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/raid1/www/Hosts/bankrupt/TCR_Public/991102.MBX T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 2, 1999, Vol. 3, No. 212 Headlines AMERICAN FAMILY ENTERPRISES: Class Action Settlement Imminent AMERICAN FAMILY ENTERPRISES: Files Chapter 11 AMERICAN SKIING: Fiscal Year-End Figures:Revenues Down, Losses Up AMERITEL: USCI's Subsidiary Files for Bankruptcy BELL GEOSPACE: Case Summary BOSTON CHICKEN: Court Grants Exclusivity Extension BREED TECHNOLOGIES: For $200M It Could Be Yours BRUNO'S: Amendment To Plan CENTRAL EUROPEAN: 17.27% Of Stock An "Attractive Investment" COMMERCIAL FINANCIAL: Objects To Attorneys For ABS Committee COSTILLA ENERGY: Applies To Retain Investment Bankers COSTILLA ENERGY: Seeks Approval To Assume Farmout Agreements COSTILLA ENERGY: Seeks Authority To Pay Operators FORSTMANN & CO: Notice of Sale of Assets GREATE BAY CASINO: Sells Stock In Pratt Casino Corp. HARNISCHFEGER: Court Extends Exclusivity HARVARD PILGIRM: Massachusetts HMO Says Bankruptcy Is Not Near HEALTHCOR: Creditors' Committee Objects To Settlement ICO: Cell Phone Mogul to Assist ICO in Emerging from Bankruptcy IMAGYN MEDICAL: Notice Of Order Confirming Plan JUMBOSPORTS: Seeks Approval of Agency Agreement with Liquidator LAMONTS APPAREL: Extension Of Loan - Renewal Of Credit LEVITZ: Motion To Release & Distribute Escrowed Funds NATURAL GAS: AGLC Obtains Interim Relief in Bankruptcy PHONETEL: Court Confirms Pre-Packaged Plan POWER DESIGNS: DIP Reports Figures For Periods Ended 12/31/98 PREMIER SALONS: Case Summary PREMIER SALONS: Files for Bankruptcy Protection PSI INDUSTRIES: Creditors' Committee Taps Lehman of Tew, Cardenas STARTER: Seeks Extension of Exclusivity SUN HEALTHCARE: Government Seeks Stay of DIP Order Pending Appeal THORN APPLE VALLEY: Stipulation To Extend Exclusivity VENCOR: Committee Taps Wachtell, Lipton, Rosen & Katz VENTAS: Agreement With Lenders On Long-term Debt Restructuring WSR CORP: Charon Investments Objects To Bonus Program WSR CORP: Charon Investments Objects To Exclusivity Extension Meetings, Conferences and Seminars ********* AMERICAN FAMILY ENTERPRISES: Class Action Settlement Imminent ------------------------------------------------------------- In the wake of the Chapter 11 bankruptcy filing of sweepstakes promoter American Family Publishers earlier today, attorneys for plaintiffs in class action lawsuits against the company pending in federal court confirmed that they have reached an agreement in principle to settle the cases, brought by customers who claim they were misled by the company's mailings. Guy Burns, one of the lead attorneys for the plaintiffs, explained that "in light of AFP's financial situation, we felt it was critical to make adequate provision for those customers who may have been misled by the company's sweepstakes promotions." Lead plaintiffs' attorney Elizabeth Cabraser stated that "we are working diligently on the terms of an agreement to protect the interests of class members in the context of AFP's Chapter 11 filing." The terms of the proposed settlement remain confidential at this time, by order of the Court, but the plaintiffs' lawyers anticipate that the details will be announced shortly. There is nothing for customers of American Family Publishers to do at this time. Once the details of the proposed settlement have been finalized, notice will be given advising customers of their rights and the procedures to be followed in making a claim. AMERICAN FAMILY ENTERPRISES: Files Chapter 11 --------------------------------------------- Sweepstakes company American Family Enterprises, Jersey City, N.J., filed for chapter 11 protection on Oct. 29 in order to help settle dozens of lawsuits alleging deceptive advertising practices over the sweepstakes, according to the Associated Press. The well known sweepstakes company, advertised by Dick Clark and Ed McMahon, also announced that it has reached an agreement in principle to settle the lawsuits, which have been consolidated in a federal court in New Jersey. The company said that no prize winners have been affected, that there is no impact for consumers and that the Nov. 24 and Jan. 31 drawings, for $1 million and $10 million respectively, are still scheduled and that all entries are valid. The company said the money for its contests is "pre-funded" and "held in trust by federally insured independent financial institutions until the award date." The assets and liabilities and the list of the largest creditors have not been made available yet. American Family sponsors the American Family Publishers sweepstakes; its past mailings have been criticized for giving people the impression that they had won or that they needed to buy a magazine subscription to enter the sweepstakes. Publishers Clearing House, another major sweepstakes operator, also has been sued by nine states because of its advertising practices. American Family admitted no wrongdoing in its proposed settlements with the states, but the company did agree to change is marketing practices. In August, the Senate voted to put new restrictions on the industry, but the House has not yet acted on similar legislation. AMERICAN SKIING: Fiscal Year-End Figures:Revenues Down, Losses Up ----------------------------------------------------------------- American Skiing Company is organized as a holding company and operates through various subsidiaries. The parent and its subsidiaries is the largest operator of alpine ski and snowboard resorts in the United States. In the 1998-99 ski season, the company's resorts generated approximately 5.1 million skier visits representing approximately 9.8% of total skier visits in the United States. The company's business includes nine ski resorts, several of which are among the largest in the United States including: (i) Steamboat, the fourth largest ski resort in the United States with over 1.0 million skier visits during the 1998-99 ski season, (ii) Killington, the fifth largest resort in the United States with approximately 978,000 skier visits during the 1998-99 season, (iii) Heavenly, which ranked as the second largest resort in the Pacific West region and the eighth largest resort in the United States with approximately 932,000 skier visits during the 1998-99 ski season; and (iv) three of the four largest resorts in the Northeast (Killington, Sunday River, and Mount Snow/Haystack) where the company enjoys a 24% market share. In addition, management believes that its portfolio of resorts includes one of the most significant growth opportunities in North American skiing at The Canyons in Utah. The Canyons' dramatic terrain is favorably located, with direct highway access to the Salt Lake International Airport, and is in close proximity to most alpine venues of the 2002 Winter Olympic Games. In addition to operating alpine resorts, the company develops mountainside real estate which complements the expansion of its on-mountain operations. The company has created an interval ownership product, the Grand Summit Hotel, in which individuals purchase quartershare interval interests while the company retains ownership of core hotel and commercial properties. The initial sale of quartershare units typically generates a high profit margin, and the company derives a continuing revenue stream from operating the hotel's retail, restaurant and conference facilities and from renting quartershare interval interests when not in use by their owners. The company is developing alpine resort villages at prime locations within five of its resorts designed to fit that resort's individual characteristics. American Skiing currently operates six Grand Summit Hotels -- two hotels at Sunday River and one hotel each at Attitash, Mount Snow, Sugarloaf and Killington. Two additional Grand Summit Hotels are under construction at The Canyons and Steamboat. The company also operates golf courses at its resorts and conducts other off-season activities, which accounted for approximately 12% of the company's resort revenues for fiscal 1999. American Skiing's revenues, earnings before interest expense, income taxes, depreciation and amortization ("EBITDA")and net loss available to common shareholders for its 1999 fiscal year were $317.1 million, $40.6 million, and $32.3 million, respectively. For comparison, fiscal 1998 showed net revenues of $338,566 and net losses of $12,274. AMERITEL: USCI's Subsidiary Files for Bankruptcy ------------------------------------------------ Ameritel Communications Inc., a wholly owned subsidiary of USCI Inc., filed chapter 11 in the Southern District of New York, according to a newswire report. Ameritel, which is headquartered in Norcross, GA., but has a customer base largely located in the New York metropolitan area, will continue serving customers through the reorganization. Ameritel plans to emerge from bankruptcy a smaller and more competitive company.(ABI 01-Nov-99) BELL GEOSPACE: Case Summary ---------------------------- Debtor: Bell Geospace, Inc. #2 Northpoint Drive, Suite 400 Houston, Texas 77060 Court: District of Delaware Case No.: 99-3551 Filed: 10/06/99 Chapter: 11 Debtor's Counsel: Jeffrey C. Wisler, Henry Gallagher Connolly, Bove, Lodge & Hutz 1220 market Street, PO Box 2207 Wilmington, DE 19899 (302)658-9141 BOSTON CHICKEN: Court Grants Exclusivity Extension -------------------------------------------------------------- With the Debtors' consent to grant the Committee and the 1996 Lenders the right to terminate exclusivity on 10-days' notice, Judge Case granted a third extension of the Debtors' exclusive period during which to propose a plan of reorganization through October 31, 1999, together with an extension of the Debtors' exclusive periods within which to solicit acceptances of that plan through December 31, 1999. (Boston Chicken Bankruptcy News; Issue 17; Bankruptcy Creditor's Service Inc.) BREED TECHNOLOGIES: For $200M It Could Be Yours ----------------------------------------------- According to the Daily Bankruptcy Review on November 1, 1999, Schultze Asset Management LLC thinks a $200 million investment will be "more than enough" to acquire a controlling interest in Breed Technologies Inc., according to the distressed investment fund's President. George Schultze said he has a very different opinion than that of a source close to Breed who said on Oct. 27 that $200 million would not nearly be enough to gain a controlling stake in the automobile occupant restraint supplier. "Given the economics, I would seriously question your source who stated that $200 million would not be enough," said Schultze. BRUNO'S: Amendment To Plan -------------------------- An eleventh-hour modification to the plan increases distributions to Class 5 General Unsecured Creditors increasing their recovery to 30 cents-on-the-dollar. In the aggregate, the modification increases the value delivered to creditors under the Debtors' Plan by $5,000,000. The Debtors have mailed their Second Amended Joint Disclosure Statement and a copy of their Second Amended Joint Plan of Reorganization to all creditors and other parties in interest. The package includes negative solicitation letters from W.R. huff Asset Management Co., L.L.C., and Mr. Haskell. Huff suggests that it is ready, willing and able to propose an alternative plan of reorganization that will deliver greater value to creditors. In a letter to the Debtors' General Unsecured Creditors, the Committee urges all creditors to vote to accept the Second Amended Joint Plan. The Committee is persuaded that the Debtors' delivery of cash to Class 5 Creditors is preferable than consideration of alternative plan structures given the intense negotiations that culminated in the Second Amended Joint Plan. Point-by-point, the Committee counters Huff's and Haskell's negative solicitation materials, favoring certainty over speculative recoveries under an alternative plan. Creditors must cast their ballots by December 1, 1999. Judge Robinson has scheduled a two-day confirmation hearing for December 20 and 21 to accommodate what Huff and Haskell propose will be a knock-down, drag-out contested confirmation hearing, with the issues squarely focused on (i) the inferiority of the Second Amended Plan as compared to alternative plan proposals and (ii) the propriety of granting broad releases to KKR. CENTRAL EUROPEAN: 17.27% Of Stock An "Attractive Investment" ------------------------------------------------------------ Earlier in the month of October it was reported that 3,196,818, or 17.27%, of the outstanding shares of common stock of Central European Media Enterprises was beneficially owned, with shared voting and dispositive powers by: Dr. Andrei V. Tsimailo, Elemental Limited, Media Most B.V., Media Most Limited, Vladimir A. Goussinsky and Zao Media Most. The shares held relate to shares held for the account of EL. EL is a Gibraltar company whose current principal business is the purchasing of shares. Media Most Ltd. is a Gibraltar company with its principal business that of investing in, and managing, media and telecommunications companies. Media Most BV is a Netherlands company whose principal business, like that of Media Most Ltd. is investing in, and managing, media and telecommunications companies. ZAO Media Most is a Russian company also engaged in the principal business of investing in, and managing, media and telecommunications companies. Dr. Tsimialo is a citizen of the Russian Federation. The principal occupation of Dr. Tsimailo is serving as First Vice-Chairman of the Board of ZAO Media Most, which is carried out at ZAO Media Most's principal address. Mr. Goussinsky is a citizen of the Russian Federation and Israel. The principal occupations of Mr. Goussinsky are serving as Chairman of the Board of ZAO Media Most, Company Executive of Media Most Ltd. and Chairman of the Board of NTV Broadcasting Company, a Russian company, that are carried out at ZAO Media Most's principal address. EL is a wholly owned subsidiary of Media Most Ltd, as a result Media Most Ltd. may be deemed the beneficial owner of the shares held for the account of EL. Media Most Ltd. is a wholly owned subsidiary of Media Most BV, as a result Media Most BV may be deemed the beneficial owner of the shares held for the account of EL. Media Most BV is a wholly owned subsidiary of ZAO Media Most, as a result ZAO Media Most may be deemed the beneficial owner of the shares held for the account of EL. Dr. Tsimailo, by virtue of his position as First Vice-Chairman of the Board of ZAO Media Most, may be deemed the beneficial owner of the shares held for the account of EL. Mr. Goussinsky, by virtue of his position as Chairman of the Board of ZAO Media Most, may be deemed the beneficial owner of the shares held for the account of EL. Approximately $6,069,899 was expended to purchase the securities. 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 acquired for the account of EL were acquired because the securities are considered to be an attractive investment. COMMERCIAL FINANCIAL: Objects To Attorneys For ABS Committee ------------------------------------------------------------ Commercial Financial Services, Inc., debtor, responds to the application of the Official Committee of Asset-Backed Security Holders ("ABS Committee") to employ Kilpatrick Stockton LLP as legal counsel. In February 1999, the ABS Committee filed applications to retain Fried Frank and Gable & Gotwals as its counsel. Now the Committee seeks to employ Kilpatrick to replace Fried Frank. The Committee states that Gable & Gotwals is fully able to represent the Committee. Six of the thirteen original voting members of the Committee have quit. With regard to plan negotiation, formulation and confirmation, CFS believes that together with Gable & Gotwals, the securitization trustees, the active and major ABS Holders, and perhaps the securities fraud plaintiffs' lawyers, there are already more than sufficient capable representatives of ABS interests, such that more counsel is unnecessary and unwarranted. COSTILLA ENERGY: Applies To Retain Investment Bankers ----------------------------------------------------- The debtor, Costilla Energy, Inc., seeks court approval of retention of Petrie Parkman & Co., Inc. as investment bankers. On May 18, 1999, Petrie Parkman was retained by the debtor to assist in analyzing options available to the debtor to restructure the debtor's existing financial obligations. Petrie Parkman has assisted the debtor in obtaining investment proposals in the months leading to the filing of the voluntray petition. The debtor seeks to continue the employment of the firm, due to the advantage of continuity provided by the firm's services. COSTILLA ENERGY: Seeks Approval To Assume Farmout Agreements ------------------------------------------------------------ The debtor, Costilla Energy Inc. is engaged in the business of exploration for and development and production of oil and natural gas in South Texas, and the Permian Basin region of West Texas and Southeast New Mexico and East Texas. The debtor seeks the court's approval of the debtor's assumption of the Farmout Agreements with JUD, LC, Canyon Oil & Gas Exploration LLC and Walter Oil & Gas Exploration Corp. The debtor believes that the terms of the Farmout Agreements are all beneficial to the debtor and that the wells are viable. COSTILLA ENERGY: Seeks Authority To Pay Operators ------------------------------------------------- Costilla Energy's prepetition non-operating payables total $1.01 million. As a result of not paying these expenses, several operators are recovering their oil and gas expenses from Costilla by applying Costilla's production proceeds to satisfy their oil & gas expenses and then remitting the remainder of production proceeds to Costilla. This process has placed a significant administrative nad accounting burden on Costilla to reconcile and properly account for its true production proceeds and oil and gas expenses. While Costilla contests the operators' ability to recoup their Oil and gas expenses from production proceeds, they do not want to litigate this issue, and Costilla has budgeted sufficient funds to satisfy the outstanding non-op payable is the budget approved in the cash collateral order. Approval to pay the Non-op payables will stabilize Costilla's revenue projections and maximize its revenue realization from production proceeds by minimizing the administrative, legal, and accounting costs associated with procuring production proceeds from the operators, thereby preserving and protecting Costilla's estate. FORSTMANN & CO: Notice of Sale of Assets ---------------------------------------- Forstmann & Company, Inc. and Forstmann Apparel, Inc., debtors, seek entry of an order authorizing the sale of substantially all of its assets. A hearing on the motion is scheduled for November 4, 1999 at 11:00 AM. The debtor has entered into an Asset Purchase Agreement with Victor Forstmann, Inc. for the sale of substantially all of the assets. The aggregate purchase price for the assets and certain executory contracts and unexpired leases is $16 million, subject to certain adjustments. GREATE BAY CASINO: Sells Stock In Pratt Casino Corp. ---------------------------------------------------- On October 13, 1999, Greate Bay Casino Corporation sold its stock in Pratt Casino Corporation, an indirect wholly owned subsidiary, to Hollywood Casino Corporation for nominal consideration. The sale of Pratt Casino Corporation by Greate Bay was part of a restructuring of Pratt Casino Corp. and its subsidiaries under a plan of reorganization confirmed by the United States Bankruptcy Court for the District of Delaware on October 1, 1999. When sold to Hollywood Casino Corp., Pratt Casino Corporation's assets consisted of its limited partnership interest in a management contract for Hollywood Casino Corporation's casino in Aurora, Illinois and a consulting contract for Hollywood Casino Corporation's casino in Tunica, Mississippi valued in the aggregate at approximately $40.3 million. Pratt Casino Corporation's liabilities consisted of an obligation in the amount of $40.3 million payable in satisfaction of certain notes issued by a Pratt Casino subsidiary and guaranteed by Pratt Casino which were in default. Pratt Casino's obligation was paid on October 14, 1999 with the portion of proceeds from Hollywood Casino Corporation's issue of $360 million of Senior Secured Notes escrowed for the purpose. The noteholders also received 100% of the assets of Pratt Casino Corporation not sold to Hollywood Casino Corporation consisting primarily of claims against the Greate Bay Casino Corp. subsidiaries which own and operate the Sands Hotel and Casino in Atlantic City, New Jersey. Such entities are presently under the supervision of the United States Bankruptcy Court for the District of New Jersey and Greate Bay Casino Corp. does not expect to have ownership or management control of the subsidiaries after reorganization. It is anticipated that Greate Bay Casino Corp. will record a charge to non-operating expenses in the approximate amount of $775,000 during the fourth quarter of 1999 representing the transfer of its claims for the benefit of the noteholders. Neither the gain on forgiveness of debt resulting from the settlement of the notes for less than their face amount nor the subsequent sale of Pratt Casino Corp. to Hollywood Casino Corp. are expected to have a material impact on the consolidated financial statements of Greate Bay Casino Corp. during the fourth quarter of 1999 since the latter's investment in Pratt was revalued to a zero basis and substantially all receivables from Pratt and its subsidiaries were fully reserved in May 1999. Prior to December 31, 1996, Greate Bay Casino Corp. was an approximately 80% owned subsidiary of Hollywood Casino Corp. On December 31, 1996, Hollywood Casino Corp. distributed the common stock of Greate Bay Casino Corp. owned by Hollywood Casino Corp. to its shareholders. The plan of reorganization of Pratt Casino Corp. and its subsidiaries was confirmed by the United States Bankruptcy Court for the District of Delaware on October 1, 1999. HARNISCHFEGER: Court Extends Exclusivity ---------------------------------------- The Debtors' attention has been consumed by the on-going cash losses at Beloit and their attention will be consumed during the next several months as they attempt to sell Beloit, James H.M. Sprayregen, Esq., representing the Debtors, told Judge Walsh at a hearing. Providing the Court with additional information about Beloit, Mr. Sprayregen related: * Beloit has posted continuous losses for some time and the Debtors are convinced that they cannot turn that trend around in their chapter 11 cases; * The Debtors are convinced that value for their estates is maximized through a sale of Beloit -- as a whole or in parts -- to a small universe of logical purchasers; * PricewaterhouseCoopers Securities has been asked to contact logical purchasers, educate those purchasers (many of which are foreign) about the chapter 11 process, and pull together a comprehensive sales and marketing campaign; * Robert Dangremond, serving as the Debtors' Chief Restructuring Officer, is the point person who will coordinate and orchestrate Beloit's sale; * The Debtors -- with input from the Committee -- intend to present the Court with a comprehensive sale procedures motion in short order; and * The Debtors envision, at this time, an auction of Beloit's assets near Thanksgiving and the closing of a sale in December. To satisfy the concerns expressed by the Committee, the Debtors, Mr. Sprayregen advised, have agreed to: * provide the Committee and its financial advisors with daily financial reports; * make their management personnel available to the Committee; * permit the Committee's financial advisors -- principally Houlihan Lokey Howard & Zulkin -- to be intimately involved in the Beloit Sale; and * grant the Committee the opportunity to give its input into major decisions. James Bromley, Esq., representing the Committee, confirmed for Judge Walsh that, given the Debtors' willingness to include the Committee in the decision-making processes and supply them with detailed information, the Committee supports the Debtors' request for an extension of its exclusive periods. The cash burn at Beloit -- already topping $115,000,000 -- is of prime concern to the Committee, Mr. Bromley noted. The Committee is supportive of a Beloit Sale and is anxious to participate in the process. With that, Judge Walsh ruled that the Debtors have, in fact, shown cause for an extension of their exclusive periods. Accordingly, the Debtors shall have (i) the exclusive right to propose a plan of reorganization in these chapter 11 cases through February 7, 2000 and (ii) the exclusive right to solicit acceptances of such plan through April 7, 2000. (Harnischfeger Bankruptcy News Issue 13; Bankruptcy Creditor's Service Inc.) HARVARD PILGIRM: Massachusetts HMO Says Bankruptcy Is Not Near -------------------------------------------------------------- Harvard Pilgrim Health Care, the largest health maintenance organization (HMO)in Massachusetts, said on Friday that it is not on the brink of bankruptcy and that it expects to break even by the end of next year, Reuters reported. A company spokesperson said that the Boston Herald's report on Friday that six Boston hospitals are "moving to secure a place in a line of creditors" if Harvard Pilgrim files for bankruptcy was "irresponsible." The Herald also reported that Harvard Pilgrim owes the hospitals more than $30 million. Although Harvard Pilgrim lost $54 million last year and expects to lose about $80 million this year in Massachusetts, the company said it has adequate cash on hand, reserves and money owed to it to pay all of its claims and obligations. The company also said a new financial plan in place should restore the HMO to health by the end of next year. (ABI 01-Nov-99) HEALTHCOR: Creditors' Committee Objects To Settlement ----------------------------------------------------- As of the petition date, a class of shareholders of the debtor reached a settlement with the debtor, its former officers and directors, and the debtor's insurer, Chubb Insurance Company, under which the class plaintiffs would receive $2.8 million from Chubb to settle all claims arising from an action for damages arising from alleged misrepresentations and other violations of federal securities law. The creditors' committee believes that approval of the settlement motion is not in the best interests of the debtor's estate because it would exhaust insurance proceeds that might otherwise be available to the estate, distribute potential property of the estate other than under a plan of reorganization and derogation of section 510(b) of the Bankruptcy Code and could violate the automatic stay. The Committee requests that the court determine the interest of the debtor in the relevant insurance proceeds and the extent to which the debtor's estate would be prejudiced by approval of the settlement motion. ICO: Cell Phone Mogul to Assist ICO in Emerging from Bankruptcy --------------------------------------------------------------- ICO Global Communications (Holdings) Ltd. announced that its board has approved a financing plan whereby telecommunications pioneer Craig O. McCaw and his affiliated companies Teledesic LLC and Eagle River Investments LLC will lead a group of international investors that will provide up to $ 1.2 billion to ICO. Under an agreement reached on Oct. 31, 1999, McCaw and his affiliates will lead a group of existing ICO investors to provide $ 225 million in DIP financing expected to be completed by Nov. 8, 1999, as well as $275 million in a second financing round expected to be completed by the end of January 2000. (Debtor-in-possession financing is interim debt financing that would be converted into equity when the company emerges from bankruptcy.) McCaw and his affiliates have also agreed to underwrite the remaining $ 700 million exit financing expected to be completed by second quarter 2000 upon consummation of the reorganization plan. He will invite existing and additional strategic and financial investors in ICO to participate in this remaining portion of financing. McCaw, chairman of Teledesic and Eagle River, said, "It is our hope that by working with ICO's team and international partners we can bring the company back to good health and make a contribution to global communications, particularly in the developing world. We recognize that this is a big job and that there's a lot of work ahead of us. Our investment in ICO marks the first step in our strategy to widen the technological tools at our disposal and serve a broader group of customers." The McCaw-led investment will enable ICO to raise the $ 1.2 billion it needs to complete the build-out of its system and to provide working capital to the company up to the launch of its global mobile satellite services in the second quarter of 2001. The investment is subject to approval of the U.S. Bankruptcy Court, the Bermuda and Cayman Island courts as well as certain other conditions. ICO Global Communications (Nasdaq:ICOFQ) was established in January 1995 as a private company to provide global mobile personal communications services by satellite, including digital voice, data, facsimile, high-penetration notification, and messaging services. ICO Global Communications was listed on Nasdaq in July 1998. The stock was suspended from trading when the company filed for Chapter 11 protection on Aug. 27, 1999. Craig McCaw is chairman of Teledesic LLC, which is building a global broadband Internet-in-the-Sky satellite communications network. McCaw and Microsoft founder Bill Gates are the company's two primary founding investors. Strategic investors also include Motorola, Saudi Prince Alwaleed Bin Talal and The Boeing Company. Teledesic (pronounced "tel-eh-DEH-sic") is a private company based in Bellevue, Wash., a suburb of Seattle. IMAGYN MEDICAL: Notice Of Order Confirming Plan ----------------------------------------------- Imagyn Medical Technologies, Inc. et al., filed notice of entry of order confirming the debtors' joint amended plan of reorganization dated September 10, 1999 as modified on October 18, 1999. JUMBOSPORTS: Seeks Approval of Agency Agreement with Liquidator --------------------------------------------------------------- The debtors, JumboSports, Inc. and its affiliates, seek approval of the going out of business sales, procedure to reject unexpired leases and the debtors' retention of liquidators subject to higher and better offers. The debtors have entered into an Agency Agreement with Buxbaum Group & Associates, Inc., Nassi Group LLC and Alco Capital Group, LLC, a joint venture. A hearing will be held on November 4, 1999. The debtor represents that the aggregate retail price of the merchandise as of the sale commencement date will not be less than $112 million. The liquidators guaranty a minimum sum of 53.25% of the aggregate retail price of the merchandise, and to the extent that proceeds exceed 63% of the aggregate retail price of the merchandise the debtor shall receive 50% of the proceeds in excess of the 63% threshold. LAMONTS APPAREL: Extension Of Loan - Renewal Of Credit ------------------------------------------------------ Lamonts Apparel, Inc. and certain financial institutions and BankBoston, N.A., as agent, have entered into a Seventh Amendment, dated October 13, 1999, to the Amended and Restated Debtor in Possession and Exit Financing Loan Agreement, dated September 26, 1997. Among other things, the Seventh Amendment provides for (i) renewal of the revolving credit facility through January 31, 2002, (ii) extension of the term loan through January 31, 2001 with an option to further extend the term loan to January 31, 2002 if certain requirements are met, (iii) an increase in the working capital facility to a maximum of $38.0 million in the months of October and November to accommodate seasonal inventory requirements, and (iv) changes in the borrowing base formula to allow Lamonts to borrow up to 70 percent of eligible inventory from January 15th through June 30th and up to 65 percent of eligible inventory from July 1st through January 14th. Immediately prior to entering into the Seventh Amendment, BankBoston assigned its interest as a lender under the revolving credit facility and the term loan to its affiliate, BankBoston Retail Finance, Inc. However, BankBoston will continue to serve as agent under the credit facility. As a result of the extension of the term loan, Lamonts anticipates that it will reclassify approximately $9.7 million of its current liabilities as long-term debt. This reclassification would reduce approximately 45% of Lamonts' working capital deficit of $21.5 million as of July 31, 1999. LEVITZ: Motion To Release & Distribute Escrowed Funds ----------------------------------------------------- In connection with the Debtors' 1994 acquisition of John M. Smyth Company, certain funds were escrowed for the benefit of the Smyth Former Shareholders, including John M. Smyth and Anthony M. Smyth. Currently, those escrowed funds total $4,869,920.48. The escrow agreement provides for distribution of the funds in June 1999. Continental Bank, N.A., in its capacity as the Escrow Agent, balked at releasing the funds in light of Levitz' chapter 11 cases without express authority from the bankruptcy court. Levitz does not assert any interest in the funds. Accordingly, by this Motion, the Debtors and Messrs. Smyth ask Judge Walrath to enter an order authorizing the release of the funds without further delay. Sally Henry, Esq., representing the Debtors, told Judge Walrath that the core parties-in-interest are in discussions and exchanging memoranda about this matter at the present time and are hopeful that they will be able to present an agreed order to the Court. (Levitz Bankruptcy News Issue 38; Bankruptcy Creditor's Service Inc.) NATURAL GAS: AGLC Obtains Interim Relief in Bankruptcy ------------------------------------------------------ Atlanta Gas Light Company (AGLC) on Friday received approval from a federal bankruptcy court judge to draw down on an $11 million surety bond it holds as security for certain obligations owed it by Peachtree Natural Gas. Peachtree was also ordered to pay AGLC $500,000, to be applied toward delivery service provided by AGLC from the date of Peachtree's bankruptcy filing through November 4, 1999. The hearing on AGLC's previously filed motion for relief from the automatic stay provisions of the federal bankruptcy code will reconvene on Thursday, November 4. Peachtree filed for Chapter 11 bankruptcy protection on Tuesday, October 26. On Wednesday, October 27, AGLC filed a motion with the federal bankruptcy court requesting, among other things, permission to draw down on Peachtree's surety bond and permission to file a petition with the Georgia Public Service Commission seeking the assignment of Peachtree's customers to creditworthy natural gas marketers. Peachtree owes AGLC approximately $13.3 million for delivery and other services billed to Peachtree prior to the bankruptcy filing. Commenting on Friday's order, AGLC senior vice president and general counsel Paul Shlanta said, "The financial relief in the order is important to our company and our shareholders. Equally important though are provisions of the order that restrict Peachtree's ability to use gas in storage." Storage gas is essential to maintain the gas distribution system during the winter months. "These restrictions help ensure that gas in storage will remain available to provide sufficient natural gas to all Georgia customers during the coldest days this winter," he said. On Tuesday, AGLC will meet with Peachtree to assess its ability to meet its creditors' and customers' needs. Next steps will be discussed in the bankruptcy hearing on November 4. Atlanta Gas Light Company is the largest natural gas distribution company in the Southeast, serving nearly 1.5 million customers in Georgia and southern Tennessee. It also is the primary subsidiary of AGL Resources, Inc. (NYSE: ATG), a regional energy holding company with operations throughout the Southeast. Although natural gas distribution is AGL Resources' core business, it also is engaged in other energy-related businesses, including retail propane sales and customer care services for energy marketers. PHONETEL: Court Confirms Pre-Packaged Plan ------------------------------------------ Chief Bankruptcy Judge Tina Brozman (S.D.N.Y.) last week confirmed PhoneTel Technologies Inc.'s pre-packaged reorganization plan; this is the first case confirmed under the guidelines for the filing of pre-packaged chapter 11 cases issued this year by the U.S. Bankruptcy Court for the Southern District of New York. ABI members Lee D. Powar, Lawrence E. Oscar and Jeffrey M. Levinson of Hahn Loeser & Parks LLP, Cleveland, led the reorganization effort on PhoneTel's behalf, along with other attorneys at the firm. Under the plan, holders of the company's 12 percent Senior Notes, due in 2006, would be converted into about 95 percent of the reorganized company's common stock, with current equity holders sharing in the remaining 5 percent. PhoneTel intends to consummate the pre-packaged plan within the next 45 days. Local counsel in New York for PhoneTel is Lawrence M. Handelsman of Stroock & Stroock & Lavan LLP. Seth Lemler of Ladenburg Thalman served as financial advisor for PhoneTel. POWER DESIGNS: DIP Reports Figures For Periods Ended 12/31/98 ------------------------------------------------------------ During the second quarter of fiscal 1999, Power Designs Inc. and its wholly-owned subsidiary, continued manufacturing operations as debtors-in-possession under Chapter 11 protection. The Vantage Partners LLC, a management consulting firm retained in compliance with court order, together with Melvin A. Becker, Vice President of Operations, continued in their roles as senior management. Product offerings were confined to three historical families of products: military grade power supplies, variable autotransformers, and linear switching power supply products. Employees and contracted consultants of the company at December 31, 1998 numbered 28. Results for the first six months of fiscal 1999 reflect a significant downsizing in operations which followed the company's Chapter 11 filing, and therefore represent a substantial change from the pre-petition figures for the same period in fiscal 1998. Accordingly a period-to-period comparison of the historical results of operations and financial condition of the company is not necessarily meaningful. Net sales increased to $811,194 for the quarter ended December 31, 1998 as compared with $482,174 for the same period in 1997. Net loss for the 1998 quarter was $10,653 while the same period in 1997 net loss was $5,736,223. Net sales increased from $1,236,839 for the six months ended December 31, 1997 as compared to $1,556,900 for the six months ended December 31, 1998. Net loss in the 1998 six-month period was $28,992, whereas in the same 1997 period the company saw net loss of $6,936,774. PREMIER SALONS: Case Summary ---------------------------- Debtor: Premier Salons International Inc. 3780 14th Avenue Suite 106 Markham, ON L3R 9Y5 GEMM Holdings Inc. - parent corporation also filed. Court: District of Delaware Case Number: 99-3975 Chapter: 11 Date Filed: October 29, 1999 Attorneys For Debtor: Weil Gotshal & Manges LLP ]701 Brickell Avenue, Sutie 2100 Miami, FL 33131 Richards, Layton & Finger PA One Rodney Square PO Box 551 Wilmington DE 19899 PREMIER SALONS: Files for Bankruptcy Protection ----------------------------------------------- Premier Salons International Inc., based in Ontario, Canada, filed for chapter 11 protection on Friday in the District of Delaware. The company, which owns about 850 salons, has assets and liabilities of between $10 and $50 million, and there are more than 1,000 creditors involved. Premier operates salons in mall-based department stores such as Macy's, Sears, Boscov's, Dayton Hudson and Strawbridge. Parent company Gemm Holdings Inc. also was included in the filing. (ABI 01-Nov-99) PSI INDUSTRIES: Creditors' Committee Taps Lehman of Tew, Cardenas ----------------------------------------------------------------- A hearing will be held on the application for employment of counsel to the Unsecured Creditors' Committee of PSI Industries, Inc. The debtor seek approval to hire Thomas R. Lehman, PA of the law firm of Tew, Cardenas, Rebak, Kiellog, Lehman, DeMaria & Tague LLP as their attorney. Mr. Lehman is the first cousin of the Bankruptcy Judge in this case, and they were law partners between 1984 and 1988. At the hearing the judge will determine whether to recuse himself from the case, although it is not mandatory. STARTER: Seeks Extension of Exclusivity --------------------------------------- SC New Haven Corporation, f/k/a Starter Corporation, and its affiliates seek an extension of the exclusive periods during which the debtors may file a plan of reorganization and solicit acceptances to the plan. The debtors request an extension of the filing period and the solicitation period to and including January 31, 2000 and march 31, 2000, respectively. The debtors are in the final stages of an asset disposition process that is designed to maximize the value of their assets and bring these cases to an expeditious conclusion. The debtors have not completed their collection of accounts receivable and the New, Haven, Conn. facility is still being marketed. Actions for turnover of estate property against Ripon Athletic, Madison Square Garden, and others have been filed and are pending. There may also be nontangible assets, such as preference or other actions, which must be evaluated. A liquidating plan may be a superior option to conversion to Chapter 7, and the debtors, Lenders, Guarantor and Committee have begun the plan negotiation process. There is a realistic possibility of reaching a consensus on a plan of reorganization. Consequently, the debtors seek these extensions. SUN HEALTHCARE: Government Seeks Stay of DIP Order Pending Appeal ----------------------------------------------------------------- Dissatisfied with Judge Walrath ruling last week that the Government's interests are adequately protected for the next 30- day period, the United States of America asks the Bankruptcy Court to issue a stay of the Interim DIP Financing Order pending the Government's appeal to the District Court. Logically, the Debtors and the DIP Lenders oppose the Government's request on at least two bases: (1) the DIP Lenders have already advanced loans to the Debtors and (2) by its own explicit terms, the order from which the Government intends to appeal is not a final order from which an appeal to the District Court can be taken. (Sun Healthcare Bankruptcy News Issue 4; Bankruptcy Creditor's Service Inc.) THORN APPLE VALLEY: Stipulation To Extend Exclusivity ----------------------------------------------------- The debtors, Thorn Apple Valley, Inc., et al., Cavanaugh Lakeview Farms, Ltd. and the DIP Lenders request that the court adjourn the hearing on the Disclosure Statement until November 29, 1999 and they request that the court further extend exclusivity since the Debtors, DIP Lenders and Committee continue to work on revising the Disclosure Statement and plan. The debtors are also negotiating with the Pension Benefit Guaranty Corporation and request more time for those negotiations. VENCOR: Committee Taps Wachtell, Lipton, Rosen & Katz ----------------------------------------------------- The Official Committee of Unsecured Creditors sought and obtained the Court's permission to retain the New York-based law firm of Wachtell, Lipton, Rosen & Katz as their lead counsel in the Debtors' chapter 11 cases. Prior to the Petition Date, Wachtell discloses, the Firm served as counsel to the unofficial committee of Senior Subordinated Noteholders. Accordingly, the Committee asks that Wachtell's retention be approved nunc pro tunc to the Petition Date. Wachtell contemplates that it will: (a) advise the Committee and represent it with respect to proposals and pleadings submitted by the Debtors or others to the Court or the Committee; (b) represent the Committee with respect to any plans of reorganization or disposition of assets proposed in these cases; (c) attend hearings, draft pleadings and generally advocate positions which further the interests of the creditors represented by the Committee; (d) assist in the examination of the Debtors' affairs and review of the Debtors' operations; (e) advise the Committee as to the progress of the chapter 11 proceedings; and (f) perform such other professional services as are in the interests of those represented by the Committee, including, without limitation, those set forth in 11 U.S.C. Sec. 1103(c). Wachtell agrees to perform its services at its customary hourly billing rates: Members $400 to $750 Associates $130 to $395 Paralegals $85 to $125 The individuals who will be responsible for the representation of the Committee and their hourly rates are: Chaim J. Fortgang $625 Richard G. Mason $550 Patricia Attar $90 Leading the engagement, Chaim J. Fortgang, Esq., advises the Court that Wachtell received a $125,000 pre-petition payment from the Debtors in connection with the Firm's pre-petition representation of the unofficial committee and negotiation of the Standstill Agreement with Vencor dated July 22, 1999. (Vencor Bankruptcy News Issue 5; Bankruptcy Creditor's Service Inc.) VENTAS: Agreement With Lenders On Long-term Debt Restructuring -------------------------------------------------------------- Ventas, Inc. (NYSE: VTR) ("Ventas"), the Louisville-based real estate company, announced today that it has reached an agreement with over 95 percent of its lenders on terms to restructure all of Ventas' debt on a long-term basis, including the $ 275 million bridge loan which had been due on October 30, 1999. "This long- term debt restructuring plan, along with the planned reorganization of Vencor and our ongoing negotiations with the federal government, are critical elements in our plan to move Ventas forward," Ventas CEO Debra A. Cafaro said. "The consummation of the long-term debt restructuring will permit the Company to pay dividends to our shareholders, and will give the Company time and flexibility to further improve its capital structure. The plan is very attractive because of its long-term nature and also because it does not require us to sell assets, refinance or raise equity in the near term." The structure of the new Ventas credit facility, which will replace the approximately $ 974 million outstanding under the current credit facility, will include: -- A new $ 25 million revolving line of credit. -- $ 200 million of Tranche A indebtedness that will be priced at Libor plus 275 basis points with a maturity date of December 31, 2002. Tranche A will receive approximately $ 50 million of principal when the long-term debt restructuring closes, $ 50 million within thirty days after Vencor's plan of reorganization becomes effective and thereafter all excess cash flow from Ventas until $ 200 million in total has been paid down on the debt. -- Tranche B consists of $ 300 million of debt bearing interest at Libor plus 375 basis points, maturing on December 31, 2005. It will receive a one-time paydown of excess cash held by Ventas within 30 days after the Vencor bankruptcy plan becomes effective. Tranche B will also receive scheduled paydowns of $ 50 million in 2003 and $ 50 million in 2004 with the balance due in 2005. -- Tranche C consists of approximately $ 474 million of indebtedness priced at Libor plus 425 basis points, with a maturity of December 31, 2007. There are no scheduled paydowns. -- The entire credit facility is pre-payable without penalty or premium. This new facility will be secured with liens on Ventas' real property assets. Also, Ventas will pay a one percent restructuring fee of approximately $ 10 million, a portion of which (approximately $ 2.5 million) was paid on October 29 in connection with the extension of the bridge loan. The remainder of the fee is payable upon closing of the new credit facility. The deal is subject to customary terms and conditions, including completing documentation of the transaction by January 31, 2000. While there are no assurances the restructuring will be completed, management is committed to the successful implementation of this transaction. The agreement provides that Ventas can pay only minimum Real Estate Investment Trust ("REIT") dividends (equal to 95 percent of its taxable income) until $ 200 million of the outstanding debt is paid down. Following that date, Ventas will have the flexibility to pay dividends at a more normalized level. Ventas expects to make the required dividend payments for 1999 in 2000, some time after the long-term restructuring closes. The 1999 dividend may be satisfied by a combination of cash and a distribution of Vencor equity, which Ventas expects to receive as part of the Vencor reorganization. Under the terms of the waiver and extension agreement, Ventas has received a four-month extension of the $ 275 million bridge loan, during which period the replacement credit facility will be documented, and a waiver of certain covenants under its existing Credit Agreement. However, two holders of the bridge loan who have not consented to the waiver and extension (representing approximately $ 20 million or 7 percent of the bridge loan principal amount) may assert a right to seek repayment of their portion of the bridge loan currently. The waiver and extension will expire on February 28, 2000, and will terminate before such date if (i) an event of default under the credit facility occurs and is continuing, and is not waived, (ii) Vencor, Inc.'s case under Chapter 11 of the United States Bankruptcy Code becomes a liquidating Chapter 11 or is converted to a case under Chapter 7 of the Code, or (iii) Ventas fails to comply with any covenants in the agreement. Ventas'long-term debt restructuring plan follows the mid-September Chapter 11 bankruptcy filing by Vencor, Inc. (OTC:VCRI), Ventas' principal tenant. It is expected that Vencor will file its reorganization plan and disclosure statement later this year and Vencor has stated that it expects its reorganization plan to become effective in the first quarter of 2000. Ventas' debt restructuring agreement provides that Vencor must emerge from bankruptcy by December 31, 2000. Congress currently is considering possible improvements to the Medicare reimbursement system. Merrill Lynch continues to act as financial advisor to the Company in connection with the long-term debt restructuring. Ventas, Inc. is a real estate company whose properties include 45 hospitals, 219 nursing centers and eight personal care facilities operating in 36 states. Ventas intends to qualify as a REIT for the year ending December 31, 1999. WSR CORP: Charon Investments Objects To Bonus Program ----------------------------------------------------- Charon Investments, LLC, the largest unsecured creditor of the debtors, WSR Corporation and its affiliates, objects to the motion of the debtors seeking approval of its reorganization bonus program and amending the employment contract of Al Woods. Charon states that it is opposed to the timing of the motion, saying it is premature, to the lack of disclosure with respect to the bankruptcy proceedings and the prospects for unsecured creditor recoveries and the specifics of the relief requested. Charon fails to see how the significant enhancement of Al Woods' severance package or the creation of a substantial reorganization bonus program, will increase the likelihood of third parties bidding for the assets of the debtors, increase the amounts that such parties are willing to pay for such assets, or expedite the timetable for effectuating the debtors' emergence from bankruptcy. On the contrary, Charon suggests that the bonus program will burden the estates with costs and dilute recoveries to unsecured creditors, while leaving creditors with significant costs and extended delays in receiving recoveries due to unresolved claims issues and unliquidated liabilities. Finally, Charon states that the $2 million threshold figure for the Bonus Program and Woods' employment agreement are completely unjustified. WSR CORP: Charon Investments Objects To Exclusivity Extension ------------------------------------------------------------- Charon Investments, LLC, the largest unsecured creditor of the debtors, WSR Corporation and its affiliates, objects to an extension of the exclusive periods. Charon points out that sixteen months have passed since the filing of the case, and the debtors have not yet filed a plan of reorganization, or negotiated a sale of assets. The Bar Date passed over a year ago, and the debtors have not objected to a single proof of claim. While a sale process ahs been agreed to, Charon is unaware of any staling horse bid or of any current offers, other than its own, which according to Charon is or has been rejected by the debtor. Charon sees no reason to further extend exclusivity. Meetings, Conferences and Seminars ---------------------------------- November 4-5, 1999 MID-SOUTH COMMERCIAL LAW INSTITUTE Assessing the Present and Looking to the Future The Doubletree Hotel, Nashville, Tennessee Contact: 1-423-549-7000 or mmiller@bdbc.com November 11-13, 1999 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION COMMITTEE ON CONTINUING PROFESSIONAL EDUCATION 11th Annual Advanced ALI-ABA Course of Study: The Emerged and Emergine New Uniform Commercial Code New York Hilton Hotel, New York City Contact: 1-800-CLE-NEWS November 17-20, 1999 AMERICAN BAR ASSOCIATION'S LATIN AMERICAN LAW SUBCOMMITTEE & THE ASSOCIATION OF COMMERCIAL BANKS OF THE DOMINICAN REPUBLIC Educational Exchange Case De Campo Resort, LaRomana, Dominican Republic Contact: 1-703-739-0800 November 29-30, 1999 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Distressed Investing '99 The Plaza Hotel, New York, New York Contact: 1-903-592-5169 or ram@ballistic.com December 2-4, 1999 AMERICAN BANRKUTPCY INSTITUTE Winter Leadership Conference La Quinta Resort & Club, La Quinta, California Contact: 1-703-739-0800 December 9-11, 1999 STETSON COLLEGE OF LAW 24th Annual Seminal on Bankruptcy Law & Practice Sheraton Sand Key Resort Clearwater Beach, Florida Contact: 1-727-562-7830 or cle@law.stetson.edu January 10-15, 2000 LAW EDUCATION INSTITUTE, INC. Bankruptcy Law C.L.E. Program Marriott Vail Mountain Resort, Vail, Colorago Contact: 1-414-228-5810 February 27-March 1, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute I Olympic Park Hotel, Park City, Utah Contact: 1-770-535-7722 March 23-25, 2000 SOUTHEASTERN BANKRUPTCY LAW INSTITUTE, INC. 26th Annual Southeastern Bankruptcy Law Institute Marriott Marquis Hotel, Atlanta, Georgia Contact: 1-770-451-4448 March 30-April 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Norton Bankruptcy Litigation Institute II Flamingo Hilton Hotel, Las Vegas, Nevada Contact: 1-770-535-7722 May 4-5, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. Bankruptcy Sales & Acquisitions The Renaissance Stanford Court Hotel San Francisco, California Contact: 1-903-592-5169 or ram@ballistic.com June 29-July 2, 2000 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 September 21-22, 2000 RENAISSANCE AMERICAN CONFERENCES & BEARD GROUP, INC. 3rd Annual Conference on Corporate Reorganizations The Regal Knickerbocker Hotel, Chicago, Illinois Contact: 1-903-592-5169 or ram@ballistic.com ********* 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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