/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011102.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, November 2, 2001, Vol. 2, No. 215 Headlines * F R A N C E * AIR LIBERTE: Seeks $20M Loan to Support Deal With Air France AIR LIBERTE: Air Lib Records $68.7 million Losses This Year DESK SA: Domo Plus Rescues Insolvent Desk SOFRER: Works Council Blames Management for Downfall * G E R M A N Y * ARTLANDER BEKLEIDUNGSWERKE: Artlander Is Tattered to Insolvency DEUTSCHE TELEKOM: Records E3.1 Billion Loss for First 3 Quarters LIBRO AG: Buch & Kunst Eyes 23 Amadeus Bookstores LTU GROUP: Pilots Agree to Pay Cut, Two-Year Wage Freeze * N E T H E R L A N D S * KPN NV: Sells Indonesian Mobile Phone Holding for $601 Million * N O R W A Y * KVAERNER ASA: Board Member Kristian Siem Takes Over CEO Post KVAERNER ASA: Aker Maritime Risks Stake Reduction * S W I T Z E R L A N D * SWISSAIR GROUP: Rescue Efforts Compromised By Too Many Players SWISSAIR GROUP: Atraxis Eyes Bidders to Takeover in Two Weeks SWISSAIR GROUP: SR Technics Sale Remote, Still Needs Cash * U N I T E D K I N G D O M * BRITISH TELECOM: CEO Cuts Short Stint as Turnaround Plan Ends BRITISH TELECOM: Telecom Drops Clear Communications' $23.7M Bid MARKS & SPENCER: Sells Stores for $506M to Topland Group PHOTOBITION GROUP: Ceases Operation Absent New Capitalization PHOTOBITION GROUP: UK Unit Forms New Outfit to Stay in Business RAILTRACK PLC: New Company Up in Six Months, Says Administrator RAILTRACK GROUP: Engineering Consortium Eyes Railway Operations RAILTRACK GROUP: SRA Mulls $146 Million Railtrack-Virgin Pact RAILTRACK GROUP: S&P Insists On Rating, Labels New Plan Murky RAILTRACK GROUP: Could Dodge Accident Liabilities =========== F R A N C E =========== AIR LIBERTE: Seeks $20M Loan to Support Deal With Air France ------------------------------------------------------------ Swissair Group subsidiary Air Lib is seeking a loan of 100-150 million French francs ($14-20 million) following a code sharing agreement in October with Air France for the Antilles and Reunion Island, La Tribune and the Financial Times reports. In addition, Air Lib needs cash to provide cost for plans to offer flights to Algeria and Cuba. Meanwhile, the Company remains in crisis, as its parent company Swissair Group still owes Air Lib 250 million French francs ($34.4 million) plus 150 million French francs ($20.6 million) in unused issued tickets. Before Swissair's collapse however, the Swiss group secured 450 million French francs ($61.9 million) to buy A340-300 planes for AOM Air Liberte. Air Lib should receive the said aircrafts under advantageous conditions, La Tribune and FT Information says. AIR LIBERTE: Air Lib Records $68.7 million Losses This Year ----------------------------------------------------------- Air Lib, the successor company of AOM Air Liberte, five months after operation this fiscal year will make losses of about 500 million French francs ($68.7 million), the La Tribune and FT Information says. Despite a 5-20% drop in the tourist industry, the company still expects 1.6 million passengers to provide 1.7 billion French francs ($233.6 million) this year. Air Lib, reported to be roughly on track with the company's forecast, is expecting losses of 400 million French francs ($55 million) next year. However, it aims to hit break-even point in 2003. DESK SA: Domo Plus Rescues Insolvent Desk ----------------------------------------- The Nanterre court has favored Domo Plus to be the buyer for Desk SA, France's third largest independent office automation supplier, a report appearing on Les Echos and Financial Times says. Domo Plus, a subsidiary of GCG owned by Patrick Getreide, will undertake to rebuild Desk, which was declared insolvent in June. Desk produced 57 million euro (51.3 million) in turnover last year. SOFRER: Works Council Blames Management for Downfall ---------------------------------------------------- The works council of telecoms company Sofrer, according to a chartered accountant's report, condemns the management of Sofrer and calls its downfall as an "accumulation of bad practice" the Les Echos and FT Information reports. The French press, from the same report of the official receiver, adds that there were discrepancies in Sofrer's accounts found last year and strongly doubts the company's recorded turnover. These earnings are believed to be closer to 800 million French francs ($109.9 million) and not 1.096 billion French francs ($150 million) appearing in the accounts. The works council is also suspicious about payments made to three Sofrer executives when they left the company. The council believe they were bribes. Sofrer went into receivership last Friday. ============= G E R M A N Y ============= ARTLANDER BEKLEIDUNGSWERKE: Artlander Is Tattered to Insolvency --------------------------------------------------------------- Artlander Bekleidungswerke Holding AG, a German clothing manufacturer, has filed for insolvency for the whole of its group, including its subsidiaries, the Frankfurter Allgemeine Zeitung and FT Information says Wednesday. The German manufacturer, which rendered a good performance from its main business, could not prevent the company's collapse, as it grew unable to pay its mounting debts. The company is reported to be able to continue operations for the current season and summer months of 2002. The group, which employs about 1,300, including 300 in Germany, posts an annual turnover of around 200 million Deutsche marks ($92.1 million). DEUTSCHE TELEKOM: Records E3.1 Billion Loss for First 3 Quarters ---------------------------------------------------------------- A provisional report released by debt-laden Deutsche Telekom reveals a E3.1 billion ($2.79 billion) loss for the first nine months of the year, says the Financial Times. The loss is primarily due to a E1.8 million ($1.6 million) charge for amortization of goodwill and UMTS mobile phone systems costs of E900 million ($810 million). A surprising write-down of E400 million ($360 million) representing the decreased value of the Company's stake in France Telecom capped the losses for the period. The German telecom provider, however, managed to racked E1.6 billion ($1.4 billion) in net profits, which resulted largely from the sale of its shares in US phone company Sprint that grossed E1.9 billion ($1.7 billion). Meanwhile, the provisional report also underscored a debt reduction of about E5.8 billion ($5.2 billion) in the third quarter. The Company's total debts still stand at E65.2 billion ($58.6 billion). The German telco wants to bring this down to E50 billion ($45 billion) by year's end. Deutsche Telekom will publish it final results on November 28, the Financial Times says. LIBRO AG: Buch & Kunst Eyes 23 Amadeus Bookstores ------------------------------------------------- German Book Compapany Buch & Kunst GmbH is interested to acquire 23 branches of the Austrian bookstore chain Amadeus, Die Presse says. Libro AG, the bankrupt book, audio and video retailer, owns Amadeus. Venture capital company Barclays Private Equity GmbH owns 55% of Dresden-based Buch & Kunst. LTU GROUP: Pilots Agree to Pay Cut, Two-Year Wage Freeze -------------------------------------------------------- Pilots of financially distressed German airline LTU have now joined the effort to save the carrier, a report by Dow Jones Newswires Wednesday said. Pilots union Vereinigung Cockpit has agreed to a 10% reduction on the salary of their member-pilots at LTU Airline, the report said. In addition, the unions also acceded to a 50% cut in the 13th month pay of LTU pilots and a wage freeze next year and 2003. According to report, the agreement was reached at the opening of wage negotiations with LTU and depends on the success of the rescue plan prepared by investors and shareholders. ===================== N E T H E R L A N D S ===================== KPN NV: Sells Indonesian Mobile Phone Holding for $601 Million -------------------------------------------------------------- Debt-laden Dutch telecom group KPN followed up its disposal of Hungarian mobile operator Pannon early this week with another stake sale in Indonesia's Telkomsel Wednesday. According to the Financial Times, the sale to Singapore Telecom grossed $601 million. The transaction involved the 22% stake the Company held at Telkomsel. The move is part of a series of non-core asset sales designed to reduce the Company's E22 billion ($19.7 billion) debt-pile. The latest transaction will be completed by December. The Company says it will not affect revenues for the year because the Indonesian stake was never consolidated in its financial statements. =========== N O R W A Y =========== KVAERNER ASA: Board Member Kristian Siem Takes Over CEO Post ------------------------------------------------------------ A board member of insolvent Anglo-Norwegian engineering group Kvaerner has picked Wednesday to replace former CEO Kjell Almskog, who resigned recently, reports the Financial Times. Siem Industries chairman and CEO Kristian Siem replaces Almskog at a time Kvaerner narrowly missed an appointment with the bankruptcy courts early this week. According to the report, Siem's biggest challenge yet is to restore confidence in the Company, which is planning a NOK3 billion ($337 million) rights issue this month to lower debts. KVAERNER ASA: Aker Maritime Risks Stake Reduction ------------------------------------------------- Aker Maritime ASA, the construction company, in which Knell Inge Rokke is largest shareholder, risks having its stake reduced from 17.8% to 4.7% if the company refuses to participate in Kvaerner's share issue. If Aker Maritime Chairman Rokke, who is also financier in Kvaerner, will not invest 500 million Norwegian kroner ($56.2 million) in new capital equity, his company's stake in Kvaerner will be shrunk into a minority shareholding. Rokke's rescue plan was rejected by the Norwegian group's board Tuesday, deciding in favor of the proposal from Yukos Oil, the Company's biggest shareholder. Rokke believes Kvaerner management is guilty of financial fraud and announced Tuesday that he will launch an investigation soon. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Rescue Efforts Compromised By Too Many Players -------------------------------------------------------------- The bid to keep Swissair planes flying for the next six months and the planned smooth turnover of operations to Crossair is being muddled by too many entities involved in the process. Coupled by inexperience in handling large corporate bankruptcies, it is no wonder that for a while this week, the possibility of a second grounding hovered in the horizon, the Financial Times said. According to the paper, confusion was bound to arise in the rescue efforts, as it is not clear who is in charge. At present, there are at least three working parties and a new steering committee tasked to form a new national airline, the paper said. Adding to the problem is the severe restriction on the role of provisional administrator Karl Wuthrich in the entire process, which only involves making sure that creditors are protected. Wuthrich limited function is one of primary cause for hindering the immediate rescue of critical subsidiaries like SR Technics and Atraxis, the report said. "Mr. Wuthrich's obligations to creditors severely restrict his ability to channel funds from one part of the group to another, especially since Atraxis and SR Technics are not covered by the provisional debt moratorium," the paper explained. Nevertheless, the government and the Swiss business sector have now agreed to find short-term funding for the two important divisions. However, one businessman warned that "little dramas" will not entirely disappear in the next few weeks. SWISSAIR GROUP: Atraxis Eyes Bidders to Takeover in Two Weeks ------------------------------------------------------------- Atraxis, the aviation IT arm of Swissair Group AG, has found several interested buyers ready to take over within the next two weeks, the airline said Wednesday. According Stefan Leser, a member of Atraxis' executive committee, "We are talking with several interested parties," the Dow Jones Newswires reports. Leser did not exclude the possibility that the company could be split up by several parties but also said Atraxis would only need one buyer. Dow Jones Newswires confirms that Deutsche Lufthansa last week was in contact with the Swiss IT group. However, the identities of the interested parties involved in the bids remain undisclosed. SWISSAIR GROUP: SR Technics Sale Remote, Still Needs Cash --------------------------------------------------------- Troubled plane maintenance subsidiary SR Technics admitted recently that it is negotiating a sale with potential investors, the Dow Jones Newswires said. However, spokesman Dominik Mueller, who refused to name the possible investors, clarified that the Company is still far from escaping its short-term financial shortfall. He doubts the present sale talks will be completed before November 9 at which time the Company needs a cash injection of about CHF30 million ($18.3 million). "Usually such talks last for around three months," he said. =========================== U N I T E D K I N G D O M =========================== BRITISH TELECOM: CEO Cuts Short Stint as Turnaround Plan Ends ------------------------------------------------------------- British Telecommunications CEO Sir Peter Bonfield is leaving his post end of January rather than end of next year, the Financial Times reported yesterday. According to the report, Bonfield cut short his stint due to the early completion of the restructuring program he had spearheaded. To recall, Chairman Christopher Bland extended Bonfield's contract early this year for another 12 months or until the latter's turnaround "break-up strategy" was complete. Bonfield leaves the Company after a six-year tour of duty that saw the UK-based telco expanding abroad, at one point, before recently regressing to its old form -- a UK-focused telecom provider. He will receive almost GBP1.5 million ($2.18 million) in salary, bonus and benefits, and as much as GBP290,000 ($421 million) in executive share awards over the next three years. He also has a deferred bonus plan totaling 296,084 shares, the report adds. Observers are betting an outsider will replace Bonfield; somebody, who they say, will focus more on the basics -- cutting costs and boosting growth of core UK franchise. BRITISH TELECOM: Telecom Drops Clear Communications' $23.7M Bid --------------------------------------------------------------- Telecom Corp., New Zealand's largest telecom provider, has rejected a $23.7M (NZ$57.6 million) in settlement from Clear Communications Ltd. over dispute on interconnection payments, the Business Herald and the Dow Jones Newswires reports. Clear Communications and Telecom has been in a state of quarrelsome disagreement over the exact amount owed by Clear to Telecom since September, when last year's NZ$35 million interconnect agreement expired. British Telecommunications PLC. owns Clear Communications. MARKS & SPENCER: Sells Stores for $506M to Topland Group -------------------------------------------------------- Troubled retailer Marks & Spencer PLC announces Wednesday it has agreed to sell 78 stores to privately-owned real estate investor Topland Group Holdings Ltd. for GBP348 million in cash. M&S said the terms of the sale involves freehold and leasehold stores which include a structured leaseback, Dow Jones Newswires says. The initial term of the store leases expire in March 2027, where M&S will pay approximately GBP24.6 million ($35.8 million) a year, carrying a fixed annual increase of 1.5-1.95%. Marks & Spencer also announced that it has agreed to enter into partnership with Topland for the occupation and management of the stores, with an option to vacate up to around one-third of the stores on the initial term of the leases. Additionally, the term guarantees M&S the right to renew any of the leases for up to 40 years. M&S director Robert Colvill states the company's future transactions wil linclude securitization and divestment. PHOTOBITION GROUP: Ceases Operation Absent New Capitalization ------------------------------------------------------------- Graphics services provider Photobition Group was placed under receivership Wednesday after failing to persuade creditors to provide it new working capital, reports AFX News. According to the news agency, the Company had voluntarily suspended trading on the London Stock Exchange Monday prior to its announcement Wednesday that it was ceasing operations. Lenders have appointed David Duggins, Richard Fleming and Roy Bailey as joint administrative receivers of the Company that supplies graphics services and products to the exhibition, display, media and advertising industries. Analysts expect the Company to report losses once more when it releases new results. This is due to the market downturn in the UK, where the Company derives nearly half of its turnover. The Company's restructuring program, commenced in December last year, failed to prevent the issuance of several profit warnings this year. Photobition's net debt in the half-year to December 2000 stood at 103.5 million stg, with interest cover of 1.73 times. PHOTOBITION GROUP: UK Unit Forms New Outfit to Stay in Business --------------------------------------------------------------- A subsidiary of bankrupt Photobition Group PLC has formed a new outfit in order to remain trading, AFX News said Wednesday. Service Graphics will replace Photobition UK Graphics and will acquire some 900 to 1,000 employees of the parent Company, which was placed under receivership Wednesday. "We are confident that, without the problems associated with Photobition's parent company, and with the continuing support of our long-established client base, Service Graphics has a bright future," a statement from Photobition UK said. Photobition UK Graphics is a key subsidiary of Photobition Group, which supplies graphics services and products to the exhibition, display, media and advertising industries. RAILTRACK PLC: New Company Up in Six Months, Says Administrator --------------------------------------------------------------- The administrator of failed transport company Railtrack PLC announced Wednesday that the company to rise out of the ashes of the plc group could be up and running within six months, a report on Financial Times says. Railtrack Administrator Alan Bloom said a decision could be made "inside six months, but it's tight," answering lawmakers' inquiry in the House of Commons Transport Sub-Committee. In winding down the the privatized plc group, the administrator is demanding more subsidies from the government to compensate for extra repair work. Currently, the administrator will decide whether to accept the government's non-profit company proposal to succeed the plc group or whether to favor the private bid for the company's properties. RAILTRACK GROUP: Engineering Consortium Eyes Railway Operations --------------------------------------------------------------- A group of engineering companies that carry out maintenance and renewal of Railtrack is planning to bid for the operation of the entire rail system, the Financial Times learned this week. The group consists of Balfour Beatty, Jarvis, Serco, Amey, Amec, First Engineering, Grant Rail, and GTRM, the report said. Accordingly, the group will try to come up with a bid within weeks following Wednesday's publication of the guidelines for interested bidders for Railtrack. "Whoever does run the railways is going to have to use us anyway," said one company executive in explaining the group's motive for joining the bid. The Financial Times believe the group will propose a scheme similar to that of the government's plan to set up a "new company" limited by guarantee that would own the track, signals and stations. The transport department wants the new company to be formed within six months. Meanwhile, Transport Secretary Stephen Byers announced Wednesday that an addition GBP800 million ($1.16 billion) government loan will be extended to Railtrack's administrators to keep the railways running. This is in addition to the GBP800 million ($1.16 billion) aid the government pledged in September. RAILTRACK GROUP: SRA Mulls $146 Million Railtrack-Virgin Pact ------------------------------------------------------------- The GBP300 million ($436 million) compromise deal inked by Railtrack and train operator Virgin Trains is now being studied by the Strategic Rail Authority, the Times said Wednesday. The amount due to Virgin is in exchange for abandoning its plan to operate the 140 mph trains by 2005 on the West Coast Main Line. Virgin is the same train operator that sought early this year compensation for lost business amounting to GBP100 million ($145 million) from Railtrack. The train operator had also threatened legal action for losses following the Hatfield accident in October last year. RAILTRACK GROUP: S&P Insists On Rating, Labels New Plan Murky ------------------------------------------------------------- Credit ratings agency Standard & Poor's says "it needs to be shown something that will work" before it will raise the "CC" rating of Railtrack, the Evening Standard said early this week. "There are still significant gaps in the plans for the new company. We have heard very little out of the rail regulator," said S&P analyst Mike Wilkins. He said the plan to set up a "new not-for-profit company" is not enough to warrant a better rating for the Company. The analyst confirmed that the treasury and transport department officials are pressuring the agency to up the Company's rating to BBB status. The better rating is being sought for to make raising money from the City a bit easier and cheaper. RAILTRACK GROUP: Could Dodge Accident Liabilities ------------------------------------------------- The chances of Railtrack escaping responsibility for the accidents in Hatfield, Ladbroke Grove and Southall is getting bigger as prosecution is not forthcoming before a new company is formed. Legal experts and industry insiders have doubts that liability can be transferred to the "new company" the transport ministry is planning to form to replace Railtrack. In addition, if in case prosecution will succeed while Railtrack is still in administration, observers believe liability will be reduced to fines, which will be paid by and to the government. One lawyer told the Financial Times that trying to prosecute the company after it has wound up operation would be "like trying to prosecute a dead man." At this, lawyer Louise Christian, who represents victims at Hatfield, Ladbroke Grove and Southall, replied: "It will reinforce the feeling of the victims of all three crashes that there's been no justice and no action." *********** 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 * * *