor in
possession under Chapter 11 of the Bankruptcy Code.
*********
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 * * *