/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011105.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 Monday, November 5, 2001, Vol. 2, No. 216 Headlines * B E L G I U M * SABENA SA: Mueller Admits Failure to Find Buyer SWISSAIR GROUP: IBM Ends Acquisition Talks With Atraxis SWISSAIR GROUP: 60 Carriers, 40 Ports to Go Down With Atraxis * G E R M A N Y * BANKGESELLSCHAFT BERLIN: Posts E662M Losses in Realty Write-off DAIMLERCHRYSLER: CEO Won't Junk Ambition to Become Global Player * I R E L A N D * AER LINGUS: Union Appeals to Prime Minister Ahern for Backing EIRCOM: Irish Government Clears Valentia's Eircom Takeover * N E T H E R L A N D S * KPN NV: Ex-minister Wijers to Aid Union in Talks With Management PHARMING GROUP: Postpones Q3 Results to Nov 30 VERSATEL TELECOM: Analysts Give Favorable Forecast on Q3 Results * N O R W A Y * KVAERNER ASA: Wins $113MM Calpine Power Plant Project KVAERNER ASA: Appoints New CEO for German Shipyard * S P A I N * XFERA SA: Restructuring Plan Calls for 73% Reduction of Workers * S W E D E N * ICON MEDIALAB: Restructures Will Propel Long-term Finances ICON MEDIALAB: Rescue Plan Triggers De-listing LM ERICSSON: To Outsource Spanish Activities, Cut 850 Jobs * S W I T Z E R L A N D * SWISSAIR GROUP: Lufthansa to Complete Atraxis Buy This Week SWISSAIR GROUP: Expert Views Cloud Crossair's Success Rate * U N I T E D K I N G D O M * BRITISH TELECOM: Shareholders Divided Over CEO's Generous Pay BRITISH TELECOM: Ex-foreign Minister Cook Berates Bonfield's Fee MARKS & SPENCER: Sells 11 Outlets in Iberia to El Corte NTL INC.: Inks 50-50 Venture With Orange to Increase Revenue UNITED PAN-EUROPE: Priority Shareholders Demand $200M Payment ============= B E L G I U M ============= SABENA SA: Mueller Admits Failure to Find Buyer ----------------------------------------------- CEO Christoph Mueller told staff last week that the possibility of getting a buyer for the entire Sabena operation is becoming slimmer, but it hopes to keep as many jobs as possible. "It is becoming increasingly clear that we will not find any investors willing to invest in the whole of Sabena," said Mueller in a memorandum, which Reuters obtained. The chief executive admitted, however, it is likely that some of the carrier's operations will be maintained in Brussels, saving about half of the current 12,000 posts. "This would be based on regional activity (Sabena's short-haul DAT subsidiary) to which several medium-haul and long-haul flights would be attached," Mueller said. Sabena is currently buried under a BEF90 billion ($2 billion) debt-pile. Mueller says investors he has been in negotiations with do not want to assume all of this debt. The investors want a new company to be set up that would be profitable in the short-term, says Mueller. SWISSAIR GROUP: IBM Ends Acquisition Talks With Atraxis ------------------------------------------------------- Computer hardware giant IBM Corporation withdrew last week its bid for troubled Swissair Group subsidiary Atraxis, leaving Lufthansa the task of saving the latter from bankruptcy. According to Reuters, the reason for IBM's withdrawal from the negotiations was not made known immediately. However, Reuters says the merger talks between Atraxis and Lufthansa has been ongoing, even before parent company Swissair Group obtained a provisional debt moratorium last month. Accordingly, IBM just joined the talks recently Atraxis needs between CHF35 million to 50 million ($21.5 million to 30.8 million) by mid-November or go broke and cause a second grounding of Swissair planes. SWISSAIR GROUP: 60 Carriers, 40 Ports to Go Down With Atraxis ------------------------------------------------------------- At least two foreign airline operations could be compromised if Atraxis ceases operation by the middle of this month, Atraxis spokeswoman Mijka Blazek warned recently. Agence France-Presse said the spokeswoman had warned that the fleet of Dubai-based Emirates and South African Airways would likely be grounded if Atraxis ceases operations. The two carriers heavily depend on the computer reservations and baggage handling systems of Atraxis. The troubled Swissair Group subsidiary all in all handles the same systems for 60 airlines and 40 airports, including Polish airline Lot and Turkish Airways. The subsidiary needs between CHF35 million to 50 million ($21.5 million to 30.8 million) by mid-November to prevent the grounding of the above carriers. Lufthansa will reportedly wrap up this week the acquisition of this vital Swissair unit. ============= G E R M A N Y ============= BANKGESELLSCHAFT BERLIN: Posts E662M Losses in Realty Write-off --------------------------------------------------------------- Embattled Bankgesellschaft Berlin AG is going to record E662 million ($598 million) this year primarily due to write-downs for real estate losses, a source told Reuters late last week. According to the unnamed source, the real estate-related losses will total E650 million ($587 million) by year's end. The bank is currently subject to several criminal and regulatory probes related to real estate activities and has just completed a E2 billion ($1.8 billion) capital increase to cover major real estate losses. The bank's troubles began in late 2000 when allegations of corruption surfaced against the city government, linking it to Bankgesellschaft's real estate dealings. The Berlin government owns 80% of the bank. DAIMLERCHRYSLER: CEO Won't Junk Ambition to Become Global Player ---------------------------------------------------------------- Despite potentially ending this year with heavy losses due to a costly restructuring plan, DaimlerChrysler AG CEO Jurgen Schrempp is sticking to his global expansion plan for the group. In an interview by German paper Handelsblatt, Schrempp says he is keeping his goal of making the Company one of the five to ten long-term successful global players. He maintains the group's projection of posting between E5.5 billion ($4.9 billion) and E6.5 billion ($5.87 billion) operating profit next year even with the deepening downturn in the automobile industry. Meanwhile, Schrempp defended the company's 37% participation in debt-burdened Mitsubishi, saying that the partnership resulted in the fast entry of the group into the Asian market. Without Mitsubishi, he said, the process would have taken another ten to twenty years. On the heavy losses this year, Schrempp said: "We set the bar very high." He said the group should have planned another two years for the integration process following the 1998 merger with Chrysler. ============= I R E L A N D ============= AER LINGUS: Union Appeals to Prime Minister Ahern for Backing ------------------------------------------------------------- Union leaders of beleaguered Aer Lingus have called on Prime Minister Ahern to back the airline's case to obtain EU approval for a state support, a report from the BBC news reports. The union representatives are expected to call for greater commitment to saving the airline, which employs 6,300 people. The state-owned carrier is losing two million Irish pounds (2.52 million euros) a day has earlier announce to lay off 2,000 workers and scale back its operations by 25% and seeks a buyer for 35% of the company. However, state aid has been ruled out by the European Commission, despite persistent campaigning from the government. The Commission maintains that allowing aid from the government to help a business it owns is anti-competitive. According to BBC, the airline is intends to sell two Boeing 737 jets to cover 40 million pounds for the job cuts. EIRCOM: Irish Government Clears Valentia's Eircom Takeover ---------------------------------------------------------- Valentia's E3 billion ($2.7 billion) takeover of former state- owned telecom monopoly Eircom was given the go ahead last week, reports Dow Jones Newswires. Ireland's Enterprise, Trade and Employment Minister, Mary Harney, said she had not referred the deal to the Competition Authority. A referral to the Competition Authority would have delayed the deal's approval. Talks were rife lately that Valentia was frantically avoiding the referral because of some changes the finance ministry had made on its bid to defeat the e-Island group's rival offer. At one point, Valentia threatened to go to court to prevent the release of documents covered by Ireland's Freedom of Information Act. The approval ends the controversial nine-month battle between Valentia and e-Island. Valentia is a consortium consisting of Goldman Sachs Inc., Providence Equity Partners Inc. and Soros Private Equity Partners. Prominent Irish businessman Tony O'Reilly heads the group. ===================== N E T H E R L A N D S ===================== KPN NV: Ex-minister Wijers to Aid Union in Talks With Management ---------------------------------------------------------------- Boston Consulting Group CEO Hans Wijers has entered the present negotiations between KPN and trade unions regarding the former's plan to cut its workforce, the Telecom Paper said last week. The former government minister's role would be centered on studying the 4,800 proposed job cuts planned by KPN so that trade unions can former a better judgment of the company's financial position. The trade unions are not convinced the company needs to layoff workers and have doubts about the pace of diminishing the workforce, the report said. PHARMING GROUP: Postpones Q3 Results to Nov 30 ---------------------------------------------- Biotechnology company Pharming Group NV fell into receivership Wednesday, a Reuters report says, pushing the release of its third-quarter results to November 30. The delay was due to uncertainty over the future of the company and over an appeal on the Genzyme bid which won Belgian court approval to buy the group's plant in Geel, Belgium, a statement obtained by Reuters said. The proceedings of the said appeal "may have a significant impact on the balance sheet of Pharming Group NV," the Dutch company further explains. Pharming, which went into receivership in August after a cash drought, said it opposed Genzyme's offer because it was too low. The group remains in favor of a bid made by Transkaryotic Therapies Inc. last month. VERSATEL TELECOM: Analysts Give Favorable Forecast on Q3 Results ---------------------------------------------------------------- Analysts projected Versatel to minimize losses in the third quarter by E15 million ($13.5 million) ahead of its disclosure of third-quarter results set Friday last week, Reuters said. However, many doubt that the company could reach break-even level by first quarter next year given the present deterioration of the telecom sector. Nevertheless, analysts were generous to project a E72.1 million ($65.1 million) revenue for the third quarter compared to the E69 million ($62.3 million) of the preceding quarter. A Bear Stearns analyst, however, called "overly optimistic" the view of some of his peers, who project Versatel to achieve break- even status by next year. The analyst pointed out that other competitors like British rival Colt Telecom Group Plc had also missed forecasts for the third quarter due to the downturn in the market. Another competitor Internet host Exodus, for its part, announced last week that it would dispose of its European facilities for the same reason. =========== N O R W A Y =========== KVAERNER ASA: Wins $113MM Calpine Power Plant Project ----------------------------------------------------- Kvaerner, engineering and construction Group, today announced that it has been awarded a S$113 million (125 million euro) construction and procurement contract by Calpine Corporation. Kvaerner will build a 540MW combined-cycle power generating facility. The new Osprey Energy Center is to be located in Auburndale, Florida in the U.S., next to Calpine's existing Auburndale facility. Kristian Siem, President and Chief Executive Officer, Kvaerner, said: "This is our first major award since the announcement of the refinancing plan. Calpine have demonstrated their confidence in our Company, and I am delighted that we have been awarded this latest project for their new Osprey Energy Center. " Full-scale construction of the facility will begin in November 2001. In the U.S. alone, Kvaerner is building a total of seven power plants with a combined capacity of nearly 4,000 MW. Kvaerner ASA's Kvaerner E&C is a world-class Anglo-Norwegian engineering and construction Group which employs over 9,000 people operating from over 30 offices worldwide. For further information, please contact: Kvaerner, London Paul Emberley, Tel: +44 77 6881 3090 Vanessa Mourant Tel: +44 (0)20 7957 3290 Fax: +44 (0)20 7957 3489 Email: vanessa.mourant@kvaerner.com KVAERNER ASA: Appoints New CEO for German Shipyard -------------------------------------------------- Kvaerner, the global engineering and construction Group, announced the appointment of Peter Viergutz as Chief Executive Officer of its German shipyard, Kvaerner Warnow Werft GmbH, a company statement yesterday says. Viergutz, 58, serves 35 years of his professional career in the German maritime industry. Since 1993, he has held the dual-position of Managing Director of Shipyard Holding (Hegemann Group), Bremen, and also Managing Director of Peene-Werft GmbH, at Wolgast, the former East German shipyard. Prior to this appointment, he held positions with Blohm+Voss AG in Hamburg over a period spanning 27 years. He will take up his new position with Kvaerner Warnow Werft early in 2002. During his time with Peene-Werft, Viergutz has helped to develop the former East German shipyard into one of the most modern yards in Europe for cargo vessels and navy ships. Peter Viergutz will succeed Arnfinn Orten, the present CEO of Kvaerner Warnow. Arnfinn Orten will continue to work closely with Peter Viergutz during a transition period. For further information: Matthias Trott Communications Manager Kvaerner Warnow Werft: +49 381 510 1102 or matthias.trott@kvaerner.com Paul Emberley Vice President Group Communications, Kvaerner PLC +44 (0)20 7339 1035 or +44 (0)7768 813090 or paul.emberley@kvaerner.com ========= S P A I N ========= XFERA SA: Restructuring Plan Calls for 73% Reduction of Workers --------------------------------------------------------------- Spanish 3G mobile phone provider Xfera SA is drawing up plans to reduce by 73% its 600 workforce to cope up with the recent developments in its business, AFX News said last week. The job cuts will be spread over Actividades de Construccion y Servicios SA-Sonera and Fomento de Construcciones y Contratas SA- Vivendi Environment. The former will see its workforce cut by 34%, while the latter is set to absorb a 31% cutback. The company explains that the planned measure is part of a wide- ranging restructuring program. Last month, shareholders deferred the scheduled launch of its 3G business until 2003, when its UMTS frequencies are made available. Earlier, the government refused to grant the company its own GSM and GPRS frequencies. Xfera is one of the four holders of Spain's third-generation mobile telephony licenses. =========== S W E D E N =========== ICON MEDIALAB: Restructures Will Propel Long-term Finances ---------------------------------------------------------- The Board of Directors of IconMedialab through a press statement announced yesterday that it is investigating alternative financing plans to provide substantial cash resources to the company. Among the alternatives is a restructuring plan that will enable the company to capitalize its unrealized tax losses. As constructed, this restructuring plan is to provide the company substantial cash for operations and will be non-dilutive to existing shareholders. The company yesterday has significant unrealized tax losses in excess of SEK 2.5B stemming from the fact that the market value of its combined subsidiaries is significantly lower than the tax base. The company seeks to monetize these tax losses through a restructuring plan based on the following key elements: 1. A new unlisted holding company ("New IconMedialab") makes a public offer for all shares in IconMedialab, whereby the shareholders in IconMedialab are offered new shares in exchange for their shares in IconMedialab. No bid premium will be offered. 2. Following the offer, IconMedialab will sell all shares in its subsidiaries to the "New IconMedialab". "New IconMedialab" will then seek to sell for cash to a new buyer all shares in IconMedialab. It is expected that the purchase price for IconMedialab will be a portion of the amount of the capital losses. "New IconMedialab" will apply for a listing on the Stockholm Stock Exchange O-list and IconMedialab will be delisted. The result of the restructuring plan is intended to be that the current shareholders will be shareholders in a new but identical IconMedialab with a strong cash position and balance sheet. The transaction would also create the financial prerequisite necessary for quickly reaching a positive cashflow. For more information please contact: Investor Relations Icon Medialab International AB Phone: +46 70 375 90 20 Email: investor.relations@iconmedialab.com ICON MEDIALAB: Rescue Plan Triggers De-listing ---------------------------------------------- Swedish Internet consultant Icon Medialab announced plans to seek a de-listing of its shares off the bourse under a restructuring scheme, a Reuters report says Thursday. Icon board member Jesper Jos Olsson according to Reuters said, "The board has put forward this suggestion in order to realize our tax losses." Icon suggested the company sells capital losses of 1.5 billion Swedish crowns ($141.3 million) to companies who might want to set them off agaist taxable profits, the company said in a statement on Thursday. "I have told several clients to sell. The market is not sure whether the company will survive or not. Investors are scared they will lose their money," a broker said. Following that announcement, shares fell 20% down Thursday. LM ERICSSON: To Outsource Spanish Activities, Cut 850 Jobs ---------------------------------------------------------- Some 300 employees in Ericsson's Spanish operations will be forced to avail of early retirement as the Company starts rolling its restructuring program forward. Expansion and Financial Times disclosed last week that a total of 850 workers out of the 3,500 employees in Ericsson Espa�a will ultimately be affected by the program. In addition to the job cuts, the operations at the Leganes plant in Madrid as well as in the Zamudio plant in Vizcaya will also be outsourced somewhere else. However, the company will try to develop a new business plan that will guarantee the continued operations of the Zamudio plant, which employs about 400 workers. The company has already cut some 6,000 jobs in its international operations this year. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: Lufthansa to Complete Atraxis Buy This Week ----------------------------------------------------------- The acquisition of cash-strapped Atraxis by Deutsche Lufthansa AG will be finalized some time this week, reports the Financial Times Deutschland. Citing an unnamed Lufthansa spokesman, the paper said the acquisition was virtually a done deal. IBM Corporation withdrew from the negotiating table last week, but it is unclear whether Lufthansa's negotiations contributed to IBM's decision. Details of the deal were not released by either camp, although the companies did admit that the negotiations began in July. According to the report, the acquisition will strengthen Lufthansa's IT operations. SWISSAIR GROUP: Expert Views Cloud Crossair's Success Rate ---------------------------------------------------------- Industry observers and analysts alike doubt Crossair's chances to emerge successfully as Switzerland's new flag carrier, advising investors against buying stakes in the airline in the meantime. According to Dow Jones Newswires, skepticism is the present consensus among analysts about Crossair's projection to turn in profits as early 2004. "The main problem of this new airline is that the business plan is still a black (hole) to most investors," says Mario Davatz, an analyst at Bank Vontobel. Analysts believe that in the now radically altered European air transport sector, only big flag carriers like Deutsche Lufthansa AG, Air France Group and British Airways PLC could survive. Accordingly, this is because said airlines have a much bigger domestic market that could sustain its operations. Crossair suffers from slow traffic at home. "These companies have either a strong balance sheets, big home markets or rigid cost-control measures, which are considered key elements to success in the current situation," says Paolo Orler of Banca del Gottardo. Orler and some of his peers believe the rescue package for Swissair Group looks more like a patriotic deed rather than an economically minded move. Industry observers see a drop in transatlantic traffic by 36% and European traffic by 9.6% in the months following the September 11 incident. Crossair plans to create around 10 million new shares at CHF280 per share. This offering will propel shareholders' equity from CHF329 million to CHF3.04 billion. =========================== U N I T E D K I N G D O M =========================== BRITISH TELECOM: Shareholders Divided Over CEO's Generous Pay ------------------------------------------------------------- The huge payoff of departing CEO Sir Peter Bonfield has divided shareholders on whether or not the executive deserves the generous package in view of his alleged "poor performance". According to a Financial Times report, Pensions & Investment Research Consultants has written the company's board seeking clarification on the package. In particular, the group, which advises institutional shareholders on corporate governance, wants provisions relating to poor performance vis-.-vis compensation cleared. "The report says executive directors have provisions relating to poor performance; but it does not say what they are or when they might be invoked," says Stuart Bell, research director of Pensions. Some shareholders, however, have accepted the excessive payoff, saying it is stipulated in Bonfield's contract, which was put to a vote in July, along with that of other executives. "Unfortunately he has not done very well. But because he has not done a good job, you pull the plug early on the basis of what you already agreed. You cannot move the goal posts after the fact. Instead of complaining, investors should kick the backside of whoever gave him the contract," says one shareholder. But another shareholder couldn't hide her infuriation: "It is pretty tawdry Bonfield is getting paid for destroying shareholder value." Bonfield leaves British Telecommunications after leading it to a failed expansion program that ultimately resulted in a costly restructuring program, including chopping the company into several disjointed parts. His compensation package totals GBP1.49 million ($2.1 million), which includes a hefty executive bonus that could double the final value of the severance package. BRITISH TELECOM: Ex-foreign Minister Cook Berates Bonfield's Fee ---------------------------------------------------------------- "At a time when workers are losing their jobs and shareholders are losing their money, we would expect executives to share some of the pain." So said Great Britain's former foreign secretary, now Member of Parliament, Robin Cook, in criticizing the hefty payoff Sir Peter Bonfield is set to receive when he leaves his post at the end of January. Cook called the payoff a "considerable sum of money," sharing the sentiments of investors who are divided on whether or not the departing CEO deserves it given his "poor performance." Bonfield is scheduled to step down next year with a GBP1.49 million (2.18 million) pocket money, plus other benefits that could double the final value of his severance package. MARKS & SPENCER: Sells 11 Outlets in Iberia to El Corte ------------------------------------------------------- Marks & Spencer has reportedly reached a deal with Spanish stores El Corte Ingles regarding its nine outlets in Spain and two others in Portugal, said the Financial Times late last week. Just like the deal with French Galeries Lafayette last month, the company refused to disclose details about the deal with El Corte. The Spanish stores employ nearly 800 workers, while the two in Portugal has 120 employees, according to the paper. The disposal of the 11 stores in the Iberian Peninsula is part of the company's promise to investors to completely withdraw from Europe by year's end. Already, the company has announced plans to similarly close four Belgian outlets after failing to find a buyer. The group is now left with only five outlets -- two in Germany, one in Luxembourg and two in the Netherlands, the report said. NTL INC.: Inks 50-50 Venture With Orange to Increase Revenue ------------------------------------------------------------ In a bid to shore up earnings, debt-laden NTL Inc. has reportedly inked a 50-50 joint venture with mobile phone operator Orange, the Financial Times said late last week. Accordingly, the two companies are going to launch the venture this week. Analysts believe the deal is beneficial to NTL than it is to Orange, as it will make the former the only company to offer a wide range of services in UK -- digital television, Internet access, fixed line telephone and now mobile phone services. Rival Telewest, a cable operator, does not yet have wireless option, the report said. The contract-only service will be sold in NTL cabled areas. Revenues and cost from the joint venture will be split equally between the two companies, the report said. NTL is presently trying to reduce a GBP12.6 billion ($18.4 billion) debt-pile, which is currently threatening to derail its projected takeoff by 2003. In August, Moody's Investors Service downgraded the company's Ba3 senior implied rating to B1, while its B3 senior unsecured issuer ratings was lowered to Caa1. UNITED PAN-EUROPE: Priority Shareholders Demand $200M Payment ------------------------------------------------------------- Priority Telecom NV's parent company, United Pan-Europe Communications NV, received a demand letter from minority shareholders in Priority Telecom NV seeking a $200 million (221 million euro) payment for an agreement that required Priority be taken public by Oct. 1, the Wall Street Jornal reports. According to Mark Land, one of the founders of Cignal Global Communications, the claim was delivered to UPC's Dutch headquarters on Friday. Cignal, a voice and data services business operating in the Netherlands, Austria and Norway, was acquired by Priority last year. UnitedPan-Europe Communications NV, which promised Europe cable internet access, is presently incurring large losses due to unprofitable investments. *********** 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 * * *