/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/990923.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, September 23, 1999, Vol. 3, No. 184 Headlines AMPACE CORP: Applies To Employ Davenport, Files & Kelly APS: Texas Taxing Entities Object To Confirmation of Plan BOSTON CHICKEN: Creditors Opposed to Exclusivity Extension BREED TECHNOLOGIES: Methode Discusses Impact of Bankruptcy CRIIMI MAE: Apollo Real Estate To Invest In Company's Shares CRIIMI MAE: Declares Dividend Payment In New Series Of Stock DOW CORNING: Motion To Compromise Stabiles Claim EATON'S: To Sell More Assets, Possibly by Month's End ELDER BEERMAN: Will Work With Dissident Shareholders ENSEC INTERNATIONAL: Finkel Grants Proxy To Rosa ENSEC INTERNATIONAL: Letter Of Intent To Sell Certain Assets FORCENERGY: Objection To Disclosure Statement GENEVA STEEL: Seeks Approval of Sale of Keigley Quarry Property HARNISCHFEGER: Motion To File Attorneys' Fees Under Seal ICF KAISER: Restructuring Plan Designed To Reduce Costs IMAGYN MEDICAL: Seeks Extension of Exclusivity INCO HOMES: Closing Down Operations/Shareholders Loss Probable LIBERTY HOUSE: Order Extends Time To Assume or Reject Leases MEDPARTNERS: Seeks Extension of Exclusivity MENATAP BANK: One Of Russia's Largest To Liquidate NOVACARE: Auditor Questions Viability ORBITAL SCIENCES: Removes Registration Of Subordinated Notes QUADRAX CORP: Plan of Reorganization With EB Acquisition ROOM PLUS: Order Authorizes Arthur Andersen SGSM ACQUISITION: Court Fixes Bar Date SKYTELLER: Emerges From Chapter 11 As a Subsidiary of First Data SMITH CORONA: Sales Decrease, Losses Increase STUART ENTERTAINMENT: Receives Nod For $30 M DIP STUART ENTERTAINMENT: Implementation of Restructuring Plan TRANSTEXAS GAS: Credit Suisse Demands To Be on Committee VENCOR: Analysts Think Vencor Still May Survive VENCOR: Motion To Honor Prepetition Employee-Related Obligations WESTMORELAND COAL: Offers To Purchase Series A Preferred Stock ********** AMPACE CORP: Applies To Employ Davenport, Files & Kelly ------------------------------------------------------- Ampace Corporation and Ampace Freightlines, Inc. applied for authorization to employ and retain Davenport, Files & Kelly LLP as special counsel for the debtor. The firm will defend Freightlines in the Parker Action, a case alleging improper denial of health insurance benefits. The firm charges hourly rates ranging from $150 per hour to $110 per hour for attorneys. APS: Texas Taxing Entities Object To Confirmation of Plan --------------------------------------------------------- The County of Brazos, City of Bryan, College Station Independent School District, County of Denton, County of Leon, City of Buffalo, Buffalo Independent School District, City of Waco, Waco Independent School District and Midland Central Appraisal District, represented by Michael Reed, Esq., of McCreary, Veselka, Bragg and Allen, P.C., in Austin, Texas, object to confirmation of the Joint Plan. The Joint Plan, the Texas Taxing Authorities say, is ambiguous. To the extent that the Debtors intend to classify their claims as priority tax claims rather than secured claims, the Texas Taxing Authorities object to confirmation. If, however, the Debtors intended to recognize the secured nature of the Texas Taxing Authorities' claims -- based on applicable Texas statutes -- then they have no objection to confirmation of the Plan. (APS Bankruptcy News Issue 22; Bankruptcy Creditors' Service Inc.) BOSTON CHICKEN: Creditors Opposed to Exclusivity Extension ---------------------------------------------------------- The official committee of unsecured creditors of Boston Chicken Inc. is turning up the heat on the fast food chicken retailer's increasingly contentious reorganization effort. The committee on Friday filed an objection under seal to Boston Chicken's motion for an extension of its exclusive periods to file a plan of reorganization and solicit plan acceptances. Shortly before the committee's objection was filed, Boston Chicken asked the court to order that the document be filed under seal. (The Daily Bankruptcy Review and ABI Copyright c September 22, 1999) BREED TECHNOLOGIES: Methode Discusses Impact of Bankruptcy ---------------------------------------------------------- Methode Electronics, Inc. (Nasdaq: METHA) today announced that on Monday, September 20, 1999, one of its automotive customers, Breed Technologies, Inc. and certain of Breed's domestic subsidiaries, filed a Voluntary Petition for Reorganization under Chapter 11 of The Bankruptcy Code. Methode is unable to predict how much, if any, of its current outstanding balance with Breed will be collected in the future. Because of this uncertainty, Methode is considering a charge to earnings of approximately $3,000,000, equal to about $0.06 a share during its second quarter ending October 31, 1999. The amount of the charge will depend upon the Breed Technologies bankruptcy proceedings. In its news release, Breed announced that it had received a commitment from its lending group for up to $125,000,000 for Debtor-In-Possession (DIP) financing. The Breed release further stated that the DIP financing, which is subject to court approval, is expected to provide adequate funding for all post-petition trade and employee obligations." Methode's worldwide sales to Breed have recently been averaging about $5,000,000 per quarter. CRIIMI MAE: Apollo Real Estate To Invest In Company's Shares ------------------------------------------------------------ Criimi Mae Inc. reports to the SEC that it entered into a Stock Purchase Agreement with an affiliate of Apollo Real Estate Advisors IV, L.P. Under the agreement, Apollo will purchase $50 million, (up to $61 million under certain circumstances), of a new series of convertible preferred stock which would be part of the financing of an approximately $910 million plan of reorganization whereby the company would emerge from Chapter 11. The agreement, which is subject to bankruptcy court approval, received the unanimous approval of Criimi Mae's Board of Directors. The special reorganization committee, composed of the outside directors of the company, recommended Board approval of the agreement with Apollo. In addition to the new equity investment, the agreement and the proposed plan call for approximately $435 million of debt financing, some of which would come from existing debtholders, and $425 million of additional amounts, the bulk of which will result from the sale of certain commercial mortgage-backed securities. Prior to October 5, 1999, ( a date which could be extended under certain conditions), Apollo has the right to commit to purchase the commerical mortgage-backed securities at specified spreads over relevant treasury rates. The company would retain related servicing rights so long as Apollo controls the entity which holds these bonds. At the company's option, up to $11 million of the $425 million of the additional amounts may come from a rights offering in which existing common stockholders would be able to purchase new preferred stock on a pro rata basis. The new preferred stock to be purchased by Apollo would be convertible into common stock at an initial conversion price of $3.25 per share, subject to an initial adjustment based on the company's debt costs and thereafter subject to certain anti-dilution adjustments. Eighteen months from the issuance of the preferred stock, the conversion price would be subject to a one-time revision if the average market price during two 60-day reference periods is less than $4.75 per share. If such a revision is necessary, the revised conversion price will become a percentage, (60% to 70% based on an agreed schedule), of the average market price during the reference periods. Under the proposed plan, the existing Series B Preferred Stock would become junior to the new preferred stock for 20 months and pari passu thereafter, with the current Series B dividend subject to upward adjustment as a result of confirmation of the proposed plan by the bankruptcy court. The Series C and Series D Preferred Stock would be redeemed in accordance with their terms. Holders of the company's publicly-traded 91/8 % Senior Notes and other unsecured creditors would be paid in full, a portion in cash and a portion in new debt. Pursuant to the agreement, the Board of Directors will be increased to nine members with holders of the new preferred stock electing four of the members. Criimi Mae has agreed that it will file a motion for expedited approval of certain provisions of the agreement involving, among other things, a buyer break-up fee and buyer reimbursement and commitment fees. The agreement is also subject to certain other conditions, including an eighteen-business day due diligence condition. Criimi Mae Chairman, William B. Dockser said, "The agreement is an important step toward emerging from Chapter 11. Apollo's investment with us provides additional capital while the plan to sell commercial mortgage-backed securities slims down Criimi Mae. Taken in its entirety, the agreement and the proposed plan establish a base for growth." CRIIMI MAE: Declares Dividend Payment In New Series Of Stock ------------------------------------------------------------ CRIIMI MAE Inc. reports to the SEC that on September 14, 1999, the Board of Directors of Criimi Mae Inc. declared a dividend for common shareholders of record as of October 20, 1999. The dividend will be payable on November 5, 1999 in up to an aggregate of 1.61 million shares of a new series of $10 Face Value Series F Redeemable Cumulative Dividend Preferred Stock. The distribution is designed to satisfy the company's remaining federal income tax obligation for the 1998 tax year. Holders of record of each share of Criimi Mae common stock will be entitled to receive 3/100ths of a share of the new Series F Dividend Preferred Stock (i.e., three shares of Series F Dividend Preferred Stock for every 100 shares of common stock held). Series F Dividend Preferred Stock will be issued in whole shares, with shareholders receiving cash from a transfer agent for their fractional share interests at a price equal to the average sales price of all aggregated fractional shares sold by the transfer agent, less transaction costs. The Series F Dividend Preferred Stock will be convertible into shares of common stock during two, 10-business day windows: the first commencing on November 15, 1999, and the second commencing on January 21, 2000. Conversions will be based on the volume-weighted average of the sale prices of the common stock for the 10-trading days prior to the date converted, subject to a floor of 50% of the volume-weighted average of the sale prices of the common stock on November 5, 1999. At the end of the second conversion period, February 4, 2000, all conversion rights of Series F Dividend Preferred stockholders will expire. The Series F Dividend Preferred Stock provides for cash dividends at an annual fixed rate of 12%. The first dividend will be paid no earlier than the end of the calendar quarter in which the company's anticipated plan of reorganization becomes effective, and no more than quarterly thereafter. Series F Dividend Preferred Stock is redeemable at the company's option after November 5, 2000 at a price of $10.00 per preferred share plus accrued dividends. On an historical note: on October 5, 1998, Criimi Mae Inc. and two affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Before filing for reorganization, the company 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 commerical mortgage-backed securities acquisition businesses. The company continues to hold a substantial portfolio of subordinated commerical mortgage-backed securities and, through its servicing affiliate, acts as a servicer for its own as well as third party securitizations. DOW CORNING: Motion To Compromise Stabiles Claim ------------------------------------------------ Prior to the Petition Date, Rebecca and Robert Stabiles obtained a $1,745,000 judgment against Dow Corning in the Superior Court of Los Angeles County, California. Dow Corning perfected an appeal and the bankruptcy filing stayed further litigation. Mr. and Mrs. Stabiles have each filed a proof of claim for $1,745,000 against Dow Corning. Following negotiation, the Stabiles have agreed to consolidate their claims, reduce them to $1,200,000, and waive all claims to post-petition interest. Dow Corning believes this is a fair and reasonable compromise. Accordingly, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, Dow Corning asks Judge Spector to approve this compromise and settlement in all respects. (Dow Corning Bankruptcy News Issue 69; Bankruptcy Creditors' Service Inc.) EATON'S: To Sell More Assets, Possibly by Month's End ----------------------------------------------------- Canadian retailer T. Eaton Co. said this week it expects to sell its remaining assets by the end of the month, according to Reuters. On Monday the company announced it had sold its name, trademark and eight of its stores to Sears Canada Inc., but the company still has its flagship store in Montreal and 45 others to sell. The 130-year-old department store chain has received interest in the remaining assets and has already accepted an offer for its main distribution warehouse in Toronto. Eaton's sought protection from creditors under the Bankruptcy and Insolvency Act on August 23 and plans to apply next week to the courts under the Companies Creditors' Arrangement Act. (ABI 22- Sept-99) ELDER BEERMAN: Will Work With Dissident Shareholders ---------------------------------------------------- Top executives of Elder-Beerman Stores Corp. have met with dissident major shareholders Snyder Capital Management LP and PPM America Inc. and will work with the money management firms to make the retailer profitable again, an Elder-Beerman executive said Tuesday. "We have had meetings with both of these shareholders in which we discussed their requests," said Scott Davido, chief financial officer and treasurer for Elder-Beerman. "We want to be cooperative and work with these shareholders. The board currently is evaluating their requests." Snyder Capital Management of San Francisco and Chicago-based PPM America, Chicago, who together hold nearly a third of Elder-Beerman shares, urge in new Securities & Exchange Commission filings that the board get two new faces. The requests were made in letters sent to Elder-Beerman Chairman and Chief Executive Frederick J. Mershad. The demands of the money management firms differ from that of David Nierenberg, another major Elder-Beerman shareholder who asked in August that the board either replace the company's two top officers or sell the 60-store chain. Nierenberg has threatened to call a special meeting of Elder-Beerman shareholders if the company isn't on the rebound by the year's end. If management doesn't fix the company by Christmas, said Nierenberg, or if the board doesn't fix management, "there is enough support to call a special shareholders meeting and have the shareholders make whatever changes we think are necessary." Nierenberg, whose investment group holds 849,000 shares or 5.5 percent of Elder-Beerman shares, said linking with Snyder and PPM will give them 37.7 percent of the outstanding stock. He said they can gather support from other large shareholders and raise that to more than the 51 percent needed to summon a special meeting. In its SEC filing, Snyder Capital Management, holder of 19.6 percent of the stock, requested that two board members be replaced. Margo Murtaugh, portfolio manager, said Elder-Beerman could benefit from new directors with wider experience. She said the board, chosen with creditor input after the Chapter 11 reorganization, is weighted with people experienced in bankruptcy matters. "It would be good to have some new talent," Murtaugh said. She had no particular directors in mind for removal. However, she said the Snyder Capital may have replacement candidates in mind but declined to elaborate. Murtaugh also urged Elder-Beerman to revoke the company rule requiring a super majority or 72 percent vote to remove directors and the staggered year election of directors. Murtaugh said Snyder Capital is not working in concert with Nierenberg. But she said his August call to action spurred the company to ask for changes. However, she said Snyder disagrees with Nierenberg in wanting top management fired. "We are supportive of management and of the chairman and chief executive, Fred Mershad," Murtaugh said. "There have been mistakes made, but he is a seasoned executive and these things happen in business. It seems that he is moving forward." PPM America's filing is similar to that of Snyder Capital Management but asks that the board be expanded by two members. PPM also asks that the posts of board chairman and chief executive be held by separate individuals. While Snyder Capital Management and PPM America urge changes, the companies have heavily increased their holdings this year. In Elder-Beerman's May proxy statement, Snyder Capital is listed as holding 1.7 million shares, or 10.8 percent, of the common stock. As of last week, the company held 3.2 million shares, or 19.6 percent. PPM America held 786,765 shares, or 5 percent, last May. Currently, the company holds 1.95 million shares, or 12.6 percent. Murtaugh said they bought more stock in August when the share price plummeted to 5 a share after management warned that the fiscal second quarter loss would be greater than expected. In late August, Moraine based Elder-Beerman reported a fiscal second quarter net loss of $1.3 million. At that time, Mershad pledged that the company would turn itself around in time for the holiday shopping season. Mershad also announced a program to repurchase $24 million of company shares. Elder-Beerman shares (NASDAQ:EBSC) closed Tuesday at 6 9/16, off 1/16. ENSEC INTERNATIONAL: Finkel Grants Proxy To Rosa ------------------------------------------------ On September 9, 1999, Ronan C. do Couto Rosa was granted a proxy from Charles Finkel, sole beneficial owner, whether directly or indirectly, of Fugrow Investments, Inc., Tecpo Comercio e Representacoes Ltda. Brazil, Mayfair Ltd. Partnership and Mayfair Co. (collectively, the "Finkel Entities"). By virtue of the proxy, Mr. Rosa may vote an aggregate of 3,425,000 shares of common stock of Ensec International, Inc., which constitutes approximately 57% of the company's outstanding common stock. The proxy has been granted by Mr. Finkel pending the execution of a definitive stock purchase agreement between Mr. Rosa and the Finkel Entities under which Mr. Rosa will acquire the shares from the Finkel Entities. It is contemplated that the acquisition will be consummated for consideration of $1.00 plus the assumption by Mr. Rosa of all personal liabilities (including certain personal guaranties not in excess of $2,200,000) of Mr. Finkel in connection with the company and the release of Mr. Finkel from such liabilities. Upon completion of the acquisition, neither Mr. Finkel nor the Finkel Entities will own or vote any shares of common stock of Ensec International. Mr. Finkel was the President, Chief Executive Officer and a director of the company prior to the issuance of the proxy. He resigned from all of his offices and positions with the company as of September 9, 1999. The company's Board of Directors adopted resolutions by unanimous written consent on or about September 9, 1999 to increase the size of the Board of Directors from three to four directors, nominate and elect Ronan C. do Couto Rosa to fill the Class III directorship vacated by Mr. Finkel; nominate and elect Fernanda Rosa to a Class III directorship with a term expiring at the annual shareholders' meeting for 2002; and nominate and appoint Mr. Rosa to the offices of President and Chief Executive Officer, which offices were vacated by Mr. Finkel, to serve the balance of the unexpired term. ENSEC INTERNATIONAL: Letter Of Intent To Sell Certain Assets ------------------------------------------------------------ On September 9, 1999 Ensec International entered into an Asset Purchase Letter of Intent with American Computer Machines Enterprises, Inc. which expresses their mutual understanding about the terms and conditions of an agreement in which American Computer Machines Enterprises will purchase certain assets of the company. The consideration to be paid will be determined by mutual agreement pending the performance of an independent appraisal of the assets by an investment banking firm. American Computer Machines Enterprises has agreed to pay $150,000 to the company as soon as practicable, in contemplation of the execution of a definitive asset purchase agreement and as an advance on the purchase price. The parties contemplate that the asset purchase will include the company's En2000(TM) software. The value of the software was previously written off by the company and is not reflected in the financial statements of the company. FORCENERGY: Objection To Disclosure Statement --------------------------------------------- Ocean Energy, Inc., a creditor of Forcenergy Inc. and Forcenergy Resources, Inc. claims that Exhibits 5 through 10 of the Disclosure statement are incomplete indicating that information is "to come." Ocean Energy, Inc. objects to the Disclosure Statement because it is inadequate to inform creditors whether to accept or reject the plan. Ocean Energy can not determine whether its proof of claim is adequate as filed or whether it needs to be amended pursuant to claims arising under rejected contracts with the debtors and whether to vote in favor or against the debtor's plan of reorganization. GENEVA STEEL: Seeks Approval of Sale of Keigley Quarry Property --------------------------------------------------------------- Geneva Steel Company seeks an order approving the sale of the debtor's property known as the Keigley Quarry Property. The property covers approximately 1,415 acres and includes both patented and unpatented mining claims as well as water rights and certain personal property owned by the debtor and located at the site. The purchaser is Oldcastle, Inc. and the purchase price is $10 million, $8.5 million to be paid in cash at closing and $1.5 million to be paid after issuance of a governmental land use permit, subject to certain conditions. Closing is subject to the debtor's not accepting any higher and better offers for the Keigley Quarry Farm Property prior to closing. HARNISCHFEGER: Motion To File Attorneys' Fees Under Seal -------------------------------------------------------- Elam & Burke; Michael Best & Friedrich; Cooma, Lau & Loh; Mayer Brown & Platt; Brand & Novak; McDermott Will & Emery; Kirkland & Ellis; Clifford Chance; and Wachtell, Lipton, Rosen & Katz will provide litigation services to the Debtors during their chapter 11 cases. Because professionals retained in a bankruptcy case are required to file detailed descriptions of the services they perform when requesting interim compensation, the Debtors are concerned that opposing parties will intercept these records, be able to ascertain the Debtors' litigation strategies, and the likelihood of success in litigation will be compromised. To solve this problem, the Debtors ask Judge Walsh to approve the public filing of redacted fee applications and the simultaneous filing of unredacted fee applications under seal with service only on the Committee and the U.S. Trustee. (Harnischfeger Bankruptcy News Issue 11; Bankruptcy Creditors' Service Inc.) ICF KAISER: Restructuring Plan Designed To Reduce Costs ------------------------------------------------------- ICF Kaiser International Inc. reports gross revenue for the quarter ended June 30, 1999 of $219,880 as compared with the same period of 1998 when gross revenues were $263,129. For the six months ended June 30, 1999 gross revenues were $445,377 compared to the same period of 1998 with gross revenues of $519,968. Net income for the quarter 1999 was $28,831 while in the 1998 same quarter there was a net loss of $35,668. In the six month period net income was $23,112 and net loss $35,223, 1999 and 1998 respectively. The company reports that its restructuring plan includes actions to realign and reduce its post-divestiture overhead cost structure such that the remaining levels are appropriate for its continuing operations. Elements of the overhead reduction plan include an approximate 25% personnel reduction in the company's wholly-owned North American operations, downsizing facilities, closing of marginally profitable office locations, discontinuing certain business offerings, improving direct labor utilization on projects and enhancing project controls to minimize risks of future contract losses. The company indicates that because of certain centralized aspects of its organization structure that existed prior to completing certain divestitures, the cost reduction elements of that phase of the plan could not begin effectively until after the divestitures were completed. According to the company, the results of the rightsizing should be evident in its operating results after June 30, 1999. IMAGYN MEDICAL: Seeks Extension of Exclusivity ---------------------------------------------- Imagyn Medical Technologies, inc., et al., debtors, seek entry of a court order extending by 60 days the debtors' exclusive periods within which to file a plan or plans of reorganization And solicit acceptances thereto. The debtors seek a 60-day extension through and including November 15, 1999 of the period during which the debtors will maintain the exclusive right to file a plan resolving this case, as well as a corresponding 60-day extension from November 15, 1998 through and including January 13, 2000 of the period during which the debtors will Have the exclusive right to solicit acceptances to such a plan. The debtor s seek this relief in an abundance of caution in order to maintain exclusivity through the schedule contemplated for plan confirmation. The debtors have already obtained approval of their Disclosure Statement and remain confident that they will succeed in their request that this court confirm the plan. INCO HOMES: Closing Down Operations/Shareholders Loss Probable -------------------------------------------------------------- Inco Homes is closing down operations as its efforts to raise capital have been unsuccessful. Therefore, projects the company was building for others for a fee are being returned to the owners, one project was sold to its second trust deed lender and another project is being deeded to its second trust deed lender who intends to build it out with another builder. Land that the company owns is being offered for sale. The company's liabilities exceed its assets by a significant amount and it is unlikely that shareholders will receive anything upon liquidation or dissolution of the company. LIBERTY HOUSE: Order Extends Time To Assume or Reject Leases ------------------------------------------------------------ The Honorable Lloyd King, US Bankruptcy Court, District of Hawaii entered an order on September 13, 1999 extending the time within which the debtor must assume, assume and assign or reject the debtors' leases through and including January 31, 2000. MEDPARTNERS: Seeks Extension of Exclusivity ------------------------------------------- The debtor, Medpartners Provider Network, Inc. seeks an extension of the debtor's plan exclusivity periods. A court approved Global Agreement establishes the terms and conditions of a funding commitment by MedPartners, Inc. and form a framework for the orderly disposition of the debtor's operations and MedPartners, Inc.'s physician practice management assets located in California. The requested 60-day extension is consistent with the terms of the Global Agreement, and the debtor claims that the requested extension of the exclusive periods will enable the significant work performed by the debtor, the parties to the Global Agreement and the representatives of all of the constituencies who participated in the Global Agreement negotiations to come to fruition in the form of a plan of reorganization that maximizes the return for creditors. The debtor requests that the court extend the exclusivity period in which the debtor may file a plan by an additional 60 days to December 3, 1999. In the event that the debtor files its plan by December 3, 1999, the debtor requests that its period to solicit acceptances of the plan be extended for 60 days to February 1, 2000. MENATAP BANK: One Of Russia's Largest To Liquidate -------------------------------------------------- Creditors of the defunct Russian bank Menatep voted to liquidate the institution, one of the country's largest banks, a newspaper reported Wednesday, quoting the bank's temporary manager. Menatep was dealt a crippling blow in last year's financial crisis, then had its license revoked in May and had all but ceased operations. "Unfortunately, Menatep's current financial situation gave creditors no other option than to call for bankruptcy," temporary manager Alexei Karmanov told the Moscow Times, adding that 99 percent of creditors had approved the motion in a meeting last weekend. The creditors' decision must be considered by a Moscow arbitration court, which still hasn't decided the bank's fate. Karmanov said that temporary administrators would have trouble finding all of Menatep's assets because the bank's former managers withheld information on its foreign bank accounts, according to the Moscow Times. Menatep denied holding back any information. The ailing bank's reported assets stand at the equivalent of $1.57 billion, which is the same amount the bank owes its creditors, Karmanov said. But temporary managers said the bank's actual assets could be as low as the equivalent of $175 million, with the rest consisting of loans that probably won't be paid back. Menatep was one of several big banks that collapsed in the wake of the August 1998 economic crisis, when the government defaulted on $40 billion of treasury debt and devalued the ruble. Millions of Menatep account holders lost their savings after the bank, like many others, failed to pay out depositors, or offered them only a small fraction of their money. Menatep is also reportedly being investigated as part of a U.S. probe into whether billions of dollars were laundered by Russians through a New York-based bank. According to some reports, Menatep funneled much of its money through the bank. Menatep has denied any wrongdoing. NOVACARE: Auditor Questions Viability ------------------------------------- PricewaterhouseCoopers LLP, the independent auditor to NovaCare Inc., has raised significant doubt as to the company's viability as a going concern, according to a filing with the Securities and Exchange Commission. The Pennsylvania-based provider of rehabilitation and employee services reported a loss of $189.6 million for the year ended June 30. PricewaterhouseCoopers also cited NovaCare's $175 million of convertible subordinated debentures due Jan. 15. According to the SEC filing, last month the NovaCare Board of Directors approved a restructuring to generate the funds needed to make the payments. (ABI 22-Sept-99) ORBITAL SCIENCES: Removes Registration Of Subordinated Notes ------------------------------------------------------------ Orbital Sciences Corporation is removing from registration its 5% Convertible Subordinated Notes due 2002, together with the related shares of Orbital Sciences Corporation common stock issuable upon conversion of such notes. Under the terms of the Registration Rights Agreement dated September 16, 1997 between Orbital and the initial purchasers of the 5% Convertible Subordinated Notes due 2002, Orbital was required to keep the registration statement effective until September 16, 1999. Orbital has filed a post-effective amendment to remove from registration $100,000,000 aggregate principal amount of the 5% Convertible Subordinated Notes due 2002, together with the related shares of Orbital common stock issuable upon conversion of such notes, which remain unsold as of the date of its post-effective amendment. QUADRAX CORP: Plan of Reorganization With EB Acquisition -------------------------------------------------------- The US Bankruptcy Court for the District of Rhode Island has approved the Joint Disclosure Statement filed by Quadrax Corporation and the investor, E.B. Acquisition, LLC as containing adequate information as required in the Bankruptcy Code. The plan provides that the existing shareholders will cumulatively receive 5% of the outstanding new shares in the reorganized debtor in a reverse stock split. Unsecured creditors will receive an immediate distribution of approximately 5.6 cents per dollar of their claim. In addition, creditors will receive 1.29 shares of stock in the reorganized debtor per dollar of their claim. Under the terms of the plan, creditors have an absolute right to turn in their stock to an investment broker (Pond Equities, Inc) within the first year for a guaranteed price of five cents per share. As a result, the guaranteed value of the cash and the stock is approximately 12 cents per dollar of claim. This return could be higher depending upon the value of the re-issued stock. The investor shall receive 49% of the outstanding new shares of the reorganized debtor. The reorganized debtor shall issue a note to the investor in the amount of $2.45 million, repayable in two years, bearing 8% per annum interest. The investor will deposit $1 million to cover all administration and priority expenses due. Victel and Victor shall be merged into the debtor, and the reorganized debtor will assume all obligations of Victel and Vicotr including the secured obligation of Congress Financial Corp. In addition, the note obligation will be secured by a second position lien, subordinate to the lien of Congress, against all assets of the debtor. The reorganized debtor intends to continue its thermoplastic tape business through an anticipated arrangement with the Fuller Company pursuant to terms and conditions of a formal agreement to be negotiated by the investor and Fuller, and subject to approval of the Bankruptcy Court prior to confirmation of the plan. The hearing on confirmation of the plan will be held on October 21, 1999 at 9:30 AM. ROOM PLUS: Order Authorizes Arthur Andersen ------------------------------------------- The debtor, Room Plus Inc. is seeking authority from the US Bankruptcy Court for the District of New Jersey to employ Arthur Andersen LLP as accountants to the debtor. The firm will undertake the performance of certain accounting functions for the debtor, including review and updating the debtor's books and records, analyzing the profitability and tax consequences of various properties, preparing audited financials, preparation of tax and other filings required by the SEC, preparation of required tax returns and monthly reports, attending meetings with the Creditors' Committee and other parties-in-interest and assisting the debtor in formulating a plan of reorganization. SGSM ACQUISITION: Court Fixes Bar Date -------------------------------------- On September 10, 1999 the US Bankruptcy Court for the Eastern District of Louisiana entered an order fixing October 31, 1999 at 5:00 PM as the Bar Date, the last date for creditors to file proofs of claim or interest in the case of SGSM Acquisition Company, LLC. SKYTELLER: Emerges From Chapter 11 As a Subsidiary of First Data ---------------------------------------------------------------- SkyTeller, LLC announced that all conditions to the effective date of its Plan of Reorganization ("the plan"), have now been satisfied and that the plan is effective according to its terms. The plan had been confirmed on September 8, 1999, in the United States Bankruptcy Court for the District of Colorado. Under the plan, creditors are to be paid in full, with interest, and First Data Corp. (NYSE: FDC) is to assume full ownership of the reorganized company. SkyTeller, a development stage company based in Englewood, Colo., provides innovative and convenient foreign currency exchange services for international travelers. Through SkyTeller In- Flight Services(R), international travelers can purchase destination currency from the comfort of their seat while on board international flights. And, through SkyTeller Pre- Flight Services(R) currently available in the U.S., travelers can purchase destination currency for delivery to their home or office from participating travel agents, by visiting skyteller.com on the World Wide Web, or by calling SkyTeller at 1-800-611-2122. According to Kent T. Londre, president and chief executive officer of SkyTeller, "The company is extremely pleased with First Data's vote of confidence. As a wholly owned subsidiary of First Data, we believe we now have the resources and support necessary to successfully establish an exciting set of value- added services for international travelers. We intend to move to an operational phase with both SkyTeller In-Flight Services(R) and SkyTeller Pre-Flight Services(R) later this year." SkyTeller provides international travelers with more choices and greater convenience when purchasing destination currency. SkyTeller In-Flight Services(R) now being tested by several international airlines, provides foreign currency exchange services to passengers onboard international aircraft. This service allows passengers to purchase the currency they will need upon arrival or to convert foreign currency back to their home currency upon their return. The service is offered by the airlines as SkyTeller's representatives. Flight attendants operate an automated point of sale device that performs the currency calculations for dispensing currency of the destination country and processing payments. SkyTeller accepts multiple currencies, travelers cheques, and credit cards for payment. The POS device also processes in-flight duty free purchases. SkyTeller Pre-Flight Services(R) offers foreign currency exchange services when international travelers book their flights, or anytime before their departure. These services are currently only available in the United States. Foreign destination currency is charged to a credit card and delivered to the traveler's home or office. Pre-Flight Services are currently offered on a beta basis through selected travel agents using the computer facilities of a worldwide central reservation system. SkyTeller has distribution agreements with three leading central reservation systems. SkyTeller also offers its services direct to consumers over the Internet at www.skyteller.com and by phone at 1-800-611-2122. Atlanta-based First Data Corp. (NYSE: FDC) helps move the world's money. As the leader in electronic commerce and payment services, First Data serves more than two million merchant locations, 1,400 card issuers and millions of consumers, making it easier, faster and more secure for people and businesses to buy goods and services. For more information, please visit the company's web site at www.firstdatacorp.com. SMITH CORONA: Sales Decrease, Losses Increase --------------------------------------------- Smith Corona Corporation has a century-old reputation as a provider of typewriters, supplies and various office products. The company ceased manufacturing in late 1997 and has since been transitioning to a sales and marketing organization. Today, the company sources products from suppliers in North America, the Pacific Rim, and Europe. Among its current products are electronic typewriters and related supplies, commercial headsets, and inkjet replacement cartridges. Smith Corona products are distributed through the company's extensive global distribution network. Net sales of $43.7 million for the year ended June 30, 1999 decreased 25.8 percent from net sales for the year ended June 30, 1998 of $58.9 million and net loss in the year ended June 30, 1999 increased to $15,886 from the net loss of $6,604 in the prior fiscal year. STUART ENTERTAINMENT: Receives Nod For $30 M DIP ------------------------------------------------ Stuart Entertainment, Inc. d/b/a Bingo King (OTC Bulletin Board: STUA) received approval Tuesday, September 14, 1999 from the United States Bankruptcy Court in Delaware to enter into a $30 million credit facility with Foothill Capital Corporation to replace an earlier working capital facility with Congress Financial Corporation. The Foothill financing, which is comprised of an $8 million term loan and a $22 million revolving credit facility, became effective as of September 16, 1999. The Foothill financing will provide Stuart with adequate working capital while it continues to work toward a restructuring that will convert the Company's $100 million 12 1/2% Senior Subordinated Notes (the "Notes") to new equity. The $30 million facility will also enable Stuart to continue to meet its obligations to its vendors, including the payment in full of all pre-petition invoices, which was authorized by order of the Bankruptcy Court entered on August 13, 1999. Joseph M. Valandra, Chairman and Chief Executive Officer of the Company, said, "Receiving Court approval for the $30 million financing with Foothill is an important milestone in the continuing reorganization of the Company. This financing provides for operating flexibility and positions the Company to maintain strong relationships with our vendors and suppliers. The terms and conditions of the financing provide for the strategic implementation of our restructuring and the timely execution of our long-term business plan." STUART ENTERTAINMENT: Implementation of Restructuring Plan ---------------------------------------------------------- Stuart Entertainment, Inc. filed a petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in Delaware on August 13, 1999 in order to implement the Restructuring Agreement, dated May 21, 1999, between certain holders of the Notes and Stuart. Under the Agreement, upon effectiveness of the Plan of Reorganization (the "Plan"), the holders of the Notes will receive, pro-rata, 100% of the common stock of Stuart, as reorganized, subject to dilution of up to approximately 10% on a fully-diluted basis by shares reserved for issuance under options to be granted to Stuart's executive management. Also, the Bankruptcy Court set certain critical dates for the confirmation of the Plan. The Bankruptcy Court will conduct a hearing on October 27, 1999 to consider approval of the Company's Disclosure Statement, which describes the terms of the Plan in detail and will be used to solicit votes on the Plan from holders of claims against, and equity interests in the Company. On December 14, 1999, the Bankruptcy Court will hold a hearing on the confirmation and final implementation of the Plan in accordance with the Bankruptcy Code. The Company expects to emerge from bankruptcy and issue the New Common Stock within twenty days after confirmation of the Plan. As part of its overall restructuring and business plan, the Company previously announced that it plans to relocate its corporate headquarters from Council Bluffs, Iowa to the Minneapolis/St. Paul, Minn. area. The Company will enter into a lease agreement, approved by the Bankruptcy Court, for its new corporate headquarters to be located at 8200 Normandale Boulevard in Bloomington, Minn. The Company plans to complete its headquarters relocation by the end of November 1999. Stuart is a worldwide leader in the manufacture of bingo paper, pulltabs and related electronic gaming equipment and supplies, with locations in the United States, Canada and Mexico. Its subsidiaries include Bazaar & Novelty, Canada's largest supplier of bingo paper and related supplies, and Video King, a major supplier of fixed base electronic gaming systems. TRANSTEXAS GAS: Credit Suisse Demands To Be on Committee -------------------------------------------------------- Credit Suisse First Boston Corporation responds to the Bondholders' Committee's Objection to appoint Credit Suisse to the Official Committee of Subdebt Holders. Credit Suisse states, "It is astounding that the Bondholders' Committee would assert that Credit Suisse must be excluded from participating on the Bondholders' Committee because of the timing of the purchase of, and the purchase price paid for the TransTexas Gas Notes." According to Credit Suisse, the Bondholders' Committee asserts that Credit Suisse purchased the Notes in order to manipulate the TransTexas plan process. "This is a scandalous statement of which the TransTexas Bondholders' Committee should be ashamed," states Credit Suisse, and it asks that the court disregard the objection. VENCOR: Analysts Think Vencor Still May Survive ----------------------------------------------- Analysts following the Vencor Inc. bankruptcy case are still uncertain about the company's long-term viability, but in the short-term they believe the company has a good chance for survival because of its attempts to eliminate some of its debt, Business First reported. The Louisville, Ky.-based company filed for chapter 11 last week with assets of $1.7 billion and liabilities of $1.4 billion and then announced an agreement with landlord Ventas Inc. to reduce rent and payments to Ventas, banks and other secured creditors. Attorney Sam Maizel of Pachulski, Stang, Ziehl & Young, Los Angeles, said "If this company doesn't reorganize, Ventas is next. Ventas can't exist without Vencor." He also said that all parties involved are savvy and have studied the case from all angles, including a lawsuit by disgruntled shareholders. "My guess is they will look at the spin-off of Ventas and see if it was a good deal for creditors. If it was not done for fair value, they could have grounds to sue ," Maizel said. VENCOR: Motion To Honor Prepetition Employee-Related Obligations ---------------------------------------------------------------- At the Petition Date, the Debtors employ approximately 55,000 employees. Paychecks were issued prior to the Petition Date and many have not been cashed. Additionally, Employees are entitled to vacation, sick pay and paid time off benefits. Annually, the Debtors estimate their payroll costs at $73,000,000. The Debtors' Employees are vital to daily operations, maintaining positive employee morale is important, and the reorganization effort will fail if the Debtors lose their valuable employees. Accordingly, the Debtors sought and obtained the Court's authority to honor all prepetition obligations to their Employees in the ordinary course of business. Additionally, the Debtors receive the services of some 2,900 temporary workers from Temporary Staffing Agencies. By this Motion, the Debtors sought and obtained the Court's authority to honor all prepetition obligations to these entities. In the aggregate, the Debtors estimate prepetition claims of Employees and Temporary Staffing Agencies at $87,000,000. Of this amount, the Debtors calculate that $1,500,000 will represent payments to 150 Employees and 600 Independent Contractors that will exceed the $4,300 cap under 11 U.S.C. Sec. 507(a). This Motion additionally covers approximately $2,850,000 owed to GE Capital Information Technology Solutions, which is currently providing the Debtors with Y2K remediation services. (Vencor Bankruptcy News Issue 2; Bankruptcy Creditors' Service Inc.) WESTMORELAND COAL: Offers To Purchase Series A Preferred Stock -------------------------------------------------------------- Westmoreland Coal Company has launched its previously announced offer to purchase up to 631,000 Depositary Shares, each representing one quarter of a share of its Series A Convertible Exchangeable Preferred Stock. The offer price is $19.00 per Depositary Share. The offer and withdrawal rights will expire at 5:00 p.m. New York City time on October 26, 1999, unless the offer is extended. On September 15, the Depositary Shares closed at $18 1/8 per share on the American Stock Exchange. On June 30, the last day before the company announced that it expected to conduct the offer, the Depositary Shares closed at $18 1/4 per share on the AMEX. The offer is being made pursuant to an offer to purchase and letter of transmittal, which is being mailed to holders of Depositary Shares. ********** The Meetings, Conferences and Seminars column appears in the TCR each Tuesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Bond pricing, appearing in each Friday edition of the TCR, is provided by DLS Capital Partners, Dallas, Texas. S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter, co- published by Bankruptcy Creditors' Service, Inc., Princeton, NJ, and Beard Group, Inc., Washington, DC. Debra Brennan, Yvonne L. Metzler, Editors. Copyright 1999. All rights reserved. ISSN 1520-9474. 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