/raid1/www/Hosts/bankrupt/TCREUR_Public/010726.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

             Thursday, July 26, 2001, Vol. 2, No. 145


                            Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Court Dismisses Bastiaens' Bankruptcy Filing

* C Z E C H   R E P U B L I C *

TCHECOMALT GROUP: Sale Offer for Subsidiaries Continues

* F I N L A N D *

SONERA CORP.: Can Pay Off Short-Term Debt
SONERA CORP.: May Sell Units to Pay Debt

* F R A N C E *

MOULINEX SA: To Report Loss This Year

* G E R M A N Y *

BROKAT AG: Fitch Cuts Rating to CCC
BROKAT AG: Moody's Cuts Senior Notes Rating to Ca
BROKAT AG: S&P Cuts Rating to CC
EM.TV: Chief Haffa Set to Resign
EM.TV: Declines to Comment on Haffa Report
EM.TV: Kirch May Cancel Stake Buy

* I T A L Y *

ALITALIA-LINEE: Passenger Volume Fell in May and June

* N E T H E R L A N D S *

KPN NV: Will Consider Belgacom Merger Proposal

* S P A I N *

JOTSA: Comes Out of Temporary Receivership

* U N I T E D   K I N G D O M *

BRITISH TELECOM: BT Wireless to Drop BT Name
BRITISH TELECOM: Concert Losses Widen
CLAIMS DIRECT: Faces Government Probe
EGG PLC: Loss Narrows to 63.4MM Pounds
EQUITABLE LIFE: City Watchdog Admits Flaws
EQUITABLE LIFE: May Plunge Into Full-Blown Insolvency
INVENSYS PLC: Yurko Steps Down as CEO
MARKS & SPENCER: Talks Over French Sale on Hold
NTL INCORPORATED: Moody's Places Ratings on Downgrade Review
RAILTRACK GROUP: Chief Says Sorry to Victims
RAILTRACK GROUP: Network Will Recover Next Year
RAILTRACK GROUP: Page and Jonas to Step Down From Board
VERSAILLES GROUP: SFO to Start Inquiry

* I N  F O C U S *

BALTIMORE TECHNOLOGIES: Internet Security Group in Crisis


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


LERNOUT & HAUSPIE: Court Dismisses Bastiaens' Bankruptcy Filing
---------------------------------------------------------------

Court documents show that the personal bankruptcy filing of
Gaston Bastiaens has been dismissed earlier this month, the July
20 edition of Reuters said.

The former chief executive of Lernout & Hauspie Speech Products
NV returned to Belgium last month to face charges of fraud,
insider trading, stock manipulation, and accounting violations.
He faces up to 15 years in prison if convicted.

He was released from jail in Belgium earlier this month pending
his trial.

Bastiaens' fraud allegations has sent L&H's stock into a
tailspin, erased nearly $10 billion in shareholder value, and
forced the company into bankruptcy.

The stock plunged after reports of accounting irregularities at
L&H's South Korean operations. Europe's largest maker of speech-
recognition and translation software was delisted from Nasdaq
Europe.


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


TCHECOMALT GROUP: Sale Offer for Subsidiaries Continues
-------------------------------------------------------

Tchecomalt Group and allied Potravinarsky holding bankruptcy
administrator Pavel Tomcala already has the evaluated bids by
investors interested in the group's subsidiaries and will start
talks on purchase contracts with selected investors, the CTK
Czech News Agency & World Reporter said on Tuesday.

Tomcala has declined to disclose the names of the successful
bidders and the prices they offered.

However, Ceskoslovenska obchodni banka, Tchecomalt Group's
largest creditor, opposed the continuation of the tender. CSOB
representatives claim the tender is not transparent and
sufficient information is lacking.

The creditors, which also include Komercni banka and CRF Praha,
have asked the Brno court to reject the administrator's potential
request for an approval on the sale of the shares.
   
The regional commercial court in Brno declared the parent company
Tchecomalt Group and the Potravinarsky holding bankrupt last
year.


=============
F I N L A N D
=============


SONERA CORP.: Can Pay Off Short-Term Debt
-----------------------------------------

Finland's largest telecom operator Sonera will not have any
difficulty paying off its short-term debt, Reuters reported on
Tuesday.

Sonera has about 3.25 billion euros in short-term debt and has
about 900 million euros left to pay of that debt by October.

Chief financial officer Kim Ignatius said the sale of Sonera's
Deutsche Telekom shares could cover the debt.


SONERA CORP.: May Sell Units to Pay Debt
----------------------------------------

Telecom operator Sonera may have to close or sell key units to
pay down its mountain of debt, Reuters reported on Tuesday.

At issue is the firm's 5.1 billion euros ($4.45 billion) in net
debt at end-June.

Sonera will pay 3.25 billion euros in short-term debt on October
after raising money through loans and sales of assets such as
stakes in listed firms. However, this still leaves Finland's
largest telecom operator with over one billion outstanding to
meet an end-year net debt goal of 2.5 billion.

Should Sonera miss this goal, it could be hit by further credit
downgrades, raising the company's capital costs and that's not
good for shareholders.


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


MOULINEX SA: To Report Loss This Year
-------------------------------------

Household appliance maker Moulinex-Brandt expects to report
losses this year in line with 2000, but should halve that figure
next year, Reuters reported on Tuesday.

The company hoped to return to profit in 2003 as the benefits of
a restructuring plan kick in. The firm recorded a 130 million
euro loss last year.

According to chairman Patrick Puy, Moulinex was in talks with its
banks over the financing of both the 200 million euro
restructuring plan and the expected losses. Negotiations should
be finalized in October.

Moulinex, which has only posted a profit twice in 10 years, is in
talks with workers over a restructuring plan that could result in
three factory closures in France.


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


BROKAT AG: Fitch Cuts Rating to CCC
-----------------------------------

Fitch on Tuesday has downgraded the senior unsecured rating of
electronic brokerage and banking software provider Brokat AG and
its 125-million-euro senior unsecured notes due 2010 to 'CCC'
from 'B-'.

The international rating agency affirmed the rating watch
negative status as a consequence of the uncertainty created by
the announcement that Brokat has appointed Dresdner Kleinwort
Wasserstein Inc as its financial adviser to examine strategic
options for a restructuring of the notes.

The company is proposing to enter into detailed negotiations and
discussions with the noteholders aimed at achieving this
restructuring.

The agency believes that the implications of this announcement
are likely to be negative for noteholders and will be seeking to
discuss with the company's management and its advisers the
proposed direction of the negotiations as soon as possible.


BROKAT AG: Moody's Cuts Senior Notes Rating to Ca
-------------------------------------------------

Credit ratings agency Moody's Investors Service has on Tuesday
downgraded from B3 to Ca the rating for the senior notes, the
issuer rating and the senior implied rating for Brokat AG.

The move follows the company's announcement that it had entered
into negotiations with its noteholders aimed at bringing about a
restructuring of the notes.

The Ca rating reflects Moody's expectation of relatively low cash
recovery for noteholders from either the company's exchange
offer, or from a liquidation of the company's assets.

Brokat AG is a supplier of software for e-business solutions like
Internet banking. It generated revenues of about DM234 million in
fiscal year 2000.


BROKAT AG: S&P Cuts Rating to CC
--------------------------------

Standard & Poor's on Tuesday lowered its long-term corporate
credit and senior unsecured debt ratings on electronic brokerage
and banking software provider Brokat AG to double-'C' from
single-'B'-minus.

The rating action follows the company's announcement that it will
restructure its senior unsecured debt obligation of 125 million
euros.

Brokat has appointed the investment bank Dresdner Kleinwort
Wasserstein Inc. as its financial adviser to examine strategic
options to restructure the notes.


EM.TV: Chief Haffa Set to Resign
--------------------------------

Chief executive Thomas Haffa of media-rights trader EM.TV
Merchandising AG will withdraw from the group with immediate
effect, according to Handelsblatt's report on Tuesday.

Haffa will be replaced by Internet service Spiegelnet AG chief
executive Werner Klatten.

Upon his departure from the group, Haffa is expected to sell his
25.1% stake to Klatten. These shares are currently worth around
75 million euros on the market.

Media giant Kirch Group rescued EM.TV from the verge of
bankruptcy earlier this year after the company was almost buried
under a massive mountain of debt.

Kirch Group has approved the sale of Haffa's stake to Klatten.


EM.TV: Declines to Comment on Haffa Report
------------------------------------------

Media group EM.TV on Tuesday did not comment on a report that its
CEO Thomas Haffa planned to resign and sell a 25% stake in the
company, the Tuesday edition of Reuters said.

The report further said Spiegelnet AG CEO Werner Klatten would
replace Haffa.


EM.TV: Kirch May Cancel Stake Buy
---------------------------------

German media group Kirch may cancel its planned purchase of a
16.7% stake in film rights group EM.TV & Merchandising AG because
of concerns by the German Cartel Office, Reuters reported on
Tuesday.

According to a source close to Kirch, the main issue was that
chief executive Herbert Kloiber of media group Tele Muenchen has
rejected all the parties interested in taking the 45% stake in
his company now held by EM.TV.

The German Cartel Office has ruled that EM.TV would have to
divest its Tele Muenchen stake if Kirch took an EM.TV stake.

A Kirch spokesman declined to comment.


=========
I T A L Y
=========


ALITALIA-LINEE: Passenger Volume Fell in May and June
-----------------------------------------------------

Traffic volume of Alitalia airline, as measured by revenue per
passenger per kilometer, fell in May by 3.9% and in June by
10.6%, the Tuesday edition of Reuters said.

The airline's transatlantic routes have dropped 9.6% in June,
after falling 14.6% in May, while domestic routes showed a
decrease in passengers of 2.2% last month.

Cargo traffic in June also fell by 6.9%.

Alitalia chief executive Francesco Mengozzi said the Italian  
airline would post by the end of the year a total debt of 3.0  
trillion lire, compared to its medium- to long-term debt of 1.5  
trillion lire for 2000.

Mengozzi added the airline last year made a loss of 500 billion  
lire.


=====================
N E T H E R L A N D S
=====================


KPN NV: Will Consider Belgacom Merger Proposal
----------------------------------------------

KPN NV has agreed to consider Belgacom's latest set of merger
proposals, the Monday edition of Reuters said.

Talks between Belgacom, Belgium's former telecommunications
operator, and its larger Dutch peer had stalled two weeks ago
after KPN failed to respond to the proposals.

The source, who spoke on condition of anonymity, declined to
elaborate.

While Belgacom officials declined comment on the progress of the
talks, KPN spokesman Bram Oudshoorn confirmed the talks were
continuing.

KPN has been struggling to find ways to reduce its debt of $20.2
billion, and a merger is considered as an option to help manage
its debt.


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


JOTSA: Comes Out of Temporary Receivership
------------------------------------------

Jotsa, according to the Expansion & World Reporter's June 21
edition, has come out of temporary receivership after its
creditors underwrote 66% of its debt.

The construction company has succeeded in getting the two thirds
of creditors necessary to lift the suspension of payments.

Jotsa went into temporary receivership in November 1999. It had
debts of 56.6 million euros, of which 8.3 million euros was owed
to banks, 883,487 euros to the Spanish treasury and 47.4 million
euros to subcontractors.


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


BRITISH TELECOM: BT Wireless to Drop BT Name
--------------------------------------------

British Telecommunications' BT Wireless plans to drop BT from its
name in a move to disassociate itself from its parent's tarnished
image ahead of it demerger, the Independent News reported
yesterday.

The mobile phone unit will rebrand later this year and relaunch
itself as a separate entity.

While the company's larger shareholders favored a demerger as
part of BT's wider strategy to reorganize its own finances, the
move has not gone down well amongst smaller shareholders. The
Communication Workers Union protested against the demerger
outside BT's Annual General Meeting in Nottingham last week.


BRITISH TELECOM: Concert Losses Widen
-------------------------------------

Losses at British Telecom's Concert joint venture have risen by
as much as 7% in the past quarter, The Times reported yesterday.

According to BT's partner AT&T, its half share of Concert losses
had risen from $122 million in the March quarter to $230 million
in the June quarter. The figure includes $70 million of charges
related to restructuring and bad-debt provisions.

The British company's share of losses is thought to have risen
from 89 million pounds in the previous quarter to about 95
million pounds in the three months to June 30.

AT&T said it remained in discussions with BT to restructure or
dissolve the joint venture and hoped to reach agreement in coming
months.


CLAIMS DIRECT: Faces Government Probe
-------------------------------------

Personal injury specialist Claims Direct, according to the
Tuesday edition of the Financial Times, admitted it is subject to
a Department of Trade and Industry investigation. The probe could
undermine its defense against the bid by Colin Poole and Tony
Sullman, who own a combined 43% of the company.

Claims Direct said it was unaware of both the reasons for and the
exact nature of the DTI investigation, which started in March.

The DTI investigators are expected to question the extent to
which the recent profit warnings and pre-tax loss of 20.2 million
pounds for the year to March 31 could have been anticipated and
disclosed when the company floated at 180p in July.

The company's formal defense document contrasted the
unacceptable"10p price tag with the 16p closing price on June 20
when the board gave Sullman and Poole permission to proceed with
a bid.


EGG PLC: Loss Narrows to 63.4MM Pounds
--------------------------------------

Egg Plc reported a 21% fall in interim pre-tax losses to 63.4
million pounds, compared with losses of 80.7 million pounds in
the same period last year, the Financial Times reported on
Tuesday.

This was slightly better than analysts' forecasts of losses of
between 65 million and 70 million pounds for the half year ended
June 30.

The UK's largest standalone Internet bank fared less well in the
mortgage market, which has become more competitive in recent
months. Mortgage sales halved from the same period last year to
164 million pounds in the first half.

Chief executive Paul Gratton said Egg is now looking for European
partners to launch a credit card similar to the one it launched
last year in conjunction with UK retailer Boots. The credit card
business is attracting upmarket customers with an average monthly
balance of 1,750 pounds.


EQUITABLE LIFE: City Watchdog Admits Flaws
------------------------------------------

Financial Services Authority Chairman Howard Davies admitted
changes were needed in the regulation of insurance companies,
according to the World Reporter' July 20 edition.
   
In the Commons, paymaster-general Richard Ottaway attacked the
FSA and the Government over their handling of the Equitable
affair. Ottaway said it was time the regulators started
regulating and that Government recognized its responsibility.
   
Equitable was forced to close to new business in December.


EQUITABLE LIFE: May Plunge Into Full-Blown Insolvency
-----------------------------------------------------

The stricken mutual Equitable Life, according to the Independent
News' report yesterday, may plunge into full-blown insolvency as
the society refused to rule out the possibility that it would
reduce bonuses again or increase the financial penalty imposed on
policyholders who cash in their fund early.

The society's inability to give the guarantee will possibly shake
further the confidence of policyholders in the society and
increase the number of individuals who have contacted brokers to
request a transfer out of Equitable's fund.

Equitable said it could not rule out another bonus cut or raise
the penalty for leaving early as these factors were affected by
stock market movements.

The group has suffered financially because the House of Lords
ruled that Equitable had to pay out an extra 2.6 billion pounds
to those with guaranteed annuities.


INVENSYS PLC: Yurko Steps Down as CEO
-------------------------------------

Chief executive Allen Yurko of Invensys, one of Britain's biggest
engineering groups, will step down after the company's third
profits warning in 10 months, according to the Tuesday edition of
the Financial Times.

Rick Haythornthwaite, former chief executive of cement
manufacturer Blue Circle Industries, will replace Yurko, who has
come under increasing pressure from shareholders.

Haythornthwaite said his first step would be to stabilize the
business and eliminate surprises as Invensys is delivering
operating profit but no cash.

Yurko's resignation will take effect on January 31. He will
receive no severance pay but he will be able to commute his
pension into a lump sum, which the company said would be worth 3
million to 4 million pounds.

These moves prompted renewed speculation that Invensys could
become the subject of a takeover bid.


MARKS & SPENCER: Talks Over French Sale on Hold
-----------------------------------------------

Retail group Marks & Spencer has suspended talks with the French
works council about the closure of its 18 stores in France, as it
prefers to seek a buyer for the businesses instead, the Financial
Times reported on Tuesday.

An M&S spokesman in London said the company has had a number of
expressions of interest in the French stores, but it was too
early to give details. M&S is confident it can sell the French
business as a single operation, allowing a guarantee of jobs.

If the UK retailer will be able to withdraw from France by
selling the sites and staff to a single buyer, it will be a
brighter exit. From the start, its withdrawal plans were attacked
by French workers, unions and politicians and also faced court
challenge.

M&S decided to close the continental businesses to focus on
turning round its core business, the flagging UK retail
operation.


NTL INCORPORATED: Moody's Places Ratings on Downgrade Review
------------------------------------------------------------

Moody's Investors Service on Monday has placed the debt and
preferred stock ratings for telecommunications and cable
communications provider NTL Incorporated and its subsidiaries
under review for possible downgrade.

The review is prompted by continued concerns over NTL's
considerable debt level, notwithstanding strong EBITDA growth
trends reported in the first quarter and second quarter of 2001.
  
The review further reflects Moody's perception of a substantial
weakening of the company's access to capital markets and the
resultant need for the company to execute flawlessly in order to
generate the cash flows required to sustain its businesses or
attract additional third-party financing.

While the company estimates that future funding needs have
generally been secured, Moody's continues to caution that NTL
could face a substantial funding gap if the company falls short
of its projections for rapid cash flow growth.  


RAILTRACK GROUP: Chief Says Sorry to Victims
--------------------------------------------

Railtrack chairman John Robinson made the company's strongest
apology to the survivors and families of the Hatfield rail crash
before he opened the annual meeting, the Financial Times reported
on Tuesday.

"I said I was sorry and I empathized with them, and I spent most
of my time listening. They said a number of things. The main
point was they were pleased I was sorry and I was amazed to hear
I was the first person to say that, and I feel sorry for
Railtrack."

Robinson's move was unlikely to be a comfortable affair for its
directors.

The company was blamed for the fatal Hatfield accident,
nationwide network chaos and a series of costly investment
project overruns. The share price has dropped more than two-
thirds and there is growing concern about financing the company
and the national rail investment program.


RAILTRACK GROUP: Network Will Recover Next Year
-----------------------------------------------

Railtrack chairman John Robinson warned that the network would
take another year to recover.

Robinson said the industry's performance was not good enough and
that train delays were on average twice as long than before the
fatal Hatfield crash last October.

The privatized company said it was responsible for each of the
18,600 trains that ran every day being on average two minutes
late. The increased delays were because nationwide track checks
carried out after the Hatfield crash and winter flooding had
revealed many faults.

Railtrack promised services would be back to normal by Easter.


RAILTRACK GROUP: Page and Jonas to Step Down From Board
-------------------------------------------------------

Railtrack on Tuesday said that non-executive directors Jennie
Page and Christopher Jonas would be retiring from the Railtrack
board on July 31.

Both joined the board in 1994 when Railtrack's business was first
split off from British Rail.


VERSAILLES GROUP: SFO to Start Inquiry
--------------------------------------

The Serious Fraud Office will launch by the end of this week its
investigation into trade finance group Versailles, The Times of
London reported on Monday.

Versailles collapsed last year with a 100-million-pound black
hole in the books.

SFO, expected to question former Versailles chief executive and
chairman Carl Cushnie, announced its intention to mount a full-
scale fraud inquiry in February last year, as the company was
forced into receivership.

Until now, the organization has failed to act. It has been
waiting for Versailles receiver PricewaterhouseCoopers to
complete its own investigations so that it can share the
information.

Last year, PwC filed a 50-million-pound legal claim alleging
fraud and breach of fiduciary duty against Versailles finance
director Frederick Clough.


==============
I N  F O C U S
==============


BALTIMORE TECHNOLOGIES: Internet Security Group in Crisis
---------------------------------------------------------

Internet security group Baltimore Technologies has been plagued
by a fall in demand for its products in recent months. The
company has issued three profits warnings since March, and worse,
Fran Rooney has resigned as chief executive and deputy chairman.

The company has swayed from one crisis to another, leading to
growing concerns about its cash position and diminishing market
confidence in its management.

Its shares have fallen during the Internet boom last year. The
company's listing in Nasdaq is also under threat as shares are
trading below the $1 threshold.

In February, Baltimore warned that its short-term sales prospects
were at risk from the slowdown in the US economy. A month later,
it issued a profits warning.

Its deepening first quarter pretax loss rose to 72.8 million
pounds against 7.2 million pounds in 2000, forcing the company to
cut about 250 jobs in May to produce 30 million to 35 million
pounds in annual cost savings. The company is expected to further
reduce its workforce as part of its restructuring program.

Last week, Baltimore was reportedly in takeover talks with US
software group Computer Associates and technology licensing
company Chantilley, but has denied as it was focusing on major
restructuring of its operations.

Now, potential clients are waiting to see whether the company,
whose stock market valuation fell from a peak of 5.1 billion
pounds to 360 million pounds, would overcome its difficulties
before investing.

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

       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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