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                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 25, 2000, Vol. 0, No. 9
  
                                   Headlines

* G E R M A N Y *

HEIDELBERGER ZEMENT: Debt-burden Climbed from 1.1bn Euros to 3.7bn Euros
SAP: Benefit Falls 43% in the Trimester

* F R A N C E *

AIR LIBERTE: British Airways to Sell Loss-Making French Subsidiary
CREDIT LYONNAIS: Penalised for Illegal Stock Deals
CREDIT LYONNAIS: Not Lived up Expectations, Fueling Doubts on Group's Solidity
EUROTUNNEL: Damaged By Continuing Loss of Duty-Free Sales
MOULINEX: Scales-Back a Planned Restructuring Involving 2,100 Job Cuts
PEUGEOT CAR: Looking to Cut Investments and at Job Cuts

* N E T H E R L A N D S *

BAAN: $26m Deficit, Its Seventh Successive Quarterly Loss
WORLD ONLINE: Investors Have Begun Legal Action Against the Company

* U N I T E D   K I N G D O M *

BOO.COM: Troubled Company Loses Another Senior Executive
BRADFORD & BINGLEY: Put Up for Sale
BRITISH NUCLEAR: Company Operating at a Loss
GROUCHO CLUB: Faces Hostile Bid
HEYWOOD WILLIAMS: Underperforming UK Maker of PVC Windows & Doors
LOOT: Scoot.com Granted Sole Negotiating Rights to Buy Company
PHILLIPS & DREW: Funds Still Suffering
PHOENIX GROUP: Rescue Attempt was on the Brink 0f Collapse
STAGECOACH HOLDINGS: Losses 3rd director, Possible Board Split
VERSAILLES: 'Only �5m' for Versailles Creditors


=============
G E R M A N Y
=============


HEIDELBERGER ZEMENT: Debt-burden Climbed from 1.1bn Euros to 3.7bn Euros
------------------------------------------------------------------------  
After making numerous acquisitions last year, Germany's Heidelberger Zement AG
is to return to its policy of expansion in small stages. In order to slim down
its corporate debt, the construction-materials group also plans to divest non-
core activities, according to a report circulated by HANDELSBLATT.

Chief executive Rolf H�lstrunk said Wednesday that the firm had absorbed last
year's acquisitions - Sweden's Scancem, German mortar manufacturer Maxit and
an increased shareholding in Belgian subsidiary CBR - with no long-term effect
on results. The integration of the two takeovers had now been completed, he
added.   H�lstrunk forecast a low double-digit growth in operating profit for
the current year, to be achieved through lowering costs and moderate growth in
sales. Due to forthcoming divestments, sales would slip back slightly form
1999 levels.   

Following the Scancem takeover in 1999, Heidelberger had now become the
world's number three construction materials group, announced H�lstrunk. Full-
year consolidation of Scancem and Maxit ensured sales climbed strongly from
3.9bn euros to 6.4bn euros. Operating profit was boosted 54% to 644m euros.
Without including the consolidation of acquisitions, sales rose 7% and
operating profit 12%.  Although Heidelberger carried out three capital
increase to fund the buy-outs, the group's net debt-burden climbed from 1.1bn
euros to 3.7bn euros. The financial burden of the increased debt situation
would first be felt in 2000, H�lstrunk stressed. Non-core activities would be
divested to improve the debt situation, he added.

Further acquisitions are planned by the group, primarily in the Far East.
Heidelberger recently acquired a cement plant in Bangladesh, where the group
now produces around 4m tonnes per day. Negotiations with Indonesia's
Indocement were "well on the way". However, H�lstrunk stressed that there were
still numerous hurdles to be overcome before a deal was concluded.


SAP: Benefit Falls 43% in the Trimester
---------------------------------------
From La Gaceta de los Negocios, April 20-24, 2000:

The increase of the income has not been sufficient to contain the fall of the
quarterly results of SAP. The German manufacturer of software has registered a
reduction of 43% in his net benefit, that has been located in the 56 million
euros (9,318 million pesetas) at the end of first trimester.

The number of businesses, nevertheless, follows its rate ascending, reaching
the 1,180 million euros between January and March, 10% more.
The benefit before taxes, excluded the costs from the bond program for the
personnel, grew 114%, until the 334 million euros. Nevertheless, including the
costs of this program, the benefit before taxes was reduced until the 95
million euros, 45% less.

The president of the company, Henning Kagermann, recognized the difficulties
undergone by his company the first trimester, due to the increase of the
competition in the sector of the applications of software for Internet,
specially in the U.S.A.

The strategy mySap.com for Internet, at the present time the axis of the
future strategy of the manufacturer, not yet has given the awaited results.
In fact, according to information appeared in Bloomberg, the company is
finding problems to sell these products, since some clients complain which the
inflexibility of the structure of prices of such forces to them to buy all the
components of the software east.

In any case, and in spite of the disapointing semester results, Kagermann one
was trusted that its company will surpass the obstacles and will experience a
remarkable growth in its quarterly business during in both following.


===========
F R A N C E
===========

AIR LIBERTE: British Airways to Sell Loss-Making French Subsidiary
------------------------------------------------------------------
British Airways is negotiating to sell its 86 per cent stake in Air Libert�,
its loss-making French subsidiary, to Taitbout Antibes, a financial
institution registered in the Netherlands, says a report appearing in the
Financial Times.  

BA said that it had entered into a period of exclusive negotiations with
Taitbout, in preference to pursuing talks with Air France, the FT reports,
adding that no timetable is set for completion of the negotiations.

The French airline was forced to cancel three-quarters of its 180 flights on
Friday, as unions staged a one-day strike in protest at the planned sale,
disrupting Easter weekend plans for thousands of travellers.  BA had to
provide replacement planes for its flights from London Gatwick to Toulouse and
Bordeaux, which are normally operated by Air Libert�.  The French carrier's
2,500 workers went on strike over the lack of information provided by BA about
its plans for the future of its French operations.  Last year, Groupe Alpha
and Marine Wendel bought a 50.01 per cent stake in AOM, a rival French
domestic airline, in co-operation with SAir group which purchased 49.5 per
cent.  


CREDIT LYONNAIS: Penalised for Illegal Stock Deals
--------------------------------------------------
The watchdog responsible for monitoring financial irregularities in Japanese
commerce is pressing authorities in the state to penalise French banking group
Credit Lyonnais after an investigation revealed illegal stock deals, says a
report appearing in The Independent.  Authorities, The Independent says, have
documented three occaisons in the last three years when the banking giant
broke trading practices. One of the violations involved falsefying sales
prices for a customer pursuing a stock transaction.  So far there has been no
comment from officials at the French bank. International firms are said to be
under particular scrutiny since the Japanese financial regulation authority
began rigorously examining the financial services industry.


CREDIT LYONNAIS: Not Lived up Expectations, Fueling Doubts on Group's Solidity
------------------------------------------------------------------------------
French corporate governance faces its second test in as many weeks next
Thursday, when Cr�dit Lyonnais is due to decide whether to strip one of its
biggest shareholders of its voting rights.  The news follows last week's
announcement by Dresdner Bank, of Germany, that it had built up a 3.6 per cent
stake in the French bank privatised last year, the Financial Times reports.

Under the terms of the Lyonnais privatisation, the FT explains, 33 per cent of
the capital is held by a group of "partner shareholders", who have pledged to
develop commercial links with the bank and protect it from hostile bids.
Lyonnais on Friday said its statutes allowed any shareholder with more than 5
per cent of the capital to demand that Dresdner be stripped of its voting
rights. The statutes say that investors must notify Lyonnais when their stake
rises above 0.5 per cent, or risk losing the votes attached to shares above
this threshold.

The controversial clause comes to light as other French companies face growing
criticism from activist shareholders over discrimination on voting rights
French company law, dating back to 1966, does not guarantee equal votes to all
shareholders.  

Vivendi, the multi-utility, is being sued by ADAM, France's biggest
association of minority shareholders, for seeking to dilute the votes of
investors with stakes bigger than 2 per cent.  ADAM is also threatening to
take legal action against Soci�t� G�n�rale, the second-largest listed bank,
which this week imposed a cap limiting shareholders' votes to 15 per cent,
regardless of the size of their stake.  



EUROTUNNEL: Damaged By Continuing Loss of Duty-Free Sales
---------------------------------------------------------
The loss of duty-free sales is continuing to damage Eurotunnel, the Anglo-
French Channel tunnel operator, which saw a heavy fall in demand for car and
coach shuttles in the first quarter of 2000.  Patrick Ponsolle, chairman,
tells the Financial Times that a 19 per cent drop in car shuttle services and
the loss of retail revenue had been partly offset by a 42 per cent increase in
truck freight. In spite of that, Eurotunnel's total operating revenue fell 9
per cent to �130.1m ($205.8m) in the first quarter.  The Anglo-French Channel
tunnel operator said the loss of car traffic was also a result of rising
ticket prices, which had been put up to help compensate for the loss of duty
free sales.  Mr Ponsolle said the group was increasing its market leadership
of cross-Channel passengers and freight. Eurostar passenger traffic rose 5 per
cent to nearly 1.5m, and rail freight was up 6 per cent to 734,000 tonnes.
Group income figures were distorted because shops have been franchised and
Eurotunnel gets only a share of the margin instead of showing total income and
then deducting the cost of sales.


MOULINEX: Scales-Back a Planned Restructuring Involving 2,100 Job Cuts
----------------------------------------------------------------------
Merger talks between Moulinex and Brandt, the French kitchen appliance makers,
enter a crucial phase this week, the Financial Times reports, with executives
from the two companies due to meet to discuss final details.  

"Both companies are now in agreement that it is in their interests to merge,"
said an adviser to El.Fi, the Italian family owned group that controls Brandt,
France's biggest white goods maker.   

The structure of the deal, which could be announced early next month, is
understood to include a guarantee of future share price performance for
Moulinex shareholders. Under the terms of the guarantee, the shareholders
would receive a cash bonus from El.Fi if their shares do not reach a
predetermined price at a given date in the future.  A merger of Moulinex and
Brandt would create Europe's third largest company in the white goods sector,
with annual sales of roughly E2.7bn ($2.5bn). The combined entity would
relegate the European operations of Whirlpool of the US to fourth position,
and rank just behind the European leaders Electrolux of Sweden and Germany's
Bosch-Siemens.  Moulinex and Brandt have ironed out their differences since
El.Fi announced last month that it had acquired 15 per cent of Moulinex's
shares. Since then, the Italian company has raised its stake to almost 25 per
cent and proposed a merger of the two groups' assets. Earlier this month the
board of Moulinex mandated Pierre Blayau, chairman, to conduct talks with
El.Fi.

Mr Blayau has asked El.Fi to back its claims that a merger would provide at
least FFr400m (E61m, $57m) of synergies. Moulinex employees have urged the
company to examine El.Fi's proposals, because the synergies could make it
possible for Moulinex to scale back a planned restructuring involving 2,100
job cuts.

Brandt is being advised by Clinvest, the investment banking arm of Cr�dit
Lyonnais.  Soci�t� G�n�rale is advising Moulinex.


PEUGEOT CAR: Looking to Cut Investments and at Job Cuts
-------------------------------------------------------
French car manufacturer Peugeot, which has a strong presence in the West
Midlands, employing more than 3,000 people, is the latest manufacturer to
suggest that it may have to cut back investment and jobs because of the
strength of the pound.  A senior source at Peugeot tells The Observer that
jobs are at risk because the pound's high value, particularly against the
euro, was making UK investment decisions 'hard to predict'.  The news comes at
a time, The Observer notes, when Nissan, Toyota and Ford have all recently
admitted struggling in the current high exchange rate climate. Last month, BMW
cited sterling's strength as a reason for selling Rover, a move which
threatens to ravage the the West Midlands economy.

In January, Peugeot, the majority of whose 4,000 UK workers are employed in
Coventry, announced plans to produce a new Citro�n car there to build on the
success of its 206 model. The plant now produces the 206 model at the rate of
160,000 a year.  While the Peugeot source stopped short of saying this plan
was now on hold, he did say that components would probably be sourced abroad
rather than in Britain.



=====================
N E T H E R L A N D S
=====================

BAAN: $26m Deficit, Its Seventh Successive Quarterly Loss
---------------------------------------------------------
Officials at Baan, the Dutch software company, were last week in crisis
control mode after reporting dismal first-quarter figures.  Despite a $26m
deficit, its seventh successive quarterly loss, Rob Ruijter, its chief
financial officer, tells the Financial Times, customers have nothing to worry
about; the company is on a solid financial footing and aimed to be in the
black within a year.  


WORLD ONLINE: Investors Have Begun Legal Action Against the Company
-------------------------------------------------------------------
GOLDMAN SACHS could be banned from taking part in Japanese privatisations
after the country's Finance Ministry expressed serious concern about the
investment bank's role in the troubled flotation of World Online, the Dutch
Internet company, reports The Times.  A ban would exclude Goldman Sachs from
participating in the next stage of the flotation of NTT, the Japanese telecoms
giant, depriving it of massive fees.  Until now the bank has played a leading
role in the privatisation of NTT, one of the world's biggest telephone
companies with a turnover of $80 billion (�50.6 billion) a year. In the latest
stage of the NTT flotation banking advisers, including Goldman, shared fees of
more than �150 million.

Japan's Ministry of Finance, The Times relates, has demanded details from
Goldman Sachs about its participation in the World Online float, especially
after it was revealed that Nina Brink, the Dutch company's chairman, had sold
her 9.5 per cent stake in the company before the offer, at a discount to the
eventual float price.  Investors have begun legal action against the company,
Goldman Sachs and ABN Amro, the other bank involved in the offer, claiming
that the sale of the stake was not properly indentified in the listing
particulars. World Online shares have fallen sharply since flotation.

Late last week, a Goldman Sachs spokesman said the bank was puzzled by the
action of the Japanese ministry, but had complied with the request for
information.  He added: "The Amsterdam stock exchange has already said that
the listing particulars complied with the rules."  

Japanese regulators have already taken action against one US investment bank.
Last year, they banned CSFB from derivatives trading in Japan after employees
were found shredding documents relating to the violation of "firewall"
regulations separating securities and banking activities.


===========================
U N I T E D   K I N G D O M
===========================


BOO.COM: Troubled Company Loses Another Senior Executive
--------------------------------------------------------
From The Times, April 22, 2000:

BOO.COM, the start-up Internet fashion house that has already lost its finance
director and one of its three founders, has parted company with another senior
executive.

Luke Alvarez, vice-president and chief development officer, has resigned to
become chief operating officer of Emap Digital, the new division responsible
for the publisher's online brands.

The departure of Mr Alvarez comes just a month after Dean Hawkins stepped down
as finance director of Boo and moved on to Chello Broadband, a Dutch Internet
start-up company.

The month previously Patrik Hedelin, who had established the company with
Ernst Malmsten and Kajsa Leander, resigned in order to spend more time with
his family in Sweden.

The departures are certain to raise concern among Boo's financial backers, who
include Bernard Arnault, the French billionaire. It is also backed by the
Benetton family, Bain Capital, JP Morgan and Goldman Sachs.

The company's trading has seen a slower beginning than many expected. After
its late launch, it was left nursing piles of unsold autumn/winter stock and
held a sale - with prices 40 per cent off - to clear the backlog.
About the same time, it axed about 100 of its 400 staff to reduce costs.
Last month Mr Malmsten and Ms Leander moved to reassure their investors by
releasing selected financial data. This showed underlying sales of �430,000
for its first quarter. However, some analysts believed Boo had established a
target of �1.2 million for its fourth quarter.

The company, seen as the lastminute.com of retail, was set up with a �10
million advertising budget in November 1998. Mr Malmsten and Ms Leander had
founded previously an online bookstore.


BRADFORD & BINGLEY: Put Up for Sale
-----------------------------------
Bradford & Bingley, the building society which a year ago voted to convert to
plc status and list on the London Stock Exchange, may instead be put up for
sale, reports This is London.  Chief executive Christopher Rodrigues is
believed to be seeking approaches from organisations willing to buy the whole
business before trying to float it. American banks are reportedly interested
but British commercial banks are also in the frame.  

Market sources said the society, which appointed Goldman Sachs to oversee a
flotation planned later this year, is receptive to approaches to avoid the
embarrassing possibility that it could fail to attract the support required to
finalise conversion at a second demutualisation ballot in July. At least 75%
of savers and a majority of borrowers on a 50%-or-greater turnout of the
Bradford & Bingley's 3.5 million members must vote in favour of conversion in
July.

These targets have become harder to hit as original estimates of conversion
windfalls have plummeted to about �500 following a downgrading of bank shares.
A trade sale could restore the opportunity of a sizeable windfalls for
members.


BRITISH NUCLEAR: Company Operating at a Loss
--------------------------------------------
British Nuclear Fuels is planning to keep government proposals for
privatisation on track by rejigging its accounts so as to present a �62
million operating loss as a profit, says a report appearing in  The Observer.
In an interview with The Observer last week, chairman Hugh Collum expressed
his concern that operating losses give City investors a negative picture of
the company which could jeopardise his chances of delivering the Government's
Public Private Partnership plans by 2002.  Collum said he was asking auditors
about reclassifying income BNFL gets from interest on investments as operating
income.  His strategy will be highly controversial. Earlier this month, BNFL
was heavily criticised by Martin O'Neill, chairman of the influential commons
Trade and Industry Select committee, for producing unclear accounts. Last
week, BNFL finance director Ross Chiese was fired as part of a management and
safety shake-up unveiled by Collum and chief executive Norman Askew.

Collum said: 'From running the actual business, it's operating at a loss. The
way it looks at the moment, people may feel that everything is going
negative.' But he said BNFL gained interest from upfront payments for fuel
reprocessing - payments currently classified as financial income.
'You could argue that some of the interest you receive ought to be given
credit [as operating income],' he said.

The presentation of account was crucial, Collum said: 'This is our selling
document for the PPP.' He added that any changes would be within accounting
rules.


GROUCHO CLUB: Faces Hostile Bid
-------------------------------
If they refuse you entry at the door, don't despair: Buy the club, quips the
Financial Times.  

The Groucho Club, the cosy London watering hole of actors, writers and media
folk, faces the threat of a hostile takeover from Benjamin Fry, a hotel, bar
and restaurant developer aged 29.  Mr Fry, who is not a Groucho member but who
has friends to get him into the Soho club, wrote to the 350 shareholders on
Wednesday offering �10.2m for the business.

The Groucho, which is listed on Ofex, the unregulated market, has a share
register that reads like a media A-list. Shareholders include comedian Steve
Martin, novelist Salman Rushdie, newspaper editor Janet Street-Porter and Lord
Archer, the former mayoral hopeful and now aspiring West End actor.  

Mr Fry decided to appeal directly to the shareholders after discussions with
Tony Mackintosh, the Groucho chairman who controls a 17 per cent stake in the
company, fell through.

"I would like to be able to settle this thing amicably, but I am preparing to
go hostile," Mr Fry said yesterday, after he had sent his appeal to Groucho
shareholders asking them to call an EGM to consider his 230p a share offer. He
is offering a 50 per cent premium on the share price, which closed at 150p
yesterday. The company's stock traded heavily yesterday for the first time in
months.


HEYWOOD WILLIAMS: Underperforming UK Maker of PVC Windows & Doors
-----------------------------------------------------------------
Heywood Williams, the underperforming UK maker of PVC windows and doors, has
received an exploratory offer of about 300p a share from a venture capital
consortium. This would value the company at more than �240m ($379m), according
to the Financial Times.  Heywood shares will open on Tuesday at 211p. Last
week, they rose 17-1/2p, or 9 per cent, although it is not known whether the
bidders have been buying shares in the market.  Informed sources tell the FT
that the Manchester offices of two private equity firms have come together to
make the offer. The likeliest backers are two from HSBC Private Equity, 3i,
Barclays Private Equity, and Murray Johnstone Private Equity.

Bardox, the trade bidder that owns the Everest windows brand, is known to have
held discussions with the consortium about purchasing non-core assets, should
a deal emerge.

Warburg Dillon Read is advising the private equity backed offer. Deutsche
Bank, Heywood's long-standing adviser, is known to be counselling the building
and construction group.



LOOT: Scoot.com Granted Sole Negotiating Rights to Buy Company
--------------------------------------------------------------
Scoot.com, the internet and telephone directory services group, is in talks to
buy Loot, the UK classified advertising magazine, in the latest example of
online companies buying "bricks and mortar" competitors to gain access to
established groups of new subscribers.
Scoot, which is planning a pan-European network of online services, is
understood to have been granted sole negotiating rights to buy the Loot
business, which could be worth up to �200m ($318m).

Talks are still at an early stage and no deal is expected to be announced
before the end of May.  Scoot said earlier this year that it had received
additional funding of �100m from Vivendi, the French media and
telecommunications group which is a substantial shareholder in the internet
operator with just under 10 per cent of its share capital.

People familiar with Scoot said a deal to buy Loot could be partly funded
through a further equity injection from Vivendi at a significant premium to
the current market price. Scoot's shares closed at 157p on Thursday, valuing
it at �876m.

If the purchase is made, Scoot would join a growing list of internet operators
that have purchased non-internet competitors to boost their businesses.
Ebookers.com, the online travel agency, paid $1m for Oslo-based Geotours in
January and last year bought two travel agencies in Germany.

Scoot was set up in 1995 as Freepages and is already expanding throughout
Europe with the help of Vivendi. It is active in the UK, Belgium and the
Netherlands and will soon be launched in France, Germany, Italy, Spain and
Portugal. The launch in France is set for later this year and Scoot expects to
attract up to 250,000 subscribers within three years.

Scoot declined to comment to the FT on whether it was in talks to buy Loot. It
reported losses of �20.6m in the year to September 30. Turnover fell to �18.2m
against �21.3m.


PHILLIPS & DREW: Funds Still Suffering
--------------------------------------
Reuters reports that Phillips & Drew, the fund management firm whose bearish
investment chief Tony Dye left in March, has suffered another poor quarter,
the Daily Mail reported on Friday.  Phillips & Drew's flagship exempt fund,
which looks after 723 million pounds ($1.14 billion) of assets, fell 2.2
percent to the end of March, the newspaper reported, citing figures from
industry monitor CAPS.  Dye's departure from Phillips & Drew, a unit of Swiss
investment bank UBS AG , ended a 17 year career at the firm. Under his
guidance the fund had invested less heavily than many in new-economy stocks in
the telecoms, media and technology sectors.  The group's performance was below
an average fall of 0.4 percent for the industry, the Daily Mail report said.  
However, it said that funds managed by some rival firms fell even more than
Phillips & Drew. Abbey Life fell 4.1 percent, Standard Life by 3.8 percent,
Britannic by 3.4 percent and Prudential by 2.4 percent.


PHOENIX GROUP: Rescue Attempt was on the Brink 0f Collapse
----------------------------------------------------------
Phoenix Group, the consortium bidding to take over the Rover car company, on
Sunday night said that its rescue attempt was on the brink of collapse.
Failure would hand victory to Alchemy Partners, a rival venture capital bid,
and could lead to up to 19,000 redundancies at car plants and suppliers and in
the wider economy.

John Hemming, a Midlands businessman involved with the Phoenix bid, told the
Financial Times that talks last Thursday with BMW, Rover's parent company,
failed to extend the deadline beyond this week.  Without more time to do due
diligence on hundreds of millions of pounds of assets, the group could not
guarantee their overdraft and the bid would fail, Mr Hemming said.

"If we can't get the overdraft guaranteed, we won't be able to pay anyone, so
it would be not good at all," he said. "It's a non-starter unless we can get
the overdraft guaranteed in some form or another."

Unions were furious with BMW's failure to extend the deadline. "This is the
most important week in the history of Rover," said Tony Woodley, chief
automotive negotiator for the Transport and General Workers Union.
"It's unreasonable, unrealistic and impossible, especially bearing in mind
they have given Alchemy months."

Phoenix, a group of Rover dealers and suppliers led by former Rover chief
executive John Towers, cannot begin due diligence until BMW's exclusive deal
with Alchemy expires this week. It then has three days until the deadline for
bids, the FT says.  The process would normally take six weeks, but could be
done more quickly, said Mr Hemming. The overdraft was vital to secure �200m-
300m of finance offered to Phoenix, on top of a promise of �500m from BMW, he
said. "It's not an issue of capital, but cash flow," he said.



STAGECOACH HOLDINGS: Losses 3rd director, Possible Board Split
--------------------------------------------------------------
Stagecoach, the UK transport group, has lost another director amid growing
speculation about a possible board split over acquisitions and share buy-
backs, reports the Financial Times.  Jim Leng, chief executive of Laporte, the
chemicals group, resigned on Thursday, after only three months as a non-
executive director.  Mr Leng's sudden departure follows close on the heels of
the resignations of the chief executive and head of the US operation, and a
profits warning three weeks ago.  The share price halved to a low of 61p
following the warning about the UK bus and rail and Coach USA businesses.
The shares closed 1-1/4p higher at 64-1/2p on Thursday.  

Stagecoach issued a short statement that gave no reason for the resignation of
Mr Leng, who was only appointed to Stagecoach on January 11.  

Mr Leng, 53, is also a non-executive director of Pilkington, and a governor of
the National Institute of Economic and Social Research.  Analysts said the
loss of a non-executive director, although not normally serious, was a blow to
the company at a time when confidence in management was low.

"To be associated with Stagecoach at the moment doesn't do much for your CV,"
said one analyst. "It's not going to reflect well that another person is
going."

The latest resignation also reignited concern about a possible board split,
first raised when Mike Kinski resigned as chief executive last month.
The �1.2bn acquisition of Coach USA last summer and a �250m share buy-back -
approved at an extraordinary meeting also on Thursday - are thought to be
possible sources of tension.


VERSAILLES: 'Only �5m' for Versailles Creditors
-------------------------------------------
Versailles, the trade finance company that collapsed this year, booked �69m
($109m) of fictitious transactions, an investigation by PwC, the group's
receiver, has concluded, a report appearing in the Financial Times relates.  

PwC is expected to tell a meeting of creditors today that it will be able to
collect �5m or less of the �100m of debts recorded in the accounts as owed to
Versailles by customers.

The news will be an embarrassment to the big banks and the leading
institutions that helped establish Versailles as a stock market success.
"It was a bit of a shocker," said a person close to the case. "There has been
a misrepresentation of the business over a substantial period of time."
Versailles, which floated on the Alternative Investment Market in 1995, grew
to a market value of �630m by the time its shares were suspended in December
after the discovery of accounting irregularities.

The group attributed its rapid growth to heavy demand for its products -
essentially loans to companies that lacked the capital to develop. The
manufacturer would be able to buy raw materials it could not otherwise afford.
But PwC concluded after investigation that Versailles had been the subject of
a fraud. It issued a writ against Frederick Clough, finance director, alleging
breach of fiduciary duty, deceit and conspiracy to defraud.

The group was placed in receivership in January, two days after the Serious
Fraud Office announced it was launching an enquiry.

A report sent to creditors by PwC this month suggests Versailles engaged in
"cross-firing", whereby turnover was inflated artificially by a series of
circular payments between companies in the group.

PwC concludes that genuine transactions accounted for just �31m of the �100m
of recorded debts owed by clients for completed and part-finished deals.
The report says �8m of the �31m may have to be written off, most of it
representing internal invoices that cannot be converted to cash.
PwC says a further �13m relates to a transaction with Tiger Sports, an
Edinburgh-based designer and developer of sports goods that has itself been
the victim of a fraud.

PwC says Tiger Sports has been left with a "significant amount" of stock,
understood to be golf equipment, without a final customer who will accept
delivery or pay for it.

Mark Walker, a director of Tiger Sports, declined to discuss the alleged
fraud, adding that his company was not in receivership or liquidation.
Versailles' main creditors - Barclays Bank, National Westminster Bank and
Royal Bank of Scotland - are between them owed �70.5m.



S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter Europe is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ, and Beard Group, Inc.,
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Copyright 2000.  All rights reserved.  ISSN 1529-2754.

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