/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010514.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 Monday, May 14, 2001, Vol. 2, No. 94 Headlines * B E L G I U M * LERNOUT & HAUSPIE: To File Recovery Plan Next Week SABENA SA: Imposes Ban on Transport of Valuables SABENA SA: Offers Special Rates for Passengers XEIKON NV: Seeks to Raise Credit Lines * F R A N C E * HIGHWAVE OPTICAL: Profit Warning Sends Shares Sliding VALEO SA: May Pull Out of U.S. Factory * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Sees Partnership as Only Solution COMDIRECT BANK: Goes Into Red With 19.8 Million Euro Loss EM.TV: Rothblum Leaves Management Board FREENET.DE: First Quarter Loss Deepens to 4.6 Million Marks PIXELPARK AG: Plans Higher Redundancies INFOMATEC AG: Confirms US$7 Million Sales Contract LIPRO AG: Develops Reorganization Program TDS AG: Widens Loss to 1.3 Million Euro * I R E L A N D * EIRCOM PLC: Bidders to Ready Plans by June * I T A L Y * E.BISCOM SPA: First-Quarter Loss Widens to 30.7 Million Euros * P O L A N D * ELEKTRIM SA: Deutsche Telekom Offers $400 Million for PTC HUTA KATOWICE: Widens First-Quarter Loss * R U S S I A * IRKUTSKENERGO AO: Posts $35.24 Million Net Loss in 2000 * U N I T E D K I N G D O M * ANTISOMA PLC: Seeks 20 Million-Pound Funding BRITISH TELECOM: Moody's Drops Rating to Baa1/P-2 BRITISH TELECOM: S&P Downgrades Ratings JARVIS PORTER: Closes Creative Packaging Unit MARKS & SPENCER: Alison Reed to Assume Post on July SPORTAL: On the Edge of Liquidation ============= B E L G I U M ============= LERNOUT & HAUSPIE: To File Recovery Plan Next Week -------------------------------------------------- Lernout & Hauspie Speech Products will file its recovery plan with the Ieper commercial court on May 21, according to the May 10 report of Dow Jones. Creditors will then vote on the plan on June 5 in a court session. SABENA SA: Imposes Ban on Transport of Valuables ------------------------------------------------ Sabena has imposed a new ban on the transport of valuable goods through Brussels National Airport due to insufficient security, Reuters in its May 9 edition said. On April, the Belgian government imposed a temporary ban on the transport of valuable goods through the airport following an attempted diamond robbery. The ban was lifted after new security measures were agreed, including escorts for the transport of valuables. The Belgian Aviation Authority declined to comment on Sabena's new ban. SABENA SA: Offers Special Rates for Passengers ---------------------------------------------- Sabena, together with Swissair, now offers a Round-the-World fares package so its passengers can travel around the world via the South Pacific at special rates, a May 10 press release said. The rates can be used when traveling in First, Business and Economy Class. Passengers can make 3 to 8 stopovers in a period ranging from 10 days to one year. Routing must include visits to Europe, the United States and Australia. Passengers who start their journey in Belgium pay 2,350 euro for Economy Class, 4,650 euro for Business Class, or 6,650 euro for First Class. XEIKON NV: Seeks to Raise Credit Lines -------------------------------------- Xeikon is in talks with a consortium of four banks to raise its credit limits, Dow Jones on May 9 reported. The color printing company will use the financing to meet operational costs until it returns to profitability. Earlier this month, the company posted a first quarter net loss of US$11 million, compared to US$5.37 million a year earlier. The loss was due to a poor product mix, the impact of fixed production costs on lower production volumes, and temporary commercial accommodations to customers. =========== F R A N C E =========== HIGHWAVE OPTICAL: Profit Warning Sends Shares Sliding ----------------------------------------------------- Shares in the French optical network component manufacturer Highwave Optical Technologies were down 1.75 euro, or 4.4%, at 37.95 euro after it issued a profit warning earlier Thursday, according to Dow Jones' report. The group also said that revenue in the April-June period would be much lower than expected, while its sales to fall by some 30% in the quarter to total some 23 million euro, compared with 32.9 million euro in the fourth quarter of the previous year. The warning is due to a delay in orders from one client. Director for corporate relations Stephen Kraft declined to name the customer. VALEO SA: May Pull Out of U.S. Factory -------------------------------------- Valeo said that it would pull out of its factory in Rochester in U.S. if it cannot reach an agreement with the unions over the planned cut of 1,200 jobs at the factory, AFX News in its May 9 edition reported. According to chairman Thierry Morin, they are engaged in strong discussions with social partners on how to make the site profitable quickly. Valeo acquired Rochester in 1998 when it bought the Electrical Systems division of ITT Industries. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Sees Partnership as Only Solution ---------------------------------------------------------- Bankgesellschaft Berlin looks set to take the form of the sale of a shareholding as a financing solution, while other options for raising the required capital of DM2 to 3 billion to close the bank's financing gap could more or less be ruled out, Handelsblatt in its May 9 report said. Other financing options included a public-sector loan or the issue of participation certificates. DSGV savings banks organization has signaled its interest in investing in Bankgesellschaft Berlin. BayernLB, which confirmed talks to this effect, said it was still too early to enter into concrete negotiations. Under discussion is an investment of the organization via DGZ Deka Bank. COMDIRECT BANK: Goes Into Red With 19.8 Million Euro Loss --------------------------------------------------------- Europe's largest online broker Comdirect suffered a first-quarter pretax loss of 19.8 million euros, following a hit by expansion costs, the May 10 edition of CNN said. Retail investors have also been trading less in the volatile markets and fees earned fell from 53 million euros a year ago to 29.5 million euros. The results also showed marketing expenses rose from 17.31 million to 25.16 million euros and group administrative costs totaled 70.16 million euros, up from 52.79 million euros. In March, the group said it generated a pretax loss of 41.6 million euros in 2000 as result of steep losses in its subsidiaries in U.K., France and Italy. Retail investors have withdrawn investments after stock markets soured in the second half. EM.TV: Rothblum Leaves Management Board --------------------------------------- EM.TV & Merchandising AG programming chief Sylvia Rothblum has left the management board, the May 9 edition of AFX News said. Sales chief Rainer Huether will manage the few remaining programming projects. In February, press reports suggested Rothblum was ready to resign because of her opposition to KirchGruppe's financial rescue of EM.TV. She was appointed to the board in November and will remain in a consulting capacity until October 31. Rothblum couldn't be reached for comment. FREENET.DE: First Quarter Loss Deepens to 4.6 Million Marks ----------------------------------------------------------- First quarter net loss of Internet access provider freenet.de almost quadrupled to 4.6 million marks ($2.08 million), against 1.2 million in 2000, as the company invested heavily in research and development and new online services, according to the May 9 edition of Reuters. "The group has set up numerous new services. Our research and development unit has also pressured earnings," spokeswoman Elke Ruether said. Freenet.de had also seen a slowdown in advertising compared with the fourth quarter last year. Freenet.de said costs of purchased services grew to 13.6 million marks in the quarter from 8.4 million in the first three months last year. PIXELPARK AG: Plans Higher Redundancies --------------------------------------- Following a slump in its first quarter sales, Internet service provider Pixelpark AG said it plans to cut some 15% of its 1,189 global workforce, the May 9 edition of Handelsblatt said. Pixelpark's workforce is currently in the process of appointing a works council. Over the past few months, many IT companies, including EM.TV and Internet service provider Tomorrow, have also made redundancies and recently organized workforce representation. INFOMATEC AG: Confirms US$7 Million Sales Contract -------------------------------------------------- Infomatec Integrated Information Systems AG has counter-signed and closed a US$7 million sales order, despite the insolvency proceedings opened on May 8, the Frankfurt Stock Exchange in its press release said. The sale enables Infomatec to guarantee software adaptation and services in the context of the hardware sale. The order is on the delivery of 40,000 Surfstations in several installments beginning June 1. Infomatec repossessed the Surfstations when a sale did not materialize in the first half of last year. Confidentiality was agreed on the purchaser's identity. Beginning on June 1, Infomatec will receive monthly installments of US$1.75 million. The payments, which will cover operating costs of 1.3 million euro for the months to come, are secured by a letter of credit. LIPRO AG: Develops Reorganization Program ----------------------------------------- Lipro AG has developed a capital reorganization program to secure its future with the cooperation of its banks, Wall Street Journal reported on Thursday. The plan includes a comprehensive restructuring program, staff reductions, and a focus on its core competencies. The troubled logistics software company has paid no dividends during the last 12 months, or during the previous 3 fiscal years. In 1999, Lipro AG's earnings before extraordinary items - 34,857.32 euro, or -0.7% of sales. It has a long term debt of 1.12 million euro and total liabilities of 4.18 million euro. TDS AG: Widens Loss to 1.3 Million Euro --------------------------------------- TDS Information Technologie AG posted 2001 first-quarter loss before interest and taxes of 1.3 million euro, compared with an EBIT of 600,000 euro a year ago, its May 10 press release said. Furthermore, its first-quarter sales dropped to 30.3 million euro from 33.8 million euro a year earlier, but adjusted for the exclusion of sales due to the divestment P-C trading unit this represents an increase of 37%. TDS will be concentrating on consulting services this year. It will offer considerable potential for growth, and on the profitable application hosting/ASP segment. The company, a leading provider of information technology consultancy and services in Germany, expects a better second half after its planned restructuring. ============= I R E L A N D ============= EIRCOM PLC: Bidders to Ready Plans by June ------------------------------------------ Potential bidders of Eircom were asked to formulate proposals by June, following a failed agreement between the eIsland consortium and Eircom's trade unions, The Irish Times reported on Friday. EIsland and the other two potential bidders, the Valentia Consortium and Dermot Desmond's investment vehicle International Investment Underwriting (IIU), are expected to work within the new structure. All three are hoping to get the backing of the Eircom board for their bid and should comply with the timetable proposed by Merrill Lynch and Goodbody Corporate Finance. ========= I T A L Y ========= E.BISCOM SPA: First-Quarter Loss Widens to 30.7 Million Euros ------------------------------------------------------------- The first-quarter consolidated loss of broadband Internet group e.Biscom widened to 30.7 million euros from 22.6 million euros in the year-earlier quarter, Reuters in its May 9 edition said. E.Biscom's also had negative earnings before interest and tax of 42.8 million euros compared with an operational loss of 3.5 million euros in the year-ago quarter. In the March edition of The Troubled Company Reporter, it said that the group made a consolidated net attributable loss of 102.6 million euros in 2000. =========== P O L A N D =========== ELEKTRIM SA: Deutsche Telekom Offers $400 Million for PTC --------------------------------------------------------- Deutsche Telekom AG has offered to pay Elektrim SA $400 million (452.1 million euros) for 3.5% of Polska Telefonia Cyfrowa, according to the Wall Street Journal's Friday report. If successful, it would bring to an end a bitter struggle for control of PTC between Deutsche Telekom and its French rival Vivendi. PTC is 51%-owned by Elektrim, 45% by Deutsche Telekom and 4% by Holdco, a holding company with financial ties to Deutsche Telekom. Vivendi owns 49% of Elektrim Telekomunikacja, a subsidiary that holds the Polish company's telecoms assets, including the PTC stake. The PTC bid is likely to prompt a legal challenge from Vivendi. It may also trigger a clause in the Elektrim's partnership agreement with Vivendi that would allow the French company to sell its stake in Elektrim Telekomunikacja at an independently established market price, should Elektrim lose control of PTC. HUTA KATOWICE: Widens First-Quarter Loss ---------------------------------------- After suffering a net loss of 46 million zlotys last year, the first-quarter net loss of steel mill Huta Katowice has soared to 78 million zlotys ($19.7 million) due to falling output and higher financial costs, Reuters reported on Wednesday. Its three month sales stood at 833 million zlotys and the company produced just under one million tons of steel in the period, said the statement. The state-owned producer nearly collapsed late last year following the failure of privatization talks. =========== R U S S I A =========== IRKUTSKENERGO AO: Posts $35.24 Million Net Loss in 2000 ------------------------------------------------------- Irkutskenergo, Russia's second largest power generating company, posted net losses of $35.24 million in 2000, down 21% from $44.61 million in 1999, Interfax Daily Financial Report in its May 8 edition said. The company's long-term receivables dropped from $99.93 million to $61.83 million, while short-term receivables rose from $87.45 million to $109.36 million. Payables fell from $39.25 million to $32.96 million, Interfax added. =========================== U N I T E D K I N G D O M =========================== ANTISOMA PLC: Seeks 20 Million-Pound Funding -------------------------------------------- Biotechnology company Antisoma intends to seek further funds by the end of this year either through a cash call of at least 20 million pounds, or by licensing out one of its products, according to The Times' May 10 report. The loss-making company, which revealed a net cash of 11.4 million pounds for the nine months ending March, believes they have to raise more money from the markets or do a licensing. Antisoma reported pre-tax losses of 6.2 million pounds (6.6 million pounds) for the nine months to March. Its shares fell 0.5p to 158.5p. BRITISH TELECOM: Moody's Drops Rating to Baa1/P-2 ------------------------------------------------- Moody's Investors Service has on May 10 downgraded to Baa1 and Prime-2 the long-term and short-term debt ratings of British Telecommunications Plc (BT) and its guaranteed subsidiaries, as well as those of Esat Telecom Group Plc (Esat) and its guaranteed subsidiaries. The downgrade follows BT's announcement that it is to demerge into two separately quoted businesses, BT Wireless and Future BT, as well as the planned rights issue to raise GBP5.9 billion. This rating action concludes Moody's review for possible downgrade initiated on March 19, 2001. Moody's downgrade is based on the fact that BT will, from now on, operate under a different business and financial risk profile, commensurate with long-term Baa1 and short-term Prime-2 debt ratings. These factors override the positive impact of (1) BT's expected significant debt reduction of approximately GBP12 billion; (2) management's intention to tighten the company's geographic and business focus to the UK global wireline and to certain segments of the Western European wireline markets; and (3) BT's plan to reduce its current debt levels to around GBP15 billion - GBP20 billion. The wireless demerger implies also that the company will no longer be an integrated telecommunications company and will lose some of the benefits associated with it. The rating change further assumes that BT receives proceeds of approximately GBP5.9 billion from a rights issue in addition to the GBP4.8 billion of cash proceeds expected from the recently announced asset disposals in Japan and Spain, which will be applied to the reduction of debt. Additionally, Moody's expects BT to dispose of Yell for around GBP2 billion to GBP3 billion, and also notes the positive impact of the suspension of dividend payments. However, the rating action does not factor the potential positive rating implications of the ongoing discussions regarding the future of both Concert and Ignite because of their uncertain outcome. BRITISH TELECOM: S&P Downgrades Ratings --------------------------------------- Standard & Poor's on Thursday lowered its long-term corporate credit and senior unsecured debt ratings on British Telecommunications PLC (BT) and related entities to single-'A'- minus from single-'A', following the release of the company's full-year results and announcements of operational and capital restructuring. At the same time, the short-term ratings on BT were lowered to 'A-2' from 'A-1'. In addition, all ratings were removed from CreditWatch, where they were placed with negative implications on February 16. The outlook is now negative. BT announced the launch of a 5.9 billion-pound ($8.4 billion) equity rights issue, the planned demerger of its wholly-owned wireless assets (BT Wireless) to shareholders, and suspension of its final dividend for the fiscal year ended March 31, 2001. These moves follow recent announcements by the company to sell its minority wireless interests in Japan, Spain, and Malaysia for net cash proceeds of about 4.8 billion pounds. It has also indicated that it will continue discussions for the trade sale of Yell, its directories and E-commerce subsidiary. On completion, these transactions should result in net cash inflows to BT of about 12.7 billion pounds, and reduced cash outflow through lower dividend flows and the elimination of BT Wireless' capital expenditure. All transactions remain subject to regulatory or shareholder approval. The demerger of the company's wholly owned wireless assets, as well as the sale of some of its minority interests in other wireless assets, removes the most significant streams of future revenue and earnings growth previously attributable to BT. Conversely, the demerger and asset sales significantly reduce BT's exposure to riskier, more volatile cash flows (including third-generation mobile telephony), leaving the company with a much higher proportion of utility-type revenues. Although there is a competitive hiatus in the domestic fixed-line market at present, regulative structures continue to pressure BT's revenues, while more intensive competitive pressures are expected to resume in the future. Consequently, if remaining group revenues and earnings are not to dissipate, BT must successfully contain costs while expanding its nontraditional businesses. More specifically, BT plans to increase its digital subscriber line (DSL) penetration and also target high-value managed data and associated telecom services to the business market. The benefits from these initiatives are likely to be slow to materialize. In addition, the company plans to increase penetration in the wholesale market--a task that is likely to prove challenging and may accelerate margin compression from this business. Standard & Poor's also believes that the company's mass-market Internet business, BTopenworld, with its strong U.K. presence, but array of second-tier Internet service provider businesses outside the U.K., is unlikely to make a positive contribution in the medium term. Following the demerger of BT Wireless, Standard & Poor's expects that BT's remaining businesses should generate a reasonably stable average annual EBITDA of about o6 billion over the next few years. Furthermore, free operating cash flows are expected to remain broadly neutral until the end of fiscal 2004, reflecting continued investment needs--particularly in the wholesale and broadband (Ignite) businesses. This suggests that overall credit protection measures will remain broadly static over an extended period of time, with lease-adjusted EBITDA interest coverage of about 4 times (x) and net debt to EBITDA of about 3x. These ratios remain somewhat weak for the current rating, even after consideration of the company's proportionally increased focus on utility-type domestic fixed-line revenue streams. BT retains a substantial degree of financial flexibility, however, through its array of noncore assets that could be divested over the medium term. The current assessment assumes BT Wireless will be divested without any debt in its capital structure, suggesting additional near-term flexibility for the parent company. In addition to the announced restructuring actions, BT is understood to be in discussions with U.S.-based AT&T Corp. (A/Watch Neg/A-1) regarding the future strategic position of Concert, their global communications joint venture. Concert continues to underperform, both operationally and financially. Since the final outcome of these talks is yet to be determined, and may vary considerably in both scale and scope, any future restructuring of Concert has been held outside the current rating assessment. The ratings assume the successful completion of BT's 5.9 billion- pound rights issue; the sale of its Japanese, Spanish, and Malaysian mobile assets; and the demerger of its wholly-owned wireless assets. As a result of these transactions, however, credit protections measures will be weak for the current rating, suggesting an ongoing need to gain efficiency improvements, as well as grow new business lines in a continually competitive environment. If BT were to exercise some of the financial flexibility available to the company and move its financial parameters comfortably within the net debt to EBITDA of 3x, and EBITDA interest coverage of 4x, parameters, the outlook could be revised to stable. BRITISH TELECOM: To Sell Italian Blu Stake ------------------------------------------ As agreed with other shareholders, British Telecommunications PLC will sell its 20% stake in Italian mobile telephone operator Blu, the May 10 edition of Dow Jones reported. There has been widespread speculation that the Blu stake would be sold after it withdrew from the October auction of third- generation mobile licenses in Italy. According to Chief Executive Peter Bonfield, BT will hold onto its 23% stake in Italian fixed-line operator Albacom SpA. JARVIS PORTER: Closes Creative Packaging Unit --------------------------------------------- Jarvis Porter Group PLC said it would close its creative packaging division based at Hinckley in Leicestershire for continuously incurring unacceptable levels of losses, according to AFX News' May 10 report. Despite operational restructuring and efficiency improvements, the company has not been possible to achieve a viable level of sales. Its losses have widened over the past two years to 2.9 million sterling from 1.8 million a year earlier. The restructuring will involve around 250 redundancies and will cost around 8 million pounds. Jarvis Porter has been in negotiations for the sale of the division as a whole. MARKS & SPENCER: Alison Reed to Assume Post on July --------------------------------------------------- Marks & Spencer PLC said that Alison Reed would become finance director on July 11, following her appointment on March 29. In a report dated May 10, AFX News said that Robert Colvill would continue as finance director until that date. SPORTAL: On the Edge of Liquidation ----------------------------------- Sports content provider Sportal is on the edge of liquidation, just a month after it embarked on a search for a further 7 million-pound of funding to take it to profitability in 2002, Net Imperative in its May 9 edition reported. The company is currently in talks with more than one party over a buy-out of the business. One of the approaches is said to be from media giant Vivendi. While existing investors contributed an undisclosed amount of further capital, Sportal still needs interim funding to survive profitability since funding from external sources had not materialized. *********** 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 Ma. Cristina D. 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 * * *