========================================================================== LOEWEN BANKRUPTCY NEWS Issue Number 1 -------------------------------------------------------------------------- Copyright 1999 (ISSN XXXX-XXXX) June 2, 1999 -------------------------------------------------------------------------- Bankruptcy Creditors' Service, Inc., Phone 609-392-0900 FAX 609-392-0040 -------------------------------------------------------------------------- LOEWEN BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue; newsletters are delivered by e-mail. Reproduction of LOEWEN BANKRUPTCY NEWS by any means is prohibited without the permission of the publisher. ========================================================================== IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO LOEWEN BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF LOEWEN GROUP [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 1999 [00003] BREAK-DOWN OF LONG-TERM DEBT STRUCTURE AS AT MARCH 31, 1999 [00004] COMPANY'S PRESS RELEASE CONCERNING CCAA & CHAPTER 11 FILINGS [00005] CHAPTER 11 DATABASE CONCERNING DEBTORS' 871 VOLUNTARY PETITIONS [00006] CCAA FILING DATABASE CONCERNING APPLICANTS' VOLUNTARY APPLICATION [00007] CONSOLIDATED LIST OF THE DEBTORS' 75 LARGEST UNSECURED CREDITORS [00008] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES [00009] DEBTORS' & APPLICANTS' MOTION TO IMPLEMENT CROSS-BORDER PROTOCOL [00010] DEBTORS' MOTION FOR APPROVAL OF $200,000,000 DIP FACILITY KEY DATE CALENDAR ----------------- 06/01/99 Petition Date 06/16/99 Deadline for filing Schedules of Assets and Liabilities 06/16/99 Deadline for filing Statement of Financial Affairs 07/21/99 Deadline to provide Utility Companies with adequate assurance 07/31/99 Deadline to assume or reject leases and executory contracts 07/31/99 Deadline to File Canadian Plan of Arrangement 08/30/99 Deadline for removal of actions pursuant to F.R.B.P. 9027 09/29/99 Expiration of Debtors' Exclusive Period to propose a Plan 11/28/99 Expiration of Debtors' Exclusive Solicitation Period 05/31/01 Deadline for Debtors' Commencement of Avoidance Actions 06/01/01 Expiration of DIP Financing Facility Organizational Meeting with UST to form Official Committees Bar Date for filing Proofs of Claim First Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) -------------------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO LOEWEN BANKRUPTCY NEWS -------------------------------------------------------------------------- LOEWEN BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. An original invoice, delivered by fax, provides notice that a newsletter edition has been transmitted. Prompt payment is always appreciated. Subscriptions may be canceled at any time without further obligation. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- -------------------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF LOEWEN GROUP -------------------------------------------------------------------------- THE LOEWEN GROUP, INC. 4126 Norland Avenue Burnaby, BC V5G 3S8 CANADA Telephone 604/299-9321 Fax 604/473-7330 http://www.loewengroup.com The Lowen Group, Inc., and its hundreds of affiliated entities operates the second-largest number of funeral homes and cemeteries in North America (Service Corporation International is number-one). In addition to providing services at the time of need, the Company also makes funeral, cemetery and cremation arrangements on a pre-need basis. Today, the Company operates 1,116 funeral homes and 429 cemeteries throughout North America. During 1997, the Company expanded into the United Kingdom and now operates 32 funeral homes there. As of March 31, 1999, the Company also operated three insurance subsidiaries that principally sell a variety of life insurance products to fund funeral services purchased through a pre-need arrangement. The Loewen Group, Inc., serves as the holding company for all operations of the Company, which are contained in subsidiary and associated companies. Loewen was incorporated under the Company Act of British Columbia on October 30, 1985. GROWTH BY ACQUISITION. Loewen pursued an aggressive growth strategy based primarily upon acquisitions. In the past three years the Company's growth strategy emphasized cemetery acquisitions, as compared to the historical emphasis on funeral home acquisitions. Since 1995, the Company has grown by 651 locations to 1,701 at December 31, 1998, including 348 additional cemeteries. RECENT DIFFICULTIES. Loewen's recent financial results have been disappointing. Beginning in the second half of 1998, as part of its strategy to improve its results, liquidity and financial condition the Company virtually eliminated its acquisition program in order to concentrate on improving existing operations. This strategy focuses upon emphasizing cash flow from operations and, in particular, cash flow from cemetery operations. Also, efforts to reduce costs have been made, including the closure of the Company's Cincinnati and Trevose offices and consolidation of substantially all management functions in Burnaby. In July 1998, the Company secured the services of the investment banking firm Salomon Smith Barney to identify and evaluate opportunities to maximize shareholder value that could include strategic partnerships, combinations, dispositions and capital investments in the Company. MANAGEMENT CHANGES. Significant management changes occurred beginning in the fourth quarter of 1998. On October 8, 1998, Robert L. Lundgren was appointed President and Chief Executive Officer replacing Raymond L. Loewen who resigned on the same date. On December 17, 1998, the Company named three new outside directors, Thomas M. Taylor, John S. Lacey and William R. Riedl, to the Company's Board of Directors, replacing three inside directors who simultaneously retired from the Board. On January 22, 1999, the Company's Board of Directors appointed John S. Lacey as Chairman, replacing Co-Chairmen Robert L. Lundgren and Raymond L. Loewen. Through actions taken on March 30, 1999 and April 12, 1999, the Board of Directors was reduced from 14 to seven members. RECENT ASSET SALES. On March 31, 1999, the Company completed the sale of 124 cemeteries and three funeral homes for gross proceeds of $193 million, of which $126.5 million was required to be paid to certain lenders, to an investor group led by McCown De Leeuw & Co., a private investment firm. The Company has two smaller groups of properties which are considered probable for sale. BUSINESS OPERATIONS. The Company's operations are comprised of three businesses: funeral homes, cemeteries and insurance. The Company maintains a regional management structure for both funeral home and cemetery businesses that is organized in several geographic regions in the United States, Canada and Europe. Management believes that this recently implemented organizational structure will enable the Company to better manage local profit centers. (1) FUNERAL HOMES. The Company's funeral homes offer a full range of funeral services, including the collection of remains, registration of death, professional embalming, use of funeral home facilities, sale of caskets and other merchandise, and transportation to a place of worship, funeral chapel, cemetery or crematorium. To provide the public with the opportunity to choose the service that is most appropriate from both a personal and financial perspective, the Company offers complete funeral services (including caskets and related merchandise) at prices averaging approximately $3,400. Substantially all of the Company's funeral homes provide basic cremation services, and the Company has proprietary programs designed to provide a full range of merchandise and services to families choosing cremation. In 1998, cremations accounted for approximately 26% (27% in 1997) of all funeral services performed by the Company. As a percentage of all funeral services in the United States, cremations have been increasing by approximately 1.0% annually over the past five years and, in 1997, accounted for approximately 24% of all funeral services performed in the United States. Funeral operations accounted for approximately 56% of the Company's consolidated revenue for 1998. Amounts paid for funeral services are recorded as revenue at the time the service is performed. Payments made for pre-need funeral contracts are either placed in trust by the Company or are used on behalf of the purchaser of the pre-need contract to pay premiums on life insurance polices under which the Company is designated as the beneficiary. At the date of performing a pre-arranged funeral service, the Company records as funeral revenue the amount originally trusted or the insurance contract amount, together with related accrued earnings retained in trust and increased insurance benefits. (2) CEMETERIES. The Company's cemetery operations assist families in making burial arrangements and offer a complete line of cemetery products (including a selection of burial spaces, burial vaults, lawn crypts, caskets, memorials, niches and mausoleum crypts), the opening and closing of graves and cremation services. The Company's cemetery operations comprised approximately 36% of the Company's consolidated revenue for 1998, the majority of which was derived from pre-need sales of cemetery products and services. The pre-need sale of interment rights and related products and services is recorded as revenue when customer contracts are signed. At that time, costs related to the sale are also recorded and an allowance is established for future cancellations and refunds, based on management's estimates in light of actual historical experience and trends. A portion of the proceeds received by the Company from pre-need merchandise and service sales is generally set aside in trust funds to provide for the future delivery of the cemetery products and services. In addition, the Company provides for the long-term maintenance of its cemetery properties by placing a portion, typically 10%, of the proceeds from the sale of interment rights into a perpetual care trust fund. The income from these funds is used to offset the maintenance costs of operating the cemeteries. At December 31, 1998, the Company's cemeteries had approximately $270 million in perpetual care trust funds, which are not reflected on the Company's balance sheet because the principal is required to stay in trust in perpetuity. (3) INSURANCE. The Company operates three insurance subsidiaries licensed in 29 jurisdictions to principally sell a variety of life insurance products to fund funerals. Revenue from the Company's insurance operations totaled approximately $97 million in 1998, or 8% of the Company's consolidated revenue. EMPLOYEES. At December 31, 1998, the Company employed approximately 16,700 people with approximately 575 people employed at the Company's corporate offices. Approximately 100 of the Company's employees are members of collective bargaining units. PROPERTIES. The Company's properties consist primarily of funeral homes and cemeteries. Of the Company's 1,151 funeral homes at December 31, 1998 (including 51 funeral homes located on or adjacent to a cemetery property), 172 were leased facilities and the balance were owned by the Company. In addition, 50 of the funeral homes owned by the Company were mortgaged as security for loans from the seller of the property or from a commercial lender. Generally, the Company has a right of first refusal and an option to purchase its leased premises. The Company's corporate offices in Burnaby occupy 35,000 square feet in a building owned by the Company and 54,000 and 3,900 square feet of office space under separate lease agreements expiring in 2000 and 1999, respectively. In 1999, in connection with the Company's closure of the Trevose office and transitioning of its administrative functions to Burnaby, the Company entered into two additional leases that each expire in 2002 for an aggregate 25,000 square feet of corporate office space in Burnaby. MANAGEMENT SERVICES. The Company operated or provided management or sales services to 550 cemeteries at December 31, 1998, of which eight were mortgaged as security for loans from the seller of the property. For certain cemeteries, the Company provides management and sales services pursuant to certain management and sales agreements. The cemeteries operated by the Company contained an aggregate of approximately 24,000 acres of which approximately 58% were developed. -------------------------------------------------------------------------- [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 1999 -------------------------------------------------------------------------- THE LOEWEN GROUP INC. CONSOLIDATED BALANCE SHEETS AS AT MARCH 31, 1999 EXPRESSED IN THOUSANDS OF U.S. DOLLARS (UNAUDITED) ASSETS Current assets Cash and term deposits................................... $ 78,611 Receivables, net of allowances........................... 204,481 Inventories................................................ 32,522 Prepaid expenses......................................... 18,032 ------------ 333,646 Long-term receivables, net of allowances................... 546,596 Cemetery property.......................................... 1,193,846 Property and equipment..................................... 796,931 Names and reputations...................................... 743,489 Insurance invested assets.................................. 269,567 Future income tax assets................................... 10,720 Prearranged funeral services............................... 413,846 Other assets............................................... 158,092 ------------ $ 4,466,733 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Current indebtedness..................................... $ 48,782 Accounts payable and accrued liabilities................. 137,877 Long-term debt, current portion.......................... 742,248 ------------ 928,907 Long-term debt, net of current portion..................... 1,395,987 Other liabilities.......................................... 370,035 Insurance policy liabilities............................... 171,795 Future income tax liabilities.............................. 200,961 Deferred prearranged funeral services revenue.............. 413,846 Preferred securities of subsidiary......................... 75,000 Shareholders' equity Common shares............................................ 1,274,163 Preferred shares......................................... 157,146 Deficit.................................................. (534,996) Foreign exchange adjustment.............................. 13,889 ------------ 910,202 ------------ $ 4,466,733 ============ -------------------------------------------------------------------------- [00003] BREAK-DOWN OF LONG-TERM DEBT STRUCTURE AS AT MARCH 31, 1999 -------------------------------------------------------------------------- (EXPRESSED IN THOUSANDS OF U.S. DOLLARS) Bank credit agreement........................................ $ 253,013 Management Equity Investment Plan ("MEIP") bank term credit agreement due in 2000.................... 82,901 9.62% Series D senior amortizing notes due in 2003........... 36,518 6.49% Series E senior amortizing notes due in 2004........... 30,432 7.50% Series 1 senior notes due in 2001...................... 225,000 7.75% Series 3 senior notes due in 2001...................... 125,000 8.25% Series 2 and 4 senior notes due in 2003................ 350,000 6.10% Series 5 senior notes due in 2002 (Cdn. $200,000,000).. 132,521 7.20% Series 6 senior notes due in 2003...................... 200,000 7.60% Series 7 senior notes due in 2008...................... 250,000 6.70% PATS senior notes...................................... 300,000 Present value of notes issued for legal settlements discounted at an effective interest rate of 7.75%......... 37,103 Present value of contingent consideration payable on acquisitions discounted at an effective interest rate of 8.0%................................................... 4,838 Other, principally arising from vendor financing of acquired operations or long-term debt assumed on acquisitions, bearing interest at fixed and floating rates varying from 4.8% to 14.0%, certain of which are secured by assets of certain subsidiaries............. 110,909 ----------- $ 2,138,235 =========== -------------------------------------------------------------------------- [00004] COMPANY'S PRESS RELEASE CONCERNING CCAA & CHAPTER 11 FILINGS -------------------------------------------------------------------------- VANCOUVER, BC -- June 1, 1999 -- The Loewen Group Inc. (NYSE,TSE, ME:LWN) announced today that, in order to ensure time to implement a new strategic plan while concurrently reducing its debt structure to compete more effectively in the marketplace, the Board of Directors has authorized the Company to file a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code, as well as an application for creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Canada. In conjunction with the filings, the Company's U.S. subsidiaries have received a commitment for up to US $ 200 million in debtor-in-possession (DIP) financing from First Union National Bank. The post-petition financing, which is subject to court approval, is expected to provide adequate funding for all post-petition trade and employee obligations as well as the Company's ongoing needs during the restructuring process. The Company's Canadian subsidiaries have sufficient liquidity to fund daily operations and do not anticipate the need for additional financing. The Loewen Group Chairman, John S. Lacey said, "The filings will enable the Company to move forward with the implementation of its strategic plan while it restructures its burdensome debt load. During the past three years, the Company has experienced increasingly intensive working capital needs primarily as a result of its aggressive pursuit of cemetery acquisitions versus its historical emphasis on funeral home operations. We must focus our energy on correcting our balance sheet and implementing a solid business plan." Mr. Lacey said that the plan or "vision" is to return to the original focus of The Loewen Group as a funeral service company with strategically located ancillary cemetery operations. "In recent years, we have lost that focus as the Company has concentrated more on cemetery sales and less on funeral home operations that are our most profitable, core assets." Mr. Lacey emphasized that the restructuring will have no negative impact on the ability of the Company's funeral home and cemetery operations to fulfill its commitments to clients. "Our clients should also be assured that monies held in trust accounts for pre-need contracts are secure and protected by state and provincial regulations," Mr. Lacey said. "It is the Company's intent to continue operations without interruption at Loewen's over 1500 facilities in the U.S. and Canada." He also noted that the Company's United Kingdom subsidiaries, which generate less than 1% of the Company's revenues, are excluded from the filings. Because of significant future debt repayment obligations, the Company recently has been working with its senior lenders in anticipation of restructuring its debt. "The restructuring will finally allow the creation of a capital structure more suitable to the long term operation of our business," Lacey said. According to Robert B. Lundgren, president and chief executive officer of The Loewen Group, the realization of the Company's business plan will be built around a funeral home strategy of providing extraordinary service and compassionate care at fair prices. "We intend to be the best service provider in all market segments, to focus on selected markets with potential for growth and to enhance our market share and brand name with aggressive marketing," said Mr. Lundgren. On the cemetery side of the business, Mr. Lundgren said, "The Company will focus its efforts on the larger cemeteries that already support or have the potential to support funeral home operations." Mr. Lundgren said that in addition to the debt restructuring, the Company has already identified and begun to implement several key operational elements of this plan. Those elements include: - Completing consolidation of accounting and administrative facilities to one location; - Suspending the Company's acquisition program; - Improving cashflow characteristics of the pre-need sales program; and - Implementing more competitive pricing programs at selected funeral home locations. "Our efforts to be more competitive have already produced positive results in our selected funeral home businesses and we plan to extend these programs to many more of our funeral home markets by year end," Mr. Lundgren said. Mr. Lacey said that, The Loewen Group is optimistic it will emerge from the restructuring process as a stronger, more competitive enterprise. "We are extremely grateful to the customers, employees and lenders who have supported the Company through these challenging times," Mr. Lacey said. "We believe this restructuring will set the Company on a path of recovery, growth and profitability." The Loewen Group and approximately 870 of its U.S. subsidiaries filed their Chapter 11 cases in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The CCAA application will be brought later today before Mr. Justice James Farley of the Ontario Superior Court of Justice for The Loewen Group's 116 Canadian subsidiaries. Based in Vancouver, The Loewen Group Inc. owns or operates more than 1100 funeral homes and more than 400 cemeteries across the United States, Canada and the United Kingdom. The Company employs approximately 13,000 people and derives 90 percent of its revenue from U.S. operations. -------------------------------------------------------------------------- [00005] CHAPTER 11 DATABASE CONCERNING DEBTORS' 871 VOLUNTARY PETITIONS -------------------------------------------------------------------------- Debtors: The Loewen Group, Inc., Loewen Group International, Inc., and 869 affiliated entities. Consolidated Bankruptcy Case No.: 99-1244 Petition Date: June 1, 1999 Court: United States Bankruptcy Court District of Delaware Marine Midland Plaza Building 824 Market Street Wilmington, Delaware 19801 Judge: The Honorable Peter J. Walsh Circuit: Third Debtors' Lead Counsel: Richard M. Cieri, Esq. Michelle M. Morgan, Esq. Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, OH 44114 Telephone 216/586-3939 Telecopier 216/579-0212 Paul E. Harner, Esq. Charles M. Oellermann, Esq. Jones, Day, Reavis & Pogue 1900 Huntington Center 41 South High Street Columbus, OH 43215 Telephone 614/469-3939 Richard A. Chesley, Esq. Jones, Day, Reavis & Pogue 77 West Wacker Drive Chicago, IL 60601 Gregory M. Gordon, Esq. Jones, Day, Reavis & Pogue 2300 Trammell Crow Center Dallas, TX 75201 Debtors' Local Counsel: William H. Sudell, Jr., Esq. Robert J. Dehney, Esq. Morris, Nichols, Arsht & Tunnell 1201 North Market Street Post Office Box 1347 Wilmintgon, DE 19899-1347 Telephone 302/658-9200 U.S. Trustee: John D. "Jack" McLaughlin, Esq. Office of the United States Trustee Curtis Center, 9th Floor West 901 Walnut Street Philadelphia, PA 19106 (215) 597-4411 -------------------------------------------------------------------------- [00006] CCAA FILING DATABASE CONCERNING APPLICANTS' VOLUNTARY APPLICATION -------------------------------------------------------------------------- Applicants: The Loewen Group, Inc., and 116 affiliated entities. Court File No.: 99-CL-3384 Application Date: June 1, 1999 Court: Superior Court of Justice Commercial List 393 University Avenue Toronto, Ontario M5G 1E6 Judge: Mr. Justice James Farley Applicants' Counsel: Derrick C. Tay, Esq. John T. Porter, Esq. Orestes Pasparakis, Esq. Meigher Demers Barristers & Solicitors Suite 1100, Box 11 Merrill Lynch Canada Tower Sun Life Centre 200 King Street West Toronto, ON M5H 3T4 Telephone 416/340-6032 Monitor: KPMG, Inc. Monitor's Counsel: Geoffrey B. Morawetz, Esq. Goodman Phillips & Vineberg Barristers & Solicitors Suite 2400, 250 Yonge Street Toronto, ON M5B 2M6 -------------------------------------------------------------------------- [00007] CONSOLIDATED LIST OF THE DEBTORS' 75 LARGEST UNSECURED CREDITORS -------------------------------------------------------------------------- State Street Bank and Trust Company Series 1-4 and 6-7 $1,150,000,000 Senior Notes State Street Bank and Trust Company PATS Senior Notes 300,000,000 Teachers Insurance & Annuity Assoc. Promissory Notes 155,000,000 The Trust Co. of Bank of Montreal Series 5 Senior Notes 132,521,000 Oaktree Capital Management, LLC Promissory Notes 100,000,000 Franklin Mutual Advisers Promissory Notes 100,000,000 Baupost Group Promissory Notes 100,000,000 Angelo, Gordon & Co. Promissory Notes 90,000,000 Wachovia Bank of Georgia, N.A. Promissory Notes 82,901,000 Magten Asset Management Corporation Promissory Notes 75,000,000 Appaloosa Management, L.P. Promissory Notes 50,000,000 Peoples Bank Biloxi O'Keefe Notes 30,000,000 Bank of Montreal Bank Loan 19,581,301 The Fuji Bank Ltd. Bank Loan 15,665,041 Hibernia National Bank Bank Loan 15,665,041 Deutsche Bank, AG Bank Loan 15,665,041 Rabobank Nederland, New York Branch Bank Loan 15,665,041 MassMutual Promissory Notes 15,000,000 Contrarian Capital Management, LLC Promissory Notes 15,000,000 Allied Capital Promissory Notes 15,000,000 Credit Agricole Indosuez Bank Loan 14,685,976 Sanwa Bank, Ltd. Bank Loan 12,238,313 Barclay Capital Bank Loan 12,238,313 Union Bank of Switzerland, AG Bank Loan 12,238,313 Bank of New York Bank Loan 12,238,313 Comerica Bank Bank Loan 12,238,313 Mellon Bank Canada Bank Loan 12,238,313 CoreStates Bank, NA (First Union) Bank Loan 12,230,313 Cerberus Capital Management L.P. Bank Loan 10,000,000 ING Barings Promissory Notes 10,000,000 KBC Bank, NV Bank Loan 9,790,651 Republic National Bank of New York Bank Loan 7,342,988 First Hawaiian Bank Bank Loan 7,342,988 Bankers Trust Co. Bank Loan 7,342,988 US Bank of Washington, N.A. Bank Loan 7,342,988 Sakura Bank, Ltd. Bank Loan 7,342,988 National Westminster Bank PLC Bank Loan 7,342,988 Sumitomo Bank, Ltd. Bank Loan 7,342,988 BBL International (UK) Limited Bank Loan 7,342,988 Toyo Trust and Banking Company, Ltd. Bank Loan 7,342,988 Goldman, Sachs & Company Bank Loan 5,665,041 Erste Bank der Osterreichsen Bank Loan 4,895,325 Bank Poska Kasa Opeik SA Bank Loan 4,895,325 Natexis Banque BICE Bank Loan 4,895,325 Dai-Ichi Kangyo Bank, Ltd. Bank Loan 4,855,325 PHH Vehicle Management Services Trade Debt 473,400 Batesville Casket Company Trade Debt 200,000 Williamsburg Companies, Inc. Trade Debt 196,267 Frontier Communications Service Trade Debt 191,330 AT&T Trade Debt 164,974 Hayhoe Construction Corp. Trade Debt 87,974 Cold Spring Granite Company Trade Debt 78,492 U.S. Yellow Pages Trade Debt 70,819 Advanced Businesslink Corp. Trade Debt 43,125 Conestoga-Rovers & Assoc., Inc. Trade Debt 40,389 Software Company Trade Debt 39,902 Granite Bronze Trade Debt 37,917 Federal Express Corp. Trade Debt 33,198 Int'l Cemetery & Funeral Association Trade Debt 28,050 Loder Drew & Associates Trade Debt 27,825 Matthews International Corp. Trade Debt 26,007 Metrocall Trade Debt 18,498 Terrybear, Inc. Trade Debt 16,752 Vantage Products Corp. Trade Debt 16,417 Barbara Ford Coates Florida Taxes 15,016 Quality Move Mgmt., Inc. Trade Debt 13,300 Sterling Commerce (Southern) Trade Debt 12,037 Los Robles Memorial Park Trade Debt 11,390 Marmoles & Granitos Trade Debt 9,795 F. James Geers & Co. Trade Debt 8,729 Tribute Precast Systems, Inc. Trade Debt 7,994 Watson Wyatt & Company Trade Debt 7,210 Bell Atlantic Trade Debt 7,014 Star Granite Co., Inc. Trade Debt 6,877 Willbee Concrete Products Co. Trade Debt 6,456 -------------------------------------------------------------------------- [00008] DEBTORS' MOTION FOR JOINT ADMINISTRATION OF CASES -------------------------------------------------------------------------- Pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, the U.S. Bankruptcy Court directs that the US Debtors' 871 chapter 11 cases be consolidated, solely for administrative purposes, under Case No. 99-1244, and that all pleadings and papers be captioned: UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re: : Jointly Administered : Case No. 99-1244 (PJW) LOEWEN GROUP INTERNATIONAL, : INC., a Delaware Corporation, et al. : Chapter 11 : Debtors. : At the First Day Hearing, Judge Farnan made it clear that his order neither contemplates a substantive consolidation of the Debtors' estates nor prejudices the right of any party-in-interest to seek substantive consolidation. -------------------------------------------------------------------------- [00009] DEBTORS' & APPLICANTS MOTION TO IMPLEMENT CROSS-BORDER PROTOCOL -------------------------------------------------------------------------- Judge Farnan and Mr. Justice Farley have adopted, on an interim basis, subject to the right of any party-in-interest to object, a protocol proposed by the Debtors and the Applicants to ensure that: (a) the U.S. Cases and the Canadian Cases are coordinated to avoid inconsistent, conflicting or duplicative activities; (b) all parties are adequately informed of key issues in both Insolvency Proceedings; (c) the substantive rights of all parties are protected; and (d) the jurisdictional integrity of the Courts is preserved. The Protocol contemplates that the Canadian Court and the U.S. Court will communicate with one another, defer to the other as they believe appropriate in a given circumstance, not attempt to regulate the proceedings before the other tribunal, conduct joint hearings when appropriate, and work together to harmonize and coordinate matters relating to the administration of the Insolvency Proceedings. The Protocol provides that, by appearing before one Court, a party does not automatically submit to the jurisdiction of the other Court. The Protocol grants each Court from which authority is obtained to employ or retain a professional sole and exclusive authority to regulate that professional and pass on that professional's compensation, except for KPMG, which will be regulated by both Courts because of its dual role as the Canadian Monitor and the U.S. Auditor. The Protocol requires that notice of all U.S. proceedings be served on the Monitor's Counsel and that notice of all Canadian proceedings be served on the U.S. Trustee. Both the U.S. and Canadian Courts agree to recognize and enforce the stay of proceedings and actions against the Debtors, the Applicants, their Directors, and their Asserts arising under both the CCAA, the U.S. Bankruptcy Code, and other applicable Canadian and U.S. law. -------------------------------------------------------------------------- [00010] DEBTORS' MOTION FOR APPROVAL OF $200,000,000 DIP FACILITY -------------------------------------------------------------------------- Loewen owes approximately $2.1 billion to its bank lenders and noteholders. That debt is secured by liens on a pool of shared collateral (including all accounts, contracts, contractual rights, chattel paper, documents, instruments and general intangibles), guaranties, and stock pledges. Additionally, Fairway Finance Corporation is owed $49 million under the Neweol Receivables Facility, another $35 million is owed under promissory notes, and another $100 million is owed on account of other secured and unsecured indebtedness. In short, the liabilities are staggering. Financial performance has deteriorated. As of the commencement of the Insolvency Proceedings, Loewen's credit sources were fully tapped. To provide Loewen's with access to fresh working capital, First union National Bank agrees to lend up to $200,000,000 under the terms of a Post- Petition Revolving Credit Agreement. This Debtor-in-Possession Financing Facility will be secured by a first priority lien on all previoulsy unencumbered assets and will constitute a superpriority administrative expense claim pursuant to 11 U.S.C. Sec. 364(c)(1). The DIP Facility, with Judge Farnan's interim approval at the First Day Hearing, provides the Company, on an interim basis through the time of a Final Hearing, with access to up to $60,000,000 of credit. On a final basis, but not past June 1, 2001, the DIP Facility will provide up to $200,000,000 of credit, $150,000,000 of which will be in the form of revolving loans and $50,000,000 of which will back letters of credit. The proceeds of the loan will be used to immediately refinance the Neweol Receivables Facility. Further draws will be made to fund on-going working capital needs. Borrowings under the DIP Facility will accrue interest at the Federal Funds Rate plus 1.75%. First Union will collect a $1,800,000 Structuring and Closing Fee; an Unused Line Fee equal to 0.50% per annum on all amounts not borrowed; letter of credit fees of 2.5% per annum; and reimbursement of all professional fees. First Union's liens will be subject to a $10,000,000 Carve-Out for patyment of professional fees and fees of the U.S. Trustee. Loewen agrees that any sale of assets in excess of $2,000,000 will require the consent of 66-2/3% of the Lending Syndicate Members, and that any sale proceeds must be paid to the DIP Lenders. Loewen covenants with the DIP Lenders to maintain Minimum Cemetery Operating Cash Flows of no less than: Minimum for the Minimum for the Prior For the Period Ending Current Fiscal Quarter Four-Fiscal Quarters --------------------- ---------------------- --------------------- June 30, 1999 ($15,000,000) ($15,000,000) September 30, 1999 ($10,000,000) ($25,000,000) December 31, 1999 ($5,000,000) ($30,000,000) March 31, 2000 0 ($30,000,000) June 30, 2000 $5,000,000 ($10,000,000) September 30, 2000 $5,000,000 $5,000,000 December 31, 2000 $5,000,000 $15,000,000 March 31, 2001 $5,000,000 $20,000,000 Minimum Non-Cemetery Operating Cash Flows shall be no less than: Minimum for the Minimum for the Prior For the Period Ending Current Fiscal Quarter Four-Fiscal Quarters --------------------- ---------------------- --------------------- June 30, 1999 $10,000,000 $10,000,000 September 30, 1999 $10,000,000 $20,000,000 December 31, 1999 $20,000,000 $40,000,000 March 31, 2000 $30,000,000 $70,000,000 June 30, 2000 $20,000,000 $80,000,000 September 30, 2000 $20,000,000 $90,000,000 December 31, 2000 $30,000,000 $100,000,000 March 31, 2001 $30,000,000 $100,000,000 Consolidated Operating Cash Flows shall be no less than: Minimum for the Minimum for the Prior For the Period Ending Current Fiscal Quarter Four-Fiscal Quarters --------------------- ---------------------- --------------------- September 30, 1999 ($10,000,000) ($10,000,000) December 31, 1999 $10,000,000 $0 March 31, 2000 $20,000,000 $20,000,000 June 30, 2000 $15,000,000 $35,000,000 September 30, 2000 $15,000,000 $60,000,000 December 31, 2000 $20,000,000 $70,000,000 March 31, 2001 $20,000,000 $70,000,000 Minimum Funeral Home Gross Margins (similar to an EBITDAL calculation) shall not be less than: For the 3-Month Minimum Funeral Period Ending Home Gross Margin --------------- ----------------- June 30, 1999 $45,000,000 July 31, 1999 $43,333,333 August 31, 1999 $41,666,667 September 30, 1999 $40,000,000 October 31, 1999 $43,333,333 November 30, 1999 $46,666,667 December 31, 1999 $50,000,000 January 31, 2000 $53,333,333 February 28, 2000 $56,666,667 March 31, 2000 $60,000,000 April 30, 2000 $56,666,667 May 31, 2000 $53,333,333 June 30, 2000 $50,000,000 July 31, 2000 $48,333,333 August 31, 2000 $46,666,667 September 30, 2000 $45,000,000 October 30, 2000 $50,000,000 November 30, 2000 $55,000,000 December 31, 2000 $60,000,000 January 31, 2001 $60,000,000 February 28, 2001 $60,000,000 March 31, 2001 $60,000,000 April 20, 2001 $60,000,000 May 31, 2001 $60,000,000 The DIP Facility restricts decreases in "Same-Store" revenues by requiring that Loewen shall not permit Funeral Home Revenues for the 3-month period ending as of the last day of any fiscal quarter to be less than (i) in the case of the fiscal quarters ending on June 30, 1999 and September 30, 1999, 92.5% and (ii) thereafter, 95% of the Funeral Home Revenue for the 3-month period ending on the last day of the corresponding fiscal quarter in the immediately preceding year. The DIP Lenders prohibit any single acquisition in excess of $2,000,000 or more than $10,000,000 in acquisitions during any 12-month period. Capital Expenditures are limited to: For the Period Maximum CapEx -------------- ------------- April 1, 1999 to September 30, 1999 $16,000,000 April 1, 1999 to December 31, 1999 $31,900,000 April 1, 1999 to March 31, 2000 $49,900,000 July 1, 1999 to June 30, 2000 $67,900,000 October 1, 1999 to September 30, 2000 $69,900,000 January 1, 2000 to December 31, 2000 $72,000,000 April 1, 2000 to March 31, 2001 $72,000,000 *** End of Issue No. 1 ***