/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011024.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 Wednesday, October 24, 2001, Vol. 2, No. 208 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Re-files Protection Petition, Reveals Buyers * F I N L A N D * SONERA CORP: Announces New Five-point Strategy to Earn Money SONERA CORPORATION: Mulls Rights Issue to Raise 625B Pounds * F R A N C E * MOULINEX-BRANDT: SEB's Partial Takeover Bid Wins Approval * G E R M A N Y * DEUTSCHE TELEKOM: Increases Hravtski Telekom Stake to 51% * I R E L A N D * AER LINGUS: BA Leads Bidders for Troubled Irish Carrier EIRCOM PLC: Valentia Wary Over Details in Bid, Blocks Release * I T A L Y * ALITALIA SPA: Re-capitalization Imminent, Says Economic Ministry * N E T H E R L A N D S * NBBS REIZEN: Accounting Inefficiency Main Cause for Bankruptcy * N O R W A Y * KVAERNER ASA: Yukos Pays $100M for Hydrocarbon, Technology Units * S W I T Z E R L A N D * SWISSAIR GROUP: Swiss Industry Rally Behind Rescue Efforts * U N I T E D K I N G D O M * BRITISH NUCLEAR: Has Enough Funds t Run Ops Over Next 10 Yrs BRITISH TELECOMMUNICATIONS: Confirms Alliance Talks With BSkyB BRITISH TELECOMMUNICATIONS: Eyes Operation of Post Office Fleet BRITISH TELECOM: Union Continue to Protest MM02 Split-up COLT TELECOM: Shares Dip Anew Following Miss in Profit Targets COLT TELECOM: Re-issues 649.4 Shares MARCONI PLC: HSBC, Barclays t Broker Restructuring Plan MARKS & SPENCER: To Pay E270MM for 18 French Outlets NTL INC.: BBC Is Interested in NTL's Transmission Tower Unit RAILTRACK GROUP: New Company to Receive 1BB-Pound Aid RAILTRACK GROUP: 1MM-Pound Annual Salary Awaits New Rail Chief RAILTRACK GROUP: WestLB Bids 240p a Share for a Takeover ============= B E L G I U M ============= LERNOUT & HAUSPIE: Re-files Protection Petition, Reveals Buyers --------------------------------------------------------------- Lernout & Hauspie re-filed Monday its petition for temporary protection from creditors after an appellate court tossed it for being "arbitrary and unjust," Dow Jones Newswires reports. In its petition, the Company also disclosed that it has received several bids for its Speech and Language Technology (SLT) division, including a deal with U.S. competitor Speechworks. Accordingly, it has reached a agreement with Speechworks for its recognition and text-to-speech technology worth $10 million in cash and $2.5 million in shares. The agreement will start an auction process that will give other interested parties the chance to match or raise Speechwork's bid. The petition projected an auction by mid-November. The petition also revealed that Critical Path has made a non- binding $25 million offer for the SLT unit, while a similar offer from Mastervoice Technologies was allegedly "binding...subject to certain conditions." Upon having sold its last remaining assets, the company will go into liquidation and a projected $20 million in cash will be split among its creditors, Lernout said in its court filing. The re-filing of the petition came just days after the Ghent- based appellate court criticized the "arbitrary and unjust" differentiated treatment of groups of creditors in the Company's recovery plan. ============= F I N L A N D ============= SONERA CORP: Announces New Five-point Strategy to Earn Money ------------------------------------------------------------ Leading telecom operator Sonera announced recently its new five- point strategy to boost the Company's profitability and cashflow. According to a report by AFX News, the new strategy aims to do the following: (1) Cap investments in European 3G; (2) Divest selected non-core assets; (3) Scale-down new services businesses; (4) Re-focus Sonera's organization using a new customer-driven approach; and (5) Maintain its position as a leading provider of telecommunications services in Finland. The above targets are a part from the rights issue currently contemplated by the Company to raise 1 billion Euros ($891 million) in fresh funds. Sonera recently reported that its third quarter revenues rose by 8% to 549 million euros ($489 million). It expects its EBITDA to go down to the low 30s in the short-term and mid-30s in the long- term. SONERA CORPORATION: Mulls Rights Issue to Raise 625B Pounds ----------------------------------------------------------- Telecom operator Sonera is planning to carry out a rights issue to substantially reduce its debts by year-end, The Times reported Monday. The plan follows a similar rights issue recently conducted by British Telecom, which enabled it to raise 5.9 billion pounds in fresh funds. Sonera is aiming to raise 625 million pounds out of its own rights issue to help slice its 4.1 billion debt to around 2.5 billion by the end of the year. In addition, CEO Harri Koponen says the Company also plans to sell assets and scale back its investments on 3G networks to arrest further slide in its core earnings and cut debts. According to The Times, Sonera's 36.8 million shares in Deutsche Telekom will likely be among those assets to be peddled. =========== F R A N C E =========== MOULINEX-BRANDT: SEB's Partial Takeover Bid Wins Approval --------------------------------------------------------- SEB successfully tip the scale to its favor Monday as a French court approved its partial takeover bid of rival Moulinex-Brandt, The Times reported yesterday. The takeover will cover Moulinex's smaller appliance operations, excluding the loss-making microwave oven and vacuum cleaner division. The Times says financial details were not disclosed, but it is believed SEB shelled out 190 million pounds ($270 million) for the acquisition. Moulinex filed for bankruptcy last month after its restructuring plan to reduce an 800 million francs debt mound was denied support by parent company El.Fi. ============= G E R M A N Y ============= DEUTSCHE TELEKOM: Increases Hravtski Telekom Stake to 51% --------------------------------------------------------- Telecommunications company Deutsche Telekom recently concluded and signed an agreement to buy an additional 16% stake in Croatian national operator Hravtski Telekom. The German phone operator will pay $450 million (500 million euros) for the said shares, a report obtained from Europe Media said. The increase of Telekom's majority holding to 51% is, according to Croatian Prime Minister Racan, the biggest privatization project enacted since he and his cabinet came into power. ============= I R E L A N D ============= AER LINGUS: BA Leads Bidders for Troubled Irish Carrier ------------------------------------------------------- British Airways is up front in the running to acquire troubled Irish carrier Aer Lingus with its impending alliance with American Airlines, the Irish Times reported Monday. According to the report, pressure is intensifying for an "open skies" policy to be forged by year-end as European airlines try to absorb the fallout from the September 11 attacks on the U.S. The UK-US "open skies" accord is the only remaining impediment to an alliance between British Airways and American Airlines, as Washington has made it a pre-requisite for the grant of antitrust immunity. Already, deals between their European rivals to cope with the present downturn have overtaken the planned alliance, adding more pressure for the accord to be inked before the year ends. EIRCOM PLC: Valentia Wary Over Details in Bid, Blocks Release ------------------------------------------------------------- Valentia Telecommunications is reportedly blocking the release of the details related to tax changes made by the finance minister on its bid for Eircom's takeover. Apparently, the said changes proved to be the deciding point that allowed Valentia to top the rival offer of eIsland Group, the Irish Times said Monday. Valentia is accordingly prepared to go to court to stop the Department of Finance from releasing said details, which is mandated by Ireland's Freedom of Information Act. The report alleged that "an unspecified changes" were made to the tax laws "in order to allow the Eircom Employee Share Ownership Trust to become a member of the consortium." Without the changes, the beneficiaries of the trust may have become liable for tax on the shares in Eircom, which were granted to them ahead of the company's flotation in 1999, the report said. The ESOT owns just under 15% of Eircom and its support for Valentia was the critical factor in the battle with eIsland Group, the report added. The Department of Finance files would shed light on how and why the Minister for Finance agreed to make the changes, the Irish Times said. The takeover is currently under review by the Tanaiste, which under Irish Law must give its clearance to the deal. The regulatory body has requested for more information on the takeover, which is prompting Valentia to be wary about the changes in its bid. ========= I T A L Y ========= ALITALIA SPA: Re-capitalization Imminent, Says Economic Ministry ---------------------------------------------------------------- The Economic Ministry disclosed Monday that fresh capital amounting to 750 billion Italian Lira ($345.4 million) will be infused into Alitalia SpA later this year. Dow Jones Newswires, in a report, says the capital infusion will be incorporated into the new industrial plan for the Company, which will be based upon stronger international alliances. Alitalia is a member of the Sky Team Global airline alliance and has standing partnerships with Air France and Delta Air Lines. The re-capitalization plan received the go-ahead from the European Union last week. ===================== N E T H E R L A N D S ===================== NBBS REIZEN: Accounting Inefficiency Main Cause for Bankruptcy -------------------------------------------------------------- Unsound financial practices and the inability to readily determine its profits caused the near insolvency NBBS Reizen last year, reports Het Financieele Dagblad/FT Information. Insiders from the now bankrupt Dutch travel agency disclosed that it took seven months for the Company to collect all hotel vouchers and airline bonuses necessary to determine its profits. Accordingly, what kept the Company above water then was the subsidies from Dutch guarantee fund SGR, which prevented insolvency. The recent attack on the U.S., however, proved to be the proverbial final nail on the Company's coffin. =========== N O R W A Y =========== KVAERNER ASA: Yukos Pays $100M for Hydrocarbon, Technology Units ---------------------------------------------------------------- Kvaerner's second largest investor Yukos has purchased the Company's hydrocarbon and technology business for $100 million, reducing long-term loans capital requirements to $112 million. In a report by the Financial Times, an agreement on the sale has already been reached, easing temporarily the Company's liquidity crisis as it struggles to cover shortfalls in the next months. But while the deal has certainly put the Company's head substantially above water in the meantime, it has also cast doubts on how long Yukos will remain a shareholder. The hydrocarbon and technology business is believed to be what Yukos originally sought for when it acquired 12.1 percent of the Company's shares. "Yukos is not an investment bank. If someone were to offer us 10 times as much [for our shares], we would be stupid not to accept," said spokesman Hugo Erikssen. Already, the Russian oil company has refused to commit to the planned rights issue of the Company this December. Yukos's acquisition is still subject to approval by the new Kvaerner board. The transaction includes Kvaerner's hydrocarbon business, which consists 600 people providing onshore oil engineering services, and Kvaerner's 375 staff within the process technology. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Swiss Industry Rally Behind Rescue Efforts ----------------------------------------------------------------- Swiss companies pulled their resources Monday to put up the needed cash for the SFr4.2 billion ($2.5 billion) rescue package of ailing flag carrier Swissair, The Times reported yesterday. The private sector guaranteed close to half of the rescue package. Among the private investors were chemicals group Ciba, Zurich insurance, Credit Suisse, Givaudan, Roche, Novartis, Nestle, Schindler, UBS, cement maker Holcim, and insurer Swiss Re. According to one investor, the rescue of the carrier "is a matter of national honor." "In the end, I think it will include all large Swiss companies. This is a small country and everybody knows everybody," said the unnamed investor quoted by The Times. The Swiss federal government, for its part, will provide a bridging loan of SFr1 billion. The Swiss cantons will take part in the rescue by paying SFr381 million for a stake in Crossair. =========================== U N I T E D K I N G D O M =========================== BRITISH NUCLEAR: Has Enough Funds t Run Ops Over Next 10 Yrs ------------------------------------------------------------- British Nuclear Fuels Ltd. said the company has sufficient funds to operate for the next 10 years, refuting earlier newspaper reports that said it was on the brink of bankruptcy. A BNFL spokesperson declared that the company's last annual report is proof of that fact. He adds that financing for the nuclear clean-up cost of 34 billion pounds has been provided for, the AFX News said on Monday. "BNFL is responsible for 10 bilion pounds (of the total 34 billion pounds), and we covered 88% of that," he explained. BRITISH TELECOMMUNICATIONS: Confirms Alliance Talks With BSkyB -------------------------------------------------------------- British Telecommunications is reportedly forging an alliance with a satellite broadcaster to mount a united front against cable operators currently offering TV, Internet and telecom services in one package. According to an article by the Financial Times, the Company has confirmed that it is indeed talking with satellite broadcaster BSkyB. Among the initiatives being explored lately is the possibility of a joint billing for pay television and telecom service, the report says. BT clarified, though, that an announcement is still far-fetched. An eventual alliance between the two companies, however, is nothing new as both recently tied a discount scheme together with terrestrial digital TV broadcaster ITV Digital. BRITISH TELECOMMUNICATIONS: Eyes Operation of Post Office Fleet --------------------------------------------------------------- In a seeming reversal of strategy, British Telecommunications has expressed interest in running the 40,000 fleet owned by the Post Office, reports the Financial Times. According to the report, the Company confirmed Monday that it has approached Consignia, the renamed group running the Royal Mail, for preliminary discussions. If the talks prove successful, it would be a turnaround from its recent decision to peddle its own 58,000 vehicles to interested buyers, part of a strategy to focus on core telecom operations. A source says BT will likely bring in a third party to finance the plan as it is not willing to put in large amounts of its own money. It is not clear what will become of its own fleet, but many believe the telecom operator will try to keep them along with that of the Post Office if this venture proves profitable. An outsourcing agreement or alliance with other fleet operators is likely in the making, according to the report. BRITISH TELECOM: Union Continue to Protest MM02 Split-up -------------------------------------------------------- The Communications Workers Union representing about 80,000 BT workers will be making last ditch effort to stop the MM02 break up, a report from the AFX news said Monday. BT will hold a shareholder meeting in Birmingham on Tuesday and pursue earlier plans of the demerging of its mobile unit despite loud protest. During the extraordinary general meeting (EGM), BT expects to gain the 75% of votes required to bring about a demerger, having held previous discussions with large shareholders to generate support. COLT TELECOM: Shares Dip Anew Following Miss in Profit Targets -------------------------------------------------------------- Colt Telecom shares shed off another 20% Monday after analysts scaled back its profit targets following a 6.4 million pound shortfall in the three months to September 30, The Times said. The previous targets had EBITDA rising threefold to almost 100 million pounds ($142 million) in 2002. According to the report, the profit downgrades revived fears that the Company would not reach positive cashflow without the need for extra cash. Analysts project a funding gap of about 350 million pounds ($498.7 million) despite proceeds from its recent open offer backed by Fidelity. Colt actually posted a pre-tax profit of 1.3 million pounds ($1.8 million) but this was off profit targets by about 1 million pounds ($1.4 million). Last month, Colt dropped from the FT-SE 100 index after suffering an 85% slump and is one of the worst performing stocks this quarter on the FT-SE 350 Telecommunication Services index. COLT TELECOM: Re-issues 649.4 Shares ------------------------------------ Colt Telecom has filed a registration statement with the U.S. Securities and Exchange Commission in early October to announce the offer of 649,425,440 New Ordinary Shares at 62 pence per share to raise approximately 400 million pounds. Further details of the Open Offer are expected to be sent to shareholders later this week. For further information, please contact: John Doherty Director, Investor Relations Tel: 020 7390 3681 MARCONI PLC: HSBC, Barclays t Broker Restructuring Plan -------------------------------------------------------- Troubled communications equipment giant Marconi plc is seriously pushing for the extension of its bank loans and develop a "long- term" financing plan, reports The Times. According to the report, HSBC and Barclays, the two biggest lenders of the Company, are at the forefront of negotiations to ensure this restructuring plan hits the road. The banks are currently coordinating with Lazard and Morgan Stanley for the development of a refinancing plan for the company, the report says. The Company's bank loans expire in early 2003. The Times report says Marconi is expected to press for an extension to cover any funding gap caused by weakness in its core markets. In return, according to the report, banks will likely insist on higher interest rates, the addition of covenants and increased security over Marconi assets. The Company is presently deep into a 4.5 billion pound bank debt. At present, The Times says, its options include a buy back plan of up to 2.2 billion (1.37 billion pound) of its outstanding euro and dollar-denominated bonds. Accordingly, Marconi still has an undrawn credit facility amounting to 2.5 billion pounds that it could use for this repurchase program. MARKS & SPENCER: To Pay E270MM for 18 French Outlets ---------------------------------------------------- Department store chain Societe Anonyme des Galeries Lafayette said it expects to pay from 240 to 270 million euros for 18 of the Marks & Spencer stores in France. Co-chairmen Philippe Houze and Philippe Lemoine told the Agence France-Presse that their offer is equivalent to 20 to 25% of its eight million French franc shareholder capital for the acquisition. NTL INC.: BBC Is Interested in NTL's Transmission Tower Unit ------------------------------------------------------------ The BBC may buy part of Cable TV operator NTL's transmission tower business, the Sunday Business reported, citing sources familiar with the sales. The paper revealed that BBC's engineering and communications business BBC Technology expressed intention to acquire NTL's satellite up-loading business. BBC Technology currently provides satellite services to Sky, DirecTV, as well as to the BBC. RAILTRACK GROUP: New Company to Receive 1BB-Pound Aid ----------------------------------------------------- A draft proposal prepared by the transport department outlining the takeover of Railtrack's assets by a new company provides for a 1 billion pound grant, the Sunday Times reported recently. According to an unnamed source quoted by the paper, the grant is central to the department's plan for the takeover of Railtrack's assets, which is currently in administration. The said draft, which is already on its seventh version, reportedly recognizes that the new company will not be able to borrow commercially; hence, the aid. "He (transport secretary Stephen Byers) accepts that banks may be slow to lend money to the new company because of the uncertainty about its operating costs and because of the collapse of Railtrack," said the source. Under the blueprint, the Strategic Rail Authority (SRA), which supervises the industry, will also offer to lend about o1 billion to the new company to cover any cost over-runs. This "loan" will be junior to commercial bank debt and will effectively be a grant, the report said. Thus, lenders will be told that they have first call on Railtrack's income and that if its costs run too high, the taxpayer will pick up the tab, said the report. Meanwhile, under the proposal, all new rail projects or track enhancements will be developed by "special purpose vehicles" or companies set up on a project-by-project basis. They will have private investors but will also be grant-aided by government. The enhancements will be sold to the new company, the source said. The transfer of all expensive projects to the special vehicles is aimed to limit the risk of the new venture. The source also said that banks will be told that the track access charges paid by train operating companies will be ring- fenced for repayment of debt, while the existing track-access payments will be divided in two. Some of the money will be called an availability payment and will be payable on a basis relating to the availability of the assets, rather than performance. This money will be ring-fenced for the banks, the source said. The other money will be called an OMR payment (operation, maintenance and renewal), the source added. RAILTRACK GROUP: 1MM-Pound Annual Salary Awaits New Rail Chief --------------------------------------------------------------- A 1-million-pound ($1.42 million) annual salary awaits the new chief executive of the company that will take over the assets and operations of Railtrack, the Sunday Times said. A source quoted by the paper said the salary is due to the fact that the new company that will ran the rail network will not be able to offer share options. "The pay of the chief executive and the senior team needs to be sufficient to attract high-caliber executives to run an organization every bit as complex as the other privatized utilities," added the source. The propose salary is contained in the seventh draft of a proposal outlining how the new company will take over the rail network currently owned and operated by Railtrack, which is now in administration. RAILTRACK GROUP: WestLB Bids 240p a Share for a Takeover -------------------------------------------------------- State-backed bank WestLB has made a takeover bid over Railtrack of up to 240p per share, the Financial Times reports Friday. WestLB's head of asset securitisation and principal finance group Mrs. Robin Saunders lead negotiations with appointed administrators Ernst & Young during last Friday's meeting. The price of the offer has yet to be finalized, but it was indicated in the City that it could amount to about 240p a share. WestLB, Germany's largest public sector bank, is also talking to Bechtel, National Express and other companies in the industry to win favor for the consortium. Consortium chairman is David James. UK private equity group Electra is also reported to have agreed to join the WestLB consortium. Electra last year bid unsuccessfully for Go, the low-cost airline then owned by British Airways. It is understood to be looking for transport sector investments having raised 1 billion ($910 million) in funds in April. In a confidential letter to senior civil servant in the transport department Sir Richard Mottram, Sanders proposes a spin off of the safety and systems operations into a non-profit company. Further, Sanders suggests that Railtrack's other activities be controlled by a private equity-based company run by a consortium put together by WestLB. According to Sanders, the said separation will reconcile the perceived conflict between safety and profitability. However, it warns of a need for "certain commitments from the government not a blanket underwriting, but agreements on dealing with specific liabilities and contingencies". Saunders is now seeking a meeting with the government. Backed by German government, the bank's structure has long been a source of controversy in Brussels. The reported state backing has guaranteed the bank a high credit rating, thereby making it cheaper for it to raise money in the markets to do takeovers. *********** 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 * * *