/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011009.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, October 09, 2001, Vol. 2, No. 197 Headlines * B E L G I U M * SABENA: Court Grants Judicial Composition Until Nov. 30 SABENA SA: Virgin May Save Belgian Carrier * G E R M A N Y * ADAM OPEL: Faces Possible Union Action BANKGESELLSCHAFT BERLIN: Former Employees Face Fraud Charges BIODATA INFORMATION: Faces Watchdog Probe BROKAT AG: Shares Tumble Over Restructuring Plan BROKAT AG: To Devise Financial Restructuring Plan KINOWELT MEDIEN: $150MM Film Rights Debts Unsettled MG ROVER: Memo Warns Workers About Pay Deal * I R E L A N D * EIRCOM PLC: Faces Delay Over Valentia Buy * I T A L Y * ALITALIA-LINEE: Postpones Announcement of Industrial Plan ALITALIA-LINEE: Seeks Damages From EU ALITALIA-LINEE: Shares Suspended Friday * N E T H E R L A N D S * UNITED PAN-EUROPE: S&P Lowers Rating to CCC * S W I T Z E R L A N D * SWISSAIR GROUP: Court Approves Temporary Protection SWISSAIR GROUP: Creditors to Sue UBS and Credit Suisse SWISSAIR GROUP: Develops New Flight Schedule SWISSAIR GROUP: Receives CHF50MM Government Loan SWISSAIR GROUP: UBS Chief Says "Sorry" * U N I T E D K I N G D O M * ATLANTIC TELECOM: Calls in Administrators ATLANTIC TELECOM: Colt Snubs Atlantic Assets BRITISH TELECOM: Faces Criticism Over De-merger Bonus MARCONI PLC: May Lose 200MM Pounds From Hedge Scheme MARKS & SPENCER: To Reveal Sales Figure This Week RAILTRACK GROUP: Shares Suspended From Trading ============= B E L G I U M ============= SABENA: Court Grants Judicial Composition Until Nov. 30 ------------------------------------------------------- The Brussels Trade Court has granted Sabena judicial composition until November 30. Friday's decision gives Belgium's struggling flag carrier time to restructure the company while continuing operations. Judicial composition is a precautionary measure, temporarily putting a company in difficulty under shelter of its creditors. It secures the continuity of the operations and gives management the time to put forward recovery measures. For employees, it means the continuity of the work relationship. Sabena applied to the Brussels court for protection after its parent Swissair broke a promise to inject badly needed cash. SABENA SA: Virgin May Save Belgian Carrier ------------------------------------------ Executives from Virgin Express are expected to meet senior Belgian government officials this week over plans to restructure Sabena, according to The Guardian's report yesterday. The stricken airline last week received an 80 million-pound emergency aid package from the Brussels government to keep the airline flying for the next month. Sabena desperately needs support from the private sector to head off European Commission concerns about state aid, the Guardian added. ============= G E R M A N Y ============= ADAM OPEL: Faces Possible Union Action -------------------------------------- German automaker Adam Opel AG will face possible strikes now that talks between the company and its workers' unions regarding its restructuring plan have broken off, according to Dow Jones Newswires' Sunday report. People within the company said that it would now take until mid- November until the program, known as Project Olympia, is in place. Opel chief Carl-Peter Forster first announced in August that the carmaker would be reducing production capacity by around 15%, or 350,000 cars, thereby affecting all European plants. However, the union wants to see an increase in the number of jobs in Germany instead of further job cuts. The union is also demanding Opel's Speedster model and the Astra Cabrio will be produced in the German cities of Bochum and Eisenach, and not in England and Italy. BANKGESELLSCHAFT BERLIN: Former Employees Face Fraud Charges ------------------------------------------------------------ Berlin prosecutors said Friday they have launched fraud charges against two former Bankgesellschaft Berlin employees, Reuters reported. The investigation is said to include both Bankgesellschaft Chief Executive Wolfgang Rupf and the chief executive of state bank NordLB, Manfred Bodin. Justice officials did not confirm the report. The investigation extended its charges to 15 other people involved in a property lending scandal at the bank, Reuters added. Last week, Bankgesellschaft completed a two-billion-euro capital injection to cover the state's huge real estate losses in an attempt to save the bank's capital base from collapse. Bankgesellschaft was also target to several criminal and regulatory probes on real estate lending activities that led to millions of euros in losses at the bank. BIODATA INFORMATION: Faces Watchdog Probe ----------------------------------------- BAWe, the federal supervisory office for securities trading, is investigating whether IT security provider Biodata Information Technology AG is guilty of having misled its own shareholders, reports Handelsblatt. The securities-trading watchdog is also looking into suspicions of share-price manipulation and insider trading. On Friday, the Lichtenfels-based company corrected the information set out in an ad hoc statement issued in August. According to the original statement, Biodata would be installing 6,000 firewalls for Australian company Netcard, adding 20 million euros to the company's annual sales revenue. This was more than 33% of the group sales revenue otherwise expected for 2001. The original ad hoc statement failed to mention that the order was subject to the condition that Netcard's end clients ordered the relevant products by September 5. This did not happen. Chief executive Tan Siekmann resigned after Biodata issued a sales and profit warning. Biodata shares fell by over 50% on the Neuer Markt. BROKAT AG: Shares Tumble Over Restructuring Plan ------------------------------------------------ Shares in troubled software firm Brokat Technologies AG tumbled 20% to 0.60 euro Friday, on an announcement of the company's new capital measures, according to the recent report from Handelsblatt. The company invited its shareholders to an extraordinary annual general meeting on November 12, to vote on the proposed 50:1 capital write-down, accompanied by a capital increase against cash and material assets. The invitation cites a report from auditors Moores Rowland, which warns that the company will by the end of November become ripe for insolvency if it does not undertake the proposed measures. Brokat recently sold its two U.S. divisions for a combined $80 million. BROKAT AG: To Devise Financial Restructuring Plan ------------------------------------------------- Loss-generating software company Brokat Technologies AG is in the process of devising a three-step financial reorganization plan, according to the Frankfurt Stock Exchange. The management board expects to propose these measures at an extraordinary shareholders' meeting on November 12. The plan includes a reduction of the company's capital stock to 745,057 euros, an increase of non-cash capital from previously approved capital and an increase of cash assets from 14.9 million to up to 16.8 million euros. The shareholder meeting will also consider the sale of its Mobile Business unit to U.S.-based eOne Global. KINOWELT MEDIEN: $150MM Film Rights Debts Unsettled --------------------------------------------------- Kinowelt Medien AG has been unable to produce a bank guarantee for payment of debts owed to Hollywood film studios for the acquisition of 245 films and 500 series, reports the Financial Times Deutschland/FT Information. The media group agreed to a $300 million package back in 1999, and has since paid half of that sum. However, its creditor bank refused to pay for the remaining amount, which means that Kinowelt has not yet received any of its films. With Warner calling off the deal and filing charges, Kinowelt's plan to re-sell part of its package (40 films) worth 70 million Deutche marks to the German TV company ZDF will be wiped out. MG ROVER: Memo Warns Workers About Pay Deal ------------------------------------------- About 6,000 workers could lose their jobs at MG Rover if they do not accept new conditions, the Sunday Times reported. In a two-page memo, MG Rover referred to the collective working time flexibility (CWTF). The memo goes on to warn workers, who will have to work longer hours if they accept the deal. According to the memo, "Without CWTF, there would be a requirement to implement continual costly line rate changes that could result in constant variation in headcount requirements, which could naturally lead to redundancy." Rover spokesman Stuart McKee denied the statement hinted at job cuts if the pay deal were rejected. ============= I R E L A N D ============= EIRCOM PLC: Faces Delay Over Valentia Buy ----------------------------------------- Eircom shareholders are likely to have to wait up to three months before being paid for their shares by Valentia Telecommunications, according to the Sunday Times. As required by Irish law, Valentia sought regulatory clearance for its purchase. The tanaiste responded by requesting more information on the takeover. The European commission ruled in July that it had no jurisdiction over the matter, giving the tanaiste a free hand in deciding whether to allow the deal to go through. The delay will be a considerable setback for Valentia, as it increases the chance that one or more members of the consortium will back out of the purchase. Last month, Valentia, chaired by Sir Anthony O'Reilly, had won enough acceptances from shareholders to allow it to declare its 2.36 billion pound bid for Eircom unconditional. ========= I T A L Y ========= ALITALIA-LINEE: Postpones Announcement of Industrial Plan --------------------------------------------------------- Italian national carrier Alitalia has decided to postpone the publication of a new industrial plan for the company until a later date, reports the Financial Times. Alitalia earlier decided to speed up measures announced in a contingency plan that was published immediately after the terrorist attacks in the U.S. There has been strong speculation that Alitalia's new industrial plan would include a 3 billion-lira recapitalization program for the 2002-2006 period. Alitalia was expected to announce an increase in its anticipated losses this year following last month's attacks to 250 million euros, up from the projected figure of 213 million euros. ALITALIA-LINEE: Seeks Damages From EU ------------------------------------- State-owned Alitalia decided to seek damages against the European Union for a ruling that the airline's 3 billion-lira recapitalization plans amounted to state aid, reports the Financial Times. The move comes as the company is set to unveil a four-year industrial plan for the group, expected to include a request for an immediate recapitalization to reduce overall debts that amounted to 1.654 billion lira in the first half of 2000. In July, the EU's executive commission said Alitalia could not receive an extra injection of capital from its owner because such funding would amount to state support, which is not allowed under EU rules. ALITALIA-LINEE: Shares Suspended Friday --------------------------------------- Alitalia's shares were temporarily suspended Friday morning at the Milan bourse after making strong gains in the wake of the approval of a new four-year business plan. According to the Financial Times' report, shares continued to make gains after the suspension was lifted, rising almost 7 cents to E86.6 cents, a gain of more than 8% in early afternoon trading. ===================== N E T H E R L A N D S ===================== UNITED PAN-EUROPE: S&P Lowers Rating to CCC ------------------------------------------- Standard & Poor's lowered its senior unsecured debt rating on United Pan-Europe Communications N.V. from B- to CCC, and its corporate credit rating from B+ to B-. The downgrade is based on the continued uncertainty on the restructuring of UPC's highly leveraged balance sheets. Last week, debt rating agency Moody's lowered the ratings of UPC's senior unsecured notes from Caa1 to Caa3 and its subsidiary bank debt from B1 to B2. Moody's ratings changes came as UPC shares continued to deteriorate. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Court Approves Temporary Protection --------------------------------------------------- A Zurich commercial court has on Friday put cash-strapped Swissair Group, including its airline division SairLines, flagship carrier Swissair AG and its leasing unit Flightlease, under creditor protection until December 5 to avert bankruptcy, Reuters reported. Swissair filed for protection from its creditors on Thursday under Nachlassstundung arrangement after its weak finances were bowled over by a sharp drop in air travel in the wake of last month's attacks in the United States. The Nachlassstundung, a form of moratorium on debt enforcement under Swiss law, suspends all payment demands and interest, suspends limitation periods and protects the companies concerned from debt enforcement by creditors. SWISSAIR GROUP: Creditors to Sue UBS and Credit Suisse ------------------------------------------------------ A group of more than 60 banks are preparing a multi-billion-pound legal action against Swissair's main commercial banks UBS and Credit Suisse over their controversial restructuring of the troubled national airline, the Daily Telegraph reported Sunday. The banks, understood to include Deutsche Bank, Commerzbank, Citibank and Hypovereinsbank, lent Swissair 9 billion Swiss francs during its disastrous expansion phase over the past two years. The banks are furious that UBS and Credit Suisse did not consult them about the restructuring plan. They suspect that the two Swiss institutions profited unfairly ahead of the rest of Swissair's creditors as a result of the deal. Last week, the two banks agreed to buy the Swissair's 70% stake in the rival Swiss airline Crossair for 258.8 million Swiss francs. UBS and Credit Suisse declined to comment on the threat of legal action over the weekend. A UBS spokesman also refused to confirm or deny whether creditor banks had been consulted about the restructuring plan. SWISSAIR GROUP: Develops New Flight Schedule -------------------------------------------- Swissair Group is working on a comprehensive flight schedule to cover all routes until it closes at the end of the month, reports Bloomberg. Manfred Brennwald, Swissair's director of flight operations, will oversee the transition of 26 long-haul and 26 short-haul airplanes into the fleet of Crossair. UBS AG and Credit Suisse Group bought control of Crossair from Swissair last week as the national carrier grounded its fleet for two days. The Swiss government's financial aid has allowed Swissair to resume flights until Crossair takes over. "We'll support the integration of the planes into the new airline according to Crossair's business plan," Swissair Chairman Mario Corti said. SWISSAIR GROUP: Receives CHF50MM Government Loan ------------------------------------------------ Swiss Finance Minister Kaspar Villiger said Friday that the government has already paid out 50 million Swiss francs to Swissair Group AG, according to Dow Jones Newswires' report. The government earlier decided on a 450-million-Swiss-franc package to enable Swissair to continue its flight operations until October 28. Swissair grounded all its planes last week because it did not have the cash to pay fuel companies and other expenses. SWISSAIR GROUP: UBS Chief Says "Sorry" -------------------------------------- UBS chairman Marcel Ospel has apologized for his bank's participation that led to the temporary grounding of Switzerland's national airline Swissair, according to the Financial Times' Sunday report. Ospel has admitted that his decision to fly to New York immediately after Swissair announced plans to file for bankruptcy was a mistake. UBS, along with Credit Suisse, agreed to buy the Swissair's 70% stake in the rival Swiss airline Crossair for 258.8 million Swiss francs. Swissair chairman Mario Corti said he was deceived by UBS and accused the bank of forcing the grounding of the Swissair fleet by turning off its liquidity. =========================== U N I T E D K I N G D O M =========================== ATLANTIC TELECOM: Calls in Administrators ----------------------------------------- Cash-strapped network operator Atlantic Telecom Group Plc has called in administrators on Friday after talks on selling the company or restructuring its debt had failed, Reuters reported. The decision looked likely to cost shareholders all their money and up to 675 Atlantic employees their jobs. Atlatic announced it would apply at the High Court in London for its principal U.K. trading subsidiary, Atlantic Telecommunications Ltd., to assign administrators. Nigel Hawkins, telecoms analyst at Williams de Broe, blamed Atlantic's decline on its 520-million-pound takeover of First Telecom last year. The money spent on expanding First Telecom delayed Atlantic's move into top-line profits and left it with cash of just 55.5 million pounds at the end of June. It lost 27.5 million pounds in the second quarter on sales of just 20 million. The Aberdeen-based company put itself up for sale last month and began talks on restructuring its debt with bondholders. ATLANTIC TELECOM: Colt Snubs Atlantic Assets -------------------------------------------- Energis and Colt, according to This Is London's Sunday report, are not interested in the British, German and Dutch assets of smaller rival Atlantic Telecom, which called in administrators last week. Administrator Steven Pearson of PricewaterhouseCoopers hopes to sell these assets to raise cash for bondholders, who are owed 200 million pounds. The administrator plans to run the company as a going concern until a buyer can be found. BRITISH TELECOM: Faces Criticism Over De-merger Bonus ------------------------------------------------------ British Telecom set to come under renewed fire on Wednesday from corporate governance group PIRC over the bonuses to be paid to directors on the de-merger of mmO, the former BT Wireless business. According to The Times' report yesterday, executive chairman David Varney will get from mmO a one-off payment of 150,000 pounds. Chief executive Peter Erskine will get a discretionary bonus, while the other executive directors will receive shares in the new company. PIRC declined to comment on the detailed criticisms it has of the remuneration package. MARCONI PLC: May Lose 200MM Pounds From Hedge Scheme ---------------------------------------------------- Heavily indebted telecommunications equipment company Marconi could lose more than 200 million pounds from a hedging scheme related to its employee share option program, reports the Financial Times. The scheme is related to Marconi's November 1999 decision to award its 38,000 employees 1,000 shares each if the share price doubled from 800p to 16 pounds. Marconi earlier said it had funded 210 million pounds of collateral with banks in September to cover liabilities associated with the hedging deal. When the scheme was set up, the shares had been rising fast and it opted to hedge the cost of its potential liability with banks, including Barclays Capital and HSBC. The initial share option scheme has been made redundant by the collapse in the value of the shares. MARKS & SPENCER: To Reveal Sales Figure This Week ------------------------------------------------- The troubled retailer Marks and Spencer is expected to show this week a trend in falling sales, according to the Financial Times' Sunday report. Analysts said they expected the trading statement for the second quarter to show an overall drop in sales of 2%, down from 3% in the first quarter. The group has been losing market share to rivals for three years. RAILTRACK GROUP: Shares Suspended From Trading ---------------------------------------------- Shares of Railtrack Plc were suspended from trading after the High Court in London appointed accountants Ernst & Young as administrators for the rail network owner, Bloomberg reported yesterday. The U.K. government will continue to pay non-default interest and scheduled principal payments and other debt for at least 45 days and make other arrangements to continue to pay debt, the report added. Railtrack would have debts of 700 million pounds by December and 1.7 billion by March. Politicians and the British public have criticized Railtrack over safety in the last two years. A broken rail caused a collision at Hatfield, north of London, last October in which four people died. A train crashed near Paddington Station in west London a year earlier when a train ran a red signal, killing 31 people. Its chief executive quit in November, followed by its chairman and then its chief operating officer. Railtrack shares fell 1 pence, to 280 p, on Friday giving the company a market value of $1.4 billion pounds. The company's shares have fallen 84% since reaching a record 1,768 pence in November 1998. ************ 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 * * *