/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011126.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 26, 2001, Vol. 2, No. 230 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Former Director Files 6MM-Euro Claim SABENA SA: Unions Will Not Oppose Job Cuts at Technics * D E N M A R K * TOCANO: Liquidator Sees Legal Tangle * F R A N C E * AOM-AIR LIBERTE: To Cut Back Fleet, Jobs as Losses Increase COCOON: Creditors Have Seen Enough Expansion, Demand Wind-Up * G E R M A N Y * MAN AG: Chief Expects EUR500 Million From Restructuring Plan MAN AG: Releases Third-Quarter Results MAN AG: Truck Unit Will Be Hardest Hit in Downsizing Next Year MAN AG: Will Scale Down Output by 15% Until 2003 MAN AG: Woes to Continue Next Year as Orders Will Likely Fall MAN AG: Pre-tax Forecast Downgrade Surprising, Say Analysts * I R E L A N D * AER LINGUS: CEO Says Privatization Will Happen in March * I T A L Y * ALITALIA SPA: Consortium Ready to Buy 30% Stake for $635 MM ALITALIA SPA: Mulls $1.3 BB Fund-raising for Next 2 Years * N O R W A Y * KVAERNER ASA: Reveals Additional Funding Requirements * S P A I N * IBERIA SA: Unveils 799-MM-Euro Cost Savings Plan for 2002 * S W E D E N * SONG NETWORKS: Wins Three-year Contract in Finland * S W I T Z E R L A N D * SWISSAIR GROUP: South Africa Approves SAA Stake Buyback SWISSAIR GROUP: Atraxis Chops Off 250 More to Stay Afloat * U N I T E D K I N G D O M * ATLANTIC TELECOM: Seeks 1MM Pounds From Government EQUITABLE LIFE: FSA Director Urges Compromise Deal NEW MILLENIUM: US$35-Million Dome Funds to Be Returned to Gov't ============= B E L G I U M ============= LERNOUT & HAUSPIE: Former Director Files 6MM-Euro Claim ------------------------------------------------------- Lernout & Hauspie Speech Products NV's former managing director John Duerden has made a claim of over EUR6 million (US$5.3 million) in salary arrears and lost income to L&H receivers, Financieel Ekonomische Tijd and FT Information reports. Less than one fifth of some 500 creditors have submitted corresponding claims to the Ypres court of commerce Wednesday. Creditors have until December 12 to present their claims. The creditors who have filed claims include Belgian bank and insurer KBC, which stands as key creditor with a claim of EUR174 million (US$153.0 million), followed by Artesia Banking with EUR47 million (US$41.3 million). SABENA SA: Unions Will Not Oppose Job Cuts at Technics ------------------------------------------------------ Unions will not oppose the planned 700 job cuts at Sabena Technics, but will try to negotiate the reduction of the number of forced redundancies, reports Le Soir/FT Information. Sabena Technics chief Peter de Swert says the unions are already amenable to the job cutbacks, as they understand that the measure will help save the company. De Swert, however, did not indicate whether or not management would reduce the number of forced redundancies, which the unions demand. Those who will get the axe represent about 35% of the 2,000 workers the company currently employs. The bankruptcy of German carrier City Bird and parent company Sabena has left the subsidiary a BEF5.4 billion (US$117 million) gaping hole in its annual turnover. ============= D E N M A R K ============= TOCANO: Liquidator Sees Legal Tangle ------------------------------------ Insolvent Danish CD manufacturer Tocano could face more claims from creditors should the latter decide to pursue the company for misleading them of its real stature prior to its bankruptcy. Liquidator Kaj Andreassen says creditors are allegedly mulling a case against the company for releasing results that made it appear attractive over the years. The company was declared insolvent in September. It owes creditors DKK250-300 million (US$29-35 million). Toft & Fischer of Denmark and Novio of Norway, two former customers, are currently continuing Tocano's operations. Both companies will take over the company's production equipment by year's end. =========== F R A N C E =========== AOM-AIR LIBERTE: To Cut Back Fleet, Jobs as Losses Increase ---------------------------------------------------------- Struggling French carrier Air Lib announced last week it will scale down operations and reduce its workforce to counter the huge losses it expects to incur this year. According to the company, the measure has become inevitable as total losses for the year is estimated to reach FRF600 million (US$80.4 million). Prior to the September 11 incident, these losses were only pegged at FRF400 million (US$53.6 million), says La Tribune/FT Information. COCOON: Creditors Have Seen Enough Expansion, Demand Wind-Up ------------------------------------------------------------ Creditors of French house builder Cocoon have reportedly moved for the liquidation of the company after seeing enough of its excessive expansion program, says Les Echos/FT Information. According to the report, the company was placed "in a state of involuntary liquidation" last week after creditors became fed-up with its 4-year expansion that only resulted in losses. Last year, the company only tallied a FRF3.1 million (US$414,000) profit, down by 75 percent from its 1999 return. In October, the company unloaded two property marketing companies to reduce cost. This involuntary liquidation of Cocoon follows the same pronouncement on two of its subsidiaries a month ago. PHT and Batirev were responsible for the EUR2.6 million (US$2.2 million) losses the group incurred last year. The 4-year-old program has spread the company over twelve external growth operations. Creditors no longer want any part of this. ============= G E R M A N Y ============= MAN AG: Chief Expects EUR500 Million From Restructuring Plan ------------------------------------------------------------ MAN AG Chairman Rudolf Rupprecht sees a EUR500 million (US$439 million) improvement in earnings annually once his restructuring plan is completed in 2003. However, he says, 2002 will be a difficult year owing to the slump in the truck manufacturing sector. "If the economy in the second half recovers, we could partially already expect a disproportionate improvement in earnings," he told analysts recently in telephone conference. "On the assumption that the economy will continue to grow, we see the chance in 2003 to be so profitable that we would be able to approach again our profit margin targets," he said. A major component of this restructuring program is a job cutback of up to 6,000 in Germany and abroad, with about 4,400 of these implemented by the middle of next year. MAN AG: Releases Third-Quarter Results -------------------------------------- Following an economic slowdown in the industry, heavy equipment maker MAN Aktiengesellschaft received new orders, which fell 8% or EUR11.7 billion (US$10.2 billion) against last year, a company press release reveals. In the case of both new orders and sales, the company forecasts volumes of between EUR15.5 billion (US$13.6 billion) and EUR16.0 billion (US$14.0 billion). Sales of EUR11.4 billion (US$ 10.0 billion) were down -1% compared to last year. Reserves amounting to EUR75 million (US$65.9 million) for the total additional costs of reorganizing the British subsidiary ERF accrued during the third quarter. For this quarter, MAN Group recorded earnings before interest and taxes of EUR215 million (US$189 million) and earnings before taxes of EUR68 million (US$59.8 million). MAN Group expects for the full year that earnings before interest and taxes will be EUR400 million (US$351.5 million) whereas earnings before taxes at EUR200 million (US$175.8 million). The factors that contributed to the decline in earnings in the Commercial Vehicles Division include: (1) declining production, (2) high costs due to parallel manufacture of two ranges of trucks, (3) pressure on conditions, (4) higher operating losses in the bus sector and at ERF, and (5) continued difficulty in the SMS group smelting and rolling-mill technology restructuring due to mounting losses. Strong earnings are still being recorded by other sectors of the Industrial Equipment and Facilities Division, as well as by Industrial Services, Printing Systems, Diesel Engines and Financial Services. In the year 2002, with new restructuring and cost-cutting measures, the group expects to recover in the second half of next year. By the end of 2002, MAN Group is expected to cut its workforce by 6,000 where layoffs will affect temporary employees in Germany. MAN AG: Truck Unit Will Be Hardest Hit in Downsizing Next Year -------------------------------------------------------------- Truck unit MAN Nutzfahrzeuge AG will absorb the hardest blow in the planned 6,000 job cuts next year, a company spokesman told AFX News recently. The spokesman, who refused to be named, said 4,400 of those who will be laid off will come from the unit while 600 will be from the SMS Group, part of the Industrial Equipment and Facilities Division. The balance will be taken from other companies within the MAN Group, including 350 in the printing machinery unit MAN Roland AG, the spokesman said. MAN AG: Will Scale Down Output by 15% Until 2003 ------------------------------------------------ A total of 15% of current production volume will be slashed until 2003 to cope with the projected downturn in the sector, says MAN AG Chairman Rudolf Rupprecht. He said output this year will be 60,000 units less or about 5-6% less, while production next year will be scaled down by 10%. Rupprecht did not disclose how the drop in production will affect the company. So far, however, the company has issued profit warnings due to falling orders. MAN AG: Woes to Continue Next Year as Orders Will Likely Fall ------------------------------------------------------------- Struggling German truck maker MAN AG faces more trouble next year. According to management board Chairman Rudolf Rupprecht in a recent telephone conference with analysts, truck market volume next year will be reduced to 280,000 units from 315,000 this year. He projects the number to pick up only in 2003. Already, the company has issued four profit warnings due to falling orders this year. Analysts are expecting the company to cut profit forecast from EUR400 million (US$351 million) to as low as EUR250 million (US$219 million). MAN AG: Pre-tax Forecast Downgrade Surprising, Say Analysts ----------------------------------------------------------- Analysts called last week the reduced full-year pre-tax forecast of MAN AG a double profit warning as it surpassed earlier projections, reports AFX News. According to them, the reduction was expected but the amount was nevertheless surprising. The company scaled down its pre-tax forecast for the year to EUR200 million (US$175 million) from EUR400 million (US$351 million). "This 200 million euro is clearly below our own forecast and therefore is indirectly a double profit warning from MAN," says Andre Remke of Vereins-und Westbank. "The scale of the nine months loss and the profit downgrade astonished us," he adds. "They've posted a third-quarter pretax loss of 87 million euro compared with a profit of 75 million last year. This is clearly worse than we've expected," says Remke. MAN explained the cut in profit forecast was mainly due to losses in the British subsidiary ERF. The company sees the unit losing "double-digit million figure in euros." ============= I R E L A N D ============= AER LINGUS: CEO Says Privatization Will Happen in March ------------------------------------------------------- The privatization of financially strapped Irish carrier Aer Lingus could be effected before the end of March next year, says CEO Larry Stanley. In a recent European Aviation Club seminar, Stanley expressed optimism the government will go ahead with the plan as the situation in the air transport industry worsens. "One good thing that has come out of this is that our government has decided to press ahead with privatization," Stanley said referring to the industry downturn. ========= I T A L Y ========= ALITALIA SPA: Consortium Ready to Buy 30% Stake for $635 MM ----------------------------------------------------------- A group of 10 to 14 investors is reportedly eyeing a 30% stake in struggling Italian airline Alitalia, says Alpi Eagles Chairman Paolo Sinigallia. Sinigallia, who also revealed that his carrier is part of the consortium, says the group is willing to shell out as much as ITL1.4 trillion (US$635 million) for the stake. He says a junior minister of the government has already told the group the stake could be sold. The government owns more than 50 percent of the carrier. "The government should see this as a big opportunity," says Sinigallia. ALITALIA SPA: Mulls $1.3 BB Fund-raising for Next 2 Years --------------------------------------------------------- Significant job cuts and a ITL3 trillion (US$1.3 billion) re- capitalization plan make up the two-year restructuring program of airline Alitalia SpA, the Financial Times says. The program, unveiled late last week, projects breakeven to be achieved by 2003. CEO Francesco Mengozzi, who drafted the plan, refused to give any details other than it will involve significant cost reductions, including job cutbacks. The board, which approved the re-capitalization plan, likewise refused to specify exactly how it will accomplish this, although it made clear its intention to use the state aid approved by the European Commission. Alitalia has yet to use the ITL750 billion (US$340 million) final tranche of the state aid, which the Commission approved for the carrier's restructuring between 1996 and 2000. There are indications, however, that this re-capitalization plan would be done through a convertible bond issue. Officials have admitted that they are still working on a structure to avoid breaching any European Union rules. Meanwhile, unions are threatening to go on strike should Alitalia lay off more than the number it announced in September. The carrier recently said it sees a total of 3,500 employees that need to be chopped off its payroll. This is a significant increase from the 2,400 announced two months ago. The airline incurred a total loss of ITL289 billion (US$131 million) for the first nine months this year, up from ITL283 billion (US$128 million) the same period last year. Net debt grew by ITL180 billion (US$81 million) during the third quarter to ITL1.8 trillion (US$83 billion). =========== N O R W A Y =========== KVAERNER ASA: Reveals Additional Funding Requirements ----------------------------------------------------- Engineering and construction group Kvaerner ASA in a press statement late last week said it will require further excess funding from now until the end of November. Earlier this week, the group announced that it had received 440 million Norway kroner (US$49.0 million) as a partial payment for the sale of the Hydrocarbons and Process Technology businesses to Yukos. According to the deal, the remaining 400 million Norway kroner of the funds raised from the sale will be paid on November 30. However, in addition to the funds raised, the Group sees a further excess funding of 250 million Norway kroner (US$27.8 million), until after the coming Extraordinary General Meeting on November 29. Kvaerner has asked its banks to provide the necessary funding and is also in talks with Yukos Oil over a possible early settlement of the remaining part of the payment for the sale. For more information, contact Paul Emberley, Vice President Group Communications at telephone +44 (0)20 7339 1035 or +44 (0)7768 813090 or paul.emberley@kvaerner.com ========= S P A I N ========= IBERIA SA: Unveils 799-MM-Euro Cost Savings Plan for 2002 --------------------------------------------------------- Troubled airline Iberia, Lineas Aereas de Espana SA said its cost saving measures dubbed as "anti-crisis" plan in 2002 is going to save up to EUR799 million (US$701.8 million), a report obtained from the AFX News said. An Iberia spokeswoman said the plan involved savings of EUR625 million (US$549.0 million) through a 15% cut in capacity, EUR120 million (US$105.4 million) through redundancies and a EUR54 million (US$47.4 million) cut in general costs. She said the company will achieve the reduction in capacity by returning 12 of its leased aircraft and "delaying indefinitely" an order for 15 planes from Airbus. The airline plans lease as before 8 Boeing 757s, 2 Boeing 747s and 2 Boeing 337s to scale down in capacity and hold additional plane orders of 15 planes from Airbus indefinitely. =========== S W E D E N =========== SONG NETWORKS: Wins Three-year Contract in Finland -------------------------------------------------- Telecommunications network operator Song Networks Holding AB has received a contract from the Central Organization of Finnish Trade Unions to provide communications services, the Dow Jones Newswires sources say. The three-year deal is worth over EUR3 million (US$2.6 million) where Song Network will provide union offices with telecommunications infrastructure and Internet access. ===================== S W I T Z E R L A N D ===================== SWISSAIR GROUP: South Africa Approves SAA Stake Buyback ------------------------------------------------------- The South African government's plan to repurchase from debt-laden Swissair Group its 20% stake in local carrier South African Airways (SAA) won approval recently, the Business Day and Financial Times reports. Threats within SAA, Transnet and the South African government have forced the buyback. According to the report, unless something was done, Swissair's crisis could spill over to SAA, which has already posted a 735 million rand (US$73.8 million) loss this year. Negotiators had already been to Zurich to discuss the details of the purchase. Minister for Public Enterprises Jeff Radebe declined to attach a value to the shares, but an analyst estimates that South Africa may pay between 650 million rand (US$65.3 million) and 800 million rand (US$80.4 million). SWISSAIR GROUP: Atraxis Chops Off 250 More to Stay Afloat --------------------------------------------------------- An additional 250 staff will have to go before Electronic Data Systems Corporation assumes control of Swissair reservation unit Atraxis, reports AFX News. The company, however, clarified the move is not a condition to Electronic Data's takeover, but nevertheless a measure to keep the company viable until then. The new management is set to assume the struggling reservation company early December. The company has already axed more than 300 employees prior to this announcement. Atraxis employs 2,100 workers worldwide. =========================== U N I T E D K I N G D O M =========================== ATLANTIC TELECOM: Seeks 1MM Pounds From Government -------------------------------------------------- The administrator of insolvent fixed-line operator Atlantic Telecom Group plc approached the government recently for nearly GBP1 million (US$1.4 million) fresh funds to support an emergency service for thousands of customers. Wendy Alexander, the Scottish Parliament's Enterprise Minister agreed to meet with PwC regarding the reported emergency funding for Atlantic. PricewaterhouseCoopers (PwC) was assigned as administrator for Atlantic last month after the company failed to find a buyer. A spokesman at the Scottish Executive Enterprise Department said that a number of options had been discussed where Alexander had been in contact with Oftel, the telecoms regulator and the Department of Trade and Industry. However, doubt remains on whether the government can provide financial aid as EU laws disallows anti-competitive practices. EQUITABLE LIFE: FSA Director Urges Compromise Deal -------------------------------------------------- Financial Services Authority (FSA) Managing Director John Tiner says there is no Plan B for Equitable Life; hence policyholders must accept a compromise. Tiner warned that should the compromise deal fail, a GBP250 million (US$351.7 million) capital boost from Halifax will be forfeited, and about a million policyholders would be "highly vulnerable." The compromise Tiner is referring to involves the following: (1) a cap on the society's liabilities; (2) holders of guaranteed pensions will receive a one-off bonus equivalent to an average 17.5% of the value of their policy. In return, they must agree to waive their rights to a guaranteed retirement income; and (3) policyholders without a guarantee will get a 2.5 percent boost to their policy in return for promising not to sue the society for mis-selling. Tiner says the financial boost from Halifax as well as the arrangement with policyholders is only way to boost the company's sagging finances. NEW MILLENIUM: US$35-Million Dome Funds to Be Returned to Gov't --------------------------------------------------------------- More than GBP25 million (US$35 million) in emergency funds will be returned by the firm managing the "Dome", the failed tourist attraction, when it is winded up next month, reports The Times. David James, chairman of the New Millennium Experience Company, which manages the Dome, says the balance of the GBP47 million (US$66 million) emergency fund he requested from the government will be paid to the New Opportunities fund. This savings, however, is relatively lower than the GBP793 million (US$1.1 billion) total cost of the Dome, which included GBP628 million (US$883) from the Millennium Commission. Meanwhile, an audit committee says creditors of the company, who are owed only about GBP1 million (US$1.4 million), will be paid in full. The company is set to be liquidated end of next month. According to the report, Richard Heis, a partner of KPMG, the accountancy firm, will officially be appointed as administrator. Heis will wind up the company's affairs under a so-called members voluntary administration order. There are still no firm plans to sell the Dome, the report says. ********** 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 * * *