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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

              Monday, April 02, 2001, Vol. 2, No. 64


                            Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Bankruptcy Judge Rejects Trustee Appointment
SABENA SA: Virgin Express Concerned About Sabena's Future

* F R A N C E *

WESTERN TELECOM: Fails to Resume Trade

* G E R M A N Y *

MICROLOGICA AG: Tenovis Intends to Buy Micrologica
T-ONLINE INTERNATIONAL: Expects First-Quarter Loss of 70MM Euro

* I T A L Y *

ALITALIA-LINEE: Sebastiani Resigns From Italy's Flag Carrier

* P O L A N D *

ELEKTRIM SA: To Sell Cable Unit

* P O R T U G A L *

JERONIMO MARTINS: Announces Restructuring Plan
JERONIMO MARTINS: Suspends Shares

* S W E D E N *

LM ERICSSON: Chairman Asks Support From Shareholders

* S W I T Z E R L A N D *

SAIRGROUP: Corti to Announce First Cuts Today
ZURICH FINANCIAL: Denies Rumors Hueppi Will Quit

* U N I T E D   K I N G D O M *

BRITISH TELECOM: Criticized for Lack of Financial Discipline
EQUITABLE LIFE: MPs Criticize Auditor
EQUITABLE LIFE: Seeks New Auditor
HUNTINGDON LIFE: In Talks for New Market Makers
MARKS & SPENCER: Abandons Overseas Operations
MARKS & SPENCER: On Review for Possible Downgrade
MARKS & SPENCER: To Franchise HK Operation
RAILTRACK GROUP: Running Out of Time As Monopoly Operator
VIRGIN EXPRESS: Widens Net Loss to 65.2 Million Euro


=============
B E L G I U M
=============


LERNOUT & HAUSPIE: Bankruptcy Judge Rejects Trustee Appointment
---------------------------------------------------------------

U.S. bankruptcy judge Judith Wizmur decided on Thursday not to
appoint a trustee in the Lernout & Hauspie Speech Products NV
bankruptcy case, according to Dow Jones' March 29 report.

Wizmur ruled that the former owners of an L&H subsidiary Dragon
Systems Inc., have failed to prove the need for a trustee. James
and Janet Baker contended that mismanagement, employee defections
and the sharing of assets among the three debtors required a
trustee to protect their former company.

If Wizmur appointed a bankruptcy trustee, L&H lender Cerberus
Capital Management will withdraw the $60 million debtor-in-
possession financing it is providing the company.

Wizmur also approved on Thursday L&H's request to extend by 60
days the period in which only the bankrupt company, and no other
parties, may submit a reorganization plan, and Lernout's proposed
$13.1 million sale of voice recognition technology to high-tech
auto parts supplier Visteon Corp (VC). The Bakers, whose former
company developed the technology, objected to the sale and
proposed to repurchase the software themselves.


SABENA SA: Virgin Express Concerned About Sabena's Future
---------------------------------------------------------

Virgin Express Holdings PLC said it is concerned about the
effects of the uncertain future of Sabena Belgian World Airlines
SA, following rumors about SAirGroup AG's intention to dispose
its investment, AFX on Thursday reported.

Sabena's need to restructure was delayed by unfair subsidies from
the Belgian State. This has forced independent low-cost airlines
operating in Brussels into debt or out of business.

There is also significant excess capacity at Brussels airport.
The expansion of Brussels-based airline activities over the last
years has led to unsustainable low pricing and losses for all
significant operators.


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


WESTERN TELECOM: Fails to Resume Trade
--------------------------------------

A flood of sell orders prevented shares in Western Telecom from
resuming trade on Wednesday after a two-week suspension, Reuters
reported.

Shares in Western Telecom, which recently declared itself in
default with suppliers, last quoted at 2.30 euros on March 15.

Earlier last week, a commercial court ruled that the troubled
long-distance telecom service provider could continue business
under a six-month surveillance plan.


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


MICROLOGICA AG: Tenovis Intends to Buy Micrologica
--------------------------------------------------

The management team of Tenovis, the Frankfurt-based supplier of
telecommunication services, the Executive Board of Micrologica AG
and their insolvency manager B. Brinkmann, announce their
intention of selling the flourishing core business of Micrologica
AG to the Tenovis group to ensure a continuation of the business
operations, a March 29 press release from the Frankfurt Stock
Exchance said.

Following comprehensive negotiations with various interested
parties before and during the CeBIT, it was agreed on Thursday to
commence final negotiations that will be conducted exclusively
until April 20 and implemented before the beginning of May,
provided that insolvency proceedings have been instigated by
then.

The core business encompasses the relationships and maintenance
contracts with more than one hundred well known customers and
further potential customers, and the acquisition of the software
rights to Micrologica Communication Center together with some 60
to 70 employees in Bargteheide.

This will enable Tenovis to significantly expand its present
market share of 16% in the field of Contact Center Solutions and
to become a potential market leader in the supply of Contact
Centers.

Both parties agreed to keep the future value of the transaction
confidential. It will be used to cover some of the liabilities of
Micrologica AG.

Following the intended divestment of its core business, the
remaining, stock exchange quoted Micrologica AG will continue to
operate its profitable maintenance services for pharmaceutical
wholesalers and the SW product business of its subsidiary company
Softek GmbH.

Together with the insolvency manager, the Executive Board is
continuing its negotiations with other investors to strengthen
Micrologica AG in future with a view to achieving the three goals
of securing further jobs, satisfying the creditors and preserving
the shareholders' interests. There are no plans to withdraw the
company from the stock exchange.


T-ONLINE INTERNATIONAL: Expects First-Quarter Loss of 70MM Euro
------------------------------------------------------------

T-Online International AG expects its first quarter EBITDA loss
to be at the same level as the 70 million euro loss achieved in
the fourth quarter of 2000, AFX on Thursday reported, citing
chief financial officer Rainer Beaujean.

The company's results will continue to be burdened by the flat
rate narrowband offer to customers. Although the flat rate took
effect on March 1, customers signed 1-year contracts and this
will continue to burden earnings through December 2001, Beaujean
added.


=========
I T A L Y
=========


ALITALIA-LINEE: Sebastiani Resigns From Italy's Flag Carrier
------------------------------------------------------------

General Giovanni Sebastiani has resigned as director general of
Alitalia, just weeks after former Chief Executive Domenico
Cempella left the company, according to Reuters' March 29 report.
Alitalia would not give further details.

Sebastiani had been flagged as a possible successor to Cempella
when the former chief resigned in early February.


===========
P O L A N D
===========


ELEKTRIM SA: To Sell Cable Unit
-------------------------------

Telecommunications conglomerate Elektrim SA on Wednesday signed a
letter of intent to sell a 70.49% stake in its cable subsidiary
Elektrim Kable SA to cable maker Krakowska Fabryka Kabli SA,
according to Dow Jones' March 29 report.

The transaction would be based on a $130.5 million valuation for
all of Elektrim Kable, which would indicate a sale price of about
$92 million. Detailed terms and conditions will be determined by
a share sales agreement on April 11.

KFK's purchase of Kable would give the combined group about 90%
of Poland's cable market that could lead to difficulties in
obtaining required approval from securities and competition
regulators.


===============
P O R T U G A L
===============


JERONIMO MARTINS: Announces Restructuring Plan
----------------------------------------------

Retailer Jeronimo Martins SGPS SA, which on Thursday posted a
59.07 million euro loss for 2000, announced a restructuring plan
to finance sustainable growth and wouldn't destroy shareholder
value through rushed asset disposals, Dow Jones reported.

With the plan, J. Martins said it would split the company into
two separate companies, one for distribution and one for other
investments. This will leave the retail and distribution unit to
be called JM Distribucao, with retail-only assets in Portugal,
Poland and Brazil.

Jeronimo Martins will also issue 60 million new shares at 5.00
euro each to stabilize its balance sheet, which had become
burdened by heavy debts.


JERONIMO MARTINS: Suspends Shares
---------------------------------

Shares in retailer Jeronimo Martins SGPS have been suspended on
the Lisbon stock exchange ahead of the start of trade on
Thursday, Dow Jones reported.

A spokeswoman for the Lisbon exchange confirmed the trading
suspension but provided no further information.


===========
S W E D E N
===========


LM ERICSSON: Chairman Asks Support From Shareholders
----------------------------------------------------

Ericsson chairman Lars Ramqvist has appealed to the 4,000
shareholders that came to the company's annual general meeting on
Wednesday to support chief executive Kurt Hellstroem, Dow Jones
in its March 29 edition said.

Ramqvist hoped that Hellstroem would get the same support he did
as chief executive during the economic downturn in 1990-1992.


=====================
S W I T Z E R L A N D
=====================


SAIRGROUP: Corti to Announce First Cuts Today
---------------------------------------------

SAirGroup's new executive chairman Mario Corti is expected to
announce the first cuts in the organization today, Reuters in its
March 29 edition said. He will also report a big loss for last
year.

While the loss for last year could be as high as 2.5 billion
Swiss francs ($1.45 billion), including restructuring charges,
the group's most immediate problems are in Belgium and France.

Yet, it is uncertain whether SAirGroup will abandon its three
French subsidiaries, AOM, Air Liberte and Air Littoral, and
Belgian's Sabena.


ZURICH FINANCIAL: Denies Rumors Hueppi Will Quit
------------------------------------------------

Claudia Kraaz, spokeswoman for insurance giant Zurich Financial
Services, told Dow Jones Newswires on Thursday that chief
executive and board chairman Rolf Hueppi won't step down from
either of his posts.

"Rolf Hueppi has an excellent track record, he led the company's
transition from being a mere Swiss player to becoming a
successful global financial services group," Kraaz said.

Zurich warned that earnings would decline further this year. This
added pressure on its CEO, with criticism focusing on his dual
role of chief executive and chairman of the board.


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


BRITISH TELECOM: Criticized for Lack of Financial Discipline
------------------------------------------------------------

British Telecommunications' finance director Philip Hampton has
criticized decisions taken by other members of the BT board for
lack of financial discipline that led to several acquisitions
made for reasons of pride, according to the Financial Times'
March 29 report.

The newly appointed director singled out the acquisition of Viag
Interkom in Germany as particularly damaging. He claimed it was
too expensive given the mobile network's poor strategic position.

He also admitted that Concert, BT's joint venture with AT&T of
the US, was experiencing fresh difficulties.

Hampton's comments added to speculation of a gap among board
members and raised suspicions that the he was lobbying to take
over Sir Peter Bonfield as chief executive if he is forced to
step down. BT dismissed this idea as mischief making.


EQUITABLE LIFE: MPs Criticize Auditor
-------------------------------------

MPs have on Thursday criticized Ernst & Young, Equitable Life's
auditors, for failing to highlight the troubled company's
financial problems in its accounts, the March 30 edition of The
Times said.

This is in spite of the fact that the company had put its
potential liabilities to holders of guaranteed annuity rate (GAR)
policies at up to 1.5 billion pounds in returns to the Treasury
Select Committee and covered itself with a reinsurance policy.

Equitable Life was forced to close to new business after the
House of Lords told the company last year that it must meet the
guarantees in full. It was only then that the company publicly
admitted the problem would cost it 1.5 billion pounds.


EQUITABLE LIFE: Seeks New Auditor
---------------------------------

Ernst & Young will not be seeking re-election in Equitable Life
in May, according to This Is London's March 28 report. A
replacement has not yet been found.

The auditor has faced widespread criticism after the House of
Lords ruled that Equitable had to honor terminal bonuses for
holders of its guaranteed annuity policies, which led to the
closing of its doors to new business last December.

Equitable has held several meetings with policyholders in recent
weeks and has been consistently questioned about its auditor.
There were even calls for Equitable to sue Ernst & Young but the
mutual stresses that it has found no evidence of professional
misconduct.  


HUNTINGDON LIFE: In Talks for New Market Makers
-----------------------------------------------

Huntingdon Life Sciences Group PLC is in discussions with a
number of people on possible replacements for their two market
makers, who withdrew their services after intimidation by animal
rights activists, AFX in its March 29 edition said.

On Wednesday, Winterflood Securities and Dresdner Kleinwort
Wasserstein both withdrew from their position as market makers in
the stock.

With the withdrawal of the two market makers, trading in
Huntingdon Life has been through automated quotes. This prompted
Hungtindon's shares to fall a new low on the first day without
market makers.


MARKS & SPENCER: Abandons Overseas Operations
---------------------------------------------

Leading clothing and food retailer Marks & Spencer will
restructure its global operations to ultimately focus on the UK
retail market, BBC News in its March 29 edition said.

These steps include the closure of European operations, the sale
of US operations, Brooks Brothers and Kings, the franchising of
Hong Kong operations, and the closure of UK catalogue operations.

Chairman Luc Vandevelde told the BBC that the revamp would affect
5,000 jobs, a majority of which is in continental Europe. It will
also give the troubled retailer a complete focus on traditional
customers in the UK.

Vandevelde has given himself until the end of this year to begin
the turnaround in the store's fortunes, but denied that the
restructuring was a panic measure.

The company said that as a result of the closure and sale of
overseas stores, it intended to return 2 billion pounds to long-
suffering shareholders within the next 12 months.


MARKS & SPENCER: On Review for Possible Downgrade
-------------------------------------------------

Moody's Investors Service on March 29 lowered to A2 from A1 the
long term debt ratings of Marks and Spencer plc's guaranteed
subsidiaries and placed these ratings and the company's Prime-1
short-term rating under review for possible downgrade.

The rating action follows Marks & Spencer's announcement of a
wide-ranging strategic realignment of its business profile,
combined with an intention to return GBP 2 billion to its
shareholders.

Moody's lowered the ratings in Marks and Spencer Finance plc's
Euro Medium Term Notes program and Euronotes guaranteed by Marks
and Spencer plc to A2 from A1, Marks and Spencer Finance
(Nederland) BV's Euro Medium Term Notes program guaranteed by
Marks and Spencer plc to A2 from A1, Saint Michael Finance plc's
Euro Medium Term Notes program and Euronotes guaranteed by Marks
and Spencer plc to A2 from A1.

The rating agency also placed under review for possible downgrade
Marks and Spencer Finance plc's Euro Medium Term Notes program
and Euronotes guaranteed by Marks and Spencer plc at A2, Marks
and Spencer Finance (Nederland) BV's Euro Medium Term Notes
program guaranteed by Marks and Spencer plc at A2, Saint Michael
Finance plc's Euro Medium Term Notes program and Euronotes
guaranteed by Marks and Spencer plc at A2, Saint Michael Finance
plc's Commercial paper guaranteed by Marks and Spencer plc at
Prime-1.

With Marks and Spencer's announcement of a deep restructuring in
its its global operations, Moody's believes that management will
continue to face significant challenges in the UK business and a
weaker financial profile.

Nevertheless, a number of major uncertainties remain, which
Moody's will seek to evaluate before concluding its review. These
include the likelihood of finding buyers for all the assets
management expects to sell, the cash costs associated with the
restructuring, and the timing of the entire restructuring
exercise.

Moody's continuing review will also focus on the extent to which
asset disposals may provide financing for the expected payment to
shareholders, the impact that the planned realization of property
assets will have on lease-adjusted financial measures, the extent
of change in management's financial philosophy, and management's
strategy for turning around the remaining UK business.


MARKS & SPENCER: To Franchise HK Operation
------------------------------------------

Clothing and food retailer Marks & Spencer plc plans to
sell its Hong Kong subsidiary business to a franchise
partner, following its announcement that it will close all
its stores in Europe and slash 4,390 jobs in a
restructuring effort caused by the slide of the company's
business over the past two years.

In a report dated March 29, Xinhua News Agency said that M&S has
not indicated any target sales price or identified any potential
partners for the Hong Kong stores.

The stores in Hong Kong are the only Marks & Spencer operation in
Asia still wholly owned by the parent company in Britain.


RAILTRACK GROUP: Running Out of Time As Monopoly Operator
---------------------------------------------------------

Regulator Tom Winsor told Railtrack on Thursday that time is
running out for it to continue as the monopoly operator of the
British rail network, This Is London reported.

Winsor said that Railtrack must show that the network could
restore normal operation rather than chasing the fanciful
aspirations of future projects.


VIRGIN EXPRESS: Widens Net Loss to 65.2 Million Euro
----------------------------------------------------

Virgin Express Holdings PLC booked a net loss of 65.2 euro
million in 2000, compared to a net loss of 5.7 million euro in
1999, Dow Jones in its March 29 report said.

The airline company said that high fuel costs and the dollar's
strength against the euro hurt its 2000 results. The group added
that its restructuring costs in 2000 totaled 18.3 million euros.




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-
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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.

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