/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010720.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 Friday, July 20, 2001, Vol. 2, No. 141 Headlines * A U S T R I A * STEINER GROUP: Faces More Problems Over Steiner Probe * B E L G I U M * CITY BIRD: Sees Profit Next Year FLV FUND: Opts to Remain Autonomous REAL SOFTWARE: Sells American Subsidiaries SABENA SA: Belgium to Face EU Scrutiny Over Sabena Aid * F R A N C E * AIR LIBERTE: Atlani Makes Last-Minute Bid AIR LIBERTE: Takeover Suspense Continues LEON DE BRUXELLES: Shares Sink by 24% * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Chairman Admits Faults BANKGESELLSCHAFT BERLIN: NordLB Undecided on Capital Hike MANAGEMENT DATA: Appeals for Insolvency MANAGEMENT DATA: Shares Dive by 70% MET@BOX AG: Shareholders Criticize Prosecutor SPAR-HANDELS: Admits Management Errors * I R E L A N D * EIRCOM PLC: US Investor Will Sell Eircom Stake If Bid Succeeds * I T A L Y * ALITALIA-LINEE: 1997 Investment Is State Aid ALITALIA-LINEE: Seeks Damages From Commission Over State Aid * N E T H E R L A N D S * KPN NV: Belgium Wants Clarity on Belgacom KPN NV: Talks With Belgacom at a Standstill UNITED PAN-EUROPE: Banks Invest 450MM Euros in UPC * R U S S I A * MEDIA-MOST: Kiselyov and Skvortsov at NTV Again * S W I T Z E R L A N D * PROGRESS WATCH: Appeals Against Bankruptcy Ruling SWISSAIR GROUP: Soars on Sabena Deal * U N I T E D K I N G D O M * BALTIMORE TECHNOLOGIES: Chantilley Withdraws Bid Approach BRITISH TELECOM: Defends Plan to Break Up Company BRITISH TELECOM: Regains Financial Health by Trimming Heavy Debt EQUITABLE LIFE: FSA Faces Attack Over Handling of Equitable INDEPENDENT INSURANCE: PwC to Cancel Policies MARCONI PLC: Holders Criticize Management MARKS & SPENCER: To Close Belgian Stores Before Year's End ONE.TEL: May Face A$80MM Claim ============= A U S T R I A ============= STEINER GROUP: Faces More Problems Over Steiner Probe ----------------------------------------------------- Engineering group Steiner is facing up to further problems with the revelation that former head Leopold Steiner is under investigation on suspicion of insurance fraud, the Wirtschaftsblatt & Financial Times reported on Wednesday. The investigator believes there is a possible link between the fire last year at Steiner subsidiary Steco, which caused an estimated damage of 300 million Schilling. It is believed that documentary evidence has been found to prove that Steiner overvalued the contents of the warehouse. ============= B E L G I U M ============= CITY BIRD: Sees Profit Next Year -------------------------------- Belgian airline City Bird Holding, which had a 62 million euros net loss in 2000, expects to be profitable next year, Dow Jones Newswires reported on Tuesday. The airline is currently under bankruptcy protection from the Brussels commercial court in Belgium until September 26 to allow its charter flights to take place as scheduled. FLV FUND: Opts to Remain Autonomous ----------------------------------- The Board of Directors of Belgian venture capital group Flanders Language Valley Fund said Tuesday said it has decided to continue on its own as talks to find a partner or acquirer have failed. During the last few months, FLV has evaluated a number of scenarios for possible partnerships and/or acquisitions. The company stopped all negotiations since the proposals of interested partners did not correspond to the fair or potential value of the fund. The proposals did not contain adequate protection for the shareholders. To safeguard and optimize the current value of the fund in the interest of the shareholders, the Board of Directors decided that FLV Fund would continue its activities autonomously but in a different way. FLV Fund said it currently has $44.5 million in cash. Together with the proceeds from expected exits, FLV Fund should be able to optimize the value of the existing portfolio. REAL SOFTWARE: Sells American Subsidiaries ------------------------------------------ Real Software Group has on July 18 reached an agreement with Real Energy Solutions, Inc. to acquire all of the shares Real Software holds in Real Enterprise Solutions, Inc. (RES) and Integration & Networking Consultants, Inc. (INC). The sale of its American subsidiaries is for Real software a further step in the implementation of its strategy to focus geographically on the European market. Real Software already stopped funding the American entities in March and has since examined possible ways to leave the American market. Real Software is confident that this MBO of her American subsidiaries is the next important step after last week's announcement that it reached an agreement on restructuring its outstanding debts with a syndicate of banks. The MBO-deal consists of a complete sale of all the shares held in RES and INC by the Group for "one" symbolic dollar. Also part of the deal is the sale to Real Energy Solutions of all of the intercompany debts held by Real Software. Two weeks ago, Real Software North America, the smallest of the three American subsidiaries, which had stopped its activities already some time ago, was filed under Chapter 7. As of this moment, all direct activity of the Real Software Group in the USA has come to a definite end. The withdrawal from its loss-making subsidiaries in the U.S. is for Real Software, after the restructuring of its debt, the group's most important business achievement in most recent months. SABENA SA: Belgium to Face EU Scrutiny Over Sabena Aid ------------------------------------------------------ The Belgian government will face renewed scrutiny from the European Union Commission over its latest cash contribution to a 430 million euro rescue package for national airline Sabena SA, Dow Jones Newswires reported on Wednesday. A Commission spokesman said they would be unable to comment further until it had received notification of the deal from the Belgian government, which holds a 50.5% stake in Sabena. On Monday, the Commission said it was considering opening a formal investigation into whether the Belgian government's previous cash contribution of 100 million euro constituted state aid. =========== F R A N C E =========== AIR LIBERTE: Atlani Makes Last-Minute Bid ----------------------------------------- Businessman Alain Atlani, who is willing to bring 3 billion French francs to the deal, made a last-minute offer for French airline AOM-Air Liberte, La Tribune & Financial Times reported on Wednesday. Details of the bid by airline chairman Marc Rochet are still unknown as he is 350 million French francs short of the total sum needed. Given the situation, the court may decide to delay its decision on the fate of the company until next week. The two main contenders for the acquisition of the airlines are US-owned property group Fidei and Holco, led by pilot Jean- Charles Corbet. AIR LIBERTE: Takeover Suspense Continues ---------------------------------------- Receivers Gilles Baronnie and Baudoin Libert of the troubled French airline group AOM-Air Liberte has refused to rule out any option, the Liberation & Financial Times reported on Wednesday. The two receivers are expected to submit a report on the airline's financial situation and the takeover bids it has received to the commercial court of Creteil as soon as the bidding period ends. The offers for AOM-Air Liberte's activities have been lodged by the French property company Fidei and Air France pilot Jean- Charles Corbet, in association with Holco. AOM and Air Liberte were forced to file for bankruptcy last month after shareholders Swissair Group and Marine-Wendel refused to bail out the airlines. LEON DE BRUXELLES: Shares Sink by 24% ------------------------------------- The share of mussels-and-fries restaurant chain Leon de Bruxelles plunged 23.58% on Monday in Paris, to close at 1.62 euros. The Nanterre commercial court in France placed Leon de Bruxelles in receivership on June 28, with an observation period of six months. Last year, the troubled chain sustained a 12.1 million-euro loss. It now has 57 million euros worth of debts. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Chairman Admits Faults ----------------------------------------------- Chairman Wolfgang Rupf of state-owned bank Bankgesellschaft Berlin has admitted that he and the board of management personally made mistakes, although he said they had not known the risk situation concerning the bank's property, Suddeutsche Zeitung & Financial Times reported on Wednesday. Rupf expects major shareholders Parion and NordLB to participate in the urgently needed capital increase at the bank. The 2-billion-euro capital increase, demanded by the German banking watchdog BAKred, will take place by means of a share issue at a ratio of one to two and by the establishment of a dormant partnership. The majority owner, the Berlin state, wants all shareholders to contribute to the dormant partnership. If they do not, the share issue will be carried out at a ratio of one to four, the report added. BANKGESELLSCHAFT BERLIN: NordLB Undecided on Capital Hike --------------------------------------------------------- Bankgesellschaft Berlin AG shareholder Norddeutsche Landesbank (NordLB) is yet to make a decision on whether it will take part in Bangesellschaft's planned capital increase, the Wednesday edition of AFX News said. NordLB must be convinced that the new Bankgesellschaft will be different from the old one, and large risks still remain in its real estate provisions, which must be discussed. Bankgesellschaft chairman Wolfgang Rupf said that if the bank failed to get the capital injection from its owners, the bank would be threatened by bankruptcy. MANAGEMENT DATA: Appeals for Insolvency --------------------------------------- Management Data AG on Tuesday has filed an appeal for insolvency. The media software company is now in talks with investors to seek new finance, but it proved the completion is not possible due to the application for insolvency. The receiver will continue negotiations with interested investors. The company board, however, assumes that subsidiary companies D.A.V.I.D. GmbH and OmniBus Systems Ltd. will not be affected by the situation as both companies have been profitable in the past year. MANAGEMENT DATA: Shares Dive by 70% ----------------------------------- Shares of Management Data AG has slumped 69.33% to 0.46 euros on Tuesday after it said it would file for insolvency as banks were unwilling to back the company, Reuters reported. Management Data's first quarter sales amplified to 15 million marks but its operating loss before interest, tax, depreciation and amortization plunged to 5.65 million marks from a loss of 3.2 million a year ago. The second quarter injection of five million euros by U.S. investor Global Emerging Markets was not enough to save the company. Chief Executive Officer Holger Antz is confident that sufficient funds could be raised from the sale of part or all of the company to secure its future, Reuters added. MET@BOX AG: Shareholders Criticize Prosecutor --------------------------------------------- Shareholders in set-top box producer Met@box AG made an informal complaint on public prosecutor Manfred Knothe, according to Frankfurter Allgemeine Zeitung's Tuesday report. A shareholders' association spokesman said Knothe was wrong when he heated up speculation by taking a personal stance, and was weakening Metabox's position in rationalization talks. The public prosecutor's office in Hanover said Knothe did not expect the procedure against those responsible for Metabox to be called off completely. SPAR-HANDELS: Admits Management Errors -------------------------------------- Spar Handels-AG has admitted its past error of putting profit ahead of its customers, Die Welt & Financial Times reported on Tuesday. The retail group added that internal errors and continuing competition in food retail are the reasons behind the poor results. Spar expects to see the restructuring measures begin to bear fruit this year. It hopes for a greater reduction in losses. Annual deficit has, however, improved from DM203.6 million to DM156.8 million, compared with the forecast of halving the figure, while turnover fell by DM247.1 million to DM3.17 billion. ============= I R E L A N D ============= EIRCOM PLC: US Investor Will Sell Eircom Stake If Bid Succeeds -------------------------------------------------------------- Spectrum Equity Investors, a major investor backing one of the bids for Eircom PLC, intends to sell an undisclosed portion of its Eircom stake if its 3 billion euros offer succeeds, Dow Jones Newswires reported on Wednesday. According to William Collatos, managing general partner of Spectrum, the private equity firm will sell the stake to a European venture-capital investor. He did not specify who the partner could be. If e-Island's bid is victorious, Spectrum would be the largest shareholder in Eircom but intends to sell its holding below 50% and become a significant minority shareholder with multiple seats on Eircom's board. Spectrum is the principal equity sponsor of a 1.36 euros-a-share bid for Eircom by investment vehicle e-Island, who's doing a battle over Eircom with Valentia. Valentia and e-Island are in the midst of an intensive lobbying campaign to win backing from key shareholders for their offers. E-Island is backed by J.P. Morgan Chase & Co., while the Valentia group includes Goldman Sachs. ========= I T A L Y ========= ALITALIA-LINEE: 1997 Investment Is State Aid -------------------------------------------- The European Commission reclassified a 1997 investment of $1.2 billion in Alitalia as state aid, the Financial Times reported on Wednesday. The European Court of First Instance threw out the Commission's earlier decision on the grounds of uncertain methodology late last year. Alitalia fought the decision because flagship carriers are only allowed one final injection of state aid. The Commission's reclassification means that further contributions to the Italian airline will have to be justified as normal business investments. ALITALIA-LINEE: Seeks Damages From Commission Over State Aid ------------------------------------------------------------ Alitalia SpA would seek damages from the European Commission because of its decision to reconfirm the clearance of 2.750 trillion lire of state aid, the AFX News reported on Wednesday. The Italian airline said it would proceed with actions to obtain compensation for the serious damages resulting from the 1997 decision. In 1997, EU Competition Commissioner Neil Kinnock cleared 2.750 trillion lire of state aid to Alitalia. The commission also ordered the airline to limit its capacity, banned it from selling flights at below market prices, and imposed other restrictions. ===================== N E T H E R L A N D S ===================== KPN NV: Belgium Wants Clarity on Belgacom ----------------------------------------- The Belgian government wants more clarity from telecommunications company Royal KPN NV on whether it is willing to accept a merger with Belgian firm Belgacom SA, the Financial Times reported on Wednesday. The talks about a possible merger have been stalled for two weeks over valuation and corporate governance. The Belgians have been pushing for a merger of equals between the groups, led by Belgacom chief executive John Goossens, and for significant management changes in the KPN ranks. KPN said it was preparing an answer to Belgium's letter, which it regarded as a normal part of a clarification process in the talks. The discussions remained on course. KPN is advised by ING Barings. KPN NV: Talks With Belgacom at a Standstill ------------------------------------------- Negotiations between telecom group KPN and Belgian rival Belgacom have come to a standstill as no progress was made over the past ten days, the Tuesday edition of Het Financieele Dagblad & Financial Times said. The talks reached a deadlock because KPN does not want to be a minority shareholder in the merger combination. Earlier, a shareholder action group took KPN to a commercial court for allegedly misleading accounting practices in its latest annual report. KPN rejected the accusations and said its accounts met all legal requirements. UNITED PAN-EUROPE: Banks Invest 450MM Euros in UPC -------------------------------------------------- Dutch banks ABN Amro, ING Bank and Fortis Bank have pledged 450 million euros worth of loans to cable company United Pan-Europe, De Volksktrant & Financial Times reported on Wednesday. The loans are part of a 4 billion euros credit facility that UPC obtained from a group of international financial institutions in October last year. UPC will not have to pay back the money until 2008. If UPC collapses, the banks can sell the company's cable networks that are worth 3 billion euros. The cable networks in Germany, Poland, Malta and Israel are not part of the collateral. A subsidiary of IBM Holland also pledged to join the consortium of banks with 15 million euros. =========== R U S S I A =========== MEDIA-MOST: Kiselyov and Skvortsov at NTV Again ----------------------------------------------- Media-Most representatives Evgeniy Kiselyov and Sergei Skvortsov have been elected to NTV's board of directors to replace Mikhail Shmushkovich and Vladimir Arseniev, who after the change of power at NTV went over to Gazprom-media's side. According to the Wednesday edition of Commersant Daily & Financial Times, NTV considers the meeting of its shareholders, organized by Media-Most's representatives, to be illegal. Gazprom-media's head Alfred Koch said that the decisions taken by the meeting would be challenged in court. ===================== S W I T Z E R L A N D ===================== PROGRESS WATCH: Appeals Against Bankruptcy Ruling ------------------------------------------------- Progress Watch has appealed against the Supreme Court's bankruptcy decision handed down on June 27, the Le Temps & Financial Times reported on Tuesday. The watchmaker has also applied for a stay of bankruptcy. All 60 or so of the company's jobs will to be saved. SWISSAIR GROUP: Soars on Sabena Deal ------------------------------------ Shares in Swissair Group soared on Wednesday after the Swiss aviation group and the Belgian government reached an agreement over the funding of Belgian carrier Sabena SA, the Financial Times reported. Investors were relieved, sending Swissair's shares up almost 17% to 120 Swiss francs. Under the agreement, Swissair, which holds 49.5% of Sabena, will contribute 258 million euros to the second recapitalization of the Belgian flag carrier. The Belgian government, the majority shareholder, will fund the remainder of the 430-million-euro cash injection. Swissair will also assume payment for Sabena's order for nine narrow-bodied Airbus Industrie aircraft. In return, the Belgian government and Sabena have dropped lawsuits and canceled an agreement under which the Swiss airline will be freed form its obligation to increase its stake in Sabena to 85%. Swissair won't have to provide further funding to the Belgian carrier. =========================== U N I T E D K I N G D O M =========================== BALTIMORE TECHNOLOGIES: Chantilley Withdraws Bid Approach --------------------------------------------------------- British firm Chantilley Corp Ltd has confirmed that it has withdrawn its approach regarding a possible offer for Baltimore Technologies PLC after the Internet security group declined a request from Chantilley for a meeting. According to the Tuesday edition of AFX News, Chantilley has no current intention to make an offer for Baltimore, although it reserves the right to change its mind should Baltimore wish to recommend an offer. Baltimore rejected the bid because it felt the all-share deal would not create a stronger combined business. BRITISH TELECOM: Defends Plan to Break Up Company ------------------------------------------------- British Telecom chairman Sir Christopher Bland has defended his plans to break the company into Future BT and BT Wireless and spin off its mobile phone division BT Wireless, the Press Association reported yesterday. At its annual meeting in Nottingham's National Ice Centre, Bland told 1,300 shareholders that the demerger was in the business's strategic interests. He further acknowledged that there were strong arguments against splitting up the fixed and mobile phone networks. BRITISH TELECOM: Regains Financial Health by Trimming Heavy Debt ---------------------------------------------------------------- British Telecommunications Chairman Christopher Bland said that the company's program of selling non-core assets and raising cash from shareholders had cut its debt from 27.9 billion pounds in March to 17.5 billion pounds by the end of June, Dow Jones Newswires reported on Wednesday. The company plans to divest its mobile interests in British Telecom's wireless division from the main business to help them focus more clearly on their customers' needs. This would happen near the end of the year. Investments in mobile-data services are starting to pay off for British Telecom wireless, and the business intends to increase its profitable market share by targeting high-value users. EQUITABLE LIFE: FSA Faces Attack Over Handling of Equitable ----------------------------------------------------------- City regulator Financial Services Authority, according to the Wednesday edition of the Financial Times, faces a joint attack on Thursday over its handling of the crisis at Equitable Life. Opposition MPs plan to press chancellor Gordon Brown over what actions the FSA took to assess the risk to policyholders after the mutual's collapse. FSA chairman Sir Howard Davies will also be questioned. Equitable outraged its nearly 1m with-profits policyholders on Monday by cutting the value of their pension funds by 16% after directors received a confidential review of the mutual's finances. FSA said it never encouraged policyholders to remain or leave. INDEPENDENT INSURANCE: PwC to Cancel Policies --------------------------------------------- Independent Insurance liquidator PricewaterhouseCoopers advised the company's remaining 192,000 customers that their policies would be cancelled, the July 19 edition of The Times said. Individual policyholders could receive partial refunds of premiums for the policies through the Policyholders Protection Board, but businesses, many of which pay premiums of thousands of pounds, will have to accept being added to the list of creditors. The liquidators said that they were seeking mutual agreement with policyholders whose policies have no termination notice periods. They will be asked to indicate a preferred cancellation date no later than July 31. MARCONI PLC: Holders Criticize Management ----------------------------------------- Shareholders of telecom equipment maker Marconi PLC criticized the company's management for a recent plunge in the stock price, the Wall Street Journal reported yesterday. Much of the discussion at Wednesday's meeting centered on Lord Arnold Weinstock, who ran the company as a conglomerate and was famous for hoarding cash, and on John Mayo, ousted as the company's deputy chief executive. Despite their anger, shareholders re-elected chief executive officer Lord George Simpson and other Marconi directors. Lord Simpson promised to focus on core operations that generate cash. At the meeting, Marconi chairman Sir Roger Hurn praised Mayo for working honestly and tirelessly for the company and for making many valuable contributions. He also praised Lord Weinstock but said many conglomerates haven't fared well in recent years. MARKS & SPENCER: To Close Belgian Stores Before Year's End ---------------------------------------------------------- Marks and Spencer PLC aims to close four department stores in Belgium and its outlet in Luxembourg before Christmas, AFX News reported on Tuesday. "Management proposed closing on December 24, but employees would prefer December 15," Alain Duran of the liberal CGSLB labor federation said. Though the retail group is offering to help laid-off staff find new jobs, Duran said employees are holding out for moral indemnity to compensate for the brutal way the shutdown was announced. M&S in March announced plans to close its 38 stores in continental Europe, including 18 in France, to concentrate on the more profitable UK market. ONE.TEL: May Face A$80MM Claim ------------------------------ Backers of One.Tel may be facing costs of up to A$80 million if it emerges that the group traded whilst insolvent, CIT Online reported on Tuesday. Directors who would be held personally liable include the sons of media giants Rupert Murdoch and Kerry Packer. The Australian telecom service provider collapsed on May 30 this year after its largest shareholders PBL and News Limited withdrew their support for a A$132 million capital increase. Administrators of One.Tel say the company was probably financially insolvent in March or April 2001, and maybe even as far back as December 2000. The company looks set to be terminated on July 24. One.Tel's UK operation was sold to gas utility Centrica for 58 million pounds. ************* 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 * * *