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/raid1/www/Hosts/bankrupt/TCREUR_Public/000530.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, May 30, 2000, Vol. 1, No. 16 Headlines G E R M A N Y LURGI AG: Loss-Making Company Needs to Restructure M O L D O V A TIREX-PETROL: Stations are Either Frozen or Under Liquidation N E T H E R L A N D S BAAN: Analysts Paint a Gloomy Picture of Software Firm U N I T E D K I N G DO M AIRTOURS: Loss Pushes Deficit to o62 Million ALUGRAPHICS LTD: Notice of Creditors Meeting BELL GROUP: Shares Collapse from 192.5p to 99p BOO.COM: Industry Learns Reasons for Retailer's Fall CLIFFE HOLDINGS: Notice of Creditors Meeting CLIFFE CONSTRUCTION: Notice of Creditors Meeting CLIFFE PLANT: Notice of Creditors Meeting EGG INTERNETBANK: Losses to Continue Until Next Year FREECOM: Cries, Shares Suspended Lost Over 39% of Value LIGHTFOOT INTERNATIONAL: Notice of Creditors' Meeting MG FOUNDRY: Notice of Creditors' Meeting MILLENIUM DOME: One of Country's Biggest Financial Disaster NCK LTD: Notice of Creditors Meeting NEWTON CONSTRUCT: Notice of Creditors Meeting SHALIBANE: Reports Major Financial Difficulties STAFFORDSHIRE COMM: Notice of Creditors' Meeting STOREHOUSE PLC.: Disastrous Financial Results VODAFONE AIRTOUCH: Telecom's Growing Debt Burden ============= G E R M A N Y ============= LURGI AG: Loss-Making Company Needs to Restructure -------------------------------------------------- Handelsblatt English Summary, Friday, 26 May 2000 Germany's MG Technologies AG, formerly known as Metallgesellschaft AG, on Thursday reported unexpected losses at its plant-engineering subsidiary Lurgi AG and announced it would carry out far-reaching restructuring at the unit. MG Technologies said that Lurgi incurred DM55m loss in the first half of the 2000 business year, ended March 31. Neukirchen said there were a number of reasons behind Lurgi's losses. The uncertain situation on Germany's liberalized electricity market had led to a drop in incoming orders - from 1bn euros in the first half of 1998/99 to 734m euros in the reporting period. Furthermore, the plant-engineering sector had been subject to severe pressure on prices, he said. In addition, MG Technologies discovered major accounting discrepancies at steel-construction unit Stahlbau Plauen, which is 60%-owned by Lurgi subsidiary Lentjes Group. But Neukirchen said that "from a present perspective, the past financial manipulations will not have any significant impact on MG's financial statements." Neukirchen said he expected the situation at Lurgi to stabilize in the second half, but he still forecast an end-of-year loss. He said a restructuring program would be initiated, including a reduction in Lurgi's workforce by 1,200 to around 5,000 by the end of the year. ============= M O L D O V A ============= TIREX-PETROL: For Privatisation, Stations are Either Frozen or Under Liquidation ------------------------------------------- BBC Summary of World Broadcasts May 26, 2000 Tirex-Petrol, a big state-run fuel importing and trading company, has been put for a privatization and investment tender. According to the Department of Privatization and State Property Administration, the state is selling all its shares in the company - 81.2 per cent. The contest will be held in one stage, and the deadline for submitting bids is 16th June. Tirex-Petrol is the former monopolist on Moldova's oil product market, but presently its presence on it has slid to 10-12 per cent. Of its 52 gasoline filling stations across the republic, only 36 are working, and the rest are either frozen or are subject to liquidation. Its statutory fund equals 41.2m lei. Interest in purchasing the company is being shown by potential investors from Russia, Romania, Germany and some other countries. Last year, the government was going to pass the controlling parcel over to Romanian power suppliers in payment for the electricity debt. Also, readiness to purchase the package was expressed by Mabanaft company of Germany - one of Tirex's main creditors. Tirex-Petrol owes about 7m dollars to the Germans. ===================== N E T H E R L A N D S ===================== BAAN: Analysts Paint a Gloomy Picture of Software Firm ------------------------------------------------------ Financial Times May 25, 2000 Whatever deal is struck, analysts painted a gloomy picture of Baan's prospects. Jan Coen Balt, from Stroeve, the Dutch stockbrokers, said: "The bulk of its value is Aurum. Baan does not have any prospects whatsoever on its own. Whatever happens, it very much looks like Baan as we know will not be here after whatever deal they make." Baan, Europe's second biggest business software company after SAP, of Germany, reported its seventh successive loss-making quarter in April. ========================== U N I T E D K I N G DO M ========================== AIRTOURS: Loss Pushes Deficit to o62 Million -------------------------------------------- The Times May 26, 2000 AIRTOURS, the British travel group, yesterday revealed the full scale of the millennium holiday disaster with a o61.9 million loss in the opening half of the year. The result, although within analysts' expectations, compared with a loss of just o27.3 million in the previous first half, when travel companies traditionally trade in the red. The deficit included about o15 million of losses from the millennium trading period, which was marred by heavy discounting, and another o14.3 million from Airtours' expansion in the German market. Exceptional costs of o13.4 million, largely related to restructuring and e-commerce investment, produced a bottomline loss before tax of o75.3 million. Revenue in the period rose 13 per cent to o1.43 billion and the interim dividend was 1.8p a share (1.65p). Tim Byrne, managing director, said the millennium period had been tough for all travel operators. ALUGRAPHICS LTD: Notice of Creditors Meeting -------------------------------------------- Insolvency UK Company Name : Alugraphics Ltd Other name : The Friars Press IA 1986 Section : 98 Creditors Meeting Time : 11.00 am Meeting date : 01/06/00 Meeting address : 332 Brighton Road Meeting City Code : Croydon CR2 6AJ Authorised by : T J Brown Director 04/05/00 Last day for proxy: 31/05/00 Proxy address : 332 Brighton Road Croydon CR2 Liquidators : Firm Name : Neville Eckley Address : 332 Brighton Road Croydon CR2 6AJ BELL GROUP: Shares Collapse from 192.5p to 99p ---------------------------------------------- Citywire May 25, 2000 Security services provider Bell Group saw its share price halved after it warned that it had lost money in April. Chief executive Pat Curran said the month's loss meant results for the first four months of this year were 'significantly below market expectations'. Turnover was down 20% on a comparable basis compared with the same four months last year. Curran said: 'This is a reflection of the worse than expected slowdown in sales due to the restructuring and consolidation over the last six months in the group's UK market and a continued delay in orders following the intensive dealing with Y2K issues in late 1999.' He admitted that profit margins had been squeezed. The shares collapsed from 192.5p to 99p early this afternoon. They had already slumped from 450p in mid-March. Curran said that orders are now returning to expected levels and new business is being generated but 'the full effects will not be realised until later this year and into 2001'. BOO.COM: Industry Learns Reasons for Retailer's Fall ---------------------------------------------------- The Guardian May 25, 2000 Since last week's collapse of Boo.com, the prophets of doom have been out in force predicting the end of the internet is nigh and are taking bets on where the virtual grim reaper will strike next. The announcement on Monday that online information provider Netimperative is calling in the receivers only whetted their appetite for even more culling. But Boo's fate was little surprise for senior, wiser figures within the e-world. It's like any business in any sector, if you start off with a fundamentally flawed business model and manage it badly it's highly likely you will go out of business, insists chief executive of Just-sites.com, Allan Davies. But what was flawed about the business model? After all, when Boo.com was launched it was feted in many parts of the media as a revolution in e-commerce. 'I am amazed that any investor would have believed the stories about this business,' says Davies. He says it was like deciding to open a clothes store on the high street with M&S on one side and C&A on the other, then selling a reduced range of goods at the same price and making it very difficult to get in the front door. He admits his comments are more acidic than most, fuelled by the fact that he has spent the last six months working hard to raise money from venture capitalists, despite the fact his online business is making money. Just-sites.com, is in the more fashionable business to business (B2B) sector and provides information for companies on anything from market research to the clothing industry. Davies suggests there are lots of online businesses based on solid business propositions, but they do not grab the headlines. Visiting the Boo.com we site now is a sad experience, which highlights the disappointment of its brief but notorious life. Boo.com generated huge expectations but failed to fulfill them: in the About Boo section, the site still predicts it will become the world's leading online retailer of fashion and sportswear, and create an awesome virtual shopping experience surpassing anything else on the web. Is the merciless criticism justified? Boo has been pilloried, says independent internet consultant, Naunton Dickins. But that is nothing unusual. There are companies going belly up every day of the week. The only difference is Boo made so much noise that everyone wanted it to fail. It was young, attractive , had huge amounts of money and great dreams and the public was keen to see the first public internet failure. Internet analysts argue that Boo was flawed because it could not offer discounted products, its range was limited, and the snazzy graphics meant pages took ages to download. The service was designed for computers with 56K modems. Without one, you suffered. The company was hugely over-ambitious in its attempt to launch in 18 countries simultaneously and burned cash at rate guaranteed to make any traditional bank manager choke on his lunch. Another criticism was that Boo concentrated too much on the glamour side of PR and marketing - including lavish parties around the world - but ignored the boring and essential stuff: ensuring you can efficiently fulfil your customers' orders. Management consultants will probably present Boo as a classic example of how not to launch and run an internet company. But it is easy to put the boot in and ignore any positive contribution Boo could have made to the development of the online industry. 'I think its most positive contribution is to press the re-set button on people's thinking about investing in internet companies,' says Davies. 'There is a lot of garbage talked about the dot.com businesses. The best thing to come out of this will be that people will be much more aware that fantasy business plans are things of the past. No one is going to invest in silly business ideas any more.' News of Boo's collapse spread panic through the new dot.coms. Morale-raising internal meetings have been held at some, and PR companies have rushed out press releases emphasising the strong business credentials of the companies they represent. Simon Steward, vice president of the venture capitalist company, Think Ventures, says Boo has taught investors a lot. Now they should know they have to invest in high quality businesses because the perils of unproven internet ventures have been made quite clear. He explains: 'You need to be looking for experienced people to operate online businesses. You need to be looking for real talent and well-argued and well -reasoned business models.' In the light of the sudden departure of Miss Boo, many industry insiders are suggesting that traditional bricks and mortar companies are starting to strike back. Traditional players like M&S can watch pioneers like Boo fail and learn from them. They can move more gradually as they have more secure funding, and they can also move at the pace of their customers as they become more used to the idea of shopping online. Bricks and mortar companies have an advantage because they have a brand. People are able to guess the web address and the brand gives some security and trust. E-commerce begins with silicon and ends with trust. They also have a reassuring high street presence where customers can go if they have a problem. Neither do they have to spend millions on brand recognition in each country. New technology companies are realising that they can learn a lot from old style land-based businesses in the retail sector. Last year Amazon was rumoured to be in the process of striking deals which would have seen Amazon -branded bookshops in supermarkets. Recently ThinkNatural.com, the health and nutrition e-tailer, attracted pounds 3 million worth of investment from Kingfisher, the retail group which owns the Superdrug and Woolworth chains. In chatrooms on business sites, directors of established companies have been reiterating that the internet is no different to any other form of business and needs to follow the same rules. They charged Boo with making the basic business error of not ensuring it had adequate demand and supply to survive its short term start up costs. Despite Boo's high profile failure, most senior financial analysts remain utterly convinced that e-commerce is the future. 'I think the speed of the transition to the internet has been over-hyped but it will inevitably have a huge impact,' explains Steward. The internet is fundamentally altering how we communicate: the revolution has just started. 'In any promising new market,' he adds, 'there is a natural tendency for expectations, investments and prices to overshoot.' The growth of the internet is being driven now by the introduction of interactive TV and mobile phones that will all create new markets and new waves of activity. Despite the fact that Boo crashed in the highly-competitive clothing sector, the vast majority of analysts do not think selling clothes on the internet is doomed. They say many people are still stuck in the mindset of a traditional retail environment, but forecast that this will change. For example, it is suggested that people could go shopping offline and take photographs of themselves wearing an outfit. After showing it to their friends, they might make the actual purchase online because it is more convenient. Some e-commerce directors argue that men can be very conservative in their shopping habits, and could be persuaded to buy online for a reduced price as they know what they like and usually find shopping boring. But it is still not all over for Boo. With the liquidators trying to auction off the company's remains, some people still harbour hopes for Europe's first high profile internet casualty. 'Boo is probably the biggest known internet brand now,' says Naunton Dickins, an independent internet consultant. 'Everyone knows about Boo.com. I have a weird feeling they might rise again.' CLIFFE HOLDINGS: Notice of Creditors Meeting -------------------------------------------- Insolvency UK Company Name : Cliffe (Holdings) Ltd IA 1986 Section : 98 Creditors Meeting Time : 12.00 pm Meeting date : 01/06/00 Meeting address : 8 South Square Grays Inn Meeting City Code : London WC1R 5EU Authorised by : D A Fry Director 05/05/00 Liquidators Firm Name : Begbies Traynor Address : 6 Raymond Buildings Grays Inn London WC1R 5BP CLIFFE CONSTRUCTION: Notice of Creditors Meeting ------------------------------------------------ Insolvency UK Company Name : Cliffe Construction Ltd Other name: IA 1986 Section : 98 Creditors Meeting Time : 12.00 pm Meeting date : 01/06/00 Meeting address : 8 South Square Grays Inn Meeting City Code : London WC1R 5EU Authorised by : D A Fry Director 05/05/00 Liquidators Firm Name : Begbies Traynor Address : 6 Raymond Buildings Grays Inn London WC1R 5BP CLIFFE PLANT: Notice of Creditors Meeting ----------------------------------------- Insolvency UK Company Name : Cliffe Plant Ltd IA 1986 Section : 98 Creditors Meeting Time : 12.00 pm Meeting date : 01/06/00 Meeting address : 8 South Square Grays Inn Meeting City Code : London WC1R 5EU Authorised by : D A Fry Director 05/05/00 Liquidators Firm Name : Begbies Traynor Address : 6 Raymond Buildings Grays Inn London WC1R 5BP EGG INTERNETBANK: Losses to Continue Until Next Year ---------------------------------------------------- The Guardian May 26, 2000 Mike Harris, the founder of Egg, and his senior colleagues, will between them receive shares worth o6.3m and options of more than o8.6m in shares when the loss-making banking unit of the Prudential is floated next month. But their potential payouts might have been higher had it not been for cooling demand for dot.com stocks which has slashed the potential value of Egg from o2bn two weeks ago to between o1.1 and o1.4bn. The 170-page prospectus shows that Egg is facing opposition from a design company over its attempts to register its name as a trade mark. It also admits that Egg will continue to make losses until the end of next year and that the savings account is only ever likely to operate on a break-even basis. Analysts said this meant that Egg needed to rely on selling more than one product to its savings customers to make profits and Mr Harris admitted yesterday that over the next three years 25% of its profits were likely to be derived from its online broking service. FREECOM: Cries, Shares Suspended Lost Over 39% of Value ------------------------------------------- CITYWIRE RESEARCH REPORT May 25, 2000 Freecom shares came back from suspension this morning and have already lost over 39% of their value with a fall to 105p, an all- time low well below the issue price. The fall comes after an announcement freecom.net made yesterday, after the market closed. It said the companyies agreed offer for rival Oneview.net, was based on miscounted customer numbers. The confusion arose because of a misunderstanding over what constituted a customer. Oneview was of the opinion every website it hosted counted as a customer while freecom worked on the assumption a customer was a client who used the Oneview service for one or more websites. The consequence of this was the 5800 customers Oneview claimed it had was only 4000 customers according to Freecom's definition - a 31% discrepancy. The realisation struck after the deal had been completed. Freecom's management confirmed the situation over the weekend but took until yesterday to agree with Oneview's directors, how to resolve the problem. From the market's reaction it would seem this was not achieved without damage to the credibility of freecom's management. The agreement reached requires three of Oneview's directors - Stuart Lawley, chairman; Steven Salmon, managing director; and Stephen Winyard, sales and marketing director - to resign. In addition they will return 9 million of the freecom shares they are to receive in advance of the acquisition. These will be placed during the year to raise funds. The agreement means the acquisition will cost freecom 27% less than under the original terms. But is this outcome fair? Bob Morton, the company's non-executive chairman, told citywire.co.uk last night: 'What you have to do is to come to a pragmatic solution to avoid legal battles that could result in huge costs where the only winners are the lawyers. 'Neither party can be happy in the circumstances. Unfortunately it's not a win-win situation: it's a lose-lose situation. What's important is to draw a line and move forward. There is a lot of work to do integrating the new businesses and I want management to be focused on that.' LIGHTFOOT INTERNATIONAL: Notice of Creditors' Meeting ----------------------------------------------------- Insolvency UK Company Name : Lightfoot International Ltd IA 1986 Section : 98 Creditors Meeting Time : 11.30 am Meeting date : 01/06/00 Meeting address : Insol House 39 Station Road Meeting City Code : Lutterworth LE17 4AP Authorised by : S Bunting Director 03/05/00 Last day for proxy : 31/05/00 Proxy address : Insol House 39 Station Road Lutterworth LE17 4AP Liquidators Firm Name : F A Simms & Partners Address : Insol House 39 Station Road Lutterworth LE17 4AP MG FOUNDRY: Notice of Creditors' Meeting ---------------------------------------- Insolvency UK Company Name : M G Foundry Ltd IA 1986 Section : 98 Creditors Meeting Time : 11.00 am Meeting date : 01/06/00 Meeting address : Nottingham Gateway Hotel Nuthall Road Nottingham NG8 6AZ Authorised by : G Burton Director 05/05/00 Liquidators Firm Name : Panos Eliades Franklin & Co Address : 6 Bloomsbury Square London WC1A 2LP MILLENIUM DOME: One of Country's Biggest Financial Disaster ------------------------------------------- Electronic Telegraph May 25, 2000 Former Millenium Dome chief Jennifer Page yesterday came under heavy fire from disaffected policyholders at re-elections to the board of Equitable Life in a fiery annual meeting in London. Some members questioned the credibility of Ms Page, who has been a director of the beleaguered mutual life assurer since 1994, in the light of what they claim as the dismal failure of the Dome project. One of about 600 members present said: "I consider it inappropriate that someone who was responsible for the Dome, one of the country's biggest financial disasters, should be responsible for my investment. It is entirely wrong and you are laying yourself open for yet another public relations disaster." Equitable has been unable to throw off long-standing controversy over its treatment of 90,000 members with guarenteed annuities. The schemes, sold in the 1970s and 1980s, promised to pay a minimum pension worth about 11pc of the fund. Equitable cut bonus rates to cover costs resulting in a legal battle with policyholders. The case is now with the House of Lords. Another policyholder said: "I would like to hear why Ms Page thinks she should be a director of this organisation given that the Dome, which she was closely involved with, is losing money hand over fist?" Equitable president John Sclater first sought to deflect personal criticism from Ms Page by looking to distance her from the decision to take the Dome job. He claimed she"was strong-armed by the Government into creating the Dome", which she produced "as requested on the day". Ms Page said: "I am a public servant and I am used to being asked to do difficult jobs. I do not believe I did anything which deserves criticism of my judgment and integrity." Despite the misgivings of some members, Ms Page is set to be re-elected after a postal ballot saw 342,000 votes in favour and just 145,000 against. The number of favourable votes for Ms Page was significantly lower than for four fellow directors, who all received in excess of 400,000. A bid by rebel member Edward Doogan to win a seat on the board failed. He received 240,000 postal votes in favour and 246,000 against. NCK LTD: Notice of Creditors Meeting ------------------------------------ Insolvency UK Company Name : NCK Ltd IA 1986 Section : 98 Creditors Meeting Time : 12.00 pm Meeting date : 01/06/00 Meeting address : 8 South Square Grays Inn Meeting City Code : London WC1R 5EU Authorised by : D A Fry Director 05/05/00 Liquidators Firm Name : Begbies Traynor Address : 6 Raymond Buildings Grays Inn London WC1R 5BP NEWTON CONSTRUCT: Notice of Creditors Meeting --------------------------------------------- Insolvency UK Company Name : Newton Construct & Manage Serv Ltd IA 1986 Section : 98 Creditors Meeting Time : 10.30 am Meeting date : 01/06/00 Meeting address : The Hilton Hotel East Midlands Airport Meeting City Code : Castle Donnington DE74 2YW Authorised by : Joint Administrator Last day for proxy : 31/05/00 Proxy address : 56 High Pavement Nottingham NG1 1HX Liquidators Firm Name : Cooper-Parry Address : 56 High Pavement Nottingham NG1 1HX SHALIBANE: Reports Major Financial Difficulties ----------------------------------------------- Citywire May 25, 2000 Shalibane shareholders were treated to a full and frank confession of the AIM-quoted company's ills today. Things seem to have got worse rather than better over the past 12 months. Chairman J Grimond said: '1999 was a very difficult year for the group. Management problems and poor customer relations were a major factor in the poor performance.' Shareholders at the car components manufacturer already knew that there were problems with customers in 1998. Grimond said today: 'These problems proved more serious than originally thought and led to a serious loss of business from a number of major customers. These losses started during the first half of 1999 but the full effects were not felt until the second half. 'The loss of business over that expected meant that even further reorganisation and redundancies were necessary and that further asset write-offs were needed. Reducing revenues and increasing losses led to serious cash difficulties. In turn this caused major production difficulties as supplies became difficult,' Shalibane lost o5.8 million in the 12 months to 31 December compared with a profit of o419,000 in 1988. The latest figure results from lost sales, production inefficiency, reorganisation, redundancies and asset write-offs. The loss means that there are no distributable reserves and therefore no dividend. The shares were unchanged this morning at 19.5p. They peaked at over 90p two years ago. Shalibane pointed out that no directors serving at the end of 1998 remain on the board. STAFFORDSHIRE COMM: Notice of Creditors' Meeting ------------------------------------------------ Insolvency UK Company Name : Staffordshire Comm Warehousing Ltd IA 1986 Section : 98 Creditors Meeting Time : 11.30 am Meeting date : 01/06/00 Meeting address : North Stafford Hotel Station Road Meeting City Code : Stoke-on-Trent Authorised by : S Eardley Director 11/05/00 Liquidators : Nola Barber Firm Name : Lines Henry Address : 27 The Downs Altrincham WA14 2QD STOREHOUSE PLC.: Disastrous Financial Results ------------------------------------------- Citywire May 25, 2000 Retailer Storehouse, owner of Mothercare, this morning reported a spectacular but not unexpected 93% profit collapse, blaming price deflation, increasing costs and new competition. Pre-tax profit for the year ended 1 April was o7 million, compared to o98.6 million last year. Turnover decreased only marginally to o1.266 billion, compared with 1999's o1.328 billion. No final dividend will be paid, meaning no dividend has been paid all year. Last year, a final dividend of 5.4p brought to 9.1p the year's total dividend. VODAFONE AIRTOUCH: Telecom's Growing Debt Burden ------------------------------------------------ Financial Times May 26, 2000 Six months on from Vodafone's epic bid for Mannesmann, cracks are starting to appear in the new group's ability to meet mounting spending commitments. Despite paying for the Pounds 113bn acquisition with shares rather than cash, Vodafone inherited debts that have swollen group borrowings to an estimated Pounds 20bn. These would be difficult enough to service at the best of times. Full-year results due on Tuesday are expected to reveal operating profits last year of just Pounds 2.64bn - less than twice the likely annual interest bill. Profits from Mannesmann should reduce the burden next year, but any immediate attempt to raise more money on the debt markets could meet fierce opposition from existing bond holders already worried about interest cover. Vodafone has also been hit by the general collapse in telecommunications and technology share prices. Its shares have fallen a third since the post-Mannesmann peak in March, and remain too volatile to consider issuing any new paper in the near future. All this comes as the cost of maintaining Vodafone's dominant position among international mobile operators has leapt beyond expectations. The auction of third generation mobile phone licences in the UK forced the company to pay Pounds 6bn just to stay ahead in its domestic market. Another Pounds 2bn is probably needed to build the network, and all this money will be required long before the anticipated increases in profitability per customer promised by the next generation of services. The success of the UK auction in raising money for the Treasury has also encouraged other governments to consider the true value of their own licences. Multiplied across Vodafone's vast portfolio of international assets, the cost of bidding for all the necessary licences and meeting the infrastructure costs could reach a total of Pounds 58bn, according to some analysts. Not all the money will be needed at once, particularly in the US where radio spectrum has not yet been allocated for third generation services. Other analysts estimate total spending will be nearer Euros 52bn (Pounds 32bn). To set against that, Vodafone also has plenty of valuable assets. It has just sold Mannesmann's engineering interests for Euros 9.4bn, despite previously promising to demerge the business as an independent entity, and is thought to have raised about Euros 7.5bn by selling its stake in France's Cegetel. Further partial sales of the fixed-line telecom businesses inherited from Mannesmann look inevitable. However, the most valuable assets may require calmer equity markets before any cash can be unlocked. Yesterday, Vodafone decided to delay the partial flotation of its Pacific business based in Australia, which was expected to raise up to Pounds 4.6bn, until the recent downturn. An initial public offering of the US joint venture Verizon - worth perhaps Pounds 17bn if 20 per cent was sold - looks equally distant. This leaves Orange. Vodafone acquired its smaller UK rival as a result of Mannesmann's earlier takeover bid last autumn, and is now forced to dispose of Orange for regulatory reasons. Once again, a demerger had been promised, but Vodafone argues circumstances have changed due to the higher cost of licences and looks likely to sell Orange to France Telecom for a mixture of cash and shares. Anything less than Pounds 20bn in cash could leave a serious hole. "Without the sale of Orange, they would be pushing it tight and they would probably need to go back to the market. You wouldn't want do that at the moment," warns Steve Trowbridge, telecoms analyst at Teather & Greenwood, the stockbrokers. Although constrained from giving too many details due to its imminent results, Vodafone is confident of its ability to juggle finances whatever the state of the capital markets. The enormous range of assets and potential disposals give it a degree of flexibility not available to smaller telecoms operators in a similar bind. The share price has recovered sharply this week as investors prepare for the imminent offer from France Telecom, and healthy results on Tuesday could further strengthen its position. James Ross, telecoms analyst at ABN Amro, is upbeat about Vodafone's likely operating performance but worried about the uncertainty caused by its cash squeeze. "I am sure they will find a way to meet these fairly onerous funding requirements, but the market may have to adjust to a great deal more uncertainty in the short term." Given Vodafone's past success at pulling off daring deals such as Mannesmann, the odds are probably still in its favour. Nonetheless, Chris Gent, Vodafone's smooth-talking chief executive, looks once again to be flying by the seat of his pin- striped pants. 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., Washington, DC. Peter A. Chapman and Sharon Cuarto, Editors. Copyright 2000. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is $575 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 301/951-6400. * * * End of Transmission * * *