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Technology Stocks : Zenith - One and Only -- Ignore unavailable to you. Want to Upgrade?

To: Robert Utne who wrote (6312)	9/29/1999 5:42:00 PM
From: Robert Utne	Read Replies (2) \| Respond to of 6570

Dow Jones News/September 29, 1999 Judge Needs Time To Mull Zenith's Reorganization Plan WASHINGTON -- A federal bankruptcy judge Tuesday after two days of hearings said she needed more time to consider whether to confirm Zenith Electronics Inc.'s prepackaged plan of reorganization, Federal Filings Business News reported. The electronics manufacturer's official committee of equity security holders and 12 individual stockholders objected to Zenith's prepackaged reorganization plan and the accompanying disclosure statement. The equity committee also opposed the company's retention of investment banker and financial adviser Peter J. Solomon Co., or PJSC. On Monday and Tuesday, Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Del., heard 15 hours of testimony as each side presented four witnesses. The equity committee charged that the prepackaged plan is unfair to minority shareholders, was proposed in bad faith, is inequitable and is premised on a valuation prepared by a biased investment banker, PJSC. James Sprayregen of Kirkland & Ellis, counsel to Zenith, said that all parties very professionally handled Tuesday's hearing, but that there was a major disagreement about valuation. Jeff Marwil of Katten Muchin & Zavis, counsel to the equity committee, said "our valuation shows that there is substantial value for shareholders." The equity committee, with the assistance of Ernst & Young, prepared a valuation of Zenith saying the company is worth well over $1 billion. As reported, Zenith's Chapter 11 petition filed Aug. 23 listed $311 million in assets and $732 million in liabilities. Under Zenith's plan, all outstanding common stock will be canceled, and stockholders, including LG Electronics Inc. (Q.LGE), Zenith's majority shareholder and a major creditor in the case, will receive nothing for their existing equity stakes. LGE and its affiliates acquired a controlling interest in Zenith's common stock in November 1995. LGE will receive 100% ownership of Zenith in exchange for $200 million that Zenith owes it. The Korean conglomerate will also receive certain Zenith manufacturing assets in exchange for forgiving certain other debt the company owes. In addition, holders of the $103.5 million principal amount of Zenith's 6.25% convertible subordinated debentures would receive $50 million of new 8.19% senior debentures maturing in 2009. The bondholders support Zenith's plan. The equity committee won appointment as an official committee last month, after being formed on an ad hoc basis in August 1998. The panel retained Wilbur Ross Jr. of Rothschild Inc. as a valuation expert. Marwil said that Ross on Tuesday testified on how Zenith's assets could have been better marketed for sale, which would have led to a higher valuation of the company. The possibility of a settlement between Zenith and its minority shareholders appears very unlikely. Sprayregen said that there is "no possibility" that Zenith's plan will be amended to give some return to its shareholders. Marwil said that "the debtor and LGE have made it clear that they have nothing to negotiate with us." He added that he thought there is sufficient evidence to deny confirmation of the reorganization plan. Judge Walrath asked the attorneys for the electronics manufacturer and its official committee of equity security holders to submit post-trial papers on Monday summarizing testimony and clarifying their positions. ------------------------------------------------------------ In addition, Judge Walrath is reviewing a motion that my attorney filed with Bankruptcy court to lift the automatic stay of bankruptcy, allowing me (in behalf of the the entire community of Zenith Electronics Corp.) to file a derivative lawsuit against Zenith's directors and LGE, in Delaware state court.