/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/011128.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 Wednesday, November 28, 2001, Vol. 2, No. 232 Headlines * B E L G I U M * LERNOUT & HAUSPIE: Begins Bankruptcy Auction in New York SABENA SA: SIC Can Proceed Without DAT * F R A N C E * AIR LIB: Swissair Fails to Inject Cash * G E R M A N Y * BROKAT AG: Court Appoints Brokat Administrator BROKAT AG: Fitch Downgrades Ratings to D BROKAT AG: S&P Cuts Ratings to D DAIMLERCHRYSLER: Stocks Climb on Hopes of Economic Growth in 2002 DAIMLERCHRYSLER: Turkey Orders Recall of Subsidiary PIXELPARK AG: Goldman Downgrades Stock on Weak Third Quarter SCHMIDTBANK KGAA: Banks Appoint SchmidtBank Representatives TEAMWORK INFORMANTION: To Undergo Insolvency Restructuring * I R E L A N D * AER LINGUS: 40-MM-Pound Rescue Package to Fund Social Plan EIRCOM PLC: Directors Receive Bonuses * I T A L Y * ALITALIA SPA: Awaits Funding Plan Clearance * N E T H E R L A N D S * KPN NV: Clarifies Scheepbouwer Options, Redundancy Plans KPN NV: Suspends Cash Dividend Payments Until 2004 * N O R W A Y * KVAERNER ASA: Gets Financing to Stave Off Collapse KVAERNER ASA: Rejects Aker Merger Proposal * P O L A N D * LOT AIRLINES: Government Seeks Any LOT Investor * R U S S I A * OAO GAZ: Will Restructure Debt * S W E D E N * SCANDINAVIA ONLINE: Eniro Acquires 44% Stake in SOL * U N I T E D K I N G D O M * BRITISH BIOTECH: Narrows First-Half Losses BRITISH NUCLEAR: New LMA Poses Threat to BNFL BRITISH TELECOM: Sells Property to Cut Debt COLT TELECOM: Delays Share Dealings to December EQUITABLE LIFE: FSA Launches New Probe EQUITABLE LIFE: Seeks Court Approval for Compromise Deal ============= B E L G I U M ============= LERNOUT & HAUSPIE: Begins Bankruptcy Auction in New York -------------------------------------------------------- The bankruptcy auction for the assets of Belgian speech technology company Lernout & Hauspie started Monday at a New York law office, the New York Times reported. The proceedings were expected to produce only a fraction of the hundreds of millions of dollars that Lernout & Hauspie owes. Officials did not release the names of the bidders. The company failed to stave off insolvency, and the parties were given a November 21 deadline to submit bids for the company's assets, which were divided into eight groups. The minimum opening bids for the eight groups were set at a total of $21.5 million. Among the assets for sale is speech recognition technology developed by Dragon Systems, a company Lernout acquired in 2000 for more than $500 million in stock. Dragon's technology was set at a minimum price of $6 million. Other assets that have already been sold include Bowne & Company, bought by Mendez for $44.5 million. MedQuist bought the medical transcription business for $25 million, while executives of the Kurzweil Educational Systems Group unit of Lernout announced that they would buy the unit for about $2 million. Applications Technology was sold for $2 million to Apptek Partners. SABENA SA: SIC Can Proceed Without DAT -------------------------------------- Sabena Interservice Center, a unit of insolvent Belgian national airline Sabena Group, could survive without the participation of Delta Air Transport, another Sabena unit that took over some of its parent company's operations, the Echo reports. Initially, SIC's original restructuring plan required the participation of DAT in its capital. However, a court-appointed administrator said SIC's activities can operate without DAT participation. The report adds that the new plan will be announced in detail to creditors on November 29. SIC serves as an internal bank for the Sabena Group extending 24 billion Belgian francs in loans. It has 8.85 billion Belgian francs in capitalization where Sabena underwrites 74% and DAT has 19.5%. =========== F R A N C E =========== AIR LIB: Swissair Fails to Inject Cash -------------------------------------- Less than four months after leaving receivership, French air company Air Lib, formerly AOM-Air Liberte, has been hit hard by the crisis in the air transport sector. According to a report from Le Monde/FT Information, the company's directors warn that the events of September 11 and their effect on the global economy have put the company in a critical situation. The directors pointed out that Swissair airlines has not yet injected the 400 million French francs it is required to pay according to the terms of the companies' draft takeover agreement. The directors continue to seek new investors and are trying to obtain two Airbus A340-A300 aircraft, which are to be delivered to Swissair at the end of the year as part of the takeover agreement. ============= G E R M A N Y ============= BROKAT AG: Court Appoints Brokat Administrator ---------------------------------------------- A Stuttgart court has appointed lawyer Volker Grub as the interim administrator of Brokat Technologies AG after the internet software maker filed for insolvency Friday. Brokat Technologies was compelled to take the step after it saw no chance of eliminating its excess debts when the company failed to reach agreement with the holders of high-coupon Brokat bonds. The company sought to redeem the 11.5% senior notes as part of its restructuring plan. Brokat's E-finance and Encorus divisions are not affected by the insolvency proceedings. BROKAT AG: Fitch Downgrades Ratings to D ---------------------------------------- International rating agency Fitch downgraded Monday the Senior Unsecured rating of Brokat AG (formerly Brokat Infosystems AG) and its 125-million-euro Senior Unsecured notes due 2010 to D from CC, removing the Rating Watch Negative status. The rating action follows the company's announcement that lengthy debt-restructuring talks with bondholders had failed and that management was to file for insolvency. BROKAT AG: S&P Cuts Ratings to D -------------------------------- Standard & Poor's reduced its corporate credit and senior unsecured debt ratings on Germany-based software producer Brokat Technologies AG to D from CC. Following Brokat's recent application for bankruptcy, S&P noted that its limited asset base makes very unlikely the repayment of the senior unsecured notes upon liquidation. S&P added that the ratings were removed from CreditWatch, where they were placed with negative implications in June. DAIMLERCHRYSLER: Stocks Climb on Hopes of Economic Growth in 2002 ----------------------------------------------------------------- European stocks rose on optimism that lower oil prices will help spark economic growth next year, Bloomberg reported Monday. The #5 carmaker, DaimlerChrysler AG, gained 99 cents, or 2%, to close at 50.69 euros. Siemens, Germany's No. 1 electronics and engineering company, added 1.22 euros, or 1.8%, to close at 69.02 euros. The German-American carmaker will close the year with heavy losses due to a costly restructuring plan. DAIMLERCHRYSLER: Turkey Orders Recall of Subsidiary --------------------------------------------------- A Turkish judge on Monday deemed buses made by DaimlerChrysler subsidiary Mercedes-Benz Turk A.S. unsafe and ordered their immediate recall, Reuters reported. Model 0 403 buses produced by Mercedes-Benz Turk, with three commercial vehicle factories in Turkey, were said to have faulty designs that led to the deaths of 49 people in a 1997 accident. Mercedes-Benz Turk, which produces 67% of all passenger buses made in Turkey, told Reuters it would appeal. PIXELPARK AG: Goldman Downgrades Stock on Weak Third Quarter ------------------------------------------------------------ Berlin-based Web site designer and Internet consultant Pixelpark AG extended losses as Goldman Sachs downgraded the stock to market underperform from market perform. The downgrade comes on the heels of weaker than expected third-quarter results and a fiscal year profit warning. Goldman Sachs said that despite making progress on cutting its cost base, the group's sales trend remains alarming following four consecutive quarters of slowing activity. Pixelpark posted an operating loss of 14.2 million euros in the third quarter. Sales were down 26% to 17.4 million euros as a result of continual, difficult market conditions. Shares overall have dropped 80% this year, valuing the company at about 142 million euros. SCHMIDTBANK KGAA: Banks Appoint SchmidtBank Representatives -------------------------------- -------------------------- Paul Wieandt, former chairman of German banks BfG AG and Landesbank Rheinland Pfalz, was appointed new managing director of troubled Bavarian bank SchmidtBank KGaA, Die Welt/FT Information reported. At the same time, Germany's four biggest private banks, which saved SchmidtBank from insolvency, announced their representatives for the new management. Deutsche Bank AG has appointed Jurgen Bilstein, while Bayerische Hypo & Vereinsbank AG Michael Kemmer, Commerzbank AG Peter Kroll and Dresdner Bank AG Theo Harnischmacher. The consortium bailed out the struggling private bank after German bank regulator Bundesaufsichtsamt fur das Kreditwesen (Bakred) insisted it should find new financial backers or file for bankruptcy. Schmidtbank is thought to have lost hundreds of millions of euros on lending to medium-sized companies in southern and eastern Germany. TEAMWORK INFORMANTION: To Undergo Insolvency Restructuring --------------------------------------------------------- Paderborn-based information management solutions provider Teamwork Information Management AG will be restructured with the aid of an insolvency plan procedure. Receiver Dr. Frank Kebekus and teamwork AG board of management member Heinz Ikenmeyer agreed with Aktieninvestor.com AG CEO Magister Mair on the procedure. At a general meeting of shareholders planned for January, a capital reduction in the ratio 5:1 and two capital increases with subscription rights at the theoretical nominal value of 1.00 euro in the ratio 1:1 and 2:3 will be adopted. Aktieninvestor.com AG has assumed liability for shares that are not taken up in the two capital increases. The first capital increase aims to increase the working capital; the second will finance the insolvency plan that requires the consent of the creditors and court ratification. Approximately 3.5 million euros will be injected into the company by these capital increases. The shareholders will also be able to subscribe to a shareholder- friendly warrant issue that injects a further 1.3 million euros into the company. The goal of these capital measures is for the company to discharge its debts and be furnished with a positive capital stock. As a precondition for implementation of the restructuring model, the former shareholders SBG - Sparkassen Beteiligungsgesellschaft mbH and WestUBG - Westdeutsche Unternehmens-Beteiligungs- Aktiengesellschaft have already transferred their holdings of 450,500 shares to Aktieninvestor.com AG. Aktieninvestor.com AG specializes in guiding companies in crisis situations during their efforts to raise capital. For further information, contact Dr. Sabine Brummel, Investor Relations, at telephone +49 (0)5251 - 5201- 145, or email sbrummel@teamwork.de ============= I R E L A N D ============= AER LINGUS: 40-MM-Pound Rescue Package to Fund Social Plan ---------------------------------------------------------- Irish national carrier Aer Lingus Group plc has come up with 40 million pounds to fund a voluntary redundancy program necessary for its survival, reports the Irish Independent. Twenty million pounds were raised from the sale of two planes, while the remaining funds were raised from loans. After the implementation of the airline's social plan, there will be around 4,000 employees left in the company. EIRCOM PLC: Directors Receive Bonuses ------------------------------------- Directors of former state-owned telecom monopoly Eircom have been paid a total of 400,000 pounds in addition to their normal fees for the extra work involved in selling the company to the Valentia consortium, the Irish Times reports. Ray MacSharry was paid 100,000 pounds on top of his 110,000 fee as chairman of the company. The non-executive directors were paid 30,000 pounds, in addition to the annual fees of 38,000 to 41,000 pounds. Eircom deputy chairman Jim Flavin received 75,000 pounds in addition to his annual fee of 78,000 pounds, while director Pat Mulloy got 50,000 pounds in addition to his annual payment of 41,000 pounds. The payments, approved by the takeover panel, were made about 10 days prior to the takeover of the company by Valentia. Details of the payments were not disclosed to shareholders in the Valentia offer documentation because they were agreed subsequent to that document, the Times added. ========= I T A L Y ========= ALITALIA SPA: Awaits Funding Plan Clearance ------------------------------------------- Alitalia still needs fresh funds if Italy's struggling national airline is going to remain a global player, the Financial Times reports. The company is seeking financial support from the government, to the tune of 387 million euros of allocated state aid. Alitalia also hopes to secure a refinancing of between 1.2 billion to 1.4 billion euros with a convertible bond. Last week, the national airline unveiled its two-year plan, under which it expects to break even by 2003. The plan involves cutting about 3,400 jobs and selling real estate assets and some non-core businesses. Alitalia expects to make a net loss of 673 million euros, more than double the figure for last year, due to the sharp downturn in demand for air travel. ===================== N E T H E R L A N D S ===================== KPN NV: Clarifies Scheepbouwer Options, Redundancy Plans -------------------------------------------------------- Royal KPN nv clarified Monday shareholders confusion regarding the option scheme of CEO Ad Scheepbouwer and the issue on the company's social plan. In August, when continued operations of the company was threatened due to financial difficulties, the Supervisory Board decided to look for a new CEO and approached Scheepbouwer. If Scheepbouwer succeeds, it will mean continued employment for 32,000 people plus an encouraging future to all the other stakeholders. Based on the prospectus published, in addition to the 4,800 redundancies earlier announced, a further 1,300 jobs will disappear by the end of 2004. In effect, some of the staff lost by natural causes during the period up to and including 2004 will not be replaced. There is no expectation of additional redundancies or new plans. KPN NV: Suspends Cash Dividend Payments Until 2004 -------------------------------------------------- Debt-laden Dutch telecoms company Royal KPN NV will suspend the payment of cash dividends until November 2004 under the terms of the company's recent 2.5-billion-euro revolving credit facility, AFX News reports. The report adds that the revolving credit facility will mature in January 2004 rather than November 2004, if the company does not have a rating with a stable outlook of at least BBB from Standard & Poor's and Baa2 from Moody's in December 2003. Moody's confirmed last week KPN's Baa3 senior unsecured long-term debt rating and its Ba1 subordinated long-term debt rating, with a stable rating outlook, while S&P affirmed the long-term senior corporate credit and senior unsecured debt ratings at BBB- and the short-term debt rating at A3 with a stable outlook. KPN expects to gain approximately 4.8 billion euros from the rights issue to strengthen its balance sheet. =========== N O R W A Y =========== KVAERNER ASA: Gets Financing to Stave Off Collapse -------------------------------------------------- Struggling Anglo-Norwegian construction and engineering firm Kvaerner has secured 250 million Norwegian crowns in emergency liquidity from banks and one of its suppliers to avert imminent collapse until a shareholders' meeting tomorrow. Shareholders will vote on a rescue plan for Kvaerner worked out by the board with backing from Russian oil firm Yukos, which ownes 22% of Kvaerner. The proposal needs the agreement of two-thirds of shareholders and all lenders, including bondholders. In addition to converting debt into equity, the proposal calls for a 3 billion Norwegian krone rights issue. If no agreement is reached, Kvaerner, which employs 35,000 people in 35 countries, may have to declare bankruptcy. The Nordic investment boutique Sundal Collier & Co. and Oslo law firm Thommessen Krefting Greve Lund AS are advising Kvaerner. Nordic financial groups Carnegie AB, Orkla Enskilda and Pareto are advising Aker Maritime, which recently increased its stake in the Oslo-based group to 24.9%. ProCorp ASA, a Norwegian corporate finance boutique, is advising Yukos on Norwegian matters. KVAERNER ASA: Rejects Aker Merger Proposal ------------------------------------------ Kvaerner and Russian company Yukos Oil have rejected a proposal to merge Kvaerner's oil and gas operations with Norwegian offshore company Aker Maritime. Talks to rescue Kvaerner from liquidation failed after the construction and engineering company demanded that it must raise capital before starting merger talks with Aker Maritime. The Kvaerner Board concluded that the proposal presented by Aker Maritime could not possibly develop into an acceptable solution, nor would it subsequently secure support from other major shareholders or lenders. Kvaerner's demand was unacceptable to Aker's chairman Kjell Inge Rokke. 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 =========== P O L A N D =========== LOT AIRLINES: Government Seeks Any LOT Investor ----------------------------------------------- The Treasury Ministry will accept a financial investor outside the airline industry for LOT Polish Airlines, the Warsaw Business Journal reports. The decision follows recent speculation that international carriers, including British Airways and Air France, had shown interest in investing in the Polish airline but that nothing was finalized. "No airline is interested in this stake," ministry director Jan Szczesny said. "With the current state of the industry, you can't expect any airline to be prepared to invest in other carriers." The treasury owns 68% of LOT, while the remaining 25% of shares belongs to Swiss aviation group Swissair and 7% to LOT's employees. In mid-November, the government injected $76.3 million worth of shares in LOT, which posted a $61 million net loss in the first half of 2001. =========== R U S S I A =========== OAO GAZ: Will Restructure Debt ------------------------------ Russian automaker OAO GAZ will sign an agreement to restructure its debt in January 2002 with the European Bank for Reconstruction and Development, the A&G News reports. Excluding interest, the sum of the debt of OAO GAZ to EBRD totals US$65 million. The carmaker also owes Avtobank US$15 million. Due to financial difficulties, GAZ stopped paying its debts in the early part of 1999. =========== S W E D E N =========== SCANDINAVIA ONLINE: Eniro Acquires 44% Stake in SOL --------------------------------------------------- Swedish telephone directory publisher Eniro AB last week made a cash offer to the shareholders of the collapsed portal network Scandinavia Online AB. Eniro offered 11.50 Swedish kroner in cash for each share. The offer represents a premium of approximately 44% in relation to the last closing price of the SOL share on Stockholmsborsen during the last trading day prior to the announcement. Shareholders representing 75.9% of the shares and votes in SOL have undertaken to irrevocably accept Eniro's Offer. The acceptance period is expected to last from November 26 through December 14. Eniro president and CEO Lars Guldstrand said the sale would strengthen the company's search and directory services in the Nordic region. The acquisition will be followed by organizational restructurings that will be concluded during 2002 is EBITDA accretive from April 2002 and will lead to a total negative impact on EBITDA for the full year 2002 amounting to -20 MSEK. For more information, contact CEO Birger Steen at telephone +46 709 35 28 18 or email birger.steen@scandinaviaonline.se =========================== U N I T E D K I N G D O M =========================== BRITISH BIOTECH: Narrows First-Half Losses ------------------------------------------ British Biotech PLC narrowed its losses to 8.4 million pounds for the six months ended October 31, compared with a loss of 12.2 million pounds in the year-earlier period. The drug developer also said it had 62.2 million in cash in October 31, which it expects to last around three-and-a-half years. It substantially reduced cash burn for the half year of 2.8 million pounds, compared with 14.0 million pounds in 2000. "The turnaround at British Biotech continues to make good progress. We have had a productive half-year in which three products started clinical studies and a major restructuring of the business was completed," CEO Dr. Elliot Goldstein said. For more information, contact British Biotech Finance Director Tony Weir at telephone 011-44-1865 781166 Fax: 000-44-1865 781047 BRITISH NUCLEAR: New LMA Poses Threat to BNFL --------------------------------------------- The U.K. Atomic Energy Authority urges the government to improve competition in decommissioning disused nuclear power plants as part of plans to create a national atomic liabilities management authority (LMA), the Financial Times reports. The move can save taxpayers but can also threaten to weaken British Nuclear Fuels' business at a time when the company is trying to recover from last year's loss of 210 million pounds. Whitehall officials are expected to confirm plans for the new LMA soon to help push through the partial privatization of British Nuclear Fuels. Under the proposal, some 34 billion pounds of liabilities on BNFL's balance sheet and 8.5 billion pounds of liabilities currently the responsibility of UKAEA will be transferred to the LMA. BRITISH TELECOM: Sells Property to Cut Debt ------------------------------------------- British Telecom (BT) exchanged contracts with Telereal, a 50:50 joint venture between Land Securities Trillium and The Pears Group, for the sale of the majority of its U.K. property portfolio for 2.38 billion pounds. Completion is scheduled on December 14, or earlier. Around 6,700 properties will be transferred comprising offices, telephone exchanges, vehicle depots, warehouses, call centers and computer centers. The transaction also includes the transfer of approximately 350 employees from BT Affinitis to Land Securities Trillium (Telecom) during the first quarter of 2002. According to BT Group chairman Sir Christopher Bland, the sale is another important step in the company's restructuring and debt reduction program. COLT TELECOM: Delays Share Dealings to December ----------------------------------------------- Cash-strapped Colt Telecom Group LPC has revised the date of its open offer of 649 million new shares and subscription of up to 186 million shares at 62 pence per share, AFX News reported. The company said the open offer would not be declared effective on November 27, adding that the latest time and date for receipt of completed application forms is on December 7. Dealings in new shares are expected on December 13. The fundraising would help bridge the funding gap of Colt, which lost 54 million pounds in the second quarter. EQUITABLE LIFE: FSA Launches New Probe -------------------------------------- The Financial Services Authority launched a new probe into Equitable Life following the discovery of a letter that raised questions about statements the troubled U.K. mutual life assurer had made about its financial strength. According to the Financial Times, the April 1999 letter written by former chief actuary Chris Headdon raised doubts about the true value of the contract designed to bolster the life assurer's solvency. The letter, written at the time when Equitable was facing claims from thousands of guaranteed annuity rate policyholders, was sent to Equitable's reinsurer, Irish European Reinsurance Company. It effectively meant Equitable's reinsurance contract was worth less than the 700 million pounds stated on the company's solvency returns filed with the FSA. The regulator said that if it had been aware of the letter at the earlier stage it would not have been prepared to accept the reinsurance arrangements. The regulator said it would consider taking further action. In July 2000, the House of Lords ruled that Equitable should increase bonus payouts to guaranteed annuity rate policyholders, a decision that led it to close to new business. EQUITABLE LIFE: Seeks Court Approval for Compromise Deal -------------------------------------------------------- Equitable Life asked the Chancery Division of High Court to allow it to present to its policyholders a compromise agreement designed to limit the company's liabilities, the Daily Telegraph reported. The pensions group has been struggling since the House of Lords ruled against reductions in terminal bonuses for policyholders who decide to exercise their guaranteed annuity rates (GAR) options. The ruling has resulted in a shortage in Equitable's fund amounting to 1.5 billion pounds. It is believed that Equitable Life will offer its GAR holders a one-off bonus equivalent to an average 17.5% of the value of their policy on the condition that they will relinquish their right to guarantees. Policyholders without a guarantee will get a 2.5% boost to their policy in return for promising not to sue the society for mis- selling. ********** 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 * * *