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/raid1/www/Hosts/bankrupt/TCR_Public/991013.MBX T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, October 13, 1999, Vol. 3, No. 198 Headlines ADVANCED GAMING: Plan Authorizes Issue of 25 Million Shares AMERICAN MOBILE SATELLITE: Initial Public Offering At $12/Share ANGEION: To Acquire Medical Graphics Corporation CENTRAL EUROPEAN: 18.81% Of Common Stock Acquired COLT'S MANUFACTURING: Getting Out of Consumer Handgun Business EAGLE GEOPHYSICAL: Reports Bankruptcy Filing to SEC EATON'S: Unveils Creditors' Plan FACTORY CARD: Seeks To Fix Bar Date FIRSTPLUS FINANCIAL: Ernst & Young Resigns As Accountant GULF STATES STEEL: Creditor Seeks Conversion To Chapter 7 GULF STATES STEEL: Order Authorizes Retention of Lazard Freres HARNISCHFEGER: Key Employee Retention & Severance Program HOUSING RETAILER: Associates Housing Finance Seeks Payment JITNEY-JUNGLE: Case Summary & 20 Largest Unsecured Creditors JITNEY-JUNGLE: Files Voluntary Petition in Bankruptcy NATIONAL RESTAURANTS: Meeting of Creditors NATIONSWAY TRANSPORT: Proposes to Pay Past-due Wages NEUROMEDICAL SYSTEMS: Objects To $7 Million Claim By Netmed ORANGE COUNTY: Considers Buying Back $329 Million in Debt ORBIT INTERNATIONAL: Shareholders Approve Reverse Stock Split PARAGON TRADE: $420 Million Lawsuit vs. Weyerhaeuser PARAGON TRADE: Trio Seeks Removal/Replacement Of Board PLANET HOLLYWOOD: Case Summary & 20 Largest Unsecured Creditors PLANET HOLLYWOOD: Closes 9 Sites Including in Santa Ana SERVICE MERCHANDISE: Increases Borrowing Availability SIRENA APPAREL: Notice of Bar Date STUART ENTERTAINMENT: Order Approves Employee Retention Agreement STUART ENTERTAINMENT: Court OK's Employ of Wasserstein Perella TELETRAC INC: Seeks Approval of Stipulation With Norwest Bank TRANSTEXAS GAS: Court Approves of Disclosure Statement TRANSTEXAS: Summary of Plans TREESOURCE INDUSTRIES: Signs Financing Package VENCOR: Motion To Establish Key Employee Retention Program WORLDWIDE DIRECT: Committee Taps Special Insurance Counsel ZENITH ELECTRONICS: Final Order Grants Post-Petition Financing ********* ADVANCED GAMING: Plan Authorizes Issue of 25 Million Shares ----------------------------------------------------------- Advanced Gaming Technology, Inc. announces that the company's plan of reorganization was confirmed on June 29, 1999 by the U. S. Bankruptcy Court in the District of Las Vegas. The company anticipated that the effective date of the plan would be July 29, 1999. The company had filed for reorganization under Chapter 11 of the U S Bankruptcy Code on August 26, 1998. The plan authorizes the company to issue 25 million shares of new common stock. Approximately 18 million of the new shares will be issued on the effective date. A "disputed claims reserve" of approximately 7 million shares will be established to allow for disputed claims that might subsequently be approved by Final order of the Court. Unsecured creditors holding allowed claims will be issued 1.88 shares of new common stock for each $1 of allowed claim. Based on current estimates the company expects shareholders of record on July 29, 1999 to receive 1 share of new common stock in exchange for each 66 shares currently owned. Approximately 115 million shares of the company's common stock are outstanding at this time. The new common stock will continue to trade under the symbol "AGTI" on the OTC Bulletin Board. AMERICAN MOBILE SATELLITE: Initial Public Offering At $12/Share --------------------------------------------------------------- American Mobile Satellite Radio Holdings Inc. commenced its initial public offering of 10,000,000 shares of common stock at $12 per share. A subsidiary of Englewood, CO-based Liberty Media Corporation agreed to acquire one million shares of this offering. American Mobile granted its underwriters an over- allotment option to purchase up to an additional 1,500,000 shares of common stock if necessary. The shares were being sold by the company through its underwriters Bear, Stearns & Co. Inc.; Donaldson, Lufkin & Jenrette; Deutsche Banc Alex. Brown; and Merrill Lynch & Co. The shares, offered on NASDAQ, were expected to close on Friday, October 8, 1999. American Mobile Satellite Radio plans to transmit up to 100 national audio channels of music, news, talk, sports and children's programming from two satellites directly to vehicle, home and portable radios for a monthly subscription price of $9.95. ANGEION: To Acquire Medical Graphics Corporation ------------------------------------------------ Angeion Corporation and Medical Graphics Corporation have entered into a merger agreement under which Angeion will acquire all of the outstanding shares of Medical Graphics for $2.15 per share, for a total of approximately $16.3 million. After the merger, Medical Graphics will become a wholly-owned subsidiary of Angeion and will continue to operate its current business and utilize its infrastructure, technology and customer base as a platform from which to implement growth strategies in the cardiopulmonary market. Richard E. Jahnke, Medical Graphics President and Chief Executive Officer, will become President and CEO of Angeion Corporation. James B. Hickey, Jr., President and CEO of Angeion since July 1998, will continue to serve as a director on Angeion's Board of Directors after the merger. The boards of directors of both companies have approved the transaction, which is subject to customary conditions including approval by Medical Graphics shareholders. The companies anticipate the transaction to be completed before the end of 1999. "Angeion's merger with Medical Graphics is an important first step in our strategy to build shareholder value," said Mr. Hickey. "During the past two years, Medical Graphics has successfully completed its turnaround process and is now a profitable, solid franchise from which to build broader capabilities. Revenues are increasing, margins have significantly improved, and profits continue to grow. This transaction is an excellent use of our resources to drive additional growth through internal development and acquisitions. Medical Graphics met our acquisition criteria and has a strong, effective management team," he added. Mark Sheffert, Chairman of the Board of Medical Graphics, said, "Medical Graphics has been considering strategic options for some time, and this transaction met the criteria established by our board for a merger partner. This merger offers our shareholders a premium to our stock's current price and presents a fair value. It also provides Medical Graphics' management team and employees with resources necessary to build a stronger cardiorespiratory company with broader information technology applications. The merger also allows Medical Graphics to remain a Minnesota-based company with no anticipated layoffs of employees." Richard E. Jahnke has served as President and Chief Executive Officer of Medical Graphics since August 1998. Prior to joining Medical Graphics, he served for five years as President and Chief Operating Officer at CNS, Inc., which develops and markets consumer health care products. Founded in 1977, Medical Graphics is a leader in developing, manufacturing and marketing systems for the diagnosis and management of heart and lung disease. Based in St. Paul, Minnesota, the company has 120 employees, including direct sales and service representatives across the country, and has a distribution system to market its products internationally. Medical Graphics recorded $20 million in revenues for the year ended December 31, 1998. Angeion Corporation was founded in 1986 and began to develop implantable cardioverter defibrillators (ICDs) in 1991. The company has been exploring strategic alternatives to provide greater shareholder value since December 1998. This past April, Angeion began to implement a major restructuring plan to refocus its business, conserve cash and significantly reduce operating expenses. At the end of June 1999, Angeion had cash reserves of approximately $29 million and recently reported an additional $9 million in cash to be received after approval of its recently announced licensing agreement with Medtronic, Inc. CENTRAL EUROPEAN: 18.81% Of Common Stock Acquired ------------------------------------------------- 3,481,818 shares of common stock of Central European Media Enterprises has been acquired by Dr. Andrei V. Tsimailo, Elemental Limited, Media Most B.V., Media Most Limited, and Zao Media Most. The parties share voting and dispositive power equally. The shares represent 18.81% of the outstanding shares of common stock of the company. Vladimir A. Goussinsky beneficially owns the same number of shares but holds sole voting and dispositive power over the shares noted. Approximately $549,792 was expended to purchase the securities reported. The amount expended was provided by New Television Technologies Limited, a Gibraltar company and a wholly owned subsidiary of Media Most Ltd., in the form of an interest-free inter-company loan payable on demand. The securities listed were said to be acquired for the purposes of investment. In addition, the parties may seek to enter into discussions with Central European Media Enterprises about potential areas of mutually beneficial business cooperation. COLT'S MANUFACTURING: Getting Out of Consumer Handgun Business -------------------------------------------------------------- Colt's Manufacturing Co., one of the most famous gunmakers in the United States, announced yesterday that is eliminating some of its unprofitable handgun product lines, but said it is not exiting the consumer handgun business because of pending litigation against the industry. In a news release, the West Hartford, Conn., company "strongly refuted media reports that it is exiting the total handgun portion of its business." Newsweek had reported that by the end of the month, the company would virtually withdraw from the consumer handgun business, lay off 300 of the 700 workers at its Hartford, Conn. area plant and focus on manufacturing military and collectible guns in part to reduce liability related to lawsuits filed across the country against gun manufacturers for their role in increasing violence in the country. Colt's filed for chapter 11 protection in 1992 and emerged from bankruptcy in 1994 when a group of new investors purchased the company.(ABI 12-Oct-99) EAGLE GEOPHYSICAL: Reports Bankruptcy Filing to SEC --------------------------------------------------------- On September 29, 1999, Eagle Geophysical, Inc. announced that the company and its U.S. subsidiaries filed a voluntary petition in federal court in Wilmington, Delaware under Chapter 11 of the U.S. Bankruptcy Code. The company cited substantially reduced demand for its services due to lower oil company spending on seismic data and burdensome interest costs from the company's debt load as the primary factors for the filing. The filing in federal court in Delaware will allow the company to continue its operations under the protection of the bankruptcy court while it finalizes discussions with its senior note holders and other major creditors on a restructuring plan. To provide liquidity through the reorganization process, including payment of suppliers and trade creditors, Eagle Geophysical has secured a commitment for up to $15 million of debtor-in-possession financing from Wells Fargo Business Credit, a current Eagle Geophysical lender, subject to bankruptcy court approval. On Friday, September 24, 1999, Eagle Geophysical's wholly-owned English subsidiary, Horizon Exploration Ltd., filed administration proceedings in London, England. Horizon Exploration conducts the company's offshore seismic operations. Horizon Exploration plans to continue its offshore seismic data acquisition operations during this administration under the management of a third-party administrator, who is a licensed insolvency practitioner. The administration imposes a moratorium on creditor claims against Horizon Exploration while the administrator works towards a voluntary arrangement with creditors under English insolvency law. Eagle Geophysical has been aggressively pursuing a financial restructuring to address its liquidity problems and recapitalize its balance sheet since it retained CIBC World Markets as its financial advisor in May, 1999. The company has been conducting substantive discussions since mid-August 1999 with a committee of holders representing a majority of its outstanding $100,000,000 Senior Notes due 2008. However, continuing liquidity problems and the expiration of the 60 day grace period for the July 15, 1999 interest payment on the Senior Notes precipitated the company's Chapter 11 filing. "Despite recent increases in oil prices, demand for seismic data acquisition has not yet significantly improved. The decreased revenues we have experienced since the first quarter of this year, combined with the debt service requirements from borrowings we incurred to increase our offshore data acquisition capabilities have combined to make ongoing operations with our current capital structure impossible. We determined it was in the best interest of our customers and financial stakeholders to seek Chapter 11 protection in order to provide sufficient time and resources to effectively complete the restructuring of our business and position ourselves for anticipated upturn in the seismic data acquisition business," said Jay Silverman, President and CEO of Eagle Geophysical. In response to Eagle's filing for protection under Chapter 11, Nasdaq halted trading of Eagle Geophysical, Inc.'s common stock on September 29, 1999. Trading will remain halted pending receipt and review of additional information by Nasdaq. Eagle will cooperate in providing the requested information to Nasdaq. Eagle Geophysical provides onshore and offshore seismic data acquisition services to the petroleum industry. EATON'S: Unveils Creditors' Plan -------------------------------- T. Eaton Co. has unveiled a restructuring plan that offers creditors about C$130 million in restitution, according to Reuters. Unsecured creditors and shareholders will vote on the insolvent Canadian retailer's plan on Nov. 19; two-thirds of them must approve the plan for it to be effective. The plan was filed in an Ontario court under the Canadian Companies' Creditors Arrangement Act (CCAA). The majority of the funds, C$80 million, will come from Sears Canada Inc., which has recently bought a number of Eaton stores and assets. Another C$56 million will come from the sale of Eaton's other real estate. If approved, the plan provides for C$98.5 million to unsecured creditors, including suppliers, and C$12 million for landlords. Shareholders would receive C$20 million and secured creditors would receive C$14.9 million. Eaton's filed for bankruptcy protection on Aug. 23 with C$330 million in liabilities. (ABI 12-Oct-99) FACTORY CARD: Seeks To Fix Bar Date ----------------------------------- The debtors, Factory Card Outlet Corp. and its affiliates seek to extend and fix the bar date for filing certain proofs of claim. The debtor became aware of additional creditors, subsequent to the original bar date order. The debtor now requests that the court set December 6, 1999 at 5:00 PM Pacific Time in order to allow the additional creditors time to file proofs of claim. FIRSTPLUS FINANCIAL: Ernst & Young Resigns As Accountant -------------------------------------------------------- On September 29,1999,Ernst & Young LLP resigned as principal accountant and delivered a letter to FirstPlus Financial Group, Inc. informing the company of the immediate cessation of the client-auditor relationship between it and Ernst & Young LLP. The company is required to restate its financial statements for each of the fiscal years in the three-year period ended September 30, 1997, the three-month transition period ended December 31, 1997, and the first three quarters of the fiscal year ended December 31, 1998. As a result of limited resources and other issues, the company says it has been unable to complete the previously announced restatement, as well as the preparation of its financial statements for the fiscal year ended December 31, 1998 or any subsequent period. Additionally, the company has not yet filed its annual report for the first two quarters of fiscal 1999. The company is currently unable to make an assessment as to when it will be able to file its delinquent filings or any of its future filings. It is expected that the impact of the restatement will be material to the results of all prior periods. Accordingly, previously issued financial results for the periods indicated as affected by the restatement above should not be relied upon. The company is currently searching for a successor accounting firm but has not yet engaged any firm. GULF STATES STEEL: Creditor Seeks Conversion To Chapter 7 --------------------------------------------------------- James L. Gibney, a creditor in and recipient of retirement benefits from the debtor, Gulf States Steel of Alabama, seeks conversion of this case to a Chapter 7 case. Gibney asserts that the debtor failed to pay retirement benefits, and that the debtor can no longer propose a plan of reorganization which is confirmable. GULF STATES STEEL: Order Authorizes Retention of Lazard Freres -------------------------------------------------------------- The US Bankruptcy Court for the Northern District of Alabama, Eastern Division, entered an order authorizing the debtors to employ Lazard Freres & Co. LLC to render financial consulting and investment banking services in connection with the Chapter 11 case, and the debtor's business generally. The employment of Lazard nunc pro tunc to July 5, 1999 is granted for the sole purpose of negotiating the $17.85 million DIP loan with Ableco Financing LLP. Upon confirmation of a plan of reorganization, Lazard may apply for allowance of the $250,000 fee, as compensation under the Retainer Letter. By separate order the court approved the retention of PricewaterhouseCoopers to serve s the financial advisors to the Unsecured Creditors' Committee. HARNISCHFEGER: Key Employee Retention & Severance Program --------------------------------------------------------- The Debtors have identified approximately 150 individuals who are currently employed or to be hired who are critical to the their businesses and a successful restructuring. These Key Employees, the Debtors explain, have intimate knowledge about the companies and their industries, are highly experiences and not easily replaced. A Key Employee Retention & Severance Program, the Debtors explain, is important in order to: (1) retain management and professional teams essential to continuing operations and completing the Debtors' financial turnaround; (2) recruit and retain in a tight labor market the talent necessary for the Debtors' successful emergence from chapter 11; (3) motivate employees throughout the reorganization process and encourage performance improvement; (4) replace existing long-term equity-based compensation programs, the value of which is uncertain; (5) establish severance programs for retention plan participants and other executives and managers to create a stronger sense of security through the chapter 11 process; and (6) provide appropriate alternatives to existing pre-petition contractual obligations the Debtors have with selected executives and managers. The Debtors categorize these 150 Key Employees in three Tiers: Tier I President and CEO Executive VPs: Law & Government Affairs & CFO Subsidiary Presidents and COOs Tier II Other Executive Managmeent Positions (corporate and subsidiary VPs) Tier III Corporate and Subsidiary Managers and Professionals With an estimated aggregate cost of $15,115,609 to $22,575,627, the Program has four components: (A) Annual Incentive Plan. Tied to EBITDA targets, incentives are paid as a percentage of annual salary: Tier I 30.0% to 120% Tier II 12.5% to 100% Tier III 2.5% to 70% (B) Stay/Emergence Bonus Plan. As a percentage of annual salary: Tier I 60% Tier II 40% to 50% Tier III 30% (C) Change in Control Agreement. In the event of a change of control, Key Employees receive (unless party to another agreement providing greater benefits): Tier I 3 years' salary Tier II 2 years' salary Tier III N/A (D) Severance Plan. In the event of an involuntary termination without cause, Key Employees receive salary payments for: Tier I 24 months Tier II 12 months Tier III 6 months (Harnischfeger Bankruptcy News Issue 12; Bankruptcy Creditors' Service Inc.) HOUSING RETAILER: Associates Housing Finance Seeks Payment ---------------------------------------------------------- Associates Housing Finance LLC seeks entry of an order compelling Ted Parker Home Sales, Inc. and Carolina Home Sales, Inc. to comply with previous court orders and to pay over to Associates the proceeds from all sales of inventory, and to account for certain units. Associates states that the balance owing by debtors to Associates for inventory financing alone was over $24 million as of the date of filing. Associates Housing believes that certain units have been sold, but that the debtors have not paid over the sale proceeds. Associates Housing has filed a separate motion seeking payment of $4.67 million and asserts its right to recoup its claim against the monies in the Curtailment Reserve Account. JITNEY-JUNGLE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Jitney-Jungle Stores of America, Inc. 1770 Ellis Avenue Suite 200 Jackson MS 39204 Court: District of Delaware Case No.: 99-3603 Filed: 10/12/99 Chapter: 11 Debtor's Counsel: James H.M. Sprayregen Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Laura Davis Jones Young Conaway Stargatt & Taylor LLP 11th Floor Rodney Square North Wilmington, DE 19899-0391 Total Assets: $660,668,000 Total Liabilities: $660,668,000 No. of shares of preferred stock 599,340 - 37 holders No. of shares of common stock 425,080 - 33 holders 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ Bank of New York Bondholder $91M State Street Bank and Trust Bondholder $56.5M Chase Bank of Texas, NA Bondholder $32.6M State Street Bank and Trust Bondholder $29.5M Investors Fiduciary Trust Co Bondholder $25.8M Investors Fiduciary Trust Co Bondholder $22.4M Chase Manhattan Bank Bondholder $21.5M Bank of New York Bondholder $18.9M Chase Manhattan Bank Bondholder $11.6M Morgan Stanley & Co. Bondholder $8.5M SSB-Trust Custody Bondholder $8M Topco Vendor $7.5M Goldman, Sachs & Co. Bondholder $7M Super Value Vendor $7M Morgan Stanley & Co., Inc. Bondholder $6.85M Donaldson, Lufkin and Jenrette Bondholder $6.5M Chase Bank of Texas, NA Bondholder $6.5M Deutsche Bank Securities Inc. Bondholder $4.74M Americource Vendor $4M The Northern Trust Company Bondholder $3.45M Citibank NA Bondholder $3.35M JITNEY-JUNGLE: Files Voluntary Petition in Bankruptcy ----------------------------------------------------- Jitney-Jungle Stores of America, Inc. today announced that it and nine of its affiliates have filed voluntary petitions to seek protection under Chapter 11 of the Federal Bankruptcy Code. The filings, which were made today in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, DE, will enable the Company to conduct business as usual while it implements a plan to reorganize its capital structure and focus on strengthening the Company's operations and financial position. Jitney-Jungle also announced that it has obtained a $260 million debtor-in-possession (DIP) financing commitment from a consortium of lenders led by BT Commercial Corporation. Upon court approval, these funds will be available to the Company to retire its existing $150 million revolving credit facility and enhance its liquidity in order to meet all inventory needs and fulfill future obligations associated with operating its business. Moreover, under the financing commitment, the Company has obtained favorable terms for trade vendors to ensure their continued support. Ron Johnson, President and Chief Executive Officer of Jitney- Jungle, said: "Jitney-Jungle has an 80-year history of successful operations in its core markets. Our objective is to use the reorganization process on a fast-track basis to create a more manageable capital structure and strengthen our business operations so that Jitney-Jungle can significantly enhance its profitability. With Court protection under Chapter 11, Jitney-Jungle will have the breathing room it needs to restructure its debt and complete its transition into a stronger company." "Today's filing should not have any significant impact on our customers. Jitney-Jungle stores are open, stocked with inventory, and conducting business as usual today," added Mr. Johnson. "Likewise, our employees will continue to receive their salaries and benefits without interruption. We are also pleased that we were able to secure advantageous terms under our DIP facility for our vendors to accommodate their ongoing support for the Company." Mr. Johnson also noted that the Company has retained Jay Alix & Associates as its crisis management and corporate turnaround expert. Michael Feder of Jay Alix will serve as Chief Restructuring Officer and Chief Administrative Officer of Jitney- Jungle. He will assist the Company's senior management team in overseeing the restructuring and turnaround process. Jitney-Jungle Stores of America, Inc., one the largest supermarket operators in the Southeast, currently operates 75 combination stores (including 23 Premier stores), 106 conventional stores, and 15 discount stores for a total of 196 supermarkets, 10 liquor stores and 55 gasoline stations located throughout Mississippi, Alabama and Louisiana and in Tennessee, Florida and Arkansas. NATIONAL RESTAURANTS: Meeting of Creditors ------------------------------------------ A meeting of creditors has been set in the case of National Restaurants Management Inc. for October 27, 1999 at 3:00 PM. The debtor's address is 162 West 34th Street, New York, NY. Attorney for the debtor is Leonard H. Gerson, Angel & Frankel PC, 460 Park Avenue, New York, NY. The Chapter 11 bankruptcy case of National Restaurants management Inc. was filed on July 7, 1999. NATIONSWAY TRANSPORT: Proposes to Pay Past-due Wages ---------------------------------------------------- NationsWay Transport Service Inc. filed a motion in bankruptcy court last week in Phoenix proposing to pay its former employees some of the $4.6 million in past-due wages owed to them, according to The Denver Post. NationsWay proposed to pay workers $2 million as part of an interim financing plan related to the liquidation of the bankrupt estate. According to court documents, money paid to workers would be for wages accrued before the May 20 bankruptcy filing. NationsWay executive Jerry McMorris has asked for an Oct. 19 hearing on the proposal, which calls for lenders to contribute an additional $18.5 million to help liquidate the company and its affiliates. The lenders are owed $41 million. (ABI 12-Oct-99) NEUROMEDICAL SYSTEMS: Objects To $7 Million Claim By Netmed ----------------------------------------------------------- The debtor, Neuromedical Systems Inc. objects to the claim filed by NetMed, Inc. in the sum of $7.16 million. The debtor asserts that the only supporting document attached to the claim is a copy of the Distribution Agreement. The debtor does not believe the claimant should be entitled to any damages as a result of the debtor's rejection of the Distribution Agreement. The debtor asserts that the burden is on the claimant to prove actual damages for the breach of contract with reasonable certainty. Claimant has provided no evidence that it suffered any damages as a result of the debtor's rejection of the Distribution Agreement. The debtor states that the claimant and/or its predecessors invested $2.99 million in the debtor. The investment was in the nature of an equity contribution, made years before the Distribution Agreement. The claimant and/or its predecessors received $1.7 million in commissions/royalties for four years. The debtor's records show that $38,636 is owing the claimant from commissions and royalties. The debtor states that had the debtor not sold its intellectual property to AutoCyte, the debtor would have been forced to shut down - without breaching the Distribution Agreement. The debtor believes that any projection of lost profits or royalties/commissions without the sale to AutoCyte would have been minimal. ORANGE COUNTY: Considers Buying Back $329 Million in Debt --------------------------------------------------------- The Orange County, Calif., Board of Supervisors is considering a proposal to buy back $329 million in debt stemming from the county's 1994 chapter 9 bankruptcy, according to Reuters. At the board's Oct. 2 meeting, supervisors will discuss the plan to buy the general obligation pension and recovery bonds in order to reduce the county's long-term debt. The outstanding bonds have an approximate par value of $329 million, and the county expects it would spend about $300 million to buy them. The county would tap into its debt reserve payment and money from litigation settlements to fund the purchase. Orange County filed chapter 9 in December 1994 after its investment pool lost more than $1.6 million. (ABI 12-Oct-99) ORBIT INTERNATIONAL: Shareholders Approve Reverse Stock Split ------------------------------------------------------------- The shareholders of Orbit International Corp. have approved, at a special meeting, an amendment to the company's Certificate of Incorporation to effect a one-for-three reverse stock split of the company's outstanding stock. The company previously announced that it did not meet the requirements to maintain its listing on the Nasdaq National Market and had intended to transfer its listing to the Nasdaq SmallCap Market as it currently meets all the requirements for listing on the SmallCap Market with the exception of the minimum bid price of $1. The approval of this one-for-three reverse stock split now puts the company in compliance with the requirements of a SmallCap listing. Orbit International Corp., based in Hauppauge, is involved in the manufacture of customized electronic components and subsystems for military and nonmilitary government applications. Its Behlman Electronics, Inc. subsidiary manufactures and sells high quality commercial power units and low noise uninterruptable power supplies (UPS). The Behlman military division designs, manufactures and sells power units and electronic products for measurement and display. PARAGON TRADE: $420 Million Lawsuit vs. Weyerhaeuser ---------------------------------------------------- Continuing a tenacious fight with Paragon Trade Brands Inc.'s former parent, the bankrupt diaper maker's shareholders filed a lawsuit against Weyerhaeuser Co., claiming over $420 million in damages. The legal action, filed in the U.S. Bankruptcy Court in Atlanta, alleges breach of contractual representations and warranties in connection with the sale of Weyerhaeuser's diaper business to Paragon, which Weyerhaeuser spun-off in 1992. The lawsuit alleges that at the time the diaper-related assets were sold to Paragon for $200 million, Weyerhaeuser was aware of the substantial threats that Procter & Gamble Co. and Kimberly- Clark Corp. were making to sue and recover damages from Weyerhaeuser for infringing on their diaper patents. (The Daily Bankruptcy Review and ABI - October 12, 1999) PARAGON TRADE: Trio Seeks Removal/Replacement Of Board ------------------------------------------------------ The following persons have acquired shares of common stock in Paragon Trade Brands Inc.: Matthew S. Metcalfe, 25,000, representing 0.2 % of the outstanding shares of common stock of the company; Robin E. Winslow, 37,342 shares with sole voting and dispositive power and 548,350 shared powers, representing 4.9% of the outstanding shares, and Frank E. Williams Jr., 26,000 with sole voting and dispositive power, representing 0.2% of the outstanding shares of common stock of the company. The aggregate number of shares beneficially owned by the members of the group identified is 636,692 or 5.3% of the company's outstanding common stock. The persons cited above have decided to call themselves the "Committee to Enhance the Value of Paragon" and indicate that the committee's name describes its purpose. The committee seeks to remove the present Board of Directors and to replace that Board with nominees of its own, that is the respective members of the Committee, Robin E. Winslow, Frank E. Williams, Jr. and Matthew Metcalfe. The committee plans to solicit proxies to further that end. Once the incumbent Board of Directors has been replaced by the committee's nominees, the committee intends immediately to invite up to three persons to be chosen by the Official Creditors Committee of Paragon from its members (other than representatives of Weyerhaeuser, Procter & Gamble or Kimberly-Clark) to join the Board of Paragon. The committee proposes to take whatever actions are necessary and appropriate to increase the Board and then to appoint such representatives to the Board. The specifics of the committee's intentions as to the redirection of Paragon's business activities and its position vis-a-vis a Plan of Reorganization will be included in proxy solicitation materials to be furnished to the shareholders in conformance with Federal Securities Laws. The members of the committee say they do not plan to acquire additional securities or to dispose of securities presently owned. Robin E. Winslow's principal occupation is that of a Securities Trader employed by Dempsey & Company. The principal business of Dempsey & Company is as a broker-dealer and a member of the Chicago Stock Exchange. Matthew S. Metcalfe's principal occupation is that of Chairman and President of Airland Corporation, whose principal business is consulting. Frank E. Williams, Jr.'s principal occupation is Chairman of the Board of Williams Enterprises of Georgia. The principal business of that company is steel fabrication and construction. PLANET HOLLYWOOD: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Planet Hollywood International Inc. 8669 Commodity Circle Orlando, Florida 32819 Type of business: Company operates theme restaurants and merchandise shops Court: District Delaware Case No.: 99-3629 Filed: 00/00/99 Chapter: 11 Debtor's Counsel: Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, NY 10038 Robin e. Keller, Esq. James L. Patton, Jr. Pauline K. Morgan Young Conaway Stargatt & Taylor LLP PO Box 391 Rodney Square North, 11th Floor Wilmington, Delaware 19099 Total Assets: $392,183,000 Total Liabilities: $359,109,000 No. of shares of common stock Class A 100,405,867 approx. 4360 holders Class B 8,579,920 approx. 19 holders 20 Largest Unsecured Creditors: Name Nature Amount ---- ------ ------ US Trust Company of New York Indenture Trustee $250M 12% Sr Subordinated Notes Due 4/1/05 CEDE & Company Record Holder $250M Bay Harbor Management LLC Beneficial Holder $87.9M Of 12% Subordinated Notes due 4/1/05 Varde Partners Beneficial Holder $29.5M Of 12% Subordinated Notes due 4/1/05 Bank of Montreal Beneficial Holder $5.1M Of 12% Subordinated Notes due 4/1/05 LL Capital LP Beneficial Holder $4.5M Of 12% Subordinated Notes due 4/1/05 SF Investment Beneficial Holder $3.25 M Of 12% Subordinated Notes due 4/1/05 8669 Commodity Circle Landlord $742,747 TRW Inc. Trade 192,559 HRH American Phoenix Corp Trade 191,787 Brass & Stainless Designs Trade 147,658 Bovis Construction Corp Trade 142,755 Soundelux Trade 141,492 Prologis Trust Trade 80,429 Excelled Skin & Leather Trade 56,958 Focus Lighting Trade 53,745 Unique Wood Design Trade 48,270 Creative Management Serv. Trade 44,928 RTC Group Trade 43,961 TRM Architect Trade 41,680 PLANET HOLLYWOOD: Closes 9 Sites Including in Santa Ana ------------------------------------------------------- The Los Angeles Times reports on October 12, 1999, that Planet Hollywood International closed nine of its company-owned restaurants Monday, including one in Santa Ana. Robert Earl, the co-founder and chief executive of the movie- themed chain, said he hopes a new Orange County location will replace the "underperforming" restaurant across from South Coast Plaza. Earl said the chain would like to open a restaurant in Anaheim, an apparent reference to Downtown Disney, the entertainment mall Walt Disney Co. plans to open next to Disneyland in 2001. Planet Hollywood had owned 32 U.S. restaurants before the closures, which are part of a prepackaged reorganization worked out with its creditors. The chain, which announced in August that it would pare unprofitable sites, filed for Chapter 11. In addition to the Santa Ana restaurant, Planet Hollywood closed restaurants in Chicago; Fort Lauderdale, Fla.; Gurnee, Ill.; Houston; Indianapolis; Maui, Hawaii; Miami and Phoenix. One or two more sites could be closed depending on negotiations to win more favorable terms from landlords, Earl said. He would not say if one is Beverly Hills, where the company has complained that it is hampered by a city prohibition on late-night liquor sales. The company's other California restaurants, in San Francisco and San Diego, apparently are unaffected. Despite backing from celebrities such as Bruce Willis, Arnold Schwarzenegger and Sylvester Stallone who received stock in return for promotional work, the chain has suffered from declining sales at many locations. Sales of Planet Hollywood T- shirts and other merchandise, which account for a quarter of revenue, have also fallen. The Orlando, Fla.-based chain also is selling peripheral businesses such as its sports-themed All Star Cafes. It has also lined up a $ 30-million cash infusion from its largest shareholders, Saudi Arabian Prince Alwaleed bin Talal and Singapore billionaire Ong Beng Seng, and a trust fund benefiting Earl's children. Before the cuts, Planet Hollywood owned and operated 48 restaurants around the world, with franchisees operating 32 more. The Santa Ana restaurant was the second in the nation when it opened in 1992, after one in New York. Planet Hollywood went public at $ 18 a share in 1996 and traded as high as $ 28.50. Trading was suspended in August with the share price at 75 cents. SERVICE MERCHANDISE: Increases Borrowing Availability ----------------------------------------------------- Service Merchandise Company, Inc. announces that its lenders have approved an amendment to its $750 million debtor-in-possession financing agreement that provides for the release of the $50 million borrowing base reserve which had been in effect pending negotiation of financial covenants. The adoption of the covenant package provides the company an additional $50 million in availability under the DIP facility, as the borrowing base reserve is eliminated. The covenants require the company to maintain either a minimum EBITDA (earnings before interest, taxes, depreciation, and amortization) performance Or minimum availability under the facility. Under the DIP agreement, the company's senior lenders, led by Citibank as administrative agent and BankBoston as documentation agent and collateral monitoring agent, provided $750 million in post-petition financing to fund the company's operations during its restructuring. "The two-pronged nature of this covenant and its reasonable EBITDA thresholds signify the strong support and confidence of our lenders. We believe that the flexibility of the covenants, coupled with the release of the $50 million reserve, will further increase our merchandise vendors' confidence in our liquidity and will maintain the momentum of their return to normalized payment terms," said Chief Executive Officer Sam Cusano. Under the terms of the amendment, a maximum annual capital expenditure covenant is set at $50 million. Additional flexibility is provided to carry over 50 percent of unused capital expenditures from a prior year and to earn additional capital expenditure capacity as EBITDA rises. "This additional boost to our liquidity raises the company's availability to approximately $185 million as of October 5, 1999," said Thomas Garrett, Chief Financial Officer. "This development further demonstrates the confidence shown by our lenders." Service Merchandise and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 in the U. S. Bankruptcy Court for the Middle District of Tennessee in Nashville on March 27, 1999. Known as "America's Leading Jeweler", Service Merchandise is a specialty retailer focusing on fine jewelry, home and gift products. SIRENA APPAREL: Notice of Bar Date ---------------------------------- The US Bankruptcy Court for the Central District of California, Los Angeles Division, has established December 6, 1999 as the last date to file proofs of claims or interests against the estate of the Sirena Apparel Group Inc. STUART ENTERTAINMENT: Order Approves Employee Retention Agreement ----------------------------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an order authorizing the debtor to enter into or assume employee retention and severance agreements. STUART ENTERTAINMENT: Court OK's Employ of Wasserstein Perella -------------------------------------------------------------- The US Bankruptcy Court for the District of Delaware entered an order on September 28, 1999 authorizing the debtor to employ and retain the firm of Wasserstein Perella & Co., Inc. under a general retainer as their financial advisor under the terms provided in its Engagement Letter. TELETRAC INC: Seeks Approval of Stipulation With Norwest Bank -------------------------------------------------------------- The debtor, Teletrac, Inc. seeks approval of a stipulation and order regarding the allowed claim of Norwest Bank Minnesota, NA. A hearing on the motion is scheduled for November 22, 1999 at 9:30 AM. The Bank is indenture trustee for the holders of the debtor's 14% Senior Notes due 2007 in the original principal amount of $105 million. The Bank filed a proof of claim in the amount of approximately $110 million. AS of September 10, 1999, the value of the Pledged Collateral was approximately $21.7 million. The parties' agreement fixes the Indenture Trustee's Claims one allowed Class 3 claim in the amount of $82,412,907. The debtor states that taking into account the costs and risks to the debtor's estate of seeking a contested adjudication of the claims of the Indenture Trustee, the proposed settlement should be approved. TRANSTEXAS GAS: Court Approves of Disclosure Statement ------------------------------------------------------ By order dated September 29, 1999, the US Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, entered an order approving the Disclosure Statement of the debtors, TransTexas Gas Corp. Written acceptances or rejections of the plan must be received by counsel for the debtors, on or before November 4, 1999. A hearing on confirmation of the plans shall be held at the US Bankruptcy Court at 615 Leopard, Corpus Christi Texas 78476 commencing at 9:00 AM on November 9, 1999. TRANSTEXAS: Summary of Plans ---------------------------- 1. The Transamerican Energy Corporation (TEC) plan - provides that TEC will be liquidated and that the creditors of TEC will receive distributions as follows: a) holders of the Bondholder DIP Secured Claims will receive no distributions under the TEC plan; b) holders of allowed priority claims will receive payment in full, in cash; c) holders of the TEC Senior Secured Note Claims will receive their ratable proportion of all of the collateral pledged by TEC that secures the TEC Senior Secured Notes and all distributions TEC would have been entitled to receive under the TransTexas Plan and The TARC plan; d) holders (other than affiliates of TEC) of allowed general unsecured claims will receive their ratable proportion of $5,000 and e)the interests held by TEC common stockholders will be canceled. 2. The Transamerican Refining Corporation (TARC) plan - provides that TARC will be liquidated and that the creditors of TARC will receive distributions as follows: a) Holders of the Bondholder DIP secured claims will receive no distributions under the TARC plan; b) Holders of allowed priority claims will be paid in full; c) holders of the TARC Senior Secured Note claims will receive a ratable proportion of all of the collateral pledged by TARC that secures the TARC Senior Secured Note; d) holders of allowed general unsecured claims will receive their ratable proportion of the litigation trust; e) holders of TARC Subordinated Note Claims will receive, pursuant to a compromise and settlement by and between Firstar and First Union their ratable proportion of 17.5% of the funds held in the Interest Reserve Accounts, less reasonable fees and expenses payable to First Union and its attorneys, plus their ratable proportion of the lititgaion trust; and e) the TARC common stock interests will be cancelled. 3. The TransTexas Plan - provides for the reorganization of tis business and provides that the creditors of TransTexas will generally receive distributions as follows: a) Holders of allowed Priority claims shall be paid in full; b) Holders of secured tax claims shall receive cash payments over six years plus 12% interest or payment in full; c) Holders of TransTexas Senior Secured Note claims shall receive all of the new senior secured notes, all of the new senior preferred stock, all of the new junior preferred stock, all of the new common stock, all of the new warrants and an amount of cash equal to the maximum GUC cash amount; d) Holders of the GMAC secured claim shall be assumed such treatment shall be impaired; e) Holders of allowed miscellaneous secured claims shall receive at the option of the debtor - treatment to leave holders unimpaired, cash payments, or return of collateral; f) Holders of mineral interest secured claims shall receive at holder's election - cash payments over five years, plus simple interest or 40% of claim amount; g) Holders of a M&M Lien Secured Claim shall receive cash payments over five years plus simple interest; h) Holders of the TransTexas senior secured Note Deficiency Claim shall receive no distribution under the plan; i) Holders of allowed general unsecured claims shall receive no distribution; j) Holders of TransTexas Subordinated Note claims shall receive no distribution; k) Holders of allowed convenience claims that elect to reduce their claims to $500 shall receive cash; l) Production payment holder claims shall receive such treatment as shall leave their claims unimpaired and m) Holders of allowed interests will receive no distribution. TREESOURCE INDUSTRIES: Signs Financing Package ---------------------------------------------- TreeSource Industries, Inc. (OTC Bulletin Board: TRES) announced that it has signed a credit agreement with GE Capital Corporation for a $16 million interim revolving line of credit. The credit line will be used to fund seasonal working capital increases. Company CFO Robert W. Lockwood stated "the Company has not had a revolving line of credit since 1991 and has relied on cash from operations for day to day liquidity. The credit agreement with GE Capital Corporation is competitively priced, flexible, and well tailored to address the cyclical and seasonal nature of the lumber business." The Company filed for voluntary reorganization under Chapter 11 on September 27, 1999. The credit facility was approved by the Honorable Judge Thomas T. Glover on October 4, 1999 on an interim basis pending the return of the Honorable Judge Samual J. Steiner. The Company is currently operating as a debtor in possession. Dave Loftus, TreeSource Treasurer commented that "the new facility will increase daily operating liquidity and provide additional assurance to our many vendors and suppliers that TreeSource has the ability meet its obligations while in chapter 11. The Court approved payment in full for all log vendors in the ordinary course of business and we hope to pay pre-petition unsecured creditors 90% of their claim. The credit facility is a key element in our plan to pay creditors and fund seasonal working capital requirements." TreeSource Industries, Inc. operates facilities in Oregon, Washington, and Vermont, producing softwood and hardwood lumber products. VENCOR: Motion To Establish Key Employee Retention Program ---------------------------------------------------------- Edward Kuntz, Vencor's Chairman, CEO and President, has surveyed the individuals in the Debtors' employ and has identified certain Key Employees whose services must be retained to successfully complete the reorganization process. These Key Employees, whose specific identities are being kept under wraps, include most senior officers of the Debtors' operational departments, members of the human resources department, the legal department and the finance department. The Key Employee Retention Program has two components: $7,325,000 of Retention Bonuses, equaling 50% to 125% of an individual's annual salary, to be paid in three installments (1/3 on Court approval of this Program; 1/3 on the Effective Date of a Plan of Reorganization; and 1/3 three months after the Effective Date of a Plan); and $3,675,000 of Performance Bonuses to be paid, based on undisclosed criteria, on the Effective Date of a Plan. In short, the Debtors argue, the benefits of paying $11,000,000 as an administrative expense in these chapter 11 cases to Key Employees outweigh the costs the estates would incur if these Key Employees were lured away by a better offer from a competitor. The details about who will be paid how much under the Key Employee Retention Program, the Debtors tell Judge Walrath, must be kept under the Court's seal because, "the publicizing of this extremely sensitive information may negatively impact the Debtors' reorganization effort, and the privacy rights of the relevant employees." (Vencor Bankruptcy News Issue 4; Bankruptcy Creditors' Service Inc.) WORLDWIDE DIRECT: Committee Taps Special Insurance Counsel ---------------------------------------------------------- The Official Committee of Unsecured Creditors in the case of Worldwide Direct, Inc., et al. seeks court authority to employ Howrey & Simon as special insurance counsel for the committee. The committee and the debtors entered into a stipulation wherein the debtors delegated to the Committee all claims and causes of action against the debtors' current and former officers and directors and other derivative claims. The Committee's analysis , and to the extent necessary, prosecution of the Officer and Director Claims will require an expertise in insurance coverage issues arising under the director and officer insurance policies purchased by the debtors. The professionals in the firm agree to charge their customary hourly rates which range from $149 per hour to $465 per hour. ZENITH ELECTRONICS: Final Order Grants Post-Petition Financing -------------------------------------------------------------- By order entered September 27, 1999, the US Bankruptcy Court for the District of Delaware granted the motion of the debtor authorizing the debtor to borrow or obtain loans and letters of credit up to a sublimit of $45 million pursuant to the DIP credit agreement and the other DIP loan documents up to an aggregate amount of $150 million, based on availability and borrowing base requirements. The aggregate principal balance of loans outstanding under the pre-petition credit agreement as of the Petition Date was $83,528,398. A carve out amount of $2 million is provided in the order with the express limitation of the Equity Committee's expenses at $300,000. ********* 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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