/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/010830.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, August 30, 2001, Vol. 2, No. 170 Headlines * B E L G I U M * CITY BIRD: Depends on Thomas Cook for Survival SABENA SA: Faces Virgin Express Lawsuit SABENA SA: In Purchase and Leaseback Deal * F R A N C E * AIR LIBERTE: Job Transfer Draws Near FIMATEX SA: Socgen to Sell Brokerage Arm NORTEL NETWORKS: May Cut Jobs in France SOFRER: To Declare Itself Insolvent * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Chief Rupf Ready to Resign BANKGESELLSCHAFT BERLIN: To Receive 1.132BB Euros From State BAYER AG: Roche Denies Bayer Bid BROKAT AG: To Sell Operations DEUTSCHE TELEKOM: Promises to Reduce Debt DEUTSCHE TELEKOM: Share Price Drop Concerns Chief Sommer EM.TV: Kirch Withdraws Acquisition Bid MET@BOX AG: Court Delays Insolvency Proceedings * I R E L A N D * EIRCOM PLC: ESOT Supports Valentia Offer * I T A L Y * ALITALIA-LINEE: Benetton Not Interested in Alitalia Stake * N E T H E R L A N D S * KPN NV: Belgacom Merger Talks Nears End PHARMING GROUP: Court Grants Belgian Unit Suspension of Payment VERSATEL TELECOM: Moody's Places Rating on Downgrade Review * N O R W A Y * BROADBAND MOBILE: HI3G to Buy 3G Company * P O L A N D * ELEKTRIM SA: Vivendi Deal Nears Completion * S W I T Z E R L A N D * SWISSAIR GROUP: CFO Schorderet Resigns * U N I T E D K I N G D O M * BRAINSPARK PLC: Closes Companies Amid Funding Sentiment EQUITABLE LIFE: Chancellor Brown Gets Demand From Action Groups GLOBALNET FINANCIAL: NewMediaset to Win GlobalNet Bid MARCONI PLC: Says ADRs Will Continue to Trade on Nasdaq SCOOT.COM: Ends Debenture Agreement ============= B E L G I U M ============= CITY BIRD: Depends on Thomas Cook for Survival ---------------------------------------------- The survival of ailing Belgian airline City Bird now depends on its largest client, travel group Thomas Cook, the Financial Times in its August 24 edition said. City Bird, which owes aircraft manufacturer Boeing nearly 50 million euros in compensation for returning three MD-11 aircraft, was granted suspension of payment in early July. The company has to present a recovery plan before September 26. Thomas Cook has admitted it is interested in City Bird. SABENA SA: Faces Virgin Express Lawsuit --------------------------------------- Belgian low-fare airline Virgin Express NV, a unit of U.K.-based Virgin Express Holdings PLC, has filed a lawsuit against Sabena airlines for not respecting a contract under which Sabena was to buy 96 seats on Virgin aircraft until 2005, Dow Jones Newswires reported on Tuesday. Sabena said in a statement that it wants to return to a 1996 agreement to buy 80 seats on Virgin Express flights to Rome and Barcelona and 85 seats to London because it is trying to reduce capacity. Sabena is struggling to cut back capacity to compensate for losses that have cast doubt on the company's survival. It is currently negotiating a restructuring plan with its personnel that involves laying off 1,421 workers. SABENA SA: In Purchase and Leaseback Deal ----------------------------------------- Singapore Aircraft Leasing Enterprises (SALE) and Boullioun Aviation Services have forged separate purchase and leaseback deals with Belgian carrier Sabena to help the troubled airline undertake a revamp, Business Times reported on Tuesday. Sale and Boullioun, which each acquired an Airbus A319 aircraft from Sabena for US$42 million, agreed to lease back the aircraft to the airline for 10 years. The move represents a boost in Sabena's cash outlay, because the sale and leaseback will allow it to shoulder only 1% of the aircraft's value per month. =========== F R A N C E =========== AIR LIBERTE: Job Transfer Draws Near ------------------------------------ Slightly over 1,000 jobs at troubled French airline AOM Air Liberte could be transferred to Air France and other companies, the Financial Times reported on Tuesday, citing French transport minister Jean-Claude Gayssot. AOM Air Liberte plans to make 1,405 people redundant. FIMATEX SA: Socgen to Sell Brokerage Arm ---------------------------------------- Societe Generale plans to sell its unprofitable online brokerage unit Fimatex to a rival financial group, citing difficult market conditions, the Financial Times reported yesterday. SocGen's possibility of disposing Fimatex comes against a background of rapidly rising losses at some of Europe's leading online brokers. SocGen and Fimatex declined to comment. Fimatex is one of the larger online brokers in continental Europe. It is struggling to add new customers or reach profitability in spite of cost-cutting measures involving staff cuts and delayed marketing campaigns over the past year. Last month, Fimatex said its operating profit in the first half fell 13% to 34.8 million euros. NORTEL NETWORKS: May Cut Jobs in France --------------------------------------- Canadian telecommunications equipment supplier Nortel Networks may announce on September 3 some 800 job cuts at its French subsidiary as part of its wider restructuring plan in Europe, according to Dow Jones Newswires' Tuesday report. Nortel Networks announced in June that it would reduce its global workforce by 30,000 this year. In France, Nortel employed 7,700 at the end of 2000. For the six months ending June 30, revenues fell 20% to $10.36 billion. Net losses from continuing operations before accounting change totaled $19.01 billion, up from $1.3 billion. SOFRER: To Declare Itself Insolvent ----------------------------------- U.S.-based SpectraSite has ordered its French unit Sofrer to declare itself insolvent, the Les Echos reported on Tuesday. Sofrer employs 1,000 people, including 870 in various parts of France. The telecoms network site management company also operates in Spain, Portugal, Belgium, the Netherlands and Poland. SpectraSite acquired 19% of Sofrer's capital last January via its European joint-subsidiary SpectraSite Transco. It then bought the remaining 81%. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Chief Rupf Ready to Resign --------------------------------------------------- Chairman Wolfgang Rupf, of Berlin's troubled public-sector banking group Bankgesellschaft Berlin, is finally ready to resign, Handelsblatt reported on Tuesday, citing Berlin Mayor Klaus Wowereit. Mayor Wowereit did not give a date for Rupf's departure, however. The bank's owners, including the majority shareholder State of Berlin with 56.6%, have not yet found a successor for Rupf. The government reached an agreement with employee representatives in June to oust Rupf. At the start of the year, the supervisory board had extended Rupf's mandate until 2006. BANKGESELLSCHAFT BERLIN: To Receive 1.132BB Euros From State ------------------------------------------------------------ The State of Berlin, which owns 57% of Bankgesellschaft Berlin, intends to pay the troubled bank an initial slice of the capital increase amounting to 1.132 billion euros this Friday. The State also signaled shareholders regional public-sector bank Norddeutsche Landesbank, with a 20% stake, and insurance group Parion, with 7.5%, that it expects them to participate in the capital injection by September 27. "The State of Berlin has the capacity to act and is determined to work on a solution that will be tenable in the future, with or without partners, in order to maintain Berlin's banking status and to structure Bankgesellschaft so that it ready for the future", Mayor Klaus Wowereit explained. Mayor Wowereit and Finance Senator Christiane Krajewski issued no new statements on the status of negotiations with potential investors. Bankgesellschaft Berlin posted a net loss of 1.6 billion euros for 2000 (see http://bankrupt.com/misc/bgb.pdf),attributed to bad property loans and dealings in real-estate funds. The bank is in immediate need of 2 billion euros in fresh capital. BAYER AG: Roche Denies Bayer Bid -------------------------------- Swiss pharmaceuticals giant Roche has denied a market rumor that it had offered to buy the troubled pharmaceuticals unit of German chemicals group Bayer for $20 billion, Independent News reported yesterday. The move comes as Roche's share price fell 3% during early trading, on a story from Reuters about the possible bid. Reuters, however, stood by its story. Earlier this month, Bayer withdrew its anti-cholesterol drug Baycol from the market after it has been linked to 52 deaths. BROKAT AG: To Sell Operations ----------------------------- German software company Brokat Technologies AG, according to the Financial Times' report on Tuesday, will sell all its North American operations and its mobile telecommunications division in order to concentrate on European e-finance activities. The transactions will bring income of almost 80 million euros to the loss-making company. Including income from recent smaller sell-offs, the company will have around 100 million euros at its disposal in order to ward off the threat of insolvency for the present. The mobile business is being sold to U.S.-based eOne Global. Stefan Rover, who is resigning from Brokat as board chairman, will head it. DEUTSCHE TELEKOM: Promises to Reduce Debt ----------------------------------------- Deutsche Telekom has vowed to cut its 65-billion-euro debt by one quarter before the end of 2002, with half of the money to come from a partial flotation of its mobile division next year, the Daily Telegraph reported yesterday. According to Finance director Karl-Gerhard Eick, Deutsche Telekom will raise 20 billion euros from asset sales, with 10 billion euros coming from the mobile flotation. With the other purchases, group debt is expected to stand at 50 billion euros by the end of 2002. Chief executive Ron Sommer also promised an increased sales and profits growth every year until 2004, the Telegraph added. DEUTSCHE TELEKOM: Share Price Drop Concerns Chief Sommer -------------------------------------------------------- Deutsche Telekom AG Chairman Ron Sommer, according to the Tuesday edition of Dow Jones Newswires, was deeply concerned when the share price lost more than 20% of its value since the beginning of the month, when an institutional investor sold 44 million of the shares in one day. Sommer's critics say he paid too much for VoiceStream Wireless Corp. of the U.S. and that this is the source of the share-price problem. Earlier this year, Telekom paid about 42 billion euros for VoiceStream and another small operator and some investors are shedding the shares they inherited from the deal. Investors still fear of a further drop in the share price. Telekom's debt level rose to 65.5 billion euros in the first half, mostly due to the acquisition of VoiceStream. EM.TV: Kirch Withdraws Acquisition Bid -------------------------------------- Germany's Kirch Group AG has withdrawn its bid to acquire a stake in media company EM.TV & Merchandising AG after the German cartel office blocked the planned acquisition in July, the Wall Street Journal reported yesterday. Kirch was supposed to gain control of 25.1% of EM.TV's shares and 49% of EM.TV's stake in the Formula One racing circuit in exchange for $550 million in cash and rights to children's programming. Although the deal is now off, Kirch has already exercised considerable control over EM.TV when it took control of the company's majority stake in the Formula One auto racing circuit. EM.TV designated chief executive Werner Klatten now plans to buy 25% of the company from the ousted founder Thomas Haffa. MET@BOX AG: Court Delays Insolvency Proceedings ----------------------------------------------- A German court in Hildesheim has confirmed it will postpone a decision on insolvency proceedings against Met@box AG, Dow Jones Newswires reported on Tuesday. The move came after the digital set-top box manufacturer received a DEM2 million loan from a private lender, assuring the liquidity of the company until its October shareholders meeting. The court is delaying the decision since the loan shows that Metabox has sufficient liquidity to not damage the company's creditors between now and the meeting. Meanwhile, Metabox has named Herbert Steinhauer chief financial officer, provisional president, and manager of the company's insolvency. Stefan Domeyer will remain an executive board member. ============= I R E L A N D ============= EIRCOM PLC: ESOT Supports Valentia Offer ---------------------------------------- Eircom PLC's Employee Share Ownership Trust, which owns 15% of the Irish telecommunications company, has supported Valentia consortium's 3.0-billion-euro (EUR1.365 a share) cash bid for the group, Dow Jones Newswires reported on Tuesday. The long-running battle for Eircom is nearing an end as Valentia, led by Irish businessman Tony O'Reilly, looks closer to gaining the 80% shareholder backing that is required. Former ESAT Telecom Chairman Denis O'Brien leads rival bidder e- Island. Valentia will post its formal offer document on Friday, after which Eircom shareholders will have 60 days to cast their vote. Valentia's backers include Goldman Sachs Group Inc., Providence Equity Partners Inc. and Soros Private Equity Partners Ltd. E- Island's backers include U.S. investment bank J.P. Morgan Chase & Co. and Spectrum Equity Investors. Eircom came up for sale in October when it sold its mobile business to Vodafone. ========= I T A L Y ========= ALITALIA-LINEE: Benetton Not Interested in Alitalia Stake --------------------------------------------------------- Edizione Holding SpA, the holding of the Benetton family, has denied it is interested in taking a stake in Alitalia SpA, the Tuesday edition of Dow Jones Newswires said. The denial comes after regional Italian airline Alpi Eagles SpA chairman Paolo Sinigaglia expressed interest in taking a stake in the national flag carrier. The Benetton family has 18% of Alpi Eagles. In reference to the Troubled Company Reporter Europe's yesterday edition, Sinigaglia said the deal would only go through if Alpi Eagles shareholders, including the Benetton family, agree. Alitalia has been struggling unsuccessfully for years to return to profit. The government has planned for the airline's privatization to fill the hole in its budget deficit. ===================== N E T H E R L A N D S ===================== KPN NV: Belgacom Merger Talks Nears End --------------------------------------- Dutch telecommunications group KPN NV and Belgacom SA of Belgium has entered the final stage of merger negotiations. According to Wall Street Journal's report yesterday, Belgacom officials are pushing hard to conclude talks this week. They are demanding that KPN offer cash or extra voting power on a merged concern's executive committee in case the company's share price does not recover from its current lows by the time of a deal. Shares in KPN edged up 6% to 4.24 euros on Tuesday. They were down since mid-June when the merger deal was first proposed. KPN officials have rejected the assertion, saying that the valuation of a merged company would not only depend on market value, but also on future revenue. They will not sign a merger agreement with Belgacom unless it becomes clear what will happen to the two companies' mobile-phone divisions. WSJ added that KPN has been looking to merger with another telecom company as a way to help reduce its 23.2-billion-euro debt. KPN will announce its figures for the first half of 2001 on September 3 (see First-Quarter results http://bankrupt.com/misc/kpn1.pdf). PHARMING GROUP: Court Grants Belgian Unit Suspension of Payment --------------------------------------------------------------- The commercial court of Turnhout city in Belgium has granted suspension of payment to biotechnology company Pharming in the Belgian town of Geel, the Financial Times reported on Tuesday. The company, which needs capital to continue its research and development, has requested the suspension of payment in hopes to find a solution to secure its future. Earlier, the District Court in The Hague has granted cash- strapped biotechnology parent Pharming Group N.V. a receivership status. It is now seeking for new financing to secure its short- term future. Aside from the Netherlands and Belgium, Pharming also has operations in Finland and the USA. VERSATEL TELECOM: Moody's Places Rating on Downgrade Review ----------------------------------------------------------- Moody's Investors Service on Tuesday placed the ratings of Versatel Telecom International N.V. under review for possible downgrade. Ratings affected by the review are the company's senior implied rating at B3, unsecured issuer rating at B3, the $225.0 million 13.25% senior notes due 2008 at B3, $150.0 million 13.25% senior notes due 2008 at B3 and $180.0 million 11.875% senior notes due 2009 at B3. Versatel's 120.0-million-euro 11.875% senior notes due 2009 were also downgraded at B3, the 300.0-million-euro 11.25% senior notes due 2010 at B3, 300.0-million-euro 4.0% senior convertible notes due 2004 at B3 and 360.0-million-euro 4.0% senior convertible notes due 2005 at B3. The review was prompted by concerns on Versatel's ability to grow revenues and cash flows and to a level sufficient to service the company's sizeable debt obligations. The ratings review also reflects concerns as to the company's ability to enhance its current liquidity profile given current market conditions. Versatel is based in Amsterdam, The Netherlands. The local access broadband network operator also has operations in Belgium and Northwest Germany. In the second quarter of 2001, Versatel reported total net revenues of 63.0 million euros and an adjusted EBITDA loss of 19.3 million euros, for total debt of approximately 1.8 billion euros, including capital leases. =========== N O R W A Y =========== BROADBAND MOBILE: HI3G to Buy 3G Company ---------------------------------------- Telecom company Hi3G, partly owned by Investor of Sweden and Hong Kong-based Hutchinson Whampoa, is said to be the most likely buyer of Broadband Mobile, Dagens Industri and FT Information reported on Tuesday. The Norwegian 3G company, which went bankrupt at the beginning of August, was owned by Finland's Sonera of and Norway's Enitel, but their cooperation fell apart as the company generated major losses. U.K.'s Orange and Norwegian company Bane Tele are said to be interested in the remainder of Broadband Mobile. =========== P O L A N D =========== ELEKTRIM SA: Vivendi Deal Nears Completion ------------------------------------------ The investment agreement between cash-strapped conglomerate Elektrim and France's Vivendi should be completed before the end of the month, the Polish News Bulletin & World Reporter in its Monday edition said. Under the terms of the deal, Vivendi will pay 489 million euros for Elektrim's fixed-line, data transmission and internet companies. A further 100 million euros will be for control over eastern Europe's top mobile phone operator Polska Telefonia Cyfrowa. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: CFO Schorderet Resigns -------------------------------------- Swissair Group's chief financial officer Georges Schorderet has stepped down from the company, Dow Jones Newswires reported on Tuesday. The move came after Swissair's accounting practices were under attack earlier this year, but still held a post within the group. Swissair posted a loss of 2.9 billion Swiss francs in 2000 after taking 2.7 billion francs in charges for writing down its stakes in loss-making Belgian airline Sabena, France's AOM/Air Liberte and LTU of Germany. The heavily indebted Swiss group is undergoing a drastic restructuring to sell assets and cut costs by 500 million francs before the end of the year, but has so far indicated it does not plan a capital increase. =========================== U N I T E D K I N G D O M =========================== BRAINSPARK PLC: Closes Companies Amid Funding Sentiment ------------------------------------------------------- Internet incubator Brainspark PLC has closed its two companies as follow-on funding market has not come back, the Financial Times reported yesterday, citing chief executive Stewart Dodd. The companies Brainspark closed are broadband consulting firm EC1 Media and Gasworld, a trading platform for gas companies. Brainspark confirmed last month it was in discussions with companies, believed to include investment bank Durlacher. The company's net asset value fell from 20.5 million pounds in December to 12.4 million pounds at the end of June because of write-downs on investments. Its current share price of 4 1/2p values the business at about 5.5 million pounds. EQUITABLE LIFE: Chancellor Brown Gets Demand From Action Groups --------------------------------------------------------------- Representatives of Equitable Life Policyholders Action Group, Equitable Life Members Action Group, Equitable Life Members Help Group, and the Drawdown Group have sent a second letter to Chancellor Gordon Brown demanding compensation for Equitable Life policyholders from the government, the Daily Telegraph reported yesterday. The letter, signed by ELPHAG chairman Ron Bullen, states, "The Government has a responsibility to compensate those who have suffered as a result of the failure of regulators to carry out this task effectively and forcefully." The Equitable Life action groups sent its first letter on August 9. Equitable Life is currently beating the details of a compromise deal with its policyholders aimed at stabilizing its troubled finances. Under the agreement, policyholders with guaranteed annuity rate (GAR) options would probably receive a cash payment in return for giving up their GARs. GLOBALNET FINANCIAL: NewMediaset to Win GlobalNet Bid ----------------------------------------------------- British Internet investor NewMedia Spark is expected to win its $11.3 million battle for control of financial information website GlobalNetFinancial.com, Reuters reported on Wednesday. On Monday, NewMedia said it would raise its offer for the website to $0.45 per share, valuing the firm at around $11 million, from $0.36 per share to match a rival bid from Italian Internet software company AISoftware. GlobalNet said it would run out of cash in the near future. It has sold or closed many of its financial websites and laid off much of its workforce in Europe. MARCONI PLC: Says ADRs Will Continue to Trade on Nasdaq ------------------------------------------------------- Debunking a press report suggesting that UK's largest telecom equipment manufacturer Marconi PLC may axe its listing on the Nasdaq, Vice President for Media Relations Joe Kelly says, "We have no plan of withdrawing from the Nasdaq." Earlier this week, an unnamed source told reporters for This Is London that Marconi's Nasdaq listing "an expensive treat" costing 35,000 pounds in fees and citing the need for troubled Marconi to pay for US advisers and support for shareholders. Marconi's shares have collapsed in the wake of news about losses lay-off. SCOOT.COM: Ends Debenture Agreement ----------------------------------- Scoot.com said on Tuesday it has agreed to terminate the subscription agreement on July 22, 1999 between the company and the debenture holders, with effect from completion of the sale of the Loot business. The online directories firm further agreed to end the March 23 agreement under which the Scoot has certain rights to issue new ordinary shares and obligations to issue warrants (refer to http://bankrupt.com/misc/scoot.pdf). Scoot.com has terminated on August 17 the listing of its American Depository Shares (ADSs) in Nasdaq due to a low volume of trading. It would also terminate its depositary agreement with The Bank of New York on November 22. ************* 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 * * *