/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990913.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 13, 1999, Vol. 3, No. 176 Headlines ALTA GOLD: Announces Several Court Decisions CENTENNIAL COAL: Settlement of Claims Between Debtors and Sunrise CRIIMI MAE: Apollo Real Estate Advisors Support Reorganization CRIIMI MAE: Committee Opposes Exclusivity Extension FORCENERGY: Order Authorizes Assumption of Drilling Contract GEMCOR: Files For Bankruptcy When Russian Fails To Pay HARNISCHFEGER: Papermaking-Equipment Company to Close 2 Factories HVIDE MARINE: Refinancing $240 Million in Debt ICO GLOBAL: Tougher Climb Than Iridium To Emerge From Bankruptcy IRIDIUM: Chooses To Litigate Bankruptcy Cases in Manhattan MAIDENFORM: Expects To Generate Wholesale Sales of $250M NEWCARE: Nursing Homes To Stay Open PAN AM: Announces Details of Renewed Passenger Service RAND ENERGY: Seeks Approval of Bid Procedures SA TELECOMMUNICATIONS: Seeks Approval of Litigation Counsel SINGER: Russian Deal Could Ruin Company SOUTHERN MINERAL: Considers Bankruptcy STUART ENTERTAINMENT: Committee Seeks Stay For Payments SUN TV: West Virginia Attorney General Cuts Deal TELEPAD CORP: Trustee Seeks To Employ Law Firm WSR CORP: Seeks To Extend Time To Assume/Reject Leases YUTE AIR: Submits Plan To Escape Bankruptcy BOND PRICING FOR WEEK OF September 7, 1999 ********** ALTA GOLD: Announces Several Court Decisions -------------------------------------------- Alta Gold Co., Las Vegas, announced yesterday that the bankruptcy court has taken the company's motion to dismiss its chapter 11 case off calendar, pending the resolution of the proposed sale of an interest to Olinghouse, according to a newswire report. Alta Gold also said that the court has denied its motion to extend the exclusivity period and has appointed a sales agent to assist in raising additional capital through the sale of various assets. Alta Gold is continuing negotiations with Olinghouse. (ABI 10- Sept-99) CENTENNIAL COAL: Settlement of Claims Between Debtors and Sunrise ----------------------------------------------------------------- The debtors, Centennial Coal, Inc. and its affiliated debtors seek approval of a settlement of claims between the debtor and Sunrise Coal Inc. The controversy between the parties arose from a certain Coal Washing and Service Agreement. The Settlement Agreement provides that Centennial shall receive payment of $745,832 from Sunrise. Sunrise shall purchase certain equipment from Centennial for a purchase price of $135,000. The Coal Washing Agreement shall be assumed by Centennial and any plan of reorganization shall incorporate the terms of the Settlement Agreement. CRIIMI MAE: Apollo Real Estate Advisors Support Reorganization -------------------------------------------------------------- Criimi Mae, Rockville, Md., announced yesterday that it has entered into a stock purchase agreement with an affiliate of Apollo Real Estate Advisors IV L.P., under which Apollo will purchase $50 million of a new series of convertible preferred stock, according to a newswire report. The stock would be part of the financing of an approximately $910 million reorganization plan to enable Criimi Mae to emerge from chapter 11 protection. The agreement, subject to the bankruptcy court's approval, has unanimous support from Criimi Mae's Board of Directors. The agreement and plan also call for about $435 million of debt financing, some of which would come from existing debtholders, and $425 million of additional amounts, most of which would result from the sale of certain commercial mortgage-backed securities. Criimi Mae has filed a motion to extend its exclusivity period by 60 days; a hearing is scheduled for today. Criimi Mae and two affiliates filed chapter 11 on Oct. 5, 1998. (ABI 10-Sept-99) CRIIMI MAE: Committee Opposes Exclusivity Extension -------------------------------------------------------------- The Official Committee of Unsecur3ed Creditors of Criimi Mae, Inc. oppose the motion filed by the debtors, seeking a further sixty day extension of exclusivity until November 10, 1999. The Committee state that the grounds in support of this opposition are stet forth in a confidential Memorandum, containing nonpublic information. The Committee seeks a n order permitting the Committee to file a plan of reorganization even if the debtors file a plan on or before September 10, 1999. FORCENERGY: Order Authorizes Assumption of Drilling Contract ------------------------------------------------------------ The US bankruptcy Court for the Eastern District of Louisiana entered an order authorizing Forcenergy to assume an amended drilling contract with Pool Company. Forcenergy is authorized to cure the defaults existing under the Drilling Contract by executing a promissory note in favor of Pool in the amount of $3.6 million. Pool claim under the Original Contract is allowed as a general unsecured claim in the amount of approximately $7.6 million. Demobilization charges under the Amended Contract, presently estimated by the parties at $400,000 will be reduced by 12 1/2% for each sixth through the eighth wells that may be drilled under the debtor's Gulf of Mexico drilling program for 1999-2000. GEMCOR: Files For Bankruptcy When Russian Fails To Pay ------------------------------------------------------ The Buffalo News reports on September 6, 1999, that Gemcor, the West Seneca aerospace fastener manufacturer that had planned to more than double its work force when it moved to a new plant in 1997, has filed for bankruptcy protection after a Russian customer failed to pay for $ 2 million in orders. Gemcor, which is located at 100 Gemcor Drive in West Seneca, said it will continue to operate under current management after filing to reorganize its finance under Chapter 11 of the U.S. Bankruptcy Code. The company, which makes equipment that the aerospace industry uses to install the fasteners and rivets that are used on commercial airplanes, now employs more than 100 workers, down from a peak of about 200. Gemcor executives said the company also has been squeezed by a slowdown in the aerospace industry, which led to a drop in the number of factories that are installing new capital equipment, like the automatic fastening systems that Gemcor makes. "The business downturn has required retrenchment by the company over the short term," Gemcor said in a prepared statement. Gemcor managers said the company previously has endured downturns within the industry, which caused the firm to start cutting costs after the slowdown became apparent. But those cost-cutting efforts could not prevent the bankruptcy filing after the company wasn't paid for two big systems ordered by a major Russian customer, who couldn't raise enough foreign currency to pay for the equipment as the depressed Russian economy continued to weaken. "We would not have been forced to file to obtain court protection if the company had been paid in full for two, very large, completed systems manufactured for delivery to Russia," Gemcor said. The systems now are in storage while the company awaits payment. Gemcor, which said it has more than $ 14 million in assets and roughly the same amount in liabilities, indicated that it is current in its obligations to the company's secured creditors. But the company, whose formal name is General-Electro Mechanical Corp., said it will have to restructure its debts to trade creditors. The company said the bankruptcy filing relieves Gemcor "from the distraction and expense of pending litigation. This court protection enables the management to focus on the business plan for the company." Gemcor executives said the company has made considerable investments in recent years to develop new technology that is 25 percent faster than conventional systems in addition to being easier to assemble and maintain. HARNISCHFEGER: Papermaking-Equipment Company to Close 2 Factories ----------------------------------------------------------------- THE MILWAUKEE JOURNAL SENTINEL reports on September 9, 1999, floundering Beloit Corp. said Wednesday it will close all its manufacturing operations in Beloit and Rockton, Ill., costing about 350 workers their jobs by early next year. The cuts follow five years of depressed pulp and papermaking equipment sales, a slump deepened last year by the Asian economic crisis. The move also comes barely three months after Beloit Corp.'s parent, Harnischfeger Industries Inc., filed for Chapter 11 bankruptcy protection. With the cuts, St. Francis-based Harnischfeger will have trimmed 3,750 jobs in a little more than a year. Beloit Corp. plans to close its PerformPro Pipe Roll Shop in Beloit, trimming about 40 hourly jobs, and shutter its Blackhawk plant in nearby Rockton, laying off more than 250 hourly workers. The remaining 60 jobs to be cut will be support positions at the two sites, including some white-collar jobs. Peter Rosenberg, Beloit Corp.'s director of corporate communications, said the shutdowns will be complete by Jan. 30 and that the layoffs of about 290 union employees will not occur for at least 60 days. He said jobs will be phased out as work is completed at the plants. "We don't understand, and we are very angry about it," said Mike Hornby, business representative for District 10 of the International Association of Machinists and Aerospace Workers, which represents the union employees. "This is the heart and soul of Beloit Corp.," Hornby said. He added that no severance package has been offered and that fewer than 20 workers would be eligible for retirement benefits. The cuts will leave the union's Local 1197 with about 50 members at Beloit Corp.'s research and development and field services operations in the area. Rumors of the layoffs had been strong for the last two months, Hornby said, but the union was not notified of the move until 9 a.m. Wednesday. Workers were told shortly thereafter. In the past year, the union has already lost nearly 200 members to downsizing at Beloit Corp. Those jobs were among roughly 3,400 trimmed by Harnischfeger worldwide. The majority came from the Beloit end of the business; Harnischfeger's mining business suffered fewer cuts. The latest trims leave Beloit Corp. with about 750 employees in its Beloit offices and 150 at its Rockton R&D center. An additional 30 work in Beloit Corp.'s Deerfield, Ill., headquarters. Beloit has about 5,000 workers worldwide. Rosenberg said the work previously done in the Beloit area would be spread between the company's plants in Poland and Brazil. Beloit Corp. also has facilities in Italy, England and France, all of which have been downsized in the last year. Mark Readinger, Beloit Corp.'s president and chief operating officer, said in a statement that the closings were a result of the depressed market for the company's products, which created excess capacity for all manufacturers of papermaking equipment. The company noted that its main competitor, Valmet-Rauma Corp. of Finland, expects its 1999 earnings to be half those of 1998. In addition, the down market has led to 17,200 job cuts in the U.S. pulp and paper industry, the largest single-year loss since a downturn in 1983. Readinger added that the market for large papermaking machinery "is not expected to return for at least 18 to 24 months." Beloit Corp. has seen its sales sag from nearly $ 1.3 billion in 1997 to about $ 830 million last year. Bookings to make new products dipped nearly 30 percent in the first three months of this year. The decline at Beloit Corp. has been a major contributor to 115-year-old Harnischfeger's mounting losses, which hit $ 90.7 million in the first six months of fiscal 1999, just before the company filed for protection. Analysts also have said that a soured Beloit Corp. deal in Indonesia cost the company about $ 300 million, ultimately driving Harnischfeger into bankruptcy. The latest trims, analysts said, are in keeping with the company's attempts to cut costs and capacity to more nearly match market demands. Earlier this summer, Harnischfeger closed its Princeton Paper Co. plant in Fitchburg, Mass., which was losing $ 2 million a month. The move cost 140 workers their jobs. Harnischfeger executives were at an off-site meeting Wednesday and could not be reached to comment on the Beloit Corp. layoffs and their long-term impact on the company. The stock market barely took note of the announcement, with Harnischfeger shares closing at $ 1.375, up 6.25 cents a share. The firm's stock has barely moved in price since a few weeks after the bankruptcy filing. HVIDE MARINE: Refinancing $240 Million in Debt ---------------------------------------------- The Sun-Sentinel reports on September 10, 1999 that with its coffers nearly bare and no way to make an already overdue payment to bond holders, Fort Lauderdale-based Hvide Marine said Thursday it filed for Chapter 11 protection from creditors in bankruptcy court, as it reorganizes its troubled finances. The marine services company said business would continue as usual while it refinances about $ 240 million in debt. Banks will extend a $ 60 million, debtor-in-possession credit to keep operations running. And if all goes as planned, Hvide said it expects to emerge from Chapter 11 by early next year. "Today's filing helps remove the cloud of uncertainty that has hung over the company for the last several months and gives us time to put our financial house in order," said Jean Fitzgerald, the industry veteran named CEO in June to help turn around the debt-ridden company. Restructuring and trimming debt should "strengthen our operating capabilities and enable us to be a financially sound and competitive enterprise going forward," Fitzgerald said. Wall Street analysts were not shocked by the move. In mid-August, after Hvide missed a $ 12.5 million interest payment to bondholders, the company warned that it might be forced to seek bankruptcy protection in September unless it could restructure its debt or sell new bonds. "I think they did pretty much what they could do," said Jim Rollyson, an equity analyst with Raymond James & Associates in St. Petersburg. "They couldn't refinance the debt, cash was running thin, and they could only sell assets today at depressed prices." The big question now is how fast Hvide can restructure and emerge from the Chapter 11 filing it made Wednesday night at U.S. Bankruptcy Court in Delaware. One point in its favor: Oil prices and drilling activity are picking up. That augurs for higher prices and more bookings for Hvide's services carrying supplies and crews to offshore oil rigs. "As long as crude prices remain firm, and oil field activity continues to increase, which I believe it will, then it's very possible Hvide can emerge from bankruptcy in early 2000," said Robert Ford, an equity analyst with CIBC Oppenheimer in Houston. Hvide got into financial trouble partly because it loaded up on debt to buy ships to serve the oil rig market. When oil drilling plummeted last year, the company faced a cash crunch. To address the problem, Hvide this summer tried to sell nearly $ 300 million in new bonds, but found few takers. It then asked existing bondholders to swap debt for stock, with no luck. Hvide seeks to swap bonds for new shares, refinance bank credit and give current stockholders either new shares or warrants to buy them. Current stockholders will see their holdings substantially diluted under the plans, said Hvide. "That's the risk of equity investing. You're the last one to get anything out of the deal," said CIBC's Ford. "There's been such a strong stock market for so long that sometimes we forget." Hvide's stock did not trade Thursday. It closed Wednesday at 56 cents. ICO GLOBAL: Tougher Climb Than Iridium To Emerge From Bankruptcy ---------------------------------------------------------------- Aviation Week and Space Technology reports on September 6, 1999 that ICO Global Communications could face an even tougher climb than Iridium does to emerge from bankruptcy, because the company still needs another $ 1.7 billion just to get its medium-Earth- orbit constellation up and running, financial analysts say. The $ 4.7-billion satellite telephone venture, a commercial spinoff of the London-based Inmarsat consortium, filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware on Aug. 27, exactly two weeks after competitor Iridium filed for protection in the same court. The big question now is whether ICO prime contractor Hughes and other investors will ante up more money or cut their losses and run -- even as several of ICO's 5,700-lb. spacecraft are nearing completion at Hughes' factory in Los Angeles. Hughes is under a $ 2.4-billion contract to build a dozen ICO satellites, including two spares, based on the HS 601 platform. The first of those had been scheduled for delivery this week for launch later this year. Two additional spacecraft are in system testing, a fourth is assembled, and the remaining eight are in various stages of assembly, ICO said. Commercial operations had been scheduled to begin in the second half of 2000, with the satellites relaying telephone calls across the globe. It was unclear last week how the bankruptcy would impact ICO's launch schedule. The company has contracted for 12 direct injections to an orbit 10,390 km. (6,450 mi.) above Earth, with five launches on the Delta III, four on the Proton, two on the Atlas IIAS and one on Sea Launch. HUGHES' EXPOSURE ON the project is about $ 500 million, which could be reduced to $ 300 million after tax writeoffs, the company said. That includes $ 60 million already invested as part of an agreement to take a 4% stake in the project and the value of satellite work that has not yet been paid for. TRW holds a 7% share it received to settle a patent infringement lawsuit against ICO. ICO's bankruptcy filing represents a reversal of fortune for a company that had been thought by some analysts to have a better business plan than Iridium. The medium-orbit ICO design permits global coverage with just 10 large satellites. By contrast, Iridium's low-Earth-orbit system requires 66 much smaller satellites. And ICO's spacecraft are designed to last for 12 years, compared to as little as five years for the Iridium satellites. Robert B. Kaimowitz, an analyst at ING Barings, estimated earlier this year that Iridium would have to wholesale its service at $ 1.40/min. to break even, while ICO could do the same for just 23 cents/min. Tim Logue, a space and telecommunications analyst in Washington, said ICO was so popular when it was being formed that it turned back $ 1 billion in extra commitments. But investors soured on the entire mobile satellite industry early this year after Iridium's financial woes came to light. Iridium already had its constellation in place and Globalstar, a satellite telephone venture that plans to start phasing-in service later this year, was able to complete its financing after Loral guaranteed a $ 500-million loan. Third-to-market ICO, however, was caught $ 1.7 billion shy of the $ 4.7 billion needed to finish its system. ICO failed to raise $ 500 million in a public rights offering. The company then sought to sell a $ 600-million stake to Hughes and other investors. But those negotiations faltered, leaving the company unable to meet a hefty interest payment due on Sept. 2. Financial analysts were somewhat split on ICO's future prospects. On the positive side, the company can afford to wait until Globalstar proves the validity of the market, said Citibank's Eva Hale Leighton. ''ICO has all kinds of time,'' she said at a Euroconsult conference in Paris last week. Despite the bankruptcy filing, Salomon Smith Barney is maintaining the bullish outlook it issued on ICO in early August. ''It's encouraging that key strategic investors continue to show strong support for the project,'' said analyst John Coates. ''It was more a question of timing and terms than getting investors to agree'' to put up more money. He added that the fundamentals of the project remained sound. But others were more bearish, noting that ICO still has to raise much more money than Iridium does. ''In terms of restructuring, all you've got to do is put $ 500 million or so into [Iridium] to get to cash flow break-even,'' Banc of America Securities analyst J. Armand Musey told Aviation Week. ''With ICO, you need to put in $ 1.5-2 billion . . . and you have all the technical risks.'' Moody's recently downgraded ICO's debt rating from B3 to Caa 2, compared to Caa 3 for Iridium, and is reviewing a further downgrade. William Kidd, an analyst at C.E. Unterberg Towbin, said ICO faces a "very, very difficult" challenge. He said the venture's fate may rest on how well Globalstar performs commercially. "If Globalstar goes incredibly well on Day One, maybe [ICO] can put together a round of financing," he said. "But Globalstar may take time to be successful." ICO CEO Richard Greco expressed confidence the bankruptcy filing would provide the company "the extra time needed to reorganize, recapitalize, and complete our financing." IRIDIUM: Chooses To Litigate Bankruptcy Cases in Manhattan ---------------------------------------------------------- After weeks of weighing its options, Iridium LLC has chosen to prosecute its Chapter 11 proceedings in the U.S. Bankruptcy Court in Manhattan, citing the locale's convenience to all parties involved. In an answer to the involuntary petitions filed in Manhattan against the company's Iridium Operating LLC and Iridium Capital Corp. subsidiaries on Aug. 13, Iridium stated that it is consenting to the jurisdiction of the court and is seeking to transfer the voluntary cases filed by the parent company and eight subsidiaries in Delaware on Aug. 13 to the New York venue. (The Daily Bankruptcy Review and ABI September 10, 1999). MAIDENFORM: Expects To Generate Wholesale Sales of $250M -------------------------------------------------------------- WWD reports on August 30, 1999 that Maidenform was weighed down with a litany of misfortunes over the past several years, which included Chapter 11 bankruptcy proceedings, sparse funding for product development, piece goods or deliveries, and a pack of corporate competitors who ate up market share and retail space. The 77-year-old Maidenform -- known by many as the grand dame of the foundations industry -- has emerged with the sense of relief that often accompanies the end of a crisis. Maidenform Worldwide exited Chapter 11 status in late July, securing $ 60 million in asset-based financing from GE Capital. The company, which filed for bankruptcy protection in July 1997, expects to generate wholesale sales of $ 250 million in 1999, said Maurice Reznik, president. Reznik said, "I believe one of the reasons we survived is because Maidenform is an extraordinarily resilient brand," he continued. "And I think consumers have been unaware of the situation at the company. It's amazing how a lot of people still think the 'I Dreamed...' ad campaign is still going on. Some brands transcend reality." Maidenform's 1999 ad budget, which excludes co-op ads and in- store support, is $ 2.5 million, said Reznik, adding that the budget in 2000 will be " significantly higher." In 1996, the annual budget was $ 5 million. Maidenform's financial woes apparently did not rub off on its consumer image. According to the 1997 Fairchild 100, a national survey of apparel brands conducted with The NPD Group, a research firm, Maidenform rated 30th out of 100 top brands, scoring higher than marquee names like Vanity Fair intimate apparel, Eddie Bauer sportswear and Rolex watches. In the 1995 Fairchild 100, Maidenform ranked 29th. At its height in the early 1990s, the company -- then headed by third-generation owner Elizabeth Coleman -- generated estimated annual volume of around $ 395 million. It was the most powerful, privately held innerwear firm in the U.S. As so many independent operations over the past decade, Maidenform was squeezed by huge overhead costs in a shrinking market as Fortune 500 companies such as Sara Lee, VF and Warnaco began launching a barrage of acquisitions and mergers. Maidenform's troubles began after its ill-fated purchase of 92 percent of NCC Industries in 1994 and its Lilyette full-figure bra brand, which could have made Maidenform a formidable force. But it proved to be a money pit. In the transaction, Maidenform had sold a 28 percent stake of its common stock to NCC's major shareholder, Triumph International. Triumph, based in Germany, is Europe's largest lingerie maker, with estimated yearly sales of over $ 2 billion. When Maidenform's debt began to balloon in late 1995 and 1996, and deliveries started to become sporadic, industry observers erroneously assumed that Triumph would be Maidenform's white knight. But Triumph officials have never commented. One Maidenform executive, though, privately said Triumph was "turned off by the promotional atmosphere at U.S. stores and working with American retailers." Over the past two years, the company has used a three-tiered strategy to get back on track: a restructuring of its financial and marketing units that resulted in several hundred job cuts throughout the company; aggressive new product introductions teamed with updated point-of-sale materials; an advertising campaign that included ads on kiosks and buses for the first time, and a seasoned management team, including Paul Mischinski, chief executive officer, and Reznik. Outlining how Maidenform turned the company around, Reznik noted, "The company couldn't function like a normal company. Basically, the company had to reinvent itself. It was a very dusty brand. The competition got stronger, so it raised the bar for us. We had to have bigger, better and more focused product introductions. NEWCARE: Nursing Homes To Stay Open ----------------------------------- A Bankruptcy Court examiner has agreed to keep 27 nursing homes owned by an Atlanta-based chain open through September while efforts continue to sell them. The ruling affects homes owned by the NewCare Health Corp. in Massachusetts, Georgia, Florida, Texas, Tennessee and Kansas. NewCare, which sought Chapter 11 protection in June, acquired its four Massachusetts homes in a bankruptcy sale in December. The homes include Pine Manor Nursing Home in Springfield, Elms Manor Nursing Home in Chicopee, Oak Manor Nursing Home in Holyoke and Meadowood in South Hadley. State and federal officials have said they are investigating allegations that the company pocketed money withheld from workers pay for health insurance and quietly emptied a $ 500,000 escrow account it had been required to post to get an operating license in Massachusetts. The company removed the money from an escrow account it established in January with a Boston law firm two days after state health officials confirmed the account had been established, according to a spokeswoman for the state Health Department. State officials said the department did not learn the money had been removed until August. PAN AM: Announces Details of Renewed Passenger Service ------------------------------------------------------ Pan American Airways today announced the details of its scheduled passenger service from Portsmouth, NH to Orlando/Sanford International Airport. Flights will begin October 7, 1999. Dave Fink, President of Pan Am said, "Pan Am's return to scheduled service is an exciting milestone for the airline, and we intend to offer comfort unseen on other airlines and convenience unavailable at major airports." The original Pan Am, founded in the late 1920's by Juan Trippe, set the standard for modern air travel worldwide as the operator of the famous Pan Am Clippers and, later, as the first to fly the Boeing 747. Along the way, Pan Am's blue globe became one of the most recognized logos in the world. The new Pan Am was acquired by the owners of New Hampshire-based Guilford Transportation Industries under a Plan of Reorganization approved by a Miami, Florida Bankruptcy Court judge in June of 1998. The new owners relocated the company's headquarters from Ft. Lauderdale to Portsmouth in December of 1998. At Portsmouth, the company operates a 220,000 square foot maintenance facility, as well as other aviation related businesses. RAND ENERGY: Seeks Approval of Bid Procedures -------------------------------------------------------------- The debtor, Rand Energy Company, seeks entry of an order approving bid procedures in connection with the sale of certain of the debtor's West Texas and Eastern New Mexico oil and gas properties. The debtor and Fagadau Energy Corporation entered into a letter of intent to sell these certain oil and gas properties. Under the terms of the Letter Agreement, the debtor will receive base cash consideration of $475,000. The debtor seeks an order approving the following procedures (among others) relating to the sale: Rand shall not actively market, sell negotiate to sell or attempt to sell the properties to any person other than Fagadau prior to the date on which the bankruptcy court commences a hearing to consider approval of the Purchase Sale Agreement. If Rand ultimately sells to an entity other than Fagadau, the sale must be for a minimum base purchase price of $525,000. SA TELECOMMUNICATIONS: Seeks Approval of Litigation Counsel -------------------------------------------------------------- The debtors, SA Telecommunications Inc. and its affiliates and the Official Committee of Unsecured Creditors seek entry of an order approving the selection and retention of litigation counsel as contemplated by the chapter 11 plan. The Disclosure Statement has not yet been approved and the plan has not yet been confirmed. The debtors expect such confirmation prior to November 19, 1999. After conducting substantial inquiries, the debtor sand the Committee have determined to separately select and retain Whitman Breed Abbott & Morgan LLP and Bragar Wesler Eagel & Morgenstern, LLP as litigation counsel to pursue such matters in a non-duplicative fashion. The Bragar Wesler firm will be responsible for the pursuit of potential claims against one or more of the debtors' directors and officers, some of which claims may be covered by applicable insurance coverages. Such retention specifically excludes the pursuit of potential claims against such persons for preferences and fraudulent conveyances. The firm's retention is expected to encompass two levels of engagement - investigation and, if appropriate, the pursuit of claims. The Whitman Breed firm will be employed as special litigation counsel to handle all other causes of action and litigation matters that fall within the plan's definition of "causes of action," specifically excluding matters upon which the firm is to be engaged. The initial funding of the Litigation Counsel shall be in the amount of $150,000. SINGER: Russian Deal Could Ruin Company --------------------------------------- The Guardian (London) reports on September 10, 1999 that Singer, the world's best-known sewing machine manufacturer, is threatened with financial collapse after becoming embroiled in a highly questionable Russian deal. The company has appointed one of New York's leading law firms to investigate its purchase of Podolsk, an industrial complex near Moscow. Its auditors, Deloitte and Touche, are refusing to approve last year's accounts largely as a result of the acquisition. Among the questions raised by the investigation is the involvement of Semi -Tech Global, the previous owners of Podolsk and a subsidiary of Semi-Tech, the Canadian conglomerate which owns almost 50% of Singer. The investigation is also looking into the use of Kellerman, a company based in the British Virgin Is lands and three Cypriot firms. The highly unusual nature of the purchase prompted Jerry Hostetter, a spokesman for Singer, to deny any involvement with what is expected to be the world's biggest ever money laundering operation involving the Bank of New York and the Russian mafia. Problems have arisen for Singer because of its payment of $50m for the Russian operation at the end of 1997. The company is understood to have been bought or transferred from Semi-Tech Global. Singer renegotiated this payment last month and announced that it expects to receive some $ 23.6m back from the deal by the end of September. So far, it has received just $ 6m and the seller failed to pay $ 1.5m due 10 days ago. In a statement the company said it had appointed Skadden, Arps, to investigate the Russian deal. Analysts believe that Singer faces bankruptcy unless it gets the money. Singer is understood to be facing demands from its own pension fund as well as bankers in the next 30 days. Semi-Tech itself filed for Chapter 11 bankruptcy protection earlier this week after facing increased demands from creditors. The company, which is officially based in Hong Kong, is run by the reclusive Chinese Canadian businessman, James Ting. As a result of its difficulties, analysts believe that Singer, which has 18,000 employees around the world, could be put up for sale. After sharp falls this week, its shares dropped to just above $ 1 yesterday, valuing the 148-year-old company at just $ 95m. It recorded a net loss of $ 207m in its unaudited 1998 accounts on sales of $ 1.26bn. SOUTHERN MINERAL: Considers Bankruptcy -------------------------------------- Southern Mineral Corp., Houston, announced that it has received an extension until Sept. 30 for the repayment of a $2.9 million Tranche A obligation under its domestic credit facility, according to a newswire report. Following the sale of its interest in the Texan Gardens Field on Aug. 31 and a reduction in staff by about 50 percent, the company is considering numerous financing sources to restructure its domestic bank debt. Southern Mineral said it may need to sell additional oil and gas assets or obtain additional financing from current or new lenders to raise the funds to meet the Sept. 30 payment deadline. If it is not able to raise sufficient funds, it will consider a merger, additional financing or equity sources, further reductions in costs and bankruptcy. Southern Mineral has oil and gas properties along the Texas Gulf Coast, Canada and Ecuador. (ABI 10-Sept-99) STUART ENTERTAINMENT: Committee Seeks Stay For Payments ------------------------------------------------------- The Official Committee of Unsecured Creditors of Stuart Entertainment, Inc. is seeking a court order staying the debtor from making payments to its pre-petition vendors and suppliers. The Committee is seeking the order to stop the debtor from paying virtually all pre--petition unsecured creditors holding claims on account of providing pre-petition goods and services to the debtor. The Committee states that the previous Payment Order was obtained inappropriately and without proper notice. The Committee alleges that the impression created by the debtor through its pleadings and representations inaccurately conveys the impression that the plan is a consensual one that resulted form extensive negotiation between the debtor and its creditors. The Committee is advised that the debtor negotiated the plan with one creditor, Contrarian. The debtor asserts that Contrarian is a large holder of notes with a face value in excess of $50 million. The Committee complains that although the Indenture Trustee was known to the debtor, the Indenture Trustee was not invited to participate in any of the negotiations which resulted in the filing of the plan. The Committee also complains that the debtor's largest unsecured trade creditor and the holder of 20% of the 12-1/2% subordinated notes were also excluded from any negotiations with respect to the plan. The Committee has concluded that the debtor's plan is not confirmable, in part, because of the treatment of Contrarian and the benefits afforded to it that are not enjoyed by similarly situated creditors. And secondly, by virtue of the Payment Order, pre-petition vendors and suppliers will have received cash payment s in the full amount of their claims, while noteholders, other than Contrarian, will receive illiquid stock in a private company. SUN TV: West Virginia Attorney General Cuts Deal ------------------------------------------------ West Virginia Attorney General Darrell McGraw announced a new agreement with TransAmerica Bank so that customers who bought merchandise from now bankrupt Sun TV and Appliance can have warranties honored, according to a newswire report. TransAmerica Bank will provide customers with prorated credits or refunds for the warranties. Sun operated stores in Charleston, Beckley, Huntington and Parkersburg, W.V. (ABI 10-Sept-99) TELEPAD CORP: Trustee Seeks To Employ Law Firm ---------------------------------------------- The Chapter 11 trustee in the case of Telepad Corporation, Kurt F. Gwynne, seeks authorization to employ the law firm of Klett Lieber Rooney & Schorling as gneeral general bankruptcy counsel. The Trustee is an associate with the firm. WSR CORP: Seeks To Extend Time To Assume/Reject Leases ------------------------------------------------------ The debtors, WSR Corp filed a motion seeking an order to extend the debtors' time to assume or reject unexpired leases of nonresidential real property. A hearing to consider the motion will be held on September 22, 1999 at 3:30 PM. The debtors claim that they need additional time before being compelled to make a decision to assume or reject nay or all of the unexpired leases. Granting the relief requested will provide the debtors with the time and flexibility they need to coordinate the assumption or disposition of their leases with the efforts of CDG to identify potential acquirers and the debtors' efforts in formulating and implementing a business strategy, both of which are predicates to the formulation of a confirmable plan of reorganization. The debtors wish to extend the period within which they must assume or reject the unexpired leases to December 6, 1999. YUTE AIR: Submits Plan To Escape Bankruptcy ------------------------------------------- The Anchorage Daily News reports on September 9, 1999 That bush carrier Yute Air Alaska submitted a plan to get out from under bankruptcy protection in federal court Tuesday. Having cut costs and sold seven planes, the Anchorage-based company managed to secure $ 1.5 million in credit, according to a plan filed in U.S. Bankruptcy Court in Anchorage. With the money, Yute will be able to keep operating and begin paying off its creditors, including $ 1.1 million owed to a state lending agency, $ 355,000 owed National Bank of Alaska and $ 162,000 owed the Internal Revenue Service. Last month, Yute planned to sell a seven-seat commuter plane to pay the tax bill. The day the deal was to close, the buyer pulled out and a $ 100,000 check to the IRS bounced, according to court documents. This week, the IRS filed a motion to force Yute to liquidate its holding, said Steve Warnke, vice president of finance for Yute. The court will act on that motion by Sept. 28, Warnke said. "The IRS is rattling its saber a little bit," Warnke said. "We'll most likely avoid that with this plan." Yute's plan still needs to be approved by creditors and the court. Yute has cut overhead costs by $ 15,000 per month, trimmed its fleet of planes by one-third and is making a bid for the profitable business shuttling passengers between Anchorage and Kenai, according to court filings. Yute was started by pilot and businessman Will Johnson with one plane in Dillingham in 1990. Six years later, Johnson had 20 aircraft connecting Bush villages to larger Western Alaska towns like Kotzebue, Aniak, Dillingham, Bethel and King Salmon, according to court documents. In 1997, Johnson bid for the next rung in the airlines business - - flights connecting Anchorage and those larger Western Alaska towns. Yute leased planes from Texas-based Merlin airlines. In the summer of 1997 and again in 1998, Western Alaska suffered poor salmon runs. That meant many of its potential customers lacked the cash to travel much. At the same time, Yute claims that Merlin failed to supply enough maintenance personnel or pilots. Poor service hurt business, which hurt Yute's ability to pay bills. During 1998, Merlin pulled its aircraft, according to Yute's court documents. The company claims Yute owes it $ 1.7 million -- a figure Yute disputes. After the Merlin pullout, Yute was left with a large debt load and only the thin business in the salmon- poor Bush to support the company. In January, Yute filed for Chapter 11 bankruptcy protection to buy time while the company reorganized. Since January, Yute has had a net loss of $ 30,000, according to court documents. But Yute has also sold seven planes and plans to sell two more. The company has also cut overhead costs. Breaking into the Anchorage-Kenai business would also help. The route is the busiest and most profitable in the state, according to Yute. Under Yute's bankruptcy plan, Nations Credit will supply Yute with the $ 1.5 million loan. Warnke said he hopes the company will emerge from court protection by Nov. 1. If the business goes as planned, company officials Yute will see a profit of $ 75,000 for the second half of 1999. BOND PRICING FOR WEEK OF September 7, 1999 ========================================== DLS Capital Partners, Inc., bond pricing for week of September 7,1999 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 17 - 20 (f) Amer Pad & Paper 13 '05 57 - 59 Asia Pulp & Paper 11 3/4 '05 67 - 69 E & S Holdings 10 3/8 '06 49 - 51 Geneva Steel 11 1/4 '04 13 - 15 (f) Globalstar 11 1/4 '04 63 - 64 Hechinger 9.45 '12 10 - 13 (f) Integrated Health 9 1/2 '07 25 - 28 Just for Feet 11 '09 29 - 33 Loewen 7.20 '03 54 - 56 (f) Planet Hollywood 12 '05 26 - 28 (f) Purina Mills 9 '10 24 - 27 Samsonite 10 3/4 '08 83 - 85 Service Merchandise 9 '04 18 - 19 (f) Sunbeam 0 '18 17 - 18 TWA 11 3/8 '06 64 - 66 United Artists 9 3/4 '08 31 - 34 Vencor 9 7/8 '05 28 - 30 (f) Zenith 6 1/4 '11 21 - 23 (f) ********** The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. 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