/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010821.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, August 21, 2001, Vol. 2, No. 163 Headlines * B U L G A R I A * BALKAN AIRLINES: Debt Reaches BGN214MM * C Z E C H R E P U B L I C * TCHECOMALT GROUP: Negotiations With Buyers Continue * F R A N C E * SAMES SA: Sames Corp Files Chapter 7 * G E R M A N Y * BAYER AG: Faces Class Action Suit for Baycol * I R E L A N D * EIRCOM PLC: Lynch Prepares Bid as Eircom Chief * N E T H E R L A N D S * UNITED PAN-EUROPE: Lays Off 1,500 Staff Members * P O L A N D * DAEWOO-FSO: FSC Warns of Delay in Daewoo Sale * S W E D E N * LM ERICSSON: To Sell Microelectronics Division * S W I T Z E R L A N D * GRETAG IMAGING: Posts Loss of SFr152MM SWISSAIR GROUP: Plans 2,000 Job Cuts * U N I T E D K I N G D O M * BALTIMORE TECHNOLOGIES: To Cut 400 Jobs This Week CAMMELL LAIRD: OFT to Study A&P Deal EIDOS PLC: Court Dismisses $5BB Violence Lawsuit EQUITABLE LIFE: Guernsey Operation Under Scrutiny EQUITABLE LIFE: Liberal Democrats Seek Back-Up Plan EQUITABLE LIFE: To Meet Action Groups ICELAND GROUP: Chairman Declines to Comment on Sales Memo MARCONI PLC: Defends Use of Company Jets MARCONI PLC: Unions Seek Recovery Plans MARKS & SPENCER: To Raise 400MM Pounds With Bond Issue NTL INCORPORATED: Braces for Pressure With Moody's Review POLESTAR CORP.: Posts Third-Quarter Results POLESTAR CORP.: S&P Cuts Ratings to CCC RAILTRACK GROUP: Ex-Chief Says Railtrack Will Never Work SCOOT.COM: Delists Ordinary Shares in Nasdaq VAUXHALL: Posts 191MM-Pound Loss Over Plant Closure * I N F O C U S * SSL INTERNATIONAL: Faces Toughest Test =============== B U L G A R I A =============== BALKAN AIRLINES: Debt Reaches BGN214MM -------------------------------------- The receivers of Balkan Airlines said the national air carrier's debt now reaches to 214.3 million Bulgarian lev, compared with the 209 million Bulgarian lev receivable presented to the Sofia City Court in May, PARI Daily & World Reporter in its August 15 edition said. The city court scheduled an open sitting on September 4 and 5 to discuss the objections from the creditors. Meanwhile, Balkan Airlines is holding negotiations with British company Aircraft Leasing & Management on a contract for operative leasing of a Boeing 737-300. Currently the plane is flying under a Trans Brazil flag. Under an operative leasing contract, the plane is not sold but only used for payment. The minimum term of such contracts is three years and if an agreement is reached, Balkan Airlines will have to pay an advance installment. =========================== C Z E C H R E P U B L I C =========================== TCHECOMALT GROUP: Negotiations With Buyers Continue --------------------------------------------------- Talks between administrator Pavel Tomcala of the bankrupt Tchecomalt Group and with parties interested in assets of the food group is ongoing, the August 15 edition of Czech News Agency & World Reporter said. The winners of a tender for the group's assets are Malterie Soufflet of France, Rolnicke druzstvo Bezno, Agropol Group and AGF Trading of the Agrofert Group. Tchecomalt Group has filed for bankruptcy petition last autumn due to excessive debts and lack of finances after the collapse of Investicni a Postovni banka, which had provided the funds. =========== F R A N C E =========== SAMES SA: Sames Corp Files Chapter 7 ------------------------------------ Sames Corp., which designs and makes spray finishing and coating application equipment, has filed a voluntary petition under Chapter 7 of the U.S. Bankruptcy Code for the Northern District Of Illinois on Friday, Dow Jones Newswires reported. The case has been assigned to Judge Bruce W. Black and the interim trustee is Norman Newman. Sames Corp.'s French unit, Sames SA, filed for bankruptcy in May due to cash flow problems and a lack of liquidity. Sames SA's assets were sold in July to French industrial company Exel Industries for 65 million francs. ============= G E R M A N Y ============= BAYER AG: Faces Class Action Suit for Baycol -------------------------------------------- Naomi Carroll, a city woman from Philadelphia who said she suffered severe pain and swelling, and weakness in her leg muscles after using anti-cholesterol drug Baycol in November, is leading a class-action lawsuit against the drug's maker, the Associated Press reported on Friday. Bayer AG is facing a growing number of lawsuits on behalf of patients. The lawsuit accuses Bayer of fraud, negligence and wrongful death. Baycol, known as Lipobay outside the U.S., was withdrawn everywhere except Japan two weeks ago after it was linked to 52 deaths worldwide. Bayer in its website called the claims unfounded and said that a causal connection between Baycol and the deaths has not been established. The company also said it included warnings with the drug. ============= I R E L A N D ============= EIRCOM PLC: Lynch Prepares Bid as Eircom Chief ---------------------------------------------- Eircom finance director Peter Lynch has indicated to Valentia consortium, the company's likely new owner, that he would be interested in taking Alfie Kane's place as chief executive, the Sunday Times reported. Kane will possibly loose his job after a planned takeover by Sir Anthony O'Reilly's consortium goes through. When Lynch joined Eircom, 1,500 office-based staff had their corporate mobile phone services cut as part of his cost-cutting measures. Employees were offered a free pre-paid mobile phone handset and some free airtime in compensation. Now, Lynch is focusing on the fixed-line business. He believes the company's future lies in the provision of digital subscriber lines (DSL), through which phone, television and Internet services can be sent via phone lines into homes. Lynch believes Eircom can afford it, provided it stays focused and staffing levels are kept at a reasonable level. If Lynch is appointed chief executive, his 279,000-euro pay package will grow accordingly. He is now on a standard package with a pension contribution of 14%, a car allowance, a basic salary and bonus, half of which is guaranteed in the first year. ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: Lays Off 1,500 Staff Members ----------------------------------------------- UPC Distribution, the largest division of media group United Pan- Europe Communications, said last week it would axe up to 1,500 employees from its Western and Eastern European operations, the Warsaw Business Journal reported yesterday. UPC will cut 500 employees from its Eastern European subsidiaries and 1,000 from its Western European offices within three to six months. The announcement follows the release of UPC's second-quarter report, in which the company posted negative earnings before interest, tax, depreciation and amortization (EBITDA) of 54 million euros, compared with negative 61 million euros in the first quarter. Two weeks ago UPC, merged its Polish cable TV network Wizja TV with France's Cyfra Plus to reduce the company's debt. Under the deal, UPC will keep a 25% stake in the new platform in return for 150 million euros in cash and continued control over its Polish cable business. Aside from the job cuts to reduce costs in Central and Eastern Europe, UPC also plans to eliminate high-cost television channels with limited viewership and to renegotiate existing contracts. =========== P O L A N D =========== DAEWOO-FSO: FSC Warns of Delay in Daewoo Sale --------------------------------------------- Financial Supervisory Commission has warned the government of new delays in its attempt to sell bankrupt Daewoo Motor Co. to US auto giant General Motors Corp, the Agence France-Presse in its August 16 edition said. South Korea's financial watchdog made the announcement as it was revealed separately that Daewoo Motor now has a debt of 13 billion dollars. The deal has been delayed by GM's insistence that it is not interested in Daewoo's troubled and antiquated Pupyong plant in Korea. GM teamed up with Italy's Fiat SpA to make an offer for Daewoo after Ford withdrew last year a 6.9-billion-dollar bid. It said the fall in Daewoo Motor's sales means the company is worth much less than in 1999 when creditors rejected a 5-billion-dollar bid from the US company. Daewoo Motor has factories and branch operations in 15 countries including India, Poland, Ukraine and Romania. The automaker was declared bankrupt in November last year. =========== S W E D E N =========== LM ERICSSON: To Sell Microelectronics Division ---------------------------------------------- Telecommunications equipment company Ericsson has appointed advisers to sell its microelectronics division in a deal that could value the business at $1 billion to $2 billion, the Financial Times reported yesterday. Ericsson Microelectronics, which designs and makes semiconductors and circuits, has been struggling alongside other companies in the sector to cope with a drop in sales due to the downturn in the global telecoms equipment market. Last month, Ericsson disclosed it was reviewing non-core operations for possible divestment to bolster its balance sheet and help it maintain profitability, but did not then identify its microelectronics unit. It is understood that US investment bank Merrill Lynch has been appointed to handle the sale. The group recorded an underlying loss of more than $980 million in the first half. Its manufacturing is carried out in Sweden, California, Texas and China while design centers are located in Sweden, Norway, the UK, and the US. ===================== S W I T Z E R L A N D ===================== GRETAG IMAGING: Posts Loss of SFr152MM -------------------------------------- Photo processing company Gretag Imaging has lost 152 million Swiss francs in the first half of 2001, following a net profit of 56.6 million francs in the first half of 2000, Reuters reported yesterday. Gretag said its first-half sales dropped by 47% to 265 million francs in an unfavorable economic context. The company also expected a loss in the second half. The company's dramatic fall was blamed on a weak U.S. economy and poor management by Gretag's three founding shareholders, Eduard Brunner, William Recker and Hans-Rudolf Zulliger. Analysts say they had concentrated too much on growth and had not paid adequate attention to financial controls. SWISSAIR GROUP: Plans 2,000 Job Cuts ------------------------------------ Swissair Group AG, according to the August 17 edition of Dow Jones Newswires, plans to slash 2,000 jobs as its copes with rising costs and slumping economic conditions while it struggles to turn itself around. Swissair chairman and chief executive officer Mario Corti, however, wants to accomplish the reductions through attrition. =========================== U N I T E D K I N G D O M =========================== BALTIMORE TECHNOLOGIES: To Cut 400 Jobs This Week ------------------------------------------------- Baltimore Technologies will make up to 400 people redundant this week and unveil plans to restructure its business, the Independent News in its August 19 edition said. A source close to Baltimore said that the job losses would be between 250 and 400, on top of the 250 workers sacked in May. The company is also expected to hoist a "For Sale" sign over significant parts of its business. The announcement will come on Wednesday when Baltimore is expected to reveal a half-year pre-tax loss of 18 million pounds. In March 2000, Baltimore was a FTSE 100 company with a market capitalization of 13 billion pounds. Today, it is worth just 115 million pounds as the City has lost faith in Baltimore's management team. The company has around 54 million pounds of cash on its balance sheet. Analysts predict that at its present burn rate, it will run out of money in nine months if it does not raise extra funds. The Financial Services Authority has investigated the company in March after its officers were accused of telling analysts that its figures were not good before they issued a trading statement. Baltimore further admitted an overstatement of sales figures in July. CAMMELL LAIRD: OFT to Study A&P Deal ------------------------------------ John Vickers, the Director-General of the Office of Fair Trading, will examine A&P's 10-million-pound acquisition of ship repair company Cammell Laird because of monopoly fears, the Monday edition of The Times said. AEEU engineers union representative Ted Gilbertson has warned Trade and Industry State Secretary Patricia Hewitt last week that the deal would hand A&P a monopoly. A&P already owned six shipyards for repairs in Britain, while the Cammell Laird acquisition added a further three yards. If Vickers objects to the acquisition, the doors will be reopened to the two management offers to buy Cammell's Birkenhead and Teesside yards. EIDOS PLC: Court Dismisses $5BB Violence Lawsuit ------------------------------------------------ United States' Colorado chief judge Lewis Babcock has ordered the dismissal without prejudice of the $5-billion writ lodged against computer games company Eidos, the Sunday Times reported. Families of the 13 victims of America's Columbine High School massacre brought the action two months ago, claiming video games caused the shooting by making violence pleasurable and disconnected from reality. Since Final Fantasy 7, the game that Eric Harris and Dylan Klebold owned when they killed 13 people in 1999, did not involve guns, Eidos is in the clear. The legal decision will be received with relief by shareholders plagued by profit warnings. Eidos went to market with a discounted rights issue in June to raise 52 million pounds with a 1-for-3 cash call at 155p a share. This came days after it reported a doubling of full-year losses. In 1999, Eidos was valued at 1.2 billion pounds, but it closed on Friday at 373 million pounds. EQUITABLE LIFE: Guernsey Operation Under Scrutiny ------------------------------------------------- Equitable Life, according to The Times' report yesterday, will face fresh legal scrutiny as financial watchdog Guernsey Financial Services Commission has appointed top law firm Norton Rose to investigate the company's Guernsey-based operation. The commission is seeking to clarify whether the Policyholders Protection Board will cover Guernsey-based policyholders if Equitable becomes insolvent. In a letter to Equitable Life chairman Vanni Treves, the Equitable Members' Action Group (EMAG) claimed that international policyholders should have a full restoration of benefits and should be treated separately to UK members. Policyholders' pension pots were cut by 16% last month, and those leaving the life fund early lose a further 7.5% of their funds. EQUITABLE LIFE: Liberal Democrats Seek Back-Up Plan --------------------------------------------------- The Liberal Democrats has urged pension provider Equitable Life to produce a back-up plan in the event a compromise deal will be unsuccessful, the Daily Telegraph in its August 16 edition said. Equitable Life was forced to close business last year because it was unable to meet guaranteed annuity rate (GAR) liabilities. The company needs to agree a compromise deal with GAR policyholders in order to cap its liabilities. A draft agreement is expected to offer GAR policyholders 20pc of the value of their funds in return for waiving their rights. If a compromise deal is reached on March 2002, Equitable's life fund will qualify for a cash injection of 250 million pounds from the Halifax. A further 250 million pounds will be paid if certain sales targets from those businesses are met. Chairman Ron Bullen of the Equitable Life Policyholders Action Group also supported the call for a back-up plan. EQUITABLE LIFE: To Meet Action Groups ------------------------------------- Representatives of three policyholder action groups, according to Press Association's Friday report, will meet with chairman Vanni Treves of troubled life assurer Equitable Life in a bid to discuss a proposed compromise that is due to be put to policyholders in September. The mutual is thought to face a liability of more than 1.5 billion pounds in connection with its guaranteed annuity rate policies (GAR). ICELAND GROUP: Chairman Declines to Comment on Sales Memo --------------------------------------------------------- Former Iceland chairman and founder Malcolm Walker said he could not comment on an internal memo in October that appeared to suggest he was aware of a sharp fall in sales two months before his controversial 13.5-million-pound share sale last December. According to the August 19 edition of the Financial Times, the Department of Trade and Industry and Financial Services Authority are investigating events at the frozen-food retailer. Walker has sold shares five weeks before the company issued a profit warning and the share price fell sharply. MARCONI PLC: Defends Use of Company Jets ---------------------------------------- Troubled telecoms group Marconi is defending its use of two company jets after reports it is spending nearly 5 million pounds a year on the planes. According to the August 17 edition of Press Association, Marconi's planes transport engineers from one of Marconi's main plants at Coventry in the UK, to its sites at Pittsburgh in the US and Genoa in Italy. MARCONI PLC: Unions Seek Recovery Plans --------------------------------------- Angry unions are demanding the management of Marconi for recovery plans amid mounting fears of the ailing telecom group's future, according to The Times' report yesterday. Unions are also pressing for no compulsory redundancies after the company announced last month that it would cut 1,500 jobs in the UK. The company is expected to unveil a sell-off of non-core businesses and to cancel its dividend as part of a raft of moves aimed at saving the group up to 500 million pounds. Some analysts are, however, skeptical that Marconi chief executive Lord Simpson of Dunkeld can produce radical proposals. They fear that he will rely on more modest cost-cutting measures. MARKS & SPENCER: To Raise 400MM Pounds With Bond Issue ------------------------------------------------------ Marks & Spencer is preparing to raise up to 400 million pounds in a bond issue secured against its property assets to help chairman Luc Vandevelde return the 2.2 billion pounds he has promised investors by March, the Sunday Times reported. The troubled retailer has asked property consultancy DTZ Debenham Tie Leung to carry out a valuation of its assets ahead of the issue. American investment bank Morgan Stanley will probably handle the sale. The company is already raising 350 million pounds in a sale and leaseback of stores and has shortlisted four bidders. It is raising an additional 200 million pounds from the sale of its London headquarters. A further 350 million pounds could come from the disposal of U.S. clothing store chain Brooks Brothers. NTL INCORPORATED: Braces for Pressure With Moody's Review --------------------------------------------------------- Heavily indebted cable company NTL anticipates further financial pressure today as ratings agency Moody's is expected to downgrade the company's credit worthiness to C, the Monday edition of the Telegraph said. The ratings review is so severe that it would force many investors to dump the company's debt, as well as increasing the cost of any future corporate borrowings. NTL owes $16.4 billion, half of which is in bonds. The size of its debt, which last year cost the company $1.2 billion to service, dwarfs the company's market capitalization of $1.9 billion. POLESTAR CORP.: Posts Third-Quarter Results ------------------------------------------- The Polestar Corporation PLC, one of the largest independent print groups in Europe, announced on August 15 its operating profit before exceptional items for the third quarter ending June 30 amounted to 6.4 million pounds, compared with 12.8 million pounds for the corresponding period last year. The company's turnover of 133.1 million pounds represents an increase of 11.9% over the corresponding period last year with 118.9 million pounds. Furthermore, Polestar has appointed Houlihan Lokey Howard & Zukin and Close Brothers Corporate Finance as financial advisors to review the strategic alternatives for restructuring its debt obligations, which currently represent a significant drain on its cash resources. Debt restructuring will strengthen the group's capital base and help increase available cash for operations. Polestar has operations in the United Kingdom, Spain and Hungary. It provides essential printing services to a range of customers that include major magazine and newspaper publishers, retailers and direct mail organizations. POLESTAR CORP.: S&P Cuts Ratings to CCC --------------------------------------- Standard & Poor's on August 16 has lowered its long-term corporate credit on printing group The Polestar Corp. PLC to triple-'C' from single-'B'-plus and senior unsecured debt ratings to double-'C' from single-'B'-minus, after news of possible balance-sheet restructuring actions. At the same time, the Polestar-guaranteed senior secured bank loan rating on related entity The Polestar Group Ltd. was lowered to triple-'C' from single-'B'-plus. All ratings were placed on CreditWatch with negative implications. The downgrade follows the company's announcement that it has hired a financial advisor to help restructure its balance sheet. Standard & Poor's is concerned that any restructuring may place bondholders at a significant disadvantage to other creditors and have a detrimental effect on their investment. The rating actions also reflect deepening uncertainty regarding Polestar's ability to complete the property and business disposals needed to meet the scheduled debt amortization due in December 2001. Polestar's operating margins continued to decline in the third quarter of fiscal 2001, the EBITDA margin narrowing to 15% in the first nine months of fiscal 2001 from 19% over the same period in 2000. RAILTRACK GROUP: Ex-Chief Says Railtrack Will Never Work -------------------------------------------------------- Former Railtrack chief executive Gerald Corbett, according to the Sunday Times, believes the entire rail industry is structurally flawed and needs a radical overhaul. In an interview, Corbett added that there would be no progress under the present structure since there are too many vested interests. He fears the government will not act until there is another rail disaster. Corbett was in charge of Railtrack during the October 1999 Paddington crash, which killed 31 people, and the October 2000 accident at Hatfield, in which four people died. SCOOT.COM: Delists Ordinary Shares in Nasdaq -------------------------------------------- Online directories firm Scoot.com on Friday said that it has decided to terminate the listing of its American Depository Shares (ADSs) on Nasdaq effective August 17 due to a low volume of trading. As a result, the Scoot.com has also decided not to pursue a hearing with the Nasdaq to review the decision to delist the company's ADSs with the company's failure to file its Annual Report on Form 20-F for the period ended December 31, 2000 within the prescribed time period. Scoot.com also said it would terminate its depositary agreement with The Bank of New York, in respect of the ADSs effective on November 22, 2001. Details of the termination will be sent to holders of the shares. The listing of the company's ordinary shares on the London Stock Exchange will still continue. VAUXHALL: Posts 191MM-Pound Loss Over Plant Closure --------------------------------------------------- General Motors' British unit Vauxhall made a loss of 191 million pounds last year because of the huge cost of closing its Luton plant, the August 17 edition of Press Association said. The loss was due to a 234-million-pound provision for re- structuring costs at the UK factory. Vauxhall will end car production at Luton in March. It will avoid compulsory redundancies by transferring workers to other sites and offering voluntary pay-offs. ============== I N F O C U S ============== SSL INTERNATIONAL: Faces Toughest Test -------------------------------------- Almost everyday, employees of healthcare group SSL International load thousands of Durex condoms, as well as Dr Scholl footcare products, to trucks and ship them to warehouses across the UK, ready to be delivered to pharmacies and retailers. However, in 1999 and 2000, many of those products were left to languish in the warehouses. This has brought the one of the largest consumer healthcare companies in the world into a financial scandal. The company has commissioned the Serious Fraud Office to conduct an inquiry to determine whether there is evidence of criminal offense by its current or former employees. SSL has also commissioned its own probe by auditors KPMG and city law firm DLA. The investigation has revealed a system that allowed employees to overstate SSL's sales and profits through the use of fake invoices. In early June, SSL told investors that sales had been overstated by 22 million pounds and profits before exceptionals by 19 million pounds in the 25 months to March 31, 2000. The overstatement of profits may have been driven by desire to meet internal targets, possibly linked to bonuses. According to chairman Stuar Wallis, a complex fraud appeared to have taken place over a long period, which means that investors were trading company shares on the basis of erroneous information. SSL grew from a small enterprise into a healthcare giant through the merger with footcare company Scholl and the acquisition of condom maker London International Group. Trade loading was an issue for all three companies. The healthcare group has suffered two profit warnings since November, partly caused by questionable trading practices, the ouster of chief executive Iain Cater in February after a dispute with the board, the retirement of chairman Wallis next month, and the departure of Dieno George, head of European operations, and Graham Collyer, technical director. With the disastrous chain of events, SSL's share price dropped, valuing the company to at just over 1 billion pounds, compared with 1.5 billion before the first profit warning. ************ 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. Lourdes Reyes, 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 * * *