/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010620.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 Wednesday, June 20, 2001, Vol. 2, No. 120 Headlines * B E L G I U M * CUSTOM SILICON: Announces Mass Layoff SABENA SA: Business Plan Needs Extra Funding and Cost Cutting SABENA SA: To Cancel Airbus Orders XEIKON NV: Plans US$40MM Bond Issue * F R A N C E * AIR LIBERTE: To Reduce Flights at Orly * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Berlin Probes Real Estate Unit BROKAT AG: S&P Lowers Ratings to B- DAIMLERCHRYSLER AG: Chrysler to Sell Parts SPAR HANDELS: Steps Up Restructuring * I T A L Y * GRAPES COMMUNICATIONS: Long-Term Ratings Remain Negative * S W I T Z E R L A N D * SWISSAIR GROUP: Ernst & Young to Conduct Extraordinary Audit * U N I T E D K I N G D O M * BRITISH TELECOM: Will Meet Debt Target Early E-DISTRICT.NET: Shares Sink to 90% INDEPENDENT INSURANCE: A.M. Best Downgrades Rating to F INDEPENDENT INSURANCE: Calls in PwC to Conduct Probe INDEPENDENT INSURANCE: Collapses Into Liquidation INDEPENDENT INSURANCE: S&P Downgrades Ratings to BB INDEPENDENT INSURANCE: Fitch Downgrades IFS Rating to DD LAKAH GROUP: Fitch Downgrades Rating to D NTL INCORPORATED: Former NTL Ireland Boss to Head UK Operation NTL INCORPORATED: Mulls Broadcast Arm Sale to Raise 1BB Pounds SCOOT.COM PLC: Considers Strategic Review TADPOLE TECHNOLOGY: Sees Bigger 2001 Loss ============= B E L G I U M ============= CUSTOM SILICON: Announces Mass Layoff ------------------------------------- CS2 in its June 13 press release said it plans to decrease its 201 workers to a staff of about 150, following the company's May announcement of collective dismissal. Consultation has started to find alternative measures that could alleviate the consequences of the collective redundancy. The works council has agreed to drastically curtail the labor cost during the coming period of fall in production. On the other hand, the measures have been taken in function of a rapid availability of competent workers when the revival of the market of semiconductors will occur. SABENA SA: Business Plan Needs Extra Funding and Cost Cutting ------------------------------------------------------------- The board of directors of Sabena Belgian World Airlines said in its press release on Monday that the new business plan presented to them by chief executive Christoph Mueller needs further capital injection and cost reduction. Sabena's shareholders, the Belgian government and Swissair, will now be consulted about the financing of the business plan. The detailed contents of the business plan will not be revealed to employees or other interested parties until the board and the two principal shareholders have approved the financing. SABENA SA: To Cancel Airbus Orders ---------------------------------- Sabena Belgian World Airlines will cancel its order of 19 Airbus A320/319s from Airbus Industrie, the Monday edition of AFX News said. Sabena ordered 34 Airbus planes three years ago, of which 15 have been delivered. In April, press reports said the Belgian airline, which posted a net loss of 325 million euro in 2000 against a loss of 14 million a year earlier, needs a further cash injection of 400 million euro. XEIKON NV: Plans US$40MM Bond Issue ----------------------------------- Triggered by the company's recent operating losses and high level of working capital, printing systems supplier Xeikon N.V. announced on Monday it intends to raise an additional $40 million in convertible debt securities in a private placement. The issuance of convertible debt securities will be subject to the approval of the company's shareholders, who will be convened for an extraordinary shareholders meeting in the third quarter of 2001. The company has engaged an investment bank to assist it in the offering. =========== F R A N C E =========== AIR LIBERTE: To Reduce Flights at Orly -------------------------------------- AOM and Air Liberte airlines, which filed for bankruptcy protection on Friday, said they were set to start reducing operations out of Orly Airport, the Wall Street Journal reported on Monday. The daily round-trip flights from Paris to Nice will be reduced from fourteen to twelve. Trips from Paris to Toulouse will also be cut to eight from ten, while from Paris to Toulon to five from six, and from Paris to Perpignan to five from six. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Berlin Probes Real Estate Unit ------------------------------------------------------- Berlin prosecutors have launched an investigation into Bankgesellschaft Berlin's real estate subsidiary, IBAG, the June 16 edition of Reuters said. The decision to launch the probe occurred after the bank commissioned an independent review of IBAG and shared the review's findings with prosecutors. The crisis in Bankgesellschaft started when banking watchdog Bundesaufsichtsamt fur das Kreditwesen (BaKred) announced it would be investigating the company for irregularities in its property lending business. Bankgesellschaft's losses have worsened the financial situation of its largest shareholder, the city-state of Berlin, by increasing the city's debt mountain of already 70 billion marks. BROKAT AG: S&P Lowers Ratings to B- ----------------------------------- Standard & Poor's on June 14 lowered its long-term corporate credit and senior unsecured debt ratings on electronic brokerage and banking software provider Brokat AG to single-'B'-minus from single-'B'. At the same time, the ratings were placed on CreditWatch with negative implications. The rating downgrades and CreditWatch placement reflect the increasing uncertainties about Brokat's ability to rapidly secure financing sources to fund its operations in the medium-term. With a cash balance of 89 million euros at the end of March 2001, the company had sufficient financial flexibility to fund its operations to approximately the end of the third quarter 2001. In addition, recently announced restructuring measures, including the closure of certain foreign subsidiaries and a reduction of about 20% of its workforce, will pressure further existing cash balances. The resolution of the CreditWatch status will focus on the impact of recently announced restructuring measures on Brokat's financial flexibility and its ability to secure new funding sources in the near term. If the company fails to access new funding sources, Standard & Poor's said the ratings would be further downgraded. DAIMLERCHRYSLER AG: Chrysler to Sell Parts ------------------------------------------ Chrysler plans to sell some of its parts makers to stimulate DaimlerChrysler's drive to cut costs, Reuters in its June 16 edition said. In February, DaimlerChrysler announced a plan to turn around its loss-making U.S. unit that includes cutting 26,000 of its 125,000 jobs and reducing costs by $2.1 billion by the end of 2001. The cost-savings plan appears to be on track, as 13,000 manufacturing jobs have been reduced sooner than expected. SPAR HANDELS: Steps Up Restructuring ------------------------------------ Germany's leading food retailer Spar Handels AG announced a restructuring in its aim to return the group to profit by the fourth quarter of this year, Handelsblatt in its June 14 edition said. Under the restructuring plan, the group will focus on the 3,000 independent retail outlets that Spar supplies as a wholesaler, its discount chain Netto with around 900 stores, and Eurospar with 400 stores. All of the group's other activities will be sold or repositioned. They include the non-food business Kodi (120 stores), cash & carry activities, outlets at petrol stations, and Internet portal Einkauf 24. The group, which booked a loss of around DM357.8 million in 1999, has not yet decided which units will be sold. The restructuring plan is also expected to require around DM500 million in financing. ========= I T A L Y ========= GRAPES COMMUNICATIONS: Long-Term Ratings Remain Negative -------------------------------------------------------- Standard & Poor's on June 13 maintained the long-term ratings of Grapes Communications on CreditWatch with negative implications, following the announcement by Grapes that it has sold its Spanish operations to Portugal's largest alternative telecommunications operator, ONI, for about 68 million euros, and that it is planning to fully repay its outstanding bank facility. The ratings on Grapes, a provider of communications services in Spain, Italy, and Greece, were initially placed on CreditWatch on March 14, 2001. Upon Grape's receipt of payment for the Spanish assets and full reimbursement of the secured bank facility, Standard & Poor's will affirm its long-term corporate credit rating on Grapes at triple-'C'-minus and will raise the senior unsecured debt rating to triple-'C'-minus from single-'C'. Standard & Poor's expects Grapes to fully repay and cancel its secured bank facility with the 68-million-euro cash proceeds from the sale of its fixed-line and wireless local loop services in Spain to ONI. The cancellation of the secured bank facility would remove the primary factor for the subordination of the company's 200 million euro senior unsecured notes issued at the holding level to liabilities at the operating level. While the sale of the Spanish operations would leave Grapes with about 58 million euros in nonrestricted cash, the company's financial flexibility nevertheless remains a critical factor. With an estimated cash-burn rate of about 17 million euro per quarter, the company should have sufficient cash to fund its operations for the coming two to three quarters but its ability to secure additional funding over this period is highly uncertain, Standard & Poor's said. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Ernst & Young to Conduct Extraordinary Audit ------------------------------------------------------------ Ernst & Young will carry out Swissair Group AG's extraordinary audit, according to AFX News in its Monday report. Swissair's annual general meeting in April voted in favor of an extraordinary audit, after the airline reported a 2.885 billion Swiss francs net loss. A local court has appointed Ernst & Young as accountants following PricewaterhouseCoopers' resignation as auditor for Swissair. =========================== U N I T E D K I N G D O M =========================== BRITISH TELECOM: Will Meet Debt Target Early -------------------------------------------- British Telecom will meet its ambitious debt-reduction target nine months ahead of schedule after closing its 5.9-billion-pound rights issue on Monday. The Times newspaper reported yesterday that BT issued the 207 million shares at 430p a share after an international tender that closed oversubscribed. Chairman Sir Christopher Bland said the proceeds of the issue would allow the company to deliver to shareholders the benefits of structural change. BT has raised more than 15.2 billion pounds in asset sales and through the issue since March. The telecom group raised another 120 million pounds by selling its 44% stake in Bharti Cellular. BT also plans to sell IT services arm Syntegra for 1 billion pounds and its stake in Cegetel in France for up to 3.5 billion pounds. E-DISTRICT.NET: Shares Sink to 90% ---------------------------------- Troubled interactive entertainment channel e-district.net sank 90% in one day as shares resumed trading after a four-month suspension, the Press Association in its Monday edition said. E-district.net reported in February that numbers for registered users, page impressions, and revenues were substantially overstated, prompting for an immediate suspension of its shares. Chief executive and company founder Steve Laitman was later dismissed. INDEPENDENT INSURANCE: A.M. Best Downgrades Rating to F ------------------------------------------------------- Insurance information source A.M. Best Co. has on Monday downgraded the rating of Independent Insurance Company Ltd to F (In Liquidation) from B- (Fair) with developing implications. The downgrade follows Independent Insurance's court application to be placed in administration. PricewaterhouseCoopers (PwC), the appointed provisional liquidators, is reviewing the financial position of the company and will be seeking to arrange a scheme that will enable the settlement of claims to policyholders. It is also seeking buyers for parts of the business that are still viable. INDEPENDENT INSURANCE: Calls in PwC to Conduct Probe ---------------------------------------------------- Independent Insurance has called in accountant PricewaterhouseCoopers to examine the alleged reinsurance contracts in the company as part of a review of events leading up to Independent's collapse, according to The Observer in its June 17 report. The insurer's board disclosed that it had uncovered a number of contracts believed to cancel out the benefits of another reinsurance contract. It is believed that non-executive directors did not receive information on the existence of the contracts before they signed off the 2000 accounts in March. City regulator Financial Services Authority is also believed to have launched its own investigation. Since the annual meeting in April, Independent has uncovered further contracts that would produce a loss. INDEPENDENT INSURANCE: Collapses Into Liquidation ------------------------------------------------- Independent Insurance has collapsed into provisional liquidation, causing worries for policyholders, according to BBC News' Monday edition. Accounting firm PricewaterhouseCoopers, which has been appointed provisional liquidator to sell the assets, is conducting an investigation into the firm over alleged reinsurance contracts in the company. The Serious Fraud Office has confirmed it is studying documentation on Independent Insurance to see if there is sufficient evidence to launch an investigation. A spokesman for the liquidator says job losses are inevitable, but it was too early to say how many of the 2,000 employees would go. INDEPENDENT INSURANCE: Fitch Downgrades IFS Rating to DD -------------------------------------------------------- Rating agency Fitch has on June 18 downgraded the Insurer Financial Strength (IFS) rating of Independent Insurance Company Limited to 'DD' from 'B'. The rating action follows the company's announcement that provisional liquidators have been appointed, recognizing the potential insolvency of the company. The provisional liquidators, PricewaterhouseCoopers, are currently assessing the liabilities of the company, which Fitch anticipates are greater than the total assets of the Independent. The agency believes that creditors are likely to vote for a scheme of arrangement that will provide the most efficient route to partial payment of outstanding liabilities. Fitch estimates that ultimate payments to creditors in a liquidation will be in the range of 50-90%. INDEPENDENT INSURANCE: S&P Downgrades Ratings to BB --------------------------------------------------- Standard & Poor's on June 14 lowered its counterparty credit and insurer financial strength ratings on insurer Independent Insurance Co. Ltd. to double-'B' from triple-'B'-plus. At the same time, Standard & Poor's revised the CreditWatch implications on Independent to negative, from developing, where they were placed on May 24, 2001. The lowering of the ratings follows the failure to complete the capital raising plans being pursued by its parent company, Independent Insurance Group PLC, and the subsequent temporary suspension of business, pending clarification of the appropriate level of technical provisions and the reinsurance position. The double-'B' rating reflects the company's weakened capital position in addition to its significantly damaged business reputation that will be difficult to recover from. The CreditWatch negative designation reflects the possibility of a further deterioration in the group's financial position if the technical provisions need to be increased and the reinsurance protection proves not to be robust. LAKAH GROUP: Fitch Downgrades Rating to D ----------------------------------------- International rating agency Fitch has on June 14 downgraded Lakah Group's Senior Unsecured debt rating to 'D' from 'CC' and taken the rating off Rating Watch Negative. The rating action follows the group's failure to make the June 8 interest payment due on its US$100 million 2004 bonds within the five-day grace period. Following this event of default, and considering the level of indebtedness within the group, Fitch views it as unlikely that Lakah will be able to repay all its obligations. The group had debt of some US$450 million at the end of 2000. NTL INCORPORATED: Former NTL Ireland Boss to Head UK Operation -------------------------------------------------------------- Ian Jeffers was appointed to head NTL's operations in Scotland, Wales and the North of Ireland, the Irish Independent reported on Monday. Jeffers will take up the new position in July. The former head of cable group NTL in Ireland left his position just weeks after the parent company caused major embarrassment to Irish management when it decided to stall the roll-out of digital TV and internet services to customers. Jeffers joined NTL in 1995 as head of communications in Northern Ireland. NTL INCORPORATED: Mulls Broadcast Arm Sale to Raise 1BB Pounds -------------------------------------------------------------- Cable and television company NTL plans to sell its broadcast transmission business in order to raise 1 billion pounds, the Sunday Times reported. NTL has been planning a partial flotation of its broadcast business, which in the first three months of the year generated 57 million pounds and 40% of the group's underlying earnings. NTL rival Crown Castle International is considering whether to make an offer for the loss-making network. The company is worth about 2.3 billion pounds. SCOOT.COM PLC: Considers Strategic Review ----------------------------------------- In response to speculation regarding a potential fundraising and efficiency improvement initiatives, Scoot has confirmed on Monday that it is examining a number of initiatives aimed to enhance Scoot's financial position and its path to profitability. No final decision has yet been reached, however, the Board of Scoot expects to complete a strategic review by the end of June. TADPOLE TECHNOLOGY: Sees Bigger 2001 Loss ----------------------------------------- Laptop maker Tadpole Technology warned that its loss for the year would be bigger than market expectations, the Financial Times reported on Friday. For the first six months of the year, its loss widened to 3.0 million pounds from 1.2 million pounds as investments in marketing and research & development rose more than 70%. The company said order delays caused by the worldwide economic slowdown hit revenues and that this would continue in the second half. *********** 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 * * *