/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011030.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 30, 2001, Vol. 2, No. 212 Headlines * B E L G I U M * REAL SOFTWARE: Announces Completion of Meta Software Acquisition SABENA SA: BA, Virgin Bids to Rescue Sabena * G E R M A N Y * DAIMLERCHRYSLER: Foregoes Plan to Sell Aircraft Leasing Unit DEUTSCHE TELEKOM: Analysts Expect E1 BB Third-Quarter Losses LTU GROUP: Money to Last Until Mid-November * I R E L A N D * AER LINGUS: Management, Union Negotiating Survival Plan * N E T H E R L A N D S * KPN NV: Refuses to Budge on 3G Investment Spree, Talks With BT VERSATEL TELECOM: Bondholders Want Better, Higher Offer * N O R W A Y * KVAERNER ASA: Spokesman Says There's Enough Cash KVAERNER ASA: Two Largest Shareholders Refuse to Give Cash * P O L A N D * NETIA HOLDINGS: Plans to Slash Workforce by Another 10% * S W E D E N * ADCORE AB: CEO, Senior Managers Take Stock Option, up Shares LM ERICSSON: Credit Protection Cost Rises on Reported Q3 Loss * S W I T Z E R L A N D * SWISSAIR GROUP: Second Grounding Possible in Two Weeks * U N I T E D K I N G D O M * 360NEWTWORKS: Four More Subsidiaries File for Protection BRITISH TELECOMS: BT Unions Fight for Ntwk to Remain British HUNTINGDON LIFE: Largest Shareholder Will Not Fold to Pressure KINGFISHER PLC: Investors Demand Mulachy, Five Others Resign MARCONI PLC: Refuses to Meet With Bondholders NTL INC.: Newcastle United Shares up for Bid RAILTRACK GROUP: Babcock & Brown to Base Bid on Byers Guidelines ============= B E L G I U M ============= REAL SOFTWARE: Announces Completion of Meta Software Acquisition ---------------------------------------------------------------- Real Software NV announced recently that it is now the sole owner of Meta Software NV following its acquisition of the latter's outstanding shares. According to the company, the move is part of a restructuring plan to move from a constellation of companies to an integrated group. The company recently inked an agreement that rescheduled its E218.2 million ($194 million) debt. The deal involved a E99.2 million debt restructured into a 10-year loan, the first five years of which will be interest-free. Last year, Real Software failed on a U.S. acquisition and huge debts brought it on the brink of bankruptcy. SABENA SA: BA, Virgin Bids to Rescue Sabena ------------------------------------------- British Airways plc chief Rod Eddington met with Belgian Public Enterprise Minister Rik Daems in Brussels last week, industry sources, the Observer reports. Though unclear about the extent of investment, BA is eyeing on Sabena's long-haul routes, including those to Africa. Meanwhile, Sir Richard Bransom's Virgin Group which owns 59% of Brussels-based budget airline Virgin Express Holdings plc, will next week submit its bid to the Belgian state to take over operation of Sabena's short-haul routes. The paper adds that Virgin Express chairman David Hoare will propose to merge with a regional subsidiary of Sabena, DAT (Delta Airline Transport) to handle a fleet of 70 to serve short-haul routes. Virgin Express is expected to inject $30 million in equity and Sabena may expect up to $20 million more of cash input from Hoare. Further government aid from Belgian may be granted if such intentions marterialize. If Sabena collapses, Virgin Express revenues will be crippled as 39% of Virgin Express revenues come from Sabena operations. Sabena received creditors protection from the Belgian courts up to November 30 and acquired a $112.3 million (E125 million) bridge loan from the state. ============= G E R M A N Y ============= DAIMLERCHRYSLER: Foregoes Plan to Sell Aircraft Leasing Unit ------------------------------------------------------------ Restructuring German-American carmaker will not go ahead with its plan to sell its aircraft leasing company Debis Air Finance, reports Reuters. Accordingly, the present downturn being experienced by the airline industry is not the opportune time to undertake the move. "We have agreed with the other shareholders not to pursue these plans for the time being. Now is not the most appropriate time," spokesman said last week. But a sale could still take place after a recovery in the industry, the spokesman hinted. Debis Air Finance, which DaimlerChrysler wanted to sell as part of its attempts to shed non-core businesses, has around 100 employees and leases more than 220 aircraft, the report said. DEUTSCHE TELEKOM: Analysts Expect E1 BB Third-Quarter Losses ------------------------------------------------------------ Troubled German telecom behemoth Deutsche Telekom AG has reportedly incurred an underlying net loss of over E1 billion ($896 million) in the third quarter, reports Reuters. Accordingly, the biggest chunk of the losses would be owned by U.S. unit VoiceStream, which will be included in the report for the first time. Analysts forecast a net loss before exceptional items of about E1.27 billion ($1.13 billion) for the three months ending September 30. The Bellevue, Washington-based mobile phone operator was acquired last May 31 and valued then at $28 billion. It was first consolidated in June, but its losses are only expected to make its mark on the third quarter results. LTU GROUP: Money to Last Until Mid-November ------------------------------------------- German charter airline LTU runs the danger of folding up mid- November if it fa*ils to find a new investor to take the place of now-bankrupt Swissair Group AG, reports FT Deutschland. According to the report, sources from within the company say the carrier only has enough money to continue operations until the middle of November. So far, only the German state of North Rhine-Westphalia has expressed willingness to guarantee E100 million to E150 million in credits ($89.4 million - $134 million). LTU's remaining big shareholder, the German retail and tourism group Rewe, is not prepared to increase its current 40% stake, the report says. Until recently, the carrier has depended on Swissair to finance its costly restructuring program. ============= I R E L A N D ============= AER LINGUS: Management, Union Negotiating Survival Plan ------------------------------------------------------- Negotiations have reportedly begun between Aer Lingus management and union to try to agree on a survival plan that includes cutting operations by a quarter and slashing 2000 jobs, reports the Financial Times. According to the report, the talks commenced Sunday -- days after Ireland's Public Enterprise Minister Mary O'Rourke announced that the carrier will lose $86.6 million this year and another $173 million next year. O'Rourke has said that without an agreement the carrier will run out of cash in January next year. "I think the unions have been in denial. But we hope they must just be waking up to the reality of the situation," the minister said. The government has agreed to free at least 35% of the stakes in the carrier for foreign investment, but company officials believe the implementation of a survival plan is a pre-requisite for securing outside equity. ===================== N E T H E R L A N D S ===================== KPN NV: Refuses to Budge on 3G Investment Spree, Talks With BT -------------------------------------------------------------- Despite already losing E22.8 billion ($20.3 billion), Dutch phone firm KPN is still pushing ahead with its investments on third- generation mobile phone infrastructure and licenses. The company announced recently that it is in talks with British Telecom, the equally distressed British company, which is spinning off its mobile phone unit before the year ends. The company did not reveal any details about the negotiations, except that it is about sharing the cost of building 3G mobile phone infrastructures in the Netherlands. Since March 2000, KPN shares have lost over 90% of its value as investors began questioning its ability to cope with its debts. Recently, it unveiled a debt-cutting strategy, which involves the slashing of its workforce by 10% or about 4,800 jobs. This job cut, however, is not enough, according to analysts who expect the firm to sell its German-based mobile phone subsidiary E-plus. VERSATEL TELECOM: Bondholders Want Better, Higher Offer ------------------------------------------------------- Bondholders are reportedly not satisfied with the current buyback offer of Versatel Telecom and are demanding a better deal, reports Reuters. Under advise by bankers, the bondholders are pushing for more cash and equity in compensation for swapping their higher-ranking debt for less secure equity in the company. At present, the company is offering between 20.5 and 21.5 percent of face value in cash and 10.5 and 11.6 shares for the high-yield bonds and 15 percent in cash and 7.1 shares for the convertibles. Versatel has high-yield bonds, worth one billion euros ($892.1 million), and convertible notes, worth 660 million euros ($588.8 million), which it wants to buy back to reduce leverage. The deal requires the approval of 90 percent of bondholders. =========== N O R W A Y =========== KVAERNER ASA: Spokesman Says There's Enough Cash ------------------------------------------------ Cash-strapped Kvaerner ASA explained over the weekend that it is not about to fold up following its admission that it needed NOK500 million ($56.1 million) by Monday to stay afloat. A spokesman told The Times that the company has enough cash, only that this money is in the bank accounts of subsidiaries, which cannot be released easily due to local laws protecting creditors. "We actually have enough cash but it is not in the right place. We have $100 million in Helsinki but, under Finnish law, the directors would be liable to prosecution if they released it," the spokesman said. The company risked being declared bankrupt yesterday as a result of the funding shortage. It was not clear as of press time whether the company eventually secured the amount it needed. According to The Times, thousands of British employees face the grim possibility of losing their jobs should the company be declared bankrupt. Kvaerner employs 7,000 people in London, Aberdeen and Teesside, The Times says. KVAERNER ASA: Two Largest Shareholders Refuse to Give Cash ---------------------------------------------------------- Kvaerner's luck may have just run out. Two of its largest shareholders refused Sunday to extend the needed cash to cover a short-term funding gap that threatens to force the company into bankruptcy, reports the Financial Times. According to the report, Yukos Oil, which recently became its largest shareholder, refused to accelerate the purchase of the company's hydrocarbon and process technology units. The deal is due to be completed by December, which will net $100 million for the company. Similarly, Aker Maritime, the second largest shareholder, also refused to lend cash. Earlier, it had promised to come through for the company provided it won control over it. On Sunday, the company feverishly worked on a deal to swap debt for equity. But, according to the report, many believed this would not be enough to cover the fund shortfall. It was not clear whether or not the Anglo-Norwegian engineering group was able to secure the needed cash to stave off bankruptcy. =========== P O L A N D =========== NETIA HOLDINGS: Plans to Slash Workforce by Another 10% ------------------------------------------------------- Poland's fixed-line telephone services provider Netia Holdings SA announced last week another 10% reduction of its workforce, AFX News said. The cutback follows the recent downgrades made by Standard, Fitch, and Moodys on its corporate credit ratings. The company has already slashed its workforce by 10% early this year. Its first quarter losses amounted to 169.2 million zlotys ($41.4 million), which has since then accelerated the decline of its financial viability. =========== S W E D E N =========== ADCORE AB: CEO, Senior Managers Take Stock Option, up Shares ------------------------------------------------------------ Adcore CEO Ole Oftedal upped his share in the company by recently acquiring 68,750,000 shares worth SEK27.5 million ($2.6 million), a press statement released late last week said. The chief executive now owns 68,798,692 shares of the company. The new shares were acquired from Active Holding B.V., which participated in Adcore's directed issue, the statement said. Johan Ek, who occupies a position in Adcore's management, also acquired 15,481,250 shares, which increased his total stakes to 2.7%. These new shares were also from Active Holding. In addition, a smaller group of executives in Adcore has acquired call options from Active Holding B.V. at market value. The options entitle to subscribe for around 25,000,000 shares in Adcore AB. The Board of Directors in Adcore has resolved to propose to an EGM for an option program to be directed to all staff. The terms and conditions for this program will be presented shortly. Adcore is a leading Stockholm-based Internet consultancy firm. It recently recorded losses of SEK1.9 billion ($179 million). For more information, contact Ole Oftedal, CEO, by Phone: +46 (0) 705 92 75 99 by E-mail: ole.oftedal@adcore.com or Frans Benson, Investor Relations, by Phone: +46 (0) 8 635 80 54 or by E-mail: frans.benson@adcore.com LM ERICSSON: Credit Protection Cost Rises on Reported Q3 Loss ------------------------------------------------------------- The deeper than expected third quarter loss of Ericsson has made the cost of credit protection shoot up significantly overnight, reports Reuters. The five-year default swaps on Ericsson widened about 15 basis points (bps) on the day to a bid/offer spread of 310/330 bps, trading at 320 bps, a dealer quoted by Reuters said. Ericsson, the world's largest maker of mobile networks, has reportedly made a SEK5.8 billion ($548.7 million) pre-tax loss in the third quarter, versus a market consensus of SEK4.5 billion ($426 million). Default swaps are insurance-type instruments giving investors the ability to hedge or gain the risk of an issuer defaulting on a loan or bond. The credit protection buyer pays the seller an annual premium, measured in basis points. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Second Grounding Possible in Two Weeks ------------------------------------------------------ The fleet of Swissair Group AG, which is now operated by Crossair, faces a second grounding in just over a month if a subsidiary fails to find cash in two weeks, says BBC News. According to the report, SR Technics, the maintenance arm of the carrier, needs a cash injection of about CHF30 million ($18 million) or go broke by November 9. In addition, it also needs CHF250 million ($154 million) to remain in business, says SR Technics President Hans Ulrich Beyeler. Crossair CEO Andre Dose says a solution has to be formed soon as the airline will be unable to find a new maintenance firm in two weeks time. Dose says the credibility of Crossair and the rescue of the national airline will suffer if Swissair planes will be grounded anew. SR Technics falls outside the rescue package recently put up for Swissair and the bankruptcy protection afforded it. The firm also did not benefit from the bridging loan two Swiss banks extended the former. "The banks do not think we are creditworthy," Beyeler explains. The firm is planning to layoff 800 of its 3,600 employees to save money. =========================== U N I T E D K I N G D O M =========================== 360NEWTWORKS: Four More Subsidiaries File for Protection -------------------------------------------------------- Four additional operating subsidiaries of 360networks have filed for voluntary protection in the Supreme Court of British Columbia, a company statement released last week said. This is aside from the 360atlantic (UK) Limited, which has also instituted administration proceedings in England, the statement said. The four companies that sought the protection under the Companies' Creditors Arrangement Act of Canada are: 360atlantic (Canada), 360atlantic (USA), 360atlantic sales (USA) and 360atlantic(Barbados). According to the Telecom Paper, PricewaterhouseCoopers has been appointed as Monitor to oversee these companies during the reorganization period. The company's principal U.S. subsidiary, 360networks (USA) Inc., and 22 of its affiliates is also concurrently under Chapter 11 protection of the U.S. Bankruptcy Code. 360networks offers optical network services to telecommunications and data communications companies in North America. BRITISH TELECOMS: BT Unions Fight for Ntwk to Remain British ------------------------------------------------------------ A decision by shareholders last week to remove the 15% shareholding limit are causing several British Telecom union to lobby the government to ensure the country's telephone network won't fall into foreign hands. The shareholding limit has effectively kept the company protected from takeover since its partial privatization in 1984, The Times says. All this changed last week when shareholders decided to do away with this limit, which BT Chairman Sir Christopher Bland says as showing "a lack of confidence if you need that sort of clause." Communication Workers Union deputy general secretary Jeannie Drake says there are "huge security implications" in allowing the firm's network fall into foreign hands. Connect, the union representing telecom industry professionals, said that ownership of BT's network raises "national interest" questions and "issues of the integrity of the network and supply." Several foreign entities are reportedly interested in buying parts of the company's network. Earth Lease, a consortium led by Babcock & Brown, the private equity investor, is reportedly interested in bidding up to GBP8 billion ($11.5 billion) for BT's local network, the copper wires linking customers' premises to exchanges. German bank WestLB is also thought to be interested in offering up to GBP25 billion ($36 billion) for the company's entire network, including its nationwide fiber network. HUNTINGDON LIFE: Largest Shareholder Will Not Fold to Pressure -------------------------------------------------------------- US investment bank Stephens Inc. says it will not ditch Huntingdon Life Science despite the day-long rally staged yesterday by animal rights activists. According to the Financial Times, the bank remains committed to financially backed the animal testing company even with the mounting pressure and intimidation it has received lately. Some 300 to 600 protestors were expected to attend the rally yesterday to force the bank to dump HLS similar to what Oracle, HLS' third largest shareholder, had done two weeks ago. Merrill Lynch, Barclays, HSBC, CSFB, Philips & Drew and WestLB Panmure are among those that have similarly abandoned the company. In recent weeks, according to the report, an HLS employee was carjacked in Chicago, while protestors broke into the company's San Francisco offices and chained themselves to desks. Stephens Inc. is the largest shareholder of HLS. KINGFISHER PLC: Investors Demand Mulachy, Five Others Resign ------------------------------------------------------------ A group of shareholders has again called for the replacement of CEO Sir Geoff Mulcahy, the Sunday Times reports. Accordingly, newly designated Chairman Francis Mackay has been told by the group to push the nearly 60-year-old chief executive and the other equally aging members of the board into retirement. The shareholders say the company has "huge strategic issues and needs new thinking." "We have made it clear to Francis that he must refresh the board - and that includes Geoff. This is why he was put in. Geoff will get a fair run to sort himself out but one year is more than ample. He is almost 60 and the time has come," says one investor. The other members of the board, which the group wants to be replaced, are: (1) Michael Hepher, who is also chairman of Canada Life; (2) John Bullock, a retired accountant; (3) Patrick Hardy, a retired SG Warburg managing director; (4) Margaret Salmon, an executive at the BBC; and (5) Tony Percival, a retired Kingfisher finance director. Percival, Bullock and Hardy are all in their sixties and are seen by shareholders as being stale and too close to Mulcahy. According to the report, the disposal of the above executives is needed to succeed in the planned GBR2 billion ($2.8 billion) acquisition of Castorama, a French company Kingfisher is already 46% part-owner. "When we have sorted out the non-executives and Mulcahy, we must move to take out the minority shareholders in Castorama. It will not work until we do," an investor told the Sunday Times. Kingfisher recently reported an interim loss of 355 million pounds, after a 526-million-pound of exceptional charges. MARCONI PLC: Refuses to Meet With Bondholders --------------------------------------------- Troubled telecom equipment maker Marconi plc has refused a meeting requested by a bondholder group that also recently sought a role in any negotiations to restructure the company's debts. According to Reuters, the law firm of Bingham Dana had written Marconi about the meeting on October 15. The report did not indicate the reason for Marconi's refusal. The group holds about E600 million ($536 million) worth of bonds and is concern that the banks spearheading the negotiations would get greater security over the company's assets should it fall into liquidation. HSBC and Barclays are presently leading negotiations to restructure Marconi's GBP4.2 billion ($6 billion) debt mountain. NTL INC.: Newcastle United Shares up for Bid -------------------------------------------- Debt-laden cable television operator NTL disposed of its shares in English football club Newcastle United deciding to retain its interest over its core business media rights, the Guardian reports Saturday. The shares were primarily put up for bid because the director who bought Newcastle United shares, Freddy Shepherd, intends to take the club private. Maintaining media partnership with the club, NTL takes the first 10 million pounds ($14.4 million) of profit that it might generate. Despite NTL's willingness to part ownership from Newcastle United, analysts predict the company will find difficulty to attract buyers and may shoulder a loss if any offers comes out of such development. Apparently, football club shares are unattractive to investors as even the industry's equivalent to a blue-chip stock, Manchester United, is trading at one-thirds of its value two years ago. RAILTRACK GROUP: Babcock & Brown to Base Bid on Byers Guidelines ---------------------------------------------------------------- The US finance group Babcock & Brown is considering to bid for all or part of Railtrack, the privatized UK rail network operator, the Financial Times reports Sunday. The large-scale refinancing group will base their proposal on bidding guidelines that will soon be set by transport secretary Stephen Byers. On Sunday, the US group reveals, "We have been looking at [Railtrack] for several months. We are keenly interested, but given the political situation over the last couple of weeks we have to wait for certain issues to be resolved." WestLB, the state-backed German bank, has already put forward a takeover approach for Railtrack earlier. Babcock & Brown operates in some of the most technical and least high-profile areas of finance which include originating, arranging and managing large asset-based and project-based financings and acquisitions. *********** 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. 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