March 30, 2000
Milberg Weiss Files Class Action Suit Against Fruit of the
Loom
Milberg Weiss announced yesterday that a class action has commenced
in the U.S. District Court for the Western District of Kentucky on
behalf of purchasers of Fruit of the Loom Inc. Class A common stock
during the period between Sept. 28, 1998 and Nov. 4, 1999, according to
a newswire report. The suit charges Fruit of the Loom's two top officers
with violations of the Securities Exchange Act of 1934, and alleges that
during the third and fourth quarters in 1998, the company told investors
it was materially reducing its levels of finished goods and raw
materials inventory by curtailing production at its maquiladora
facilities for several days in each of those quarters and that it
expected strong sales growth in 1999-2000. On April 21, 1999, the
company reported a loss of $.13 per share, claiming the results were due
to an inability to manufacture sufficient product to meet strong demand.
The suit claims the company then suffered greater setbacks in the third
quarter of 1999 due to its operations, including a $60 million write-off
of over-valued and non-existent inventory, a $20 million loss on cotton
futures contracts and a $10 million charge for a loss on a supply
contract from a previously sold facility. In December 1999, Fruit of the
Loom filed for bankruptcy.
The suit alleges that subsequent to its bankruptcy filing, Fruit of
the Loom's stock became virtually worthless, inflicting millions of
dollars of damage on class members. Those interested in serving as lead
plaintiff are asked to move the court no later than 60 days from March
22, 2000. Those wishing to discuss this are requested to contact
plaintiff's counsel, William Lerach or Darren Robbins of Milberg Weiss,
at (800) 449-4900 or via e-mail at
color='#000000'>wsl@mwbhl.com. Those wishing to join this class
action may do so online at
href='http://www.milberg.com/fruit/'>http://www.milberg.com/fruit/
.
Sunrise Assisted Living Reorganizes
Sunrise Assisted Living Inc., McLean, Va., one of the nation's
largest providers of assisted living for seniors, said today it has
reorganized its business operations and obtained a $75 million loan to
pay off debts and buy back stock, The Washington Post reported.
The restructuring comes amid increased financial stress in the elderly
care industry; in recent months, four national nursing home operators
have filed for bankruptcy, citing reduced Medicare payments as a major
reason. Unlike nursing homes, assisted-living companies are not
dependent on Medicare payments; their customers generally have private
insurance or pay cash to live in full-service facilities such as
Sunrise's. Sunrise came under stress when it expanded rapidly, opening
22 communities in the last 15 weeks. When its earnings did not meet Wall
Street analysts' expectations in the last six months of 1999, its stock
price plummeted. Sunrise's three divisions, Sunrise Management Services,
Sunrise Properties and Sunrise Ventures, which operate assisted-living
facilities and buy and sell real estate and develop new business
ventures, will now report their financial results separately under the
Sunrise corporate umbrella, and a seven-year, $75 million Freddie Mac
loan, obtained at a fixed interest rate of 8.66 percent, will be used to
pay down $59 million in project financing and buy back company stock,
Sunrise officials said. 'The loan demonstrates our ability with a major
financial institution to get attractive refinancing terms,' said Paul J.
Klaassen, Sunrise's founder, chairman and chief executive. 'It's very
important for the public markets to see that we can get long-term
financing.'
Matthews Studio Group Ends Talks to Sell Four Star Lighting
Theatrical equipment supplier Matthews Studio Group, Burbank,
Calif., said yesterday it has ended talks to sell its Broadway-based
division, Four Star Lighting, to its managers and a group of private
investors, according to Reuters. In a statement, Matthews said that it
will continue to retain the assets and operations of the entire Four
Star Lighting operation and will continue to explore other solutions to
its current liquidity issues, including the possibility of filing for
bankruptcy. Founded in 1964, Four Star Lighting is the leading supplier
of theatrical equipment to the Broadway market. Matthews Studio Group
acquired Four Star in April 1998.
Ventas Posts Its Debt Restructuring Costs
Ventas Inc., Washington, recorded losses of $4.2 million in the first
quarter related to the February restructuring of $973 million in debt,
according to the company's annual report filed Wednesday with the
Securities and Exchange Commission, a newswire report stated. Ventas
said the one-time charge resulted from the write-off of the unamortized
deferred financing costs associated with the new credit agreement, which
restructured its $973 million in debt into three tranches and
established a revolving credit facility of $25 million. Ventas disclosed
that it received a refund of $26.6 million from the Internal Revenue
Service in February, representing the company's income tax refund for
1996 and 1997, as well as interest the company paid on its 1998 federal
income tax return. Vencor Inc., which was spun off from Ventas in 1998
and holds virtually all the leases for Ventas' acute care hospitals and
skilled nursing facilities, has made claims that it is entitled to the
refund under the companies' tax allocation agreement; Ventas said it
would defend its right to the refund.
Ventas also said that it and Vencor, which filed chapter 11 in the
District of Delaware on Sept. 13 along with 128 affiliates, continue to
be engaged in advanced settlement discussions with the federal
government seeking to resolve all federal civil and administrative
claims against them arising from the participation of Vencor facilities
in various federal health benefit programs. The U.S. Department of
Justice (DOJ) recently filed two proofs of claim in the bankruptcy court
asserting approximately $1.3 billion against Vencor, including triple
damages. According to the filing, the DOJ has informed Ventas that it if
liability exists, Ventas and Vencor will be jointly and severally liable
for the portion of such claims related to the period before the 1998
Vencor spinoff.
Hurricane Refinery Purchase Approved by Shareholders
Hurricane Hydrocarbons Ltd., Calgary, Alta., said yesterday that its
shareholders had approved several resolutions, including the purchase of
a Kazakhstan refinery, that should allow it to emerge from bankruptcy
protection, according to Reuters. Last week, Hurricane, which has been
operating under court protection since May, said its Kazakh subsidiary
agreed to buy the Chimkent oil refinery from the country's Kazkommertz
Bank for $51 million and 33 percent of Hurricane's shares. The deal,
expected to close this Friday, coincides with the time the cash-strapped
company expects a Canadian court to approve its reorganization plan.
Hurricane will repay $50 million in debt on Friday, exceeding the
minimum $42 million initial payment required under its agreement with a
group of U.S.-based bondholders, and the company said it expects to
repay all its debts by October 2001. Hurricane's creditors approved the
refinery purchase in early March.
Handy & Harman Files for Bankruptcy
Handy & Harman Refining Group Inc., South Windsor, Conn., one of the
world's largest refiners of gold, silver and other precious metals,
filed chapter 11 on Tuesday in the District of Connecticut in Hartford,
according to Reuters. It was not immediately known if the bankruptcy
filing was related to a controversy over a precious metals fraud scheme
against the government of Argentina in which Handy & Harman is
entangled. Several former Handy & Harman executives were indicted in
early March in an alleged $130-million scheme to defraud Argentina. The
51-count indictment handed down on March 7 in Newark, N.J., named John
Bartholomew of MTB Bank, and Barry Wayne, former president of South
Windsor Metallurgical Inc., a one-time Connecticut subsidiary of Handy
& Harman, in an alleged conspiracy to ship precious and non-precious
metals to the United States from Argentina at inflated prices, making it
appear that hundreds of millions of dollars of legitimate
metal-containing products were being shipped and generating millions of
dollars in incentives from Argentina's government. Wayne was charged
with conspiracy, customs fraud, wire fraud affecting a financial
institution and money laundering. Handy & Harman, which listed debts
and assets of between $50 and $100 million, is a member of the Golden
West Refining Group of Australia, Canada and Papua New Guinea.
University Hospital Issues Response to PHS Bankruptcy Rulings
Farah M. Walters, president and chief executive officer of
University Hospitals Health System, issued a statement yesterday
regarding the decision by the U.S. Bankruptcy Court in Delaware to open
the bidding process on PHS properties, according to a newswire report.
'We are extremely pleased that the bankruptcy court has supported the
position of University Hospitals Health System and the sentiment of the
greater Cleveland community to open the bidding process,' the statement
said. 'We will move forward immediately to work with PHS to make a fair
offer for the two hospitals. Our goal continues to be to acquire both
hospitals in operating condition so that they may remain open with full
service to their communities and protecting the jobs of their employees.
We hope there will be no further attempt to dismantle the operations of
these hospitals as there has been in the past three weeks. We greatly
appreciate the outpouring of support that University Hospitals Health
System has received on this issue from the physicians and staff at St.
Michael and Mt. Sinai-East, from individuals living in their
neighborhoods, and from the people of greater Cleveland.'
Wilshire Financial Services Reports Results Following Its
Emergence from Bankruptcy
Wilshire Financial Services Group Inc. (WFSG), Portland, Ore.,
reported today the results of operations for the fourth quarter and
seven months ending Dec. 31, 1999, following the its emergence from
bankruptcy on June 10, according to a newswire report. Its net loss for
the fourth quarter was $6.2 million ($0.31 per share) and $14.1 million
($0.70 per share) for the seven months ending Dec. 31, and its operating
results for the same period include market valuation losses and
impairments on mortgage-backed securities and other assets of $10.8
million, loan loss provisions of $1.0 million and a $2.4 million charge
for the discontinuation of European operations, or a total of $14.2
million ($0.71 per share). 'WFSG's 1999 financial results understate our
current financial stability and the improved results of our new
strategic focus, both of which are now surfacing in the year 2000,' said
Stephen P. Glennon, chief executive officer of Wilshire Financial
Services Group. 'Subsequent to the reorganization process, we put a new
management team in place, diligently reduced Wilshire's overhead, and
focused the company on its core banking and loan servicing businesses. I
am pleased to report that the fourth quarter, despite the reported loss,
reflected our substantial progress in these efforts.' WFSG invests in
and services residential and commercial mortgages, primarily those
requiring special loss mitigation and/or investor reporting
capabilities, and conducts a real estate services banking business
through its wholly-owned subsidiary, First Bank of Beverly Hills,
F.S.B., focusing on commercial mortgage origination, residential and
commercial mortgage acquisition and merchant bankcard processing
businesses.
Court Approves Global Ocean's Plan
Disclosure Statement
On March 24, Global Ocean Carriers Ltd. (GLO) received bankruptcy court
approval of the disclosure statement related to the shipping company's
prearranged chapter 11 plan of reorganization. The U.S. Bankruptcy Court
in Wilmington, Del., has scheduled a plan confirmation hearing for May
8, according to the company's lead bankruptcy counsel. Andrew D.
Gottfried of Morgan Lewis & Bockius L.L.P., counsel to Global Ocean,
told DBR that ballots, the plan, and the disclosure statement would be
mailed to creditors and other parties in interest this week.
Courtesy of
href='http://www.fedfil.com/bankruptcy/developments.htm'>The
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30, 2000.
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