/raid1/www/Hosts/bankrupt/TCREUR_Public/011026.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

             Friday, October 26, 2001, Vol. 2, No. 210


                             Headlines


* B E L G I U M *

LERNOUT & HAUSPIE: Insolvent, Says Belgian Court
REAL SOFTWARE: On a EUR218.2 Million Debt Revamp
SABENA SA: Keeps Mum Over Bankruptcy News, Fuels Speculation

* F I N L A N D *

SONERA CORPORATION: State in Conflict Over Rights Issue

* F R A N C E *

MOULINEX-BRANDT: SEB Wants to Resume Operations Before Christmas

* G E R M A N Y *

ADAM OPEL: CEO Doubts Hefty Cut in Operating Losses This Year
DAIMLERCHRYSLER AG: Eyes on Future Partnership With Hyundai
DEUTSCHE TELEKOM: Now Owns 51% of Croatia's Hrvatski Telekom
DEUTSCHE TELECOM: Goldman Sachs Forecasts E700MM Loss
LTU GROUP: Two German City Banks Allegedly Eyeing Stakes

* I R E L A N D *

AER LINGUS: Analysts Say Sale of 35% Stake Not Enough

* I T A L Y *

ALITALIA SPA: New Plan Doubles Previously Announced Job Cuts
ALITALIA SPA: May End Partnership With Delta Airlines

* N O R W A Y *

KVAERNER ASA: CEO to Step Down November 1

* P O L A N D *

NETIA HOLDINGS: Fitch Cuts Corporate Credit Rating to B- From B+

* S P A I N *

IBERIA SA: Spokeswoman Confirms Compensation Talks With Gov't

* S W E D E N *

ICON MEDIALAB: Adds SEK27.4 MM More to Last Year's Record Loss

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

SWISSCOM AG: To Own CHF100 Million Crossair Stake
SWISSAIR GROUP: EU Counts on Swiss to Respect State Aid Rules

* U N I T E D   K I N G D O M *

BRITISH TELECOMMUNICATIONS: Shareholders Approve MMO De-merger
MARKS & SPENCER: G. Lafayette Wants 5 of 19 French Outlets


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

LERNOUT & HAUSPIE: Insolvent, Says Belgian Court
------------------------------------------------

Like the appeals court in Ghent last week, the Ypres Commercial
Court Wednesday proclaimed Lernout & Hauspie Speech Products NV
insolvent, a report from Dow Jones Newswires says.

In its filing Monday to the Ypres court, Lernout proposed an
auction, in mid-November, at which it will put up for sale its
remaining speech and language technology operations.

The court in Ypres said asset sales is expected to raise up to
$20 million, according to L&H, but this amount remain short for
the company's debts, which total BEF22 billion ($485 million).

The Ypres court said it cannot accept that a company "keeps
itself in operations (in an artificial way) with the sole purpose
of liquidation."

On Monday, Lernout re-filed its petition for protection from
creditors at the Ypres courts, seeking another temporary
suspension of payments after a Belgian appeals court rejected its
request for a Chapter 11-type bankruptcy protection.


REAL SOFTWARE: On a EUR218.2 Million Debt Revamp
------------------------------------------------

Real Software SA announced in a company press release Wednesday
that it has finalized the conditional agreement started in July
with a consortium of five banks to reschedule its EUR218.2
million ($194 million) debt.

According to a report obtained from the Dow Jones Newswires, the
banks in the syndicate include KBC, Fortis, Dexia, LB Lux and
Landbouwkredit.

The debt-restructuring scheme is in three parts and subject to
the approval of the company's shareholders at an extraordinary
meeting, the statement adds.

The deal involves a E99.2 million debt restructured into a 10-
year loan, the first five years of which will be interest-free.

Additional issue of four million warrants is planned, wherein
after a lock-up period of three years is expected to increase
equity.

Another 24.8 million euros will be written off but may be
reinstated if the group substantially exceeds growth forecasts.

Finally, a E94.2 million of debt will be extended into a 12-year
loan with a comfortable two-year capital repayment.

In view of the total debt revamp, the financial cost will amount
to E4.6 million for the second half of 2001, compared to E8.8
million in the first half.

Last year, Real Software failed on a U.S. acquisition and huge
debts brought the company on the brink of bankruptcy.


SABENA SA: Keeps Mum Over Bankruptcy News, Fuels Speculation
------------------------------------------------------------

Hopes of resurrecting Belgian carrier Sabena are increasingly
growing fainter as it continue to fail in its efforts to find
investors, Reuters said Wednesday.

And as if adding more insults to injury, a front-page item
appearing in De Standaard Wednesday suggested that the airline
could file for bankruptcy anytime this week.

According to Reuters, it didn't help to dispel the "unsourced"
news item when Sabena spokesman Wilfried Remans chose not to
comment on the report.

The carrier was recently granted a two-month bankruptcy
protection, which goes with a caveat that a drastic restructuring
plan be put in place by mid-November.

Sabena's only hope in Virgin Express has failed to materialize so
far, said Reuters.  It earlier expressed interest in the Belgian
carrier.

The national airline's woes began when Swissair, which owns 49.5%
of Sabena, failed to deliver the cash injection it promised.

Swissair is experiencing its own financial woes and only this
Monday had to be resuscitated through a CHF4.2 billion ($2.5
billion) salvage package.



=============
F I N L A N D
=============


SONERA CORPORATION: State in Conflict Over Rights Issue
-------------------------------------------------------

Junior finance minister Suvi-Anne Siimes recently criticized the
state_s decision to back a planned E530 million rights issue in
troubled telecom operator Sonera.

According to a report on AFX News, a meeting between Sonera group
in the presence of Sonera chairman, Tapio Hintikaa, and
government representatives to agree on state backing for the
rights issue was very questionable.

On October 24, the Finnish government will meet to vote on the
government_s conduct in question to settle the conflict.


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

MOULINEX-BRANDT: SEB Wants to Resume Operations Before Christmas
----------------------------------------------------------------

SEB S.A. CEO Bertrand Dupont says the Moulinex plants it recently
acquired will immediately resume operations in order to cash in
on the Christmas season that has traditionally driven sales up.

Dupont wants to put the maximum number of products "on the
shelves" before Christmas, according to a report by Dow Jones
Newswires.

Meanwhile, Dupont clarified that the acquisition of cash-strapped
Moulinex will not hurt SEB's revenue.  Instead, it will add E649
million ($577.9 million) to its coffers next year.

SEB is also maintaining its 15% earnings per share growth target
this year, says Dupont.

The purchase, however, will push SEB's debt-to-equity ratio up to
120% toward the end of 2001, from 80% in 2000, the report says.

But Dupont expects that ratio to fall back to between 70% and 80%
in 2002 or 2003.

"(Acquiring Moulinex) is an important transaction, but it doesn't
jeopardize the group's financial situation," says Dupont.


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


ADAM OPEL: CEO Doubts Hefty Cut in Operating Losses This Year
-------------------------------------------------------------

Uncertain of its performance in the fourth quarter and the
deteriorating market conditions forced CEO Carl-Peter Forster to
admit Wednesday that it may not be able to cut operating loss
this year.

"It will be increasingly difficult to try and get our profits
back up but we are still trying.  We don't know how the last
quarter will work out," Reuters quoted Forster as saying.

The restructuring German unit of General Motors Corp. posted a
whooping 982 million German marks ($456 million) operating loss
last year, which it aims to avoid and cut substantially this
year.

Early this month, the Company announced a plan to layoff 2,500
workers in Germany by 2003 to arrest a further slide down the red
line.


DAIMLERCHRYSLER AG: Eyes on Future Partnership With Hyundai
-----------------------------------------------------------

A DaimlerChrysler AG executive reveals that the German group is
studying the possibility of cooperating with South Korea's
Hyundai Motor Co. on a new project.

DaimlerChrysler management board member Juergen Hubbert told a
financial daily newspaper that the two carmakers may jointly
develop a gasoline engine, or Hyundai may make cars in a
Mercedes-Benz A-Class plant in Brazil.

A similar report from Handelsblatt said Hyundai revealed their
possible intention to cooperate in research and development,
sales and purchasing as well as working on a gasoline engine with
Japan's Mitsubishi Motor Corp.

DaimlerChrysler owns a 10% stake over the South Korean automaker
and 37% control over Mitsubishi.


DEUTSCHE TELEKOM: Now Owns 51% of Croatia's Hrvatski Telekom
------------------------------------------------------------

Deutsche Telekom's takeover of the majority stake in Hrvatski
Telekom was made official yesterday in a ceremony held at
Croatia's capital city Zagreb.

The German telecom giant now controls 51% of the Croatian
company, which until this recent shift in share ownership was
majority-held by the government.

In increasing by 16% its erstwhile 35% percent stake in the
company, Deutsche Telekom paid E500 million ($446 million).

Asked about further moves to buy more shares in the company, the
German carrier declined to comment.  However, this recent
acquisition has solidified its customer base in Eastern Europe.

Already, the German giant holds stakes in Austrian, Polish,
Russian, Slovakian, Czech, Ukrainian, and Hungarian fixed and
mobile carriers.

The Croatian holding adds 5 million more fixed and mobile phone
customers to Deutsche Telekom's ever-growing share in the
European telecom market.


DEUTSCHE TELECOM: Goldman Sachs Forecasts E700MM Loss
-----------------------------------------------------

Analysts calculate Deutsche Telekom's third quarter net loss to
come in the range between 655-700 million euros, AFX News reports
Wednesday.

Third quarter sales are expected to be between 12.3-12.8 billion
euros, Goldman Sachs said.

Further, the investment group adds that the results are expected
to show a rise in the 500,000-subscriber base of its mobile unit
T-Mobile in the quarter.

The company will report its preliminary results on October 31.

Analysts foresee Deutsche Telekom to achieve its target of
doubling the full year EBITDA of its mobile operations compared
to last year.

The good performance of the mobile operations is expected to
compensate for the rather weak performance in the company's other
businesses.


LTU GROUP: Two German City Banks Allegedly Eyeing Stakes
--------------------------------------------------------

The city savings banks of Duesseldorf and Cologne are reportedly
eyeing stakes in troubled airline LTU International, Dow Jones
Newswires reported Wednesday.

Citing a report by Focus-Money, Dow Jones says Stadtsparkasse
Duesseldorf and Stadtsparkasse Koeln are presently negotiating
with Swissair and retail group Rewe.

Swissair and Rewe respectively own 49.9% and 40% of the troubled
carrier.

The Cologne bank has so far dismissed the report as plain
"rumors," while the Duesseldorf City bank gave no comment when
asked by Focus-Money.


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


AER LINGUS: Analysts Say Sale of 35% Stake Not Enough
-----------------------------------------------------

Industry analysts say the 35% stake being offered by the Irish
government in national carrier Aer Lingus would not raise even
half of the money needed to cover a hole in its balance sheet.

According to a report by Reuters Wednesday, the stake will not
even come close to 100 million Irish Punt ($113 million) or half
of the IEP200 million the Company sorely needs to keep flying.

The Irish government formally approved the release of the above
stake last Tuesday, provided that the State retains 51% control
of the carrier.

The search for the buyer will be focused on airlines that have
previously signified interest in buying a part of Aer Lingus,
says Reuters.

British Airways and Spanish carrier Iberia are reportedly up
front in the running.


=========
I T A L Y
=========


ALITALIA SPA: New Plan Doubles Previously Announced Job Cuts
------------------------------------------------------------

A new restructuring plan drawn up by state-owned Alitalia SpA
provides for a 5,200-job cutback, instead of the 2,600 earlier
contemplated, the Dow Jones Newswires said early this week.

Early this week, the Treasury called for a more radical plan for
the national flag carrier as a precondition for any fresh cash
injection.

The carrier's board is scheduled to meet Monday to draw up
strategy.  A four-hour strike by pilot union Anpac will be staged
on the same day, the report said.


ALITALIA SPA: May End Partnership With Delta Airlines
-----------------------------------------------------

Italy's Transport Minister Pietro Lunardi hinted Wednesday that
flag carrier Alitalia SpA may drop its partnership with Delta
Airlines.

Lunardi says the move is primarily due to the problems Delta is
presently experiencing, a report by Reuters quoted the minister
as saying.

"It is possible that instead of Delta (DAL), Alitalia could look
to another U.S. carrier...At this moment we need strong
partners," says Lunardi.

Last Wednesday, Delta announced that it was seeking to defer
aircraft deliveries to minimize daily losses that have been
further exacerbated by the September 11 incident.

Alitalia and Delta signed a commercial partnership last July that
facilitated their membership to the Sky Team airlines alliance.

The two carriers also combined their "frequent-flyer" programs
early this month in what was then viewed as a positive step
towards closer cooperation in the future.


===========
N O R W A Y
===========


KVAERNER ASA: CEO to Step Down November 1
-----------------------------------------

Kvaerner ASA President and CEO Kjell Almskog has called it quits
and will leave his post effective November 1, a company statement
released Wednesday said.

Almskog will also resign his board position in the troubled
Anglo-Norwegian construction and engineering group.

The Company had previously announced Almskog resignation but
never indicated any date.


===========
P O L A N D
===========


NETIA HOLDINGS: Fitch Cuts Corporate Credit Rating to B- From B+
----------------------------------------------------------------

Uncertainty in the Company's finances over the next six months
forced Fitch to lower early this week the senior unsecured
corporate credit rating of Netia Holdings to "B-" from "B+".

The ratings agency says the Company will likely run out of cash
after the first quarter next year.  The Company has been inside
Fitch's "Rating Watch Negative" since August 6.

"This rating action reflects the continued uncertainty as to how
the company will fund the business until it turns free cash flow
positive," explains the agency.

According to Fitch, the unexpected sluggish growth of Company
revenues and EBITDA, coupled by the uncertainty of its strategic
plan are behind the weakening of its financial outlook.

In view of Netia's deteriorating credit trend and the business'
capital structure, Fitch draws investor's attention to the
provisions of Netia Holdings BV and Netia Holdings II BV's senior
notes.

"Fitch believes that the group's constrained financial
flexibility presents note holders with a risk of being
structurally disadvantaged as a result of any new debt funding
arrangements," an agency statement says.

This risk is not factored into Netia's senior unsecured corporate
credit rating, Fitch says.

The Company is Poland's leading alternative local and long-
distance fix line telecommunications provider.


=========
S P A I N
=========


IBERIA SA: Spokeswoman Confirms Compensation Talks With Gov't
-------------------------------------------------------------

A spokeswoman for Spanish carrier Iberia SA neither confirmed nor
denied a report Wednesday that it is seeking E18.3 million ($16.3
million) from the government to cover its losses.

Dow Jones Newswires said the spokeswoman only confirmed that
indeed the carrier is in talks with the government, leaving out
details on the figures.

The above amount, which the financial daily La Gaceta cited in a
report, is allegedly the money lost by the airline after its
flights to the U.S. were cancelled days following September 11.

The spokeswoman clarified, however, that the financial aid the
Company seeks from the government is well within EU regulations
regarding state aids.


===========
S W E D E N
===========


ICON MEDIALAB: Adds SEK27.4 MM More to Last Year's Record Loss
--------------------------------------------------------------

Financially-distressed Icon Medialab literally built upon its
losses last year by amassing yet another record loss for the
third quarter.

According to Dow Jones Newswires, the Company posted a net loss
of SEK300.3 million ($28.3 million) in the third quarter, up by
SEK27.4 million ($2.5 million) from last year's level for the
same period.

The Company blames the 20% sales backlog beginning in the third
quarter this year, the report says.

Sales dropped to SEK233.5 million ($22 million) during the
period, substantially lower than last year's SEK242.3 million
($22.8 million).


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


SWISSCOM AG: To Own CHF100 Million Crossair Stake
-------------------------------------------------

Swisscom AG will invest 100 million Swiss francs (EUR 67.6
million) in the new airline Crossair, a report obtained from the
Telecom paper revealed Wednesday.

Communications network group Swisscom AG, along with other
leading Swiss companies, will take a shareholding in the new
airline.

The new financial commitment of Swisscom is not intended to have
a negative effect on its other existing obligations.

Swisscom remains concentrated on its core businesses of fixed-
line services, network operation, mobile communications and e-
business, the company said in a press release.


SWISSAIR GROUP: EU Counts on Swiss to Respect State Aid Rules
-------------------------------------------------------------

A transport spokesman for the European Commission said Wednesday
that it is counting on the Swiss government to "respect" EU
regulations on state aid even if it is not yet a member of the
union.

Gilles Gantelet told Reuters that the Commission is confident the
Swiss government will allow modifications to the CHF4.2 billion
($2.5 billion) rescue package for Swissair.

"We cannot ask for Switzerland to do more than a member state,"
said Gantelet, who also disclosed that the matter might be
discussed during a meeting between EU and Swiss officials on
November 15.

Under EU rules, no bailout package can be afforded to airlines
already in trouble before the September 11 attacks in the United
States.

Also, all such rescue plans must be approved by the EU to assure
that they meet rules designed to curtail state aids, save for
certain circumstances.

Gantelet, however, said Switzerland has agreed to abide by the
rules under a bilateral pact it entered into with the Commission,
although said pact has not been fully ratified yet.

Nevertheless, he said, the Swiss government has been submitting
documentation to the Commission in the same way that a European
Union member state would.


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


BRITISH TELECOMMUNICATIONS: Shareholders Approve MMO De-merger
--------------------------------------------------------------

British Telecommunications Chairman Sir Christopher Bland staked
his post Tuesday during an extraordinary shareholders' meeting
that approved its demerger from mobile phone arm MMO.

According to the Financial Times, Bland offered to resign if the
demerger will not eventually improve the lot of shareholders.

This bet proved to be successful as 4.3 billion shares were voted
in favor of the break-up compared to only 69 million against.

"With independent access to the capital markets, [the two
businesses] will be much freer to pursue their own investment
strategies," said CEO Sir Peter Bonfield after the vote.

"We believe that each company's separate and more focused
investment story will be more attractive to investors," he added.

Unfortunately for Bonfield and Bland, not too many share his
enthusiasm.

In recent months, analysts have scaled down their forecasts for
MMO, cutting its projected 15 billion pounds ($21.4 billion)
market capitalization to as low as 6 billion pounds ($8.5
billion).

The demerger will be completed next month. Dealing in both is due
to begin on November 19, according to the report.


MARKS & SPENCER: G. Lafayette Wants 5 of 19 French Outlets
----------------------------------------------------------

Department store chain Galeries Lafayette said Tuesday it intends
to acquire "a minimum of five" of the 19 French stores from
retailer Marks & Spencer PLC, the Dow Jones Newswires reports.

The French group assures that the move will save about 1,500 jobs
at the stores.

Galeries Lafayette said it will keep five sites including the
flagship M&S store on Boulevard Haussmannand two other Paris
stores and outlets in Strasbourg and Bordeaux.

The Boulevard Haussmann unit is planned to be turned into "the
art of living and household fashion," a Galeries Lafayette
spokesperson said.

The plan will reportedly be made final by the end of November.

Meanwhile, trade union officials reacted angrily to the news
questioning Galeries Lafayette's capacity to secure the jobs,
promising industrial action and urging the Socialist-led French
government for support.

Galeries Lafayette officials are scheduled to meet with the M&S
French works council Tuesday next week for the planned
acquisition and expects to secure operators for the entire
erstwhile M&S store.

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

        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
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