/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/991220.MBX T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 20, 1999, Vol. 3, No. 244 Headlines AEROPERU: Creditors Approve Liquidation AUTOMOTIVE PERFORMANCE: Restructuring Nearing Completion BAPTIST FOUNDATION OF ARIZONA: Order Sets Status Hearing BAPTIST FOUNDATION OF ARIZONA: Plan to Liquidate To Repay Debts BELL GEOSPACE: Taps The Pembrook Group CORAM RESOURCE NETWORK: Court Approves Counsel For Committee CRIIMI MAE: Prepares Final Financing Terms FILENE'S BASEMENT: Hirsch Construction Seeks Relief From Stay FILENE'S BASEMENT: Seeks To Assume and Assign Leasehold Interests FLORIDA COAST: Taps Belfint Lyons & Shuman FORCENERGY: Motion For Authority To Approve Agreement FORCENERGY: Motion For Authority To Approve Seismic Contracts FORCENERGY: Motion To Substitute Revised Warrant Agreements FRUIT OF THE LOOM: Moody's Downgrades $1.4B of Debt Securities GENESIS DIRECT: Application To Retain Gruppo, Levey ICO GLOBAL: Final Approval To $500 Million Rescue Package JITNEY JUNGLE: Change of Venue JUMBOSPORTS: Motion For Authority To Sell Real Property JUST FOR FEET: Committee Taps PricewaterhouseCoopers JUST FOR FEET: Motion To Schedule Auction JUST FOR FEET: Seeks To Reject 11 Unexpired Leases LOEWEN: Announces Sales LONDON FOG: Needs Court Approval For $3M Customs Bond MONDI OF AMERICA: Authority To Schedule Auction MONDI OF AMERICA: Rodeo Collections Objects To Lease Rejection MOUNT AIRY LODGE: To Be Sold In Bankruptcy Court on May 10 NEXTWAVE: Announces $1.6 Billion of Investments and Partnerships PLANET HOLLYWOOD: Creditor Wilroad Associates Files Objections PLUMA INC: Order Approves Rejection of ADT Contract PREMIER SALONS: Seeks Time To File Schedules and Assets SHOE CORP: Seeks Order Authorizing Use of Cash Collateral TALK AMERICA: Order Authorizes Employ Of Special Counsel TRANSTEXAS GAS: Jack Stanley's Empire TRANSTEXAS GAS: Seeks Approval of Ramirez Compromise TRISM INC: Motion For Authority To Reject Certain Leases ********* AEROPERU: Creditors Approve Liquidation --------------------------------------- Aviation Daily reported on December 7, 1999 that the long- expected decision to liquidate Aeroperu was taken last week in Lima in a vote supported by 80% of the grounded carrier's creditors, among them Mexican holding company Cintra and the Peruvian government. Because of its $ 170 million in debt, repeated attempts by minority groups to restructure the airline failed. Top Consulting has been appointed as liquidating agent and has been given 10 days to submit a specific liquidation proposal. Founded 26 years ago as a state-owned company, Aeroperu was privatized in 1994 with the government retaining 10% and remaining shares held by various private investors, which includes a small percentage by employees. In Miami, 33 former Aeroperu workers have been trying unsuccessfully to collect unpaid salaries and benefits and withdraw their pension plan contributions, and have resorted to legal action. In April, Aeroperu's lawyers filed for protection under Chapter 11 in federal court, and consequently the court appointed a bankruptcy trustee. AUTOMOTIVE PERFORMANCE: Restructuring Nearing Completion -------------------------------------------------------- Automotive Performance Group, Inc.'s (OTCBB:RACG) Chairman and Chief Executive Officer, Dean M. Willard, today updated the Company's recent restructuring activities and commented on current business trends in his Letter To Shareholders. His comments are reproduced in their entirety in the following release. December 16, 1999 Dear Fellow Shareholder: I am writing to you in my continuing effort to keep you informed of the performance and progress of Automotive Performance Group (APG). We are nearing completion of the fourth month of operation of our most important investment, PBT Brands, Inc. (PBT), the parent company to Permatex. I am very pleased to report that the results of this business are on plan, with annualized revenues running well in excess of $100 million. AC Tech, another PBT company, is also completing a strong year. AC Tech has made excellent progress in establishing new specifications for sealant materials for the construction and maintenance of aircraft. As the emerging second source for these important materials, each new specification brings a strong flow of revenues to this startup company. I am also pleased to advise you of further progress in our effort to restructure and strengthen the remainder of APG's investments. We have reached an agreement as to the terms of sale of the operating assets of Klein Engines and Competition Components (Klein). The sale, which is expected to close before the end of the year, is being made to RPM Corporation, a company formed by Robert Pullinsi, the current President of Klein. This transaction further reduces APG's cash commitments and allows the former management and employees of Klein to continue to provide high performance engines, components and services to the auto racing community. We have achieved important progress with our Boyds investment, as well. Some of our successes with Boyds have been in the courtroom. Protecting important assets acquired with Boyds, the cost of litigation has further aggravated our cash situation. The legal matter I am referring to is a recent decision in the United States Bankruptcy Court granting Boyds a preliminary injunction against Boyd Coddington, Sr. and Boyd Coddington, Jr. to stop them from using any of the registered trademarks and Boyds Wheels and Hot Rods by Boyd. We are continuing to pursue these defendants in Federal District Court concerning their infringing actions. Boyds has been able to establish business relationships within the automotive wheel industry which have the potential of generating$2-3 million in revenues for the Company next year. There is no assurance that Boyds will be able to realize these revenues, as we require substantial working capital to support the activity and we are still attempting to arrange the necessary financing. In the meantime, we have taken every possible step to reduce cash outflows relating to this business. We also successfully completed the sale of the rights to the Boyds appearance products line to our current licensee. Our management team continues in its commitment to the successful restructuring of APG and Boyds. The companies are still faced with an extremely tight cash position and a need to further convert short-term obligations into some form of long-term debt or equity. Our primary objective is to protect our investment in the Permatex companies and to the proper restructuring of our obligations. We have had to delay certain SEC filings as we await results of audits being completed on the opening balance sheet of Permatex. Once these SEC filings are complete we expect to schedule our annual meeting of shareholders. In my capacity as Board Chairman and Chief Executive Officer, I continue to welcome constructive ideas from our shareholders. In this regard, I have received a strong indication of support for our plan to first protect the Permatex investment and second to minimize or eliminate any cash outflow relating to the other operating subsidiaries of APG. Management is implementing that plan. We are also working to find other corporate opportunities, including acquisitions, which will provide APG with a positive cash flow and further appreciation in shareholder value. This management team has been in place now for one year and I thank you on behalf of the entire group for your continuing support. Sincerely, Dean M. Willard Chairman and Chief Executive Officer Automotive Performance Group, Inc., participates in the fast- growing high-performance automotive and specialty chemical industries through its 22% equity ownership in PBT Brands, Inc., a leading manufacturer, distributor, and marketer of premium functional chemical products to the automotive maintenance and repair markets, and Advanced Chemistry and Technology, Inc. (AC Tech), which develops and manufactures sealants for the aerospace and aircraft industry. BAPTIST FOUNDATION OF ARIZONA: Order Sets Status Hearing -------------------------------------------------------- The court states that it has received in excess of 100 letters from investors in the debtors and will likely receive many more. The court states that the investors do not want to accept a cash out at 20% or stock in a new for profit entity. The court said that the investors believe they would receive a larger return on their investment if the assets were liquidated in a Chapter 7 proceeding. The court writes that it is unclear how the writers have reached this conclusion at this early stage in the cases. The court will not respond to these letters, but will meet with interested creditors and investors at a brief status hearing on December 21, 1999 at 9:00 AM at the Hyatt Regency Phoenix at Civic Plaza, 122 North Second Street in Phoenix. AT this meeting the court will simply discuss the expected progress of the case and implemented procedures. BAPTIST FOUNDATION OF ARIZONA: Plan to Liquidate To Repay Debts --------------------------------------------------------------- Faced with investor opposition to a restructuring plan, the Baptist Foundation of Arizona has decided to sell off its assets to repay debts and then shut down. The foundation filed for Chapter 11 bankruptcy protection listing liabilities of $640 million, of which $590 million is owed to about 13,000 investors. Its assets are estimated at $160 million to $200 million. It is unclear how much could be raised through liquidation. Under the original restructuring plan, investors would have been given two options: cashing out and receiving 20 percent of their original investment, or investing in a new publicly held company that would be formed to hold and manage foundation assets. There were not enough funds available to allow all investors to cash out at 20 cents on the dollar. Foundation officials told The Arizona Republic it was clear those two options had little support. "Two things became clear when we went out and listened to them," foundation spokesman Lew Phelps said. "They thought the 20-cent buyout was unfair, and an awful lot of them said they didn't want to invest their money in stocks anymore. They said, 'Just sell the assets and give me the money.' " The liquidation proposal must still be approved by a committee representing investors and the foundation's restructuring committee before it goes to bankruptcy court. Letters were to have been mailed either today or Friday explaining the proposal, Phelps said. The foundation, which has been accused of securities fraud and is under investigation by Arizona officials, froze investor funds in August. Foundation executives involved with the troubles were replaced and the restructuring committee was formed. Investors, many of whom lost their life savings, have since formed a group to fight the original restructuring plan. BELL GEOSPACE: Taps The Pembrook Group -------------------------------------- The debtor, Bell Geospace, Inc. seeks authority to retain The Pembrook Group, LLC as its financial advisors. The debtor proposes to pay Pembrook $15,000 per month for its services and a $50,000 fee if and when a restructuring transaction is consummated. CORAM RESOURCE NETWORK: Court Approves Counsel For Committee ------------------------------------------------------------ On December 9, 1999, the US Bankruptcy Court for the District of Delaware entered an order approving the application of the Official Committee of Unsecured Creditors to employ Obermayer Rebmann Maxell & Hippell LLP under a general retainer. CRIIMI MAE: Prepares Final Financing Terms ------------------------------------------ Bankruptcy Judge Duncan W. Keir (D. Md.) yesterday granted Criimi Mae Inc., Rockville, Md., and its affiliates a one-week extension through Dec. 23 to file their proposed disclosure statement, according to a newswire report. The company had requested the extension in order to finalize the terms of a key component of its amendment plan: recapitalization from Merrill Lynch Mortgage Capital Inc. and German American Capital Corp., two of Criimi Mae's largest secured creditors. The company and its two affiliates filed chapter 11 on Oct. 5, 1998. FILENE'S BASEMENT: Hirsch Construction Seeks Relief From Stay ------------------------------------------------------------- Hirsch Construction Corporation requests relief from the automatic stay to allow Hirsch to pursue its rights to compensation from National Press building LLP for labors and materials supplied by Hirsch for property owned by NPBLP and leased by Filene's Basement. Hirsch has a general unsecured claim against the debtor in the amount of $122,106. Hirsch requests that the automatic stay be terminated so that it may take the necessary and appropriate actions to pursue collection from NPBLP and/or the Contractor's Fund to the extent of the amount due to Hirsch. FILENE'S BASEMENT: Seeks To Assume and Assign Leasehold Interests ----------------------------------------------------------------- Filene's Basement Corp., and its wholly owned subsidiary, Filene's Basement, Inc. seek an order authorizing and approving the assumption, assignment and sale of certain leasehold interests free and clear of liens, bidding procedures in connection with such sale, and the form of notice of sale thereof, limiting service, and establishing cure amounts. Initially, the debtors decided to close 17 of their stores. On November 1, 1999, the court approved the retention of Atlantic Retail Properties as special real estate consultant to the debtors for the purpose of marketing and selling the leasehold interests associated with the Phase I GOB Stores. The debtors then decided to close an additional 18 stores. The court has authorized the sale of the inventory at these stores to Gordon Brothers, which sales are ongoing. The debtors request authority to schedule and conduct an auction on January 12, 2000 commencing at 11:00 AM at the offices of debtors' counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, One Financial Center, Boston, MA. The debtors are seeking authority to retain Keen Realty Consultants Inc. as their agent for the purpose of marketing and selling the GOB leases. The GOB Sales have either concluded or are anticipated to conclude by the middle of January, 2000. FLORIDA COAST: Taps Belfint Lyons & Shuman ------------------------------------------ The debtors, Florida Coast paper Holding Company LLC and its affiliates seek authority to employ and retain Belfint Lyons & Shuman PA as accounting consultants for the debtors. The firm will perform accounting consulting services in connection with various year-end and employment issues, including payroll compliance, trial balances, account analysis and the issuance of W-2 forms for employees. The firm will also provide consulting services in connection with various pension and 401(k) issues. The debtors have agreed to compensate the firm at its normal hourly rates. The hourly rates range from $70 -$210 per hour. FORCENERGY: Motion For Authority To Approve Agreement ----------------------------------------------------- The debtors, Forcenergy Inc. and Forcenergy Resources Inc. seek authority to approve agreement regarding Throughput Charge (Medema Family Trust) and to assume amended Throughput Agreements with the Medema Family Trust and SPC LLC. The Throughput Agreements pertain to a petroleum and natural gas pipeline constructed to transfer petroleum and natural gas from reserves underlying leases in Alaska. The debtors state that the agreement is in the best interest of the debtors, as an integral component of Forcenergy's on-going business strategy is the continued exploitation of its Alaska properties. Under the agreement Forcenergy will continue to pay certain Throughput Charges accruing on and after June 5, 1997. FORCENERGY: Motion For Authority To Approve Seismic Contracts ------------------------------------------------------------- Forcenergy Inc. seeks authority to approve contract amendments and to assume amended Seismic Contracts with TGS-NOPEC Geophysical Company, Seismic Exchange Inc. and Diamond Geophysical Service Corporation. FORCENERGY: Motion To Substitute Revised Warrant Agreements ----------------------------------------------------------- The debtors, Forcenergy Inc. and Forcenergy Resources Inc. seek permission to substitute the Revised Warrant Agreement to be filed as a part of the debtor's amended plan supplement replacing the documents currently identified as Exhibits 9 and 17, respectively. FRUIT OF THE LOOM: Moody's Downgrades $1.4B of Debt Securities -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Fruit of the Loom, Inc. (Fruit) based on the company's weak liquidity position, operating problems, and high execution risk. The seriousness of the liquidity situation is b ased on the expected expiry of its covenant waiver under its current bank facility on January 31, 2000 and the as yet unannounced financing or finalized contingency plans should the banks fail to grant further waivers. The ratings also reflect the company 's weak balance sheet accompanied with high debt levels, as well as its strong market share, well-known brands, and established retail relationships. Ratings lowered are: * $600 million tranche of its Revolving Credit Facility, due 9/19/02, to Caa1 from B1; * $60 million term loan due 9/19/02, to Caa1 from B1; * 7% debentures, due 2011, to Caa1 from B2; * 6.5% senior notes, due 2003; to Caa1 from B2; * 7.375% debentures, due 2023 to Caa1 from B2; * 8.875% senior notes due 2006, to Ca from B3; * senior unsecured shelf registration to (P)Ca from (P)B3; * subordinated shelf registration to (P)C from (P)Caa1; * preferred stock shelf registration to (P)"c" from (P)"ca"; and * senior implied rating of Fruit of the Loom, Inc. to Ca from B1. Fruit of the Loom's most significant near term challenge remains one of maintaining the liquidity and funding to support its upcoming inventory build. Because the company typically starts to build inventory early in the year to meet second and third quart er sales which generally account for 55-60% of annual sales, it is critical that it have in place its funding for next season as soon as possible. The bank credit agreement waiver expires on January 31, 2000 and no contingency funding plan has been comple ted. Further, the banks are parri passu with $425 million of senior secured public debt issues. Therefore, Moody's expects that there is a high potential for a Chapter 11 bankruptcy filing. Fruit of the Loom has experienced significant operating difficulties during the last 15 months. Additionally, management upheaval has resulted in the Board of Directors appointing a new Acting Chief Executive Officer as well as announcing a search for a n ew CEO and new CFO. Lacking permanent personnel in these key positions at a critical juncture, such as this, is likely to further handicap the company with its stakeholders such as customers and lenders and creates high execution risk for any turnaround p lan. During 1999, Fruit completed a corporate reorganization by which its subsidiary, Fruit of the Loom, Ltd., (Cayman), a Cayman Islands company, became Fruit's parent. Additionally, more recently, the company granted security to holders of certain debt obligations. As a result of these changes, the seniority and relative collateral position of various securities was affected. Bank lenders have a guarantee from Cayman an d from material domestic subsidiaries as well as liens on the domestic assets of the company and financial covenants. Holders of the 6.5%, 7%, and 7.375% public debt issues, enjoy guarantees of material domestic subsidiaries as well as liens on the domest ic assets and a more limited set of covenants, but do not have a guaranty of Cayman. The guarantees on these public debt issues would terminate if ratings became investment grade. The 8.875% note issue is supported by Cayman and material domestic subsidiary guarantees, but lacks liens on the assets and has modest covenants relative to the 6.5%, 7% and 7.375% issues. The material domestic subsidiary guarantees supporting the 8.875% issue would also terminate if ratings became inves tment grade. The 8.875% debt issue although, guaranteed by Cayman is effectively subordinated to over $900 million of bank and public debt issues that hold security in the domestic assets of the firm. The reorganization and creation of Cayman as a holding company and the expected transfer of non-domestic operations to be subsidiaries of Cayman from being subsidiaries of Fruit could result in a shift in profitability and cash flow from Fruit and the guarantor subsidiaries to non-guarantor subsidiaries, dep ending on the level of transfer pricing among the related companies. Accordingly, changes of this nature could potentially negatively impact credit quality for these debt holders in the future. Fruit of the Loom, Inc. is the principal operating subsidiary of Fruit of the Loom, Ltd., a Cayman Islands company, and is headquartered in Chicago, Illinois. The company is a major producer of underwear, activewear, jeanswear, and sportswear sold under a variety of brand names including Fruit of the Loom, BVD, Gitano and Pro Player. GENESIS DIRECT: Application To Retain Gruppo, Levey --------------------------------------------------- The debtors, Genesis Direct, Inc., et al. seek to retain and employ Gruppo, Levey & Co.("GLC") in connection with the proposed sales of the debtors' Proteam.com and Voyager Collection businesses. Gruppo, Levey is an investment banking firm that specializes in advising and selling catalog related businesses. GLC is being hired to assist in marketing these businesses. GLC shall be engaged as the exclusive financial advisor until February 28, 2000 in connection with negotiations with various entities. GLC has requested that the debtors pay GLC an aggregate transaction fee equal to the greater of 2.5% of the Aggregate Transaction Value, or $250,000 if a sale of the business is consummated with one of the entitles listed on the Retention Agreement. ICO GLOBAL: Final Approval To $500 Million Rescue Package --------------------------------------------------------- Aviation Week & Space Technology reports on December 13, 1999 that a U.S. Bankruptcy Court has granted final approval to a $500-million rescue package developed by a group of international investors and intended to enable ICO Global Communications to emerge from Chapter 11 protection. The financing will be provided by a group led by Craig McCaw, chairman of Teledesic LLC, and Subhash Chandra, chairman of Indian TV conglomerate Essel Group. Under an agreement between the two made public last week, McCaw will provide up to 62% of the equity funding required for refinancing of the global satellite telephone system and Chandra up to 38%. The McCaw-led team filed a proposal on Oct. 31 in association with Teledesic and Eagle River Investments, an affiliated company, to lead a group of ICO investors in providing the $ 500- million package (AW&ST Nov. 8, p. 53). The package includes $ 225 million in debtor-in-possession financing and $ 275 million in additional equity funding to be finalized by the end of January. An initial $ 150 million of debtor-in-possession financing was approved by the court on Nov. 9. McCaw, Chandra and their partners also agreed to underwrite the $700 million in additional funding needed for ICO to emerge from bankruptcy, if this financing is not provided by other investors. This portion of the refinancing plan, to be completed by June 30, will be open to participation by ICO's existing creditors and shareholders. If none accepts the offer, McCaw and his affiliated companies will end up with 46% of ICO and Chandra 28%. The total amount, $ 1.2 billion, will be sufficient to ensure completion of the 10-satellite medium-Earth orbit network and provide working capital up to the beginning of the service in the second quarter of 2001. The first satellite is scheduled to be launched in late January or early February, probably on a Sea Launch booster. JITNEY JUNGLE: Change of Venue ------------------------------ The Advocate (Baton Rouge, LA.) reports on December 16, 1999 that the $660 million Chapter 11 bankruptcy filing by Jitney Jungle Stores of America Inc., the owner of Delchamps Food Stores and other retail operations, will be held in a New Orleans courtroom after the company's creditors asked for it to be moved from Wilmington, Del., where the company is chartered. CEO Ron Johnson said his company agreed to the change in venue because most of its creditors are from the South. Jitney Jungle's debt began to grow in 1995 when it acquired $200 million in debt after New York investment firm Bruckmann, Rosser, Sherrill and Co. bought a majority of the company. The company took on another $200 million in debt in 1997 when it bought Alabama-based Delchamps. Since then the company has borrowed another $200 million to build new stores and buy new products. JUMBOSPORTS: Motion For Authority To Sell Real Property ------------------------------------------------------- The debtors, JumbSports, Inc. and its affiliates seek authority to sell real property located in Dallas, Texas (North) to Seitz Group, Inc. The property is located at 3500 Preston Road, City of Plano, County of Collin, State of Texas. The debtor is currently conducting a going-out-of-business sale at its sporting goods store located on the real property. The debtor anticipates that the sale will be completed on or before January 15, 2000. The total purchase price for the rela property including the existing building and improvements is $4.6 million. JUST FOR FEET: Committee Taps PricewaterhouseCoopers ---------------------------------------------------- The Official Committee of Unsecured Creditors of Just For Feet, Inc., et al. applied for authority to retain PricewaterhouseCoopers, LLP as its accountants and financial advisors. The firm will provide the following services: Attend the meetings and all telephone conference calls of the Committee; Review financial information furnished by the debtor to the Committee; Confer with the debtor's management, counsel and financial advisors; Review the debtor's schedules and statement of affairs; Report to the Committee as to the ramifications of the debtor's business activities; Prepare various wok product and reports to the Committee; Provide the Committee with financial and accounting expertise in relation to the case; Assist the Committee's counsel with offers to sell the debtor's inventory, leases and other assets; Assist the Committee in negotiations with the debtor and other parties-in-interest on a plan of reorganization. JUST FOR FEET: Motion To Schedule Auction ----------------------------------------- The debtors, Just For Feet, Inc., et al. seek authority to schedule an auction for the sale of the debtors' leasehold interests in certain non-residential real properties. The debtors are currently conducting store closing sales in 83 specialty stores and 37 superstores. The debtors retained Gordon Brothers Retail Partners LLC to conduct the closing sales for the 83 specialty stores, and Universal Geneva Liquidation Services to conduct the closing sales for the 37 superstores. Gordon Brothers has the right to conduct the closing sales in the specialty stores until January 31, 2000 and Universal has the right to conduct the closing sales at the superstores until February 29, 2000. The debtors have retained Keen Realty Consulting to assist them in marketing the leases for the closing stores. The debtors request authorization to schedule and conduct an auction for the leases on January 24, 1999 at 11:00 AM. In addition, the debtors request that the court approve the terms and conditions of the auction. The auction shall take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, 25th Floor, New York, NY 10153. JUST FOR FEET: Seeks To Reject 11 Unexpired Leases -------------------------------------------------- The debtors, Just For Feet, Inc., et al. seek authority to reject 11 unexpired leases of nonresidential real property. Based on an analysis performed by Keen Realty Consulting, Inc. the debtors request that the court approve the rejection of leases covering 11 stores. The debtors have determined that it is unlikely that the leases have value to a third party since the rent due is at least equal to current market rates. The stores are located at: Marley Station, Glen Burnie, MD. Metro North Mall, Kansas City, MO Lakeforest Mall, Gaithersburg, MD Randal Park Mall, Cuyahoga, OH Eastgate Shopping Center, Roseville, MI Metro North Mall, Kansas City MO South Station, Swift Creek, NC Mac Arthur Center, Norfolk, VA Irondequoit Mall, Rochester, NY Iverson Mall, Hillcrest Heights, MD Mondawmin Mall, Baltimore, MD LOEWEN: Announces Sales ----------------------- Loewen Group Inc. said on December 15, 1999 that it plans to sell up to 201 funeral homes and 170 cemeteries in the United States as part of its plan to emerge from bankruptcy. Loewen also is considering selling or restructuring 54 additional properties. The Vancouver-based funeral services company filed for Chapter 11 bankruptcy protection in June. (Dow Jones News) LONDON FOG: Needs Court Approval For $3M Customs Bond ----------------------------------------------------- The debtors, London Fog Industries, Inc., et al. seek court authority to obtain a customs bond in an amount up to $3 million, to provide a letter of credit to Avalon Risk Management Inc. as security therefor and to enter into an agreement with Avalon and Kuehne & Nagel, Inc., the debtors' customs broker, reflecting the terms upon which the bond will be issued and may be drawn. The debtors have an urgent need to obtain approval of the agreement because the debtors' current customs bond, underwritten by Intercargo Insurance Company expired on December 9, 1999. As a result of the bankruptcy, Intercargo was unwilling to issue a new bond in favor of the debtors. The bond proposed by Avalon is the best available under the circumstances. Avalon has also agreed to provide the debtors with two additional surety bonds as set forth in the agreement, in an amount in any individual case, of up to $50,000. MONDI OF AMERICA: Authority To Schedule Auction ----------------------------------------------- The US Bankruptcy Court of the District of Delaware entered an order on December 3, 1999 authorizing and scheduling an auction for the sale of the debtors' leasehold interests in certain non- residential real properties, approving terms and conditions of such auction, including bidding protections and establishing cure amounts. The auction will be held on December 17, 1999 at 11:00 AM at the offices of Schulte Roth & Zabel LLP, 900 Third Avenue, 23rd Floor, New York, NY. The court will conduct a hearing to approve the assumption and assignment of those leases sold at the auction on January 4, 2000 at 4:00 PM. MONDI OF AMERICA: Rodeo Collections Objects To Lease Rejection -------------------------------------------------------------- Rodeo Collection Ltd., Landlord, objects to the debtors' pending motion for an order authorizing debtors to reject a certain lease covering the premises located at 413 N., Rodeo Drive, Beverly Hills, CA. The Landlord is specifically concerned that the date of rejection be a date that is ordered by the court rather than that chosen by the tenant. MOUNT AIRY LODGE: To Be Sold In Bankruptcy Court on May 10 ---------------------------------------------------------- Mount Airy Lodge and its sister resorts will be sold May 10 in bankruptcy court, under a new loan agreement. As part of the deal, the Los Angeles investment company holding the $29 million mortgage on Mount Airy will provide $1 million more to keep the resort in operation until the sale. The company earlier agreed to keep the resort open through the end of the year. Oaktree Capital Management agreed in bankruptcy court late Wednesday afternoon not to sell Mount Airy Lodge at a sheriff's sale that had been scheduled for March 30 in Monroe County Court. Lawyers said the resort should net more in bankruptcy court than at a sheriff's sale. Oaktree, which had bought Mount Airy's loans from PNC Bank in the early 1990s, started foreclosure proceedings in July against Mount Airy, Strickland's Mountain Inn and Pocono Garden Lodge. A court-appointed company was named to run the resort and the investors sought permission to close it. The three resorts filed for Chapter 11 bankruptcy protection from creditors Nov. 8, hours after the funeral of Mount Airy Lodge president Emil Wagner, 77, who committed suicide Nov. 3 as creditors were closing in. Wagner left his majority ownership in the resort to Hana Danko, the resort's beverage manager and his personal assistant. The remaining shares in the resort are owned by the Martens family. Bankruptcy lawyer Brian Manning said all parties have agreed to have the resort sold May 10. A broker will be chosen next week to advertise the resort, and it will continue to be operated by Hostmark Management Group of Chicago, he said. Mount Airy Lodge, one of the oldest and most famous Pocono Mountain resorts and one of the area's largest employers, grosses about $25 million annually. But, it listed more than $46 million in debts to 400 creditors. In its glory days, Mount Airy lured thousands from New York City, a 90-minute drive away. It offered mountain air, golf, horseback riding and nightclub acts that also fueled nearby Catskill Mountain resorts. But the traffic slowed due to competition from Atlantic City casinos and cruise ships, along with cheaper travel to the Caribbean. NEXTWAVE: Announces $1.6 Billion of Investments and Partnerships ---------------------------------------------------------------- NextWave Telecom Inc. today announced that it has entered into significant financial and strategic agreements moving it closer to its goal of deploying the first state-of-the-art wireless telecommunications network specifically designed to provide next- generation wireless services. Total new equity investments in NextWave amount to over $1.6 billion from key investors including Global Crossing Ltd. (Nasdaq: GBLX), Liberty Media Corporation (NYSE: LMG.A and LMG.B), Pacific Capital Group and Texas Pacific Group. "NextWave is extraordinarily pleased to announce that this impressive group of blue chip companies and investors has chosen to join NextWave to build the most advanced IP-based third generation wireless telecommunications network," said Allen Salmasi, NextWave's Chairman and Chief Executive Officer. "These companies are among the most innovative and sophisticated telecom companies and investment firms in America, with a broad range of experience in telecommunications financing, network deployment and operations, information technology, Internet media and content, web hosting services, and e-commerce. We could not have assembled a better team." NextWave also announced a strategic services agreement with Global Crossing. The strategic services agreement makes Global Crossing the preferred provider of backhaul, long distance backbone, web-hosting, and other communications services to NextWave. NextWave also announced that it is modifying its plan of reorganization, which is now pending before the Bankruptcy Court for the Southern District of New York, to reflect the agreements announced today. As modified, the plan would leave the Federal Communications Commission's (the "FCC's") claim against NextWave unimpaired. A confirmation hearing has been scheduled for January 5, 2000, subject to receipt of either the opinion of the Second Circuit or an order from the Second Circuit allowing confirmation to proceed. "The convergence of wireless and Internet services and the recent mega-mergers, acquisitions and joint ventures in the wireless sector have made these new financing relationships possible for us, creating an opportunity for NextWave to implement its business plan immediately," said Mr. Salmasi. "The modified plan of reorganization preserves everyone's legal rights, including the FCC's, and requires no waivers of the FCC's Designated Entity rules for any of the investors, making it a win-win' for all parties. In fact, NextWave is fully committed to supporting the governmental and private sector initiatives to bridge the "Digital Divide" and provide wireless Internet Access to underserved communities of our country," continued Salmasi. Today's filing also modifies the treatment of general unsecured creditors under NextWave's reorganization plan. "Many of these claims belong to small and medium-sized companies, including minority and women-owned businesses, who stood with us during NextWave's earliest days," Mr. Salmasi said. Under the modified plan, such creditors are entitled to cash payment of the full amount of their allowed claims. Mr. Salmasi continued, "In ways that can't be measured in dollars and cents, that modification provides me the greatest amount of satisfaction." NextWave's Plan of Reorganization gives birth to one of the most technologically advanced IP-based packet-switched third generation wireless networks in the world that will result in the continued leadership of the United States in the broadband telecommunications arena. This was the original premise behind the creation of the entrepreneurs' block of the spectrum by the United States Congress and the FCC. David Friedman, of Kasowitz, Benson, Torres & Friedman, who is counsel to the Official Creditors Committee of NextWave, underscored the Committee's support for rapid confirmation of NextWave's modified reorganization plan. "The Committee strongly endorses the modified plan NextWave has filed today. Obviously, with this kind of strategic backing, the Company's modified plan has an excellent chance of succeeding in the marketplace. Given that the plan now preserves the government's interest, it appears there should be no obstacles to NextWave moving rapidly through the confirmation process with the support of all constituencies." NextWave Telecom, Inc. (www.nextwavetel.com) was organized in 1995 as a leading provider of wireless high-speed Internet access and voice communications services to the consumer and business market on a nationwide basis. NextWave holds a total of 95 PCS licenses, covering more than 166 million POPs coast to coast, that include all top 10 U.S. markets, 28 of the top 30 markets, and 40 of the top 50 markets. NextWave's carriers' carrier strategy will allow existing carriers and new service providers to market NextWave's network services through wholesale airtime arrangements offered by the company. In September 1999, NextWave announced that over 99% of voting creditors and shareholders have expressed approval of its Plan of Reorganization. Other major investors include CIBC, Loews Corporation, BFD Equity Associates, Bay Harbour Management, Joseph Littlejohn & Levy, Resurgence Asset Management LLC and other major financial institutions. PLANET HOLLYWOOD: Creditor Wilroad Associates Files Objections -------------------------------------------------------------- Creditor Wilroad Associates Limited Partnership, a Florida Limited Partnership files its limited opposition to the motion for an order extending the debtors' time to assume or reject unexpired leases of nonresidential real property. The creditor states that the lease is not on the list of leases subject to the motion to extend and that the debtors have been proceeding as if the lease does not exist. The creditor states that the debtor has failed to pay pre-petition rent in the amount of $65,921 and post-petition rent in the estimated amount of $288,715. Wilroad requests that the court deny approval of the motion to extend. Wilroad Associates Limited Partnership objects to the Disclosure Statement filed by Planet Hollywood International, Inc. The creditor complains that the Disclosure statement makes no mention of the retail lease or of the fact that Planet Hollywood Region VII has failed to stay current on post-petition rent. PLUMA INC: Order Approves Rejection of ADT Contract --------------------------------------------------- The debtor, Pluma Inc. is authorized to reject executory contracts with ADT Security Systems, Inc. and Entergy Security. Both companies provide for certain security services at the debtor's facilities. The court also authorized rejection of leases with North Bowles Partnership, covering a lease at 229 Holly Drive, unexpired equipment leases from Crown Credit Company, a lease with Ahmad T. Haq, MD, PC covering a facility located at 26 Broad Street, Martinsville, Virginia and an unexpired lease with Badgett & Hauser Development Corporation covering a facility located at 223 Boulevard Street, Eden North Carolina. PREMIER SALONS: Seeks Time To File Schedules and Assets ------------------------------------------------------- The debtors, Premier Salons International, Inc., et al. and the office of the United States Trustee concur in requesting additional time to file schedules of assets and liabilities , statement of financial affairs, schedule of executory contracts and unexpired leases, and lists of equity security holders until December 17, 1999. The debtors state that the collection of information for the schedules and statements is requiring an expenditure of substantial time and effort on the part of the debtors. SHOE CORP: Seeks Order Authorizing Use of Cash Collateral --------------------------------------------------------- Shoe Corporation of America, Inc., debtor seeks an order authorizing the debtor's use of cash collateral. The debtor believes the aggregate balance owing Lenders as of the Filing Date was approximately $37,148,000. The debtor will need funds to maintain its business operations after December 31, 1999. TALK AMERICA: Order Authorizes Employ Of Special Counsel -------------------------------------------------------- The US Bankruptcy Court for the District of Maine entered an order authorizing the employ of Jonathan Emord, Esq., Claudia- Lewis-Eng, Esq., Eleanor A. Kolton, Esq. And the firm of Emord & Associates PC as special counsel. The fees for said special counsel in excess of $25,000 must be approved by the court. TRANSTEXAS GAS: Jack Stanley's Empire ------------------------------------- Platt's Oilgram News reported on November 8, 1999 that the massive $ 3.5-bil bankruptcy case of maverick Texas oilman John R. (Jack) Stanley's TransAmerican Energy empire is rolling toward a resolution. Creditors are expected to get pennies on the dollar for their claims. But Stanley would retain 20% control of his surviving TransTexas Gas, a $ 3-mil golden parachute contract and warrants that would let him regain control of E&P arm TransTexas. Prior to TransTexas' Chapter 11 bankruptcy filing in April, Stanley held 81.4% of TransTexas stock, and 100% of parent TransAmerican Energy, through a series of other private holding companies that have not been brought into the bankruptcy. The actual magnitude of the economic loss on the TransAmerican case, the third big Chapter 11 involving Stanley companies in 25 years, is difficult to determine. Almost half the total liabilities, or some $ 1.5-bil, is intra-company debt owed by TransTexas or other units to parent TransAmerican Energy (TEC). TransTexas would survive. But TEC and TEC's 89%-owned TransAmerican Refining Corp, which has an indirect 30% stake in what is now the Orion refinery at Norco, Louisiana, will be liquidated. The public holders of $ 1.6-bil of secured TEC bonds will get $200-mil of new 15% TransTexas secured notes, the refinery interests, $ 300-mil of preferred stock and most of TransTexas' new common. But TransTexas admits the new securities, except for the notes, have "nominal or no value." Trust Company of the West, which became Stanley's defacto partner by taking effective control of the refinery in a recapitalization of the plant last year, comes through unscathed on its secured $ 56-mil TransTexas production payment claim on Galveston Bay gas output. Only a smattering of cash will be paid out in the proposed reorganization. The $ 8-mil of unpaid royalty owners would get only 40 cents on the dollar. Even trade creditors secured by liens say they would get only about 20 cents on the dollar, since they would be lumped in with $ 100-mil or so of general unsecured claims. Those unsecured claims would get just $ 30-mil of cash supplied not by TransTexas, but rather by the new bondholders, who are offering that "gift" to other creditors as part of a settlement that prevents their own claims from being challenged in court. Lawyers for the TransTexas unsecured creditors committee, threatened at one point to sue over the myriad of Stanley's intra-company deals, but ultimately agreed to a nominal settlement. The reorganization plan would saddle TransTexas with more than $ 300-mil in debt and production payments, including $ 200-mil in 15% five-year notes collateralized by nearly all its roughly $ 350-mil of assets. As of Jan 31, 2000, TransTexas is projected to have $ 3-mil of negative net worth. In its first full year out of bankruptcy, ending Jan 31, 2001, it is projected to lose $ 22-mil on $ 178- mil of revenues, including $ 45-mil of interest expense. The plan claims TransTexas will be back in the black in its second full year, earning $ 26-mil on $ 185-mil of revenues, despite another $ 39-mil of interest costs. That assumes TransTexas can drill its way out of debt and grow production with capital spending of $ 51-mil this fiscal year and $ 58-mil in fiscal 2001. That would be barely one-fourth its spending rate in fiscal 1999. In the first half of this year, however, TransTexas had only one discovery in four exploration wells. The seeming success of TransTexas' past drilling results has turned out to have been vastly over-stated in prior financial reports, the plan shows. From almost 1 Tcfe of proved reserves in February 1997, TransTexas has had to take downward revisions of some 300 Bcfe, more than wiping out its reserve additions in that time. Its sale of another 650 Bcfe of reserves and production of more than 100 Bcfe left it with a mere 161 Bcfe at Feb 1, 1999, with proved developed reserves only 120 Bcfe. Despite his track record, Stanley's employment agreement would pay him $ 300,000 a year and 300,000 warrants per year to buy new common stock at $ 15/share. He gets $ 3-mil if the pact is terminated by TransTexas' yet-to-be-identified new board "without cause," and $ 1.5-mil even if terminated "for cause." Stanley would emerge from the bankruptcy with 247,500 share of TransTexas' new common, or 19.8% control. And he would get more than 515,000 warrants to buy more stock at $ 120/share. Combined with the other warrants he would earn, he would be in position to again own some 62% of TransTexas' common equity for about $ 70- mil. Control of the company will initially remain in the hands of its new senior preferred shareholders (led by the old TEC bondholders), who will be able to elect four of five directors. Stanley can elect one. If the 20% preferred dividends are in arrears after two years, those holders can elect all five directors. But the senior preferred can be redeemed at as little as 88% of its $ 220-mil face value if the secured notes are retired (refinanced). Such provisions enabled Stanley to regain full control of TransAmerican after its last trip through bankruptcy court in the 1980s. Odds are the determined Stanley could once again control the company. TRANSTEXAS GAS: Seeks Approval of Ramirez Compromise ---------------------------------------------------- The debtors, Transtexas Gas Corporation, et al. seek an order approving a compromise and settlement with Leon O. Ramirez individually and as trustee of the Leon O. Ramirez trust, and authorizing the debtor to pay certain pre-petition royalties. TransTexas agrees to pay to Ramirez and Ramirez as Trustee the totally amount of $964,881, which is pre-petition royalties held by TransTexas in suspense for the interests of Ramirez and Ramirez as Trustee under the Lease plus interest, until paid in full. TRISM INC: Motion For Authority To Reject Certain Leases -------------------------------------------------------- The debtors, Trism, Inc., et al. applied for an order authorizing the debtors to reject certain non-residential real property leases. The debtors lease property throughout the United States, which is used as yards to store, transfer and consolidate cargo for the benefit of their customers. The debtors have determined that it is in the best interests of their estates to reject the following property leases, in that maintaining yards in these areas is no longer cost efficient. 475 Lewiston Road Grovetown , Georgia 5409 Byron Hot Springs Road Byron, CA 3777 Jackson Ave., Tulsa OK 74101 R3 Box 279 Sherman, TX ********* 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 * * *