/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010703.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 Tuesday, July 03, 2001, Vol. 2, No. 129 Headlines * B E L G I U M * CUSTOM SILICON: Court Okays Restructuring and Repayment Plan LERNOUT & HAUSPIE: Finds Bidder for Mendez SABENA SA: Breaks Talks With Swissair SABENA: Government Declines Comment on Swissair-Sabena Agreement * C Z E C H R E P U B L I C * KOMERCNI BANKA: Fitch Places Rating on Watch Positive * F R A N C E * LYCOS FRANCE: Announces Reorganization Plan * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Berlin Mayor to Resolve Ownership Issue BANKGESELLSCHAFT BERLIN: BAKred Expects 2BB-Euro Shortfall BANKGESELLSCHAFT BERLIN: Land Berlin and FSO Expresses Support PIXELPARK AG: Expects Payoff From Venturepark * I R E L A N D * EIRCOM PLC: Sticks With Valentia Bid * I T A L Y * ALITALIA-LINEE: Looks Certain to Join SkyTeam * N E T H E R L A N D S * KPN NV: To Launch $212.6MM One-Year Bond KPN NV: Will Not Sell Germany Unit KPN NV: Will Not Sell KPNQwest Stake LETSBUYIT.COM: Stops Negotiations With Lead Investor * S W E D E N * BJORKDALSGRUVAN: Liquidator Sells Swedish Mine * S W I T Z E R L A N D * SWISSAIR GROUP: Sells Air Littoral to Marc Dufour * U N I T E D K I N G D O M * BRITISH NUCLEAR: Loses 210MM Pounds After Breakdown BRITISH TELECOM: Inks Sale Deal With Spain's Airtel BRITISH TELECOM: Set to Divide Concert HUNTINGDON LIFE: Government Grants HLS Banking Facilities INDEPENDENT INSURANCE: Customers Face Credit Threat INDEPENDENT INSURANCE: From Bright to Dim Future INDEPENDENT INSURANCE: SFO to Question GE Executive JUST2CLICKS.COM: Closes Shop RAILTRACK GROUP: Connex Chief Backs Railtrack ============= B E L G I U M ============= CUSTOM SILICON: Court Okays Restructuring and Repayment Plan ------------------------------------------------------------ The Brussels Commercial Court on Friday approved the restructuring and repayment plan of Custom Silicon Configuration Services, Dow Jones Newswires reported. The court also removed its creditor protection status. The court decision was based on decreased fixed costs and its plan to convert debt to convertible bonds, which has been approved by shareholders and creditors. Under the terms of the restructuring plan, a majority of debt will be exchanged into convertible bonds, which can be converted into shares by June 20, 2003, at the latest. CS2 is still seeking a partner to help support growth. LERNOUT & HAUSPIE: Finds Bidder for Mendez ------------------------------------------ Lernout & Hauspie Speech Products NV told shareholders it has a concrete bidder for the speech technology group's profitable translation business Mendez, Dow Jones Newswires reported on Friday. "With one party, there are concrete talks going on," chief executive Philippe Bodson told shareholders. The price is seen to be below $160 million, the news agency added. Mendez, which specialized in machine translation, was responsible for a large part of L&H's revenues. It is not part of L&H's bankruptcy-protection proceedings. SABENA SA: Breaks Talks With Swissair ------------------------------------- Talks have broken down between Belgian airline Sabena and struggling airline group Swissair, the Sunday edition of the Financial Times said. The breakdown of talks comes as Swissair agreed to sell French airline Air Littoral to its former chief executive Marc Dufour. The Belgian government has grown irritated by statements by Swissair chief executive Mario Corti that he would not increase Swissair's stake in Sabena beyond 49.5%. The Belgium government is concerned about the impact of a possible Sabena bankruptcy, but is constrained by European Commission rules forbidding state aid to airlines. SABENA: Government Declines Comment on Swissair-Sabena Agreement ---------------------------------------------------------------- The Belgian government has no comment on Swissair Group chief executive Mario Corti's statement to Sabena Airlines trade unions that both groups have reached an agreement over restricting Swissair's stake in Sabena, the Friday edition of AFX News said. Swissair promised to raise its shareholding in Sabena from 49.5% to 85%, but has also made clear it is not willing to continue funding its ventures' operating losses. The Belgian government owns the remaining 50.5%. =========================== C Z E C H R E P U B L I C =========================== KOMERCNI BANKA: Fitch Places Rating on Watch Positive ----------------------------------------------------- International rating agency Fitch has placed its 'BBB' long-term foreign currency rating of Komercni banka and individual rating of 'D/E' on Rating Watch Positive following Thursday's announcement that the Czech Republic's 60% stake in KB will be sold to France's Societe Generale. Action on the individual rating reflects extensive restructuring undergone during the past 18 months following serious deficiencies in asset quality and capital. The rescue package from the government included a CZK9.5 billion capital injection and the transfer of impaired assets, which has been further supplemented by a state guarantee covering losses arising from low quality assets up to CZK20 billion in December 2000. A strong management team has taken the bank forward, re- establishing its competitive position in the market with a more focused strategy and improved efficiency. SG, the third largest French banking group, is paying 1.2 billion euros for the bank. The acquisition of KB fits with SG's strategy to expand its activities in the region, but it is aiming for expansion of retail business here, and KB is predominantly a corporate bank. =========== F R A N C E =========== LYCOS FRANCE: Announces Reorganization Plan ------------------------------------------- Lycos France SA has informed its employees of a company reorganization, the Frankfurt Stock Exchange in its Friday press release said. The reorganization includes cutting costs of technical infrastructure, reducing of budgets connected with marketing and improving teams' productivity. Twenty to forty job positions may also be affected. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Berlin Mayor to Resolve Ownership Issue ---------------------------------------------------------------- Berlin's new Social Democratic mayor Klaus Wowereit is taking charge of the ownership restructuring of Bankgesellschaft Berlin, the Wall Street Journal in its June 28 edition said. Wowereit is negotiating with Norddeutsche Landesbank, which owns 20% of BGB, insurance group Parion, which holds 7.5%, and Germany's savings-bank association. Also Wednesday, the head of Germany's regulatory agency for banking, Jochen Sanio, said he was shocked by BGB chief executive Wolfgang Rupf's statement that the bank would go bankrupt without a state bailout. Regulator chief Sanio believes the bank is currently in need of a 2 billion euro bailout. BANKGESELLSCHAFT BERLIN: BAKred Expects 2BB-Euro Shortfall ---------------------------------------------------------- According to the assessment of the Federal Supervisory Office (BAKred), Bankgesellschaft Berlin should require additional capital of 2 billion euros. Majority shareholder Land Berlin would cover the necessary amount after the financial statements has been completed. The new Berlin Senate remained committed to the promise of the previous government to fully cover the capital requirements of the Bankgesellschaft. BAKred confirmed that Bankgesellschaft CEO Wolfgang Rupf made an exorbitant contribution with risk provisions of DM7.4 billion within a very short span. BANKGESELLSCHAFT BERLIN: Land Berlin and FSO Expresses Support -------------------------------------------------------------- Bankgesellschaft Berlin shareholder, Land Berlin, and the President of the banks watchdog, the Federal Supervisory Office, have expressed their support for Bankgesellschaft CEO Wolfgang Rupf. In an interview with the Handelsblatt, the Berlin mayor Klaus Wowereit gave the restructuring of the Bankgesellschaft highest priority. PIXELPARK AG: Expects Payoff From Venturepark --------------------------------------------- Internet service providers Pixelpark AG said on Wednesday it expects a payoff of approximately 600,000 euros from Venturepark Incubator AG. The payoff will be possible as a result of new contractual agreements between the two companies. As early as May, Pixelpark decided to withdraw from the incubation business and has therefore written off the entire value of its investment in Venturepark Incubator AG in the first quarter of 2001. The 600,000-euro payment will contribute fully as unbudgeted earnings at equity to Pixelpark. ============= I R E L A N D ============= EIRCOM PLC: Sticks With Valentia Bid ------------------------------------ Phone company Eircom intends to continue with a bid from the Valentia consortium, despite a new 1.32-euro-a-share offer from Denis O'Brien's Eisland, the Sunday edition of CNN news said. The battle for control of the Eircom has been ongoing since October last year, before it sold wireless operator Eircell to Vodafone for more than $4 billion. Eisland's offer is 5% more than the 2.9 billion euros being offered by Valentia, which is backed by financier George Soros and Goldman Sachs. ========= I T A L Y ========= ALITALIA-LINEE: Looks Certain to Join SkyTeam --------------------------------------------- The Italian government said that there would be no exchange of equity when flag carrier Alitalia signs a commercial agreement with Air France this month, M2 Communications Ltd. in its June 28 edition said. The statement was a confirmation that Alitalia was considering a team up with Air France and the SkyTeam alliance. Alitalia's board members will review alliance talks at a meeting before July 10. ===================== N E T H E R L A N D S ===================== KPN NV: To Launch $212.6MM One-Year Bond ---------------------------------------- KPN NV will issue a 250 million euro ($212.6 million) one-year bond in a bid to reduce its 23.2 billion euro ($19.73 billion) debt, the Wall Street Journal reported yesterday. The former Dutch telecommunications monopoly said its asset- backed bond would reduce the cost of funding by 1.5%, saving the company about 4 million euros a year. Analysts said the bond, managed by Schroder Salomon Smith Barney, could increase risk for holders of other KPN bonds because these investors may no longer be able to claim payment from the income of the phone network. Much of KPN's debt stems from the acquisition cost of 77.49% stake in German mobile-phone operator E-Plus and prices paid for third-generation wireless licenses in Germany, Belgium and the Netherlands. KPN NV: Will Not Sell Germany Unit ---------------------------------- KPN is not interested in selling off its German wireless unit, e- Plus Mobilfunk Gmbh, Dow Jones Newswires reported on Friday. E-Plus is of key importance to KPN, since the unit is the group's strongest asset with a third-generation mobile license and eight million customers in Germany. At the same time, e-Plus is responsible for almost half of KPN's 23-billion-euro debt. According to telecom analyst Hans Huff of Bankgesellschaft Berlin, KPN will probably look at a partner for e-Plus if the Belgacom merger does not work out. If e-Plus were to find a German partner, a combination might be welcomed by capital markets, even at the risk of losing part or all of its investment in the German license. KPN NV: Will Not Sell KPNQwest Stake ------------------------------------ Royal KPN NV has no plans to sell its stake in cable infrastructure company KPNQWest NV since it is an important part of their IP (Internet Protocol) data operations, Dow Jones Newswires reported on Friday. Earlier, the Financial Times reported that KPN will be able to sell its 44% stake in KPNQWest, a joint venture with QWest, if it merged with Belgium's Belgacom. LETSBUYIT.COM: Stops Negotiations With Lead Investor ---------------------------------------------------- LetsBuyIt.com N.V. on Friday said it has been forced to stop negotiations with one of the lead investors. As announced earlier, Shmulik Stein International Limited has committed to investment funds 30 million euros, subject to LetsBuyIt.com reaching certain milestones during 2001 and 2002. Despite the fact that so far milestones have been reached by the Company, Shmulik Stein does not honor its obligations under the existing Investment Agreement. Shmulik Stein has subsequently attempted to renegotiate the terms of the Investment Agreement. Renegotiations were stopped due to unacceptable new investment terms. In addition, Shmulik Stein refused to provide securities before the issuance and registration of any new shares to SSII. LetsBuyIt.com has relied on these payments for its cash flow plan. The company is actively seeking alternative funding to ensure the continuity of its business. Its lawyers have also initiated legal steps in order to recover damages in the online retailer. =========== S W E D E N =========== BJORKDALSGRUVAN: Liquidator Sells Swedish Mine ---------------------------------------------- Liquidator Lars-Hakan Lindberg placed Swedish mine Bjorkdalsgruvan up for auction on Thursday with a starting price of 14 million Swedish krona, Dagens Nyheter & World Reporter reported. The mine was previously owned by Terra Mining, which went into liquidation two years ago with debts of 270 million Swedish krona. The liquidation was explained by falling gold prices, major loans and high interest rates. Lindberg has tried to sell the mine since Terra's liquidation but said that no companies have expressed serious interest. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Sells Air Littoral to Marc Dufour ------------------------------------------------- Troubled Swiss airline Swissair Group has on Friday agreed to sell Air Littoral to the French airline's former chief executive Marc Dufour. Swissair chief executive Mario Corti said that the deal would provide a solid future for a large part of the Air Littoral workforce, which has about 1,100 employees. The agreement was supported by Air Littoral president Marc Rochet and of the French officials. Swissair Group currently holds 49% of Air Littoral's shares. Both parties agreed not to disclose the details of the agreement. =========================== U N I T E D K I N G D O M =========================== BRITISH NUCLEAR: Loses 210MM Pounds After Breakdown --------------------------------------------------- British Nuclear Fuels lost 210 million pounds last year partly because of breakdowns at its Magnox generating plant and problems in its Spent Fuel business, according to The Times' Friday report. The results prompted Friends of the Earth to call for the National Audit Office to investigate the nuclear group. A BNFL spokesman said the results reflected the closure of the Wylfa power station for most of the year and difficulties at a downstream treatment plant at its Sellafield site. BRITISH TELECOM: Inks Sale Deal With Spain's Airtel --------------------------------------------------- British Telecom on Friday has closed the sale of its interest in Airtel Movil S.A. to Vodafone for 1.108 billion pounds. BT announced its intention to sell its 17.8% stake in Airtel in May. BT will use the proceeds to reduce its debt, which on March 31 has reduced from 27.9 billion pounds. Since May 10, BT has received 3.1 billion pounds from the sale of its stake in Japan Telecom, 5.9 billion pounds from its Rights Issue; 2.1 billion pounds from the sale of Yell and 1.1 billion pounds from this sale in Spain. Further proceeds are anticipated from the recently announced property deal, and the sale in Malaysia. BRITISH TELECOM: Set to Divide Concert -------------------------------------- US-based AT&T and British Telecommunications are ready to split between the two telecom giants their loss-making Concert joint venture, the Financial Times reported on Sunday. It is believed the companies have decided that dividing up Concert's customers and its assets is the only way to stem losses. BT chairman Sir Christopher Bland and AT&T counterpart Michael Armstrong met on Friday in London to discuss the venture's future. AT&T and British Telecom declined to comment on the report. HUNTINGDON LIFE: Government Grants HLS Banking Facilities --------------------------------------------------------- The government will give animal research company Huntingdon Life Sciences banking facilities at the Bank of England to block attempts by animal rights activists to force it out of business, the Financial Times reported on Sunday. The decision, engineered by science minister Lord Sainsbury, demonstrates the government's determination not to let a company be driven out of business by animal extremists. The company has been looking for a bank since early this year when NatWest withdrew its support. For several months, HLS has been in talks with the government over its banking arrangements. INDEPENDENT INSURANCE: Customers Face Credit Threat --------------------------------------------------- Up to 100,000 customers who cancelled direct debits linked to Independent Insurance's policies were threatened by Premium Credit Limited with legal action, the Financial Times in its June 29 edition said. Premium Credit warned customers that they could face legal action if they did not continue to honor their monthly obligations even though Independent is now in liquidation and their policies are effectively worthless. Independent Insurance now faces investigation from the Institute of Chartered Accountants, the Serious Fraud Office and city regulator Financial Services Authority. The company went into voluntary liquidation after it was revealed that it was facing unquantifiable losses stemming from claims that had not been entered into its accounting systems. INDEPENDENT INSURANCE: From Bright to Dim Future ------------------------------------------------ UK-based Independent Insurance, which reported a 70% rise in pre- tax profits in 1995, now faces a gloomy future. It started when its non-executive directors initiated an inquiry into the role of the auditors and external actuaries at the company, which was valued at 1 billion pounds but is now almost worthless. The directors wanted to find out why KPMG and Watson Wyatt failed to uncover the full extent of the problems at Independent. It is believed that finance director Dennis Lomas and deputy managing director Philip Condon did not receive information on the existence of the reinsurance contracts that played an important part in the collapse of the insurance company. The Financial Times this month has learned that Independent Insurance failed to record at least 62 million pounds of insurance claims in its accounting systems. This indicates the scale of the losses facing Independent, but the total figure for unrecorded claims is expected to be significantly higher. Then, Independent Insurance collapsed into provisional liquidation, causing worries for policyholders. Accounting firm PricewaterhouseCoopers, which was appointed provisional liquidator, is conducting an investigation into the firm over alleged reinsurance contracts in the company. PcW added Independent Insurance would run out of money within few months if it remained in business. It is even looking for a buyer for the French unit, Independent Insurance France, as it will not be able to cover claims for long. Furthermore, city regulator Financial Services Authority launched its own investigation on the private investors who sold Independent's shares in February. The investors include former staff at the company and associates of Independent's founder Michael Bright, who is now at the center of an investigation by the Serious Fraud Office (SFO). These investors are now considering legal action against the directors of the insurance group, its non-executives, and its auditor KPMG. Bright has appointed fraud lawyers Burton Copeland to act for him during the SFO investigation. Meanwhile, half of Independent's 2,000 employees will loose their jobs following the collapse of the insurance company. Although no final decision has been taken on the number of lay-offs, it is expected to come from the staff involved in writing new business. INDEPENDENT INSURANCE: SFO to Question GE Executive --------------------------------------------------- The Serious Fraud Office (SFO) will interview Walter Copping, the head of GE Capital's European insurance business, into the collapse of Independent Insurance, The Sunday Times reported. Copping, who is managing director of Ireco, negotiated a series of controversial reinsurance contracts with Independent's chief executive Michael Bright, the Times added. The SFO, the City regulator Financial Services Authority and provisional liquidator PriceWaterhouseCoopers (PwC), want to know why Ireco wrote these contracts with Independent. Investigators also want to know why Independent mortgaged 23 of its properties to Irish European Reinsurance Company, another GE subsidiary. Some shareholders are even considering whether to take action against Independent auditor KPMG and actuary Watson Wyatt for failing to spot the black hole at the company. On Friday, PwC cut 1,044 jobs at the company. More redundancies will be made in the coming weeks. JUST2CLICKS.COM: Closes Shop ---------------------------- The business-to-business Internet company Just2Clicks has given up hope of becoming profitable and is to close down since not enough businesses are using its services for long-term survival, according to BBC News' Friday edition. The site has piled up losses of 34.2 million pounds in the six months to March 31. In February, the firm announced that it was looking for a merger partner and was to sell three out of its seven e-commerce portals. It then embarked on a restructuring program that cost it 26.5 million pounds. RAILTRACK GROUP: Connex Chief Backs Railtrack --------------------------------------------- Olivier Brousse, managing director of train operator Connex, wants Railtrack to remain the guardian of the national network, according to The Sunday Times' report. Brousse, who believes train-operating companies (Tocs) should not be seeking to take control of chunks of the network, said he doesn't want to take over any part of the network. Connex runs the South Eastern franchise. It is also bidding for the Transpennine, Wales & West and Thameslink services. ************ 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 * * *