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        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, September 25, 2001, Vol. 2, No. 187


                            Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: Obtains Extension of Protection From Lenders
SABENA SA: Fails to Ink Agreement With Union Over 12% Job Cut
SABENA SA: Won't Ground Planes Over Insurance Premium Row

* F R A N C E *

AOM-AIR LIBERTE: Recovery Remain Unclear

* G E R M A N Y *

BANKGESELLSCHAFT BERLIN: Parion Sets Condition for Aid
DAIMLERCHRYSLER: Top Honchos to Reassess Restructuring Plan
DAIMLERCHRYSLER AG: Portland Unit to Lose 1.2BB by 2002
STEUCON GRUNDBESITZ: To Call General Meeting Before 2002

* I R E L A N D *

AER LINGUS: Mounting Losses Push Futura Sell-Off

* L A T V I A *

SAURIESU BUVMATERIALI: Owners to Mull Liquidation Plan on Oct. 22

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

UNITED PAN-EUROPE: Outlines Details of Priority Telecom IPO
SWISSAIR GROUP: Business Sector, Gov't. Find Ways to Aid Airline

* S W I T Z E R L A N D *

SWISSAIR GROUP: To Ground Planes If Insurance Premiums Escalate

* U N I T E D   K I N G D O M *

BRITISH TELECOMMUNICATIONS: Talks With AT&T to Decide on Concert
BRITISH TELECOMMUNICATIONS: MMO2 De-merger Prospectus Released
MARCONI PLC: Trashes Internet Hotel Plans
MARKS & SPENCER: Archie Norman Under Negotiation to Be Director
CORUS GROUP: 1,100 Job Cuts in Netherlands Factory by 2003
RAILTRACK GROUP: Director Takes Railtrack 150T Pound Payoff
VIASYSTEMS GROUP: Calls in Receivers, to Shutdown Factories


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


LERNOUT & HAUSPIE: Obtains Extension of Protection From Lenders
---------------------------------------------------------------

Embattled Lernout & Hauspie Speech Products NV obtained recently
a nine-month extension on its bankruptcy protection, reports the
Dow Jones Newswires.

The temporary protection from creditors was due to expire by end
of this month.

A Belgian Court extended the relief just days after the approval
of the Company's restructuring plan by the majority of its
creditors.

Ever since its delisting from the Nasdaq exchange after losing
$10 billion in market capitalization, the Company has been
hobbled with several financial challenges forcing it to file for
protection last January.



SABENA SA: Fails to Ink Agreement With Union Over 12% Job Cut
-------------------------------------------------------------

A deal with the union of ailing Sabena airline is still up in the
air as negotiations with management last Sunday ended without a
firm agreement on the airline's job-cutting plan.

It is not clear what exactly caused the talks to bog down,
although earlier management expressed optimism about reaching a
pact with the union by Sunday.

The airline is planning to cut 1,421 jobs or about 12% of its
workforce as part of its restructuring plan.  

Without a deal, the airline's future is hanging in the balance
and financial collapse may happen within months, says chief
executive Christoph Mueller.

Negotiations are expected to resume this week, reports indicate.



SABENA SA: Won't Ground Planes Over Insurance Premium Row
---------------------------------------------------------

It is still business as usual for embattled Sabena airlines this
week even if it is unclear on what will come out of the face-off
between insurance underwriters and carriers on liability
coverage.

This, as Belgian government representatives brought the matter of
escalating premiums to the attention of European Union finance
ministers during an informal meeting over the weekend, the Dow
Jones Newswires reports.

Several major European airlines have said they may have to ground
flights this week after insurers announced they will cut war risk
liability coverage, unless the insurance contracts are
renegotiated on less favorable terms to the carriers.


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


AOM-AIR LIBERTE: Recovery Remain Unclear
----------------------------------------
Francois Bachet, Board chairman of the French airline
group, AOM-Air Liberte has declared that the troubled group
must offer flights to Algiers if it hopes to recover, FT
Information on Friday reported.

The Algiers route was abandoned by the national carrier,
Air France in 1994.

It will be a make or break stage for the succeeding months for
AOM-Air Liberte, which narrowly escaped liquidation recently and
must now confront a slump in the air travel sector.

For the past eight weeks, it has been managed by its new owners -
Mr. Bachelet and the former Air France pilot Jean-Charles Corbet.

However, it is in financial distress as the contribution which
former shareholder Swissair is due to make to its funds this year
still leaves the French group with a 1.8 billion French franc  
shortfall.


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


BANKGESELLSCHAFT BERLIN: Parion Sets Condition for Aid
------------------------------------------------------
Germany's 8th largest insurance group Parion buoyed further the
reconstruction plans of Bankgesellschaft Berlin AG as it promised
last week to pitch in 100 million euros in fresh capital to the
bank.

However, Parion says it will only shell out the money if a
competent group of financial investors will administer it.

The bank currently plans to undertake a 2-billion-euro capital
increase to cope with real estate losses amounting to hundreds of
millions of euros in 2000 and this year.

Last month, the bank got a needed lift from the City of Berlin,
its controlling shareholder, when the latter injected 1.13
billion euros in capital.


DAIMLERCHRYSLER: Top Honchos to Reassess Restructuring Plan
-----------------------------------------------------------

The board of DaimlerChrysler is scheduled to meet this week to
assess the Company's pace in meeting its restructuring goals
amidst falling car sales and in the wake of the recent terrorist
attack on the United States, bares the Financial Times.

Although the Company declined to give details on what items are
exactly in the agenda, an executive admitted that the drop in the
projected market share would take center stage.

In addition, the initial effects of the September 11 attack will
likely be assessed, the executive added.

Chryslers has instituted cost-cutting measures and have set a
timetable for returning to profitability based on a market share
of 14 percent in the US.

This share dropped to 11.4 in August.  

Senior managers, however, expected the Company's share to regain
footing in the fourth quarter as it launches its new Dodge Ram
pick-up.

But since the attack, industry analysts have lowered expectations
for new car sales.

Weakening US demand could reduce DaimlerChrysler's operating
profit, before restructuring costs, from E1.6bn to E1.2bn
($1.1bn) for this year, says JP Morgan.

Of that decline, analysts believe E300m will be due to lower
earnings at Chrysler in the last quarter of this year.


DAIMLERCHRYSLER AG: Portland Unit to Lose 1.2BB by 2002
-------------------------------------------------------

Two truck and parts-making plants of DaimlerChrysler AG in
Portland, Oregon may be closed by year-end as its Freightliner
LLC unit would likely jock up a whooping $1.20 billion in losses,
reports Stark's News Service Interactive.

According to the report, an executive bared that management is
currently negotiating with unionized workers to re-open a three-
year contract and cut wages, scrap bonuses and future wage raises
to save the plants from closure.

Freightliner reportedly lost over $520 million in the first half
of this year.

A recovery plan is currently not fully implemented as it is still
awaiting the nod from the board of the parent firm.  

Final approval will likely be given on the second week of October
yet.

Meanwhile, the report also added that nearly 30 per cent of
Freightliner dealers appear to be on the brink of bankruptcy.


STEUCON GRUNDBESITZ: To Call General Meeting Before 2002
--------------------------------------------------------

German property investor Steucon Grundbesitz- und Beteiligungs AG
plans to call an annual general meeting before the end of the
year to discuss the troubled company's prospects and the
implementation of capital measures, reports B6rsen Zeitung.

This after creditors approved the insolvency plan during a
meeting held last September 20.  

The insolvency administrator has concluded a contract with
Zechbau Holding GmbH to obtain resources for the insolvency plan
and to meet some creditor demands.


============
I R E L A N D
=============

AER LINGUS: Mounting Losses Push Futura Sell-Off
------------------------------------------------
AER LINGUS has put its charter airline subsidiary, Futura
International Airways, up for sale in an attempt to offset losses
of up to 170 million pounds over the next two years, the Sunday
Times on its September 23 issue reported.

The sale of AER Lingus's subsidiary airline will be proposed at a
board meeting on Thursday as part of an emergency plan to
generate income for the troubled Irish state airline.

Palma-based Futura, was valued at 30 million to 40 million pounds
before the terrorist attacks in America savaged the aviation
sector. The airline yields 5 million pounds in profit a year, but
will considerably be reduced due to the effects of the attacks.

Futura is one of the few remaining non-core assets Aer Lingus can
sell off.  Earlier, it already sold Team, its aircraft
maintenance business, and other interests.

According to the paper, Bertie Ahern, the taoiseach assigned to
Aer Lingus case on Friday, was told the state airline will lose
an estimated 70 million pounds this year and up to 100 million
pounds  next year, even after cost saving measures are
implemented.

The Sunday times further reported, according to sources close to
the company, it will run out of money within six months.

The airline announced to its unions plans of job cuts. The first
redundancy notices are due to be posted this week, with 600
temporary staff  to go first.

The company is studying its flights to Los Angeles, Gatwick and
Paris, in addition to terminating routes to Newark, Washington
and Stockholm. Other services are to be scaled back.

Aer Lingus is looking for 200 million to 300 million pounds in
state aid from the government to save it from potential
bankruptcy.

However, Mary Harney, minister for enterprise, trade and
employment, stressed that a state rescue is not the answer. She
is likely to be overruled by Ahern, in whose constituency
majority of the airline's workers live.


===========
L A T V I A
===========


SAURIESU BUVMATERIALI: Owners to Mull Liquidation Plan on Oct. 22
-----------------------------------------------------------------

An emergency shareholders general meeting is scheduled next month
to consider the liquidation of Sauriesu Buvmateriali, says the
Baltic News Service & World Reporter.

Among the items to be taken up in the October 22 meeting will be
the appointment of the liquidator and the approval of the
liquidation measures.

According to the report, Sauriesu Buvmateriali will be liquidated
as KNAUF has decided that in the future it will be represented in
Latvia only by KNAUF Marketing Riga.

At present, KNAUF concern in Latvia is represented by two
companies -- KNAUF Marketing Riga and Sauriesu Buvmateriali.

The former deals with investment, production and sales while the
latter takes care of supplying the raw materials and production
of dry mixtures.

KNAUF has found the above structure significantly complicated in
addition to being contradictory with the general practice in the
industry and KNAUF's business policy.


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


UNITED PAN-EUROPE: Outlines Details of Priority Telecom IPO
-----------------------------------------------------------
United Pan-Europe Communications NV Friday outlined details of an
expected initial public offering of shares in its Priority
Telecom unit on the Euronext Amsterdam bourse, Dow Jones
Newswires said on its Friday issue.

The Dutch cable company said the reference share price for the
offering is 6.50 euros ($6.02), adding that 15% of Priority's
shares will be free floating when trading of the shares begin.
The first day of trading is expected to be on September 27.

Priority has 3.99 million normal shares, valued nominally at four
euros. Priority will also issue 2.73 million Class A shares,
which will be placed with UPC and not listed.

UPC said that, under these conditions, Priority will be listed
with a market capitalization of 43.6 million euros.

J.P. Morgan, which is the "listing agent" for the IPO, can ask
UPC to issue or sell normal shares -- up to a maximum of 10% of
the number of shares issued in the IPO -- within six months of
the listing, UPC said.

Because of last year's acquisition of Cignal Global
Communications of the U.S. by Priority in an all-stock deal, UPC
faces a $200 million penalty payment if Priority shares are not  
listed by the end of September. Priority promised former Cignal
shareholders that their new Priority shares would be listed by
October 1 or they would have the right to their money back.

Cignal shareholders own 16% of Priority, while UPC owns the rest.

UPC said that under the terms of the IPO, UPC itself, Cignal's
founders and managers as well as Priority's management, have
agreed to a lock-up period of no less than a year.

Priority and UPC have agreed on a number of financing agreements,
which should enable Priority to "continue its strategy of
sustainable growth."

First of all, Priority will receive around 174 million euros
through the placing of convertible shares if and when the IPO is
realized. Also, shareholder loans of 190 million euros will be
converted into convertible preference shares. On top of that,
there will be additional funding of 50 million euros available in
kind from UPC.

Priority Telecom is UPC's telephony unit. It had sales of 119
million euros in the first half of 2001, while loss before
interest, taxes, depreciation and amortization was 50 million
euros.

The executive board of Priority after the IPO will be headed by
Chris Rooney. It will also consist of David Chadwick, Stephen
Beebe, Cees Bohnenn and Robert-Jan Lousberg.

Financially troubled UPC is a start-up cable company offering
television, Internet and telephony services through its cable
networks. The value of the company shares has almost completely
been wiped off over the past year.

The company's market capitalization is 136 million euros, less
than the penalty UPC would have to pay if Priority shares are not
listed before the end of September.

UPC shares closed Thursday at 31 European cents. Its shares were
trading above 84.90 euros in March last year.



SWISSAIR GROUP: Business Sector, Gov't. Find Ways to Aid Airline
----------------------------------------------------------------

Realizing the necessity for Swissair to continue flying, the
Swiss government and several business entities began talks over
the weekend to help the ailing flag carrier get back to financial
health.

However, while all agree that the airline plays an important role
in the country's economic position, the grant of aid will likely
depend on Swissair's ability to draw a successful long-term
business plan.

In addition, a consensus must be reached with the airline's
creditors before any plans can be implemented successfully, says
the Finance Ministry.   

The national flag carrier incurred losses amounting to 2.9
billion francs ($1.8 billion) last year when its expansion
strategy failed.  

The recent terrorist attack on the United States has put the
Company in an even graver situation.  

The airline said it lost 65 million Swiss francs in the week
following the attack.

According to an Associated Press report, employee
representatives, banks, other companies, and government
representatives are taking part in the


=====================
S W I T Z E R L A N D
=====================

SWISSAIR GROUP: To Ground Planes If Insurance Premiums Escalate
---------------------------------------------------------------

Beleaguered airline Swissair Group AG says it will ground
airplanes should negotiations between the airline industry and
insurance companies fail, the Dow Jones Newswires reports.

Although confident that a middle ground will ultimately be
reached, the Company says an escalation of premiums will
certainly force it to park some planes.

Following the terrorist attack on the United States two weeks
ago, insurance underwriters announced they would cancel cover on
war liabilities for third parties from midnight Monday last week,
unless they are renegotiated at less favorable terms to airlines.


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


BRITISH TELECOMMUNICATIONS: Talks With AT&T to Decide on Concert
----------------------------------------------------------------
A decision is expected on the fate of Concert Communications
Company, the loss-making global joint venture between British
Telecommunications plc and AT&T, the Financial Times reported on
Monday.

BT, who favors to end the deal, is about half way through a
comprehensive programme of disposals to reduce its debts. The
U.S. Telecom giant AT&T on the other hand is less eager to end
the music since it seeks to establish international network
presence, this time, without Concert.  

The British company on Monday's listing particulars revealed that
BT is contractually bound to pay o720 million pounds for 21% of
AT&T Canada if the partnership is not terminated within two
years. This agreement, part of series of complex deals between BT
and AT&T.

On the second half of this year, Concert's loss of o81 million
pounds was largely attributable to BT, the Financial Times said.

Concert is the last of a few telecom giants built in the 1990s to
compete for telecoms traffic of large multinational companies.



BRITISH TELECOMMUNICATIONS: MMO2 De-merger Prospectus Released
--------------------------------------------------------------
British Telecommunications plc released on Monday prospectuses
for the demerger of MMO2, its wireless operations, and for what
is left of the BT group, The Financial Times on its Sept 23 issue
reported.

Assuming that legal proceedings will be met, November 16 will be
the last day of trading for BT shares. BT group's shares closed
at 373-1/2p on Friday, valuing BT at 32.1 billion pounds.

The paper added that the demerger is set to be concluded on
November 19, after which, BT Group and MMO2 shares will go public
as separate entities.

MMO2, which includes BT Cellnet in the UK, Viag Interkom in
Germany, Telfort in the Netherlands, Manx Telecom and Esat
Digiphone in Ireland, will inherit a debt of 500 million pounds
from BT.  Yet, the paper said, MMO2 has secured a 3.5-billion-
pound bank facility with a credit rating just above high yield.

Sales at MMO2 was 1 billion pounds, earnings before interest,
tax, depreciation and amortisation (ebitda) was 64 million pounds
and operating loss was 95 million pounds.  The losses were
attributable to its Viag and Telfort operations.

The BT Group will consist of BT Retail, BT Wholesale, BT Ignite,
the internet and web hosting division and BT Openworld, which
provides narrowband and broadband services in the UK. In the
quarter, turnover for the group increased 12.5% to 4.5 billion
pounds while ebitda rose 5.9% to 1.43 billion pounds.

The demerger is expected to give the two companies greater market
flexibility, independent access to the capital markets and
improved management focus.



MARCONI PLC: Trashes Internet Hotel Plans
-----------------------------------------
Marconi has drops plans to open a series of Internet hotels
across Europe and Asia, a report in the Independent on
Sunday said.

The troubled telecoms equipment manufacturer, which has been
struggling ever since it first warned on profits in July and then
again in September is trashing the said plans due to a slumping
internet economy.

Marconi shares closed down 12.8 percent at 20.5 pence on Friday.

Hopeful, a spokesman from Marconi indicated that if the
markets improve the company might revisit the idea.


MARKS & SPENCER: Archie Norman Under Negotiation to Be Director
---------------------------------------------------------------

Former chairman of Asda, Archie Norman, has been called for a
position on the board for troubled retail giant Marks & Spencer.
The retailer is appointing non-executives. Sunday Times on its
Monday issue further reported that according to insiders, Norman
may eventually succeed Luc Vandevelde as chairman.

Norman established Asda before selling out to Wal-Mart, the
world's largest retailer.  

Roger Holmes, M&S's managing director, confirmed that the company
was looking for non-executives. Insiders are speculating that a
non-executive appointment for Norman could be a stepping stone to
the chairmanship.

M&S has cut the number of its non-executive directors from 20 to
five. The team now includes Tony Ball, Sky's chief executive, and
Dame Stella Rimington, the former spy chief.

M&S has pledged to hand back 2 billion pounds to shareholders by
March. The money is being raised by the sale of its American
businesses and the sale and leaseback of its property assets.
However, those plans remain unclear following the collapse in the
financial markets after the terror attacks in America.


CORUS GROUP: 1,100 Job Cuts in Netherlands Factory by 2003
----------------------------------------------------------

Anglo-Dutch steel manufacturer Corus Group plc announced late
last week further job cuts, this time at its factory in Ijmuiden,
the Netherlands.

The current 9,500 positions in the factory will be shaved by
1,100 jobs over the next two years, says Dow Jones Newswires.

Accordingly, the move is part of a restructuring program
announced in March.

At present the Company's workforce numbers 54,900, a far cry from
the 64,900 total last December.

The company lost 1.1 billion pounds last year and has not paid a
dividend in the first half.


RAILTRACK GROUP: Director Takes Railtrack 150T Pound Payoff
-----------------------------------------------------------

The Railtrack director who brought the company to a 'lamentable
failure' on safety received a 150,000 payoff leaving to take
charge of Railway Safety, the quasi-independent Railtrack
subsidiary, The Times on its Sept 24 Issue, reported.

Accounts of Rod Muttram, now chief executive of Railway Safety,
received the compensation for loss of office, despite the fact
that his new job carries similar responsibilities as head of
Railtrack's safety and standards directorate.

Railway Safety was established last January in response to the
Ladbroke Grove rail crash in October 1999 and is to be replaced
by a new independent rail safety body funded by a levy on the
industry.

Relatives of those killed in the crash fear that the new rail
body will be lead by the same people who failed to provide safety
of passengers previously.

An investigation on the crash, by Lord Cullen proposed that
Railway Safety should be rolled into the new body, to be called
the Rail Industry Safety Body.



VIASYSTEMS GROUP: Calls in Receivers, to Shutdown Factories
-----------------------------------------------------------

United Kingdom's leading electronic manufacturing company
Viasystems Group, Inc. has decided to call in the receivers, The
Times reported Sunday.

According to the report, the decision is largely due to the
continuing economic slowdown in the manufacturing sector, which
was compounded further by the "gloomy economic reaction to the US
terrorist attack."

Specifically, the Company points to the recession in the telecom
and datacom markets as the reason for the decision to shutdown
its factories in North Tyneside and South Shields.

About 1,600 jobs are threatened in the impending shutdown, The
Times says.

Viasystems Group, Inc. provides electronics manufacturing
services to original equipment manufacturers in the
telecommunications and networking industries.

The products and services of Company includes designing and
fabrication of printed circuit boards, wire harnesses, custom
cable and backpanel assemblies, power supply systems for
telecommunications systems and thermal management systems used in
custom enclosures.

Its major customers include Alcatel, Cisco Systems, Harris,
Intel, Lucent Technologies, Marconi Communications, Nortel,
Siemens, Sun Microsystems and Tellabs.

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

         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.

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