/raid1/www/Hosts/bankrupt/TCREUR_Public/000418.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
E U R O P E
Tuesday, April 18, 2000, Vol. 0, No. 6
Headlines
* A U S T R I A *
WIENERBERGER: About to Surrender its Independence
* G E R M A N Y *
DEBITEL: Having Problems Financing Bid for UMTS License
HERLITZ AG: Sees Existence Under Threat
KNOLL AG: Cuts 500 jobs
* I T A L Y *
ENI: More Management Turmoil
* N E T H E R L A N D S *
WORLD ONLINE: Threat of Legal Action from Shareholders
* S P A I N *
EAST GLASSWORKERS: Judge Declares Glass Manufacturer Bankrupt
SANTA BARBARA: Accumulated Losses of E920m ($883m) over Last 10 Years
THE EAGLE: Will Use the Sale of Assets to Reduce Debt
* U N I T E D K I N G D O M *
ARCADIA: Has Debt of More Than 200m, 4 Times Co. Stockmarket Value
BENTALLS: Drops into the Red, Pre-tax Loss of 1.33 Million
CCF CHARTERHOUSE: Considering a Sale of All or Part
CORUS: Will Certainly be Lost if Rover is Sold to Alchemy
HORNBY: After Nearly a Century, Could be an End of Era
HYDER: Debts of 1.9 Billion, a Little Chance of Survival
JAPAN TOBACCO: Close a Plant in Manchester
RAGDOLL PRODUCTIONS: Teletubbies Up for Sale
ROVER GROUP: Last-Ditch Bid to Save Co. Looks in Serious Trouble
STAGECOACH HOLDINGS: Disposal of Porterbrook to Redeem Bonds
WILLIAM BAIRD: Recorded Losses of 93.5m
YORKSHIRE WATER: Kelda Group Might Sell this Business
=============
A U S T R I A
=============
WIENERBERGER: About to Surrender its Independence
-------------------------------------------------
The Financial Times says that speculation is mounting that Wienerberger,
the world's biggest maker of bricks, is about to surrender its
independence with the launch of a takeover bid that could value
Austria's second-biggest industrial company at more than E2bn ($1.9bn).
Trading in shares of Wienerberger, which operates more than 200 plants
in 26 countries, was suspended at E25.15 on Friday. Trading in shares of
Belgium's Koramic Building Products, a smaller rival that owns 25 per
cent of Wienerberger, was also suspended.
Over the past six weeks Wienerberger's shares have risen by more than 40
per cent amid talk that it could be the next target in a rapidly
consolidating global building materials industry.
Britain's Blue Circle Industries is fighting a hostile 3.4bn ($5.4bn)
bid from France's Lafarge. Hanson, the UK's biggest producer of bricks,
is buying Australia's Pioneer for 1.5bn.
Speculation about Wienerberger's future came to a head on Friday when
Thomas Prinzhorn, an Austrian industrialist and a member of Jrg
Haider's right-wing Freedom party, said it was about to receive a E29.8
per share bid.
Bank Austria, the country's biggest bank, owns 25 per cent of
Wienerberger and is keen to reduce its stake in Austrian industry. Mr
Prinzhorn said that the Wienerberger share price, which had been rising
"due to several offers for Bank Austria's stake", was "still well below
its real value of E35 to E40".
Mr Prinzhorn's unusual decision to become involved in the battle for
control of Wienerberger is believed to stem from a long-running dispute
with Gerhard Randa, chief executive of Bank Austria and Wienerberger's
supervisory board chairman.
Mr Prinzhorn has accused him of trying to gain control of his family
paper company when it was in trouble in the early 1990s.
Wienerberger, which has transformed itself into the leading player in
the global brick industry over the past decade, has been an aggressive
acquiror of companies, a strategy culminating in last year's acquisition
of General Shale, the second-biggest US brick producer.
However, the company is relatively highly geared and has been repeatedly
outbid in its efforts to break into the UK building materials market by
stronger competitors.
Last year, it sold its 30 per cent stake in Ibstock, one of the UK's
biggest brick makers, to CRH, after the Irish building materials company
trumped its bid.
CRH, which is more than four times Wienerberger's size, has been
mentioned as a possible bidder, along with Switzerland's Holderbank, the
world's biggest cement company.
=============
G E R M A N Y
=============
DEBITEL: Having Problems Financing Bid for UMTS License
-------------------------------------------------------
Two US telecoms companies, including SBC Communications, and NTT of
Japan, are vying to take a possible stake in Debitel, the German
telecoms group, reports the Financial Times.
A strategic alliance with a much larger partner could help Debitel in
its bid for a licence to operate the UMTS next-generation mobile
telephone licences in Germany. In return, Debitel would provide an
attractive foothold in the German market.
Talks are understood to be at an early stage but could become cemented
rapidly, according to those close to the negotiations. Debitel on Sunday
night declined to comment.
Debitel is 74 per cent owned by Swisscom, Switzerland's flagship
telecoms group. The strength of its parent means Debitel is unlikely to
have problem financing a bid for a UMTS licence when Germany begins its
auction process.
However, the pace of consolidation in the sector and soaring costs of
applying for new mobile licences have forced a rethink by many telecoms
groups.
An outside partner would help Debitel build up a large customer base to
use the new technology, helping ensure a return on the high investment
needed.
A number of possible alternatives are being explored: an investor could
take a stake in a subsidiary of Debitel, in Debitel or Swisscom.
Both SBC Communications and NTT would bring considerable weight to any
alliance. Sales at Debitel, which has fixed, mobile and internet
activities, were DM1.7bn (E870m, $833m) in the six months to June 1999.
HERLITZ AG: Sees Existence Under Threat
----------------------------------------
Herlitz AG, one of Europe's leading manufacturers of office equipment,
said at its balance-sheet conference on Friday that it hoped to combat
its continuing difficulties with further restructuring measures. The
board forecast a turnaround for next year. Despite Herlitz just having
completed its fifth consecutive year of losses, chief executive Werner
Eisenhardt expressed confidence that the group could be returned to
profit.
He tells HANDELSBLATT that "a small two-digit" operating profit was
expected for 2001, with the turnaround to set in in the second half of
this year. However, HANDELSBLATT says, Eisenhardt delivered a blunt
assessment of Herlitz's current situation. "Our existence remains under
threat," he said. The group could not afford a further significant
reduction in its equity. Losses expected for 2000 were to be offset
through balance-sheet measures such as a reduction in stocks.
Market developments were unlikely to help the group in its recovery,
Eisenhardt said. Rather, he saw further risks arising from an increase
in raw-materials costs. Since overall economic developments were also
unlikely to bring relief, Herlitz had no choice but to remain focused on
its restructuring programme.
For 1999, Herlitz reported sales of DM1.108bn , down 5.6% from the
previous year. The loss for the year came in at DM89.8m, up from DM73.3m
in 1998. The group's workforce fell to 3,900 by the end of March 2000,
and is to fall to 3,600 by the end of the year. Personnel costs, which
fell 10% in 1999, are to be reduced by a further 20% "in the long term".
Of the group's 21 manufacturing sites, just four are to be retained.
The announcement that Herlitz's preference shares are to be converted
into ordinary shares was predictably welcomed by the market. The
preference stock surged 26.53% to close at 12.40 euros, with the
ordinary share down 3.45% at 14 euros.
KNOLL AG: Cuts 500 jobs
-----------------------
BASF cuts 500 jobs at pharmaceuticals subsidiary BASF AG is to cut 500
jobs by the end of the year at its pharmaceuticals subsidiary Knoll AG,
reports HANDELSBLATT. The German chemicals group said the cutbacks were
part of the restructuring program announced in February, which is aimed
at increasing returns in the pharmaceuticals unit. Knoll represents the
combined pharmaceuticals interests of BASF and contributed 2.5bn euros
to group sales in 1999. However, Knoll's return on sales of 4% is well
below that of its competitors. The restructuring package is intended to
bring the pretax return up to 15% by 2002. There has long been
speculation within the industry that BASF intends either to sell its
pharmaceuticals activities, or to bring them into a joint venture with
another group. Knoll employs 12,200 people worldwide.
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I T A L Y
=========
ENI: More Management Turmoil
----------------------------
Eni, the Italian oil and gas group, is facing renewed top management
turmoil after the government's attempt to change the company's statutes
to force the resignation of Vittorio Mincato, its chief executive.
This is the latest power struggle to erupt within six months at the
utilities group, the Financial Times relates, and risks raising fresh
doubts over the government's continuing efforts to influence leading
Italian companies even after they have been fully or partially
privatised. The government, which still owns a 35 per cent stake as
well as a "golden share" giving it a veto over significant strategic
decisions, is keen to reduce the executive powers of the chief executive
and give Gian Maria Gros-Pietro, Eni's new chairman, a wider executive
role.
But people familiar with the situation tell the Times that the
government also wanted to replace Mr Mincato with someone less
independent and more flexible. Since becoming chief executive 15 months
ago, Mr Mincato has made it clear he intended to apply rigidly the
company's statutes giving him all executive powers. He has also resisted
government attempts to interfere. This led to a fiery confrontation
with the previous chairman, Renato Ruggiero, former director general of
the World Trade Organisation. Mr Ruggiero resigned after barely three
months at Eni after failing to secure wider powers. Mr Mincato appears
to have successfully fended off the latest attempt to undermine his
position. The Eni board last week rejected by a significant majority a
government inspired proposal to change the company statutes.
The state shareholder had proposed at a board meeting last Wednesday to
change the statutes which currently give all executive powers to the
chief executive.
The move, disclosed in the weekend edition of the Milano Finanza
business newspaper and confirmed on Sunday by a person close to the oil
group, was designed to give the chairman more executive powers in the
management of the company.
Mr Mincato is understood to have opposed any attempt to undermine his
authority and would have resigned if the government motion had been
approved since this would have limited his freedom to run the company.
Mr Mincato, aged 62, became chief executive 15 months ago after Franco
Bernabe took over as chief executive of Telecom Italia. Mr Bernabe was
forced out of the privatised telecommunications group six months later
after Telecom Italia was taken over by Olivetti, its smaller rival.
Mr Mincato has spent 42 years at Eni where he has gained a reputation
for being a tough and independent manager.
The company recently reported strong 1999 financial results and is
responding to the consolidation in the world oil industry by actively
seeking new acquisition and alliance opportunities. It recently made a
friendly offer to acquire British Borneo, the independent UK oil
company, and has been in alliance talks with Repsol of Spain.
Mr Mincato last year also tried to negotiate a merger with Elf, the
French oil group. But Eni was ultimately trumped by TotalFina, Elf's
French rival.
Since becoming chief executive, Mr Mincato has made it clear he intended
to be a hands-on manager and has resisted repeated attempts to dilute
his hold on the company.
Although Mr Ruggiero lobbied hard to secure greater powers inside the
company, the government last summer ultimately backed Mr Mincato,
leading to Mr Ruggiero's resignation.
Less flamboyant and impulsive than Mr Ruggiero, Mr Gros-Pietro, the new
chairman, also appears to have become frustrated by the limited powers
of his role.
The former head of the IRI state holding company, Mr Gros-Pietro, is a
respected economist and manager.
His appointment was widely seen as an attempt by the government to
defuse the potentially explosive and damaging situation inside the
executive suite of one of the country's national corporate champions.
Mr Mincato's determination to hold on to his all-embracing executive
powers and the government's attempts to give Mr Gros-Pietro a greater
say in company affairs has now revived the tensions at the top of the
company.
At the same time, it has underlined continued government attempts to
interfere in large privatised groups.
=====================
N E T H E R L A N D S
=====================
WORLD ONLINE: Threat of Legal Action from Shareholders
------------------------------------------------------
The Times relates that shares in World Online slumped a further 9 per
cent yesterday as the resignation of Nina Brink, chairwoman and founder
of the pan-European Internet group, failed to distract disenchanted
investors from the company's continuing woes. World Online's Amsterdam-
listed shares, which were issued to investors last month at euro43 (26)
each, initially climbed more than 10 per cent as investors cheered the
resignation of Mrs Brink.
By the close of trading, however, the stock was down euro1.75 at a
record low of euro17.10 - more than 60 per cent below the issue price.
The fall came amid weakness in all European technology stocks. London's
tech-heavy techMARK index, fell 5 per cent, taking its losses for the
week to almost 20 per cent.
But Dutch analysts said World Online's problems were more serious than
uncertain stock market conditions. They said that the threat of legal
action from shareholders and the potential for founding investors,
including the joint underwriter, ABN Amro Rothschild, to sell their
shares were weighing heavily on the stock.
Many analysts believe that World Online is now a takeover target for
fellow European Internet service providers, such as Terra Networks of
Spain and T-Online, the Internet arm of Deutsche Telekom which lists on
Germany's Neuer Markt on Monday.
Bas de Bruyne, an analyst at Amstgeld, said that the share price rout
had left World Online too weak to remain independent. "The whole
business model is based on the share price," he told Reuters.
Mrs Brink was widely seen as resistant to advances from potential
suitors for her company. Although World Online insists it will remain
independent, analysts said her departure has raised the prospect of a
takeover bid.
Mrs Brink resigned on Thursday amid escalating criticism of her decision
to sell most of her stake in the company before its stock market debut
last month. She sold a 6.35 per cent stake in World Online at just euro6
a share - a fraction of the price paid by private investors in the
flotation - to three investment firms.
Although the share sale was disclosed in the fine print of prospectus,
Mrs Brink has been under relentless pressure to stand down from
investors galled by her lack of faith in World Online shares.
VEB, the private shareholders' lobby in The Netherlands, has also filed
a claim for damages from World Online and the joint underwriters, ABN
Amro and Goldman Sachs. VEB claims that the flotation prospectus had
given investors "incorrect, incomplete and unclear information".
=========
S P A I N
=========
EAST GLASSWORKERS: Judge Declares Glass Manufacturer Bankrupt
-------------------------------------------------------------
From Cinco Dias, April 17, 2000:
Judge of First Instance and Instrucci’n of Ontinyent (Valencia), Maria
Chuylia Angels, has declared in voluntary bankruptcy to the labor joint-
stock company East Glassworkers, located in L'Olleria and dedicated to
the decorative glass manufacture. The liabilities have been ascending to
about 1,400 million pesetas, according to sources near the company, that
counts on a group of 170 employees, although got to have more than 350
for three years. The last year invoiced about 2,000 million. East
glassworkers, that are one of the oldest and well-known companies of the
sector, failed in their adventure to open a branch in Mexico three years
ago.
SANTA BARBARA: Accumulated Losses of E920m ($883m) over Last 10 Years
---------------------------------------------------------------------
General Dynamics of the US was on Wednesday confirmed as the Spanish
government's choice to take charge of loss-making defence equipment
manufacturer Santa Brbara. The US group emerged as front-runner two
months ago after lengthy negotiations with Krauss-Maffei of Germany,
maker of the Leopard 2 tank that Santa Brbara is building for the
Spanish army under a $2bn joint programme, according to the Financial
Times. State holding company Sepi said it had accepted General
Dynamics' plan for the state-owned defence group, which has accumulated
losses of over E920m ($883m) in the last 10 years. It said the US
company had pledged to maintain the Leopard 2 programme.
THE EAGLE: Will Use the Sale of Assets to Reduce Debt
-------------------------------------------
La Gaceta de los Negocios says that the Eagle maintains to total rate
the process of absorption of Cruzcampo, that is going to be transferred
to the Spanish branch once has culminated its acquisition on the part of
its matrix, the Dutch Heineken. When the process is closed, the
indebtedness to length of the Spanish branch, that will be leader of the
brewing sector, will ascend to 100,000 million, on own bottoms of 50,000
million.
However, the Eagle counts on the pending desinversiones to reduce this
high level of debt. In order to approve the operation, the Spanish
Government put like condition that new Aguila-Cruzcampo sold 17% of its
productive assets and distribution as well as an ample portfolio of
marks. The Eagle already has decided to for sale put the plants of
Navarre, Madrid and Valencia, although according to Carlos Jauregu‘zar,
delegated advisor of the company " not yet the contacts with the buying
potentials have begun ", between which it appears the Catalan Damm.
The meeting of the Eagle met yesterday in extraordinary session to
approve the extension of 27,453.7 million necessary to acquire 100% of
Heineken Spain, proprietor of 98.74% of Cruzcampo.
Price
Heineken Spain was constituted for the purchase of Cruzcampo and the
price that will pay the Eagle by her corresponds with 135,000 million
disbursed by the brewer Andalusian, once deduced the liabilities of
Heineken Spain and after adding to the interests of market and the
expenses of the operation.
The extension, that will put in circulation 23.16 million new actions
with a noun of three euros, will be made to a price of 7.12 euros
(1,185.5 pesetas) by action, of which 4.12 euros correspond to the
transmission premium.
The price has calculated with a discount of 12.5% on the average
quotation of the two sessions previous to the meeting. The extension is
of two new actions by each three old ones, with preferred right of
subscription for the present shareholders.
Although the extension is not guaranteed, occurs by fact that Heineken
will cover it at least in the proportion that corresponds to him. The
Dutch controls 71.3% of the Eagle.
Once the absorption of Cruzcampo by the Eagle is consumed will be come
to the fusion between the two societies, for which it will be come to
the valuation from the same ones to calculate the exchange relation.
The extraordinary meeting also approved the transfer of the social
address from the Eagle to Seville and the incorporation of Piero Perron,
president of Cruzcampo, to the advice of the Eagle.
===========================
U N I T E D K I N G D O M
===========================
ARCADIA: Has Debt of More Than 200m, 4 Times Co. Stockmarket Value
-------------------------------------------
The Observer reports that Arcadia, which has lost almost 9 million in
the first half of the year, having made a 26m profit a year earlier. It
has debts of more than 200m - some four times the company's stock
market value. It is being forced to get rid of 400 shops. And that will
involve shedding no fewer than 3,500 jobs. In other words, this is a
company in deep, deep trouble.
Now, bearing this in mind, consider something else: that in the nine
weeks from mid-January to mid-March, Arcadia's shops - or at least those
which have been under its control for more than a year - sold, on
average, some 16 per cent more clothes than they did 12 months earlier.
This, surely, is a picture of burgeoning retail success. So how to
square these two, diametrically opposed versions of events? Easy: they
are, in fact, entirely consistent. Arcadia's shops have, indeed,
increased their sales enormously. The problem is this: they sold 15 per
cent more clothes, but these clothes were sold at much lower prices.
Arcadia was able to shift its merchandise only by cutting prices. Hence
the amount of cash taken by its shops rose by a much more modest 4.3 per
cent. And, as even a novice market trader will tell you, it is easy to
increase sales by cutting prices; the big challenge is increasing sales
while still making a profit.
BENTALLS: Drops into the Red, Pre-tax Loss of 1.33 Million
-----------------------------------------------------------
The Times reports that BENTALLS, the department store group that last
week rebuffed a takeover approach from rival Allders, said that it feels
under no pressure to do any deal despite plunging into the red last
year.
Edward Bentall, chairman, said the board was prepared to consider other
takeover approaches but added that the family, which controls 38 per
cent of the shares, sees no reason to sell out.
Bentalls shares fell 5 per cent to 57«p yesterday after the company
turned in a pre-tax loss of 1.33 million for the year to January 29,
against a 3.02 million profit last time.
It also said that Dermot Heffernan, a former director of Pinnacle
Leisure health clubs, would replace John Ryan as finance director.
Results were affected by a 1.6 million loss from its underperforming
Bristol store. Like-for-like sales were up 0.4 per cent over the year.
In spite of the poor financial results, the dividend is held at 3.95p
with a final 3.25p. This will deliver about 613,000 of cash to the
Bentall family.
Although Mr Bentall did not name Allders as the spurned suitor, Harvey
Lipsith, Allders chief executive, has made little secret of his plans to
expand.
Last year Allders raised 50 million in cash from completing a sale-and-
leasback agreement on its key Croydon store. The money was set aside to
fuel consolidation.
It is understood that Allders offered to pay 27 million, or 66p a
share, for control of Bentalls. The company was capitalised at 23.5
million after the share price fall yesterday.
CCF CHARTERHOUSE: Considering a Sale of All or Part
---------------------------------------------------
Financial Times relates that HSBC Holdings, the UK bank which is buying
Crdit Commercial de France, has decided to consider a sale of all or
part of CCF Charterhouse, the French group's investment bank in London.
The disclosure was contained in a circular sent to staff at CCF
Charterhouse from Charles-Henri Filippi, the division's chairman and
chief executive.
"Initially, it has been decided to explore, in consultation with
management and external advisers, the value of Charterhouse Securities
and the level of third party interest in the company," he said.
HSBC is understood to be interested in retaining Charterhouse
Development Capital, Charterhouse's private equity business, as well as
its corporate finance arm and its special investments business, which
includes PFI projects and property investments.
Charterhouse specialises in small and medium-sized UK companies, and
analysts believe its corporate finance business would complement HSBC's
own.
However, Mr Filippi said: "This does not preclude the consideration of
all options for the other businesses within CCF Charterhouse."
Some observers have estimated that CCF Charterhouse could fetch about
250m ($396.8m) if sold as a whole. However, if only the equity research
and secondary distribution business is sold, this might only fetch
between about 80m and 120m, they said.
A number of rival banks have expressed an interest in all or part of CCF
Charterhouse.
These are thought to include Bank of America, Kredietbank of Belgium and
Talisman House, a UK boutique run by Keith Harris, a former senior HSBC
banker. A bid from a management buy-out team is no longer considered
likely
CORUS: Will Certainly be Lost if Rover is Sold to Alchemy
---------------------------------------------------------
The Observer relates that fears are growing that thousands of jobs at
steelmaker Corus, along with one or more of it manufacturing plants,
will almost certainly be lost if Rover cars is sold to venture capital
group Alchemy Partners.
Executives and unions at the former British Steel, which merged last
year with Dutch metals group Hoogovens, are worried that Alchemy's plans
for drastic production cuts will add to problems caused by the high
pound and could 'tip the balance' against plants and jobs in the UK.
Last month joint chief executives John Bryant and Fokko van Duyne warned
that no jobs or plants could be safe while sterling was valued so highly
against European currencies.
Concerns are focused on the Llanwern and Port Talbot strip steel mills
in south Wales, which together account for 6,200 jobs.
Rover, which built around 450,000 cars a year before current owner BMW
began scaling production back last month, accounts for more than 10 per
cent of Corus's output of strip steel.
Corus supplies 100,000 tonnes directly to Rover - of which 75 per cent
goes to the Longbridge plant in Birmingham. A further 200,000 tonnes is
sold indirectly to the company.
The steelmaker's executives are now studying what impact Alchemy's plans
for drastic cuts in production to well below 100,000 cars a year will
have on its UK operations.
A company spokesman said Corus would embark on widescale restructuring -
which would inevitably include plant closures and job losses, if its
market share falls below 50 per cent. It currently stands at 53 per cent
of production in the UK, and is being eroded by the strong pound. Rover
could tip the balance to below 50 per cent.
Sources at the ISTC steelmaking union said there was serious concern
about the future of Llanwern and Port Talbot.
A spokesman for the union said: 'Britain cannot live by design,
insurance and music alone. The Government neglects manufacturing at its
peril'.
HORNBY: After Nearly a Century, Could be an End of Era
------------------------------------------------------
After nearly a century, it could be the end of an era for Hornby, the
British maker of model trains, according to a report appearing in the
Financial Times. Hornby, which began life as an independent company in
1901, has been buffeted by changes in the toy market favouring
electronic games. It said on Friday it was considering all strategic
options including offers for the company.
Founded by Frank Hornby, the toy maker has weathered change before,
diversifying out of Meccano, the construction toy, to develop the first
clock-powered tin train sets in 1920. Five years later came the world-
famous electric train sets. As the market changed again with demand for
train sets lessening by the 1950s, Hornby introduced Scalextric, the
model racing car sets. However, now the group feels that only an offer
for the company or a merger with a similar toymaker in Europe or North
America can give it the critical mass to survive. Peter Newey,
executive chairman, said: "We're a small company in a niche and we need
to break out of that somehow. An offer is only one strategic option but
if somebody comes along we'll have to consider it."
Richard Hyman of the retail consultancy Verdict said he believed the
shift away from more traditional toys to electronic products was an
inevitable sign of the times. He said: "Kids aren't what they used to
be and the things they play with aren't what they used to be. Hornby's
roots are in a time when its models were based on new or relatively
contemporary technology like the steam engine or the motor car - they
don't have the allure they once had." Mr Newey admitted some sadness
that Hornby could be reaching the end of the line as an independent.
He said: "It would be nicer if we had the support of our shareholders so
we could develop the business in the way that we'd like to so in that
sense there is some sadness. But it's a fact of life - smaller companies
are very out of favour."
HYDER: Debts of 1.9 Billion, a Little Chance of Survival
---------------------------------------------------------
NOMURA International, the Japanese investment bank, appears poised to
throw a lifeline to Hyder, the troubled Welsh utility, according to
The Times. Hyder said last week that it remained in takeover talks,
although it refused to say whether they involved Nomura. Nomura also
refused to comment, although market sources said representatives of the
two companies had been in negotiations in recent days.
However, a takeover by a bank of a utility that controls most of the
water and electricity network in Wales could run into political
opposition. Two years ago an attempt by Nomura to bid for the Energy
Group, the generator and electricity supplier that owned Eastern
Electricity, met with some ministerial disapproval.
However, analysts have given warning that Hyder has little chance of
survival without a takeover. The multi-utility has debts of 1.9 billion
and a market capitalisation of only 409 million. One analyst said he
could not work out any way in which Hyder could produce a sufficient
rate of return to cover its interest payments.
JAPAN TOBACCO: Close a Plant in Manchester
------------------------------------------
Japan Tobacco will close a plant in Manchester by year-end, affecting
some 300 workers. JT suggests that using plants bought from RJ Reynolds
International will be more cost-effective for exporting cigarettes to
Europe and the Middle East.
RAGDOLL PRODUCTIONS: Teletubbies Up for Sale
-------------------------------------------
THE Teletubbies are up for sale and from over the hills and far away the
men in grey suits are coming to pay, says The Sunday Times. Ragdoll
Productions, creator of the series, is considering a partial or total
sale to a media company. Ragdoll has already had several offers but Anne
Wood, the company's founder, is keen to ensure her team retains creative
control. Children's programmes such as Rosie and Jim, Brum and Tots TV
established Ragdoll as one of the leading independent television
production companies in the pre-school market. It struck gold with the
Teletubbies series. Together with international sales of videos and
merchandise, the characters Tinky Winky, Dipsy, Laa-Laa and Po boosted
sales from 7m to 22m in the past year. Though profits have grown from
700,000 to 10m, Ragdoll lacks the money to invest in new programmes.
Woods wants to develop four new children's television series and a
feature film.
ROVER GROUP: Last-Ditch Bid to Save Co. Looks in Serious Trouble
----------------------------------------------------------------
A last-ditch bid to save Rover as a volume carmaker looked in serious
trouble on Friday as BMW signalled it was not prepared to give the offer
more than a few days' consideration, says the Financial Times.
The news strengthened the position of Alchemy Partners, the private
equity firm that plans to make thousands of redundancies and transform
Rover into a specialist sports carmaker. John Towers, a former Rover
chief executive, presented his rival bid to Professor Werner Sman, the
German carmaker's top UK executive, on Friday afternoon at Longbridge,
its plant in the English midlands.
BMW said it would consider the offer seriously. But it declined to
extend its deadline for striking a deal beyond early May. This would
leave Mr Towers with only a few days for formal discussions with BMW,
compared with the months allotted to Alchemy. Under an exclusivity
agreement the German carmaker cannot negotiate with another bidder until
it has struck a final agreement with Alchemy. This could take until
April 28. Mr Towers was unavailable for comment. However, Stephen
Byers, chief trade and industry minister, said the industrialist had
rewritten his proposals following a meeting with BMW on Monday. The aim
of the Towers bid is to keep Rover in volume car production,
safeguarding jobs in the West Midlands. Mr Byers gave it his implicit
backing. "The position of the government is that if Rover has to be
sold, we would like it to be to a high volume producer," he said.
BMW on Friday backed down under the threat of legal action from three
British unions, postponing plans to reallocate Rover staff to seven new
business units as a first step towards breaking up the group. The unions
said the move was a breach of European laws on the transfer of contracts
of employment.
STAGECOACH HOLDINGS: Disposal of Porterbrook to Redeem Bonds
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Reuters reports that British transport operator Stagecoach Holdings Plc
said on Friday it would redeem a 125 million pound bond due 2007 next
month at 111.820 percent of principal amount. It said the redemption
premium was provided for in the estimated gain of 115 million pounds
arising on the disposal of its Porterbrook UK railcar leasing company.
Stagecoach sold its Porterbrook unit to diversified mortgage bank Abbey
National Plc earlier this month for a net 773 million pounds in cash,
around 200 million pounds below analysts' expectations.
Stagecoach shares tumbled 40 percent last Monday after the group issued
a profits warning and management has been unable to restore confidence
in the group following a series of analyst meetings sinbce then. The
company's credit ratings were downgraded by both Moody's Investors
Service and Standard & Poor's Corp earlier this month following the
Porterbrook sale.
WILLIAM BAIRD: Recorded Losses of 93.5m
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From The Independent, 16 April 2000:
William Baird, the textile group which is taking Marks & Spencer to
court over its decision to start buying clothes from abroad, is about to
come under pressure for its aggressive stance.
Shareholders are to challenge David Suddens, the group's chief
executive, and Sir David Cooksey, the chairman, over Baird's poor
performance and its continuing row with the high street retailer.
Mr Suddens announced last autumn that Baird would be suing M&S for
53.6m over the retailer's sudden decision to drop Baird as its
supplier.
The textile group now claims that the move cost it 104m, led to 4,000
redundancies and was responsible for its atrocious 1999 figures, in
which it recorded losses of 93.5m. Baird's shares have crashed from
124.5p a year ago to just 47.5p on Friday.
M&S has applied to the courts to have the legal action struck out, and a
hearing will take place in late June. Even if it goes ahead, Mr Suddens
is now admitting that Baird is unlikely to receive any more than 10m in
compensation from M&S.
However, at Baird's annual general meeting, taking place on Tuesday,
shareholders are expected to attack Mr Sudden and Sir David Cooksey over
the loss of the M&S contact and the group's strategy since then.
"We feel that Baird contributed to its own problems and, like Stephen
Byers and Rover, he should have seen the problems coming," said one
substantial shareholder.
"We also feel that this litigation against M&S will get nowhere and
merely puts out a bad message to other potential customers."
Mr Suddens denies that Baird could have been at fault in the loss of the
M&S contract. "We made a presentation to them in July saying that they
should move their production abroad and how we could help and support
that process," he said.
Mr Suddens further denied that investors had shown any unhappiness with
the decision to sue M&S.
"I have the full support of the board and we have spoken to all our
leading shareholders about this," he said.
Baird's largest investor is Phillips & Drew, which owns 19.8 per cent of
the group's shares. The fund manager has a reputation for shareholder
activism and is keen to see further consolidation in the textile
industry.
Last year it supported a shake-up of Coats Viyella, which saw the chief
executive resign and the chairman retire.
YORKSHIRE WATER: Kelda Group Might Sell this Business
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From Financial Times, April 16, 2000
Kelda Group, owner of Yorkshire Water Services, has improved the terms
of a 150m bond issue in response to investor pressure. The move may
force companies to provide more credit protection on future bond issues.
Rating agencies last week said the company's debt might be downgraded
after Kevin Bond resigned as chief executive and Kelda announced a
strategic review aimed at boosting its share price. The group said it
was considering selling or securitising the revenues from its water
business.
Weeks earlier, investors agreed to buy a 31-year sterling bond on the
assumption the company had a stable outlook. They are due to pay for the
bonds today. The investors put pressure on the company and on J.P.
Morgan and Warburg Dillon Read, the bond's underwriters, to compensate
them for the outlook change.
A lower rating would imply a greater risk of default and should offer a
higher return.
As well as increasing the coupon - the annual interest investors earn on
the bonds - by 25 basis points to 6.625 per cent, Kelda said it would
raise the coupon further if its ratings were cut sharply before October
2001.
James Newman, group finance director, said the company would be using
the market in future and wanted to be fair to bondholders.
Such rating protection might become more widely used.
John Hale, of the Association of British Insurers, said: "This has
become a hot topic and brings to the fore once again the issue of
whether bond documentation provides adequate protection for investors."
Companies have used rating protection to persuade investors to buy bonds
in an uncertain credit environment. The value of such measures, or
covenants, was illustrated last week when Stagecoach, the UK transport
operator, said it would buy back a sterling bond following a
restructuring and downgrades.
Its euro-denominated bonds were not bought back - a decision seen as
reflecting different covenant standards in the euro versus sterling
markets. The bond price has fallen in response to the rating action.
S U B S C R I P T I O N I N F O R M A T I O N
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Washington, DC. Peter A. Chapman and Sharon Cuarto, Editors.
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