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/raid1/www/Hosts/bankrupt/TCR_Public/990714.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, July 14, 1999, Vol. 3, No. 133 Headlines AAMES FINANCIAL: Innovative Structure Improves Cash Flow ACCESS BEYOND: Court Authorizes Trustee To Hire Counsel ADVANCED RADIO: Annual Meeting Set For September AQUAGENIX: Blames Failed California Expansion BREED TECHNOLOGIES: Debt Catches Up To It BREED TECHNOLOGIES: Successful In Obtaining Debt Waivers CAI WIRELESS: Merrill Lynch & Co. Reports 0% Beneficial Ownership COMMERCIAL FINANCIAL: Awaits Ruling on Severance Pay COSMETIC CENTER: To Begin Liquidation CRIIMI MAE: Seeks Extension of Exclusivity; Equity Investment EDISON BROTHERS: Operating As DIP Reports Ongoing Losses FAVORITE BRANDS: Latest Financial Statement Shows Loss FEDCO: Target to Buy Store Sites in Southern California FIRSTPLUS FINANCIAL: Bank One, Texas Seeks Relief From Stay FIRSTPLUS FINANCIAL: Seeks To Sell Mortgage Loans FIRSTPLUS FINANCIAL: Bank One Objects To Dismissal FLORIDA COAST: Ad Hoc Committee of Noteholders Objects To DIP FPA MEDICAL MANAGEMENT: Terminates SEC Registration/Duty To File HANBO STEEL: Nabors Consortium Named Priority Bidder HOME HEALTH: Tenth Order Approves Use of Cash Collateral IMAGYN MEDICAL: Seeks Order Authorizing Deloitte & Touche INSILCO HOLDING: Annual Meeting Scheduled For July 22, 1999 JPE INC: Company Engages Auditors Used By Majority Stockholders KOMAG INC: 2nd Quarter Will Not Meet Analysts' Expectations LAMONTS APPAREL: Terminates Merger Talks LOEHMANN'S: Intends to Close 14 Stores MCA FINANCIAL: Amendment to Final Financing Order MEDPARTNERS INC: Advisors Report 1.19% Beneficial Ownership MORO CORP: Select Securities De-Registered Per Plan NEWCARE HEALTH: Declares Chapter 11 Bankruptcy, Operating As DIP NUCENTRIX BROADBAND: Quaker Capital Corrects Ownership Statement PINNACLE BRANDS: Seeks To Retain Nightingale & Associates SIRENA APPAREL: NASDAQ Delists Stock, No Other Listing Sought STAR NEWCO: Seeks Extension of Exclusivity STARTER CORP: Seeks To Reject Leases SUN HEALTHCARE: Future Of Ballard Rehab Hospital In Doubt TRANSTEXAS: Sues To Prevent Letter Of Credit Draw Down UNITED COMPANIES: Equity Committee Objects To Clayton Advisory VENCOR, INC: Ventas Extends June Rental Due Date ********** AAMES FINANCIAL: Innovative Structure Improves Cash Flow -------------------------------------------------------- AAMES FINANCIAL CORPORATION, a leader in subprime home equity lending, announced the successful completion of actions to improve its liquidity and cash flow position, and strengthen its capital base. The company finalized a new structure in June to monetize its servicing receivable, as well as substantially reduce the burden of making future servicing advances on the loans in the company's servicing portfolio. In connection with this structure, the company received approximately $50 million for certain of the advances carried on its books. Additionally, the company received the necessary approvals of the rating agencies, the trustee and the monoline insurers on the company's securitization trusts to engage a third party to make a significant portion of future servicing advances on those pools, as part of the new servicing advance structure. Aames also announced that it signed a new forward loan sale commitment with a highly-rated counterparty for up to $1.5 billion in production through May 2000. The forward agreement will provide a substantial source of liquidity for the company's projected loan production. Aames announced that it is planning on completing its first 1999 securitization in the next quarter. In the June quarter, the company decided to delay a securitization offering because of volatile conditions in credit markets caused by interest rate uncertainty and excess supply in the asset-backed security market. In anticipation of the upcoming securitiztion, the company will carry over a larger loan inventory position into next quarter. David Sklar, Aames' chief financial officer, noted, "We decided that it was better from a shareholder value perspective to await improved market conditions. As a result, we will report a net loss for the June quarter." To further bolster its capital base, the company expects to raise $25 million in new equity from the rights offering, underwritten with a standby commitment from the company's largest shareholder, Capital Z Financial Services Fund II. Capital Z's commitment is subject to receipt of shareholder approval of an increase in the company's common stock and preferred stock and a 1,000 to 1 stock split of the outstanding preferred stock held by Capital Z and certain of its designated purchasers. The company expects to hold its shareholders' meeting in August. Because of administrative delays involving the preparation of documents and filings, Aames currently expects the offering to occur in August or September. Capital Z has amended its agreement with Aames to provide that the rights offering must occur prior to September 30, 1999 rather than June 30, 1999. Under the original agreement with Capital Z, if the recapitalization had not occurred prior to June 30, the dividend rate on the preferred stock previously issued to Capital Z would have increased from 6.5% to 15% and a warrant issued to a Capital Z affiliate to purchase up to 3 million shares of the company's common stock would have become exercisable. The company said that each of its warehouse lenders has agreed to amendments to avoid defaults due to the delay in the rights offering and expected financial results for the June 30, 1999 quarter. Mani Sadeghi, Aames' chief executive officer, stated, "These actions will position Aames for a return to growth and profitability by improving our liquidity and cash flow position. The servicing advance funding structure is an innovative way to improve current and future cash flow and reduce mid-month volatility. The new forward contract provides a significant degree of liquidity and flexibility for large portions of Aames' future production, and we are prepared to execute our new core funding strategy of 50% securitization beginning next quarter. We are already seeing stronger results from our origination and servicing operations as we ramp up our business. Finally, the support from our largest shareholders and lenders gives us confidence that we will have the needed capital to grow our business and clearly position Aames as a prudent, profitable, and innovative leader in the home equity market." Aames Financial Corporation is a leading home equity lender, and currently operates 101 retail Aames Home Loan offices serving 32 states, including the District of Columbia. Its broker division operates 44 branches serving 46 states, including the District of Columbia. ACCESS BEYOND: Court Authorizes Trustee To Hire Counsel ------------------------------------------------------- On June 30, 1999 the US Bankruptcy Court for the District of Delaware entered an order authorizing the retention and employment of Levine & Block as counsel to the Trustee authorizing the Trustee to retain and employ Levine & Block as counsel to the Trustee. ADVANCED RADIO: Annual Meeting Set For September ------------------------------------------------ The 1999 annual meeting of Advanced Radio Telecom Corporation is being held the Bellevue Hilton, 100 112th Avenue NE, Bellevue, WA 98004, on September 21, 1999 at 10:00 a.m. PDT. The purposes of the annual meeting are to approve a $251 million equity investment in ART; approve a 4 million share increase in the number of shares issuable under the company's stated equity incentive plan; elect two class III directors; and to attend to any other business properly presented at the annual meeting. The first and second items of business as noted must each be approved by a majority of the shares of the common stock voted on that proposal. The nominees for director who receive the greatest number of votes will be elected directors. AQUAGENICS: Blames Failed California Expansion ---------------------------------------------- The Miami Herald reports on July 13, 1999 that a Fort Lauderdale company headed by the former chair of the Broward County School Board is seeking court protection from creditors. Aquagenix, a publicly traded environmental company, filed for Chapter 11 protection on Friday in U.S. Bankruptcy Court. Its shares closed at 20 cents Monday, down 49 cents for the day. In the past year, the stock has traded as high as $1.56 1/4. In filings with the Securities and Exchange Commission, Aquagenix largely blamed a failed California expansion and former Chairman Andrew P. Chesler for the company's woes. In 1998, the company reported $16 million in revenue with a $13 million loss that included $9.1 million in one-time charges. Among those charges: $682,000 in allegedly improper disbursements to Chesler, who was removed on June 2, 1998. The company demanded that Chesler repay the money to no avail. Peter LeMay, the company's chief financial officer, said Aquagenix plans to re-focus on what it does best: clearing waterways of unwanted vegetation. But first Aquagenix must restructure millions in debt -- the bulk of which is owed to Equitable Insurance, LeMay said. Executives at Equitable, which owns more than 6 percent of Aquagenix stock, declined to comment. "Aquagenix should not have been in the construction business in California," said LeMay, who was hired in March. LeMay said Chesler had expanded the company into California, doing unrelated work such as installing sprinklers and building roads. Those projects have not been profitable. Fischler, who owns 52,500 shares of Aquagenix stock or 1 percent of the company, has been a director since September 1994. Aquagenix, which employs about 100 people in Florida and North Carolina, serves more than 3,000 clients in the southeastern United States. The company plans no layoffs, and clients will see no interruption in service, LeMay said. BREED TECHNOLOGIES: Debt Catches Up To It ----------------------------------------- The Detroit Free Press reports on July 13, 1999 that one of the world's largest makers of air bags, collision sensors and other auto safety devices seems headed for a crash. Breed Technologies Inc., the creation of one of the most colorful entrepreneurs in the auto supply business, has posted seven straight quarterly losses. It has closed almost half its plants and has laid off 4,892 employees -- about 25 percent of its workforce -- and has seen its stock price plummet to one-12th what it was last year. The Lakeland, Fla.-based supplier has defaulted on loans. Creditors, demanding that it repay $900 million in debt, extended their deadline for a third time last week. They gave Breed Technologies, which supplies safety systems to all the Detroit-based automakers and more than a dozen foreign-based car companies, until Oct. 12 to find a partner or a buyer. Wasserstein Perella & Co., a New York investment bank, has been hired to find buyers and negotiate a deal. Jay Alix & Associates, a Southfield-based consulting firm that advises troubled companies, already was working with Breed. Breed spokeswoman Gina McLean says the company probably won't exist in its current form much longer, but it will not renege on promises to automakers. Most analysts expect other safety-systems suppliers to buy Breed's operations. The Florida company's largest rivals -- Cleveland-based TRW Inc. and Sweden's Autoliv AB -- are eager to grab Breed's assets and compete for contracts. If they don't, creditors could shut it down. Or an automaker could buy the supplier's factories as a last-ditch effort to continue production and supply of the critical safety systems. "The automakers could face a situation where things get so bad that Breed can't keep producing," said Marc Santucci, automotive analyst and president of ELM International, an East Lansing consultant. Allen Breed founded Breed Corp. in 1961 to design and engineer crash-detecting sensors for the military. Soon he thought about combining his sensors with a big balloon in the steering wheel that inflated a fraction of a second after an accident to prevent fatal head injuries. Breed spent much of the 1960s and '70s pitching his concept in Detroit -- with no success. His luck changed in the '80s when federal regulators and auto executives started seeing the advantages of air bags -- a concept that entrepreneurs and engineers in Europe were exploring. Undaunted by decades of rejections, Breed clinched deals with Big Three executives. Many of them were reluctant to give multimillion-dollar contracts to a relatively unknown company that at one point had to design camera pens and a circular-shaped hot-dog press to stay afloat. Air bags caught on quickly. In 1987, about one in every 10 new cars had air bags -- mostly luxury vehicles that sold air bags as an expensive option. In 1988, about one in four vehicles had air bags. In 1989, 40 percent had them. By 1990, all cars sold in the United States were required to have driver's-side air bags. The long- struggling company blossomed. It rocketed from $2.4 million in revenues in 1987 to $89 million in sales five years later. In 1993, a year after the company went public, sales reached $153 million. In 1994 sales doubled to $324 million. Breed Technologies was one of the most profitable suppliers in the automotive industry. But the ubiquity of air bags made the business more difficult: As air bags became standard, more companies competed in the lucrative market. Meanwhile, automakers ordered more and more -- and demanded bigger volume discounts. Competitors such as TRW decided to cut costs by automating factories or hiring small suppliers with lower labor costs to build their parts. Competitors also started building electronic sensors, which auto executives said eventually would replace the electromechanical sensors Breed had pioneered. By contrast, Breed Technologies hired manual assemblers, many off the unemployment lines, to make its electromechanical sensors by hand. Breed insisted that electromechanical sensors were superior, and he refused to change to electronic sensors. Another mistake: The company became obsessed with growth. It decided to provide not only sensors and air bags but all kinds of automotive safety products -- from seat belts to the very steering wheels that contained sensors. In October 1997, the company purchased Allied Signal's safety restraint operations for about $710 million -- an exorbitant price. Shortly afterward, the company bought one domestic and two European steering wheel manufacturers and even a leather-wrapping operation -- all on credit. In total, it acquired 11 companies and took on more than $1 billion in debt. But two years ago Breed developed cancer and gave up all day-to- day and strategic responsibilities. His wife, Johnnie Cordell Breed, took over as chairwoman. Although Cordell Breed had been deeply involved in the company's management, and is a self-made millionaire from a travel business she operated before marrying Allen Breed, analysts are unsure she could compensate for the strategic missteps. Her task becomes especially daunting considering the timetable: Creditors again will come knocking Oct. 12. BREED TECHNOLOGIES: Successful In Obtaining Debt Waivers -------------------------------------------------------- BREED Technologies, Inc., recently announced it has obtained a waiver of certain financial covenants related to its senior credit facility. The waiver extends through October 12, 1999. Terms of the waiver impose certain obligations upon Breed during the waiver period which, if not complied with, could result in a termination of the waiver and a default under the credit facility. These obligations include, among other conditions, increased interest rates for periods after August 1999, the implementation and effectuation of a capital transaction program to explore strategic alternatives for the business, increased reporting requirements to Breed's lenders, and additional lenders fees to be paid by the end of the waiver period (subject to extension under certain circumstances). Certain of the conditions are consistent with actions already contemplated by Breed's management, and the management of the company says it believes that all of the conditions are achievable. In addition, the waiver permits Breed to utilize net proceeds from the sale of certain assets for general corporate purposes, rather than the repayment of debt as required under the credit facility. Breed also confirmed that it has engaged the investment banking firm of Wasserstein Perella & Co. to advise its Board of Directors regarding Breed's capital transaction program. CAI WIRELESS: Merrill Lynch & Co. Reports 0% Beneficial Ownership ----------------------------------------------------------------- Merrill Lynch & Co., Inc. (on behalf of Merrill Lynch Asset Management Group), has announced that it no longer holds any beneficial stock ownership in CAI Wireless Systems Inc. COMMERCIAL FINANCIAL: Awaits Ruling on Severance Pay ---------------------------------------------------- The Daily Oklahoman Knight Ridder/Tribune Business News reports that a ruling on whether severance pay will be allowed for 1,590 employees of Commercial Financial Services Inc., who lost their jobs because the company closed in June, is anticipated Friday. Dana L. Rasure, chief judge for the U.S. Bankruptcy Court for the Northern District of Oklahoma, ruled earlier Thursday against a preliminary injunction sought by three former employees that would have prevented the payment. Fred C. Caruso, president of the company that specialized in collecting credit card debt, said that, if allowed, the affected employees -- 261 in Oklahoma City and 140 in Tulsa still on the job -- would be entitled to two weeks severance pay. In return, the employees would give up their right to make other claims, among them discrimination and negligence as well as claims under the national Workers Adjustment and Retraining Notification Act (WARN). Employees still would retain all claims related to medical insurance, a 401(k) plan, unemployment compensation benefits and any claims that originated before the company filed for bankruptcy on Dec. 11, 1998. Caruso said the employees would have 45 days to sign a release that advised them to see an attorney before signing. Even after signing, they would have an additional seven days to reconsider before a check was issued. The form was based on one used in 1994 by the Phillips Petroleum Co. of Bartlesville. If all the eligible employees signed, it would cost CFS about $2.2 million compared with about four times that amount if efforts to implement the WARN Act were successful. That act calls for 60 days notice to employees on the closing of a plant. In testimony to the court, Caruso said any attempt to implement the WARN Act would be opposed and, if necessary, appealed. Any legal decision on the act likely would be a year off and appeals would delay payment even longer, he said. CFS believes its action in closing the company was necessitated by unforeseen events that it was unable to avert and therefore is not subject to the WARN Act. Three former employees -- Farrah R. Fleming, Calvin Keydendall and Mathew Hudson -- sought the preliminary injunction. Their attorney, Shannon Davis, is seeking to expand their separate adversary proceedings in bankruptcy court into a class action suit. Under the CFS proposal those employees who accept severance pay would not be allowed to join in the class action case. COSMETIC CENTER: To Begin Liquidation ------------------------------------- The Cosmetic Center, Columbia, Md., will not emerge from chapter 11 bankruptcy but will liquidate its 124 stores instead, The Washington Post reported. The company, which sells discounted cosmetics and fragrances, plans to close its stores by the end of the year; it filed chapter 11 this past spring after four years of losses. A recent analysis of the company showed the industry is too competitive while the company's financial problems are too deep. About 1,200 employees will lose their jobs after the liquidation. (ABI 13-July-99) CRIIMI MAE: Seeks Extension of Exclusivity; Equity Investment ------------------------------------------------------------- CRIIMI MAE Inc. (NYSE: CMM) filed a motion with the Bankruptcy Court to extend for an additional two months the Company's exclusive period to file a plan of reorganization. The exclusive period is currently scheduled to terminate on August 2, 1999. The Company indicated in its motion that it was in negotiations with a substantial party to finalize an agreement for an equity investment of up to $200 million. This party is continuing its due diligence review of the Company. This investment would be part of an approximately $920 million funding of a plan of reorganization consisting of the private placement of equity, bank financing and the issuance of high yield debt. Although there can be no assurances, the Company's financial advisor, Wasserstein Perella & Co., expects that an agreement can be executed by the end of July. On October 5, 1998 CRIIMI MAE and two affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Before filing for reorganization, CRIIMI MAE had been actively involved in acquiring, originating, securitizing and servicing multi- family and commercial mortgages and mortgage related assets throughout the United States. Since filing for Chapter 11 protection, CRIIMI MAE has suspended its loan origination, loan securitization and commercial mortgage-backed securities ("CMBS") acquisition businesses. The Company, however continues to hold a substantial portfolio of subordinated CMBS and, through its servicing affiliate, acts as a servicer for its own as well as third party securitizations. EDISON BROTHERS: Operating As DIP Reports Ongoing Losses -------------------------------------------------------- Since March 9, 1999, when Edison Brothers Stores, Inc. and seven affiliated companies filed in the United States Bankruptcy Court for the District of Delaware a voluntary petition for reorganization under Chapter 11 of title 11 of United States Code, the company has continued in possession of its properties and is operating and managing its business as debtor-in-possession subject to Court approval for certain actions of the company. Monthly operating reports are filed with the Office of the United States Trustee. In its latest filing for the period ended May 29, 1999, the company used two periods of reporting. In the four weeks ended on that date net loss sustained was 6.4 million on revenue of 69.6 million. In the 11.8 week period, also ended on that date and including the 4 week period cited, net losses were 12.2 million on total revenues of 179.4 million. The company's statements reflect both debtor and non-debtor entities but Edison Brothers states that inclusion of the non- debtor entities does not materially affect the financial statements. FAVORITE BRANDS: Latest Financial Statement Shows Loss ------------------------------------------------------ Favorite Brands International, Inc., operating as debtor-in- possession, filed its latest monthly financial statement showing a net loss for the month ended May 22, 1999, of $2,365,000 on revenue of $60,600,000. FEDCO: Target to Buy Store Sites in Southern California ------------------------------------------------------- Target Stores, a division of Dayton Hudson Corp., will purchase Fedco Inc.'s real estate assets, including its 13 Southern California stores, according to a newswire report. Fedco will cease its retail operations following the completion of its liquidation sales. Fedco, which is operating under chapter 11 protection, has retained Schottenstein/Bernstein Capital Group to conduct final close-out stores of remaining inventory, and upon the court's approval, the group will temporarily close the Fedco stores to take inventory before reopening them for liquidation stales. Upon confirmation of the reorganization plan, Fedco proposes that its current members will be entitled to receive a coupon book, redeemable at Target stores, valued at $300 in discounts and other offers. The company will use any remaining assets to establish a non-profit foundation to assist other charitable organizations in the communities Fedco stores have served. Fedco was formed as a mutual benefit non- profit corporation to offer merchandise values and various services to benefit the community. It operates 10 membership stores and three appliance and furniture centers. (ABI 13-July- 99) FIRSTPLUS FINANCIAL: Bank One, Texas Seeks Relief From Stay ----------------------------------------------------------- The debtors, FirstPlus Financial, Inc. And FirstPlus Special Funding Corp., seek relief from the automatic stay with respect to Bank One's claims for contribution and indemnity from the debtors arising from a custodial agreement executed by German American Capital Corporation, Bank One, and FirstPlus Special Funding Corp. GACC seeks to hold Bank One liable under the Custodial Agreement for damages in excess of approximately $6.5 million. Bank One states that cause exists for granting Bank One relief from the automatic stay to permit Bank One to a)make demand upon the debtors; and b)to amend its complaint to add the debtors as additional defendants. If the debtors are not joined, Bank One will have to litigate its claims in two forums. FIRSTPLUS FINANCIAL: Seeks To Sell Mortgage Loans ------------------------------------------------- Financial has negotiated a Portfolio Loan Purchase and Sale Agreement with U.S. Bank National Association NA under which US Bank will, upon its review and approval, purchase free and clear of all liens, claims, and encumbrances 2,790 encumbered HLTV mortgage loans with a total face value of over $89 million. The open bid procedure requires competing bidders to submit bids which exceed US Bank's purchase offer by at least 1.25% or approximately $1.1 million. If, under this example, a competing bid was accepted, Financial would receive an additional $800,000 and US Bank would be entitled to a breakage fee of $300,000. Financial seeks court authority to sell the 2,790 loans set forth in the agreement. Financial estimates that the proposed sale to US Bank will generate approximately $85.5 million for the benefit of certain secured creditors of the estate. Financial will pay Bear Stearns and RFC, as secured creditors, their portions of the proceeds realized from the proposed sale which represent collateral for their respective secured claims. By separate motion, the debtor seeks approval of a compromise settling certain disputes between Financial and US Bank arising from the Purchase and Servicing Agreement. US Bank shall pay to Financial the amount of $3.1 million in final settlement of any and all claims. FIRSTPLUS FINANCIAL: Bank One Objects To Dismissal -------------------------------------------------- Bank One, Texas NA objects to the motion of FirstPlus Special Funding Corp. to dismiss the Chapter 11 case of FirstPlus Special Funding Corp. By separate motion, Bank One Texas, NA objects to the joint motion to compromise a controversy with German American Capital Corporation and related entities. Bank One states that FirstPlus Financial,Inc., FirstPlus Special Funding Corp. And German American Capital Corporation have proposed a settlement that cannot be approved by this court. Special Funding was a bankruptcy remote vehicle of FirstPlus created for the express purpose of engaging in loan transactions with GACC. In December, 1997, FirstPlus sold certain mortgage loans to Special Funding under a Purchase and Sale Agreement. Special Funding borrowed money from GACC to purchase the Mortgage Loans. In connection with that loan, Special Funding executed a Security Agreement in favor of GACC granting GACC a security interest in the mortgage loans. Bank One states that the settlement proposed should not be approved because, as it related to the Special Funding estate it contemplates dismissal of the Special Funding case without specifying who will operate the entity post-dismissal; it does not eliminate the costs of litigation; it is wholly unfair to the general unsecured creditors of Special Funding; and it is objectionable to the only creditor of the Special Funding estate other than GACC and fails to disclose material terms of the settlement to creditors. The settlement cannot be approved because creditors of Special Funding will be paid less under this compromise than they would receive in Chapter 7. More significantly, Bank One argues, the Settlement permits FirstPlus, the sole shareholder of SpecialFunding, to retain all of the value attributable to the Special Funding estate without paying unsecured creditors of Special Funding in full, in direct violation of the absolute priority rule. The settlement, according to Bank One, constitutes a sub rosa plan of reorganization which strips Bank One of its right to vote against the proposal and does not enforce the statutory requirement that Bank One be paid in full before shareholders of Special Funding can retain any property. Under the terms of the settlement, FirstPlus will receive $6 million in cash from an escrow deposited by Special Funding. At the same time, GACC will receive the remaining $3.3 million of an original $9.3 million deposit from the escrow to pay down GACC secured debt. Bank One opposes the settlement because, while it resolves some issues between the debtor and GACC, it does not resolve litigation with Bank One. FLORIDA COAST: Ad Hoc Committee of Noteholders Objects To DIP ------------------------------------------------------------- The Ad Hoc Committee of Noteholders, representing certain holders of Series A and Series B 12 3/4% First Mortgage Notes Due 2003 issued by the debtors Florida Coast Paper Company, LLC and Florida Coast Paper Finance Corporation, submits an objection to the debtors' motion for entry of a third DIP Financing order. The Noteholders say that their security interest in the paper pulp mill is not being adequately protected. The Mill is deteriorating and the $1.5 million debt facility proposed by Stone Container Corporation is not intended to assist the debtors in reorganization, nor is it sufficient in amount to adequately protect the Noteholders' collateral. The Noteholders have proposed their own credit facility to the debtors in an amount up to $5 million. FPA MEDICAL MANAGEMENT: Terminates SEC Registration/Duty To File ---------------------------------------------------------------- FPA Medical Management Inc., Miami, Florida, has filed ceertification and notice with the SEC of termination of registration with the Commission and the suspension of its duty to file reports to that body. HANBO STEEL: Nabors Consortium Named Priority Bidder ---------------------------------------------------- Creditor banks of insolvent Hanbo Steel have selected the Nabors consortium of the United States as the priority bidder for the bankrupt steel maker. The creditor banks named the consortium of investment funds and steelmakers following a review of the bid which was transferred to them through the New York branch of Deutsche Bank, which absorbed Bankers Trust Co recently. The sale of Hanbo Steel now depends on the outcome of final talks with the Nabors consortium, comprised of Nabors Capital, an affiliate of the world's largest oil exploration firm Nabors Industries, Third Avenue Trust and Junghu Industry of South Korea, among others. HOME HEALTH: Tenth Order Approves Use of Cash Collateral -------------------------------------------------------- On June 30, 1999 the US Bankruptcy court for the District of Delaware entered a tenth order approving the debtors' use of cash collateral. A hearing to consider further relief in connection with the motion and approval of the stipulation is scheduled for August 5, 1999, at 9:30 AM. IMAGYN MEDICAL: Seeks Order Authorizing Deloitte & Touche --------------------------------------------------------- The debtors, Imagyn Medical Technologies, Inc., et al. seek authorization to employ Deloitte & Touche, LLP as independent auditors and accountants. The firm will: Continue the audit of the debtors' financial statements for the year ended March 31, 1999 and, as agreed to by Deloitte & Touche, when the firm deems it appropriate, provide consents in conjunction with the filings with the SEC, assist the Debtors in connection with preparing their filings on Form 10Q with the SEC, and assist in responses to the SEC. The firm will also continue the audit of the financial statements of various employee benefit plans sponsored by the debtors. The firm will charge its current hourly rates ranging from $125 per hour to $600 per hour. Deloitte & Touche was engaged by the debtors to perform a number of services for which it was compensated for its fees and expenses in the last year in the approximate amount of $493,000. INSILCO HOLDING: Annual Meeting Scheduled For July 22, 1999 ----------------------------------------------------------- The annual meeting of stockholders of Insilco Holding Co., a Delaware corporation, will be held at the offices of Donaldson, Lufkin & Jenrette at 277 Park Avenue, New York, New York, on Thursday, July 22, 1999, at 9:00 a.m., local time. Stockholders will be voting to elect seven directors, each for a one-year term expiring at the annual meeting of stockholders in 2000. They also will consider and vote upon amending the Insilco Holding Co. Stock Option Plan to allow the grant of stock options to non- employee directors under the Plan. Owners of Insilco's common stock of record at the close of business on July 6, 1999, will be entitled to vote at the meeting. A copy of the company's annual report for the fiscal year ended December 31, 1998, was enclosed with each proxy solicitation sent stockholders. JPE INC: Company Engages Auditors Used By Majority Stockholders --------------------------------------------------------------- On June 25, 1999, JPE, Inc. d/b/a ASCET INC engaged Ernst & Young LLP, independent auditors, as the company's principal accountants to audit its financial statements for the year ending December 31, 1999. Ernst & Young was engaged to replace PricewaterhouseCoopers LLP, independent accountants, who had previously been engaged for the same purpose, and whose dismissal was effective on June 25, 1999. The decision to change the company's accountants was approved by the company's Board of Directors on June 25, 1999 and was based on JPE's desire to appoint a new independent auditor after Kojaian Holdings LLC and ASC Holdings LLC (with whom Ernst & Young has had a long-standing working relationship) acquired a majority interest in the company's outstanding shares of common and preferred stock on May 27, 1999. KOMAG INC: 2nd Quarter Will Not Meet Analysts' Expectations ----------------------------------------------------------- Komag, Incorporated, the world's largest independent supplier of thin-film media for computer hard disk drives, announced revised expectations for its second quarter ending July 4, 1999. The company indicated that second quarter financial results will not meet analysts' expectations. Based on quarter-to-date actual results, the company now expects that second quarter net sales will remain essentially flat sequentially on a modest growth of approximately 5% in unit sales. In the first quarter of 1999 the company reported net sales of $90.0 million on shipments of 10.1 million disks. The company previously announced that second quarter unit shipments were expected to grow 20-35% sequentially compared to first quarter actual unit shipments due in large measure to completion of the acquisition of the disk media operations of Western Digital Corporation on April 9, 1999. Under the volume purchase agreement associated with this acquisition WDC began to purchase substantially all of its media requirements from Komag after the closing date. "Unit shipments in the last month of the quarter have not materialized as expected due to recent customer order reductions and lower-than-expected volumes on certain new product programs. In response to competitive market conditions our customers have reduced the number of disks and heads per drive to support the delivery of lower priced disk drives to the rapidly expanding, low cost segment of the PC market. These customer actions, the continuing imbalance between the supply and demand for disk products, and the lack of new data-intensive applications continue to depress the financial performance of Komag and the entire disk industry," said Stephen C. Johnson, president and chief executive officer of Komag, Incorporated. The lower-than-expected unit sales volume will further widen the net loss for the second quarter of 1999 relative to both the actual net loss for the first quarter and analysts' estimates for the second quarter. The company recorded a first quarter net loss of $21.5 million, or $0.40 per share based on 53.9 million shares. The current mean of earnings estimates for the second quarter according to First Call is a net loss of $0.55 per share, or approximately $35.0 million assuming 64.0 million shares. The higher share count for the second quarter is attributable to the additional 10.8 million common shares issued as part of the consideration for the WDC acquisition. Due to expected lower unit volumes the company will have closed the recently acquired WDC media operation at the end of June, nearly fifteen months ahead of an earlier transition plan. As part of this accelerated closure the company has implemented work force reductions affecting approximately 400 people, or 20% of the post-acquisition headcount at the company's U.S. operations. The company will record a second quarter charge related to these work force reductions and other closure activities. "We continue to have excellent success with new product qualifications at our customers, but industry dynamics are restricting our near-term growth opportunities. Additionally, price pressures remain intense throughout the data storage industry, thus heightening the need for cost efficiency in all areas of our company. The company's cost efficiency is highly dependent on effective capacity utilization due to the high fixed cost structure of disk manufacturing. Therefore, our immediate challenge is to carefully balance near-term operating efficiencies and long-term capacity decisions in a market that has been extremely volatile and difficult to forecast. We remain committed to take further actions to adjust our cost structure in relation to changing industry prospects," said Johnson. LAMONTS APPAREL: Terminates Merger Talks --------------------------------------- On July 6, 1999, Lamonts Apparel, Inc. announced that it has terminated potential merger discussions with Dallas Troutman and Troutman Investment Company. Discussions with Troutman commenced in January 1999 when Troutman Investment purchased approximately one-third of Lamonts' stock, which was subsequently transferred to Mr. Troutman's personal ownership. Lamonts Apparel, Inc. operates 38 family apparel stores in Alaska, Idaho, Oregon, Utah, and Washington. The company is well- known in the Northwest as a retailer of such brand name apparel as Alfred Dunner, Byer of California, Bugle Boy, Lee, Levi, Liz Claiborne, Nike, Ocean Pacific, OshKosh, Rafaella, Sag Harbor, and Woolrich. Lamonts is headquartered in Kirkland, Wash. in the greater Seattle area and employs approximately 1,500 people. LOEHMANN'S: Intends to Close 14 Stores -------------------------------------- Loehmann's, Inc. (OTC:LOEHQ) announced that it intends to seek permission from the Bankruptcy Court for the District of Delaware to close 14 of its under-performing stores. The intended closings are part of the Company's on-going efforts within chapter11 to reduce operating losses and focus its resources on the primary East Coast, Florida and California regions. Following the closures, Loehmann's will operate approximately 55 stores in 19 states. The Company proposes to close stores in Boston, Natick and Burlington, Massachusetts; Memphis; Seattle; Cleveland; Cincinnati; Merrick, New York; Ft. Lauderdale, Florida; West Covina, Arcadia and Daly City, California; Danbury, Connecticut and a clearance center in Queens, New York. The Company selected the stores for closure based on profitability, market demographics and its regional strategy, which includes operating an appropriate number of stores for each market and exiting markets where the Company is not competitive. Mr. Robert Friedman, Chairman and Chief Executive Officer of Loehmann's remarked, "Closing these under-performing stores is a crucial step in restructuring our Company so that we can move forward with a solid base of successful locations." Loehmann's, Inc. is a leading specialty retailer of well known designer and brand name women's and men's fashion apparel, accessories and shoes at prices that are typically 30% to 65% below department store prices. Loehmann's operates 69 stores in major metropolitan markets located in 22 states. MCA FINANCIAL: Amendment to Final Financing Order ------------------------------------------------- The US Bankruptcy Court for the Eastern District of Michigan, Southern Division, entered an order on June 28, 1999 to increase the maximum amount of the loans from $5.275 to $5.705. The debtors are authorized to borrow an additional $430,000. The cap on surcharge is increased to $1.1 million. MEDPARTNERS INC: Advisors Report 1.19% Beneficial Ownership ------------------------------------------------------------ The investment advisory firm of Manning & Napier Advisors, Inc., has reported beneficial ownership of 2,380,489 shares of common stock of Medpartners Inc. Manning & Napier hold sole voting power on 2,128,011 shares and sole dispositive power on 2,380,489 shares. With the aggregate amount beneficially owned at 2,380,489 the investment advisors hold 1.19% of the outstanding shares of common stock of Medpartners Inc. MORO CORP: Select Securities De-Registered Per Plan --------------------------------------------------- Moro Corporation has filed a certification and notice of termination of registration with the SEC covering Series A Common Stock, par value $.01 per share, Redeemable Class A Warrants, and Redeemable Class B Warrants. All of the outstanding shares and warrants of the classes of securities listed were cancelled by order of the U.S. Bankruptcy Court for the District of Delaware, dated May 7, 1999, approving the First Modified Chapter 11 Plan of Reorganization of Moro Corporation. The classes of securities described are no longer owned by any holders of record. Shares of common stock par value $.001 per share, have been (and/or will be) issued pursuant to the Court confirmed Plan of Reorganization. The shares of common stock issued (and/or to be issued) pursuant to the Plan of Reorganization are expected to be held by approximately 500 holders of record. NEWCARE HEALTH: Declares Chapter 11 Bankruptcy, Operating As DIP ---------------------------------------------------------------- On June 22, 1999, Newcare Health Corporation and certain of its subsidiaries filed voluntary petitions for protection under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the district of Massachusetts in Worcester, Massachusetts, and are operating as debtors-in-possession. On June 23, 1999, the Bankruptcy Court approved the company's motions relating to the use of cash collateral, the payment of pre-petition salaries, wages and benefits, and entered an order approving a $1.4 million debtor-in-possession financing facility by Healthcare Financial Partners, Inc. NUCENTRIX BROADBAND: Quaker Capital Corrects Ownership Statement ---------------------------------------------------------------- In connection with the corporate restructuring of Nucentrix Broadband Networks Inc., under Chapter 11 of the United States Bankruptcy Code, which became effective as of April 1, 1999, all of the common stock of Nucentrix outstanding as of April 1, 1999, was canceled and newly issued shares of common stock of the company were distributed to the holders of the company's old senior notes and convertible notes. Each of the entities reported here directly or indirectly acquired its common stock in the restructuring in exchange for the cancellation of the company's old senior notes held by these entities. Quaker Capital Partners I, L.P. is the direct beneficial owner of 897,637 shares of common stock of Nucentrix. Quaker Premier, L.P. is the sole general partner of Quaker Capital Partners I, L.P., and, as such, may be deemed to beneficially own the 897,637 shares of common stock held by Quaker Capital Partners I, L.P. Quaker Capital Management Corporation is the sole general partner of Quaker Premier, L.P., and, as such, may be deemed to beneficially own the 897,637 shares of common stock held by Quaker Capital Partners I, L.P. Quaker Capital Management Corporation also may be deemed to beneficially own (i) 480,026 shares of common stock which are held by a variety of Quaker Capital Management Corporation's investment advisory clients and (ii) 83,046 shares of common stock held by Ridgeview Partners (41,523 shares) and the Carol S. Schoeppner Trust FBO Mark G. Schoeppner (41,523 shares). 480,026 of the shares with respect to which this item reports are owned by a variety of investment advisory clients of the Quaker firms. Those clients are entitled to receive dividends on or the proceeds from the sale of such shares. No client is known to own more than 5% of the class. Quaker Capital Management Corporation has sole voting power represented by 897,637 shares; shared voting power on 94,876 shares; sole dispositive power on 980,683 shares and shared dispositive power on 480,026 shares. The aggregate amount beneficially owned by Quaker Capital Management Corporation is 1,460,709 shares, representing 14.5% of the class of outstanding common stock. Quaker Capital Partners I, L.P. and Quaker Premier, L.P. have sole voting and dispositive power represented by the same amount of shares, 897,637; but no shared voting or dispositive power with Quaker Capital Management Corporation. The aggregate amount of shares of common stock beneficially owned by Quaker Capital Parners I, L.P. and Quaker Premier, L.P. is that shown, namely 897,637. This amount represents 8.9% of the outstanding common stock shares of Nucentrix. The report was made due to Quaker Capital Management Corporation ceasing to act as an investment advisor, effective as of June 24, 1999, with respect to one client that held 65,599 shares of the class of securities noted, and because of Quaker Capital Management Corporations' inadvertent overstatement in its original schedule to the SEC of shares beneficially owned by each of QCMC, QCPI and QP, which overstatement was said to have been caused by a mathematical error. PINNACLE BRANDS: Seeks To Retain Nightingale & Associates --------------------------------------------------------- Pinnacle Brands, Inc. and its affiliates seek a court order approving the retention of Nightingale & Associates, LLC as agent of the Bankruptcy Court to docket and maintain the large number of proofs of claim that will likely be filed in this case. Nightingale will receive its standard hourly rates charged by Nightingale in these cases and its actual expenses. SIRENA APPAREL: NASDAQ Delists Stock, No Other Listing Sought ------------------------------------------------------------- The Sirena Apparel Group, Inc. announced on July 8, 1999 that its common stock would be delisted from The Nasdaq Stock Market, effective at the close of business on July 9, 1999. Sirena, which filed a petition for bankruptcy protection under Chapter 11 of the Bankruptcy Code on June 25, 1999, no longer meets The Nasdaq Stock Market maintenance requirements. The Nasdaq Stock Market halted trading in Sirena's common stock on June 8, 1999. In light of its condition, the company does not currently intend to list its common stock on any other trading market. The company is a leading designer, manufacturer and marketer of branded and private-label swimwear, intimate apparel and resortwear under well-recognized brands that include Anne Klein, Liz Claiborne, Elisabeth, Sirena, Rose Marie Reid, Hang Ten, and Jezebel. STAR NEWCO: Seeks Extension of Exclusivity ------------------------------------------ The debtor, Star Newco, Inc. seeks a court order extending the period within which the debtor shall have the exclusive right to file a plan of reorganization and to solicit acceptances thereof. The debtor seeks to enlarge the Exclusive Filing Period by an additional one hundred twenty days, through and including November 5, 1999 and the right to solicit acceptances through January 4, 2000. Extending the exclusive periods will enable the debtor, in consultation with the Creditors' Committee and other creditor constituencies to continue to prosecute the environmental litigation in which the debtor is involved to see whether a negotiated resolution can be achieved in the litigation and to determine whether the debtor's streamlined business operations can function effectively and profitably now that the debtor has sold its Elgen Division and refocus its efforts on its core business. The debtor says that it has been able to reduce its debt from $8.3 million to just under $5.3 million. The debtor filed this case less than ten months ago and the debtor's new business plan has been in effect for about six month, most of which is during the debtor's "slow" season. STARTER CORP: Seeks To Reject Leases ------------------------------------ The debtors, Starter Corporation, et al., seek to reject certain leases with AT&T Systems Leasing Corporation, Ikon Office Solutions d/b/a IOS Capital Inc. and Mercantile Leasing Corporation. The debtors say that they are now burdened by unnecessary equipment, and that they have exercised sound business judgment in selecting the rejected equipment leases. SUN HEALTHCARE: Future Of Ballard Rehab Hospital In Doubt --------------------------------------------------------- The Business Press, Ontario, Calif. Knight Ridder/Tribune Business News reports that the future ownership of Ballard Rehabilitation Hospital in San Bernardino remains in doubt while its current owner's financial distress deepens. Ballard is owned by Sun Healthcare Group Inc. of Albuquerque, N.M., whose financial difficulties may be driving the company into bankruptcy court. On July 1, the company announced it failed to make a bank loan payment of $19.5 million. Sun's total bank loan, a senior credit facility, is held by several banks and amounts to more than $800 million. The banks holding the loan, acting on provisions in the loan agreement, previously stopped Sun from making an interest payment on its bonds due May 31. In a statement, Sun said it believed it had enough cash for day-to-day operations. Sun, which operates skilled nursing facilities and distributes medical supplies, is in the process of divesting its rehabilitation hospitals, including the 60-bed Ballard facility. Its financial difficulties may stymie that plan, though. "Sun has a buyer (for the rehab hospitals) and funding has been secured," said Robert Herrick, chief executive officer of Ballard. "But there is now speculation about bankruptcy, and it seems a question of which will happen first, that or closing the sale." Herrick would not name the buyer. Sun expects additional problems from the Balanced Budget Act of 1997, which has gradually reduced Medicare payments and funds California can pay out for Medi-Cal. Payments for rehabilitation services were also capped, as of Jan. 1, at $1,500 per beneficiary. That will impact Ballard, which derives 50 percent of its revenue from Medicare and another 25 percent from Medi-Cal, according to Herrick. On June 29, Sun's stock was delisted from the New York Stock Exchange. Sun's last trade, on June 28, was at 37 cents, down 98 percent from its 52-week high of $18.63. It is now quoted as a bulletin board stock. Sun has 10 local facilities in several cities between Pomona and Indio. Most offer skilled nursing services. Ballard is the only one of those facilities limited to rehab services. In total, Sun has nearly 600 facilities in five countries. TRANSTEXAS: Sues To Prevent Letter Of Credit Draw Down ------------------------------------------------------ TransTexas Gas Corp. has filed an adversary proceeding against workers' compensation insurers Zurich Insurance Co. and the Home Insurance Co. seeking, among other things, to prevent Zurich from drawing down on letters of credit securing the policies. The lawsuit, filed June 21 in the U.S. Bankruptcy Court in Corpus Christi, Texas, also seeks a permanent injunction against Zurich, the turnover of funds that the insurers hold in excess of the coverage, and an estimation of claims for allowance purposes. Allowing Zurich to draw down on the letter of credit would cause the natural gas explorer and producer "immediate and irreparable injury" as well as jeopardize reorganization efforts because under its debtor-in-possession credit agreement with Bank of New York, the lender is entitled to offset the letter of credit draw against the DIP revolver "thereby depleting the Debtor's limited available funds with which to operate during bankruptcy," TransTexas charged. (The Daily Bankruptcy Review and ABI Copyright c July 12, 1999) UNITED COMPANIES: Equity Committee Objects To Clayton Advisory -------------------------------------------------------------- The debtors seek approval to employ Clayton Advisory, Inc. to provide services with respect to bulk sale dispositions of REO properties, and to consummate bulk sales of REO properties. The Equity Security Holders Committee objects to the relief sought by the debtors, stating that the bulk sale dispositions are outside the course of the debtors' ordinary business and that the bulk sales might result in unacceptably depressed prices. The Equity Committee asks that the court at least impose certain safeguards providing a "floor" acceptable to the Equity and Creditors' Committee. Equity also objects to the $75,000 retainer to be paid to Clayton in that it should be a percentage of the purchase price of the bulk sales. VENCOR, INC: Ventas Extends June Rental Due Date ------------------------------------------------ On July 7, 1999, Vencor, Inc. announced that it and Ventas, Inc. have entered into further interim arrangements in which Vencor has agreed to make the June 1999 rental payments on various specified dates during July. Vencor and Ventas also have extended their existing standstill and tolling agreements. As extended, Ventas cannot exercise any remedy under the master leases through August 5, 1999 (or five days following any failure by Vencor to make any payment of June rent as rescheduled in accordance with the agreement) and neither party can bring any action against the other through August 5, 1999 unless Vencor fails to make such rescheduled payments. Vencor will have until August 10, 1999 to cure any default related to the non-payment of the July rent. Negotiations are continuing on an agreement for a permanent re- structuring of Vencor's financial obligations and a sustainable capital structure. Vencor reiterated that any such agreement is likely to result in existing Vencor stock having little if any value. Vencor is a long-term healthcare provider operating nursing centers, hospitals and contract ancillary services in 46 states. ********** The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. 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