/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/991217.MBX T R O U B L E D C O M P A N Y R E P O R T E R Friday, December 17, 1999, Vol. 3, No. 243 Headlines AH ROBINS: Dalkon Shield Case Nears End with Final Distributions AMERICAN GREETINGS: Announces Third Quarter Results BRUNO'S: HUFF'S Request to Serve as Estate Claims Representative ENDICOTT JOHNSON: Files For Bankruptcy FALLS LEATHER: Likely To Complete its REorganization HARNISCHFEGER: Seeks To Establish Vendor Reclamation Procedures HECHINGER: Home Depot Buys Some Hechinger Locations HVIDE MARINE: Emerges From Chapter 11 ICO GLOBAL: ICO and Eagle River Extend Due Diligence IRIDIUM: Investors Ensure Service During Restructuring KENAR: VALMATRIX Used To Value Intellectual Property LEARNINGSMITH: Agrees To Sell 64 of 87 Store Leases LEVITZ: MONTHLY OPERATING REPORT -- Month Ended October 31, 1999 LINCOLN FINANCIAL: Announces Reorganization LOEWEN: To Sell More Cemeteries and Funeral Homes PACIFIC LINEN: Closes After 20 Years PAGENET: Shares Double - Overly Optimistic? PIC/N PAY: IBJ Whitehall Provides Revolving Facility SKYVIEW: EchoStar to Acquire Skyview Media Assets STUART ENTERTAINMENT: Receives Court Confirmation Of Its Plan SUN HEALTHCARE: Considers Self-Insurance To Cut Costs SUN HEALTHCARE: Motion For Key Employee Retention Program TRANSTEXAS: Operating Results For Third Fiscal Quarter TULTEX: Employees Complain To Labor Department VENCOR: Motion To Sell Surplus Respiratory Equipment WIRELESS ONE: MCI Worldcom Eyes Sprint BOND PRICING FOR WEEK OF December 13, 1999 ********* AH ROBINS: Dalkon Shield Case Nears End with Final Distributions ---------------------------------------------------------------- A case involving nearly $3 billion in payments to about 200,000 women who used a defective birth control device is nearing an end, Associated Press reported. A.H. Robins Co., which made the defective Dalkon Shield birth control device, filed for bankruptcy protection in 1985 after it was deluged with lawsuits. In 1989, a $2.3 billion trust, the Dalkon Shield Claimants Trust, was set up by American Home Products Corp., a New Jersey-based company that bought out Robin. The Trust mailed a final payment of $63.1 million to 53,828 claimants yesterday and announced that it plans to shut down by March 31, eight years ahead of schedule. AMERICAN GREETINGS: Announces Third Quarter Results --------------------------------------------------- American Greetings (NYSE: AM) released third quarter results for fiscal 2000 in line with Wall Street expectations. Due to the success of various plans and initiatives, the Company also said it believes earnings in the next two fiscal years could increase by about 35 per cent and 20 per cent respectively. For the quarter ended November 30, 1999, American Greetings reported net income of dlrs 53.9 million, or 81 cents per share. That compares to net income of dlrs 74.6 million, or dlrs 1.04 per share, for the same period a year ago. This year's results include a loss of 9 cents per share from the company's Internet unit. Last year's results include a restructuring charge of 12 cents per share. Sales in the quarter were dlrs 623.4 million, compared with dlrs 638.4 million last year, and were impacted by the company's retail productivity initiative. American Greetings said the initiative, which will result in about a dlrs 100 million reduction in shipments to retailers during fiscal 2000, is moving toward completion. "There may be some continued effects in select accounts in the next two quarters, but the expected impact is included in our stated projections," said Morry Weiss, chairman and CEO of American Greetings. "We are encouraged that select point-of-sale data shows continued improvement in sales for our retail partners. Since these sales are achieved with lower inventory levels, the productivity of our accounts has improved, which has further strengthened our relationship with them." For the first nine months, American Greetings reported net income of dlrs 38.4 million, or 58 cents per share, compared with dlrs 122.3 million, or dlrs 1.71 per share, for the same period last year. This year's results include losses of 15 cents per share from its Internet unit and special charges of 36 cents per share related to Canadian restructuring efforts. Sales year-to-date totalled dlrs 1.56 billion, compared with dlrs 1.61 billion a year ago. American Greetings said its party goods and candle businesses continued to post strong gains in the quarter. Additionally, Plus Mark, the company's seasonal card and gift wrap unit, posted double-digit gains in sales and earnings for the quarter and nine-month periods. The Company's UK operations also continued to report strong gains in both sales and earnings. The UK results have been bolstered in recent quarters by an innovative new greeting card and licensing program called "Bubblegum," which has quickly become the UK's best-selling greeting card program. Although the financial planning process for fiscal 2001 is not complete, the Company believes earnings next year should fall into the range of dlrs 2.65 to dlrs 2.75 per share. That guidance does not include expected losses from its Internet unit. It also assumes the pending acquisition of Gibson Greetings is completed and slightly accretive in fiscal 2001. If completed, the Gibson transaction is expected to add 30 cents per share to earnings in its second full year. Assuming the successful integration of Gibson and continued benefit from other programs and cost-saving efforts, earnings in fiscal 2002 could be in the range of dlrs 3.20 to dlrs 3.30 per share. BRUNO'S: HUFF'S Request to Serve as Estate Claims Representative ---------------------------------------------------------------- "Based upon all of the pertinent facts and circumstances and the record and all of the proceedings in the Debtors' chapter 11 cases," Walter M. Grant, Bruno's Senior Vice President, General Counsel and Secretary, tells Judge Robinson by way of an Affidavit, "the Debtors believe that there is no justification for the prosecution of the potential claims, if any, relating to the Leveraged Recapitalization transaction, or any other claims identified by Huff in [his] Motion. The likelihood that any recovery would be obtained through the prosecution of such claims is remote and speculative. Their prosecution is not beneficial to the administration of the Debtors' chapter 11 cases. [T]he Debtors believe that Huff's prosecution of such claims, if authorized by the Court, could significantly delay the chapter 11 cases and the Debtors' emergence from chapter 11. The claims, if any, are dealt with in the Debtors' Plan." Accordingly, Mr. Grant urges Judge Robinson to deny Huff's Motion. Huff's Motion is "grossly inappropriate," the United States Trustee asserts in her objection to Huff's Motion. "[S]hould the Motion be granted it would in effect be handing an asset of the estate or a single entity/constituency rather than providing for a fair distribution of any proceeds among all parties similarly situates as is required by the Bankruptcy Code," the U.S. Trustee says, also noting that Huff's proposal lacks any oversight mechanisms restricting Huff's ability "to engage in a folic of its own with the tacit approval of the Bankruptcy Court." The U.S. Trustee prays that Judge Robinson deny Huff's Motion. HSBC Bank USA lends its support to Huff's Motion. The no-cost- to-the-estate pursuit of the claims for the benefit of the 10- 1/2% Noteholders appeals to HSBC. HSBC doesn't see how Huff's pursuit of the causes of action will hinder or frustrate the confirmation process--except that the Target Defendants won't like it. HSBC asks the Court to consider that the Plan not only enforces the subordination agreement against the Subordinated Noteholders, it also strips the Noteholders of their subrogation rights. Huff is convinced that there's enough value to go around to pay the Banks in full and wants its opportunity to share in the excess. The result, HSBC argues, is both equitable and consistent with the term of the Indenture. (Bruno's Bankruptcy News Issue 30; Bankruptcy Creditor's Service Inc.) ENDICOTT JOHNSON: Files For Bankruptcy -------------------------------------- Plagued by shrinking sales in shoes, a 107-year-old footwear chain has filed for Chapter 11 bankruptcy protection. Endicott Johnson officials made the announcement Tuesday. The company has slowly fallen from its status as a major manufacturer. Last year, three of the store's competitors - Kinney shoes, Chernin, and Thom McAn - closed. Endicott Johnson's decision came after the footwear retailer borrowed $7.5 million from Paragon Capital of Needham, Mass., and was still unable to spark holiday sales. Shoe spending is not what it once was, according to the U.S. Department of Labor. It estimated that in 1989, consumers spent 0.85 percent of their income on footwear, compared to 0.70 percent in 1998. Paragon CEO Stewart Cohen said that the bankruptcy filing is merely a step toward "business as usual," for the shoe store chain, which has 61 stores in 13 states. The company will remain in business, he said. "The retail shoe business has been difficult for everyone, and it hasn't gotten any better the last two or three years," said Ralph LoVuolo, a consultant serving as Endicott Johnson's interim president. "We've had continued sales decline and that has led to cash flow problems," LoVuolo said. LoVuolo said the company would disclose its assets and liabilities during a hearing Wednesday in U.S. Bankruptcy Court in Utica. Endicott Johnson was founded in 1892 and became a pillar of the Binghamton area's economy over the next several decades. In its heyday, the company employed 21,000 workers in 29 plants and warehouses. However, in recent years, Endicott Johnson lost market share to foreign competitors and its business has dwindled. In April 1998, it closed its last plant and sold its manufacturing operations to U.S. Industries, a Fortune 500 company based in New Jersey. Today, Endicott Johnson employs 26 people at its headquarters and operates 61 Father & Son stores in 13 states, with concentrations in New York, New Jersey, Florida, Pennsylvania and Illinois. It employs about 300 full and part-time retail workers. LoVuolo said it was too early to say whether any stores would be closed or any workers laid off. However, he added that Endicott Johnson had already rid itself of its underperforming stores over the past several years as it fought to avoid bankruptcy. Continued erratic sales, spurred by a penchant for discounted products, finally pushed Endicott Johnson over the brink, LoVuolo said. "Customers seldom buy unless shoes are on sale. That's made it difficult for retailers. As a result, weekly sales have been very erratic. Up and down and up and down. We are not unique," LoVuolo said. Indeed. In November alone, two other prominent regional shoe retailers found themselves in dire financial straits. LoVuolo could not estimate how long it would take Endicott Johnson to reorganize, although he remained optimistic the company would survive. He noted that Paragon's $7.5 million loan was crucial assistance because it would provide confidence to vendors and creditors. FALLS LEATHER: Likely To Complete its REorganization ---------------------------------------------------- The Broward Daily Business Review reports on December 15, 1999 that the Falls Leather Gallery, the South Florida-based furniture retailer that spent itself into bankruptcy, now looks likely to complete its reorganization within a few weeks and re-emerge, slimmer and wiser. Company representatives and its largest creditor say Falls Leather, which had 10 stores when it sought bankruptcy court protection in January, is close to finishing a reorganization plan that hinges on reducing overhead. The company has cut spending so far by closing three stores, eliminating the service department, reducing advertising expenses by 30 percent and getting rid of a company plane and a Ferrari and Porsche driven by the owners. Falls now has two stores in Miami-Dade and one each in Sunrise, West Palm Beach, Boca Raton, Fort Myers and Naples. To fund an aggressive expansion, Falls Leather Gallery, whose predecessor was founded in 1974, had spent hundreds of thousands of dollars in customer deposits on expenses other than the furniture it had ordered. As a result, the company was using deposits from new customers to pay for production and delivery of earlier orders. At the time of the filing, about 2,000 orders for furniture were outstanding, with no money to fill them. At a hearing in February, Chief U.S. Bankruptcy Judge A. Jay Cristol sternly warned that he would shut down the stores unless Salem produced a plan to make whole those customers who had given deposits. In stepped the retailers largest creditor, Industrie Natuzzi SPA and its U.S. subsidiary, Natuzzi America. The Italian manufacturer, which was owed about $ 1 million at the time of the filing, agreed to guarantee delivery of new orders, extend its credit and lend money to Falls Leather to pay for release of merchandise that was being held at the Port of Miami. After the agreement with Natuzzi, the companys second-largest supplier, Canadian manufacturer Palisser Furniture Corp., also agreed to guarantee delivery of the furniture. Falls Leather Gallery now projects about $ 10 million in sales this year, but much better control of its expenditures. HARNISCHFEGER: Seeks To Establish Vendor Reclamation Procedures --------------------------------------------------------------- The Debtors report that, with the assistance of PricewaterhouseCoopers and Poorman-Douglas Corporation, they have sifted and sorted through creditors' reclamation demands. The Debtors agree to the allowance of reclamation claims against: Debtor Entity Number of Claims Allowable Amount ------------- ---------------- ---------------- Beloit 11 $524,831 Joy 42 2,620,893 P&H 35 871,477 Continued reconciliation is necessary for reclamation claims against: Debtor Entity Number of Claims Unverified Amount ------------- ---------------- ----------------- Beloit 6 $12,279,732 Joy 22 1,229,709 P&H 14 85,672 The Debtors dispute in their entirety reclamation claims against: Debtor Entity Number of Claims Invalid Claims ------------- ---------------- -------------- Beloit 5 $553,466 Joy 22 606,728 P&H 11 309,673 (Harnischfeger Bankruptcy News Issue 19; Bankruptcy Creditor's Service Inc.) HECHINGER: Home Depot Buys Some Hechinger Locations --------------------------------------------------- Home Depot Inc. announced that it will purchase the leases of five Washington-area Hechinger Co. stores, including those in Annandale, Reston and Fairfax, Va., and Columbia, Md., The Washington Post reported. The purchase price was not disclosed, but last month Home Depot paid $15.6 million for a Hechinger property in Bethesda, Md. Hechinger completed its liquidation sales this week, after announcing in September that it would convert its chapter 11 reorganization to chapter 7. Hechinger Enterprises, a real estate investment firm controlled by the Hechinger and England families, has agreed to pay $2.6 million for leases on several other stores, and it will assume the lease on a store it owns in Washington. (ABI 16-Dec-99) HVIDE MARINE: Emerges From Chapter 11 ------------------------------------- Hvide Marine Incorporated (OTC Bulletin Board: HMARQ) today announced that it has completed its exit financing arrangements and that its Plan of Reorganization has become effective, thereby marking the Company's formal emergence from Chapter 11, 98 days after its initial filing on September 8. "This is a historic day for the Company," commented Jean Fitzgerald, Chairman, President and CEO. "We have put Chapter 11 behind us and, in the process, shed more than $430 million in debt and reduced overhead costs substantially. While much has been accomplished, much remains to be done, and we begin our new life with renewed energy and a focus on strengthening relationships with customers and suppliers and returning the Company to profitability as quickly as possible." As previously announced, the exit financing facility is being provided by a group of financial institutions led by Deutsche Bank and consists of $200 million in term loans, a $25 million revolving credit facility, and $85.5 million of proceeds from senior secured second lien notes. The proceeds of these borrowings have been used to repay the Company's borrowings under its debtor-in-possession credit facility, which totaled approximately $255 million, and will be used to pay administrative and other fees and expenses, and to provide for future working capital requirements. Warrants to purchase 6.75% of the common stock of the reorganized Hvide Marine are being issued in connection with the senior secured second lien notes, of which 1.75% represents compensation for financial advisory services. The warrants have a nominal purchase price and a term of seven and a half years. Distributions of new stock and warrants to creditors and shareholders under the Plan of Reorganization are expected to be completed shortly. As previously reported, the Plan provides that holders of the Company's 8 3/8% Senior Notes will receive 9,800,000 shares of common stock of the reorganized Hvide Marine, representing 98% of the new common equity; holders of the Trust Convertible Preferred Securities will receive 200,000 shares of common stock of the reorganized Hvide Marine, representing 2% of the new common equity, together with warrants to purchase an additional 125,000 shares; and holders of the Common Stock will receive warrants to purchase 125,000 shares of the common stock of the reorganized Hvide Marine, or one warrant for every 124 shares currently owned. The warrants will be exercisable at $38.49 per share and will have a term of four years. The Company expects its new stock and warrants to eventually trade on a major exchange or Nasdaq. As previously announced, all general and trade creditors will be paid in full. In connection with its Plan of Reorganization, the Company has reincorporated in Delaware, although its corporate offices will remain in Florida. The reorganized Company will be led by its current management and governed by a new Board of Directors, whose members include Jean Fitzgerald, Chairman; James J. Gaffney, Chairman, Vermont Industries; John F. McGovern, Aurora Capital LLC; Thomas P. Moore, Jr., Senior Vice President, State Street Research & Management Company; Donald R. Shepherd, former Chairman and CEO, Loomis, Sayles & Company, LP; and Peter M. Swift, Director, Seascope Shipping Ltd. With a fleet of 274 vessels, Hvide Marine is one of the world's leading providers of marine support and transportation services, primarily to the energy and chemical industries. Visit Hvide on the Web at www.hvide.com. ICO GLOBAL: ICO and Eagle River Extend Due Diligence ---------------------------------------------------- ICO Global Communications, a global mobile communications company in bankruptcy, announced that it and Eagle River Investments LLC have agreed to extend the time period for completion of Eagle River's due diligence in connection with its investment in ICO, according to a newswire report. Under an agreement dated Dec. 1, Eagle River's commitment to the $275 million second tranche of ICO's debtor-in-possession (DIP) financing is conditioned on, among other things, Eagle River's satisfaction with modifications to certain key vendor arrangements by Jan. 18 and completion of due diligence. On Dec. 3, the Bankruptcy Court for the District of Delaware granted final approval to ICO's DIP financing in the amount of $500 million. ICO filed chapter 11 on Aug. 27. IRIDIUM: Investors Ensure Service During Restructuring ------------------------------------------------------ Iridium LLC announced that it has obtained a funding commitment of $ 20 million from current investors led by Motorola. This funding will be used for ongoing operations while the company seeks to achieve its financial restructuring. Motorola is seeking broader participation in the $ 20 million funding commitment from other current investors. Iridium LLC will request approval of these arrangements in a motion to be filed on December 10, 1999 with the U.S. Bankruptcy Court for the Southern District of New York. The company will seek an extension of its current cash collateral order, which expires on December 15, 1999, through February 15, 2000 to accommodate these arrangements. "Our existing investors have stepped forward to provide for ongoing operations, while we continue to have discussions with potential new investors," CEO John Richardson said. Discussions with a number of parties have been held since Iridium filed on August 13, 1999 for relief under Chapter 11. However, no investment offers have been made. The Company noted that recent trading in the stock of its public investment vehicle, Iridium World Communications Limited, does not reflect the reality of its financial situation. The stock of IWCL was de-listed by NASDAQ on November 19, 1999 and is now trading on the "pink sheets." The company is in a Chapter 11 bankruptcy reorganization proceeding and, based on its debt level in excess of $ 4 billion and the legal priorities in bankruptcy, believes that it is highly unlikely that any reorganization will result in value remaining from the bankruptcy estate for holders of publicly traded equity. Throughout the restructuring process, new customers have been added to the Iridium global service network. Over 50,000 customers have purchased Iridium phones. "The loyalty of our customers despite the financial challenges we face and the interest Iridium continues to attract from new customers is encouraging. Customers can be confident that sales, including those related to Y2K, will be supported with Iridium's best efforts to provide a contingency communications alternative," said Vice President for Sales and Distribution Sue Kennedy. As part of the continuation of service to its customers the company announced that Motorola expects to commence shipments by year end of its smaller Satellite Series 9505 portable phone. This second generation subscriber product is smaller and lighter than the initial generation of Motorola Satellite Series phones. The company also announced that Randall W. Brouckman has been promoted to the position of Chief Operating Officer. CEO John Richardson said, "Randy Brouckman's promotion to COO will reinforce the senior management capability of the company during this critical period." Mr. Brouckman was formerly Senior Vice President Engineering Systems and Operations. IRIDIUM LLC became the world's first global satellite phone and paging company on November 1, 1998. Its network of 66-low earth orbiting satellites, combined with existing terrestrial cellular systems, enables customers to communicate around the globe. Iridium World Communications, Ltd. is the public investment vehicle of Iridium LLC. KENAR: VALMATRIX Used To Value Intellectual Property ----------------------------------------------------- VALMATRIX(R) was recently successfully used by the Federal Bankruptcy Court, New York Circuit Creditors Committee to value the trademarks and intellectual property of Kenar Enterprises, Ltd. The VALMATRIX(R) analysis established a value of 1.8 million for the trademarks. The Kenar package of trademarks, which includes Gillian, Schrader, and A.J. Bari, was promptly sold for nearly the amount established by the VALMATRIX(R) system. The winning buyer was Garfield & Marks, a leading women's apparel company. VALMATRIX(R) analyzes the value of intellectual property assets based on numerous parameters including global legal protections, market differentiation and financial profile. Examples of other successful valuation clients include: Barneys, The Vatican Library, Forbes, Macy's, LA Gear, Corning, Marvel, The Limited, IBM, NCR, and Xerox. IPnetwork.com, the premier Intellectual Property Marketplace on the web, now offers valuation of intellectual property as one of its suite of services for IP owners and has exclusive rights to use the VALMATRIX(R) system on its site. According to Wes Anson, Chief Marketing Officer of IPnetwork.com and creator of the VALMATRIX(R) technology, "We are very pleased to demonstrate the efficacy of this technology. As the scope of intellectual property continues to grow, expanding beyond patents and trademarks to things like domain names, the need for accurate IP valuation is critical." LEARNINGSMITH: Agrees To Sell 64 of 87 Store Leases --------------------------------------------------- The Boston Herald reports on December 15, 1999, that lawyers for bankrupt educational toy and games retailer Learningsmith Inc. yesterday said the company agreed to sell as many as 64 of its 87 store leases to a California retailer with a similar store concept. At a Learningsmith bankruptcy hearing in Boston, the company's lawyers said Store of Knowledge Inc., of Cerritos, Calif., has signed a non-binding agreement to buy between 40 and 64 of the store leases. Learningsmith, which bankruptcy court protection under Chapter 11 of the federal Bankruptcy Code on Friday, has launched liquidation sales and plans to shut down all its stores next month. Learningsmith lawyer Harry Murphy told Judge Carol J. Kenner that selling the leases would raise up to $ 3.7 million, depending on how many Store of Knowledge buys. Store of Knowledge would also buy fixtures and furniture, but no inventory. Store of Knowledge spokeswoman Dede Dunevant declined comment yesterday. It was unclear what a deal would mean to Learningsmith's employees, who stand to lose their jobs. Lawyers emphasized that the deal is non-binding, and others could make bids on the leases, including landlords. Learningsmith plans to hire real estate consultant Keen Realty to auction off its leases, including the 40 to 64 that Store of Knowledge wants. Learningsmith lawyer Donald Farrell said other companies could win those leases by outbidding Store of Knowledge. With 71 stores in about 21 states, the California chain sells educational toys and games for both children and adults, like the Learningsmith. The company's Internet site says science, brain twisters and humor come together at Store of Knowledge. Also like Learningsmith, the company has deals with public television stations, which have an equity interest in the stores. The company's only New England store is in Connecticut. LEVITZ: MONTHLY OPERATING REPORT -- Month Ended October 31, 1999 ----------------------------------------------------------------- LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES Consolidated Condensed Statement of Operations For the month Ended October 31, 1999 Net Sales 47,760,000 Net Loss (3,852,000) Total current liabilities 181,280,000 LEVITZ FURNITURE INCORPORATED AND SUBSIDIARIES Consolidated Condensed Statement of Cash Flows For the Month Ended 31-Oct-99 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) (3,852,000) NET CASH PROVIDED BY OPERATING ACTIVITIES (8,825,000) Cash and equivalents at end of period 3,994,000 LINCOLN FINANCIAL: Announces Reorganization ------------------------------------------- Lincoln National Corporation (NYSE:LNC), the parent company of the Lincoln Financial Group of companies, today announced that it is reorganizing The Lincoln National Life Insurance Company (Lincoln Life) to reflect the significant growth potential in its businesses. Under the reorganization plan, Lincoln Life will separate its life insurance and annuity businesses into two distinct operations, each of which will now report directly to Jon A. Boscia, president and chief executive officer of LNC. As part of the reorganization, John Gotta, currently senior vice president and general manager of the life manufacturing/operations, will assume the position of chief executive officer of the life insurance operation. Lincoln will commence an outside search to fill the position of chief executive officer of annuities. Steve Lewis, senior vice president, will head this business in the interim. Splitting the two businesses results in the elimination of Gabriel L Shaheen's position as president and chief executive officer of Lincoln Life. Gabe Shaheen has resigned after declining another senior level executive position within LFG. "Gabe has made significant contributions during his career at Lincoln Financial Group and we wish him well in his future endeavors," said Boscia. "With the acquisitions of Aetna's life insurance business and CIGNA's life and annuity businesses, and organic growth in annuities, Lincoln Life has grown dramatically and now accounts for approximately 70 percent of Lincoln's earnings. This new organizational structure better reflects the increased importance of the businesses - allowing for more rapid marketplace responsiveness and strategic flexibility - and represents an important step to position them for continued growth in the future," said Boscia. The life insurance operation will remain located in Hartford, Connecticut, and the annuity operation will maintain its operations in Fort Wayne, Indiana. Boscia added, "John has a demonstrated track record in his area of expertise and is a strong focused leader who I believe is extremely well prepared to take the life business to the next level." Lincoln National Corporation and its affiliates operate under the marketing name of Lincoln Financial Group. Headquartered in Philadelphia, Lincoln Financial Group has consolidated assets of $96 billion and annual consolidated revenues of $6 billion. Through its wealth accumulation and protection businesses, the company provides annuities, life insurance, 401(k) plans, mutual funds, financial planning, life-health reinsurance and institutional investment management and advisory services. LOEWEN: To Sell More Cemeteries and Funeral Homes ------------------------------------------------- Loewen Group Inc., Vancouver, announced yesterday that it is seeking the bankruptcy court's approval to sell up to 201 funeral homes and 170 cemeteries in the United States, according to Reuters. The company reviewed its funeral home and cemetery operations and identified another 54 locations that would be "rationalized" through mergers or restructurings. The second largest "death care services" provider in Northern America, Loewen sought protection from creditors in June in both Canada and the United States. Loewen has until the end of February to submit its reorganization plan. (ABI 16-Dec-99) PACIFIC LINEN: Closes After 20 Years ------------------------------------ Pacific Linen, Inc. today announced that it has successfully liquidated all of its assets in an out of court liquidation in the United States and a court supervised bankruptcy in Canada. Effective November 29, 1999, all stores were closed and the inventory and fixtures sold. On December 3, 1999, the home office in Woodinville, WA was closed, and all furniture, fixtures and equipment were auctioned for the benefit of its creditors. "This process was difficult and complicated due to the cross border nature of the company's operations and Canadian and US junior secured lenders. The senior secured lender, BankBoston N.A., had its loan fully repaid, and the junior secured lenders received payment of a significant portion of their original loans," stated Scott A. Hessler, Pacific Linen's Chairman & CEO. "We thought that the sooner we completed this process, which was accomplished in approximately 90 days, the more likely that all of the secured lenders involved would optimize their return of capital. I made a commitment to our Board of Directors that I would see this to completion, and with the help of our employees and advisors, that objective was accomplished quickly and on budget." Before the liquidation, Pacific Linen, Inc. was the largest specialty retailer of home textiles in Canada, with 28 stores in that country and the United States. PAGENET: Shares Double - Overly Optimistic? ------------------------------------------- THE FORT WORTH STAR-TELEGRAM reports on December 14, 1999 that shares of Paging Network, the world's largest paging company, more than doubled on December 13, 1999 on speculation about the value of the wireless-services division it's spinning off in a planned sale, an analyst said. Paging Network, known as PageNet, rose 81.25 cents, or 137 percent, to $ 1.40 in Nasdaq trading of 54.1 million shares, making it the most active stock by volume in U.S. trading. The company is set to be acquired by Arch Communications Group for about 78 cents a share in stock, 81 percent less than PageNet's closing price yesterday. When the transaction is completed, which is expected in the first half of 2000, PageNet will spin off its Vast Solutions unit and give holders of shares and notes an 80.5 percent stake in the unit. Messages in Internet chat rooms predicted that the Vast unit will be worth $ 4 a share to PageNet shareholders, which sent the stock up, said Prudential Securities analyst Christopher Larsen, who rates PageNet "hold. " Larsen said that estimate is very high because it assumes the unit, which provides wireless services to businesses, is worth more than it actually is based on current revenue. The calculation also fails to account for the stake given to debt holders and forgets that only 80.5 percent will be given to holders of shares and debt. The planned Arch acquisition, on which the spinoff depends, also may not go through, Larsen said, increasing the risk of investing in PageNet based on the value of the Vast spinoff. PageNet has said it might file for Chapter 11 bankruptcy protection if the sale isn't completed, and the company's bondholders may reject the sale if they think they could get a higher price for their debt by filing for Chapter 11, he said. Arch agreed to buy its larger rival in early November for about $ 1.36 billion in stock and assumed debt. The transaction called for Arch to exchange 0.1247 of a share for each PageNet share. The companies also wanted to convert about $ 1.6 billion in debt and preferred shares into common stock of the combined company. PIC/N PAY: IBJ Whitehall Provides Revolving Facility ---------------------------------------------------- IBJ Whitehall Business Credit Corp. announced yesterday that its newly created IBJ Whitehall Retail Finance unit has concluded an agreement to provide a $39 million revolving credit facility to Pic `N Pay Shoes Inc., based in North Carolina, according to a newswire report. The unit specializes in providing asset-oriented financing arrangement and a full array of commercial banking products to middle market retailers and provides senior secured debt facilities. (ABI 16-Dec-99) SKYVIEW: EchoStar to Acquire Skyview Media Assets ------------------------------------------------- EchoStar Communications Corp. (NASDAQ: DISH, DISHP) announced that its proposed$23 million purchase of certain assets of SkyView Media Group has been approved by the U.S. Bankruptcy Court for the District of New Jersey. "EchoStar's DISH Network is already the industry leader in delivering our U.S. customers their favorite international programming, and the acquisition of SkyView assets will only further strengthen and enhance our diverse ethnic and foreign- language channel offerings," said Charlie Ergen, chairman and CEO of EchoStar. Dependent upon certain terms and conditions, EchoStar expects to complete the purchase before Dec. 31, 1999. EchoStar Communications Corp., includes three interrelated business units: -- DISH Network(TM) is EchoStar's state-of-the-art direct broadcast satellite system that is capable of offering over 500 channels of digital video and CD-quality audio programming, fully MPEG-2/DVB compliant hardware and installation. DISH Network was also ranked number one in customer satisfaction among satellite/cable TV subscribers by the J.D. Power and Associates 1999 Cable/Satellite TV Customer Satisfaction Study. -- EchoStar Technologies Corporation designs, manufactures and distributes DBS set-top boxes, antennas and other digital equipment for the DISH Network and various international customers that include ExpressVu Canada and the Via Digital system in Spain. ETC provides construction, oversight and project integration services for customers internationally. ETC also oversees EchoStar Data Networks Corporation in Atlanta, a leading supplier of MediaStream(R) technology for distributing Internet content over satellite networks. -- Satellite Services provides the delivery of video, audio and data services to business television customers and other satellite users. These services include satellite uplink, satellite transponder space usage and other services. Satellite Services also administers SKY VISTA, a direct broadcast satellite service offering popular digital satellite television programming to viewers in Alaska, Hawaii, Puerto Rico and the U.S. territories in the Caribbean. EchoStar V, EchoStar's newest, state-of-the-art, high-power direct broadcast satellite, launched on a Lockheed Martin Atlas IIAS rocket on Sept. 23, 1999. EchoStar V, to be located at 110 degrees West Longitude, will allow DISH Network to offer 500 channels, including high definition television, Dolby Digital surround sound, Internet and high-speed interactive television and data services, all on a single dish. DISH Network, which currently serves approximately 3.25 million customers, is a trademark of EchoStar Communications Corporation. DISH Network is located on the Internet at www.dishnetwork.com. STUART ENTERTAINMENT: Receives Court Confirmation Of Its Plan ------------------------------------------------------------- Stuart Entertainment, Inc. d/b/a Bingo King (OTC Bulletin Board: STUA) ("Stuart" or the "Company") announced that on December 14, 1999, the United States Bankruptcy Court in Delaware (the "Bankruptcy Court") confirmed the Company's Plan of reorganization (the "Plan"). It is expected that the Plan will become effective before the end of the year. The Company had previously filed a petition for relief under Chapter 11 of the Bankruptcy code (the "Chapter 11 Case") on August 13, 1999, in order to implement the Restructuring Agreement entered into in May 1999 with certain of the holders of the Company's $100 million of 12 1/2% Senior Subordinated Notes (the "Notes"). When the Plan becomes effective, Stuart will become a private company under the name BK Entertainment, Inc. and the Notes will be converted into 100% of the new common stock of Stuart, subject to dilution of up to 10% on a fully-diluted basis by shares reserved for issuance under options to be granted to Stuart's executive management. The holders of the Notes will receive a pro rata share of the new common stock. The current shareholders of the Company who have submitted their claims will receive payments in accordance with the Plan upon it's effectiveness. As a part of the implementation of the Plan, the Company will enter into a new $40 million credit facility, which will replace an existing $30 million credit facility with Foothill Capital Corporation previously entered into during the pendency of the Chapter 11 Case. The revolving credit facility will be used to fund the Company's working capital needs and the term loans will be used for capital expenditures and to fund future acquisitions. Joseph M. Valandra, Chairman and Chief Executive Officer of the Company, said, "We are happy to announce that the Bankruptcy Court has confirmed the Plan. I'm proud of our team's effort to bring the Company through this process. We have all worked very hard to make this happen. Combining our enhanced capital structure with our strong distribution network and employee base, gives us the foundation for achieving our future goals. The rebirth of our company is an exciting time and we look forward to future opportunities." Valandra goes on to say, "The confirmation of the Plan fulfills a promise made to the public, company employees and the marketplace. As the market leader, the Company will continue to aggressively pursue our vision and execute the companies business plan." "Throughout the reorganization process, we have continued to offer what no other company in our industry can offer, a full- line of integrated products which includes Bingo King(TM), Trade Products(TM), Bazaar and Novelty(TM) to the most advanced technology and electronics in the marketplace with Power Bingo King(TM) brand's, Power Player(TM) and Power Touch(TM). We are going to point our collective resources in one direction and continue to solidify our position as the market leader," said Valandra. SUN HEALTHCARE: Considers Self-Insurance To Cut Costs -------------------------------------------------------------- The Albuquerque Journal reports on December 14, 1999 that Sun Healthcare Group Inc. expects the cost of its professional liability insurance to double next year, according to a bankruptcy newsletter outlining the first meeting of a creditors committee in its Chapter 11 filing. The company did not say how much money that would be, but has previously referred to insurance companies' dropping businesses in the nursing home industry. Two of Sun's general and professional liability insurance carriers said they won't renew Sun's policies when they expire at year's end, according to Sun's earnings report filed with the Securities and Exchange Commission last week. As a result, Sun and other companies are considering self- insuring some of the general and professional liability risks, Sun said in its earnings report. Also at the creditors committee meeting Friday in Wilmington, Del., Sun's chief operating officer and its treasurer outlined the company's restructuring strategy. According to the Sun Healthcare Bankruptcy Newsletter, the tentative plan calls for: *Exiting non-core businesses; *Exiting unprofitable nursing homes; *Focusing on owning more facilities in the future (Sun leases many of its current properties); *Reducing variable costs through cuts in staff; *Reducing fixed costs by obtaining favorable rent agreements. Sun hasn't determined yet which businesses are the non-core ones, treasurer Matthew Patrick said at the creditors meeting. The restructuring is based on Sun's eliminating its debt, reducing its fixed interest costs and providing Sun with the financial ability to reinvest in operations, Patrick said. The company, which is currently preparing its budget for 2000, said those numbers should be ready in the first few weeks in January, Mark Wimer, chief operating officer and president, said at the meeting. The creditors committee has asked Delaware Court Bankruptcy Judge Mary Walrath to approve the committee's hiring of Houlihan Lokey Howard & Zukin Financial Advisors Inc. Among other things, the firm will evaluate the finances and options of any business plan Sun proposes; advise the committee in preparing options, business plans and financial projections; and aid the committee in its negotiations with Sun and other parties interested in the terms of any proposed plan. The committee will pay its financial advisers a monthly fee of $150,000, according to the Sun bankruptcy newsletter. The committee includes the Bank of New York, Bank of America and Credit Suisse First Boston Corp. SUN HEALTHCARE: Motion For Key Employee Retention Program --------------------------------------------------------- The Debtors ask the Court to approve an employee retention program for 930 Key Employees necessary for the companies' survival at a total cost not to exceed $7,525,000. The Debtors argue that their proposed Retention Program encourages these employees to remain by providing them additional compensation if they do keep working for the Debtors. The Retention Program applies to the Debtors' top five managers, and to approximately 930 corporate, regional and facility managers and employees. The Retention Program establishes a $6,000,000 pool for the Debtors' discretionary use as retention payments to the employees and managers. In addition, the Debtors' CEO will receive "incentive payments" of $500,000; their COO will receive $350,000; their CFO will receive $350,000; their general counsel will receive $200,00; and their chief administrative officer will receive $125,000. These five executives will not participate in the $6,000,000 pool for employees and managers. The payments to these five executives are contingent on a successful Chapter 11 reorganization. The Retention Program also establishes severance payments for certain employees and executives whose employment is terminated other than for good cause. TRANSTEXAS: Operating Results For Third Fiscal Quarter ------------------------------------------------------ TransTexas Gas Corporation (OTCBB:TTGGQ) today reported operating results for its third fiscal quarter ended Oct. 31, 1999. Total revenues were $29.4 million, with a net loss of $4.8 million, or $0.08 per share, compared to revenues of $ 32.8 million and a net loss of $147.8 million for the same period last year. Year-ago figures includes the impact of a$164.9 million pre-tax asset writedown, reflecting lower commodity prices, recorded under the full cost method of accounting. Results for the quarter ending Oct. 31, 1999 reflect that the Company ceased accruing interest on its liabilities subject to compromise, as a result of the Company's Chapter 11 filing. On April 19, 1999, TransTexas filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code, in order to preserve cash and give the Company the opportunity to restructure its debt. The Bankruptcy Court has approved debtor-in-possession financing of up to$30 million. The Company filed its Second Amended Plan of Reorganization and First Amended Disclosure Statement on Sept. 29, 1999. A hearing on confirmation of the Plan commenced on Nov. 9, 1999 and is continuing. Recurring earnings before interest, income taxes, impairment loss, depreciation, depletion and amortization (EBITDA), excluding the charges associated with the plan of reorganization, rose to $20.3 million as compared to $15.9 million in the prior year quarter. Cash flow from operations was $9.8 million for the quarter versus $35.1 million in the previous year quarter. Total capital expenditures were$13.2 million, versus $53.7 million in the prior year. Sales of gas, condensate and natural gas liquids for the quarter were $28.8 million, up 6% from the previous year's $27.2 million. Total production volume for the quarter was 11.0 billion cubic feet equivalent (Bcfe) compared to production of 13.7 Bcfe in the prior year quarter. The volume decline was attributable to the sale of producing properties sold on Dec. 1, 1998. Average natural gas pricing was $2.72 per thousand cubic feet (Mcf), versus $1.94 per Mcf a year earlier. Average crude oil and condensate pricing was $21.57 per barrel (Bbl), up from $12.22 per Bbl in the year-earlier quarter. Depreciation, depletion and amortization decreased by $1.6 million primarily due to lower production volumes offset partially by a $0.63 per Mcfe increase in the depletion rate. The increased rate was primarily the result of higher acquisition cost of properties, increased drilling and development costs and limited results of drilling. Lifting costs were $0.37 per thousand cubic feet equivalent (Mcfe) for the quarter, up slightly from $0.35 per Mcfe in the prior year quarter. General and administrative expenses for the quarter were reduced to $3.5 million as compared to $4.2 million in the prior year quarter. For the nine months ended Oct. 31, 1999, TransTexas reported a net loss of $ 46.1 million, or $0.80 per share, on revenues of $77.0 million. This compares to a net loss of $155.4 million, or $2.70 per share, on revenues of $137.7 million in the first nine months of fiscal 1999. Prior year results include the cumulative effects of the asset impairment charge of $186.7 million. Gas, condensate and NGL revenues for the nine months increased by$8.2 million from the prior period primarily due do increased oil and gas prices. Total production volumes for the first nine months were 33.8 Bcfe, versus 32.0 Bcfe in the prior year. The average price received for natural gas during the nine-month period was $2.27 per Mcfe versus $2.11 in the prior year period. Crude oil and condensate prices increased to $17.63 per Bbl versus $12.36 in the prior year period. Operating expenses for the nine months decreased 12% to $15.1 million from $17.1 million due primarily to decreases in maintenance costs. TransTexas is engaged in the exploration, production and transmission of natural gas and oil, primarily in South Texas, including the Eagle Bay field in Galveston Bay. TULTEX: Employees Complain To Labor Department ---------------------------------------------- Workers laid off this month by clothing maker Tultex Corp. have voiced their frustrations to Labor Department officials who came to address concerns about health benefits and pensions. About 200 workers, some clearly agitated, packed into the Henry County administration building Tuesday night for the meeting arranged by U.S. Sen. Charles Robb, D-Va. "The company is not telling us anything, so I came here to find out some answers," said Elex Holland, 51, a 31-year Tultex employee. "This came as a complete shock to this entire community." Tultex, Martinsville's largest employer, laid off 1,100 workers Dec. 2 before filing for Chapter 11 federal bankruptcy protection. The company will lay off an additional 450 workers within the next two months. At the meeting, the workers were told they could apply for job dislocation insurance. But many of them said they couldn't afford the premium on the standard $230-a-week in unemployment benefits. VENCOR: Motion To Sell Surplus Respiratory Equipment ---------------------------------------------------- One of Vencor's affiliated Debtors, Respiratory Care Services, Inc., contracted to provide respiratory care services with various acute care hospitals. In May, 1999, Vencor decided to sell or phase out all of Respiratory Care's operations. Unable to find a buyer for Respiratory Care, Vencor negotiated an end to each of its hospital service-care contracts. All of these service contracts terminated as of October 31, 1999. Prior to the Petition Date, Vencor agreed to sell the respiratory equipment owned by Respiratory Care to the hospitals. The hospitals paid Vencor $188,227 for the equipment prior to the Petition Date. The hospitals still owe Vencor approximately $251,733. By this Motion, Vencor asks Judge Walrath for permission to complete the Surplus Respiratory Equipment sales and collect the $251,733 still owed by the hospitals. Vencor indicates that the sales price for the respiratory equipment is book value plus 20%, and that this price represents fair market value. The proceeds of the unconsummated sales will be paid to the DIP Lenders. Absent any objection, Judge Walrath granted Vencor authority to complete these unconsummated sales on an as is-where is basis, free and clear of all liens and encumbrances, pursuant to 11 U.S.C. Sec. 363. (Vencor Bankruptcy News Issue 8; Bankruptcy Creditor's Service Inc.) WIRELESS ONE: MCI Worldcom Eyes Sprint -------------------------------------- With its acquisition of Wireless One now complete, MCI WorldCom is looking toward its next target: Sprint Corp. Wireless One, the Southeast's largest wireless cable TV operator, officially became part of Clinton-based MCI WorldCom Monday. "We're happy about the opportunities this is going to provide us, and we're pleased we were able to come out of Chapter 11 with the positive circumstances we came out with," said Wireless One president and now MCI WorldCom executive Henry Burkhalter. "All of our creditors are getting their money, the stockholders are getting some money, our employment base is intact, and we're able to take advantage of our technology. "I think it's a win-win situation for everybody." Wireless One filed for Chapter 11 bankruptcy protection in February. The reorganization was completed Friday. Now MCI WorldCom must navigate the tricky process of convincing Federal Communications Commissions regulators that its proposed $115 billion acquisition of Sprint won't have a detrimental effect on long-distance telephone customers. Over the weekend, an internal FCC memo obtained by The Washington Post, said the deal was an "intolerable" blow to competition in the long distance industry. MCI WorldCom is the second-largest long distance company in the nation and Sprint is the third- largest. Spokesmen for both companies downplayed the memo and noted it was written several weeks before the two companies filed their application for FCC approval of the merger. Even the author of the memo, Tom Krattenmaker, said in the document he knew "very little about the proposed merger ... and so am reluctant to say anything." BOND PRICING FOR WEEK OF December 13, 1999 ========================================== DLS Capital Partners, Inc., bond pricing for week of December 13, 1999 Following are indicated prices for selected issues: Acme Metal 10 7/8 '07 12 - 15 (f) Amer Pad & Paper 13 '05 8 - 12 (f) Asia Pulp & Paper 11 3/4 '05 80 - 82 E & S Holdings 10 3/8 '06 37 - 40 Fruit of the Loom 8 7/8 '06 8 - 9 Geneva Steel 11 1/8 '01 11 - 13 (f) Globalstar 11 1/4 '04 56 - 58 Hechinger 9.45 '12 11 - 12 (f) Integrated Health 9 1/2 '07 7 - 9 (f) Iridium 14 '05 5 - 6 (f) Loewen 7.20 '03 52 - 54 (f) Pillowtex 10 '06 42 - 45 Planet Hollywood 12 '05 28 - 30 (f) Purina Mills 9 '10 24 - 26 (f) Revlon 0 '01 20 - 22 Rite Aid 6.70 '01 86 - 88 Sunbeam 0 '18 15 - 16 TWA 11 3/8 '06 40 - 42 United Artists 9 3/4 '08 20 - 24 Vencor 9 7/8 '08 20 - 22 (f) ********* 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. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $575 for six months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *