/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010316.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 Friday, March 16, 2001, Vol. 2, No. 53 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Accused of Gross Mismanagement LERNOUT & HAUSPIE: Judge Seeks Deal on Trustee Issue UNITED FOOD: Shareholders Propose Recovery Plan * F R A N C E * LA BORDE: Cattle Trader Goes Into Receivership * G E R M A N Y * DAIMLERCHRYSLER AG: Chrysler Group May Dump Suppliers PHILIPP HOLZMANN: Lists Reasons for Its Failure * H U N G A R Y * MALEV AIRLINES: Budapest Looks at Cash, Restructuring for Malev * I R E L A N D * FORMUS BROADBAND: Formus Communications to Close Down Unit * P O L A N D * FIAT AUTO: Subsidiary to Axe 310 Jobs * S P A I N * ARESBANK: To Sell Agribetica at 30 Million Euro SINTEL: Employment Directorate Approves Job Cuts * S W E D E N * LM ERICSSON: CEO Under Fire After Shares Plunge * S W I T Z E R L A N D * SAIRGROUP: Board Says Swissair Cannot Stay Independent * U N I T E D K I N G D O M * CIRO CITTERIO: Collapses Into Administration CORUS GROUP: Committee Attacks Corus Strategy E-DISTRICT.NET: Suspends Managers for Financial Irregularities EQUITABLE LIFE: To Set Second Meeting LASTMINUTE.COM: Sets Tough Targets RAILTRACK GROUP: Shares Fall After More Fund Request ============= B E L G I U M ============= LERNOUT & HAUSPIE: Accused of Gross Mismanagement ------------------------------------------------- Dragon Systems Inc., a company that Lernout & Hauspie Speech Products NV purchased months before going bankrupt, is said to be grossly mismanaged and needs the protection of a bankruptcy trustee, according to a Dow Jones' March 14 report, citing Co- founder Janet Baker. Baker told a federal judge that highly skilled former Dragon employees have left L&H, an evidence of gross mismanagement of her former company. She also claimed that Dragon Systems was fundamentally financially sound when L&H acquired it. An L&H attorney attempted to show, however, that the former Dragon Systems Inc. had significant problems before Lernout acquired it in a stock deal last June. L&H's $60 million debtor-in-possession financing could be in jeopardy if the judge appoints a trustee to oversee Dragon assets, the news agency added. Late last year, L&H filed for bankruptcy protection in the U.S. and Belgium after an accounting scandal that has prompted government investigations in both countries, a management shakeup and major layoffs. LERNOUT & HAUSPIE: Judge Seeks Deal on Trustee Issue ---------------------------------------------------- U.S. Bankruptcy Judge Judith Wizmur has urged lawyers of Lernout & Hauspie Speech Products NV (L&H), its creditors and Dragon Systems Inc.'s former majority shareholders, to settle amicably the question of whether to appoint a trustee to safeguard the assets of L&H Holdings USA Inc., Reuters in its March 14 edition said. Former shareholders Janet and James Baker have asked that a trustee be appointed. They claimed that L&H has grossly mismanaged Dragon Systems Inc., partly by using its assets as security for $60 million of debtor-in-possession financing that L&H needs to keep its operations afloat. Wizmur is urging all sides to consider possibilities that might give the Bakers representation on L&H's creditors committee, or establish a separate panel for the former Dragon shareholders that could have a say in bankruptcy proceedings. The parent company of U.S.-based Dictaphone ran into financial trouble last year when an internal audit showed that sales figures from 1998 through the first half of 2000 had been overstated by as much as $277 million. UNITED FOOD: Shareholders Propose Recovery Plan ----------------------------------------------- Shareholders of United Food at Heppignies/Fleurus, which specializes in the preparation and processing of crab-based products, have filed for creditors' composition for the company in a bid to stave off bankruptcy, the March 10 edition of L'Echo said. The recovery plan provides for the two minority shareholders, Floragro/Floridienne (25%) and SRIW (22%) to inject EUR 200,000 each, and for holding company Euro M & F and a new Swiss shareholder from the crab sector, to provide a cash injection of EUR 500,000. Sambrinvest, which has a seat on the United Food board, does not want to contribute to the rescue plan beyond its initial BFr 30 million loan. =========== F R A N C E =========== LA BORDE: Cattle Trader Goes Into Receivership ---------------------------------------------- Cattle trader La Borde has gone into receivership, affecting up to 500 cattle farmers, traders and feed manufacturers, according to La Tribune & World Reporter in its March 13 edition. The company's books have been seized following the filing of a lawsuit for fraud at the agricultural section of the Allier court. La Borde has reported liabilities of at least FFr20 million ============= G E R M A N Y ============= DAIMLERCHRYSLER AG: Chrysler Group May Dump Suppliers ----------------------------------------------------- DaimlerChrysler AG's Chrysler Group will dump about half of its suppliers who are unwilling to bargain for lower costs, AP Online in its March 14 edition said. The suppliers' names were not disclosed. According to chief operating officer Wolfgang Bernhard, lower prices from suppliers are as necessary as plant closings and job cuts if Chrysler is to survive. Many suppliers complained that the cuts demanded in December were too drastic and too sudden. Chrysler countered that it was paying more than Ford and General Motors for identical parts. PHILIPP HOLZMANN: Lists Reasons for Its Failure ----------------------------------------------- Construction company Philipp Holzmann, which announced a loss E50 million ($45.7 million), has set out a litany of reasons for the failure, the Financial Times in its Wednesday edition said. The principal cause of its collapse was the ongoing recession in the domestic construction market that led to a shortfall in productivity. Second, a planned asset sale to lending banks did not materialize because of disagreements over valuations. Consequently, Holzmann could not pay off liabilities, with additional interest charges. The group also faced higher than expected redundancy costs when it laid off more workers. ============= H U N G A R Y ============= MALEV AIRLINES: Budapest Looks at Cash, Restructuring for Malev --------------------------------------------------------------- The government's decision whether to restructure Malev Airlines or give a cash injection will be announced next week, Agence France-Presse in its March 13 report said. Budapest will decide between the liquidation of Malev, the creation of a new firm, or the restructuring of the firm that already exists. Liquidation would cost 30 to 35 billion forints (130 million euros, 119 million dollars), and a new company around 50 billion forints more. The ministry for the economy will examine the proposals in detail, two months after a privatization attempt failed because all potential investors-- Lufthansa, Air France, British Airways, Swissair and KLM-- pulled out before the call for offers closed. ============= I R E L A N D ============= FORMUS BROADBAND: Formus Communications to Close Down Unit ---------------------------------------------------------- Formus Broadband will cease its operations, following its parent's decision to restructure its European operations, according to The Irish Times' March 14 report. It is still unclear, though, whether the company will be wound up or bought out. Industry sources said that Formus has been in talks with Broadnet aimed to secure at least 3.5 million pounds (euro6.35 million), which it was believed the firm needed to keep afloat this year after its parent, U.S.-based Formus Communications, decided it would no longer fund the Irish operation. Formus' board has decided that the company could not be saved, so is its 71 staff. =========== P O L A N D =========== FIAT AUTO: Subsidiary to Axe 310 Jobs ------------------------------------- Delfo Polska said it would lay off 310 workers in May due to a radical drop in orders from its principal client, Fiat Auto Poland, Agence France Presse in its March 14 edition said. Fiat Auto Poland scaled back production 15% last year in response to a 28% drop in its sales in Poland, but was forced to announce last month layoffs of 750 workers. ========= S P A I N ========= ARESBANK: To Sell Agribetica at 30 Million Euro ----------------------------------------------- Aresbank and Hispano-Arab bank 3i will sell 100% of the capital of Agribetica, the leading Spanish company which bottles unbranded olive oil, for 30 million euros (Pta5 billion), according to a March 13 report by Expansion & World Reporter. Aresbank, which is on course for liquidation, acquired 53% of Agribetica in June 1999. 3i holds a 16% in Agribetica, whose directors control the remaining 31% of capital. Agribetica has three olive oil and sunflower oil refineries, a bottling plant, a cogeneration plant and a vegetable oil extraction plant. The company, which has equity of 12 million euros (Pta2 billion), made losses in 2000. SINTEL: Employment Directorate Approves Job Cuts ------------------------------------------------ The Spanish directorate general for employment on Tuesday partially approved the redundancy plan of telecom network installation company Sintel, which is currently in temporary receivership, the El Mundo & World Reporter's March 13 report said. The directorate approved the termination of the contracts of 796 of the company's 1,818 employees. The new owners had applied to make 1,201 employees redundant. Sintel has debts of more than Pta11 billion. =========== S W E D E N =========== LM ERICSSON: CEO Under Fire After Shares Plunge ----------------------------------------------- LM Ericsson's CEO was at the center of criticisms on Wednesday as doubts grew that the company can turn around its collapsing share price, Reuters in its March 14 edition said. Prime Minister Goran Persson angrily criticized large salaries and bonuses paid to Chief Executive Kurt Hellstrom and Chairman Lars Ramqvist. Ericsson, the world's biggest supplier of mobile networks and third-biggest handset producer, has remained stubbornly prone to trouble. On Monday, it said it would make a $400 to 500 million loss in the first quarter of this year instead of breaking even as earlier expected. ===================== S W I T Z E R L A N D ===================== SAIRGROUP: Board Says Swissair Cannot Stay Independent ------------------------------------------------------ Supervisory board members of struggling SairGroup said that the airline could not survive independently after abandoning an expansion strategy, Reuters in its Wednesday edition said. According to private banker Benedict Hentsch and Credit Suisse Group chief executive Lukas Muehlemann, the consequence of dropping the controversial hunter strategy was that Swissair could not remain a lone player in the international market. Meanwhile, SAirGroup has declined to comment on reports that its loss for 2000 could be as big as 2.5 billion Swiss francs ($1.48 billion). =========================== U N I T E D K I N G D O M =========================== CIRO CITTERIO: Collapses Into Administration -------------------------------------------- Ciro Citterio has collapsed into the hands of accountancy firm Kroll Buchler Phillips after a dispute with a shareholder in the family controlled menswear chain, The Times in its yesterday's report said. The move will protect the directors of Ciro Citterio from a 5 million-pound obligation to a former director Kirit Thakrar. Recently, the directors denied that the order could lead to a break-up of the company, although there has been speculation that the retailer is secretly up for sale. The administrators will keep the stores open while the group is rationalized and restructured. However, some stores will be closed, the Times added. CORUS GROUP: Committee Attacks Corus Strategy --------------------------------------------- Steelmaker Corus could make further cuts over the next 18 months because of its lack of a clear strategy, according to The Times in its yesterday's report, citing Chairman Martin O'Neill of the Trade and Industry Select Committee. O'Neill attacked the company as it detailed losses of 1.2 billion pounds, including 975 million pounds of restructuring costs related to the massive shake-up of the business. The criticism also coincides with mounting pressure on the business to strike a deal with the Government and unions for a stay of execution over the job cuts in South Wales and the North East. The committee also criticized the price of power in the UK. They said that Ministers must double their efforts to bring the industrial price of electricity in the UK to below the EU average. E-DISTRICT.NET: Suspends Managers for Financial Irregularities -------------------------------------------------------------- e-district announced in its February 19 company release that it was undertaking a full investigation, together with its external advisers, into what appeared to be financial irregularities. The Company previously announced that it suspended Chief Executive Steven Laitman, with effect on February 18 and subsequently on February 23. An injunction was served on him freezing his assets and proceedings were commenced against him for damages. On February 26, Laitman was given notice of summary termination of his employment contract with the Company. Laitman was also dismissed as a director of the Company. Additionally, e-district suspended two senior managers within the technical department with effect on February 27, one of whom has now resigned. The company declined to reveal their names. The Company has now received preliminary reports from Cap Gemini Ernst & Young and PricewaterhouseCoopers Forensic Services. The investigations have established that revenues were overstated by manipulating the Company's internal monthly reports, which showed the level of business conducted with the Company's sales agencies. In addition, supporting documentation, both written and electronic, appears to have been fabricated and manipulated. e-district has about 12 million pounds cash and a cash-burn rate of 200,000 pounds a month. EQUITABLE LIFE: To Set Second Meeting ------------------------------------- Equitable Life will hold a second London meeting for policyholders because more than 100 who wanted to attend a meeting on Wednesday were told there was no room for them, according a March 13 report by This Is London. The new meeting will take place within the next few weeks but the venue will still be decided. LASTMINUTE.COM: Sets Tough Targets ---------------------------------- Chairman Allan Leighton of Internet travel company lastminute.com aims to get a break even within the next two years, converting more of the website's visitors into active purchasers of products, This Is London in its March 12 edition said. According to Leighton, the firm had sufficient site traffic and established customers to enable it to make money but needed to lift the conversion rate to 10%, from a current 8.5%, over the next two quarters. The Company has recently launched an upgraded version of its site to improve its website and technology. RAILTRACK GROUP: Shares Fall After More Fund Request ---------------------------------------------------- Shares of Railtrack Group Plc fell 68.5 pence to 779p or 8.1% after the owner of Britain's tracks and stations asked the U.K. government for early payment of 1.5 billion pounds ($2.2 billion) in grants and subsidies, more than previously requested, Bloomberg in its March 13 edition said. According to Railtrack spokesman Donal McCabe, the Company is talking to the U.K. Strategic Rail Authority to secure the funds by the end of the month, otherwise, it may seek permission to raise fees on train operators using its rails. Without the advance of government funds that are due in 2006, Railtrack is concerned it may run out of cash by the end of September. The company in January wanted the government to make an early payment of 1 billion pounds. 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 USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam, Salve M. Mordeno and Cristina Pernites, Editors. Copyright 2001. 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 * * *