/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011004.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, October 04, 2001, Vol. 2, No. 194 Headlines * B E L A R U S * BELARUSBANK: Fitch Raises Rating to CCC- * B E L G I U M * CITY BIRD: Court Grants Bankruptcy Protection REAL SOFTWARE: Finalizes Debt Restructuring Agreement SABENA SA: Strike Disrupts More Flights * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Texas Pacific Bids for Berlin Bank DAIMLERCHRYSLER: Chrysler Sales Fall Despite Discounts MANAGEMENT DATA: English Investor Buys Subsidiaries PHILIPP HOLZMANN: Appoints Hinrichs as Supervisory Board Chairman * H U N G A R Y * MALEV AIRLINES: State Approves $950MM Guarantee MOL RT: Selects Bidders for Outsourcing Contract * N E T H E R L A N D S * UNITED PAN-EUROPE: Moody's Downgrades Rating to Caa3 * N O R W A Y * KVAERNER ASA: Secures Loan Facilities * P O L A N D * ELEKTRIM SA: Polish Insurer Threatens Elektrim-Vivendi Deal * S L O V A K R E P U B L I C * IRB BANK: OTP Makes Final Bid for IRB's Majority Stake * S W I T Z E R L A N D * SWISSAIR GROUP: BP Stops Fuel Delivery SWISSAIR GROUP: Grounds All Flights * U N I T E D K I N G D O M * BARINGS BANK: Audit Trial Begins BOOKHAM TECHNOLOGY: Appoints Steve Turley as CCO CORUS GROUP: Dutch Unit Appoints New Supervisory Board Member FEDERAL-MOGUL: Fitch Downgrades Debt Rating to D FEDERAL-MOGUL: Kroll Named as Administrator for U.K. Companies GRAND ADVENTURES: Closes and Liquidates U.K. Subsidiary MARCONI PLC: Duke Street Considers Marconi Assets MARCONI PLC: FSA Is Investigating Profit Warnings MARCONI PLC: Shares Slide Again to 13p MARKS & SPENCER: Galeries Lafayette Bids for M&S' French Stores XEROX CORPORATION: Closes Photocopier Plant in the U.K. ============= B E L A R U S ============= BELARUSBANK: Fitch Raises Rating to CCC- ---------------------------------------- International rating agency Fitch on Monday has upgraded Belarusbank's long-term rating from CC to CCC-. The bank's other ratings remain unchanged as follows: short-term C, Individual E and Support 4T. The CCC- rating reflects the bank's support by its owners in the form of capital injections and a consequent improvement in its capitalization over the past two years. However, the capitalization of Belarusbank is still weak. According to Fitch, the bank's profitability is poor and the level of loan loss reserves is low. Belarusbank, formed by the merger between State Belarus Savings Bank and Joint-Stock Commercial Bank Belarusbank, is 96%-owned by the Ministry of State Property and Privatization and 3.8%-owned by the National Bank of Belarus. ============= B E L G I U M ============= CITY BIRD: Court Grants Bankruptcy Protection --------------------------------------------- The Brussels commercial court, according to the Monday edition of Dow Jones Newswires, has granted troubled airline City Bird Holding SA bankruptcy protection. The court granted the protection on condition that German travel group Thomas Cook takes over the company. However, Thomas Cook said it would not take over City Bird. The withdrawal was triggered by the impact on the travel business of the recent terrorist attacks in the U.S. and a 129-million-euro claim by Boeing Co. on the Belgian airline. About 600 City Bird employees plan to file individual lawsuits against Thomas Cook seeking damages totaling about 1 billion Belgian francs. REAL SOFTWARE: Finalizes Debt Restructuring Agreement ----------------------------------------------------- Belgian software group Real Software Group N.V. said Monday that it has reached an agreement to buy out its minority shareholders by means of share swaps at ASQ, Connect and FSS. The agreement, part of the company's debt restructuring plan, will considerably reinforce its equity position. The heavy debt burden of Real Software resulted in a first-half net loss of 32 million euros, up from 4.1 million euros a year earlier. SABENA SA: Strike Disrupts More Flights --------------------------------------- Sabena grounded 20 of its 73 European and intercontinental flights out of Brussels on Monday, as a pilots' strike went into a fourth day in protest against the Belgian flag-carrier's restructuring plan, Reuters reported. According to Sabena spokesman Wilfried Remans, the airline company also leased planes and hired foreign pilots to help keep most of its flights on schedule. Sabena Chairman Fred Chaffart was meeting pilots to hear their complaints about the plan, which management and the airline's other unions approved last week. The pilots claim that Sabena does not have sufficient funding to carry out the plan, which includes cutting 2,000 jobs, as well as cutting routes and selling aviation-related businesses to bring the airline back to profitability by 2005. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Texas Pacific Bids for Berlin Bank ----------------------------------------------------------- International investment firm Texas Pacific Group (TPG) has emerged as a third bidder for the beleaguered Bankgesellschaft Berlin, according to Handelsblatt's Monday report. Under TPG's plans, the restructuring of Bankgesellschaft Berlin will take three to five years before the U.S. company withdraws by gradually selling its shares via the markets, Handelsblatt added. TPG also intends to continue all of Bankgesellschaft Berlin's existing operations and to pay the state at least 101% of its investments in the bank. At the end of last week, Berlin Finance Minister Christiane Krajewski held talks with Bankgesellschaft Berlin bidders NordLB and the DSGV savings banks association, and US investor Christopher Flowers. The state underwrote 1.75 billion euros of Bankgesellschaft Berlin's recent 2 billion euros capital increase after the bank incurred steep losses, mostly in its property portfolio. DAIMLERCHRYSLER: Chrysler Sales Fall Despite Discounts ------------------------------------------------------ Sales figure of DaimlerChrysler AG's Chrysler Group fell 28% to 152,165 vehicles, despite deep discounts on many of its units. According to Dow Jones Newswires' Tuesday report, car sales fell 22% to 36,956 vehicles, while truck sales fell 30% to 115,209 vehicles. Gary Dilts, Chrysler's Senior Vice President of Sales, said that sales fell partly because it offered its 0% financing program a few days after General Motors Corp. and Ford Motor Co. began the same offer. Sales at the beginning of September were off to a good start until the terrorist attacks in New York and Washington, Dilts added. Sales picked up at the end of last month as people started to take advantage of the program. MANAGEMENT DATA: English Investor Buys Subsidiaries --------------------------------------------------- Media software company Management Data AG on September 21 said that an English investor has finally acquired its subsidiaries, D.A.V.I.D. GmbH and OmniBus Ltd., following several months of negotiations. Financial details and investor name were not disclosed. The sales of both subsidiaries not only ensures the future of the daughter companies, but also enables Management Data, together with its insolvency administrator Dr Klaus Pannen to build a solid ground to satisfy the demands of creditors. Ongoing losses have caused Management Data to seek financial aid from investors. A 5-million-euro injection by U.S. investor Global Emerging Markets was not even enough to save the company. The insolvency proceedings for the estate of the media software group opened on August 31. PHILIPP HOLZMANN: Appoints Hinrichs as Supervisory Board Chairman ----------------------------------------------------------------- German construction company Philipp Holzmann AG said on September 27 that it has appointed Professor Konrad Hinrichs as chairman of the company's Supervisory Board effective February 1, 2002. Hinrichs, who has been the chairman of the Board of Management of Philipp Holzmann since December 15, 1999, mastered the crisis of the construction group and successfully managed the financial recovery of the enterprise and its organizational restructuring. Earlier, Hinrichs said the company would remain in the red this year, with debts of about 1.58 billion euros at the end of the year. He expects to lay off 700 more workers. 600 jobs have already been eliminated since the beginning of 2001. Philipp Holzmann, narrowly rescued from bankruptcy in 1999, posted in September a first-half net loss of 56.52 million euros (See http://bankrupt.com/misc/philipholzmann1.pdffor the company's financial statement). ============= H U N G A R Y ============= MALEV AIRLINES: State Approves $950MM Guarantee ----------------------------------------------- Hungary's parliament has approved a government proposal to provide the ailing Malev Hungarian Airlines Rt with a $950 million guarantee against potential damages incurred by the September 11 attacks on the United States, according to the Budapest Business Journal's Monday edition. Malev's main insurer Allianz Hungaria Insurance Rt earlier reduced its coverage to $50 million from $1 billion, in line with other international insurance companies' decision, following the September 11 terrorist strikes. Meanwhile, Malev began charging its passengers a $4 insurance supplement on Monday so that the airline can pay increased premiums demanded by international insurance companies. The charge is not incorporated into the ticket price, but is listed separately as a surcharge. Malev has been searching for a global alliance partner since its owner, the State Privatization and Holding Rt (APV), failed to sell a 50% stake in the company to a strategic investor through a tender in January. It registered an after-tax loss of Ft9.35 billion on net sales revenue of Ft108 billion last year, and is struggling to fulfill its restructuring plan, which includes job cuts totaling 600 in 2001 and 400 in 2002. MOL RT: Selects Bidders for Outsourcing Contract ------------------------------------------------ Hungary's debt-laden oil and gas company MOL Rt has notified several bidders for Hungary's $40 to $60 million outsourcing contract that they have been shortlisted, the Budapest Business Journal reported Monday. According to MOL communications officer Marta Kramer, the contract, which concerns the wastewater management of the company's refinery in Szazhalombatta, will probably be signed with the final winner within a few months. Among the shortlisted bidders are French utility Vivendi, French wastewater company Ondeo, and U.S.-based financial investor group AP International. The winner of the tender will purchase and modernize the sewage system of the refinery and enter into a long-term service contract with MOL. MOL, which reported a net loss of 78.4 billion forints in the first six months of the year, sold its telecommunications arm MolTelecom Rt. to Hungarian telecom company PanTel Rt. early in September. ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: Moody's Downgrades Rating to Caa3 ---------------------------------------------------- On Tuesday the debt rating agency Moody's lowered the rating of United Pan-Europe Communications' senior unsecured notes from Caa1 to Caa3 and its subsidiary bank debt from B1 to B2, based on the terms of the cable company's recent capital increase. Moody's ratings changes came as UPC shares continued to deteriorate and now trade at less than 1% of their peak value this year. Moody added that all of UPC's debt was under review for possible further downgrade. =========== N O R W A Y =========== KVAERNER ASA: Secures Loan Facilities ------------------------------------- Kvaerner, the toubled Anglo-Norwegian engineering and construction Group, said Monday it has secured 900 million Norwegian krone in short-term loan facilities. Of the facilities, 800 million Norwegian krone was provided by a consortium of the group's leading banks. The 100 million Norwegian krone was provided by Aker Maritime ASA. The Norwegian-registered Kvaerner is currently organized in the E&C (Engineering and Construction) and Oil & Gas business areas. The group has annual revenues in excess of US$6 billion, with some 35,000 permanent staff located in almost 35 countries throughout Europe, Africa, Asia and the Americas. Its gross debt in September has reached NKr9.5 billion after repayment of a loan to Den norske Bank related to the Stena Don rig. For more information, contact Paul Emberley, Vice President Group Communications at +44 (0)20 7339 1035 or +44 (0)7768 813090. =========== P O L A N D =========== ELEKTRIM SA: Polish Insurer Threatens Elektrim-Vivendi Deal ----------------------------------------------------------- Polish insurer PZU Zycie, according to Reuters' September 28 report, has threatened to undermine Elektrim's recent deal with Vivendi Universal if Elektrim will not buy back 200 million zlotys of bonds issued earlier this year. PZU Zycie has accused the conglomerate of violating the bond covenant, which was backed by a 3.3% stake in an Elektrim-Vivendi telecoms joint venture, Elektrim Telekomunikacja. The state-controlled insurer wants to cash out of the one-year bonds with a 19.5 interest rate, threatening legal action that could include a motion to declare Elektrim bankrupt if it does not comply. If PZU Zycie succeeds in forcing Elektrim to buy back the bonds, the conglomerate's cashflow could be seriously strained. ============================= S L O V A K R E P U B L I C ============================= IRB BANK: OTP Makes Final Bid for IRB's Majority Stake ------------------------------------------------------ Hungary's OTP Bank Rt, according to the Monday edition of Budapest Business Journal, has made a final and irrevocable bid for the Slovak government's 69.56% stake in the Slovak Investicsna a Rozvojova Banka (IRB). The remaining 7.45% of IRB shares are held by investment funds. IRB posted a pre-tax profit of 4.5 million Slovak crowns in the first nine months of last year, following a 6.4 billion-crown state bailout of its bad debts. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: BP Stops Fuel Delivery -------------------------------------- The Swiss subsidiary of BP Plc has stopped fuel delivery to Swissair Group AG as the aviation group was unable to pay a two- digit million amount for previous deliveries. According to Dow Jones Newswires Tuesday report, Swissair also did not keep a promise to pay in advance the Tuesday delivery, BP executive Giorgio Kunz said. The Swiss subsidiary of Royal Dutch Shell Group also confirmed Swissair has payments outstanding, the report added. SWISSAIR GROUP: Grounds All Flights ----------------------------------- Swissair was forced to cease all of its flight operations on Tuesday and Wednesday, since it has been unable to find the cash to keep flying. The flight suspension has not only affected thousands of passengers on more than a hundred flights, but also thousands of workers, putting even more jobs at risk than the 2,650 redundancies announced on Monday, Swissair added. Since the Swiss aviation giant is currently in administration and protection from creditors under Swiss law, Swissair cannot make any financial contribution to the provision of the facilities. Swissair tickets were no longer accepted by other airlines. The company is advising its customers to make their travel arrangements with other air carriers or via a tour operator. Swissair's cancellation of payments prompted fuel companies to cut its supply and at least one airport to block its planes. =========================== U N I T E D K I N G D O M =========================== BARINGS BANK: Audit Trial Begins -------------------------------- The case against former auditors of Barings Bank has commenced at the High Court in London, and is expected to last for more than a year, reports the BBC News. Barings' liquidators KPMG bank have claimed that auditors Coopers & Lybrand, now part of PricewaterhouseCoopers, and the Singapore office of Deloitte & Touche failed to do their job and should be blamed for the bank's demise. Barings Bank, which used to be one of the most prestigious merchant banks in London, collapsed in February 1995 after trader Nick Leeson incurred 830 million pounds of losses from unauthorized trading. BOOKHAM TECHNOLOGY: Appoints Steve Turley as CCO ------------------------------------------------ Bookham Technology plc, U.K.'s leading manufacturer of silicon integrated optical components, announced on Monday that Steve Turley has joined the company as Chief Commercial Officer. Turley was formerly Vice President, Strategic Partnerships with Nortel's High Performance Optical Component Solutions Group. He will be responsible for the entire commercial and product side of the company, driving its overall product strategy worldwide and taking leadership of the sales, marketing, product management and business development teams. Bookham Technology, whose securities are traded on Nasdaq and the London Stock Exchange, has facilities in the US, Canada, France, Italy and Japan, and employs approximately 700 people worldwide. In August, Bookham recorded a 44.6 million pounds, or 35 pence a share, in the second-quarter, from 8.2 million pounds, or 7p, in the year-ago period. It further cut 30% of its employees to 720 employees in July. Contact Sharon Ostaszewska at +44 (0) 1235 837 612 or email sharon.ostaszewksa@bookham.com for more information on the company. CORUS GROUP: Dutch Unit Appoints New Supervisory Board Member ------------------------------------------------------------- Anglo-Dutch steel manufacturer Corus Group plc said on September 28 that L.J.M. Berndsen has been appointed as a member of Corus Nederland B.V.'s supervisory board. Berndsen, is the Chief Executive Officer of Koninklijke Nedlloyd N.V. and co-chairman of the Board of P& O Nedlloyd Containerline Ltd. In September, the Troubled Company Reporter Europe said that 1,100 of the 9,500 jobs in Corus Group's factory in Netherlands would be cut over the next two years as part of the company's restructuring plan. Corus recently posted a pre-tax loss of 230 million pounds in the first half of this year (see http://bankrupt.com/misc/corus.pdf for the company's interim report), and 1.1 billion pounds last year. FEDERAL-MOGUL: Fitch Downgrades Debt Rating to D ------------------------------------------------ Fitch recently downgraded both the senior unsecured debt and the secured bank debt of Federal-Mogul Corporation to D from CCC and B-, respectively. The D rating reflects the uncertainty as to proceedings of the company's filings for financial restructuring, and also the potential liabilities related to asbestos claims. Most recently, Federal Mogul Corporation had $1.9 billion in secured bank debt outstanding, in addition to $2.1 billion of unsecured debt. The Michigan-based Federal-Mogul Corp. is a global producer and distributor of a broad range of components for automobiles and light trucks, heavy-duty trucks, farm and construction vehicles, and industrial products. FEDERAL-MOGUL: Kroll Named as Administrator for U.K. Companies -------------------------------------------------------------- The U.K. Court Chancery Division, according to Business Wire's Monday edition, has appointed independent accountancy firm Kroll Buchler Phillips as Administrators for Federal-Mogul Group's U.K.-based companies. Simon Freakley, Head of Kroll Buchler Phillips and Joint Administrator, said the Administration and Chapter 11 should allow the group to restructure its finances so that it can emerge as a stronger business. The Administration Order coincides with a voluntary filing for financial restructuring under Chapter 11 in the United States as Federal-Mogul seeks to resolve its financial difficulties caused by asbestos litigation. Federal-Mogul subsidiaries in the United Kingdom have jointly filed for Chapter 11 and Administration under the U.K. Insolvency Act of 1986 at the High Court of Justice, Chancery Division, in London, England. GRAND ADVENTURES: Closes and Liquidates U.K. Subsidiary ------------------------------------------------------- Grand Adventures Tour & Travel Publishing Corporation has closed and liquidated its U.K. subsidiary Lawson Interline Travel Ltd., after it was unable to renew required operating licenses at the end of September. The closing of the Lawson operation was directly impacted by the September 11 terrorist events. Prior to the attacks on the United States, the company was about to close a private placement offering that would have provided the necessary capital to permit the UK operation to obtain the renewal of its license. The company's U.S. operations have also been substantially damaged by the attacks, dropping new bookings by over 70%. Forty-five employees in the U.S. have already been laid off, while the closing of the U.K. operation cost over 46 employees their jobs. The company has suspended payments to all debt holders and subsequently is in default on many of obligations. Additionally, no payments to trade creditors for past services are being. MARCONI PLC: Duke Street Considers Marconi Assets ------------------------------------------------- Private equity firm Duke Street Capital may bid for the two manufacturing businesses to be sold off by stricken telecoms equipment company Marconi, reports The Times. Duke Street plans to offer 150 million pounds for Gilbarco, which makes petrol pumps for service stations. The firm is also interested in an offer of between 800 million and 900 million pounds for the whole business of appliance maker General Domestic Appliances. The interest in its assets will raise hopes that Marconi can meet its crucial target of cutting debt from 4.4 billion to at least 3.2 billion pounds by March next year. MARCONI PLC: FSA Is Investigating Profit Warnings ------------------------------------------------- The Financial Services Authority, the City of London's main watchdog, is investigating the two recent profits warnings of Marconi, according to the Financial Times' Tuesday report. The FSA enquiry is centered around the events leading up to Marconi's profit warnings on July 4 and September 4. The admission from Marconi that the FSA is interviewing individuals at the company is an indication that the watchdog has stepped up its probe from a preliminary level to a formal inquiry. The FSA declined to comment on Marconi's statement. MARCONI PLC: Shares Slide Again to 13p -------------------------------------- Shares of Marconi plunged to 13p after the troubled telecoms equipment maker said the terrorist attacks in the U.S. on September 11 could cause it to fall short of first-half targets. According to the Tuesday edition of the Daily Telegraph, the group's inability to reassure the market sent the shares down 5.25 from 18.25p to 13p. At its second profits warning in September, the company, which was recently demoted to the FTSE 250, said that asset sales would be a key part to cut its debt from 4.4 billion pounds to between 2.7 billion and 3.2 billion pounds. MARKS & SPENCER: Galeries Lafayette Bids for M&S' French Stores --------------------------------------------------------------- French department store chain Galeries Lafayette, according to Daily Telegraph's Tuesday report, is in confidential discussions with retailer Marks & Spencer and has made a bid for its troubled French operation. "We said in April that we were interested in Marks & Spencer stores for two reasons, prime locations and well-trained staff," Galeries Lafayette co-chief executive Philippe Houze said. M&S' intention to pull out of Europe to concentrate on reviving its business in the U.K. led to a wave of protests from its 1,700 staff members in France. XEROX CORPORATION: Closes Photocopier Plant in the U.K. ------------------------------------------------------- American photocopier group Xerox, according to the Daily Telegraph's report yesterday, will close its U.K. factory in Mitcheldean. About 1,300 jobs will be lost, while retaining a small workforce at the plant to work on electronic designs. Much of the site will be sold. The move came as Xerox announced plans to sell half of its office equipment manufacturing operations to Flextronics International to return to profitability. In July, Xerox Europe announced that 350 jobs would be lost at its Dundalk site in Ireland, following the group's decision to close its small office and home office equipment business division. The Irish staff has appealed to Tanaiste, Harney, to pressure the troubled copier maker to pay departing employees their pension contributions. *********** 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 Maria 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 240/629-3300. * * * End of Transmission * * *