/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990819.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, August 19, 1999, Vol. 3, No. 160 Headlines ALTA GOLD: Hearing on Motion To Extend Exclusivity CHERRYDALE FARMS: Last Date For Creditors To File Proofs of Claim COUNTY SEAT: Last Day For Filing Proofs of Claim Set DEVLIEG-BULLARD: Meeting of Creditors DOW CORNING: Modifications To Amended Joint Plan DOW CORNING: Anderson Appointed CEO - Hazelton Remains Chairman FEDERAL EMPLOYEES: Order Approves Employ of Skadden, Arps GOODY'S: Reports Earnings For Thirteen Weeks Ended July 31 HECHINGER: Seeks To Pay $10 Million in Incentives IRIDIUM: Bankruptcy Halts Trading IRIDIUM: Involuntary Petition Filed in New York IRIDIUM: Plan May Put 30% of Firm in Bondholders' Hands IRIDIUM: Was Barclays Key Bondholder Behind Involuntary Petition? KIWI: Plans to Liquidate/ Auctions Furniture LEVITZ: Apollo's Motion For Classification of Claims LEVITZ: Balance Sheet LOEWEN: Procedures For Miscellaneous Sales LOEWEN: Fees Capped For Mercer MARINER POST-ACUTE: 3rd Quarter Net Loss Exceeds Net Revenues MEDPARTNERS: Second Quarter Loss Tops MOBILE ENERGY: Order Extends Exclusivity PLANET HOLLOYWOOD: Filing Expected In Near Future PLANET HOLLYWOOD: Plans to File Voluntary Chapter 11 RUSSELL CAVE: Hearing on Disclosure Statement SOURCEONE: Committee Objects To Sale TRIANGLE SHEET METAL: Case Summary & 20 Largest Creditors UNITED COMPANIES FINANCIAL: Bar Date Fixed VENCOR: Ventas Expects Bankruptcy ZENITH: Reports Second Quarter Net Loss of $20.9 Million ********** ALTA GOLD: Hearing on Motion To Extend Exclusivity -------------------------------------------------- Alta Gold Co. filed a motion to extend its exclusive period within which to file a plan, for an additional 60 days until October 11, 1999 and to extend its exclusive period within which to solicit acceptances of its plan, for an additional 60 days, to and including December 10, 1999. A hearing will be held before the Honorable Gregg Zive, US Bankruptcy Judge, 300 Booth Street, Reno, Nevada, on September 8, 1999 at 2:00 PM. CHERRYDALE FARMS: Last Date For Creditors To File Proofs of Claim ----------------------------------------------------------------- On April 17, 1999, the Bankruptcy Court entered an order establishing June 1, 1999 at 4:00 PM as the last date and time for filing proofs of claim against the debtor. COUNTY SEAT: Last Day For Filing Proofs of Claim Set ---------------------------------------------------- On August 5, 1999, the US Bankruptcy Court for the Southern District of New York entered an order in the cases of County Seat Stores, Inc., and CSS Trade Names, Inc., establishing September 15, 1999 as the last day for filing claims against the debtors. A meeting of creditors will take place on September 16, 1999 at 3:00 PM, 80 Broad Street 2nd Floor, New York, NY 10004. Chapter 11 Trustee: Alan Cohen Attorney for Chapter 11 Trustee: William M. Silverman, Esq. Otterbourg, Steindler, Houston & Rosen PC 230 Park Ave New York, NY DEVLIEG-BULLARD: Meeting of Creditors ------------------------------------- A chapter 11 bankruptcy case was filed on July 15, 1999 concerning the debtor, DeVlieg-Bullard, Inc., 1900 Case Parkway S, Twinsburg, Ohio 44087. Attorney for the debtor is Shawn M. Riley, 600 Superior Ave E, Bank One Center, #2100, Cleveland, Ohio. A meeting of creditors is set for September 13, 1999 at 1:30 PM at First Energy Building Atrium Level #120, 76 S Main St., Akron, Ohio 44308. DOW CORNING: Modifications To Amended Joint Plan ------------------------------------------------ As Judge Spector continues to entertain debate at protected hearings on the confirmability of the Joint Plan, the Debtor and the Tort Committee submit, pursuant to 11 U.S.C. Sec. 1125 and Rule 3019 of the Federal Rules of Bankruptcy Procedure, various modifications to the Joint Plan. Significantly: (1) the Reorganized Debtor will amend its corporate charter to prohibit the issuance of non-voting equity securities; (2) to the extent that Dow Chemical settles the Mahlum Claims prior to the Effective Date, Dow Chemical will hold an Allowed Class 16 Claim for the amount it pays, payable from the Settlement Facility. If the Mahlum Claims are not settled prior to the Effective Date and the existing judgment is affirmed on appeal, Dow Chemical may seek reimbursement from the Litigation Facility; (3) The Joint Plan is amended to reflect additional insurance settlement agreements entered into with A.C.E. Insurance Company, Allianz Verischerungs, A.G., Brittany Insurance Company Limited, and Employers Mutual Casualty Company; (4) the interest rate on the Senior Notes will be set based on a basis point spread above 10-year U.S. Treasury securities as of the Effective Date. That point spread will be determined by an Independent Underwriter under an elaborate scheme crafted with the Commercial Committee; (5) the Senior Notes, at the Debtor's sole option, (a) will not be redeemable at any time prior to their maturity; or (b) will be redeemable at a redemption price equal to the greater of (i) 100% of the principal amount to be redeemed or (ii) the sum of the present values of the remaining scheduled payments discounted to the date of redemption at the then-current yield to maturity for Treasury securities with a maturity closest to the maturity date for the Senior Notes plus a "make whole spread"; (6) the Reorganized Debtor will make periodic SEC filings so long as the Senior Notes are outstanding; and (7) a payment default of more than $100 million under the Funding Payment Agreement will constitute an event of default with respect to the Reorganized Debtor's obligations under the Senior Notes. None of these changes, the Debtor and the Tort Committee assure the Court and parties-in-interest, adversely change the treatment of any claim against the Debtor. (Dow Corning Bankruptcy News Issue 68; Bankruptcy Creditors' Services Inc.) DOW CORNING: Anderson Appointed CEO - Hazelton Remains Chairman --------------------------------------------------------------- The Dow Corning Corp. Board of Directors has named Gary E. Anderson president and chief executive officer effective today. Richard A. Hazleton will continue as chairman of the Board of Dow Corning. Anderson, Hazleton and Siegfried Haberer, executive vice president will continue as the Office of the Chief Executive Officer (OCEO). Hazleton noted that the move of Anderson to the CEO position was a natural next step in an orderly succession plan at Dow Corning. "Gary has done an exemplary job of leading this company through the Chapter 11 process, and now, with that hopefully approaching closure, it is appropriate that he assume the role of CEO to lead Dow Corning into the next century. To help make this a smooth transition process, I intend to support Gary and Siegfried and expect to continue to serve the Board as chairman for some time," Hazleton said. (Dow Corning Bankruptcy News Issue 68; Bankruptcy Creditors' Services Inc.) FEDERAL EMPLOYEES: Order Approves Employ of Skadden, Arps --------------------------------------------------------- The US Bankruptcy Court for the central District of California entered an order on August 11, 1999 approving the applciation of Federal Employees' Distributing company, d/b/a Fedco, Inc., debtor to retain Skadden, Arps, Slate, Meagher & Flom LLP as its attorneys. GOODY'S: Reports Earnings For Thirteen Weeks Ended July 31 ---------------------------------------------------------- Goody's Family Clothing, Inc. (Nasdaq/NM:GDYS) reported earnings for the thirteen weeks ended July 31, 1999. Net earnings increased 12.1% to $ 9.7 million compared with $ 8.7 million for the thirteen weeks ended August 1, 1998. Sales for the second quarter of fiscal 1999 increased 11.1% to $ 277.3 million compared with $249.5 million for the same period last year. Comparable store sales for the second quarter of fiscal 1999 decreased 3.4% from the same period in the prior year. For the twenty-six weeks ended July 31, 1999, net earnings increased 7.1% to $ 17.6 million compared with $ 16.4 million for the twenty-six weeks ended August 1, 1998. Diluted earnings per share increased 10.6% to $ 0.52 per share compared with $ 0.47 per share for the same period last year. Sales for the first six fiscal months of fiscal 1999 increased 12.8% to $ 537.2 million compared with $ 476.2 million for the same period last year. Comparable store sales for the first six fiscal months of 1999 decreased 1.2% from the same period in the prior year. As previously reported, Shoe Corporation of America, Inc. ("SCOA"), which is currently under Chapter 11 bankruptcy protection, operated licensed shoe departments in most of the Company's stores. As a result of SCOA's financial difficulties, the Company's licensed shoe department sales for the second quarter ended July 31, 1999, declined approximately 28% in total and approximately 41% on a comparable store basis from the same period in the prior year, which negatively affected the Company's overall comparable store sales for the second quarter of 1999 by approximately 1.5%. Under a tentative agreement with SCOA, the Company began stocking its own shoe departments on August 9, 1999, and expects to reach minimally acceptable levels by August 30, 1999. It is not anticipated, however, that the Company will achieve an appropriate shoe inventory mix until February 2000, the date when the SCOA agreement was originally set to expire. HECHINGER: Seeks To Pay $10 Million in Incentives ------------------------------------------------- Citing the "devastating" impact on employee morale and retention, Hechinger Co. last week asked the U.S. Bankruptcy Court in Delaware for approval to pay about $10 million in incentives to keep key executives and store staffers, The Washington Post reported. The Largo, Md.-based home improvement chain told the court that without approval of the incentive plan, "there exists a high probability that a substantial number of employees, particularly those working at the store level, may terminate their employment." Under the proposal, top executives would receive bonuses this fall and next year totaling up to 61 percent of their annual salaries. Certain store employees would receive payments worth 10 percent of their yearly wages; about 1,300 employees would get retention bonuses, assuming there are no additional cutbacks in the workforce. Since June 1, Hechinger's employment has dropped from 24,500 full-and part-time employees to about 12,300. Much of the drop is attributable to store closings, but some key employees have left the 117 stores that will remain open. IRIDIUM: Bankruptcy Halts Trading --------------------------------- Phillips Business Information, Inc. reports on August 16, 1999 that Iridium stock shares fell 28 percent Friday, nearly $1.20, to close at $3.06. Since the beginning of the year, Iridium's stock has lost 92 percent of its value. Bankruptcy was triggered by Iridium's failure to cough up $90 million in interest on $1.4 billion in bonds, says Michelle Lyle, Iridium spokeswoman. "We still have enough cash [to last us] for the next few months," Lyle adds. However, she would not disclose whether Iridium would get financial backing should the company restructure. Iridium filed in the U.S. Bankruptcy Court in Delaware after a group of bondholders sought an involuntary bankruptcy filing in New York. The fate of Iridium now rests upon a question of venue. Bondholders bet they have a better chance of getting their money back from New York courts. The filing halted the trading of Iridium shares. Analysts suspect bondholders may make out better in the event of restructuring than equity holders. With more capital invested in Iridium, bondholders represent greater strategic worth investors. Iridium defaulted on $1.5 billion in bank loans and failed to meet its deadline to fulfill conditions on an $800 million syndicated bank loan - a deadline that had been extended three times. It also defaulted on $750 million in loans guaranteed by Motorola [MOT], the biggest investor in the satellite company. IRIDIUM: Involuntary Petition Filed in New York ----------------------------------------------- Case Summary: Debtor: Iridium Operating LLC Iridium Capital Corporation 1575 Eye Street, NW Washington, DC 20005 Petitioners: Canyon Capital Advisors LLC As fund manager for The Value Realization Fund LP Magten Partners Wall Financial Investments (USA) Ltd. All represented by: John J. Rapisardi Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 212) 310-8000 Note: The debtor's voluntary petition was filed on August 13, 1999 in Wilmington. IRIDIUM: Plan May Put 30% of Firm in Bondholders' Hands ------------------------------------------------------- According to a report in The Wall Street Journal, August 18, 1999, Iridium LLC submitted a filing to the SEC containing its latest restructuring proposal. The plan would leave bondholders owning a third of the company. The proposal would convert most of Iridium's debt into equity. If approved, that would leave bondholders with a 30% stake in the company. For holders of an additional $500 million in debt obligations, primarily Motorola, Iridium proposed handing over another 12% of the company. Motorola already has an 18% stake, but that would get diluted somewhat due to the overall proposal. Iridium is also seeking extensions on syndicated bank loans that total $1.5 billion. IRIDIUM: Was Barclays Key Bondholder Behind Involuntary Petition? ----------------------------------------------------------------- Communications Daily reports on August 18, 1999, that Barclays Bank wouldn't comment on reports that it was the key Iridium bondholder behind involuntary bankruptcy filing in N.Y.C. Aug. 13, the same day that Iridium filed for Chapter 11 protection in Del. bankruptcy court (CD Aug 16 p1). Barclays was joint manager of an $800 million loan that was Iridium's main line of credit on which the company defaulted Aug. 11. Meanwhile, Iridium, which had expected to post 2d-quarter results this week, told SEC Tues. it needs more time to compile financial report, saying it would post "significant net loss" for first half of 1999, and still was in process of calculating value of its "long-lived assets." Nasdaq still wasn't trading Iridium shares Tues., pending receipt of information it requested from company late last week (CD Aug 17 p7). KIWI: Plans to Liquidate/ Auctions Furniture -------------------------------------------- Kiwi International Air Lines will file for Chapter 7 bankruptcy in five days unless the grounded, debt-ridden carrier finds an investor willing to bring it back from almost certain death, the airline's court-appointed trustee said Tuesday. "It means the ball game's over," said Charles Stanziale, standing in Kiwi's empty offices facing Newark International Airport. The tiny, Newark-based carrier is down to a skeleton staff of nine employees. The company auctioned off its office furniture Tuesday to help repay an $830,000 state loan. Auctions of spare plane parts are scheduled for next month in Atlanta and Chicago. The 7-year-old airline, which had four planes and flew to six cities before it was grounded earlier this year, owes $12.5 million in taxes and $20 million to creditors, said Stanziale. "I've searched high and low" for an investor to bring back the airline as a charter, rather than as a bargain commercial carrier, he said. But he has no likely prospects and will likely apply to change the airline's Chapter 11 bankruptcy filing to a Chapter 7, focusing on liquidation rather than reorganization. Kiwi has not had planes or permission to fly since March, when the Federal Aviation Administration said the carrier was unable to fly safely. Kiwi laid off nearly all of its 500 workers and surrendered its four leased jets shortly after declaring Chapter 11 bankruptcy. The FAA in April changed the revocation to a suspension, giving Kiwi time to find someone to rescue the airline. Pan Am Airways had offered to buy Kiwi in March for $3 million. But that plan collapsed when Kiwi could not immediately restore its flight certificate. On Tuesday, auctioneer Herbert Caspert led a listless group of 20 buyers through cluttered rooms of old furniture, trying to interest them in buying scores of battered desks, filing cabinets, a giant conference table and cubicle dividers. "Cheaper than Staples," Caspert said, trying to coax a $5 bid for a desk. The entire auction netted about $3,200 for Kiwi, Caspert said. No bids were made on about half the furniture. At its peak in the mid-90s, Kiwi had 1,200 workers who owned a controlling share of the airline, and 15 leased jets. The founding pilots and flight attendants named the airline for a flightless bird to symbolize how they had lost their wings -- and jobs -- when Eastern and other carriers failed. The airline, unable to compete with carriers with similar bargains and expanded flying schedules, declared bankruptcy in 1997, but was rescued by a Baltimore physician who invested a reported $21 million. But the airline continued to shed workers, routes, jobs and planes until declaring bankruptcy again this year. LEVITZ: Apollo's Motion For Classification of Claims ---------------------------------------------------- In 1996, Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo (U.K.) Partners III,, L.P., lent $35,000,000 to Levitz Furniture Corporation. In partial consideration of that loan, Apollo received a warrant to purchase a 14.44% equity stake at a strike price of one-cent per share before the expiration of 5 years. The other Debtors executed an Indemnity Agreement in Apollo's favor in the event that LFC failed to perform its obligations; that indemnity is secured by the Debtors' assets. Apollo says that the Warrant contains comprehensive antidilution provisions, including a provision that preserves Apollo's ability to obtain a 14.44% stake even in the event of any restructuring or workout. Levitz' Plan of Reorganization, Apollo contends, doesn't accord appropriate treatment to Apollo's claims, rights and interests. Apollo turns to Judge Walrath asking that the Court, using the mechanism set forth in Rule 3013 of the Federal Rules of Bankruptcy Procedure, judicially determine the status and classification of Apollo's claims prior to confirmation. Apollo argues that the Debtors' Plan must either provide for (a) Apollo's right to obtain a 14.44% equity stake in Reorganized Levitz or (b) grant Apollo an allowed secured claim to compensate Apollo for the loss of its right. LEVITZ: Balance Sheet --------------------- Levitz Bankruptcy News Issue 35 (Bankruptcy Creditors Services Inc.) reports that as of June 30, 1999, Levitz Furniture Incorporated and subsidiaries report: Total current assets 139,238,000 Total current liabilities 197,306,000 Total long-term liabilities 40,833,000 For six months ended June 30, 1999: Net Sales 119,988,000 Net Loss (6,489,000) LOEWEN: Procedures For Miscellaneous Sales ------------------------------------------ The Debtors want the Court to approve a set of procedures permitting them to liquidate various non-core, unprofitable assets, having a sale value of $2,000,000 or less per sale transaction, without specific Court approval for each transaction and without conducting an auction for each asset. The Debtors tell the Court that it will be more efficient if they are permitted to sell these De Minimis Assets without obtaining specific Court approval for each sale, because the administrative costs for drafting, serving and filing the pleadings, as well as time incurred by attorneys for appearing at Court hearings, is unjustified in light of the proceeds to be received from such sales. The Debtors further inform the Court that conducting auctions for each proposed sale will result in unjustifiable cost and delay, since many of the smaller sale transactions are expected to arise from unsolicited third-party offers. This kind of offer is subject, usually, to extremely short time constraints. The Debtors propose to give 10-days' notice of each sale of De Minimis Assets to (i) the U.S. Trustee; (ii) counsel to the Creditors' Committee; (iii) counsel to the DIP Lenders; and (iii) the holder of any lien, claim or encumbrance or other interest relating to the property to be sold. The Debtors remind Judge Walsh that he approved virtually identical procedures in In re Montgomery Ward Holding Corp., Case No. 97-1409 (PJW) (Bankr. D. Del. Aug. 26, 1997), for De Minimis Asset Sales up to $1,000,000. Further, all assets sold pursuant to these Miscellaneous Transaction Procedures will be sold "as is" and "where is," without any representations or warranties from the Debtors as to the quality or fitness of such assets for either their intended or any particular purpose. (Loewen Bankruptcy News Issue 8; Bankruptcy Creditors' Services Inc.) LOEWEN: Fees Capped For Mercer ------------------------------ The United States trustee raised a concern with the Debtors and Mercer about Mercer's proposed $600 billing rate for its top professionals. In light of the concern expressed by the U.S. Trustee, the Debtors and Merger have agreed that Mercer will cap its professionals' billing rates at $400. Additionally, Mercer agrees to cap expense reimbursements to 10% of its fees. Mercer agrees that these discounts will be retroactive to the Petition Date. (Loewen Bankruptcy News Issue 8; Bankruptcy Creditors' Services Inc.) MARINER POST-ACUTE: 3rd Quarter Net Loss Exceeds Net Revenues ------------------------------------------------------------- Mariner Post-Acute Network, Inc. (NYSE: MPN) announced operating results for its third fiscal quarter which ended June 30, 1999. For the third fiscal quarter, the Company recorded net revenue of $365.3 million, a net loss of $405.7 million and a net loss per basic and diluted share of $5.51. These results include $351.0 million in unusual charges to earnings. These results compared with net revenue of $494.1 million, a net loss of $0.2 million and a not loss per basic and diluted share of $0.01 for the 1998 third fiscal quarter for Paragon Health Network, Inc. As previously disclosed, the Company has undertaken certain initiatives, which include focusing on core businesses and the closure, or divestiture, of non-core businesses, in an effort to mitigate the substantial negative effects on the Company of the change to Prospective Payment System reimbursement. The Company views its core businesses as (1) the operation of inpatient skilled nursing facilities; (2) the operation of long-term acute care facilities; and (3) the provision of institutional pharmacy services to internal and third party customers. Non-core businesses which have been divested, or are scheduled to be divested by September 30, 1999, include outpatient rehabilitation clinics, hospital rehabilitation program contract management, home health services and hospital based geropsychiatric program management. Operating results for the third fiscal quarter have been severely impacted by PPS implementation, therapy caps and decreasing Medicare census. In addition, the Company's pharmacy business is experiencing declining margins as a result of the impact of PPS implementation on its customer base. "As a result of the 1997 Balanced Budget Act and its implementation, Mariner is paid on the average, approximately $115.00 less per Medicare patient day," George Morgan, chief financial officer for Mariner Post-Acute Network said. "Our management focus continues to be on issues we can control, including reducing overhead, improving inpatient operations, selling non-core businesses and collecting cash. Hopefully, Congress and the White House will work together to pass Sen. Hatch's bill, Medicare Beneficiary Access to Quality Nursing Home Care Act, and restore funding to care for our seniors." The Medicare Beneficiary Access to Quality Nursing Home Care Act of 1999 (S.1500) would provide payment add-ons to 15 specific payment categories where there are high concentrations of patients with medical conditions that require high utilization of non-therapy ancillary services. Second, the bill will restore for three years 1% to the annual market basket update that was reduced in the 1997 Balanced Budget Act (BBA). S.1500 would address the discrepancy between the actual increase in costs incurred by skilled nursing facilities and what the current market basket update provides. To achieve the Company's objective of reducing annual corporate overhead by at least $50 million, and eliminating the distraction of non-core businesses, the following milestones have been achieved: * Exited the contract therapy business, resulting in over 7,000 layoffs * Insourced therapy services in Mariner's nursing homes * Closed 16 remote offices in 12 states * Eliminated over 180 corporate positions * Reduced corporate senior management positions by over 50% * Sold all corporate aircraft * Sold the outpatient rehabilitation clinics * Sold the hospital rehabilitation management contract business * Sold a portion of the home health operations * Sold the Company's New London corporate office building The Company continues to pursue further opportunities to reduce overhead and divest non-core assets. The Company continues reviewing its operations and has engaged financial advisors to assist in preparing cash forecasts. The Company is in the process of evaluating the impact of its future cash flows on the company's long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." The Company expects to complete its review of operations and its evaluation of future cash flows during the fourth fiscal quarter ending September 30, 1999. The Company's Form 10-Q for the quarterly period ended June 30, 1999 further details that the Company was in violation of certain covenants within its two credit facilities with bank groups led by the Chase Manhattan Bank and PNC Bank. The Company does not intend to pursue short-term waivers of these covenant violations and will instead use its $94.5 million of invested cash as of June 30, 1999 to operate the business pending a permanent restructuring of the related indebtedness. Mariner Post-Acute Network, Inc., headquartered in Atlanta, Georgia, operates more than 400 skilled nursing, sub-acute and assisted living facilities with approximately 50,000 beds. American Pharmaceutical Services, the Company's institutional pharmacy group, operates 41 institutional pharmacies, serving more than 1,000 facilities, comprising approximately 125,000 beds. In addition, the Company's Specialty Hospital group operates 11 LTAC hospitals in key markets. (Healthcare Business Reporter 19-Aug-1999) MEDPARTNERS: Second Quarter Loss Tops ------------------------------------- MedPartners Inc.'s second-quarter loss widened as it took another charge relating to its discontinued physician-practice management business, which is in bankruptcy in California. MedPartners posted a loss of $187.6 million, or a loss of $96 cents a share, compared with a loss of $23.3 million, or a loss of 12 cents a share for the same period last year. The net loss includes an additional $199.3 million charge for discontinued operations. The additional charge follows a $1.23 billion charge recorded in the fourth quarter to exit its physician practice operations. MedPartners said it has received approval from bankruptcy court to sell its California physician practice assets, including operations of the bankrupt MedPartners Provider Network Inc. (BestWire, July 26, 1999). The company said discontinued operations lost $199.3 million, or a loss of $1.02 a share, widening the loss of $24.1 million, or a loss of 13 cents a share, from the same period last year. Despite problems with the physician practice management business, MedPartners said its revenue had grown 25% to $796.2 million from $639.5 million, and its Caremark Pharmaceutical Group, a pharmacy benefit group, has been profitable. Operating income rose to $43.1 million from $32.5 million. Net income from continuing operations rose to $11.7 million or 6 cents a share, up from $800,000, or 1 cent a share, for the same quarter last year. On March 11, the California Department of Corporations assumed control of MedPartners Provider Network, and state regulators filed Chapter 11 bankruptcy for the network. Since then, regulators have agreed to allow MedPartners Inc. represent its subsidiary in the bankruptcy proceedings (BestWeek, April 26, 1999). MedPartners is selling its provider network, a physician-practice management company that acts as a middleman, selling physicians' services at wholesale prices to health maintenance organizations. To date, MedPartners has either sold, or agreed to sell, most of its California PPM operations; 20 practices outside of California remain to be sold. MedPartners' stock is listed on the New York Stock Exchange under the symbol "MDM." Its price was $7.375 a share Monday afternoon. (Best Company, Inc. 16-Aug-99) MOBILE ENERGY: Order Extends Exclusivity ---------------------------------------- By order of the US Bankruptcy Court for the Southern District of Alabama, dated August 12, 1999, the exclusive period of the debtor, Mobile Energy Services Company, LLC and Mobile Energy Services Holdings, Inc. is extended to and including October 18, 1999, provided however that such extension shall not be applicable to the Ad Hoc Bondholders committee; and it is further ordered that the period to solicit acceptances to the plan is extended to and including December 13, 1999, provided however, that such extension shall not be applicable to the Ad Hoc Bondholders Committee. The Ad Hoc Bondholders Committee shall have the right to file a plan of reorganization, and seek acceptnaces thereof, on or after August 13, 1999. PLANET HOLLOYWOOD: Filing Expected In Near Future ------------------------------------------------- According to a report in the Los Angeles Times on August 18, 1999 Planet Hollywood International Inc., plans to file for bankruptcy reorganization to restructure its operations. The Orlando, Fla.-based chain -- whose shareholders include actors Bruce Willis, Arnold Schwarzenegger and Sylvester Stallone -- said it has lined up a $30 million cash infusion from two of its largest shareholders, a Saudi prince and a Singapore billionaire. But company officials also said they are negotiating with lenders the terms of a pre-packaged Chapter 11 bankruptcy filing. Planet Hollywood owns 48 restaurants, and franchisees own 32. The company also owns eight sports-themed All Star Cafes -- whose investors include athletes such as Tiger Woods, Joe Montana, Andre Agassi and Wayne Gretzky -- and a handful of other themed restaurants. Founder and Chief Executive Officer Robert Earl said in an interview Tuesday that Planet Hollywood will make the Chapter 11 filing sometime within the next two months. Among other things, the move will allow the company to get out of high-cost long-term leases in money-losing locations. Earl said "the majority" of restaurants would be kept. "Nothing's happening to the restaurants," he said. "It's business as usual." Planet Hollywood shares traded at 75 cents Tuesday before trading was suspended at midday pending the bankruptcy announcement. The company went public at $18 a share in 1996 and traded as high as $28.50. The company has been trying to refinance $250 million of debt since April, when it defaulted on $15 million in interest payments to bondholders amid lagging sales at its restaurants. Planet Hollywood is the latest in a number of themed restaurants that are struggling to overcome a major hurdle: luring customers back for repeat visits. High prices and mediocre food are two factors that have led to stalled sales at some locations. Earl said the new $30 million investment -- which is tied to the approval of a restructuring plan -- would come from three of Planet Hollywood's major shareholders, Saudi Arabian Prince Alwaleed Bin Talal and Singapore billionaire Ong Beng Seng, along with a trust benefiting Earl's children. Celebrity investors generate much of the publicity with their appearances at the chain's restaurant openings, but Schwarzenegger, Stallone and Willis actually own less than 20 percent of Planet Hollywood. "I have spoken to them all today," Earl said of the three actors, adding that they expressed "continued support (along with) disappointment that it occurred." PLANET HOLLYWOOD: Plans to File Voluntary Chapter 11 ----------------------------------------------------- The Planet Hollywood restaurant chain plans to file voluntarily for Chapter 11 bankruptcy protection while it attempts to restructure its operations. Planet Hollywood International, Inc. (NYSE: PHL) announced it has entered into an agreement in principle with a subcommittee representing holders of its Senior Subordinated Notes due 2005 and with an investor group organized by Robert Earl, the Company's founder and Chief Executive Officer, to restructure the Company's financial position. The plan is designed to enable Planet Hollywood to resolve its financial difficulties, stemming in part from its rapid expansion in 1996 and 1997, while positioning the Company for a return to long-term profitability. The plan includes a $30 million equity investment from an investor group including two of the Company's largest shareholders, HRH Prince Alwaleed Bin Talal and Mr. Ong Beng Seng, and a Trust in which the sole beneficiaries are Mr. Earl's children. This capital infusion will provide the Company with the necessary working capital to continue moving forward with its strategy to improve performance by refocusing on its core base of Planet Hollywood restaurants and disposing of non-core businesses and unprofitable units. The proposed plan is conditioned upon acceptance of the offer by holders of not less than $160 million of the Notes. The plan has already received the unanimous support of the subcommittee, representing a minority of the Notes. The subcommittee, which was advised by Houlihan, Lokey, Howard and Zukin, will recommend acceptance of the agreement to an informal committee representing a majority of the $250 million outstanding principal amount of the Notes. Planet Hollywood has been in default on interest due on the Notes since April 1999. The proposed agreement provides for the satisfaction of the Notes through the issuance of a combination of $47.5 million of cash, $60 million of New Secured PIK Notes, and New Common Stock, which will give holders of the Notes a 26.5% equity stake in the reorganized Company. The investor group will invest $30 million to purchase a 70% equity stake in the reorganized Company and will assist in obtaining a minimum $40 million bridge facility (the "New Senior Secured Notes"), which will be secured by substantially all assets and will receive 3.5% of the New Common Stock. The liens of the New Secured PIK Notes will be subordinate to the New Senior Secured Notes and up to $25 million for a working capital facility. In addition, all currently existing shares of the Company's common stock will be canceled and exchanged for 200,000 New Warrants for the New Common Stock exercisable for three years. The exercise price of the New Warrants will be set at a level such that the Warrants will be "in the money" only to the extent unsecured creditors, including holders of the Notes, are paid in full. Under the proposed plan, the Company's Board of Directors will be reconstituted to consist of five members designated by the investor group organized by Mr. Earl and two members designated by the holders of the Notes. Planet Hollywood will attempt to negotiate the restructuring of various of its leasehold and other debt obligations as part of a definitive reorganization plan. The restructuring will be effected through a voluntary pre- negotiated or pre-packaged chapter 11 filing, subject to formal documentation. The Company intends to continue its operations in the normal course of business as it implements its business plan to refocus its core Planet Hollywood operations, reduce overhead costs, and continue the disposition of excess assets. Planet Hollywood's objective is to finalize and implement the restructuring prior to year-end. However, there is no assurance that the restructuring will be effectuated or as to the final terms of the restructuring. RUSSELL CAVE: Hearing on Disclosure Statement --------------------------------------------- The hearing to consider the approval of the Disclosure Statement of Russell Cave Company, Inc. f/k/a The J. Peterman Company will be held on September 9, 1999 at 2:30 PM in the US Bankruptcy Court, 300 Community Trust Bank Building, 100 East Vine Street, Lexington, Kentucky. SOURCEONE: Committee Objects To Sale ------------------------------------ The Official Committee of Unsecured Creditors of SourceOne Wireless, Inc. objects to the debtor's sale of its assets to Aquis Communications, Inc. The Committee states that the sale would terminate the debtor's existence and any possibility of reorganization. Furthermore, the Committee alleges that proceeds of the sale would benefit only certain secured creditors, primarily Foothill Capital, the Lender. "The Debtor and Lender are trying to get a free ride on the bankruptcy system to transfer the assets free and clear of all liens and encumbrances with the Court's blessing under 363. In the meantime, the Debtor and Lender have goaded the unsecured creditors with their meaningless promises that an expedient sale will produce the greatest return on the Debtor's assets, and a potential recovery for unsecured creditors. The proposed sale to Aquis is wholly objectionable in that it provides no equity for the estate, it essentially dictates the terms of the yet-to-be- filed plan of reorganization, and circumvents the policies of a Chapter 11 reorganization." Under the proposed sale agreement, Aquis is to acquire substantially all of the Debtor's assets, including the Subscribers, the Calling Party Pays Platform, certain Tower Network locations and certain FCC licenses, for a total of $4 million in cash and $3.375 million of Aquis 7.5% preferred stock, payable at closing. As the secured debt owed to the Lender exceeds $19 million, and the other secured debt exceeds $6 million, it is clear that the sale proceeds will only benefit the Lender and/or other secured creditors. The Debtor has conveniently also entered into a Management Agreement with Aquis, which provides that Aquis will handle the day-to-day management of the Debtor, including retaining responsibility for the Debtor's ongoing Midwest operations, and the funding of operating losses through the closing date. The Committee charges that the Debtor is proposing a sub rosa plan, and that the Debtor has failed to assert sufficient business justifications for the sale. TRIANGLE SHEET METAL: Case Summary & 20 Largest Creditors --------------------------------------------------------- Debtor: Triangle Sheet Metal Works, Inc. 115 New Hyde Park Road New Hyde Park, New York 11040 Type of Business: Manufacturing and installation of HVAC Duct Work Court: Southern District of New York Case No.: 99-50117 Filed: 08/11/99 Chapter: 11 Debtor's Counsel: David L. Barrack Gainsburg & Hirsch LLP One Penn Plaza New York, NY 10119 (212) 736-3636 Total Assets: $7,500,000 Total Liabilities: $6,832,471 No. of shares of common stock 100 1 holder 20 Largest Unsecured Creditors: Name Amount ---- ------ Sheet Metal Workers Union 1,971,673 - Local 28 Trident Mechanical Systems 695,295 Cambridge Leasing Corp 144,000 Mate Matura Insulation 92,430 Imperial Damper & Louver Co. 49,212 Passaic Metal Products co. 47,308 Albert Weiss Air Cond. Products 44,150 Mazur, Carp & Rubin PC 41,532 SW Anderson Sales corp. 36,774 Village of New Hyde Park 34,340 Brothers Insulation Co. Inc. 32,000 Shear-Rite Steel Corp 31,422 Pacesetter Steel Service 22,980 Bush Wholesalers, Inc. 20,506 Baldwin Steel Company 20,314 Prest-O-Sales & Service, Inc. 18,427 Hugh Richards, Inc. 16,268 Long Island Power Authority 15,780 Arlen Damper Corp. 15,631 Hilti Inc. 15,564 UNITED COMPANIES FINANCIAL: Bar Date Fixed ------------------------------------------ On July 27, 1999, the court entered an order establishing September 30, 1999 as the last date and time for the filing of proofs of claim against the debtors, United Companies Financial Corporation, et al. VENCOR: Ventas Expects Bankruptcy --------------------------------- The company that owns most of Vencor Inc.'s nursing homes and hospitals says it expects the beleaguered company to file Chapter 11 bankruptcy. Ventas Inc. said it expects the filing even if Vencor persuades its creditors to let it restructure its $ 1 billion load of debts and rent obligations. The disclosure came in Ventas' quarterly financial report filed Monday with the Securities and Exchange Commission. Ventas was formed last year when Vencor split its real-estate division into a separate company. Ventas gets nearly all its income from the $ 18.9 million in monthly rent it receives from Vencor. Those rental payments have been at least one month late since April. Ventas' report points out that Vencor has said bankruptcy is a possibility if an agreement cannot be reached with its creditors. But it goes on to say: "Whether or not an agreement is reached, the company believes that Vencor will file a petition under Chapter 11 of the Bankruptcy Code." Ventas announced that its second-quarter rental income was $ 57.2 million, including $ 56.3 million from Vencor. Net income for the period ended June 30 was $ 20.2 million, or 30 cents per share. Funds from operations, another performance indicator for real- estate investment trusts, totaled $ 31.1 million, or 46 cents per share. To cushion the blow if Vencor goes bankrupt, Ventas has built up $ 70 million in cash reserves. That reserve could be used toward the $ 275 million debt it has due Oct. 30. Ventas had outstanding debt of $976 million at the end of the second quarter. ZENITH: Reports Second Quarter Net Loss of $20.9 Million -------------------------------------------------------- Zenith Electronics Corporation (OTC Bulletin Board: ZETHQ) reported a second-quarter 1999 net loss of $20.9 million, or 31 cents per share, compared with a net loss of $31 million, or 46 cents per share, in the second quarter of 1998. Excluding restructuring charges, the quarterly loss narrowed to $16.8 million in 1999 from $26.2 million in 1998. Second-quarter 1999 operating results reflect increased sales of higher margin products, reduced manufacturing costs and lower operating expenses. Selling, general and administrative expenses were $25.4 million in the second quarter of 1999, compared with $31.2 million in the 1998 period. Second-quarter sales were $217 million in 1999, down 3 percent from $224 million in 1998. ********** 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, Yvonne L. Metzler 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. 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