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         T R O U B L E D   C O M P A N Y   R E P O R T E R

                                         E U R O P E

                     Tuesday, June 05, 2001, Vol. 2, No. 109


                                           Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Announces Republishing Agreement With HCL
LERNOUT & HAUSPIE: Appoints Rob Schwager as Dictaphone Chief
SABENA SA: Wants SAS as New Owner

* C Z E C H   R E P U B L I C *

DAEWOO AVIA: Approves Restructuring

* F R A N C E *

AIR LIBERTE: London Firm Makes $430MM Offer

* G E R M A N Y *

BANKGESELLSCHAFT BERLIN: To Post Net Loss of Below 2BB Euros
DAIMLERCHYRSLER AG: Freightliner to Post Loss
EDEL MUSIC: Sells Stake in VIVA
HERMANN HEYE: Glass Co. Enters Insolvency Proceedings
INFOMATEC INTEGRATED: Net Loss Widens to 5.1MM Euros
TELDAFAX AG: Court Initiates Insolvency Proceedings

* I R E L A N D *

EIRCOM PLC: American Bank to Bid for Eircom

* P O L A N D *

DAEWOO MOTOR: Confusion Over GM Purchase

* S P A I N *

SINTEL: Workers Camp Out in Madrid

* S W E D E N *

LM ERICSSON: Reports Poor Performance in Brazil

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

ANDRE & CIE: Hong Kong Group Buys Cocoa Operations
SWISSAIR GROUP: Credit Suisse Rejects Conflict of Interest Claims

* U N I T E D   K I N G D O M *

BRIGHT STATION: Gets GBP12MM Funding
BRITISH TELECOM: Considers Cost-Cutting Measures at Concert
GLOBAL TELESYSTEMS: Moody's Cuts Rating to C
MARKS & SPENCER: Will Find Buyer by Year's End
RAILTRACK GROUP: To Sell Property, Says Prime Minister Blair


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


LERNOUT & HAUSPIE: Announces Republishing Agreement With HCL
------------------------------------------------------------

Lernout & Hauspie Speech Products NV, a world leader in speech
and language technology, products and services, announced on May
31 in its press release that its Speech and Language Solutions
(SLS) group has reached a republishing agreement for India and
the Asia-Pacific region with New Delhi-based HCL Infosystems
Ltd., a leading provider of IT solutions and services in India.

Under the terms of the agreement, HCL Infosystems Ltd. has the
right to manufacture, package, market and distribute L&H
VoiceXpressT and Dragon NaturallySpeakingr voice recognition and
translation packaged software lines for retail markets in India,
Malaysia, Singapore, Hong Kong, Thailand, Taiwan, Nepal, Sri
Lanka, Bangladesh, Mauritius and Maldives.

As an L&H distributor for these markets, HCL Infosystems Ltd.'s
activities will encompass marketing, sales, production, public
relations, and first-line technical support.

HCL Infosystems Ltd. has been building L&H's market share in
India since 1997, when it began distributing the Company's L&H
VoiceXpressT and Dragon NaturallySpeakingr product lines. The new
agreement expands upon an existing relationship between L&H and
HCL Infosystems Ltd., and further supports L&H's commitment to
maintaining broad-line channel distribution of the retail
software products in India and the Asia Pacific region. The
products include Dragon NaturallySpeakingr Essentials, Dragon
NaturallySpeakingr Standard, Dragon NaturallySpeakingr Preferred,
Dragon NaturallySpeakingr Mobile, L&H Voice XpressT Standard, L&H
Voice XpressT Professional, L&HT VoiceCommandsT, L&HT
SimplyTranslatingT, L&HT PowerTranslatorr Pro
L&HT WebTranslatorT and L&HT Talking MaxT.


LERNOUT & HAUSPIE: Appoints Rob Schwager as Dictaphone Chief
------------------------------------------------------------

Lernout & Hauspie Speech Products NV, a world leader in speech
and language technology, products and services, announced on June
1 in its press release the appointment of Rob Schwager as
president and COO of Dictaphone Corporation.

Schwager remains president of Dictaphone Healthcare Solutions
Group, the combined healthcare business of L&H and Dictaphone,
and will continue to report to Philippe Bodson, Dictaphone CEO
and L&H's president and CEO.

"Our immediate focus will be the preservation and enhancement of
the significant value of Dictaphone's 100-year-old brand and its
various healthcare, CRS, IVS, services and manufacturing
businesses," Schwager commented on his recent appointment.


SABENA SA: Wants SAS as New Owner
---------------------------------

Sabena said it would prefer SAS (Scandinavian Airlines System) as
the first-hand option for a new owner, with America Airlines as
the second best choice, the Airline Industry Information on May
31 reported.

Under an agreement with the Belgian authorities Swissair, which
currently holds a 49.9% stake, will increase the stake to 85%,
but the carrier would like to withdraw entirely.

In 1996, SAS was interested in Sabena. However recently, SAS
chief executive officer Jorgen Lindegaard said that his airline
would now prefer expansions in Finland, the Baltic region and
Poland.


===========================
C Z E C H   R E P U B L I C
============================


DAEWOO AVIA: Approves Restructuring
-----------------------------------

Truck maker Daewoo Avia, which posted a loss of Kc1 billion in
2000, has approved its restructuring program, the June 1 edition
of Czech A.M. said.

The restructuring calls for the dismissal of about 500 employees
in the coming months.


SKODA MNICHOVO: Estimates Debt at Kc1.2BB
-----------------------------------------

Debt of truck producer Skoda Mnichovo Hradiste is estimated at
Kc1.2 billion, the May 31 edition of Czech A.M. said.

Skoda Mnichovo was declared bankrupt in March.


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


AIR LIBERTE: London Firm Makes $430MM Offer
-------------------------------------------

The London consulting company AITI has offered $430 million for
merged French airlines Air Liberte-AOM, the Associated Press on
June 1 reported.

Air Liberte chairman Marc Rochet has been trying to lure new
investors to keep the carriers afloat since top shareholders
Marine-Wendel SA and SAir Group have only agreed to provide
financing through June.

The struggling airlines, which joined forces last year, recently
announced a net loss of 2.4 billion francs for 2000. As part of
their restructuring plan, they will eliminate 1,328 of 6,000
jobs, eliminate some routes and reduce its fleet of 50 planes to
27.


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


BANKGESELLSCHAFT BERLIN: To Post Net Loss of Below 2BB Euros
------------------------------------------------------------

Bankgesellschaft Berlin AG said its 2000 unreleased net result
would show a loss below 2 billion euro, AFX News in its June 1
edition said.

The bank has not given its final full year net results because of
an investigation by banking supervisory agency BAKred on its real
estate activities.

Bankgesellschaft further said that Berlin state, which owns 56.2%
of the bank, is prepared to inject 2 billion euro. The bank also
announced a restructuring plan that will raise the possibility of
strategic partnerships.


DAIMLERCHYRSLER AG: Freightliner to Post Loss
---------------------------------------------

DaimlerChrysler AG's U.S. truck unit Freightliner will post a
loss this year but may return to profitability next year, AFX
News in its May 31 edition said.

Company board member Eckhard Cordes, however, declined to confirm
the 500-million-euro figure rumored as Freightliner's operating
loss this year.

Cordes added that the problem lies in the former managers of
Freightliner, who did not take certain decisive measures, such as
adjusting in the face of shrinking market demand in the U.S.
Apart from internal differences, both Freightliner and
Daimlerchrysler have to cope with U.S. anti-trust laws.


EDEL MUSIC: Sells Stake in VIVA
-------------------------------

Edel music AG sold its 12.1% stake in VIVA AG to the investors
group Die Initiatioren Drei Kapitalbeteiligungs KG, the Frankfurt
Stock Exchange in its May 31 press release said.

Edel, which sold its share at a profit, have a positive effect on
the second quarter earnings, and thereby reducing liabilities to
banks.


HERMANN HEYE: Glass Co. Enters Insolvency Proceedings
-----------------------------------------------------

Glass company Hermann Heye KG has entered preliminary insolvency
proceedings due to falling prices, overcapacity and the
increasing use of PET bottles, Frankfurter Allgemeine Zeitung in
its June 1 edition said. Insolvency administrator is Stefan
Hoeltershinken.

The company has an annual turnover is DM500 million. It has a
2,500 workforce and has American and Polish subsidiaries.


INFOMATEC INTEGRATED: Net Loss Widens to 5.1MM Euros
----------------------------------------------------------

Software provider Infomatec Integrated Information Systems AG has
widened its net loss for the first three months to 5.1 million
euros, compared with 4.5 million euros a year earlier, the May 31
edition of the Frankfurt Stock Exchange said. The result for the
period before interest, taxes and depreciation (EBITDA) is - 4.2
million euro.

Infomatec added that its staff numbers were reduced to 143 at the
end of the period, from 628 in 2000.


TELDAFAX AG: Court Initiates Insolvency Proceedings
--------------------------------------------------

A German court began the insolvency proceedings of TelDaFax
AG on June 1, AFX News reported. The court also appointed a
seven-member committee of creditors to determine the future of
the company.

The telephone service provider, which filed for insolvency in
early April, was cut off from the network of rival Deutsche
Telekom last week because of overdue access fees of around 73
million marks ($31.96 million). It has then found a new partner
but declined to give any names.


=============
I R E L A N D
=============


EIRCOM PLC: American Bank to Bid for Eircom
-------------------------------------------

US-based private investment bank Blackstone emerged as the fifth
bidder for the control of Eircom, the Sunday Times reported.

Blackstone specializes in leveraged buyouts and is increasingly
active in Europe. It owns the Savoy hotel group in London and has
a large shareholding in Liffe, the futures exchange.

Other parties interested in Eircom are Wall Street's most
notorious corporate raider Kohlberg Kravis and Roberts, a
consortium led by Esat Telecom founder Denis O'Brien, financier
Dermot Desmond, and newspaper magnate Sir Anthony O'Reilly.


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


DAEWOO MOTOR: Confusion Over GM Purchase
----------------------------------------

The announcement that US-based carmaker General Motors is no
longer interested in buying Daewoo Motor's foreign subsidiaries
has led confusion in the planned sale of the Polish plants,
Poland A.M. on June 1 reported.

Soon after Daewoo president Lee Jong-dae made his announcement,
Daewoo spokesman Kim Jong-do contradicted him, saying it is
unclear which of the foreign assets will be taken over by GM.

GM's Polish spokesman Zbigniew Lazar further said that
negotiations have only started and it is not known which Daewoo
companies will come under discussion.


=========
S P A I N
=========


SINTEL: Workers Camp Out in Madrid
----------------------------------

Some 1,800 former workers of Spanish telecommunications equipment
manufacturer Sintel, which has recently been declared bankrupt,
camped out in Madrid's Paseo de la Castellana to demand a
solution to the crisis.

Secretary general Candido Mendez of the UGT union urged the
government not to use the bankruptcy declaration to avoid finding
a solution for the workers who are owed 10 months back pay.

The Madrid authorities refused unions' request to grant Pta15
million in aid to those camped out.


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


LM ERICSSON: Reports Poor Performance in Brazil
-----------------------------------------------

Ericsson has registered a loss of R$74.668 million in the first
quarter, against a profit of R$9.176 million reached in 2000, its
worst result in Brazil since 1999, the South American Business
Information in its May 31 edition said.

Ericsson's liabilities are of accounts payable to the group's
companies that represent the imports of components and equipment
worth R$1.458 billion.

According to the Ministry of Development, the company is the
fourth major importer of Brazil with US$229.2 million.


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


ANDRE & CIE: Hong Kong Group Buys Cocoa Operations
--------------------------------------------------

Hong Kong-based Noble Group Limited said on June 1 it purchased
the cocoa operations of commodities trader Andre & Cie SA at an
undisclosed amount, PR Newswire reported.

Included in the purchase are state-of-the-art warehousing and
packaging plants in dominant producer countries.

The acquired entities will now trade under Noble Cocoa SA.


SWISSAIR GROUP: Credit Suisse Rejects Conflict of Interest Claims
-----------------------------------------------------------------

Credit Suisse Group rejected claims that there was a conflict of
interest when the bank held a 'buy' rating on Swissair Group AG
shares while chief executive and chairman Lukas Muehlemann was
still sitting on the loss-making airline's board.

Muehlemann's comments were in reaction to questions raised by
Swissair shareholder protection group leader Hans-Jacob Heitz,
who said Muehlemann must have known of the airline's financial
troubles while the 'buy' rating was in place.

According to the CEO, he had no involvement with their research
reports on Swissair and pointed out that at the end of 2000, 90%
of banks that covered the airline had 'buy' ratings on the stock.


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


BRIGHT STATION: Gets GBP12MM Funding
------------------------------------

Internet-technology company Bright Station PLC received
commitments from institutional investors to fund about GBP12
million through the issue of 270 million ordinary shares at 5
pence each, the Wall Street Journal in its June 1 edition said.
Proceeds of the funding will be used to boost its core Smartlogik
unit.

The proposed financing will also dilute the stakes of its
existing shareholders, saying it will offer shareholders the
option to subscribe for a proportion of the new shares.

Bright Station, which plans to rename the company Smartlogik PLC,
is in the process of closing what remains of both its Sparza and
OfficeShopper businesses, and will continue to cut head office
staff and other costs.


BRITISH TELECOM: Considers Cost-Cutting Measures at Concert
-----------------------------------------------------------

British Telecommunications is considering cost-cutting measures
at Concert, its international joint venture with AT&T, as losses
widened to a rate of 700 million pounds ($1 billion) a year or 14
million pounds a week, according to The Sunday Times' report.

BT chairman Sir Christopher Bland said that it might merge
Concert and BT Ignite, the division that provides broadband
Internet and web-hosting services to corporate customers. The
merger would be a complex transaction that could be worth 15
billion pounds.

Other option would involve heavy job losses among its 6,000
workers. The company had also introduced a recruitment freeze and
placed restrictions on travel and other expenses.


GLOBAL TELESYSTEMS: Moody's Cuts Rating to C
--------------------------------------------

Moody's Investors Services has lowered the ratings of Global
TeleSystems Group, Inc. and GTS TeleSystems Europe B.V.,
following the company's announcement that GTS Europe has elected
not to pay cash interest payments of approximately 26.9 million
on its 275.0 million 11.0% senior notes due 2009 and 225.0
million 10.5% senior notes due 2006, constituting an event of
default as of July 1, 2001. This concludes the review for
possible downgrade that commenced in November 2000.

Ratings affected by the downgrade are the senior implied rating
of GTS from Caa2 to C, unsecured issuer rating from Caa3 to C,
$105.0 million 9.875% senior notes due 2005 from Caa3 to C,
$362.0 million (reduced from $466.0 million through a debt-for-
equity swap) 5.75% senior subordinated debendtures due 2010 from
Ca to C, and $500.0 million 7.25% convertible preferred stock at
"c".

The unsecured issuer rating of GTS Europe was also reduced from
Caa1 to Ca, $265.0 million 11.5% senior notes due 2007 from Caa1
to Ca, $200.0 million 10.375% senior notes due 2009 from Caa1 to
Ca, 85.0 million 11.5% senior notes due 2006 from Caa1 to Ca,
275.0 million 11.0% senior notes due 2009 from Caa1 to Ca, 225.0
million 10.5% senior notes due 2006 from Caa1 to Ca.

The ratings downgrade and the negative outlook reflect Moody's
expectation of further defaults in the context of the company's
recapitalization efforts, as well as the limited recovery
prospects for bondholders.

Despite GTS's improved liquidity profile over recent quarters,
and the progress achieved to date in re-focusing the business,
Moody's believes that the company's high debt burden compared to
its asset base and cash flows, combined with the significant
funding needs required to further develop operations, will likely
severely impair potential recovery values to bondholders.

For the first quarter of 2001, GTS reported total revenues of
approximately 121.3 million, for EBITDA of 10.5 million and total
indebtedness of approximately 2.95 billion.


MARKS & SPENCER: Will Find Buyer by Year's End
----------------------------------------------

Marks & Spencer France chairman Alain Juillet is optimistic he
will be able to find a sole buyer for the French unit of the UK
retailer by the end of the year, Namnews in its June 1 edition
said.

Around 10 potential buyers have already been identified, one
being Galeries Lafayette. Foreign retailers have also expressed
an interest.

The first stage towards finding a buyer, which is the submission
of a report due by the end of June, may be delayed. Group
chairman Luc Vandevelde has not responded to a request for a
meeting. Talks with potential buyers and negotiations on a jobs
plan can begin once MPs and employees have been consulted on the
report.


RAILTRACK GROUP: To Sell Property, Says Prime Minister Blair
------------------------------------------------------------

Prime minister Tony Blair will tell Railtrack that it must sell
its 3-billion property portfolio, according to the Sunday Times'
report. This means that the government will not hand over a
single penny until the group has shown it has done all it can to
raise the money itself.

The company can bridge a 3-billion-pound funding gap by selling
its property and that's what the government will tell it to do,
Blair said.

Blair was outraged by Railtrack's 138-million-pound dividend
payout to shareholders last month. He will end any cash injection
from either the government or rail regulator Tom Winsor until the
company raises through a sale of its huge property portfolio.

Railtrack's property assets include mainline stations, shopping
centers, car parks and swathes of undeveloped land.

                                 *************

      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.

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